Proposals for a Mayoral Community Infrastructure LevyPreliminary draft Charging Schedule consultation 2011

Annex 2

This presentation will cover…

Why is the Mayor introducing a CIL?

Why is Crossrail important for London?

Who benefits?

Common CIL misconceptions

How the CIL works in London•Mayor/boroughs both “charging authorities”

•Mayor restricted to using CIL for transport•Boroughs collect Mayoral CIL•Both can pay admin costs from CIL:

•4% boroughs•1% Mayor

•Boroughs have to have regard to Mayoral CIL in setting their own

What is the Mayor consulting on?•Preliminary draft Charging Schedule•Mayor has issued a consultation document:

•Explaining the CIL•Explaining Crossrail and its funding•Setting out the preliminary draft schedule (section 3)•Summarising the evidence on viability•Explaining the judgements made by the Mayor in bringing the proposals forward

Why is the Mayor setting a CIL?•Mayor’s current proposals just for Crossrail

•Will review position for post-2018 later

•CIL to contribute £300 million•Plays a significant part in funding arrangements agreed by Mayor/Ministers•If sum is not raised from CIL:

•Possible need to renegotiate funding agreement•Possible delay in project•Possible pressure on other parts of TfL budget

The Londonwide benefits of Crossrail• “The Mayor’s top strategic transport

priority for London” (draft new London Plan)•Links, and support development of, key parts of London: Heathrow, West End, City, IoD, Thames Gateway•Alleviate pressure on network•Generates annual economic, transport and employment benefits of £1.24 bn by 2026•Benefits every borough in London (£15-115 m pa)•Will benefit anyone travelling on it, or lines/stations where it will relieve congestion

The rates proposed

Zone London boroughsRates

(£ per sq. m.)

1

Camden, City of London, City of Westminster, Hammersmith and Fulham, Islington, Kensington and Chelsea, Richmond-upon-Thames, Wandsworth

£50

2

Barnet, Brent, Bromley, Ealing, Greenwich, Hackney, Haringey, Harrow, Hillingdon, Hounslow, Kingston upon Thames, Lambeth, Lewisham, Merton, Redbridge, Southwark, Tower Hamlets

£35

3Barking and Dagenham, Bexley, Croydon, Enfield, Havering, Newham, Sutton, Waltham Forest

£20 

Proposed differential rates/reliefs •Zero rates for development for use for:

•Education•HealthFor viability reasons

•No proposals for discretionary reliefs Better to deal with viability by adjusting s106, makes administration by boroughs easier

•Avoiding double charging between CIL and Crossrail s106 to be dealt with by the former being a credit towards the latter

Assessing Viability

•Viability:•Fundamentally about values of land and existing uses•But recognise land availability also essential

•House prices used as an indicator of viability•Residential largest form of development•Good correlation between house prices and shop/office rents – so a valid proxy

•Use house prices to:•Assess viability•Allocate boroughs by band

Viability: Conclusions

•Banding means CIL as a % of house prices similar for 1&2 and slightly lower in 3 – where fundamentals are weakest

•Have to consider land availability when looking at levels of development against prices

•Movement in construction costs/capital values likely to have far greater viability impact than CIL

•“CIL at the levels proposed will not put at serious risk the overall development” of Greater London

Mayor’s conclusions (1)

•Evidence presented meets legal standards•Approach to viability appropriate given:

•Data availability (lacking at sub-borough level)•Nature of judgement

•Use of CIL for Crossrail appropriate•Particularly as it benefits all parts of London

•Amounts proposed should not have an undue impact on development

Mayor’s conclusions (2)

•CIL should not have undue impacts on London’s development:•40% of London Plan Opportunity Area housing and 21% employment capacity in band 3•61.5% of identified housing capacity in Band 2; 22% in Band 3

•CIL should not have adverse equalities impacts•65% of London’s BAME population live in Band 2, 20% in Band 3

Mayor’s conclusions (3)

•Effect on borough s106/CIL “take”•Average Mayoral CIL “take”: £42.8 m pa•2007-8 total London s106: £1.6 bn

•£1.3bn affordable housing•£300m “other”•With agreements from 7.1% of developments

•Wider pool•Not a £1 for £1 zero sum game

Couldn’t we…•Borrow more?•No – both TfL and GLA are already borrowing as much as is prudent

•Find the money elsewhere in the TfL budget?•No – this would mean renegotiating the Crossrail funding package and either cancelling or postponing other transport priorities

•Renegotiate the funding package?•No – no Government appetite for this, would risk delaying the project and adding to its cost

•Get districts outside London served by Crossrail to contribute?•Mayor is lobbying ministers to this end – but has no powers to compel them himself

Couldn’t we…

•Split Band 2 in half?•We will look at this if a viability case can be shown, but would add to complexity

•Move particular boroughs from one band to another?•Again, will consider if a viability case exists

•Exempt particular places/uses?•This is very difficult to do within the regulations, and a strong viability case would be needed

Couldn’t we….•Arrange bands according to how much benefit each borough gets from Crossrail?•No – the legislation is clear that this can only be done on the basis of development viability

Next steps

•Preliminary consultation closes 1 March 2011

•Consult on draft schedule: May•Submit to examiner: June/July•Examination: September•Mayor approves schedule: April/May

2012•Subject to change in light of Localism

Bill

In the meantime..

•We will work with boroughs on implementation•We will work with boroughs setting their own CIL:

•Officers from GLA/TfL meeting Redbridge – the only borough to propose a CIL so far•We will be playing a full part in the CLG “Frontrunners” Group•We will provide as much assistance as we can to boroughs in infrastructure planning

•This is a new system, and we are keen to listen