Community Infrastructure Levy - Draft Charging Schedule (Nov 2014)

Comment

Representation ID: 1806

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

Viability Buffer
Site specific circumstances mean that the economics of the development pipeline will vary from the typical levels identified via analysis of the theoretical typology. This is inevitable given the varied nature of housing land supply and costs associated with bringing forward development. It is therefore important when setting rates that the Local Authorities apply an appropriate viability 'buffer' as discussed in the PPG: "It would be appropriate to ensure that a 'buffer' or margin is included, so that the levy rate is able to support development when economic circumstances adjust. This is particularly relevant in the case of Southend-on-Sea for the following reasons:
*Unplanned Development a significant proportion of development is anticipated to take place on windfall sites. The exact nature and scale of these developments is subsequently unknown;
*Brownfield Sites brownfield sites. The viability testing supporting the CIL rates makes no allowance for site specific abnormal costs; and
*Delivery the area experiences persistent under-delivery and there has been failure to achieve annual housing targets since 2007
Each of these points means that the Council is at a greater risk of failing to deliver its housing numbers. It is therefore of paramount importance that the Council can demonstrate that these risks have been taken in to account when setting their CIL rates. Failure to do so will result in the Regulation 14 test being failed, as the CIL rates would threaten the delivery of the housing supply anticipated to come forward during the Plan period.

Object

Representation ID: 1807

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

Whilst we acknowledge that the Southend-on-Sea viability testing models a range of scales and typologies of development, in an attempt to address the unplanned nature of development in the Borough, we are concerned that the results have been disregarded in the setting of the proposed CIL rates. As discussed in the previous section, the results of the viability testing shows that a significant number of scenarios would be rendered unviable by the proposed CIL rates and that a limited viability buffer has been applied.

The table highlights that a buffer ranging from 0 -40% has been applied across the Market Areas. However, no explanation has been provided as to the level of development anticipated in each area or the justification for a lower buffer being applied in certain areas.

Object

Representation ID: 1808

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

We acknowledge that the Council wishes to keep the Charging Schedule relatively simple. However, the Councils own evidence suggests that certain areas cannot support CIL rate, suggesting that an additional Charging Zone covering Market Areas 1-3 should be included with a rate of £0 per sq m. Based on all of the points set out above, we would therefore suggest that the Council undertakes the following:
*Revised viability testing incorporating the points discussed in Section 2; and
*Application of a minimum viability buffer of 40% to the maximum CIL rates to take account of the persistent under-delivery in housing and reliance on unplanned development (brownfield windfall sites).

Comment

Representation ID: 1809

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

Effective Operation of CIL
In our PDCS representation, we highlighted the importance of the Council publishing supporting documents to outline how CIL will work in practice. We therefore provide further comment on some of these points.

Object

Representation ID: 1810

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

Relief
We note that the Council is still not proposing to offer either discretionary or exceptional circumstances relief. We would reiterate the importance of making these reliefs available and would refer back to our response to the PDCS consultation.

Comment

Representation ID: 1811

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

Reviewing CIL
As above, our comments in respect of this are unchanged from our PDCS response.

Comment

Representation ID: 1812

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

Conclusions
This Representation has been prepared by Savills on behalf of Cogent Land LLP. As set out at the start of these representations there are three key tests at Examination:
i)That "the charging authoritys Charging Schedule is supported by background documents containing appropriate available evidence
ii)The 'the proposed rate or rates are informed by and consistent with, the evidence on economic viability across the charging authoritys area, and
iii)That 'evidence has been provided that shows the proposed rate would not put at serious risk overall development

Object

Representation ID: 1813

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

The assessment of planned development and its viability is therefore an inherent test of the Examination, making the following points significant:
*Unviable Rates - The current proposed CIL rates are unviable and risk rendering a significant proportion of the housing supply across the District undeliverable;
*Incorrect Assumptions - A number of the key viability inputs adopted by PBA are incorrect. This results in an over-estimation of the maximum CIL rates that can be supported;
*Housing Delivery Cogent believes it is important to highlight that an unviable CIL poses a real risk of a materially reduced housing delivery, which in turn will affect the level of receipts collected. This is important as the Council is relying on CIL contributing to the significant funding gap in the Borough;
*Charging Zones - scale of development. Whilst the principle of applying differential rates is not questioned, the proposed Charging Zone 1 includes areas that the viability evidence proves cannot support a CIL rate; and
*Housing Supply There has been persistent under-delivery housing supply is heavily reliant on unplanned development across the Borough. This is particularly important as the future housing requirements for the Council, based on emerging information from the Thames Gateway Partnership, indicates significantly higher numbers than previously delivered under the Core Strategy. It is therefore essential that a higher buffer (minimum of 40%) is incorporated to reflect the already existing risk to the housing supply and to ensure the delivery of infrastructure and community facilities required to support the enhanced level of growth across the Borough, whilst ensuring that SBCs strategic objectives are met.

Object

Representation ID: 1814

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

In light of this, Savills and Cogent would recommend that SSBC review their supporting "appropriate available evidence" In particular we would ask that the Council undertakes the following:
*Undertaking additional viability work, incorporating the points raised above, to ensure that the proposed CIL rates are viable. In particular, this should look at the blended profit margins that are being applied;
*Removing 'nominal' rates, and
*Reviewing the proposed CIL Charging Zones in light of the above.

Comment

Representation ID: 1815

Received: 12/12/2014

Respondent: Cogent Land LLP (Cogent)

Savills and Cogent consider it necessary to stress that if the CIL level is set too high, it will have a negative impact on a large proportion of development coming forward, especially bearing in mind the historic under delivery in the Borough.