Re: Pooling restrictions and viability - Public forum - Planning Advisory Service (PAS)
Open group
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Started - July 2012
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Last activity - May
Re: Pooling restrictions and viability
Since April 2010 a local authority collects numerous (more than 5) tariff based general infrastructure contributions to be used towards education, transportation, open space and sport in the local area. My understanding is that after April 2014 (or Charging Schedule adoption) these general contributions could prevent the LA from agreeing planning obligations with developers to provide site specific Regulation 122 compliant infrastructure if the general contributions would be capable of being used to fund that infrastructure? Am I correct? For example, after adopting a CIL Charging Schedule, a major development proposal is put forward to the LA which in itself would directly generate a need for a new school, public park and traffic junctions. The cost of providing the necessary infrastructure when added to the CIL liability would render the scheme unviable. The developer would like to provide the necessary infrastructure through a s106 agreement, the cost of which would exceed the CIL liability, and then seek to reduce CIL liability through an exceptional circumstances claim to bring the scheme back into viability. If I am correct above, they would not be able to do so as the obligation would exceed the 5 obligation pooling rule? The LA could put the necessary infrastructure on the Reg 123 list but as mentioned above the cost of the infrastructure exceeds the CIL liability from the development and, in practice, there are unlikely to be sufficient CIL reserves to make up the difference, particularly in the first few years post CIL adoption. If this is correct it seems that agreeing generic contributions now could have significant implications for the viability of major schemes in the future by restricting the use of s106 obligations and thus exceptional circumstances relief?
It's complicated, but I think your understanding is correct. You can't use CIL and S106 for the same infrastructure and you can't have more than five S106 obligations for the same thing, so if you're not careful you could end up with some real difficulties. My advice to our services now is that they have to be as specific as possible about why S106 contributions are required and how the money is to be spent. This fits in any case with the regulations about obligations being related to the specific development. Any request has to be based on the need for mitigation caused by that development proposal, NOT on a general assessment of need across the area. The new regulations were specifically introduced to prevent the operation of informal tariffs and to replace them with CIL - the difficulty is that many are having to ditch the tariffs before the replacement comes into operation, and, as you say, because CIL funds will take a while to accumulate. You are right also in that the CIL is not ideal for authorities where development is coming forward on large sites which may trigger their own needs for infrastructure. It is going to be important to get the Reg 123 lists right and to keep a close eye on the pooling restrictions, particularly if those sites come forward in a piecemeal fashion or are split across several landowners. It may be that you have to sacrifice some S106 contributions on smaller developments in order to make sure you have some 'spare' to use on the more significant sites - hardly ideal! In general, it would be much simpler if the restrictions on using S106 and CIL for the same infrastructure were relaxed. The restrictions are a blunt tool to ensure that developers don't double-pay for the same project - but it would be much simpler to create and publish a good audit trail to achieve the same purpose (as we do already for numerous grant-funded projects). The Reg 123 concept doesn't really allow for the complexities and frequently changing nature of delivery arrangements and development as a whole - I'm sure we'd all love to have perfect advance knowledge of what is going to happen in all circumstances, but things don't work like that! Likewise, I can see the purpose of the restrictions on pooling S106 contributions, but this is dealing with the symptom rather than the cause, e.g. the problem is not the pooling of contributions, it is that the contributions have not necessarily related to the infrastructure required for that site. Developers now have the legal tools to challenge such requests anyway due to the new statutory basis for the S106 tests. I can imagine situations whereby a developer or a set of developers are perfectly happy to have their S106 and CIL contributions combined towards a single scheme, if this helps to get important infrastructure delivered earlier. Why should that be prevented if there is local agreement? The priority should be to get the infrastructure delivered, not spending time on bureaucratic funding constraints.
Sorry for asking a very basic question, but if the Council accepts financial contributions through S106 agreements towards a proposed infrastructure scheme prior to adoption of a CIL Schedule, does this then prohibit using CIL for contributions to help pay towards the same infrastructure scheme after a CIL Schedule is adopted?
You can collect CIL for the same project that you have previously included in a s106 after you adopt your CIL. The regulation 123 list is to stop you charging the same development for infrastructure ( type or project) under both s106 and CIL. It will be quite common that CIL will replace the previous s106 pooling or tariff for larger infrastrcuture projects.
To add to my previous comment - Look at CIL as a fairly low level tax for development across your area that makes a contribution, and s106 as the focused mitigation tool it was originally designed to be ( before the world of tariffs and non necessary contributions). S106 is ideally used for site specific mitigation and Cil is ideally used for the broader infrastructure to support the overall development of an area. In some places this distinction will not work as the type of development needs to pool from more than 5 developments to provide mitigation and therefore this has to be addressed through CIL. You cannot double dip - the regs are very clear. If your reg 123 list specified that you are collecting CIL for a project you cannot also enter into a s 106 obligation. If you already have a s106 obligation signed and you are collecting for it you should not have a CIL payment for the same development - if you have s 106 obligations contributing to a pot and introduce CIL - then have CIL payments joining that pot, this is fine and you can spend them on the one project - and I am sure many will.
Just spent a few minutes scanning the most recent pages of posts on this question and Gilian's is possibly the closest that I have found that deals with my question, though not quite. I thought that I understood Reg 123 but then doubts began to surface. I am looking for confirmation about the extent to which the use of s.106 is restricted once April 2014 is reached or a acharging scehdule adopted if sooner. My initial optimistic reading - encouraged by a PAS workshop back in 2011 - had me thinking that a judiciously worded Reg 123 list, left an LPA with the ability to enter as many s.106 agreements as it liked for anything not in the list. This is not the case is it? So assuming you are only looking at non Reg123 infrastructure and the obligation would meet Reg122 tests, are the following true and why: 1). You cannot pool more than 5 obligations for the same infrastructure type or project 2) You cannot have more than 5 obligations for the same infrastructure type even if there is no connection between them for example because they are in different parts of your district.