PLANNING LAW AND POLICY UPDATE 11 MAY 2012 –

EDUCATION BUILDING AND DEVELOPMENT OFFICERS GROUP

EBDOG CONFERENCE - COVENTRY

David Brammer, Legal Director

DLA Piper UK LLP

Today's Lesson…

"the Community Infrastructure Levy, - working with the new 'Section 106' to maximise service benefit"

this presentation will look at planning under a Coalition Government - Community Infrastructure Levy, planning obligations and viability; recent changes to legislation as well as a review of recent planning case law, touching upon :

the Localism Act and planning reform

planning policy and the NPPF

Community Infrastructure Levy ad section 106 agreements

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Localism Act

Planning reform

Plans and strategies

Powers to revoke regional strategies and other regional-level policy The Government has already attempted to revoke regional-level planning

policy but this was quashed in the Cala Homes case as primary legislation was required. Regional policy has remained material to planning decisions although the weight to be given to it has been diminished.

Duty to cooperate in respect of planning for sustainable development Local authorities, county councils and other bodies will be under a duty to

cooperate and actively engage so as to assist in the preparation of development plan documents in relation to strategic matters which are of greater than local importance. Seen as the way to deal with the potential policy/strategy vacuum left by the removal of regional plans. Failure to cooperate will prevent adoption of new plans.

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Localism Act

Planning reform

Neighbourhood planning Designation of Neighbourhood Areas (can cross local authority

boundaries) Likely to reflect town council or parish areas

Neighbourhood development plans Proposed by town or parish councils, or neighbourhood/community forums Comprising planning policy for the development and use of land in a

neighbourhood area Will be part of and should be in general conformity with the overall

development plan for the area (such that planning applications should be determined in accordance with the neighbourhood plan unless material considerations indicate otherwise)

Proposed plans are to be subject to independent examination

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Localism Act

Planning reform

Consultation prior to making planning applications Requirement upon developers to consult local communities prior to

making major planning applications Developer to have regard to consultation response and consider

making changes to their application An account of the consultation to be submitted with the planning

application

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Localism Act

Planning reform

Community Infrastructure Levy and other financial considerations When determining a planning application, an authority will be required

to consider any material "local finance considerations" in addition to the development plan and other material considerations.

A local finance consideration means a grant or other financial assistance that has been, will or could be provided

by the Government (e.g. New Homes Bonus) sums that have been, will or could be received under the Community

Infrastructure Levy

Amendment in the House of Lords made it clear that "local finance considerations" are not to be given any greater relevance or weight than other considerations.

Statutory background : CIL Regime

Part 11 of the Planning Act 2008 & section 216(1) (to which CIL Regulation 2(1) refers back):

Subject to section 219(5), CIL regulations must require the authority that charges CIL to apply it, or cause it to be applied, to funding infrastructure.

In subsection (1) "infrastructure" includes-- roads and other transport facilities, flood defences, schools and other educational facilities, medical facilities, sporting and recreational facilities, [and] open spaces. . . . . ..

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NPPF

National Planning Policy Framework

Single document to replace all existing national planning policy documents, i.e. PPGs, PPSs and Ministerial Statements.

see Annex 3 – removal of guidance including circular 5/2005

Draft was subject to consultation which ended 17 October 2011

13,700 consultation responses received

Final version published 27 March 2012…

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NPPF

National Planning Policy Framework

Based on an overarching policy in support of sustainable development which is loosely defined as

"development that meets the needs of the present without compromising the ability of future generations to meet their own needs"

(per Brundtland Commission, 1987)

Issue specific policy is focused in three area Prosperity - business and economic development People - housing, sustainable communities, green belt Places - environmental issues

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NPPF

Key elements Plan-led, flexible, up to date local development policy, in accordance

with the NPPF LPAs to provide proactive and strategic policy support for economic

development and growth Default answer for development proposals is "yes", unless this

compromises sustainable development principles LPAs to focus on local circumstances and allocating land for

development according to local need Ensure that policy and planning obligations do not threaten

development viability and a reasonable return for developers Retail and leisure development remain subject to the "town centre first"

sequential approach but this no longer applies to other commercial uses

What do we think about the NPPF, and what it means for developers

Paragraph 173 is the starting point for developers:

"Pursuing sustainable development requires careful attention to viability and costs in plan-making and decision-taking. Plans should be deliverable. Therefore, the sites and the scale of development identified in the plan should not be subject to such a scale of obligations and policy burdens that their ability to be developed viably is threatened. To ensure viability, the costs of any requirements likely to be applied to development, such as requirements for affordable housing, standards, infrastructure contributions or other requirements should, when taking account of the normal cost of development and mitigation, provide competitive returns to a willing land owner and willing developer to enable the development to be deliverable."

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NPPF – selected extracts

The Foreword "Development means growth. We must accommodate the new ways by

which we will earn our living in a competitive world. We must house a rising population, which is living longer and wants to make new choices."

Paragraph 38 "For larger scale residential developments in particular, planning policies

should promote a mix of uses in order to provide opportunities to undertake day-to-day activities including work on site. Where practical, particularly within large-scale developments, key facilities such as primary schools and local shops should be located within walking distance of most properties"

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NPPF – Comment

However …

Large parts of the draft NPPF policies remain ambiguous, as is evidenced by the different interpretations put on policies by government, conservation bodies and others.

It includes various versions of "sustainable" : "sustainable economic growth" (18) "sustainable growth" (Presumption in Favour of Sustainable Development:

Also …

No-one seems very sure about what Policies have been abolished, apart from those explicitly mentioned in Annex 3 of the Framework.

Various commentators have expressed concerns about "a return to planning by appeal".

[At the time of writing, varying opinions are still flying around.]

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NPPF: Conclusions

Will local authorities have the resource and commitment to follow through on the issues raised by the Framework in the light of the prevailing uncertainty?

Developers will press for rapid progress on sites, using the NPPF as justification.

How will they seek to do this?

Challenging S106 and CIL.

Delivering appropriate planning obligations, which take account of necessary phasing and trigger mechanisms.

Using statutory procedures to best effect (e.g. S.73 and 96A TCPA).

Flexing legal muscle if necessary – challenges via JR and S 288.

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s106 Agreements: viability

Development needs to remain viable to encourage delivery

HCA document 2009 "Investment and Planning Obligations: Responding to the Downturn" addresses viability issues (currently being updated).

Underlines importance of the need for flexibility:

balancing the provision of planning obligations (including contributions) ;

delivery of affordable housing with the need to ensure development continues to happen;

unlocking stalled developments and facilitating new proposals.

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s106 Agreements: "Responding to the Downturn" - deferred developer clauses

HCA advise flexibility on nature and timing of contributions

S106 and deferred planning obligations:

update viability assessments through phases of the development;

enable lower level of contributions, to be reviewed later on in development process if values rise;

Include 'cascade' mechanisms for affordable housing;

Testing of other contributions to ensure compliance with CIL Regulation 122.

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What is the Community Infrastructure Levy ("CIL")?

A new planning charge, introduced by the Planning Act 2008

It came into force on 6 April 2010, through the Community Infrastructure Levy Regulations 2010

Development will be liable for a charge under the Community Infrastructure Levy ("CIL"), if the local planning authority has chosen to set a charge in its area

The money can be used to support development by funding infrastructure that the council, local community and neighbourhoods believe is necessary 

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Who may charge the levy?

The levy is normally collected for the charging authority by the authority that grants planning permission

The following bodies are known as charging authorities

England district and metropolitan district councils London borough councils

unitary authorities national park authorities the Broads Authority the Mayor of London

Wales county and county borough councils national park authorities

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The benefits of the levy

Local authorities can obtain additional funding to carry out a range of infrastructure projects that support growth and benefit the local community

More flexibility to set their own priorities for what the money should be spent on

A predictable funding stream will allow them to plan ahead more effectively

Developers will have more certainty about how much money they will have to contribute

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How will a charging authority set a rate for their levy?

Charging authorities must produce a document called a charging schedule setting out the rate for their levy

The levy should strike a balance between collecting revenue to fund infrastructure and ensuring that the rates are not so high that they discourage development

The charging authority can set one standard rate or it can set specific rates for different areas and types of development

The charging schedule must undergo public examination by an independent person before the charging authority can formally approve it

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What development is subject to a charge?

Most new developments that involve an increase in floor space

Any new building or extensions to existing buildings are liable if a charging schedule was in place when planning permission was granted

Buildings that people normally use

Developments that involve the creation of a new residential unit will pay the charge, regardless of size

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Development not subject to CiL

When there is no extension of floor space as a result of the development

Structures or buildings that people only enter for the purpose of inspecting or maintaining fixed plant or machinery

Developments under 100 square metres in area will not pay

Structures which are not buildings, for example pylons and wind turbines

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How will CiL be levied?

Commencement of development

Levied in pounds sterling per square metre of floor space, arising from any chargeable development

Collected as a cash contribution

Instalments - providing the charging authority has a payment by instalments policy

It may be more appropriate to transfer land to the charging authority as payment

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Who is liable to pay CiL?

An individual or organisation (eg the developer)

If no one assumes liability, the landowner is automatically liable

What can it be spent on?

A wide range of infrastructure projects needed as a result of the development, for example transport schemes, new health centres or park improvements

The Charging Authority must produce an annual report for the financial year detailing the total receipts for the reported year, total expenditure and a summary of the items of infrastructure to which these receipts were applied

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Case studies and draft charging schedules

The first 4 Councils to complete Examinations into Draft Charging Schedules were Shropshire Council ("Shropshire"), Newark and Sherwood District Council, The London Borough of Redbridge and Portsmouth City Council

Newark and Sherwood District Council ("Newark")

Newark has decided that CIL will only apply to newly built residential, retail and industrial developments (including storage and distribution developments) rather than all forms of newly built development in the District

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Case studies - Newark

Newark's webpages state that the purpose of the Examination was

"to assess whether:

the Charging Authority has complied with the procedures within the Planning Act 2008 and the CIL Regulations 2010;

the Draft Charging Schedule is supported by appropriate available evidence;

the proposed rates are informed by, and consistent with, the evidence; and

evidence shows that the proposed rates would not put at serious risk, overall development in the area"

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Newark - Summary of the Independent Examiner's recommendations and conclusions

National Guidance (Charge Setting and Charging Schedule Procedures) requires Charging Schedules to set rates that are economically viable in each area and zone and for each type of new development proceeding under 'normal' circumstances.

The Independent Examiner concluded that it also indirectly takes into consideration site specific 'abnormal' cost factors that may arise.

This ensures that site specific considerations do not undermine the viability of the Charging Schedule, and that CIL charges remain appropriate.

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Newark - Summary of the Independent Examiner's recommendations and conclusions

Newark has identified an infrastructure funding gap of approximately £40 million over the Core Strategy plan period to 2026.

CIL will raise approximately £35 million based on the current rates.

The remainder of this shortfall will be made up from other sources, such as the New Homes Bonus.

This should be considered when planning future development, as additional obligations may also have to be fulfilled.

In line with National Guidance, authorities are not required to provide assurances as to how to spend the money obtained via CIL - they are only required to justify their CIL target.

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Conclusions

The Inspector's Reports on DCS were written prior to the enactment of the Localism Act 2011, which contains clauses directly relevant to CIL and its implementation by local charging authorities

Localism Act 2011:

allows monies to be applied at a neighbourhood level

can be used for both initial provision and on-going maintenance of infrastructure

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Review of community infrastructure levy appeal decisions

Since the introduction of CIL, it is unlawful for a planning obligation to be taken into account when determining a planning application for a development, or any part of a development, that does not meet all of the following tests:

necessary to make the development acceptable in planning terms;

directly related to the development; and

fairly and reasonably related in scale and kind to the development.

Councils must consider what is acceptable as a matter of law, as opposed to the previous policy considerations set out in Circular 05/2005 (now abolished).

Where they fail to make developer contributions "Regulation 122 compliant", such contributions have been struck out by planning inspectors on appeal, as has happened in various recent cases (see post).

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Planning appeal decision

Appeal ref: APP/m3455/V/10/2122016

Tesco store at Newcastle Road, Springfields Retail Park, Trent Vale, Stoke on Trent

Development: Replacement Tesco supermarket

Secretary of State found contributions towards the provisions of environmental enhancement in Stoke town centre and Newcastle in breach of CIL regulation as it was not necessary to make the development acceptable

In addition financial contributions to local employment training was found to be directly related to the development and reasonably related in scale, however it as not necessary to make the development acceptable in planning terms

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Planning appeal decision

Appeal ref: APP/K240/4/09/2118652

Former greyhound stadium, Nutt's Land, Hinckley, Leicestershire LE10 0NT

Development: Residential development of 84 dwellings, including provision of public open space, new access arrangements and other associated works

The provision and maintenance of open space, and contribution towards local education and transport were found to be compliant with CIL and therefore carried considerable weight in the assessment of the application

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Planning appeal decision

Payments towards local health care provision to the Police Authority, civic amenity and library facilities were not however considered to be directly related to the impact of the proposed development, and therefore carried no weight in the decision. In this instance, the inspector provided that the disregarded contributions had been levied on the basis of a standard charge, calculated on number of dwellings

There was however no specific detail provided by the local authority or assessment as to the current state of local infrastructure and therefore there was a clear "lack of jurisdiction" for these contributions

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Review of community infrastructure levy appeal decisions

Monitoring costs in agreements

Another appeal decision relating to land at 21-25 South Lambeth Road and 1 Langley Lane, London (APP/N5660/A/10/2129558 in part looked at s.106 contributions in the light of regulation 122 of the CIL Regulations

Paragraph 30 of the appeal decision refers to a contribution towards the monitoring of a Travel Plan

Since this is a payment towards the Council performing its general statutory duty of ensuring compliance with planning controls such a payment was found not to be necessary to make the development acceptable in planning terms (one of the requirements of Regulation 122)

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Interrelationship: CIL and s106 obligations

CIL can be seen as yet another attempt to introduce a development land tax.

CIL does not replace planning obligations. The two may exist side by side.

Planning obligations have long been associated with the concept of "planning gain", a concept that has undergone a remarkable transformation over the last 20 years.

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Redbridge LBC -Regulation 123 List of Infrastructure Types to be funded by CIL – January 2012

Types of infrastructure to be funded in whole or part by CIL

Education facilities

Leisure facilities

Transport improvements

Health care facilities

Library services

Community Care facilities

Open Space provision

Community facilities

"Unless the need for the infrastructure arises directly from five or fewer developments, where section 106 arrangements may continue to apply if the infrastructure is required to make the development acceptable in planning terms."

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CiL – Infrastructure Assessment

Establish the Infrastructure required to Support Growth.

Determine the Infrastructure Projects desired to be funded by CIL.

Assess the Delivery Costs.

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44 Determine Alternative Funding Sources.

The LPA needs to:

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CiL – Infrastructure Assessment

Calculate the Draft Infrastructure Funding Deficit.

Test the Draft IFD against projected CIL revenue after the viability testing and draft rates have been established

Confirm the Infrastructure Funding Deficit for Examination.

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66

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88 Prepare the Reg 123 Infrastructure List for Adoption

You need to help them!

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The future?

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•planning obligations via S 106 Agreements will continue.

•the detailed policy and tests that were set out in Circular 5/05 have now gone and are replaced by three short paragraphs which open the way for much greater flexibility or imaginative uses of planning obligations.

•The co-existence of planning obligations and CIL may mean that the possibilities of dispute between developers and planning authorities will increase rather than decrease, but there may also be more flexibility in their use.

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Questions and discussion

Over to you….

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Contact details

David BrammerLegal Director, DLA Piper UK LLPMember of National Planning Team and Legal Associate

RTPIDLA Piper UK LLPTel: +44 (0)121 262 5695 E-mail: david.brammer@dlapiper.com

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