THE COMMUNITY INFRASTRUCTURE LEVY – VIABILITY IS THE KEY


Guy Emmerson, development partner at Bruton Knowles


Guy Emmerson is Development and Valuation Consultancy Faculty Head at commercial property consultancy Bruton Knowles. He specialises in residential and commercial development consultancy advice working with landowners, developers and local authorities. guy.emmerson@brutonknowles.co.uk


Guy provides a balanced perspective of the development process backed up by both valuation and marketing experience. “Sadly, the greatest clarity CIL may afford us is how effective the previous regime was and how much we may wish to return to the tried and tested s106 approach.”


funding for infrastructure but, rather, provide ‘top up’ funding where existing mainstream sources have been exhaust- ed. There remains considerable uncer- tainty about what those mainstream sources are – particularly in these times of severe fiscal constraint.


The context


The Community Infrastructure Levy (CIL) has been slow to come into effect. But, as the number of local authorities finalis- ing their CIL charging schedules gathers pace, the debate about how to set the new charge, its impact on development and how much funding it can raise, has come to the fore.


The Government’s goal for the CIL is to raise over £1 billion to help pay for the infrastructure needed to support pro- posed new development by 2016 and most authorities will be giving it serious consideration now that the 6 April 2014 deadline for limiting the use of pooled contributions looms ever nearer. CIL is an extremely complex area and most are still feeling their way through a glut of regulations and guidance.


Where is the rest coming from?


Importantly, CIL is only intended to ‘help pay for’ necessary infrastructure. It is not even intended to be the main source of


THE TERRIER - Summer 2012


Viability assessments to inform the Charging Schedule are, by their nature, carried out at a strategic level based on a number of assumptions. The accept-


The concept is that charging author- ities should determine and cost the infrastructure needed to support the anticipated levels of development across their areas and identify any gap in the funding available for these projects. This will identify the shortfall that the levy will need to try and meet. That shortfall will then be balanced against the ability of development schemes to contribute - calculated by way of a viability assess- ment carried out at the strategic level.


If, as seems likely in many parts of the country, it is found that the viability of development is such that the entire shortfall is unlikely to be met, there remains a problem; not all the necessary infrastructure can be afforded, even with the benefit of indexing CIL payments into the future. So what happens next, and how is infrastructure delivery priori- tised in these circumstances?


Affordable housing to take the hit?


ed approach is to construct a model, based on a representative number of average development typologies, to estimate how much such developments could afford to contribute towards the infrastructure funding shortfall given, for example, set levels of site specific contributions and affordable housing (secured by way of a simpler Section 106 Agreement).


The anticipation is that CIL will be set at a level that the majority of development in that area can afford. As such, there is no intention to allow individual appli- cants relief from payment. In fact, there does not seem to be any room in the regulations for challenging the ability of a specific scheme to viably meet CIL until after a planning permission has been granted.


This suggests that applicants will have to focus their viability concerns on the site specific Section 106 requirements, most notably affordable housing.


The levy will have been set at a level that allows for an element of site specific ob- ligations but, importantly, at a level that supports policy compliant affordable housing provision. But do not expect applicants to accept that their develop- ments can viably provide both CIL and site specific requirements.


It seems to me inevitable that the whole issue of viability will get revisited at the application stage. Because CIL is a given,


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