Community Infrastructure Levy - Draft Charging Schedule (Nov 2014)

Object

Representation ID: 1796

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

Zero Rates
In our previous representations we highlighted our concern that an unviable 'nominal' rate was being proposed by the Council. A point further strengthened by the fact that the supporting viability evidence clearly shows that a number of these development scenarios are unviable prior to the introduction of a CIL charge.
3.9 We note the Councils response to this point in the Overview Document
Some consider that if a use is deemed to be unviable then additional charges should not be imposed. However, the viability evidence demonstrates that the proposed nominal rates are unlikely to be the determining factor in relation to viability and to have an impact on a developer's decision making as to whether to bring forward a development or not. Beneficially though, the proposed nominal rates will help provide funding towards the supporting infrastructure for growth should such developments come forward. This approach is not uncommon and is the Councils proposed approach.

Object

Representation ID: 1797

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

The CIL Guidance identifies that Charging Authorities do not have to set a nil rate; they can set a low rate in instances where developments appear to be unviable. It is the Charging Authoritys prerogative establish the appropriate balance between raising money from CIL to deliver much needed infrastructure to support development in their area and not putting development across the Charging Authority area at risk. In this regard it is noted that the CIL Guidance identifies that there is no requirement for a proposed rate to exactly mirror the evidence .... There is room for some pragmatism.
We fundamentally disagree with this assumption and believe that the inclusion of an unviable CIL rate will have a significant influence over where development takes place and whether site come forward for development. Over 70 Local Authorities across England and Wales, with similar viability concerns, have taken a pragmatic approach to setting their CIL rates and are proposing £0 per sq m CIL rates for both strategic sites and low value areas (list included at Appendix 5).

Object

Representation ID: 1798

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

We would also highlight that if the CIL rate is set incorrectly, and development is prevented from coming forward, that other objectives (such as meeting housing needs and promoting the local economy) will not be met. We are therefore highly concerned that suggests that applying an additional cost to already unviable sites will not have an adverse impact on development in the Borough.
We would therefore ask that the Council reviews their proposed rates and includes a £0 per sq m CIL rate for those Market Areas that are shown to be unviable.

Object

Representation ID: 1799

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

Overview
As discussed in our previous representation, we do not believe that the Council has demonstrated that the proposed CIL rates will not threaten the delivery of the Core Strategy as a whole. We note in the Overview Document that BNP makes the following comment -
Savils have not provided any evidence that would demonstrate that a cost that amounts to less than 2% of the development costs would threaten the economic viability of development across the Council's area and therefore the delivery of the Local Plan.

Comment

Representation ID: 1800

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

Firstly, we would draw the provisions of the CIL Regulations and PPG to the Council attention. Both of which place a positive duty on Local Authorities to demonstrate that their CIL rates are appropriate, as indicated by the key tests at Examination discussed in the introduction. The Council will therefore have to demonstrate at Examination that they have struck an appropriate balance and to justify that balance with evidence at Examination, showing and explaining how the rates will contribute towards the implementation
of their relevant Plan.

Object

Representation ID: 1801

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

Secondly, we do not believe that the Council can demonstrate that the CIL Viability Evidence supports the proposed CIL rates and will not threaten the delivery of the Development Plan. We have set out our specific comments and reasoning on this point below:

Local Context
Analysis of viability results should always be considered in the context of the relevant Development Plan and the identified housing supply. In Local Authorities where there has been a historic under-delivery of housing (both private and affordable), as is the case in SSBC, greater attention needs to be paid to the proposed rates, as if they are set at unviable levels the Development Plan will be put at risk.
It is therefore essential that the proposed CIL rates do not prevent sites coming forward for development.

Object

Representation ID: 1802

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

Whilst we acknowledge that the proposed 'nominal' CIL rate of £20 per sqm in Zone 1 (Market Areas 1-3) represents a small proportion of the development costs, we fundamentally disagree with BNP's assertion that this would not prevent sites from coming forward.
Once set, CIL is a non-negotiable tax. There is subsequently no potential for flexibility or negotiation. It should also be acknowledged that whilst the CIL rate as a % of GDV are relatively low, the proposed CIL rates represent a much higher proportion when illustrated as a % of land value. This is important; as if landowners' aspirations in terms of land values are not met then land will not come forward for development.

Object

Representation ID: 1803

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

As discussed, the viability testing results clearly show that CIL rates cannot be supported in certain areas. It is therefore misleading to quote CIL as a % of GV, as the Councils own evidence demonstates that the proposed CIL rates are not supported by the viability evidence. We would therefore ask that the nominal CIL rates be removed and that an appropriate viability buffer is applied to all the Market Areas.

Object

Representation ID: 1804

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

Three Way Trade Off
Cogent and Savills are concerned to note that BNP is suggesting that already unviable sites should be disregarded or the purposes of CIL testing and will not be a material consideration -
In BNPPRE's experience the proposed residential CIL rates will be a marginal factor in a scheme's viability representing an opportunity cost of cica 4% affordable housing ....In light of this BNP Paribas Real Estate consider that even in setting a nil rate of CIL would not ensure that the Council achieves its target level of 20/30% affordable housing in every site in the Councils area.

Comment

Representation ID: 1805

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

It is therefore important that the current Affordable Housing policy is fully tested in the viability evidence, in order to be able to assess whether meeting these standards will put the housing supply at risk. A view supported by the Dacorum Borough Council CIL Examiner who commented that "the sensitivity testing is useful evidence but for CIL testing purposes the greatest weight must be placed on current (or at least recent) evidence and full policy compliance on matters such as affordable housing content"
We would therefore ask that limited weight is given to this testing. In any event, we would highlight that the sensitivity testing on the larger sites illustrates limited viability in the majority of scenarios tested (see extract below) even with reduced affordable housing. To ensure certainty for both the Council and developers we would therefore ask that the proposed rates are set based on the current affordable housing policy.