Planning Obligation - A Guide to Section 106 and Developer Contributions
4. Frequently Asked Questions
When will financial contributions be paid?
In order that the needs and impacts arising from new developments are addressed as soon as possible Southend Borough Council will generally aim to achieve the payment of financial contributions before the commencement of development. In the case of major phased developments, contributions may be paid in instalments on the commencement of each phase. The phasing of payments will be set out in the S106 agreement signed by the applicant and Southend Borough Council.
Why are financial contributions Index Linked?
In order to maintain the value of contributions from the date of the committee resolution until the time development is commenced, they will be index linked to reflect changes in the Retail Price Index (RPI) or the Building Cost Information Services Tender Price Index (BCIS TPI) or the Index of Civil Engineering Contracts (CECI ).
The late payment of financial contributions is likely to incur interest at a rate 4% above the Base Rate of Barclays Bank plc (the Borough Council's banker). This is to ensure that the projects and works for which the contributions are earmarked are not unduly delayed or if delay occurs there is a contingency which may help negate the costs associated with delay.
Why should I pay the Council's Legal Costs?
Applicants are requested to pay the Council’s legal and technical fees in connection with the preparation and completion of a legal agreement as reimbursement for the costs incurred during the negotiation and completion of the legal agreement. This is due to the fact that an extra burden is placed on the local authority as a direct result of development that has planning obligations associated with it and as it is not within the local authority’s control to adjust Business Rates to cover these additional costs it is considered reasonable to directly recoup them from developers on completion of a legal agreement.
Do I need to involve a solicitor to complete the agreement?
You are strongly advised to appoint a solicitor because legal agreements and undertakings can restrict the use of the property in the future.
Can a legal agreement cover more than one obligation?
A legal agreement may contain any number of planning obligations depending on the complexity and scale of the development and what would be necessary in order to grant planning permission. Where an obligation is very straightforward it may be contained in an undertaking which tends to be a short and simple document.
How do I make payments to the Council?
On receipt of an invoice, payments in respect of financial contributions can be made on-line via the Council’s website, over the phone, at the Customer Service Centre or by sending a cheque (made payable to "Southend Borough Council" and marked for the attention of the S106 Monitoring Officer). When making a payment in respect of an invoice it is essential that the invoice number be quoted. If payments are made in advance of an invoice being received this should be by cheque only, which must be accompanied by a covering letter detailing the planning application reference number, the date of the legal agreement and details of the obligation to which the payment relates. Inflation, calculated in accordance with the provision within each agreement, will be added to the amount due on all invoices. If paying by advance cheque, please contact the S106 Monitoring Officer prior to making any payment to confirm any inflation payment due.
What will happen to the payments?
When payments are received they will be recorded by the S106 Monitoring Officer and assigned to a specific Cost Code for the scheme and to specific accounts depending on the nature of the contribution. Progress in relation to contributions will be reported regularly to Members and senior officers of the Council. A summary will also be made publicly available on a periodic basis.
How long will it take to complete a legal agreement or undertaking?
This will depend on a number of issues including the complexity and size of the proposed development and the complexity of negotiations between the parties. The Council is committed to meeting the statutory 8/13/16 week deadlines for planning applications and therefore a Section 106 agreements should be close to completion and Unilateral Undertakings should be agreed by our Legal Services prior to committee consideration. Hence, applicants are strongly advised to commence negotiations in relation to planning obligations at pre-application stage, agreeing draft heads of terms and the model S106 agreement, to avoid the possibility of planning permission being refused in the absence of an acceptable legal agreement being completed within a the statutory timeframe for determining a planning application.
How long will S106 obligations last?
Some requirements of a S106 Agreement are of an ongoing nature, for example the maintenance of a facility or the community use of a building and so the obligation will continue for so long as development implemented under the associated planning permission continues.
Where financial contributions are being made it will depend upon when payments are due to be made. For example, if a contribution is due on commencement of the development that could be up to 3 years (or such other time limit that might be agreed by the Council) after the date the legal agreement is completed and permissions are issued.
After Southend Borough Council is satisfied that all the obligations in an agreement are complied with the Council will, if requested, provide written confirmation that the obligations in an agreement have been met.
Can I vary a Section 106 Agreement?
Section 106A of the Town and Country Planning Act 1990 (as amended by the Planning and Compensation Act 1991) provides a procedure by which an applicant can apply for the formal modification or discharge of planning obligations. Within 5 years of the date of the agreement this variation can be done by mutual agreement, including an exchange of correspondence, between the parties. After 5 years of the date of a S106 agreement, the agreement can be modified by a formal application to the local planning authority, which is subject to public consultation and includes the right of appeal to the Secretary of State should a negotiated arrangement prove unsuccessful. Either way any agreement between the parties to modify or discharge a planning obligation shall be by a Deed of Variation.
Can I use my own contractors for works on the Public Highway?
This will depend upon the circumstances of the application and the site. Applicants often want to carry out repaving or environmental improvement works to the public highway adjacent to their own development using their own contractors. Southend Borough Council has a duty of care to the public as a local highway authority, including maintaining the highway to the appropriate standards. The Council must be sure that the appropriate safeguards are in place before applicants' contractors begin works on site and therefore a Section 38 or Section 278 agreement will need to be signed, and/or a Highways Licence issued prior to any works commencing that affect the public highway.
Applicants may alternatively want to make financial contributions to highway or environmental improvement works. In such cases, Southend Borough Council will apply the contribution to a scheme in the vicinity of the development and related to it. In some cases, this may be a scheme which uses pooled funding.
You are advised to contact the Council’s highways department on 01702 215003 at an early stage to discuss this further.