London Community Infrastructure Levy (CIL) · PDF fileLondon CIL Update The Community Infrastructure Levy in London Thursday 12 th June 2014. Mayoral CIL, Crossrail SPG and London

LondonCommunity

InfrastructureLevy (CIL)

Update

#rtpicil#rtpicentenary

“It is the taking by the community

for the use of the community of the

value that is the creation of the

community”

(Henry George, 1879)


Mayoral CIL & Crossrail SPGAlex Williams

View from the Inspectorate Keith Holland

ViabilityAnthony Lee

Infrastructure Planning & CIL Rory Brooke






London CIL Update The Community Infrastructure Levy in LondonThursday 12th June 2014.

Mayoral CIL, Crossrail SPG and London CIL Update.

Alex Williams, Director of Borough Planning

5

Mayoral CIL

PLANNING PERMISSION GRANTED

CIL LIABILITY CALCULATED & NOTICE ISSUED

DEVELOPMENT COMMENCED

DEMAND NOTICE ISSUED

CIL PAYMENT (POSSIBLY PHASED

• £300m for Crossrail

• Charging since April 2012

• 3 rates across London: £50 / 35 / 20 m2

• In London the Mayor is the CHARGING authority & the boroughs are COLLECTING authorities

6

Mayoral CIL –

economic context

7

Mayoral CIL Income

8

Mayoral CIL Income

9

Mayoral CIL

– where from?

12%

11%

10%

7%

6%

6%

48%

Westminster

City

Lambeth

Tower Hamlets

Camden

Greenwich

Rest of London

10

Mayoral CIL –

development hotspots

11

Mayoral CIL

– Highest Receipts

12

Crossrail

Funding SPG

13

Crossrail SPG

analysis

76%

24% Referable applns

Non Referable

applns

95%

2% 3%

CAZ

Isle of Dogs

1 km

boundary

Application type

(by receipt)Location trigger

(proportionate applications)

14

Crossrail Funding SPG

– Top Receipts

Rank Borough Amount Development Address Date S106

Signed

1 City £5,925,072 5 Broadgate July 2011

2 Westminster £3,359,999 Former Middlesex Hospital March 2012

3 City £3,603,634 St Alphage House August 2011

4 City £2,769,916 52-54 Lime Street & 34-35 Leadenhall June 2013

5 City £2,457,338 Bloomberg Place March 2012

6 City £2,083,157 30 Old Bailey August 2011

15

London Borough CIL’s

– the frontrunners

2012 I 2013 I 2014

REDBRIDGE

WANDSWORTH

CROYDON

BARNET

BRENT

HARROW

NEWHAM

MERTON

SUTTON

W.FOREST

CITY

ISLINGTON

LAMBETH 16

London Borough CIL’s

- Progress

17

REDBRIDGE

WANDSWORTH

CROYDON

BARNET

BRENT

HARROW

NEWHAM

MERTON

SUTTON

WALTHAM FOREST

CITY

ISLINGTON

LAMBETH

RICHMOND

LEWISHAM

CAMDEN

BARKING & DAGENHAM

BEXLEY

HILLINGDON

HARINGEY

SOUTHWARK

TOWER HAMLETS

KINGSTON

HACKNEY

KENS & CHELSEA

LLDC

ENFIELD

HAMM & FULHAM

GREENWICH

EALING

HOUNSLOW

BROMLEY

HAVERING

WESTMINSTERKey

Charging Draft Charging Schedule PublishedPreliminary Draft Charging Schedule PublishedPreparation stage

Borough CIL’s

– Infrastructure needs

18

Borough Funding Gap Potential BCIL

Lambeth £242m £5m pa

Lewisham £230m £4m pa

Barking & Dagenham

£148m For education alone

£2m pa

Borough CIL’s

- Office rates

19

Borough CIL’s

- Residential rates

20

Borough CIL’s

– Regulation 123 lists

The Reg. 123 list outlines types of infrastructure to be funded in whole or part

by CIL. Borough priorities tend to be:

• Education Facilities: e.g. provision / improvement of new and existing public education

facilities

• Community facilities: e.g. provision / improvement of new and existing community

facilities

• Public Realm Improvements: e.g. provision / improvement/maintenance of public

realm projects or area based public realm streetscape

•Transport: e.g. provision / improvement of strategic public transport initiatives

21

Thank you.

22











Anthony Lee

How is CIL affecting funding of infrastructure in London?

1. How CIL is affecting funding of infrastructure

2. Can CIL support longer term approach to delivery?

3. Is it working in practice?

4. Relationship between the boroughs and the Mayor

26

Introduction

How is CIL affecting the long term delivery of infrastructure

27

CIL does not account for significant % of total costs

Typically less than 5% of total costs

Lower % when existing floorspace deducted

Largely replaces existing S106 ‘ask’

S106 limited by Regulation 122 to:

Necessary to make development acceptable in planning terms

Directly related to the development

Fairly and reasonably related in scale and kind to the development

28

CIL and long term delivery of infrastructure

CIL is a less significant factor than other priorities

Affordable housing

Provision/reprovision of employment floorspace

Changes to other inputs more significant

29


30


30

-

2

4

6

8

10

12

14

AH 35% AH 50%

Resid

ual

Lan

d V

alu

e (

£ m

illio

ns)

CIL of £250 psm CIL of £350 psm

Impact of

increase from

35% to 50% AH

Impact of increase in

CIL from £250 to £350

psm

£0

£5

£10

£15

£20

£25

£30

£35

£40

£45

Ja

n-0

7

Ma

r-0

7

Ma

y-0

7

Jul-

07

Sep

-07

No

v-0

7

Ja

n-0

8

Ma

r-0

8

Ma

y-0

8

Jul-

08

Sep

-08

No

v-0

8

Ja

n-0

9

Ma

r-0

9

Ma

y-0

9

Jul-

09

Sep

-09

No

v-0

9

Ja

n-1

0

Ma

r-1

0

Ma

y-1

0

Jul-

10

Sep

-10

No

v-1

0

Ja

n-1

1

Ma

r-1

1

Ma

y-1

1

Jul-

11

Sep

-11

No

v-1

1

Ja

n-1

2

Ma

r-1

2

Ma

y-1

2

Jul-

12

Sep

-12

No

v-1

2

Ja

n-1

3

Ma

r-1

3

Ma

y-1

3

Jul-

13

Sep

-13

No

v-1

3

Ja

n-1

4

Mil

lio

ns

GDV Private GDV Dev costs Residual (with CIL) Residual (no CIL)

31


31

Risk Margin Grant

funding

Affordable Rent

Mayoral CIL £35

Borough CIL £150

Challenges of borough-by-borough charging and timings

32

All boroughs must set rates on basis of viability

Cumulative impact of policies alongside CIL

Sites critical to the plan may be individually tested

SUBJECT TO provision of information by developer

Ideally in the form of an appraisal

Should demonstrate impact of CIL (e.g. before and after CIL IRR)

Should not simply show the scheme viability is challenging

Boroughs can adopt own instalments policies

Boroughs can turn exceptional relief on and off at will

Varying approaches to use of S106 on major schemes

33

Challenges of borough-by-borough charging

Can CIL support a longer-term approach to delivery of infrastructure?

34

In principle, yes

Breaks link between receipts and schemes – flexibility

Pooling of contributions significantly easier under CIL

BUT fixed and unresponsive to market cycles +/-

35


DIFS approach

Tariff of £40,000 per unit

Timetabled increase in 2016

Money ring-fenced for NLE

All units pay tariff

Ability to negotiate but rarely

applied

36Presentation Footer Text

CIL

Tariff converted to CIL

£265 per sqm

Degree of uncertainty

Existing floorspace

Exceptional relief

Discretionary relief

Receipts could be lower

No ring-fencing

No ability to increase in NEV

Whole CS review required

CIL and long term infrastructure delivery – NEV OA

How is the relationship between the Mayor and boroughs working?

37

Mayoral CIL adopted in April 2012

LAs required to have regard to Mayor’s CIL when setting rates

Mayor adopted before all authorities except Redbridge (Jan 12)

What happens when Mayor wants to review his CIL?

Extent to which Crossrail S106 to be taken into account is unclear

Crossrail S106 is an indicative charge, subject to viability

LBTH has challenged Crossrail S106 taking priority over own CIL

38

Relationship between boroughs and Mayor of London

Conclusions

39

CIL gives LAs greater freedom to pool resources cross Borough

Old restrictions in S106 agreements swept away

Inability to flex in response to market cycles is an issue

Simplifying process of establishing and adopting rates required

BUT

CIL accounts for only a small proportion of costs

Relatively insignificant in major projects

Other policy objectives have more influence (and can flex)

40

Conclusions





London CIL Update

Infrastructure Planning

12th June 2014

Rory Brooke

London CIL Update June 2014

Structure

• Context: NPPG Requirements and Guidance

• Infrastructure evidence

• Relationship to S106 via Regulation 123

• S278

• Payments in kind

• LB Hillingdon CIL

• LB Lewisham CIL and Convoys Wharf

• Funding in Wider Context

• Warrington RIF

• Southall DIFS

• Croydon DIFS

• Questions


Context: NPPG Guidance

• Required infrastructure evidence

• CIL, S106 and Regulation 123 List

• S278

• Payments in kind


Required Infrastructure Evidence

• ‘At examination, the charging authority should set out a draft list of the projects or types of infrastructure that are to be funded in whole or in part by the levy.’

• Can use Local Plan IDP or elements of the IDP

• ‘A charging authority may undertake additional infrastructure planning to identify its infrastructure funding gap, if it considers that the infrastructure planning underpinning its relevant Plan … is weak or does not reflect its latest priorities. This work may be limited to those projects requiring funding from the levy.’

• Where infrastructure planning work which was undertaken specifically for the levy setting process has not been tested as part of another examination, it will need to be tested at the levy examination.’


CIL, S106 and Regulation 123 List

• Total developer costs are the sum of CIL and S106

• CIL and S106 do not overlap – controlled by Regulation 123 list

• But this can result in double counting

• ‘Local authorities should ensure that the combined total impact of such requests

does not threaten the viability of the sites and scale of development identified in

the development plan.’

• ‘Where the levy is in place for an area, charging authorities should work

proactively with developers to ensure they are clear about the authorities’

infrastructure needs and what developers will be expected to pay for through

which route. There should be not actual or perceived ‘double dipping’ with

developers paying twice for the same item of infrastructure.’

• ‘…where a change to the regulation 123 list would have a very significant impact

on the viability evidence that supported examination of the charging schedule,

this should be made as part of a review of the charging schedule.’


S278 Infrastructure

• ‘Planning obligations and conditions should not be used to require a developer to enter into section 278 agreements to provide items that appear on the charging authority’s Regulation 123 infrastructure list.’

• ‘Charging authorities should take care to ensure that their existing or forthcoming infrastructure list does not inadvertently rule out the use of section 278 agreements for highway schemes.’

• ‘Contributions for highway works that are secured through section 278 of the Highways Act are not subject to the pooling restriction.’


Payments in Kind

• Issue: How can developers be sure the LA will spend CIL on their site-related infrastructure?

• Possible route for more control: payments in kind

• ‘Where a charging authority chooses to adopt a policy of accepting infrastructure payments, they must publish a policy document which sets out conditions in detail.’

• ‘Where the levy is to be paid as land or infrastructure, a land or infrastructure agreement must be entered into before development commences. This must include the information specified in Regulation 73A.’

• Our understanding: DCLG allow payments in king on capital works up to a value of £4.3m without going to competitive tender.


LB Hillingdon CIL

• Local Plan adopted November 2012

• LB Hillingdon SIP, March 2013

• CIL hearing October 2013

• Examiner’s report, 10th February 2014:


LB Lewisham CIL and Convoys Wharf

• URS represented Hutchison Whampoa Properties (Europe) Limited, owners of Convoys Wharf, at the LB Lewisham CIL Examination


The site: Convoys Wharf

• Located in north Deptford, Convoys

Wharf forms a significant element of

the Deptford Creek/Greenwich

Riverside Opportunity Area

• At 16.6ha it is the largest development

site in LB Lewisham

• It is one of the few remaining large

sites on the Thames of London-wide

significance

• “Convoys Wharf, in size terms alone,

is of strategic importance and this

should be reflected in policy terms”

(LB Lewisham Core Strategy, 2010)


Development Proposal

• Planning Context- Identified in Core Strategy for mixed use

development

- Development has ability to transform the social,

physical and economic fabric of the area

- Previous planning application submitted in 2002

- In 2012 HWP appointed Sir Terry Farrell and

Partners to develop the scheme

• Current proposal- New planning application for mixed use

development, including 3,500 dwellings,

submitted to LB Lewisham in April 2013

- Application called in by the Mayor last week:

- “The strategic importance of the application site

and the contribution it has to make to

regeneration, to jobs, to homes and to other

strategic and local policy objectives is very

substantial…the avoidance of such a situation is

a sound, even compelling, planning reason for

the Mayor to exercise his powers to intervene

and to become the determining planning

authority for the application”

(GLA Planning Report, 2013)Indicative site layout


Challenge

• Issue:

• High S106 commitments

• Regulation 123 list that excluded a number of the S106 items from CIL payments

• Previous S106 deal: £47.7m

• CIL requirement:£29.4m

• Potential result: high S106 and high CIL payments: combined cost £69.6m

• i.e. £21.8m additional cost

• CIL Regulations only allows for the CIL Examination to test the draft Charging Schedule (i.e. the proposed Levy Rates) and not the Regulation 123 List (i.e. types of infrastructure the levy receipts are to be used for).


CIL Examination

• A key test at the CIL examination is the charging authority’s ability

to demonstrate that the proposed levy rate(s) will contribute

towards the implementation of their Local Plan and support the

development of their area

• ‘…the sites and the scale of development identified in the plan

should not be subject to such a scale of obligations and policy

burdens that their ability to be developed viably is threatened’

(NPPF, para 173)


Hutchison Whampoa Case

• Argued that Convoys should be treated as a strategic site for CIL purposes and that the specifics of scheme should be considered as part of the CIL Examination.

• We concluded that the Council had underestimated typical development costs by applying incorrect viability assumptions.

• Argued that the Draft Charging Schedule would render the Convoys scheme unviable.

• Our analysis also concluded that LB Lewisham’s CIL viability testing failed to adequately take in to account the context around risk associated with CIL infrastructure delivery.

• We recommended that a separate charging zone should be defined for the site.


Our Recommendations

We set out a hierarchy of three options for change at the Examination:

1. Favoured: A low CIL rate for Convoys Wharf and with most infrastructure delivered via S106. This has similar costs and risks to the current S106 package.

2. Unacceptable and viability at risk: A re-defined Regulation 123 list that shifts most Convoys Wharf infrastructure costs from the S106 package to the CIL payments. This has similar costs but higher risks to the current S106 package (with risks defined as per uncertainties inherent in CIL).

3. Most unacceptable and unviable: The current CIL charging schedule and Regulation 123 list proposals. This has higher costs and higher risks than the current proposals and S106 package.


Examiner’s Report

23rd January 2014


Infrastructure Funding: The Wider Context

• Warrington Revolving Infrastructure Fund

• Croydon Town Centre DIFS

• Southall Town Centre DIFS


Warrington Revolving Infrastructure Fund (RIF)

Up-fro

nt

funds/in

vesto

rsRGFHCA Prudential

borrowing

Pension funds

Venture capital

LEP and Government Programmes

Revolving Infrastructure Fund pot

Project A: business plan A, funding mix

A

Project B: business plan B, funding mix

B

Project N: business plan N, funding mix

N

Receip

ts/in

co

me

Rates/ TIF paymentsNHB via LEP

S106 and/or CIL payments

Operational revenues

Land sales Council funds and assets

Assessment (fit in Goldilocks zone etc)


Croydon Town Centre DIFS

• xx


Southall Town Centre DIFS

• xx


Discussion

Questions?


Viability Framework

LA CIL

Mayoral CIL or

CrossrailS106 Levy

Other S106

Land value

Developers profit

Affordable housing

requirements

Construction

costs and fees


Fit with S106


URS, Infrastructure and Funding

Funding

• CIL charge setting / viability testing

• LLDC

• Hillingdon

• LB Camden

• Westminster City Council

• Thurrock

• Leicestershire authorities

• Worcestershire authorities

• RIF

• Warrington RIF

• SWRDA RIF

• SEEDA RIF

• TIF

• Buchanan Quarter, Glasgow

• Vauxhall Nine Elms

• Parkside, Prologis

• Funds

• Derby Infrastructure Fund

• London Riverside

Infrastructure Planning

– Croydon Town Centre DIFS

– Southall Town Centre DIFS

– LLDC

– Dacorum Borough Council

– Daventry Infrastructure Framework

– Crawley and Horsham JAAP

– LB Waltham Forest

– Westminster

– LB Camden

– LB Brent

Web rtpi.org.uk/rtpi_london

Email [email protected]

Twitter @RTPI_London

LinkedIn RTPI London

Facebook RTPI London

Blog RTPI London Calling


Documents

London Community Infrastructure Levy (CIL) · PDF fileLondon CIL Update The Community Infrastructure Levy in London Thursday 12 th June 2014. Mayoral CIL, Crossrail SPG and London