Community Infrastructure Levy

Draft Charging Schedule Consultation

Representation Form

Consultation on the Community Infrastructure Levy Draft Charging Schedulewill run for eight weeks from Monday 12 Juneto 5pm on Monday 7 August 2017. We will not be able to take into account any responses submitted after 7 August2017.

Please submit your comments via the online survey at If you are unable to complete the online survey, please complete this form and send it to:

Email: please put ‘CIL consultation’ in the subject line

Post:CIL/Local Plans Team

Cornwall Council

Room 3B Pydar House

Pydar Street

Truro

Cornwall

TR1 1XU

by 5pm on Monday 7 August 2017.

Introduction

The Community Infrastructure Levy, known asCIL,will be a new charge on certain building developments to help to pay for infrastructure needed to support new development in Cornwall. The Community Infrastructure Levywill help provide funds for infrastructure required to deliver the development strategy for Cornwall, as set out in Cornwall’s recently adopted Local Plan.

Whilst the Community Infrastructure Levywill make an important contribution towards financing infrastructure, it will by no means provide all the necessary funding, so other sources of funding will be needed, including developer contributions such as S106 agreements.

TheDraft Charging Schedule, known as the DCS,is prepared in accordance with the 2008 Planning Act and the Community Infrastructure Levy Regulations 2010 (as amended), and is based on two sets of evidence: the need for infrastructure and development viability in Cornwall.

The Draft Charging Schedule sets out proposed Community Infrastructure Levy rates to charge on residential and non-residential development across Cornwall.

None of the documents included in this consultation contain information about the decision making process for how CIL income will be spent. This will be informed by the outcome of an ongoing governance review within Cornwall Council.

We would like to know your views on:

  • The Community Infrastructure Levyrates proposed for residential and non-residential development in the Draft Charging Schedule.
  • The current draft documents:

−Regulation 123 List– this sets out the infrastructure projects, or types of infrastructure, that Cornwall Council may fund, in whole or in part, through the Community Infrastructure Levy.

−Instalment Policy – this sets out the options for developers to pay their CIL charge in instalments, dependant to the total CIL liability.

−Discretionary Relief Policy – this sets out the relief that Cornwall Council proposes to provide to eligible development, over and above the mandatory relief provided for through the CIL Regulations.

You will need to read these documents before you complete the Representation Form, as this is what we are consulting on. The following documents may also be of help:

  • Guide to Community Infrastructure Levy and Draft Charging Schedule leaflet
  • Community Infrastructure Levy Consultation Explained document
  • Infrastructure Funding Gap Analysis
  • ChargingZone maps

All documents are available on our website from your Library or Information Service (One Stop Shop).

  1. Contact details

You must complete this page for your representation to be accepted. The Council cannot accept anonymous representations. Your contact details are for our use only and will not be made public or shared with any third parties.

Name: Cllr. Ashley Wood FRICS

Organisation: Lanner Parish Council (Chairman)

Address: Penhalveor Farm, Penhalveor, Redruth.

Postcode: TR16 6NL

Email Address:

Telephone number: 01209 860239

  1. Notification

1)I request to be heard by the examiner / No
2)I wish to be notified of the following:
i)The submission of the Community Infrastructure Levy Draft Charging Schedule for independent examination under section 19 of the Community Infrastructure Levy Regulations 2010 (as amended) / Yes
ii)The publication of the recommendations of the person appointed to carry out an independent examination of the Community Infrastructure Levy Draft Charging Schedule under section 19 of the Community Infrastructure Levy Regulations 2010 (as amended) / Yes
iii)The adoption of the Community Infrastructure Levy Draft Charging Schedule. / Yes

If you would like to be notified by an email or postal address which is different to the one already provided, please give details below:

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  1. Draft Charging Schedule

Please set out below any concerns or specific points of support that you have with the Community Infrastructure Levy Draft Charging Scheduleconsultation document,including any change(s) you consider necessary to address this concern(s).

You will need to say how the change(s) will address your concern(s) and it would be helpful if you could put forward your suggested revised wording to the text and any evidence to support the change(s). Please also state which section and paragraph of the Draft Charging Schedule your concern(s) and change(s) refer to.

Section/
Paragraph / Points of support, concerns, changes and reasons/evidence
The level of charge is fundamentally Cornwall Council’s assessment of what is a suitable rate to achieve the necessary infrastructure to support development identified in the Local Plan without compromising development viability.
However, informal discussions with small and medium size builders and locally based estate agents suggest that the proposals in the Draft Charging Schedule swing the cost of infrastructure disproportionately and unfairly on Cornwall’s SMEs.
Companies which tend to develop large sites tend to be of a different nature to those which develop smaller sites (10 units or less). Their costs tend to be very different which shapes their effectiveness in bidding: the development land market is far from homogenous. Larger sites tend to be developed by large national or regional companies; small sites tend to be developed by local builders. It is often argued that large companies are the only ones capable of handling large sites: yet there is little to prevent large allocations being divided into smaller sites to encourage competition (a key aim of NPPF) and, of course, large developments are usually carried out in phases anyway to minimise risk.
We have considered whether a standard CIL rate distorts market competitiveness in favour of a particular class of developer.
In 2008 (just 10 years ago,) 44% of all homes built were by smaller builders (SMEs, if you will). Today, that proportion has shrunk to just 27%.
CIL viability is assessed according to the formula:
Gross Development Value (GDV)
Minus construction costs
Minus Developer’s Profit
Equals Surplus Value or “Headroom”
This is the “residual method” of valuation. Because there are so many variables, for which a small difference can have a major impact on the result, it tends to be used where no alternative is available.
Construction Costs are a geographic average taken from the RICS Building Construction Information Service (BCIS). This is standard practice.
BCIS figures are based on developments averaging 20 units. They are predominantly informed by small sites and those provided by Registered Providers (of affordable homes). BCIS has stated however that building costs on small sites of 10 or less houses are 14% higher than those incurred on large sites. This means that if construction costs in the CIL formula are the same in all valuations, the larger developers have an immediate advantage both in the calculation of capacity to pay CIL and in their bid for land. South Oxfordshire has stated that by interrogation, major builders have confirmed that they are able to build at lower costs than BCIS.
It is sometimes argued that volume builders have larger costs of infrastructure, advertising and staff: however, this does not correlate with the theory of economies of scale which enable them to be “volume builders”.
Added to the basic construction costs is (again, standard) a figure equating to 15% of construction costs for “external works”: thus the “advantage” given the larger developer is proportionately increased further.
Additional costs to be deducted from GDV are professional fees (acquisition, architect, planning, building regulations) of 6 – 10% of GDV, Sale costs (3.5%) and finance (7% is taken as an industry norm).
The cost of planning conditions including s106 costs and affordable housing contributions are all deducted from GDV as a rule.
Some authorities, such as Cheshire East or South Gloucester have also added in for deduction 5% Contingencies
Developer’s Profit can be estimated from GDV or from gross building costs (or using an internal rate of return).
It is often stated that smaller sites are less risky than larger sites. This is not necessarily the case. Developers of smaller sites may be required to give a greater financial commitment than developers of larger sites. Larger sites can also be divided into phases to test the market slowly and generate demand over time rather than at one instance: thus, risk can be spread both for one site and more widely through the management of land banks (Persimmon had 93,649 plots in land bank for 2015 – up 48% on the previous 4 years).
The general norm would seem to be 20% of GDV, but this is an industry promoted figure and is difficult to test. Other quotes give 20% on GDV for developments of 11 or more houses with 15% being applied to sites of 10 or less. A profit of 6% is usually quoted for affordable homes.
Looking at more specific examples and sources, was quoting 11.7% net profit margin for larger builders in 2016 and 7% for smaller builders (net profit being gross profit less head office salaries, overheads and depreciation). These, of course are averages: Taylor Wimpey showed net profit margin of 13.5% in 2013 (15% above the average) and Persimmon (9% market share) 22% in 2015 with a gross margin up to 25.4%.
What can be gleaned from other charging authorities?Winchester referenced the Homes andCommunities Agency who were applying 17.5% (open market) and 6% (affordable) but opted for 20% and 10% because of “market uncertainties”. (It was 2012, but it was also Winchester!). South Oxfordshire found 17% to be “more reflective of the market” than 20%.
On balance, there seems to be a case for applying a discount to BCIS construction cost figures against larger developments (11 units +) and applying a developer’s profit of 17.5% with a 15% profit on smaller sites. To have a profit of 20% applied to all sites would seem illogical in the face of the evidence and a gap of 25% (the difference between 20% and 15%) too wide. This would make the market for land more competitive.
It was in acknowledgement of the evidence that small developments are more expensive to develop, on a per m2 basis, than large sites that the government has sought to prevent local authorities in England seeking affordable housing and tariff style contributions from developments of 10 units or less (or 5 units or less in defined rural areas or AONBs). It seems inequitable that CIL should be used to “claw back” such contributions when it is clear that they should be discounted. Almost all charging authorities do not make smaller developments pay a higher CIL rate – BCIS found only two charging authorities considering doing this. To put it starkly: should we be seeking to make life difficult for small Cornish building firms?
On a small development in a Zone 4 location – such as Wadebridge or Launceston – an extra £6,300 CIL would be added to each 3-bedroom house over an equivalent on a large development.
We do not believe it equitable or supportive of viability that small developments not required to make a contribution to affordable housing should be subjected to a surcharge on standard CIL rates.
Finally, when considering commercial developmentis it appropriate to employ 20% as developer’s profit? Probably yes. Most though would generally regard commercial development – particularly in Cornwall – as providing a higher risk than residential development. This seems another reason for lowering the rate applied for residential developer’s profit.

Please continue on a separate piece of paper if you need to

  1. Draft Regulation 123 List

Please set out below any comments you have about the Draft Regulation 123 List.

Regarding the Regulation 123 List, we feel that it is far too specific and should be pared down to simple generalities. Not to do this would tie Cornwall Council’s hands severely. In addition, it may prevent or restrict bids to the fund by local councils or groups of local councils seeking to implement infrastructure to support development in their area – particularly local council areas that are subject to a zero charge.
We would have liked to have seen some declaration of intent even at this early stage to work with local councils in the administration of CIL money as this would signal a strong desire that we all work together in supporting and delivering the Local Plan. It would also be helpful (by making the List more general) to provide a stronger rural appreciation within a list which is very urban orientated.
  1. Draft Instalment Policy

Please set out below any comments you have about the Draft Instalment Policy.

  1. Draft Discretionary Relief Policy

Please set out below any comments you have about the Draft Discretionary Relief Policy.

Please continue on a separate piece of paper if you need to

Fair Processing Notice

The information you provide will be treated in the strictest of confidence and may be passed on to other services within the Council, who will use it for the same purposes.

The information you provide on this form will be processed in accordance with the requirements of the Data Protection Act 1998 and will not be passed onto any third party. At all times, it will be treated as confidential and used only for the purpose of Equality Monitoring.

All personal information held by Cornwall Council is held safely in a secure environment.

Thank you for your assistance.

Equality Monitoring Questions

Cornwall Council is committed to ensuring that our services, policies and practices are free from discrimination and prejudice and that they meet the needs of all the community. Equality monitoring is good practice and key to ensuring that our service delivery is continually improving by increasing our knowledge about the customers we serve and their potential needs. It also ensures that our customer base is representative of the wider population of Cornwall.

By having meaningful equality monitoring information it assists us to:

• Understand who is and who isnot using our services

• Plan new or changed services and measure their effectiveness

• Highlight satisfaction levels with your services

• Show if any policies, facilities or services are not taking into account equality issues

• Improve our reputation as an equal and fair provider of goods and services

• Improve our reputation as a fair employer who provides equality of opportunity

By collecting monitoring information we are able to provide evidence that we are reaching people that need our services and identify when we are not. Equality monitoring is a useful tool to help us plan, improve and possibly change the way we deliver services. Responses from other surveys have told us valuable information about how changes we were proposing could have affected some vulnerable people.

For us to check we are providing fair and effective services, we would be grateful if you would answer the following questions.

You do not have to provide the information requested, but it would help us if you do.

Please give your age:……………………….

How do you describe your gender?

Female

Male

Gender Fluid

Non-Binary

Please see definitions for Gender Fluid and Non-Binary, below:

Gender Fluid - Someone who feels their gender identity changes over fluctuating spans of time or even within certain environments.

Non-binary - Someone who does not fit into the binary or either sexuality norms or gender norms.

How do you describe your ethnic origin?

(Please read the list below carefully before selecting the ethnic group that you feel most closely reflects your background)

Asian or Asian British

Black or Black British

Cornish

Mixed (e.g. White and Asian)

White (e.g. British, Scottish)

Other Ethnic Group

If you have any questions about the equality monitoring questions please email our Equality and Monitoring Team:

It would help the Council to know of any barriers you have faced when dealing with us. Please use the space below:

Community Infrastructure Levy

Draft Charging Schedule Consultation

Thank you for taking the time to complete the survey

Please return your completed representation form to:

Email: - please put ‘CIL consultation’ in the subject line

Post:CIL/Local Plans Team

Cornwall Council

Room 3B Pydar House

Pydar Street

Truro

Cornwall

TR1 1XU

by 5pm on Monday 7 August 2017.

More information

More information about the Community Infrastructure Levy and Draft Charging Schedule is available on our website: and in Libraries and Information Services (One Stop Shops).

More information about the Cornwall Local Plan is available on our website:

Contact us

If you have any questions about the Community Infrastructure Levy and Draft Charging Schedule you can:

Email:

Phone: 0300 1234 151