CIL Update and Stocktake Seminars 2013

During February and March 2013 PAS delivered a national seminar CIL Update and Stocktake seminar series.


The objectives of the seminars were to allow Local Authorities to better understand:

  • what is required to produce a charging schedule that will succeed at examination
  • the amended regulations and guidance, in practice and what the changes mean for in their production of a CIL
  • the level of evidence required for the examination, in terms of both viability and infrastructure
  • the relationship between s106 and CIL, and the issues and decisions that will be required in developing their approach to infrastructure delivery using s106 and CIL.

PAS were supported during the Seminar Series by DLCG, PINS, guest Local Authority speakers and the CIL Knowledge Partnership.

The topics covered in the seminars were:

  1. The New CIL Guidance - DCLG
  2. Infrastructure Evidence – CIL Knowledge Partnership
  3. Viability – CIL Knowledge Partnership
  4. CIL vs S106 and Regulation 123 List – CIL Knowledge Partnership
  5. CIL The Experience - From a Local Authority Guest speaker
  6. CIL Examination PINS
  7. Councillor CIL Seminar - The Basics, The Evidence, Spending CIL

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The New CIL Guidance - DCLG

The DCLG presentation covered two key areas; firstly the new CIL guidance published in December 2012 and secondly the draft CIL amending regulations in 2012 and 2013.

DCLG explained that the new guidance was intended to:

  • Provide more guidance on CIL implementation
  • Align the guidance to best practice that had been adopted by Local Authorities that had implemented CIL
  • Provide clarity on the relationship between CIL and section 106 for Local Authorities and the development industry.

DCLG explained that the CIL amending regulations picked up the following issues:

  • Details of the meaningful proportion  (2013 regs)
  • Minor amendments to formulas  (2012 regs)
  • Corrections that address the anomaly between section 73 applications  (2012 regs)

The following key points (P) and questions (Q) were raised by the audience:

Q - Is consideration being given to extending the deadline from April 2014 to April 2015?
A - DCLG  officials and Ministers  are aware of requests to do this.

Q - What requirements will local authorities face to monitor the delivery of CIL expenditure at Parish Council Level.
A - The CA is not responsible for a Parish Council not producing an annual CIL expenditure return although DCLG hope they will want to work closely with the Parish Council to agree priorities for spending the neighbourhood funding element.

P - Parish Councils will be required to report on CIL spending in the same way that charging authorities are when they receive CIL revenues.

P -  Parish Councils must spend the neighbourhood funding they receive to support the development of their areas. Where money is not used to support development of the area within five years of receipt, or is used for other purposes, the regulations give charging authorities the power to recover those funding.  

P - There is no requirement for Parish Councils to produce infrastructure evidence to support the CA  but DCLG are encouraging infrastructure considerations through neighbourhood plans

P - Parishes are unlikely to be able to use 5% of CIL income to administer CIL in the same way charging authorities are. It is important to note that charging authorities should calculate the 5% to cover administration and the 15% or 25% neighbourhood funding element out of the total CIL amount for the relevant development. 

P - Parishes can opt to leave the money with the Charging Authority if they agree what the funding should be spent on.

P - Wider definition for infrastructure for neighbourhood spending ‘anything else that is concerned with addressing the demands a development places on an area'

P - There could be a situation where a neighbourhood has a zero rate for CIL  (reflecting local viability) and therefore will not be rewarded by accepting development, but this will be known up front .    .

Q - Is Parish spending linked to the Regulation 123 list?
A - Doesn't need to be although we are encouraging charging authorities and parishes to work closely together to agree priorities

P – On the 15%/£100 cap per existing council tax-paying dwelling: Calculate cap first, if 15% is above that cap, parish only gets up to cap, the rest stays with Council. CIL is meant to be an incentive for neighbourhoods to accept development.

 

 

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Infrastructure Evidence – CIL Knowledge Partnership

The CIL Knowledge presentation on infrastructure covered the following key areas:

  • The New Guidance creates a Golden Thread of infrastructure evidence from the projects underpinning the local plan through to the projects that make up the regulation 123 list.
  • That regardless of the stage of the CIL project there is a mechanism for adapting the CIL evidence base to meet the new guidance without going backwards
  • That the new guidance is merely reinforcing how many CA's have been approaching their CIL projects by considering CIL vs S106 and the regulation 123 before examination
  • How the new guidance impacts on your CIL project

The following key points (P) and questions (Q) that were raised by the audience are captured below:

P – Infrastructure evidence can be updated to reflect the latest Council priorities (para 16 of CIL Guidance).  In the spirit of the guidance it will be important to maintain a ‘golden thread' between the infrastructure identified to support your Local Plan and the items funded by CIL.

 

 

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Viability – CIL Knowledge Partnership

The CIL Knowledge presentation on viability covered the following key areas:

  • The impact of the new guidance on the requirements for viability evidence at examination
  • A comparison of market value and existing use value
  • How to approach conducting a CIL viability study.

The following key points(P) and questions (Q) that were raised by the audience are captured below:

Q - Does a CA have to test all the strategic sites within their area?
A - That is for the charging authority to determine based upon the appropriate available evidence and what proportion of the Plan do the strategic sites deliver.

P - State Aid, and exceptional relief? Try to avoid using exceptional relief as a component of your approach to CIL. Set rates based on viability so that State Aid  is not required. It would be used in so few developments to such little impact, that it may not even be necessary.

P - Use current day prices and current day values when setting your CIL rates

Q – How does a Council identify the premium on existing use value.
A – One approach is by using viability assessments submitted by developers to the Council that identify the premium paid on existing use value.

 

 

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CIL vs S106 and Regulation 123 List – CIL Knowledge Partnership

The CIL Knowledge presentation on CIL vs S106 covered the following key areas:

  • The background and context that should be considered when developing an approach to CIL and S106
  • The impact of the new guidance on the CIL vs S106 evidence base
  • The issues the Local Authorities are considering when developing an approach for the use of CIL and s106 in the future.

The following key points (P) and questions (Q) that were raised by the audience are captured below:

Q - Should a Local Authority consider setting a low CIL rate and the using s106 as its principle infrastructure delivery mechanism?
A - The Council should consider if it will be able to pool s106 effectively to deliver the strategic infrastructure required to support sustainable development.

P – In seeking to agree in good time the contents of the Regulation 123 list it is vital to seek early senior officer and member support and feedback

P – Set CIL within the context of a wider suite of funding streams (New Homes Bonus, Business Rate Retention, central government grant, borrowing). This will help minimise CIL centric discussions and make the production of a regulation 123 list efficient.

P – What's to stop a developer from fragmenting a large site that is to be covered by a s106 agreement to the point where s106 no longer applies.

Q - What happens to pooled s106 money that at the point of CIL has not met the level required to deliver the piece of infrastructure; can CIL be used in this circumstance?
A - DCLG were considering this point

 

 

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CIL The Experience - From a Local Authority Guest speaker

Manchester 5 February 2013-Bristol City Council CIL :
Jim Cliffe outlined Bristol's CIL timetable, and the cost and resources required to introduce CIL. He then gives a number of tips for evidence and how to help the examiner, and prepare for implementation.

London 7 February 2013-  Wandsworth Council CIL:
Martin Howell outlined Wandsworth's CIL timetable,  evidence base in terms of infrastructure needs and viability, and
Setting rates – needs versus impact. He also referred to the Mayoral CIL and the implementation of CIL in terms of CIL related policies,  CIL Regulations – interpretation, and the Potential impacts of CIL

 

 
Birmingham 12 February 2013 - Plymouth City Council CIL:
 Peter Hearn outlined Plymouth CIL programme, in house appraisals, and their preparations on the lead up to the examination including details of supermarket differentiation. He set out the lessons that they have learnt, what went well and what they would do differently.

 

 
London 13 February and Councillor seminar 11th March 2013 -Elmbridge Borough Council CIL 
 Mark Behrendt set out the benefits of CIL for Elmbridge, the balance in terms of charge setting, their identification of funding gap, and how they approached viability evidence and differentiation. Mark went on to outline the implementation of CIL in terms of implementation and spending including approaches to prioritisation and delivery.

 

 
London 7 March 2013- LB Croydon CIL:

Steve Dennington outlined Croydon's approach to developing their CIL, which they were producing at the same time as their local plan. He outlined the issues arising at each stage of their CIL and the risks and benefits of developing submitting and having an examination a CIL and local plan. He went on to set out their very corporate approach to the administration of CIL.

 

 

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CIL Examination - PINS

The Planning Inspectorate presentation referred to experience that PINs examiners have at examination, the focus remaining mainly on viability and the importance of the evidence. There was no powerpoint presentation but the comments and questions raised can be viewed below.

The following key points(P) and questions (Q)  that were raised by the audience are captured below:

P - That it is not necessary to have a core strategy or local plan to proceed with your CIL project, you do need to be able to demonstrate a clear plan for development and supporting infrastructure.

P - Do not look for consistency in the CIL examinations because:
i) Evidence varies enormously from both charging authorities and those making representations.
ii) It is for the charging authority to strike the balance
iii) It is for the charging authority to set the rates and how much to differentiate by area and use class.

P - Challenge at examination is likely to come on the cost side of the viability equation

P - Differentiation between retail on basis of use rather than size is likely to continue to be successful at examination if backed by viability evidence.

P - Consider how to treat community facilities. For example doctors surgeries make for a strong investment and therefore are likely to be viable and should
be charged a CIL rate?

P - Consider the viability cushion; it remains a judgement for the local authority on the %.  Bristol took the approach to set a viability buffer of 50%

P - Affordable housing not meant to be compromised by CIL (para 29). See Mid Devon examiners report. [link to front runner page]

P – If affordable housing target is not being delivered then consider changing the policy.

P - Consider CIL charge as a proportion of house prices. As a rough guide on impact. Remembering CIL should have a positive impact on delivery it should not increase the house prices beyond what is reasonable.

P – Local Authorities should be able to demonstrate an infrastructure funding gap.

P – Opinion from Keith Holland (PINS) that Intention of new regulations is not to impose a requirement for Local Authorities to undertake a significant amount of additional work.

P – May experience greater challenge from developers at future examinations.
P – Consider CIL charge as a % of average housing price. At 1-1.5% of house price, probably not significant, whereas at 6-7% probably too significant.
Councillors seminar- 11th March 2013

 

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Councillor CIL Seminar - The Basics, The Evidence, Spending CIL

The Councillors CIL seminar 11 March 2013, like the officer seminars, had sessions from:

 

The Basics
The councillors' session started with a quick overview of Community Infrastructure Levy (CIL) basics: what it is, what it is for and when it applies

 

CIL Knowledge amalgamated the Infrastructure and viability presentations from the officer seminars into one presentation for members called - The Evidence

 

The Evidence
The CIL Knowledge presentation on infrastructure and viability evidence covered the following key areas:

  • The difference between Section 106 Planning Obligations and CIL
  • New Guidance creates a Golden Thread of infrastructure evidence from the projects underpinning the local plan through to the projects that make up the regulation 123 list.
  • The new guidance is reinforces the need considering when a Council will use CIL and when it will use S106, which should be reflected in the Reg 123 list that should be published at an early stage in the CIL rate setting process
  • A comparison of market value and existing use value
  • How to approach conducting a CIL viability study and how to use the technical information to inform the rate setting process.

 

 

The questions and points raised by councillors during these sessions are amalgamated with those of the officers  – set out above.

 

Spending CIL – CIL Knowledge

In addition to the sessions set out above, CIL Knowledge produced a presentation on spending CIL especially for Councillors which covered CIL Regulation 123 lists, using s106, passing CIL to Parishes and Neighbourhood Planning areas and monitoring CIL investment.

The following key points (P) and questions (Q) that were raised by the audience are captured below:

P – Where there is a parish in place 15% must be passed directly to the Parish, although when it is passed is largely at the discretion of the Charging Authority so that it can be aligned with local instalment policies.

P - What requirements will local authorities face to monitor the delivery of CIL expenditure at Parish Council Level .

Q – What mechanisms are there for developers to negotiate CIL charges?
A – At the rate setting stage.  CIL is non-negotiable once adopted.

Q – Is CIL index linked?
A – Yes it is linked to the BCIS all in tender price.  CIL charges will be updated on an annual basis to reflect variations in the BCIS rate.

Q – To what extend can CIL rates be varied? How many rates are possible
A – There is no limitation how rates can vary by intended use or by area, although the rates must be based on viability evidence and experience from the front runner suggest keeping rates simple.
P – A Regulation 123 list can be seen as an authority's list of infrastructure it intends to spend CIL on or the list of items that it expressly cannot negotiate s106 on.

P - Consider CIL as just one part of a more complex blend of funding

P - Use Annual Capital budget setting to agree priorities for CIL and therefore set Reg 123 list (need to maintain golden thread with your Local Plan)

P - Consider how you will work with Parishes and County Council at an early stage in the transition to CIL.

P - Areas without Parishes need to build in consultation on infrastructure priorities

P - Officials need to prepare thoroughly to ensure allocation and monitoring mechanisms work efficiently

P – if you are tempted to set high CIL rates to accommodate the 15 or 25%, remember you cannot set CIL differential rates based on variation in infrastructure needs and the rates must still be informed by your viability evidence.

 

 

Other relevant materials, including legislation and guidance are available on our Community Infrastructure Pages: http://www.pas.gov.uk/pas/core/page.do?pageId=122677

 

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