CIL - Draft Charging Schedule
Support
Draft Charging Schedule
Representation ID: 68032
Received: 07/04/2015
Respondent: The Theatres Trust
Thank you for consulting The Theatres Trust.
We note that cultural uses are not listed in the charging schedule and therefore assume they will not be subject to the levy. We support this, as D1, D2 and some sui generis uses (e.g. theatres) often do not generate sufficient income streams to cover their costs. Consequently, they require some form of subsidy to operate and this type of facility is very unlikely to be built by the private sector.
However, for clarity, we suggest that Table 3 also includes an entry for 'All other uses' as a nil rate.
Thank you for consulting The Theatres Trust.
We note that cultural uses are not listed in the charging schedule and therefore assume they will not be subject to the levy. We support this, as D1, D2 and some sui generis uses (e.g. theatres) often do not generate sufficient income streams to cover their costs. Consequently, they require some form of subsidy to operate and this type of facility is very unlikely to be built by the private sector.
However, for clarity, we suggest that Table 3 also includes an entry for 'All other uses' as a nil rate.
Support
Draft Charging Schedule
Representation ID: 68033
Received: 01/04/2015
Respondent: Highways England
Unable to comment on basis for contributions, but considers seeking such contributions from developers a sound approach.
Clarity is welcome.
Importance of identifying site specific impacts at planning application stage and use of S106 obligations and/or planning conditions. CIL will secure funds to address impacts and this will need to dovetail with existing tools.
HA keen to engage effectively with input to management and prioritisation process, in particular, where funds are used for capacity enhancement works to the M40. Form and cost of future capacity enhancement works between junctions 14 and 15 is at a very preliminary stage and that work is ongoing to define the most appropriate form and timing of any future works and all potential funding sources.
Important therefore that both the IDP and the Regulation 123 List are consistent in relation to the terminology used for future motorway improvements and also that both documents confirm that the costs and form of motorway capacity enhancements
The Highways Agency welcomes the opportunity to comment on the draft CIL provisions for Warwick District.
Whilst the Highways Agency is not in a position to comment on the underlying valuation or market evidence which has informed the proposed CIL rates - it considers that the Council's basis for seeking financial contributions from developers to fund District wide infrastructure requirements is sound, particularly where there is evidence of a funding gap.
The clarity provided in relation to the use of CIL relative to other S106 and conditions mechanisms - in both the Charging Schedule and draft Regulation 123 List, is welcome. It is important that site specific impacts for individual developments continue to be identified at planning application stage and, where necessary, implemented alongside new development, through the use of S106 Obligations and/or planning conditions.
The new CIL regime, which will secure funds to address District wide impacts of development, will need to dovetail effectively with these existing tools - and the Highways Agency will be keen to engage effectively with the Council to input to the management and prioritisation process, particularly where the funds are intended to be used for capacity enhancement works on the M40.
The Highways Agency has previously submitted representations to the Warwick Local Plan (Submission Draft) commenting on the content of the Council's IDP - and specifically the reference to 'smart motorways' on the M40. We would take this opportunity to reiterate that work to define the form and cost of future capacity enhancement works between junctions 14 and 15 is at a very preliminary stage and that work is ongoing to define the most appropriate form and timing of any future works and all potential funding sources.
It is important therefore that both the IDP and the Regulation 123 List are consistent in relation to the terminology used for future motorway improvements and also that both documents confirm that the costs and form of motorway capacity enhancements is preliminary at this stage, pending ongoing assessment.
The Highways Agency looks forward to ongoing engagement with the Council, and also with Warwickshire County Council in these matters. Please feel free to contact me on the details above if you wish to discuss this response in more detail.
Object
Draft Charging Schedule
Representation ID: 68034
Received: 27/03/2015
Respondent: WYG Planning and Environment
Object to the Draft Charging Schedule,particularly the Convenience based supermarkets and superstores and retail parks category. We consider that the category is poorly defined, providing no clarity as to which forms of development it would apply to. We consider that the evidence base informing the proposed CIL charge for these types of development is not robust having not tested a sufficient range of sites/development and not taking account of up to date cost information.
Notwithstanding these concerns, we consider that the increase in CIL rate between the publication of the PDCS and the DCS is irrational, is unexplained and would have a disproportionate impact on these types of development.
We consider that the CIL charge for these types of development should be zero rated. Failing that, any charge should not exceed that set out in the PDCS.
WYG Planning & Environment write on behalf of our client Ignis UK Property Fund in regard to the current consultation on the Warwick Community Infrastructure Levy Draft Charging Schedule. Our client is the owner of Leamington Shopping Park and accordingly these representations relate principally to the commercial, and specifically the retail elements of the Draft Charging Schedule (DCS).
Definitions - 'convenience based supermarkets and superstores and retail parks'.
The DCS considers three types of retail use/development:
"Retail - prime Leamington Spa zone";
"Convenience based supermarkets and superstores and retail parks"; and
"Retail - others areas."
The DCS contains no definition of these categories, which we consider to be a significant omission if the DCS is to provide clear advice to potential developers. The evidence base, in the form of the BNP Paribas Real Estate CIL Viability Study (June 2013), defines two of the above development types in the footnotes to table 1.6.1 at page 5, as follows:
"Superstores/supermarkets are shopping destinations in their own right where weekly food shopping needs are met and which can also include non-food floorspace as part of the overall mix of the unit."
"Retail warehouses are large stores specialising in the sale of household goods (such as carpets, furniture and electrical goods), DIY items and other ranges of goods, catering for mainly car-borne customers."
We do not consider that these definitions are adequate to enable a developer to understand which rate would apply to a give form of retail development. For example:
* What is a "shopping destination in its own right" in respect of superstores/supermarkets? This statement
could apply to any shop (if customers visited just that one shop) or to no shops at all (if the customers
habitually visited more than one shop by way of a linked trip);
* Who would determine (and how) whether a superstore/supermarket meets weekly food shopping needs?
It is a well reported recent trend that customers are shopping for food little and often, regardless of the
size of establishment they shop at and the range of goods provided. The days of the weekly shop
appear to be numbered. Moreover, the CIL charge would have to be calculated and paid long before the shopping habits of future customers of a development would be known. Furthermore, the type of
shopping trip carried out could change significantly, multiple times, over the lifetime of the development;
* In respect of retail warehouses, are these synonymous with retail parks (as referred to in the schedule),
or does a 'park' necessarily have to consist of more than one 'warehouse'? Would two such units
comprise a 'park', or three, or more? Is a shared car park or single ownership required?
* What does "large stores" mean? Is there a floorspace threshold? If so, this should be clearly stated.
* What does "specialising in the sales of" mean? Is it the same a "selling" or does it mean "exclusively selling" or "predominantly selling"?
* Does the inclusion of "other ranges of goods" in the definition literally encompass all other types of
goods? If so, what is the point of specifically naming household goods and DIY items? If it does include all other types of good, how can this classification of use be differentiated from the "Retail - other areas" classification?
* Who would determine (and how) whether a retail development catered for "mainly car-borne
customers"? What proportion would constitute "mainly"? How would this be known at the point of
calculating CIL - the CIL charge would have to be calculated and paid long before the mode of travel of future customers would be known. Customer travel mode could change significantly, multiple times, over the lifetime of the development.
No definition for "Retail - other areas" is provided anywhere in the DCS or evidence base. Reference to "other areas" appears to indicate that it does not apply to the defined prime Leamington Spa zone. While there is no reference to 'type' other than "retail" it may also be intended to exclude superstores/supermarkets and retail warehouses from the "Retail - other areas" category. However, given the inability to clearly define those terms (see above) it is equally not possible to define what falls outside of those terms.
"Retail - others areas" charging rates are applicable to is effectively undefined. This is unacceptable and the charge attributed to "Convenience based supermarkets and superstores and retail parks" should be zero rated so that it becomes clear that a charge applies to the prime Leamington Spa zone only and that no charge applies to any form of retail development outside of that zone.
Evidence Base
The National Planning Practice Guidance sets out the requirements of the evidence base used to support a DCS.
It confirms that:
* "Care must be taken to ensure that it is robust." (paragraph 015);
* "A charging authority must use 'appropriate available evidence' ... to inform their draft charging schedule
... consider a range of data, including values of land in both existing and planned uses, and property
prices - for example... rateable values for commercial property." (paragraph 019);
* "a charging authority should directly sample an appropriate range of types of sites across its area, in
order to supplement existing data. ... The exercise should focus on strategic sites..., and those sites
where the impact of the levy on economic viability is likely to be most significant (such as brownfield
sites)." (paragraph 019);
* "Charging authorities that decide to set differential rates may need to undertake more fine-grained
sampling... Fine-grained sampling is also likely to be necessary where they wish to differentiate between
categories or scales of intended use." (paragraph 019);
* "A charging authority should take development costs into account when setting its levy rate or rates,
particularly those likely to be incurred on ... brownfield land. A realistic understanding of costs is essential
to the proper assessment of viability in an area." (paragraph 020);
* "Differential rates should not be used as a means to deliver policy objectives... Charging schedules with
differential rates should not have a disproportionate impact on particular sectors or specialist forms of
development." (paragraph 021); and
* "A draft charging schedule is prepared by the charging authority, in light of ... updated evidence where
applicable." (paragraph 030).
Given the lack of clearly defined development types, it is difficult to see how the evidence base could have robustly tested those different types of development. Indeed, the only appraisals carried out in respect of retail development are an appraisal for "Lmtn Spa - Prime (Ctrl Parade & Royal Priors)", "Rest of L'ton Spa, Warwick,
Rest of District" and "Supermarkets, Superstores, Retail Parks" (see Appendix 5 of the June 2013 BNP Paribas Viability Study). Focussing on the last of these, we consider that carrying out a single appraisal for supermarkets/superstores (i.e. shopping destinations in their own right where weekly food shopping needs are met) and retail parks (i.e. large stores specialising in the sale of household goods, DIY items and other ranges of goods, catering for mainly car-borne customers) is entirely inappropriate. These types of development comprise two wholly different forms of retail store with different construction specifications and costs, lifespans, values and returns. To assume the same inputs and outputs for both forms of development is entirely false and accordingly the evidence base cannot be considered robust in this regard.
Furthermore, to have only considered the redevelopment of a 15,000 sq ft existing store to provide a 30,000 sq ft store in the same use is also entirely inappropriate. While this may be more applicable to an extension to an existing store, where no additional land were required to achieve the development, it wholly fails to consider the development of a new store on a new site. The viability inputs and outputs of developing a new store are likely to be very different to a relatively straightforward extension. The viability considerations are likely to be different too for developments of different scales. A relatively small store is likely to be less viable than development of a
larger store or stores due to economies of scale.
Of equal concern is the sensitivity of the variations of the appraisal carried out. Again, focusing on the
"Supermarkets, Superstores, Retail Parks" appraisal, the BNP Paribas Viability Assessment (June 2013) suggests that such development is viable in the base (appraisal 5) scenario for all current use values (CUV) considered. However, if yields drop by 0.1% (appraisal 4) such development would be unviable at £105/sqm CIL charge in all but CUV 1 scenario (£17/sqft). If CUV were to rise by c.30 pence/sqft, the development would be unviable.
Finally, we note that the Viability Assessment was updated for the DCS in the form of a Viability Assessment updated addendum report (BNP Paribas, November 2014). The updated addendum report notes at paragraph 1.2, that:
"However, the period February 2013 to November 2014 has also seen an increase in build cost inflation.
The RICS 'Building Cost Information Service' data for Warwick indicates that costs have increased by 14.9% over this period. This increase in costs will clearly have an adverse impact on development viability, partially offsetting the improvement in [residential] sales values."
It is not clear whether this reference to increased build costs is reference to the cost of material and labour or whether it is reference to tender prices. However, our reference to the RICS BCIS data confirms that tender costs for construction of all types of development, including commercial development, have indeed risen. The tender cost increases in the West Midland region is confirmed by BCIS as 9% over the Q1 2013 to Q4 2014 period.
Notwithstanding this recognition of increased costs, the November 2014 addendum report considers residential development only. No account has been taken of up to dated construction costs for commercial development and, accordingly, it can be clearly stated that there is no information currently in existence which considers up to date viability considerations for commercial development underpinning this DCS.
Given all of the foregoing, we do not consider that a robust evidence base exists and that care has not been taken to ensure that the evidence base is robust (as required by NPPG paragraph 015). A range of data, including values of land in both existing and planned uses, and property prices - have not been used (as required by NPPG paragraph 019). An appropriate range of types of sites have not been directly sampled and no appropriate focus has been brought to sites where the impact of the levy on economic viability is likely to be most significant such as brownfield sites (as required by NPPG paragraph 019). There has been no fine grained sampling to support the proposed differential rates for various (unclearly defined) types of retail development (as also required by NPPG paragraph 019).
Given the absence of updated viability information for commercial uses in the November 2014 viability
addendum report, a "realistic understanding of costs essential to the proper assessment of viability in an area" has not been achieved (as required by NPPG paragraph 020). Neither has the draft charging schedule been
prepared "in light of ... updated evidence where applicable" (as required by NPPG paragraph 030).
Proposed Rate
Notwithstanding the criticism above, the June 2013 Viability Assessment concludes in paragraph 7.3 that "Superstores, supermarket and retail parks are capable of generating greater surplus value and could absorb a CIL of £148 per square metre. After allowing for a discount below the maximum rate, we suggest a CIL of £105 per square metre."
The NPPG notes that "A charging authority's proposed rate or rates should be reasonable, given the available evidence... There is room for some pragmatism. 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. In all cases, the charging authority should be able to explain its approach clearly." (paragraph 019, NPPG). It is likely due to this guidance, which is reflected in paragraph 5.5 of the DCS and paragraph 4.5 of the Preliminary DCS, that the Charging Authority proposed a charge of £75/sqm in their PDCS (a discount of c.50%).
A consistent approach was taken in respect to other development types. Retail development in the prime Leamington Spa zone is reported as being able to absorb a CIL of £133/sqm in the base (appraisal 5) appraisal, yet the PDCS suggested a rate of just £65/sqm. Hotel use is reported as being able to absorb a CIL of £204/sqm, yet the PDCS suggested a rate of just £80/sqm. Student housing was reported as being able to absorb a CIL of £133/sqm, yet the PDCS suggested a rate of just £80/sqm. (Discounts ranging between 40% and 61%). However, inexplicably, and with no further justification whatsoever, the DCS increases the CIL for supermarkets/superstores and retail parks from £75 to £105/sqm. The CIL for other development types remain unchanged, including for residential development, notwithstanding the November 2014 viability addendum report finding "a marginal improvement in viability in comparison to the results in the June 2013 Viability
Study". Accordingly, while other forms of commercial development receive discounts of between 40% and 61% (and in the case of prime zone retail, 51%), supermarkets/superstores and retail parks receive just 29%.
The NPPG notes that "Differential rates should not be used as a means to deliver policy objectives... Charging schedules with differential rates should not have a disproportionate impact on particular sectors or specialist forms of development." (paragraph 021, NPPG).
Given that no other CIL rate was amended between the publication of the PDCS and the DCS and given the higher level of discount those other types of development receive, it is impossible not to conclude that the increase in CIL for supermarkets/superstores and retail parks will not have a disproportionate impact on these sectors/forms of development and that this is not being used as a means to deliver some other policy objective.
It is certainly the case that the charging authority has not explained its approach clearly (as required by NPPG paragraph 019).
Conclusion
On behalf of our client, Ignis UK Property Fund, we object to the Draft Charging Schedule, and particularly the Convenience based supermarkets and superstores and retail parks category. We consider that the category is poorly defined, providing no clarity as to which forms of development it would apply to. We consider that the evidence base informing the proposed CIL charge for these types of development is not robust having not tested a sufficient range of sites/development and not taking account of up to date cost information.
Notwithstanding these concerns, we consider that the increase in CIL rate between the publication of the PDCS and the DCS is irrational, is unexplained and would have a disproportionate impact on these types of development.
We consider that the CIL charge for these types of development should be zero rated. Failing that, any charge should not exceed that set out in the PDCS.
Support
Draft Charging Schedule
Representation ID: 68035
Received: 18/03/2015
Respondent: The Coal Authority
No specific comments to make at this stage.
Thank you for consulting The Coal Authority on the above document.
Having reviewed the document, I confirm that we have no specific comments to make at this stage.
Should you require any assistance please contact a member of Planning and Local Authority Liaison at The Coal Authority on our direct line (01623 637 119).
Support
Draft Charging Schedule
Representation ID: 68036
Received: 08/04/2015
Respondent: Natural England
No specific comments to make on the draft CIL Charges, however would like to make the following general comments:
Council should give careful consideration to how it intends to deliver the strategic approach outlined in para. 114 of the NPPF - In the absence of a CIL approach to enhancing the natural environment, would be concerned that the only enhancements to the natural environment would be ad hoc.
Potential infrastructure requirements may include:
Access to natural greenspace.
Allotment provision.
Infrastructure identified in the local Rights of Way Improvement Plan.
Infrastructure identified by any Local Nature Partnerships and or BAP projects.
Infrastructure identified by any AONB management plans.
Infrastructure identified by any Green infrastructure strategies.
Other community aspirations or other green infrastructure projects (e.g. street tree planting).
Infrastructure identified to deliver climate change mitigation and adaptation.
Any infrastructure requirements needed to ensure that the Local Plan is Habitats Regulation Assessment compliant.
Thank you for your consultation on the above dated and received by Natural England on 09 March 2015.
Natural England is a non-departmental public body. Our statutory purpose is to ensure that the natural environment is conserved, enhanced, and managed for the benefit of present and future generations, thereby contributing to sustainable development.
Natural England has no specific comments to make on the draft CIL Charges, however would like to make the following general comments, which we hope are helpful.
Natural England is not a service provider, nor do we have detailed knowledge of infrastructure requirements of the area concerned. However, we note that the National Planning Policy Framework Para 114 states "Local planning authorities should set out a strategic approach in their Local Plans, planning positively for the creation, protection, enhancement and management of networks of biodiversity and green infrastructure." We view CIL as playing an important role in delivering such a strategic approach.
As such we advise that the council gives careful consideration to how it intends to meet this aspect of the NPPF, and the role of the CIL in this. In the absence of a CIL approach to enhancing the natural environment, we would be concerned that the only enhancements to the natural environment would be ad hoc, and not deliver a strategic approach, and that as such the local plan may not be consistent with the NPPF.
Potential infrastructure requirements may include:
Access to natural greenspace.
Allotment provision.
Infrastructure identified in the local Rights of Way Improvement Plan.
Infrastructure identified by any Local Nature Partnerships and or BAP projects.
Infrastructure identified by any AONB management plans.
Infrastructure identified by any Green infrastructure strategies.
Other community aspirations or other green infrastructure projects (e.g. street tree planting).
Infrastructure identified to deliver climate change mitigation and adaptation.
Any infrastructure requirements needed to ensure that the Local Plan is Habitats Regulation Assessment compliant (further discussion with Natural England will be required should this be the case.)
We would be happy to comment further should the need arise but if in the meantime you have any queries please do not hesitate to contact us.
Support
Draft Charging Schedule
Representation ID: 68037
Received: 10/04/2015
Respondent: Place Partnership Limited (PPL)
Introduction:
Under paragraph 1.5, the continued use of Section 106 agreements is welcome as this will have potential to continue to provide funding for police infrastructure costs that are directly related to the new development. The Schedule does not address the potential implications of the restrictions on the pooling of Section 106 contributions. In particular the document should outline how these
restrictions will be operated in practice and whether there is potential to address some of these infrastructure requirements and generate sufficient funding through CIL.
* In calculating the CIL charge and balancing this with viability, as set out under paragraphs 1.7 to
1.11, it is essential to be clear which elements of infrastructure are to be funded through CIL and which through Section 106 agreements.
Needs and Delivery:
Warwickshire Police (WP) and West Mercia Police (WMP) welcome the inclusion of emergency
services under paragraph 2.2 of the policy, reflecting the findings of the Infrastructure Delivery Plan.
It is, however unclear from this which elements of emergency services infrastructure will be covered
by CIL and which will continue to be collected through S106 contributions. This needs to be clearly
set out in the Regulation 123 list.
* WP/WMP are currently working on a Strategic Infrastructure Assessment for Warwick and Stratford
Districts, which will help to inform police infrastructure requirements across South Warwickshire.
Proposed CIL Charging Rates:
The larger Strategic Sites as referred to in paragraph 5.2 are likely to be those where there is most
demand for increased police presence and therefore new infrastructure. If there are to be reduced
CIL payments for these sites it needs to be clear from the schedule that S106 payments would be
required towards on-site infrastructure, including police infrastructure.
* The charging rates are set at quite a cautious level, which is acceptable as long as S106
agreements continue to be used as the main funding source for police infrastructure. However, the
Regulation 123 list needs to clearly demonstrate those items to be funded through CIL and S106
and there needs to be a clear approach across the District to deal with the restrictions on pooling of
S106 contributions. We consider that the current wording in the Draft Regulation123 List relating to
'Police equipment and other costs' is much too vague and may jeopardise future requests from the
police for site-specific funding through S106. With the rates set at a cautious level it seems very
unlikely that CIL would produce the levels of contributions identified (£1 million) in the Draft
Regulation 123 List. As the 'police equipment and other costs' would be likely to relate to specific
sites, we would wish to see this aspect removed from the Draft Regulation 123 List and to continue
to be funded through S106. The Police Custody Suite should continue to be funded through CIL.
Exemptions and Payment Terms:
Infrastructure cannot be delivered incrementally i.e. small sections of a road or a police station
cannot be built in isolation. Developers should be factoring this in as part of their calculations. With
an instalment policy the risk is that a given scheme will get all of the benefits of particular
infrastructure, but share only limited costs.
* Payments for police infrastructure such as police offices, officer training, vehicles and ANPR will
need to be payable prior to occupation of the dwellings. As these would be capital costs, it would not normally be feasible for these to be paid in instalments.
See Attached
Object
Draft Charging Schedule
Representation ID: 68038
Received: 10/04/2015
Respondent: Gladman Developments
Previously submitted evidence by Carter Jonas to support response. This was not recorded in summarisations, so has been re-submitted as part of this consultation as although some dates and figures may have changed it is still relevant and important to the Charging Schedule development.
Introduction:
CIL is intended to have a positive effect on development. The Council is required to strike an appropriate balance between the desirability of funding from CIL and the potential effects (taken as a whole) of the imposition of CIL on the economic viability of development across the local authority area. Must consider the impact of CIL together with the policies contained in the Local Plan on developments within the borough when deciding an appropriate CIL rate.
Funding gap/evidence base:
CIL should not be used by Council's as a mechanism for creating an unrealistic 'wish list' of infrastructure projects in their area. When establishing a funding gap that CIL receipts are intended to contribute towards filling, it is vital that the Council take account of every possible income stream, including accurate assessments of New Homes Bonus and council tax/business rate receipts and government funding. Also included should be an assessment of statutory undertakers' asset management plans.
The Council need to have an up to date, robust evidence base that fully justifies the infrastructure needs based on the amount of development required. These should be drawn from infrastructure planning that underpins the LP, identifying the quantum and type of infrastructure required. An incomplete evidence base will make the charging schedule unsound.
When calculating the level of infrastructure needed as a result, the Council must distinguish between new and existing demands. New houses do not always create new pressure.
CIL is expected to have positive economic effects across an area in the med - long term. CIL rates will also need to be appropriate over time, bearing in mind land values, market conditions and the wider economic climate change rapidly. The viability impact of incremental policy obligations must be assessed and reflected in the charging schedule. believe that it is inappropriate to set the levy based on a partial understanding of these infrastructure costs and in particular if the total money needed for infrastructure is unknown.
Differential charging rates:
Regulation 55 of the CIL Regulations allows local authorities to grant relief for exceptional circumstances from liability to pay CIL. Such provision should be factored into the Council's CIL and will avoid rendering sites with specific and exceptional cost burdens unviable should exceptional circumstances arise.
Payments in kind:
An allowance for infrastructure payments should be made available by the Council, recognising that there may be time, cost and efficiency benefits in accepting land or infrastructure from parties liable for payment of the levy.
Requirement to consult:
Consider the need to engage meaningfully with local developers and others in the property industry early and throughout the process crucial to the production of a robust CIL.
Examination:
The examiner must be independent and have the appropriate qualifications and experience e.g. a planning inspector
Conformity with Framework:
Fundamental that the Council ensures that the proposed levy rates are realistic and not set too high. Arbitrarily high rates may jeopardise the delivery of housing schemes within the area. This would be contrary to the Government's aim to boost the supply of housing as schemes may not come forward due to viability issues.
When testing the impact of CIL it is vital that the assumptions that underlie the standard residual valuation approach used to test the impact on viability of CIL are realistic and accurate. This should include abnormal costs, contingency costs, preliminary costs, and developer profit, which should reflect the current level of risk perceived in the market.
Urge the Council to adopt an instalments policy for CIL payments as this will give developers the flexibility to pay contributions in line with development phasing schemes and will facilitate cash flow. Council should also accept the phasing of planning permissions, with each phase treated as a separate chargeable development.
Need to review CIL tariffs as the economic climate will inevitably change over the course of the plan period.
The Local Plan will need to be in place prior to the CIL being adopted. The Council needs to have a clear understanding of the level of residential development to be brought forward in the plan period when preparing the charging schedule as this will directly influence the scale of CIL. Without this the charging schedule will not reflect the relevant and true infrastructure needs. This is particularly problematic as the Local Plan remains subject to objections related to the full objectively assessed housing needs and where further concerns are being raised about the requirement of Warwick to meet some of the unmet need of Coventry. The Council must consider that changes to the CIL may be required in order to consider issues which arise from the examination in public.
See attached.
Object
Draft Charging Schedule
Representation ID: 68039
Received: 10/04/2015
Respondent: WM Morrisons Supermarkets PLC
Agent: Peacock & Smith
Object to proposed CIL rate of £105/sq m for convenience based supermarkets, superstores and retail parks.
Previously supported proposed £75/sq m charge set out in preliminary draft charging schedule as this was unlikely to harm viability.
Acknowledge that the Draft Charging Schedule has been informed by a Viability Assessment Update Addendum Report prepared by BNP Paribas (November 2014), but client is gravely concerned that the proposed £105/sq.m charge will have a significant adverse impact on the overall viability of future (large) convenience based retail development in the district, particularly when taking into account other local infrastructure works and other contributions as part of S106 agreements.
Draft charge will put undue additional risk on the delivery of foodstore proposals and will be an 'unrealistic' financial burden posing significant threat to new investment and job creation, especially in regeneration areas.
see attached
Object
Draft Charging Schedule
Representation ID: 68040
Received: 10/04/2015
Respondent: Canal & River Trust
Preliminary Draft Charging Schedule 2015 does not have any specific references to the canal infrastructure within the Warwick area, but there are references at paragraph 2.2 to the strategic cycle network improvements; Green Infrastructure; and health facilities and services which are required to mitigate the impacts of planned development.
Consider the towing path network provides a motor-vehicle-free environment in which to travel to work, school or home and is particularly suitable for cycling. The towpaths could form part of the strategic cycle network in Warwick.
There are a number of definitions of green infrastructure some of which encompass 'blue infrastructure and blue spaces' such as waterways, towing paths and their environs. The canals form part of strategic and local green infrastructure networks, and this is relevant in Warwick District.
Canal network can be used as a resource for healthy and active lifestyles: for getting the nation moving.Involved with the TCPA on their recent report Planning Healthy Weight Environments. The issue of health facilities provided by the canal infrastructure may be relevant in Warwick District.
The Draft CIL Regulation 123 Regulation List January 2015 does not include any canal related projects.
Note that a number of housing commitments are immediately adjacent to the canal as well as an employment protection site. On the basis of the planned growth within the District, Preliminary Draft Charging Schedule 2015 and Draft CIL Regulation 123 Regulation List could you confirm if projects relating to the canals are to be secured solely by s106 planning obligation or whether any will be secured by CIL?
Concerned that unspecified cycling improvements in the Transport section of the Regulation 123 List may preclude s106 being sought for such improvements to the towpath to support growth.
see attached
Object
Draft Charging Schedule
Representation ID: 68041
Received: 10/04/2015
Respondent: Crest Strategic Projects
Agent: d2planning
Do not object in principle to the adoption of a Community Infrastructure Levy (CIL) however it is essential that the emerging CIL adopts realistic rates of charging so as not to impede the delivery of strategic sites where the initial investment in infrastructure etc. is extremely high. The Council have reduced the CIL rates on strategic sites to between 50% and 60% of the rates for non-strategic sites. Concerned that this would not result in a significant reduction and even at a reduced rate, would still make a number of strategic sites unviable. In view of the high upfront costs they should be exempt from liability for CIL.
The rural areas have all been categorised in the same zone, Zone D - Rural Area. There is no longer recognition that within the rural areas, there is a difference in the land/sales values achieved.This will make a number of developments in the lower value rural areas unviable. Therefore, the draft charging schedule has not recognised differing land/sales values that the viability assessment has identified. A separate Rural Area category in the draft charging schedule should be introduced.
Recommendations:
Ensure that realistic rates of charging for CIL are adopted
Strategic sites should be exempt from liability for CIL
To introduce a separate Rural Area (Lower Value) category in the draft charging schedule to recognize the lower sales values identified in some of the Rural Areas in the district.
see attached
Object
Draft Charging Schedule
Representation ID: 68042
Received: 10/04/2015
Respondent: Taylor Wimpey Plc, Crest Nicholson Strategic Projects, Spitfire Properties LLP, Nurton Developments Ltd and Persimmon Homes Ltd
Agent: Savills
The BLV methodology and assumptions made by BNP - the application of generic BLVs is entirely inappropriate in this case - land values are extremely location-sensitive.
* The assumptions used in the viability models require attention. Most notably, we have concerns regarding the application of sales values, enabling costs and developer's profit as well as the fact that no site typologies of between 100 and 300 units have been tested.
* The rates are not supported by the viability evidence and would have the effect of putting a significant proportion of the housing supply at risk. For example, our analysis of BNP's own viability evidence, combined with our own evidence, illustrates that the majority of strategic sites allocated within the emerging Local Plan cannot realistically support a CIL rate. It is currently anticipated by the emerging Local Plan that 3,677 homes will be delivered through strategic sites across the Plan period. This equates to 29% of the District's housing supply across Zones A, B and C (which equates to over 58% of allocated sites).
* The rates to be applied in Zone D are not reflective of housing market areas on the ground. This will likely stifle the ability to deliver allocated housing sites on the edge of existing urban settlements (where the sales values to be achieved are likely to be more akin to the adjoining urban area than more, exclusive sites in higher value villages such as Lapworth, Shrewley or Leek Wootton). The 'jump' between the rates applied in different Charging Zones (particularly to the east of Warwick where rates appear to increase from £30 - £50 per sq m in Zone A to £110-£180 per sq m in Zone D) is concerning in this regard and must be addressed at the earliest opportunity or else put at risk the delivery of housing on allocated and non-allocated sites (which account for over 50% of the District's housing supply) within Zone D.
Warwick District Council CIL DCS
The Statutory CIL Guidance is clear on the narrow focus of the CIL Examination process permitted by the Regulations:
"The Examiner should establish that:
the charging authority has complied with the required procedures set out in Part 11 of the Planning Act 2008 and the CIL Regulations;
the charging authority's draft charging schedule is supported by background documents containing appropriate available evidence;
the proposed rate or rates are informed by and consistent with, the evidence on economic viability across the charging authority's area; and
evidence has been provided that shows the proposed rate (or rates) would not threaten delivery of the relevant Plan as a whole."1
This representation is therefore structured in three parts to mirror these requirements. Part 1 provides commentary on the Viability Study prepared by BNP to assess whether the Draft Charging Schedule (DCS) is supported by appropriate available evidence. Part 2 assesses the analysis and interpretation of the Viability Study2 results to determine whether the rates are informed by and consistent with the viability evidence. Finally, Part 3 analyses whether the proposed CIL rates will put the overall development in Warwick at risk.
Development appraisals have been appended to this representation.
see attached
Support
Draft Charging Schedule
Representation ID: 68043
Received: 10/04/2015
Respondent: Warwickshire County Council [Archaeological Information and Advice]
Welcomes intention to introduce the levy.
CIL rates are cautious and higher CIL charges could be considered, however this is for the DC to strike a balance for delivery of the LP.
Suggest providing corresponding guidance for development on when S106 and CIL would be incurred. This should explain that CIL Project List has been developed to address the broader impacts of development and explain that for some sites the balance between the use of S106 and CIL will be different depending on the nature of the area and the type of development being undertaken.
Suggest that that the CIL Regulation 123 List is actively monitored so that it is replenished with new projects on an on-going basis and the use of CIL and S106 remains appropriate.
Support the ambitions of the DC in providing new homes and employment together with local services and community facilities. Note that the governance and operational processes needed to underpin the collection and spending of CIL funds are outside the scope of this consultation, however these matters are important in the delivery of sustainable growth (Schedule attached).
Wish to work with the DC to agree a methodology for distribution of CIL and delivery of the critical, necessary infrastructure to support growth contained in the proposed LP in a timely manner.
Although the CIL Project List is not part of the consultation we wish to make the following comments on a number of omitted projects.
The document provided does not cover all the transport schemes that WCC has put forward in the Draft Infrastructure Delivery Plan (IDP). However, it is not clear whether the purpose of the 'CIL Regulation 123 list' is to give an idea of the range and type of infrastructure or whether it should include a detailed list of all schemes in the IDP requiring a CIL contribution.included in draft IDP).
Some cost estimates have also been amended in the draft CIL R123 document to reflect the current cost estimates.
There is no reference to Libraries services in the Reg 123 list.
The reference to unspecified school expansions is very broad. In cases where there are insufficient monies for schools from S106 and CIL this would cause the County Council difficulties for timely delivery.
Support the District Councils action to update the viability evidence for CIL and review of the CIL rates. The housing and commercial property markets are inherently cyclical and the Council is testing its proposed rates of CIL at a time when values have fallen below their peak.
Comment on para 6.4
"Based on available evidence the Council considers the proposed charge is viable. The level of charge will be monitored to ensure it remains viable. Should market or other conditions change the viability of development; the Council will introduce a revised CIL charging schedule".
Consider that there should be annual monitoring report on these matters to better understand viability and development in the area.
See attached
Object
Draft Charging Schedule
Representation ID: 68044
Received: 10/04/2015
Respondent: Warwick Castle
Agent: Nathaniel Lichfield and Partners
Hotel charging rate:
Continue to have concerns with the proposed figure of £80 per square metre. The Council's response to the representation provided in Appendix 7 to the Council meeting on the 28th January 2015 stated "Not all scenarios can be specifically modelled. The viability study seeks to ensure that overall viability will not be undermined
through CIL. Flexibility has therefore been brought into the Draft Charging Schedule by setting rates substantially below the maximum potential".
The CIL rate appears to have been arbitrarily reduced from £100 to £80 per sq. m. Given that only one example has been examined,the CIL Schedule could set a threshold of a minimum number of rooms to which the charge applies. The example hotel has 130 rooms and this could be the threshold. This would avoid the cost burden on smaller schemes that could make them unviable. If a blanket charge is to apply, appropriate evidence needs to be produced to support the proposed charge.
On this basis, our comments submitted on the document previously still stand i.e.
"The 'evidence' used to arrive at this figure appears to be based on one project (The Waterways, in Stratford). Using one example is inadequate as a basis to assess CIL.
There are further reasons to question whether this is an adequate "benchmark".
1 The Waterways hotel has been developed adjacent to a canal, but in the midst of a relatively low quality environment,dominated by single-storey industrial and retail units. Whilst the hotel is relatively 'attractive', the materials, detailing and uniformity are relatively simple. An hotel in the towns of Warwick or Leamington may need to be of substantially higher quality, especially if the site is within a Conservation Area or the setting of listed buildings. This will add to the costs, potentially both the base construction and external works percentage. These would increase in comparison with those set out in the para. 4.40.1 of BNP Paribas Real Estate Report Viability Study, June 2013.
2 Scale, the single example quoted has 130 rooms. Constructing a building of this size will benefit from 'economies of scale'.
However, many sites in Warwick and Leamington are relatively small and may not be able to accommodate a development with that number of rooms. Accordingly, the costs, per room, can increase and therefore, affect viability.
3 The worked example makes an assumption that some floorspace is existing. The refurbishment cost is given as £50 per square foot. It is unclear what scope of refurbishment is assumed and whether this would be adequate if a listed building is the subject of the refurbishment. Given the substantial number of listed buildings in Warwick the extraordinary costs of such projects should be considered.
4 Allied to point 3 is the issue of 'enabling development'. An hotel development may be necessary to generate funds for the refurbishment/maintenance of 'heritage assets'. The CIL as currently proposed may undermine a project's viability and, if it fails to materialise, the funds will not become available to spend on maintaining a heritage asset(s)."
We consider a more detailed analysis is required before setting any CIL charge for hotels. We would welcome the opportunity to discuss the situation associated with hotel development with you.
See attached
Object
Draft Charging Schedule
Representation ID: 68045
Received: 10/04/2015
Respondent: Alumno Developments
Agent: GL Hearn
Proposed charge of £80 per sqm of new floorspace for student accommodation was raised as a concern during the last consultation. This appears high compared with similar locations elsewhere. The rate is unjustified and could make development unviable. The viability report prepared by BNP Paribas in support of the emerging CIL assumes rent of £120 per week per 29 week term. It is based upon no case study evidence as far as one can see and is based Warwick University provided accommodation on campus. The income figure appears to be gross rather than net and assume would include management fees. Applies to one type of accommodation where there are cluster types which are more affordable. The appraisal should consider the proposed CIL charge to be appropriate to reflect costs of facilities which are provided off campus.
Real danger that this level of charge would restrict future accommodation supply to HMO's.
Support proposal to accept payment in instalments.
see attached
Object
Draft Charging Schedule
Representation ID: 68046
Received: 10/04/2015
Respondent: Gladman Developments
Appended Carter Jonas Letter:
The CIL Viability Study on the Council's website has nothing under the appendix headings. They are grouped at the end making study harder.
Residential tariff has not been robustly evidenced and if implemented would have adverse impact on the delivery of new housing (including affordable). Proposed Charging Zones are unduly complex and will lead to inequitable CIL cost burden.
WDC Zones B and D are the second highest rate proposed in the East and West Midlands with only a small area in Dudley being higher and reduced for affordable housing of 25%
WDC is not proposing a differential residential CIL rate to take account of the percentage of affordable housing to be provided. Additionally, Zones B and D cover 90% of the district
The CIL Viability Study notes that one risk of setting a high residential charge rate (that vastly exceeds the current S106 obligations levels) is that it could shock the land market, thus land supply will fall. No evidence is given against which to assess the likely cost differential for different forms of development under S106 and CIL Charging Schedule. In rural areas, under current proposals, it would be likely that there would be a substantial increase in the sums to be paid from new residential schemes towards infrastructure. To reduce the risk, the gap between the level of S106 contributions currently secured per unit and the per unit CIL Charges Rates for much of the district should be reduced by lowering the CIL Charge Rates for Zones B and D.
The proposed boundaries for the Charging Zones are not robustly justified and it is not clear how the Council has determined the need for more than one Charging Zone in and around certain villages e.g Radford Semele.
Residential Development Scenarios:
A major factor influencing development value, and therefore development viability, is the scale and density that is achievable on a site. The Viability Study recognises that in many cases the gross site area will need to be netted down, to make an allowance for site specific constraints, open space provision and landscaping. On large strategic sites the Viability Study assumes only 50% of the gross site area will be used for housing. On other greenfield sites, the assumption is that 67% of the gross site area will be used for housing. Carter Jonas endorses the allowances made to move from gross to net developable site areas.
In rural areas on the edge of settlements it will often be appropriate to reflect the pattern of existing development for any new housing to provide a soft interface between village and countryside. Furthermore the current trend is for detached and semi-detached 2, 3 and 4 bedroom houses. Together, these factors suggest the Viability Study should test low development densities, including 20 dwgs/ha shown in Table 4.11.1. Lower density assumptions will deliver lower Gross Development Values and a reduced sum of money being available for CIL payments.
Affordable Housing Assumptions:
Assumed that 40% of the units on qualifying sites will be affordable split with tenure of 80% rented and 20% intermediate housing. The appraisals assume no grant funding.
The assumed value of affordable housing is considered unreasonable.
Concern in relation to how the assumptions used in the Viability Study fit with those made in the Affordable Housing Viability Assessment, the latter underpinning the affordable housing policy in the emerging Local Plan.
The Affordable Housing Viability Assessment assumes Section 106 costs of £6,650 per unit, when assessing the viability of different percentages of affordable housing. This level of contribution is broadly equivalent to the CIL contribution required in Charge Zone A, but is below the level of contribution required in Charge Zone C, and significantly below the contribution required in Charge Zones B and D. On non-strategic sites in Charge Zone D, the contribution per 3-bedroom unit will be circa £19,000.
The delivery of more affordable housing in Warwick District remains a priority. It is therefore concerning that the Viability Study accepts that as a result of the proposed CIL Charge Rates, a number of developments will only come forward if the Council accepts less than 40% provision.
Financial Assumptions:
The Viability Study is light on evidence in relation to the average sales values. Would like to see the evidence particularly when considering properties on the market with regard to discount against marketing price. Would recommend a 10% discount on new build.
The allowance of £1,500 per dwg. On non-strategic sites for S278 contributions and any residual S106 contributions is considered low.
All residential developers assess development margin requirements against the Gross Development Value of the scheme. Whilst the minimum developer return will vary between house builders at any one time depending upon their own particular circumstances, there is a much closer degree of consistency with traditional bank funders' minimum requirements. For a standard build, the minimum return has been on average 20% of Gross Development Value (for the last two to three years).
BNP Paribas has used 20% of Gross Development Value in their viability modelling. As noted above, this is the minimum return that should be allowed for, with no allowance for non-standard builds.
BNP Paribas has included a 5% contingency provision on build costs. This is supported, and is a basic bank funding requirement, without which funding will not be available.
Benchmark Land Values:
The Viability Study commentary on benchmark land values makes no reference to two leading documents on planning and viability - the RICS Financial Viability in Planning and Viability Testing Local Plans. This is an important and significant oversight. Furthermore, the Viability Study makes reference to a number of appeal decisions published between 2007 and 2009. These decisions were made in a different economic time, and pre-date publication of the RICS Financial Viability in Planning and Viability Testing Local Plans.
To arrive at appropriate bench mark land values. Para 3.4.3 of the RICS Financial Viability in Planning (FVP) is a key consideration. "The residual land value (ignoring any planning obligations and assuming planning permission is in place) and current use value represent the parameters within which to assess the level of any planning obligations. Any planning obligations imposed will need to be paid out of this uplift but cannot use up the whole of this difference, other than in exceptional circumstances, as that would remove the likelihood of the land being released for development."
The gap between the two parameters needs to be understood and a judgement reached in each case as to how the market would assess the "competitive return" for the landowner. In the context of 'competitive returns to a landowner', consideration also needs to be given to Viability Testing Local Plans (VTLP) advice, which complements the RICS advice, stating that:
"....threshold land value should represent the value at which a typical willing landowner is likely to release land for development..."
For greenfield sites, VTLP recommends the use of benchmarks based on local market evidence and typical minimum price provisions used in developer / site promoter agreements involving similar sites. No such evidence is provided in the BNP Paribas Viability Study.
Planning appeal decisions and Secretary of State determinations prior to the publication of FVIP were made in the absence of professional guidance on viability testing. Future decisions / determinations are likely to have regard to the FVIP - so some of the conclusions made in earlier decisions / determinations may now be considered historic.
Example given of post FVIP appeal decision. Suggest that WDC revisits justification for base land values and running more appropriate land values through the model lowering the proposed CIL Charge Rates accordingly.
The cumulative impacts of the issues summarised is likely to lead to a very different view of the viability of the proposed Charge Rates for residential development.
See attached.