United States: Developer Contributions Consultation

Last Updated: April 4 2018
Article by John Gregory

Amongst all the reaction to the proposed revisions to the NPPF, the consultation on Developer Contributions has, to some extent, gone under the radar, although most of the proposed changes had already been outlined as part of 2017 Autumn Budget.

Some of the more significant proposals are summarised below:

Lifting the pooling restrictions

The Government proposes to remove the restriction on pooling Section 106 contributions in areas where the council has adopted the Community Infrastructure Levy (CIL). This seems logical, given that the rationale for the restriction in the first place was to incentivise councils to adopt CIL.

The proposal goes further by suggesting the removal of the restriction where authorities fall under a threshold based on the tenth percentile of average new build house prices. This is a consequence of the fact that CIL uptake has been quicker in areas where land values are higher. In areas with lower land values, some councils have concluded that they would need to set rates at a very low (or zero) rate in order for development to remain viable.

It is also proposed to remove the restriction where development is planned on several strategic sites, although it is not yet clear how "strategic sites" will be defined, and the consultation invites views in this respect.

Setting CIL rates based on existing land use

This proposal is designed to encourage the use of a specific single CIL rate for large strategic sites, charging on the basis of the majority use where 80% of the site is in a single use or where the site is small. Complex sites would be charged at a generic rate set without reference to the existing land use, or have charges apportioned between the different existing uses.

The rationale for this is that the ability to set CIL rates for different areas within the authority does not give councils sufficient scope to capture either the infrastructure needs generated by a particular development within a charging "zone", or the value generated by the grant of planning permission.

For example, land previously used for agriculture and industrial land could sit in the same charging zone, and yet the value generated by the grant of planning permission for the sites may be significantly different, as might be the infrastructure requirements that they generate.

Removal of requirement for Regulation 123 Lists

It is suggested, rightly, that Regulation 123 Infrastructure Lists do not provide clarity or certainty in respect of how CIL monies are spent.

It is proposed that these are replaced by "Infrastructure Funding Statements" that will explain how the spending of forecast income from CIL and Section 106 obligations over the next 5 years will be prioritised. While it is suggested that councils will have to report annually on where the income from CIL has been spent, there is no suggestion that the specified spending priorities would be binding or enforceable.

This proposal is aimed at addressing a perceived lack of transparency over the use of CIL monies. Whilst negotiations over Section 106 contributions are a source of frustration, they at least provide developers with some input (during the application process and Section 106 negotiations) into where money is spent, which is usually related in some way to the application. Additionally, the standard repayment clauses commonly inserted into Section 106 Agreements will bite if funds are not allocated to the specified purpose. There are no corresponding safeguards in the present CIL regime.

Indexation

CIL charges are currently indexed in accordance with the BCIS All-In Tender Price Index. This is intended to capture increases in contractor costs, but it will not always reflect house price inflation. It is proposed to index residential development to regional or local authority house prices.

Interestingly, this approach would potentially lead to a reduction in CIL during an economic downturn, which is a positive for house developers, if not for councils.

Introduction of a Strategic Infrastructure Tariff

Inspired by the Mayoral CIL used to fund Crossrail, the Government proposes to allow combined authorities and joint committees (where they have strategic planning powers), to introduce a Strategic Infrastructure Tariff to fund particular infrastructure projects. Little detail is provided, but it is a proposal designed to facilitate more cross border cooperation in the provision of major infrastructure.

Simplifying the setting and revision of charging schedules

It is proposed to replace the formal consultation requirements with a requirement to publish a statement on how an authority has sought an "appropriate level of engagement".

This would be considered through the examination process and is intended to allow authorities to set and revise charging schedules more quickly.

Comment

There is certainly sense in some of these proposals. The lifting of the pooling restriction in the circumstances described is logical, and it also seems sensible to remove it in areas where low land values make the introduction of CIL unfeasible.

Streamlining the procedure for the introduction and revision of charging schedules is also to be welcomed, as is the introduction of more flexibility over the service of commencement notices and a more proportionate approach to the application of exemptions, although it is worth noting that exemptions would still have to be obtained before development begins.

Interestingly, the consultation document also seeks views on the introduction of fees payable to councils for the monitoring of Section 106 obligations although, in practice, the incorporation of substantial monitoring fees into Section 106 Agreements remains commonplace, notwithstanding case law that suggests that the circumstances in which such fees should be sought are limited.

The criticism levelled at CIL Infrastructure Lists is fair, although there is insufficient detail yet to say if "Infrastructure Funding Statements" will provide any more certainty for developers (at the point of payment) in respect of where monies will be spent.

The proposals for simplified charging in respect of larger strategic sites and amending the indexation provisions to reflect local property prices both have some attraction in terms of making CIL charges more responsive to market conditions and site specific circumstances - although house price variations should probably be measured at local authority rather than regional level in order to better capture what can be significant variations within regions.

As always, the devil will be in the detail (and the drafting), and the consultation document confirms that further reforms set out in the Autumn Budget are being contemplated, including setting national and non-negotiable contributions in respect of affordable housing and infrastructure.

The consultation period ends on 10 May 2018.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions