CIL and Viability – The Local Authority Perspective

1. CIL and Viability – The Local Authority Perspective Adam Driscoll Infrastructure Planning and Delivery Manager (Development and Regulatory Services Delivery Unit) North London Business Park, Oakleigh Road South, London N11 1NP adam.driscoll@barnet.gov.uk 020 8359 4922

2. The London Borough of Barnet • Population increase double that of neighbouring authorities • Increase mostly in those age groups with greater need for services • Anticipated 28,000 new homes by 2026 • Declining resources for infrastructure at a time of high growth. Security marking

3. Our Plans for Growth • - Protection of conservation areas and greenbelt, • Enhancement of existing residential areas and town centres • Significant residential development and some commercial development mainly in the West of the Borough. Security marking

4. Producing Viability Evidence • DECISION 1: How quickly to bring CIL into place? • Political / senior officer motivations • S106 rigour at appeal • External pressures / factors • How did Barnet do it? • Existing Affordable Housing Viability Study • Model based on 4 types of site run with a range of scenarios • Paid for consultants to review and update existing study in light of Community Infrastructure Levy • Other Approaches: • High level appraisal of a model small development • Site specific viability review of major sites and recent cases Security marking

5. Producing Viability Evidence • Lessons Learnt: • You first need corporately agreed steer on ‘the approach’ • You can shortcut the production of detailed information, provided you understand what this means in terms of the strength of your argument and options for rate-setting • Changes to your approach can easily be imposed • Collating (commercially sensitive) viability evidence submitted with recent planning applications for major developments, and putting them into a model in which to test rates would be useful given the recent CIL Regulation changes. Security marking

6. Producing Viability Evidence • DECISION 2: Do I bring in external support? • Found to be helpful in a number of ways and unhelpful in others Security marking

7. Rate setting • DECISION 3: Rate Setting? • Getting to the right rate for your area: • Political / senior officer motivations • Do you want to minimise change or treat as a clean slate? • Who are your local power players? How will they respond? • What are my neighbours doing? • How much of an income difference does it really make? • How did Barnet do it? • Switch from ‘maximise income’ approach to ‘low single rate’ • Consultants imposed to review the initial agreed approach. Security marking

8. Rate setting • Lessons Learnt: • A single rate approach is problematic in practice • Complex set of rates will make it harder work in practice and makes ‘planning’ more technical and confusing for developer? • Zero rates are not the problem they once were • Referring to use classes is a very technical matter, be certain you’ve really understood the local applications you receive. • Understand the planning detail and its impact on developer decision-making: Do you want integral plant / undercroft car parking to cost more than if delivered outside the building? • Review the impact of proposed rate/s against the bigger schemes, not just the run of the mill small applications. Security marking

9. Communication – Use the process to discuss • The CIL adoption process takes time, 1-2 years depending on your effectiveness at bringing everyone on board. • From the outset design your communication to educate the development community and to expose site specific issues quickly; to enable solutions to be found early in the process. • Use the time for getting your collection systems in place. • Make sure developers get advanced notice of CIL commencement date at least from date when final applications won’t be CIL liable (i.e. 13 weeks before adoption). Ideally 3 months before 13 week start date, to make sure applications worst affected get permission. • Use time early on to drill down into the detail for major sites, CIL issues can throw a scheme off track until resolved. Security marking

10. Communication – The development community • You will need to make extensive allowance for educating the development community about how CIL operates in practice. • Offer 1:1 ‘CIL’ meetings with major developers in your area: • Make time allowances for changes in ownerships, silent parties can suddenly become very noisy and make life difficult • Don’t just look to corporate partners, other major sites too • Don’t underestimate partners where little appears to be happening in relation to bringing their site forwards • Engage with cases where charitable relief will not apply, particularly where they are delivering important facilities. • Ensure those reliant on existing floor space for low CIL costs think carefully about making sure that floor space counts. Security marking

11. Communicating - Engaging with colleagues • Ensure that everyone sees CIL costs in their rightful place • Developers understand it is (ideally) less than 5% development costs (1-2% will give smoothest ride through examination) • Planners need to understand developers aren’t made of money, especially for schemes hit by the shift from a unit basis (s106 charges per residential unit) to a floor space basis (CIL). • Planners need to understand some commercial / community schemes will not have built in CIL costs when land purchased / projects were developed. Also banks are only just beginning to understand CIL costs and the cash flow impact. • Planners need to understand: • existing floor space and relief assessments, • transition arrangements for different types of application, • how the CIL calculations work, as developers often don’t looks at regulations when quantifying the cost of CIL for their scheme. Security marking

12. Things to watch out for • Long standing / problem sites (minor amendments vs. new applications, retention applications and sites coming in for repeated planning applications despite previous approvals) • Cost of CIL can be significant burden that could throw smaller developers into administration • S106 balance with CIL on major sites discretionary relief, negotiating relevant contributions if CIL in place, allowing for future changes to CIL rate on multi-phase schemes…etc. • Unusual sites such as large multi-storey car parks, house-boats / moored hotels, student accommodation, office conversions to residential. • Building control and capturing permitted development cases. Security marking

13. Getting CIL collection systems in place • IT systems – start early to make sure your tracking of planning permissions, issuing of notices and collection of funds is easy. • Staff capacity and training – make sure you are up to date with existing planning obligation collection, understand how the CIL collection processes will work and have staff to deliver them. • Local land charges – make sure you sort out the link to ensure land charges are automatically updated with any notices issued. • Unusual sites such as large multi-storey car parks, house-boats / moored hotels, student accommodation, office conversions • Building control and capturing permitted development cases. Security marking

14. Discussion and Questions • Example further matters you may like to discuss: • Example cases of CIL and the liability issues that arise • Exceptional Circumstances Relief • Regulation 123 lists and setting up CIL expenditure systems • Infrastructure Planning • Changes in CIL guidance / proposed regulation changes Security marking

15. Contracting out your CIL function • The Local Authorities (Contracting Out of Community Infrastructure Levy Functions) Order 2011 • permits the CIL collection function to be outsourced • London Borough of Barnet is creating a joint-venture company with Capita Symmons to deliver all regulatory services (e.g. planning). • Joint-venture will be live from October 2013 • Seeking to offer a comprehensive CIL support service at competitive rates, including: support through CIL charging schedule process and CIL collection function. • Please get in touch if you are interested in discussing any support that we may be able to offer your authority with CIL. Security marking