Preliminary Draft Charging Schedule: Community Infrastructure Levy Schedule of Representations

Consultation 7th September – 2nd November 2015

Formal Representations Contents

Unique Page Reference Number UR 115a 1 Ur 115b 3 UR 774 5 UR 1285 7 UR 1291 12 UR 1366 14 UR 1452a 17 UR 1452b 18 UR 1460 21 UR 1812 22 UR 2240 23 UR 2274 25 UR 2369 27 UR 2371 31 UR 2402 97 UR 2589 99 UR 2608 100 UR 2658 102 UR 2659 103 UR 2660 121 UR 2661 122 UR 2662 123 UR 115a Community Infrastructure Levy Preliminary Draft Charging Schedule Response Form

If you do wish to make comments on the Preliminary Draft CIL Charging Schedule please complete the sections below. Comments should cover succinctly all the information, evidence and supporting information necessary to support or justify the comment and the suggested change.

All comments must be submitted in writing by 2nd November 2015 either by post to:

Planning Policy, Environment and Economy, 2nd Floor Civic Centre, Darwall Street, Walsall, WS1 1DG, or by email to: [email protected].

Please note that late representations will not be accepted. The CIL regulations require that any representations must be submitted to the examiner together with a summary of the main issues raised. Therefore, comments cannot be treated as confidential. They will be attributed to source and made available as public documents.

Your Details Name

Organisation (where Planning Prospects Ltd (on behalf of Norton & Proffitt relevant) Developments Ltd) Job Title (where Director relevant) Address (inc post 4 Mill Pool, Nash Lane, Belbroughton, Worcestershire code)

Telephone Number

Email Address

Q1. Do you have any comments to make on Walsall’s Preliminary Draft CIL Charging Schedule and supporting information?

Land identified as TC03 and TC26 in the emerging Walsall Town Centre Area Action Plan effectively relates to a single urban block, defined by Upper Hall Lane, Lower Hall Lane, George Street and High Street. Its development is being led by a single developer. However, whilst TC03 (the northern part of this land) falls into CIL Charging Zone 5, TC26 (the southern part) falls into CIL Charging Zone 3.

This seems arbitrary, and difficult to justify. Both parts of this land represent challenging, inner urban locations that are also difficult to separate in market, land value and development cost terms. It is therefore considered that this land in its entirety should be included within Zone 5, and not exposed to the additional charge that a Zone 3 designation would convey.

From the “Walsall Site Allocation, CIL Deliverability and Viability Study” (“the Study”) prepared for the Council by DTZ and published in September 2015 it appears that this apparent anomaly may arise from the analysis being undertaken at a relatively coarse, postcode sector, level of geography. Whilst this may be a necessity governed by data availability and the practical issue of undertaking borough wide studies there should still be scope to amend boundaries to reflect UR 115a the reality on the ground. Such an adjustment should be made so as to include both TC03 and TC26 in Charging Zone 5.

More generally, the £5 / sq m nominal charge for residential development should be removed throughout the charging schedule. The Study states (section 10.3) that, “As illustrated in the viability results set out in this report, there remain a number locations and sectors on which CIL is not considered to be realistically viable in typical circumstances. Therefore it follows that a zero tariff should be set to reflect these results.”

The Study goes on to note that other authorities have nonetheless set a nominal charge in such circumstances, although just a single example is identified (Leeds City Council). It states that, “…there is a case that [the nominal charge] would be unlikely to put delivery at risk” (emphasis added), before concluding that, “…it is not possible to substantiate this in economic viability terms.”

As such, the inclusion of the nominal charge may put delivery at risk, and make development unviable. There is no evidence to support this charge; indeed, conversely, the evidence points to CIL not being realistically viable in certain instances. The decision to include it in the Preliminary Draft Charging Schedule appears to be based on nothing more robust than the fact that it has been done in Leeds, i.e. a large city in a different region with entirely different circumstances. The CIL rates recommended in the Study (Table 1) do not include the nominal charge. Unless the nominal charge can be stood up with sound evidence directly related to Walsall then it should be removed.

Thank you for completing the questionnaire. UR 115b Community Infrastructure Levy Preliminary Draft Charging Schedule Response Form

All comments must be submitted in writing by 2nd November 2015 either by post to:

Planning Policy, Environment and Economy, 2nd Floor Civic Centre, Darwall Street, Walsall, WS1 1DG, or by email to: [email protected].

Your Details Name

Organisation (where Planning Prospects Ltd (on behalf of St Modwen relevant) Developments Ltd) Job Title (where Director relevant) Address (inc post 4 Mill Pool, Nash Lane, Belbroughton, Worcestershire code)

Telephone Number

Email Address

Q1. Do you have any comments to make on Walsall’s Preliminary Draft CIL Charging Schedule and supporting information?

St Modwen Developments Ltd have made separate representations to the Site Allocations Document (SAD), specifically in terms of the absence of an up to date assessment of housing need, and of a clear position in terms of the deliverability of identified housing sites. Those representations conclude that:

• The SAD does not draw on an up to date assessment of housing need

• It does not specify the deliverable housing supply

• It is therefore not possible to calculate how many years’ supply Walsall has, relative to the NPPF five year requirement

• It takes no account of and does not plan for the additional demand that will be placed on Walsall by exported housing requirement from Birmingham

The imposition of CIL has an obvious impact on the deliverability of housing. Until the issues raised in relation to housing supply and demand are resolved, such that UR 115b the Council can clearly demonstrate a schedule of what it considers to be deliverable sites to meet an identified need and establish a five year supply, it is not possible to comment on the extent to which the rates set out in the Preliminary Draft Charging Schedule are acceptable, or not. For example, if the deliverable sites rely heavily (say) on locations within Zone 3, then the ability of development within this Zone to support CIL should be subjected to far more detailed scrutiny than might otherwise be the case.

It is therefore suggested that further work and consultation on the Draft Charging Schedule should wait until the issues surrounding the fundamentals of the housing supply and demand are resolved. At that point St Modwen expect to make further representations in terms of the appropriateness of the proposed charges.

Thank you for completing the questionnaire. District Council House, Frog Lane UR 774 Lichfield WS13 6YZ Your Ref

25th September, 2015 Dear Sir,

Walsall Site Allocation Document Walsall Town Centre Area Action Plan Community Infrastructure Levy- Preliminary Draft Charging Schedule

Thank you for the opportunity to comment on the aforementioned documents.

None of the documents are accompanied by a sustainability assessment or Strategic Environmental Assessment, nor Habitat Regulations Assessment and it is therefore not possible to assess the impact of the documents upon sensitive habitats such as the Cannock Chase SAC. Evidence prepared to support the Lichfield Local Plan has identified that development within the boundary of Walsall Council will have an adverse impact upon the Cannock Chase SAC and a lack of evidence which can be considered in association with this consultation which seeks to address these responsibilities is concerning.

In addition I have noted from the evidence base there is a lack of a Green Belt Review and whilst reference is made within the document to consideration of this matter this does not appear to be currently provided within the evidence base.

Walsall Site Allocation Document and Walsall Town Centre Area Action Plan The Strategy as a whole which focuses development within existing centres, including Walsall Town Centre and seeks to re-use brownfield land is supported in principle.

Walsall Site Allocation Document Whilst Lichfield District Council is not the mineral planning authority, as this responsibility lies with Staffordshire County Council, I would like to make the following comments. With regard to mineral site MP5 Land at Brownhills Common, which is identified as dormant, the recognition that an assessment of the impacts upon Chasewater and Southern Staffordshire Coalfield Heaths SSSI is supported. However with regard to the impacts of mineral development upon sites of nature conservation value and especially where they link as part of the larger ecological network extending between Cannock Chase and Sutton Park at sub para ix the sites should be required to mitigate for their impact during the operation of the site not just retain the existing habitats as long as possible and then restore. The early phasing of the restoration should be sought where possible to enable the retention of a corridor for nature conservation.

I would also re iterate the previous general comments made at the issues and options consultation that where mineral development is located near to the Lichfield border it is requested that consideration be given to the impacts upon the residents who live beyond the Walsall administrative boundary particularly with regard to the impacts of transport and amenity and UR 774 suitable mitigation where necessary be secured.

The Council supports the reopening of the Walsall to Brownhills rail link (Policy T3) and beyond to Lichfield which is in accordance with adopted Lichfield District Local Plan Core Policy 5: Sustainable Transport and the identification of the canal Policy EN4: Canals which is in accordance with the objectives of the Lichfield Heritage Towpath Trail and Core Policy 9: Tourism of the adopted Lichfield District Local Plan.

Yours faithfully,

Development Executive (Spatial Policy and Delivery) UR 1285 Community Infrastructure Levy Preliminary Draft Charging Schedule Response Form

All comments must be submitted in writing by 2nd November 2015 either by post to:

Planning Policy, Environment and Economy, 2nd Floor Civic Centre, Darwall Street, Walsall, WS1 1DG, or by email to: [email protected].

Your Details Name

Organisation (where Tyler-Parkes Partnership relevant) Job Title (where relevant) Address (inc post code) 66, Stratford Road Shirley Solihull West midlands B90 3LP Telephone Number

Email Address

Q1. Do you have any comments to make on Walsall’s Preliminary Draft CIL Charging Schedule and supporting information? Please refer to accompanying letter of representation submitted on behalf of the Police and Crime Commissioner for West Midlands in response to the Community Infrastructure Levy Preliminary Draft Charging Schedule consultation.

Thank you for completing the questionnaire. UR 1285 tyler parkes

Planning and Architecture | advice | applications | drawings

Our ref. 8981 WTC AAP2 HRW

Planning Policy Team Economy and Environment Walsall Council Civic Centre Darwall Street Walsall WS1 1DG

Emailed Only to: [email protected]

30th October 2015

Dear Sir/Madam

Community Infrastructure Levy (CIL) Preliminary Draft Charging Schedule: Formal Representations on behalf of the Police and Crime Commissioner for West Midlands

We act for the Police and Crime Commissioner for West Midlands (PCCWM), formerly known as the West Midlands Police Authority, and are instructed to make representations on local development documents in respect of securing policy reference in such documents to matters including:

Recognising the community need for securing safe environments with crime reduction made a priority;

Requiring developers to demonstrate how proposals address community safety and crime prevention in Design & Access Statements, or other relevant planning application documents;

Promoting a safe and secure entertainment, leisure and evening economy;

Ensuring the timely and effective engagement of the police and other emergency services to ensure effective delivery of infrastructure projects required as a result of development growth with the recognition that the police are a social infrastructure delivery agency;

In appropriate cases, seeking financial contributions towards the additional expenditure burden placed on the PCCWM as a consequence of development proposals and growth;

tylerparkes drawing on experience. planning for approval. Telephone: 0121 744 5511 Address: Tyler Parkes, 66 Stratford Road, Shirley, Solihull B90 3LP E-mail: [email protected] Website: www.tyler-parkes.co.uk The Tyler-Parkes Partnership Ltd Registered in England No. 4102717 UR 1285

Ensuring the timely and effective engagement of the police and other emergency services in the planning processes in relation to matters likely to affect crime and fear of crime; and

Ensuring the timely and effective engagement of the police and other emergency services in relation to Counter-Terrorism matters. For example, Counter Terrorism Security Advisors can give appropriate advice concerning Vehicle-Borne Devices (VBD) mitigation and the Crowded Place agenda (particularly in relation to shopping areas and the night-time economy).

The PCCWM clearly has a statutory duty to secure the maintenance of an efficient and effective police force for its area and, of course, the Council is also statutorily required to consider crime and disorder and community safety in the exercise of its duties with the aim of achieving a reduction in crime. Crime and the fear of crime are material considerations throughout the development process and Section 17 of the Crime and Disorder Act 1998 should be paramount.

To this end, we confirm we have already made representations on behalf of PCCWM in respect of the Walsall Town Centre and Site Allocations consultation documents. We are grateful for the opportunity to comment on the Preliminary Draft CIL Charging Schedule.

The PCCWM would welcome the opportunity to become actively involved in the on-going infrastructure delivery policy strategy and the PCCWM would be pleased to meet with you to discuss any of the matters raised in this letter of representation.

In light of this, and the continued need for community safety, the PCCWM would wish to make the representations set out in the following paragraphs:

1. The PCCWM support the decision not to include Police operational development within the list of uses eligible for CIL charges.

2. The PCCWM is a community infrastructure provider which should be eligible for receipt of funds raised through CIL. The PCCWM therefore formally request that the Infrastructure Delivery Plan (IDP) identifies the Police and Emergency Services, as an infrastructure type capable of receiving CIL.

3. The PCCWM request that that they are engaged in the IDP reviews and prioritisation of the Regulation 123 List on an on-going basis. They wish to emphasise that it is important for the PCCWM to receive a proportion of CIL funds raised to contribute towards bridging the funding gap arising from the planned growth to ensure the standards of the Police Service are maintained to meet national and local strategic crime reduction objectives.

4. Due to ongoing financial and manpower constraints within the PCCWM as well as an internal review of the Police Estate, it is not possible for detailed funding gap information to be provided. We recognise that it will not therefore be possible to include detailed information on the scale of financial contributions required from developers towards additional police infrastructure within the current CIL viability calculations. However, this does not undermine the fact that the PCCWM are a legitimate recipient of CIL and Section 106 Agreement developer funding, as justified in the body of the letter below.

5. The PCCWM formally request that an enabling paragraph is included within the emerging CIL and supporting Infrastructure Delivery Plan (IDP) to ensure that the policy framework is in place for a detailed case to be made in the future, either as part of a CIL review or in response to individual planning applications or 2 UR 1285

redevelopment schemes. The suggested wording is set out below:

‘ ‘Emergency services represent a key form of social infrastructure, and it needs to be ensured that such provision is sufficient to support the population growth. The Council will engage with the emergency services in seeking to ensure that future infrastructure is delivered in the most appropriate locations.

There is currently an internal review of the Police Estate and a review and consolidation of police facilities throughout the whole of the West Midlands. More detailed information on the direct implications of the planned growth within Walsall local authority area will therefore be available once these reviews have been completed. It is inevitable that development on the scale currently proposed in the Black Country Core Strategy and emerging Walsall Development Plan Documents would place a significant financial burden on the Police and Crime Commissioner for West Midlands to retain and maintain an acceptable level of policing infrastructure with a consequent funding gap.’

Justification

6. In order to provide the social and community infrastructure necessary to fulfill the Walsall vision and growth objectives there will be a need for the PCCWM to receive financial contributions towards essential infrastructure from funds raised through CIL and Section 106 Agreements to bridge any funding gap. Provision of police stations and safety facilities are important in ensuring that the national and local strategic objectives of providing community facilities which help to create environments where crime and disorder, and the fear of crime, do not undermine quality of life or community cohesion are met.

7. The PCCWM is not dissimilar to many Council services in that it receives funding from a number of sources, however, as with other infrastructure providers, this is not sufficient to respond effectively to the level of growth proposed. In order to ensure the continued provision of an appropriate level of infrastructure by the PCCWM the identified funding gap will need to be ‘plugged’ by developer contributions, primarily gathered through the CIL.

8. There are many examples elsewhere in the country where planning authorities have included the Police within S106 agreements to receive developer contributions. For example in Thames Valley and Leicestershire developer funding has been secured for the police authority with sums of monies obtained ranging from £5,000 (for an extension to a business centre) to £660,000 (where a Sustainable Urban Extension was proposed). This illustrates that it is appropriate for police infrastructure to be funded in part from developer revenue.

9. The PCCWM formally recommend that Police infrastructure be included in the ‘Regulation 123 List’ which Walsall Council will base on their IDP to comply with national and local planning policy strategic objectives. The PCCWM clearly has a statutory duty to secure the maintenance of an efficient and effective police force for its area and, of course, the Council is also statutorily required to consider crime and disorder and community safety in the exercise of its duties with the aim of achieving a reduction in crime and helping to create environments where crime and disorder, and the fear of crime, do not undermine quality of life or community cohesion.

10. The National Planning Policy Framework (NPPF), March 2012, paragraph 156 sets out the strategic priorities for local planning authorities, including, ‘the provision of health, security, community and cultural infrastructure…’ Security is therefore a 3 UR 1285

national strategic planning objective for local authorities.

11. Police Stations and safety facilities are strategically important community facilities which help to create environments where crime and disorder, and the fear of crime, do not undermine quality of life or community cohesion, policy aims contained in the NPPF (paragraphs 58 and 69).

12. The Black Country Core Strategy, adopted February 2011, highlights the fact that the provision of appropriate infrastructure in a timely manner underpins the whole transformational and regeneration strategy. Policy DEL1 ‘Infrastructure Provision’ sets out the strategic policy requirements for the four Black Country local authority areas, Sandwell, Dudley, Walsall and Wolverhampton, in respect of ensuring appropriate levels of and funding for infrastructure needs arising from the scale of growth proposed in the Core Strategy.

13. The policy states that, ‘All new developments should be supported by the necessary on and off-site infrastructure to serve the development, mitigate its impacts on the environment, and ensure that the development is sustainable and contributes to the proper planning of the wider area’ and that this will be ‘secured through planning obligations, the Community Infrastructure Levy, planning conditions or other relevant means or mechanisms’ The Policy Justification text for DEL1 explains that ‘The scale of growth proposed in the Core Strategy will have significant impacts on the local environment and the capacity of a range of infrastructure and facilities. Without appropriate investment, future development will be neither sustainable nor acceptable. The definition of infrastructure in this context is wide, ‘including… locally specified requirements, such as crime prevention measures’;

My Client should be grateful if you would reflect these representations when preparing the CIL Draft Charging Schedule, Infrastructure Delivery Plan and Regulation 123 List.

We should be grateful if you would acknowledge receipt of this letter of representation.

Yours faithfully,

Senior Planning Consultant

4 UR 1291

Black Country Local Enterprise Partnership The Deckhouse, Waterfront West Dudley Road, Brierley Hill DY5 1LW

Chief Executive Walsall MBC Town Hall Lichfield St Walsall WS1 1TP

30th October 2015

Dear

Walsall MBC Sites Allocation Document (SAD) and Town Centre Area Action Plan (AAP) Preferred Options and Community Infrastructure Levy (CIL) Draft Charging Schedule Consultation

As you may be aware, at its meeting on 19th October, the Partnership Board was informed of Walsall’s consultation on its preferred options for the Sites and Allocations (SAD) and Town Centre Area Action Plan (AAP) and charging schedule for Community Infrastructure Levy (CIL). This letter sets out the LEP’s response to these consultations.

The Board welcomed the documents as being in line with, and building upon, the agreed Black Country Core Strategy and supporting the aims and objectives of the Strategic Economic Plan. In particular:-

 The LEP agrees that the preferred options show that development needs can be accommodated and delivered without amending the Green Belt and that the SAD will be able to allocate sufficient sites to deliver at least the Core Strategy housing requirements for the Borough to 2026 and to meet Core Strategy targets for industrial land.

 The Partnership supports the objective of the SAD and Employment Land Review (ELR) to re-engineer the industrial land supply to provide a good portfolio of opportunities across the Borough, but particularly in the M6, Black Country Route and Black Country Spine Road corridor.

 The scope for lesser quality industrial land to be considered for release, mostly to housing is welcomed. This would be a good way of continuing to provide a supply of housing from brownfield sources. It will be important however, that appropriate safeguards are observed, especially to ensure that remaining adjacent industry is not compromised. UR 1291

 The LEP notes that the Darlaston Strategic Development Area Access Project is now underway, and that the M6 Junction 10 will be improved. These improvements will play their part in making the Enterprise Zone sites in Darlaston more competitive. It is important that the LEP and local authorities continue to press and work for further improvements to transport connectivity across the Black Country for businesses and residents, including high quality rail services to connect Walsall with Wolverhampton, Birmingham and other main centres as soon as possible

 The LEP welcomes the continued support for investment in Walsall town centre, for shopping (especially comparison shopping), offices, leisure and other town centre uses. The LEP accepts the need to reflect economic and other trends and to ensure deliverability. The proposals for rather smaller amounts of shopping and office floorspace than is set out in the Core Strategy are therefore supported. The Plan recognises the need to act positively to promote and safeguard investment if the town centre is to avoid decline. The allocation of a Social Enterprise Zone in the St. Mathews Quarter is welcomed and the LEP will look to support this through joint working with social enterprises and the Council.

 It is noted that the CIL Preliminary Draft Charging schedule reflects work that shows it will be viable to levy a charge on large foodstore, retail warehouse developments (in any location), and on housing developments (in most, but not necessarily all, parts of the Borough) and that, despite charges being relatively low compared to other authorities, receipts will exceed the future income from Planning Obligations due to their scaled back nature and will be able to be used more flexibly towards the Borough’s infrastructure.

The Partnership therefore confirms its support for the proposals set out in the Plans and Schedule and looks forward to continuing to work with the Council and other partners to ensure their successful delivery supporting the overall ambitions for the Black Country as a whole.

Yours sincerely,

Chairman Black Country Local Enterprise Partnership UR 1366

Unit 2 Eclipse Office Park High Street Staple Hill Bristol BS16 5EL

T: 0117 956 1916 E: [email protected] F: 0117 970 1293 W: www.tetlow-king.co.uk

Planning Policy Date: 2 November 2015 Environment and Economy 2nd Floor Civic Centre Our Ref: MR\CB M5\0507-10 Darwall Street Walsall WS1 1DG

By email only: [email protected]

Dear Sir or Madam

RE: CONSULTATION ON THE PRELIMINARY DRAFT CHARGING SCHEDULE

We represent the West Midlands HARP Planning Consortium which includes all the leading Housing Association Registered Providers (HARPs) across the West Midlands. Our clients’ principal concern is to optimise the provision of affordable housing and to ensure the evolution and preparation of consistent policies that help deliver the wider economic and social outcomes needed throughout the region. As significant developers and investors in local people, HARPs are well placed to contribute to local plan objectives and act as long term partners in the community.

Overarching Comments

We welcome the opportunity to comment on the CIL Charging Schedule and the underlying viability evidence. Our main concern is to ensure that the delivery of affordable housing is not squeezed by CIL charges that are set too high. The delivery of affordable housing should be a fundamental consideration for local authorities when setting the rate of CIL.

The starting point should be delivering the affordable housing development plan targets; we consider it extremely important that the Council properly considers the overall impact of CIL on the delivery of affordable housing. Greg Clark MP, current Secretary of State for Communities & Local Government.

“A key point of the viability test for CIL [charge setting] is that it doesn’t make socially important development unviable, including social housing. I would expect that to be at the forefront of examiners’ minds”

In order to expedite this it is vital that all local authorities make delivering the affordable housing target/targets in the development plan their starting point to developing CIL and they must ensure that the charges do not “threaten delivery of the relevant Plan”. This is sought under paragraph 38 (reference ID 25-038-20140612) of the PPG on CIL, and was also highlighted as being necessary by the Inspector in his report on the Mid-Devon District Council CIL examination, of November 2012:

“The Council should have taken all its policy requirements, including affordable housing, into account when setting the CIL rate and on this basis it can be concluded that the viability evidence, on which the proposed charge of £90per/m2, is not robust.”

We are concerned that though the current CIL charge appears viable the Viability Study omits any worked examples so we cannot fully assess the assumptions included and their impact on the Charging Schedule.

Chairman Directors R S J Tetlow MSc Dip Surv FRTPI FRICS FCIH FRSA S Hinsley BA (Hons) MRTPI J M Adams BA (Hons) BTP MRTPI Tetlow King Planning Limited J Sneddon BSc (Hons) MRTPI Registered Office Unit 2 Eclipse Office Park High Street Staple Hill Bristol BS16 5EL Registered in England No. 2165802 J Stacey BA (Hons) Dip TP MRTPI Government Approved Constructionline Registered No. 8559 UR 1366

Evidence Base

We have been unable to fully assess the viability study as there are no worked examples of the schemes suggested. For example we would like to examine if the affordable housing threshold has been applied correctly to each scheme but because there is no worked example we do not know how all the assumptions have been applied.

To rectify this, the next viability study should include worked examples of the schemes for the consultees consideration.

Affordable Housing Assessment

5.8 of the viability study correctly identifies the affordable housing target of 25%, however it states that 100% of the offer will be affordable rent. Policy HOU3 of the Black Country Core Strategy states that the tenure will be worked out on a site by site basis. The CIL viability study should assess the impact a range of affordable housing tenures would have on the Charging Schedule, not just that of affordable rent.

Section 106 Agreements

The PPG (Reference ID: 25-018-20140612) stipulates that information on a Council’s ability to meet its affordable housing targets and the amounts raised in previous years through Section 106 Agreements should be included within the evidence base. If this has been provided it should be made clear in the documentation. If not, this is an omission which needs to be rectified.

Instalments Policy

The Council discuss the introduction of an instalments policy, we support this as having to pay large sums upfront means that developers will need to take on more debt so pay higher rates of interest. This in turn will affect their cash flow and therefore the development viability of their sites.

Older People’s Housing

A 60 bed care home scheme has been tested in the viability study and residential care homes have, as a result been excluded, we would like it clarified if this also includes Extra Care within the C2 use class.

Further to this Extra Care schemes within the C3 Use Class do often share some characteristics with general market housing, such as provision of each unit with its own front door, however the comparative differences in terms of their structure and funding are far greater.

Many Extra Care schemes provide a very significant degree of care, indeed frequently to a level comparable with that offered in a traditional care home. Unlike general market housing which benefits from being sold ‘off plan’, all of these forms of care and accommodation are funded entirely upfront and at risk by the provider, with sales only able to occur after completion. By their very nature, schemes also require dedication of a significant element of their floor space to care and communal facilities, thus the balance of gross saleable and un-saleable communal space is very much reduced from that of the general market housing.

With that in mind, the Statutory Guidance makes it clear that specialist forms of development should not be unduly affected by CIL charges:

“A charging authority that plans to set differential rates should seek to avoid undue complexity. Charging schedules with differential rates should not have a disproportionate impact on particular sectors or specialist forms of development” (Reference ID 25-021-20140612).

This should be heeded by the Council and testing undertaken so as to fully assess a suitable CIL level for Extra Care schemes within the C3 Use Class that does not render them unviable. UR 1366

Exemption and CIL Relief

Exemptions and CIL relief are important as it allows the Council some flexibility in ensuring that housing remains deliverable on a few specific sites, particularly in the current depressed market. Exceptional circumstances policy will only be applicable in a very small number of cases where the costs of items in a Section 106 Agreement are greater than CIL and where the exemption from CIL would not constitute State Aid. We consider that within the short and medium term allowing exceptions would assist the delivery of affordable housing in Walsall.

CIL Review

The Council should include a policy to carry out a review of CIL every three years or if there has been a 10% change in house prices. This should include a caveat which states that the review will be done ‘whichever is sooner’.

The above comments are intended to be constructive. We would like to be kept informed of this Community Infrastructure Levy’s progress and consulted on further stages; please ensure that the West Midland HARP Planning Consortium are retained on the LDF database, with Tetlow King Planning listed as their agents.

Yours faithfully

TOWN PLANNER For and On Behalf Of TETLOW KING PLANNING

CC Accord Housing Association Bromford Housing Group Midland Heart Limited Walsall Housing Group Waterloo Housing Association Ltd

– Housing Department

UR 1452b

Walsall Community Infrastructure Levy

Draft Infrastructure Delivery Plan Birmingham & Black Country Wildlife Trust proposals

Flood Risk / Water Infrastructure Infrastructure Estimated Total Estimated Funding Source Funding Gap in Evidence Base Comments Cost in £ Funding Available £ in £

Walsall Brooks £30,000 £0 None at present £30,000 Tame Anker Mease To identify individual Report (cf. Dudley (TAM) Catchment projects to benefit and Birmingham Management Plan + the water Brooks Reports Brooks Reports environment work in Dudley and Birmingham Implement site £125,000 £0 None at present £125,000 TAM Catchment 5 potential site specific projects in Management Plan projects (could be Tame Anker Mease scaled according to Catchment funding available or Management Plan priorities) Walsall Freshwater £100,000 £0 None at present £100,000 TAM Catchment 2 year development Invertebrate Network Management Plan + programme across Programme FIN development Walsall to identify work to date water course water quality improvements (could be scaled according to funding available or priority areas) Nature Conservation / Environmental Infrastructure Nature Improvement £500,000 £0 None at present £500,000 Birmingham & Black 25 potential initial Area Improvements Country Nature site projects (could Programme for Improvement Area be scaled according Walsall to funding available, priority areas or UR 1452b

projects focus) Local WildlifeSite £200,000 for 4 year £0 None at present £200,000 (cost for 4 B&BC LNP State of To ensure that local Assessments / programme of 100 year programme for Environment sites are in Management sites 100 sites) Dashboard Indicator favourable condition Programme Env 1 (can be scaled Defra Single Data list according to fund indicator 160-00 available) UR 1460 Community Infrastructure Levy Preliminary Draft Charging Schedule Response Form

All comments must be submitted in writing by 2nd November 2015 either by post to:

Planning Policy, Environment and Economy, 2nd Floor Civic Centre, Darwall Street, Walsall, WS1 1DG, or by email to: [email protected].

Your Details Name

Organisation (where Sport England relevant) Job Title (where Planning Manager relevant) Address (inc post code) SportPark 3Oakwood Drive Loughborough LE11 3QF Telephone Number

Email Address

Q1. Do you have any comments to make on Walsall’s Preliminary Draft CIL Charging Schedule and supporting information? Under the section: Likely continued use of S106, Sports facilities should be also be included along with those already mentioned.

Built Sport facilities should also be included in the examples infrastructure likely to be funded.

In all cases there needs to be robust justification for items it be included where it is on the 123 List or S106. Also while I accept that this just a preliminary draft charging schedule, Inspectors have held it that local authorities need to be precise in the projects which are to be funded.

Sport England is working with Walsall MBC on a new Playing Pitch Strategy which will be sufficient evidence for CIL contributions for playing fields. This because the document will have a costed prioritisation list of projects.

Thank you for completing the questionnaire. UR 1812 Community Infrastructure Levy Preliminary Draft Charging Schedule Response Form

All comments must be submitted in writing by 2nd November 2015 either by post to:

Planning Policy, Environment and Economy, 2nd Floor Civic Centre, Darwall Street, Walsall, WS1 1DG, or by email to: [email protected].

Your Details Name

Organisation (where Cannock Chase Council relevant) Job Title (where Planning Policy Manager relevant) Address (inc post Civic Centre, PO BOX 28, Beecroft Road, Cannock, code) WS11 1BG

Telephone Number

Email Address

Q1. Do you have any comments to make on Walsall’s Preliminary Draft CIL Charging Schedule and supporting information? - Note the rates for residential developments (£25-£50) proposed within the areas bordering Cannock Chase District are broadly comparable to our own CIL flat rate of £40 per sqm. - In relation to the IDP (and future Regulation 123 list) it states that as no housing allocations are proposed within the 8km zone of influence of the Cannock Chase Special Area of Conservation that no financial contributions are required for mitigation measures to address Habitat Regulation requirements. This quote only refers to ‘allocations’. Given that the SAD is not allocating small sites, it needs to be clarified if there are any small sites likely to come forward (forming part of the SAD housing supply) which are within the 8km as these would be liable for contributions. In addition, it should also be clarified that if windfall sites come forward then CIL will be top sliced for contributions towards the SAC as this is the approach being adopted by other authorities who have adopted / are proposing to adopt CIL who are affected by this issue.. - Would suggest that the Hatherton Branch Canal project is referenced on the IDP. UR 2240 Community Infrastructure Levy Preliminary Draft Charging Schedule Response Form

All comments must be submitted in writing by 2nd November 2015 either by post to:

Planning Policy, Environment and Economy, 2nd Floor Civic Centre, Darwall Street, Walsall, WS1 1DG, or by email to: [email protected].

Your Details Name

Organisation (where NATURAL ENGLAND relevant) Job Title (where Lead Adviser relevant) Address (inc post Parkside Court, Hall Park Way, Telford code) TF3 4LR

Telephone Number

Email Address

Q1. Do you have any comments to make on Walsall’s Preliminary Draft CIL Charging Schedule and supporting information?

Local Plan evidence base Natural England acknowledges the following text located within ‘Local Plan evidence’ on your website

http://cms.walsall.gov.uk/index/environment/planning/planning policy/local plans/evidence.htm Habitats Regulation Assessment (HRA)

The Black Country Core Strategy (BCCS) was subject to a Habitats Regulation Assessment (HRA) which was published in June 2010. The HRA Screening Report, following the precautionary principle, identified the possibility that proposals in the BCCS could have likely significant effects on three European Sites (the Cannock Chase SAC, the Humber Estuary SAC, SPA and Ramsar and the Severn Estuary SAC, SPA and Ramsar).

UR 2240

The Appropriate Assessment (AA) stage of the HRA process recommended that, as the strategic growth network identified in the BCCS would be delivered through individual authorities’ Site Allocation Documents or Area Action Plans, these future plans should re-examine any likely significant effects and any appropriate mitigation that may be needed.

Therefore a separate HRA process is being undertaken to accompany the production of the Site Allocation Document and Town Centre Area Action Plan. This process has narrowed the likelihood of any significant effects, as a result of the policies in the proposed Development Plan Documents, to Cannock Chase SAC only. There is an approach to mitigate the effects of increased recreational pressure from new residential development under consideration by the Local Authorities who constitute the Cannock Chase SAC Partnership. Walsall Council has dedicated significant amounts of resources and played an active role in discussions with the partnership over several years, but has been unable to negotiate a mutually acceptable outcome. As a result of this, and a recent Court of Appeal decision the Council is taking advice on how best to proceed and ensure the Council, as a competent authority under the Conservation of Habitats and Species Regulations (2010), fulfils its statutory responsibilities. A HRA Screening Report will be published following the completion of the HRA process. This report will update the identification of European Sites that may suffer likely significant effects, and what these effects might be, as a result of proposals in the two plans.

Natural England understands from this text that:

(i) An HRA screening has begun and has ruled out significant effects on European sites with the exception of Cannock Chase SAC.

We would welcome sight of the council’s screening to date.

(ii) The Council is in the process of taking advice regarding its role as a competent authority under the Conservation of Habitats and Species Regulations 2010 and in particular with respect to the Wealden District Council Court of Appeal decision.

Natural England would be happy to meet with the Council to facilitate completion of the HRA screening process.

UR 2274 Lead Adviser – North Mercia

Page 2 of 2 UR 2369 Community Infrastructure Levy Preliminary Draft Charging Schedule Response Form

All comments must be submitted in writing by 2nd November 2015 either by post to:

Planning Policy, Environment and Economy, 2nd Floor Civic Centre, Darwall Street, Walsall, WS1 1DG, or by email to: [email protected].

Your Details Name Organisation (where Persimmon Homes West Midlands relevant) Job Title (where relevant) Graduate Planner Address (inc post code) Persimmon Homes West Midlands Venture Court Broadlands Wolverhampton WV10 6TB Telephone Number Email Address

Q1. Do you have any comments to make on Walsall’s Preliminary Draft CIL Charging Schedule and supporting information?

Thank you for providing Persimmon with the opportunity to inform the production of Walsall Council’s CIL Charging Schedule. This representation forms the formal response of Persimmon Homes West Midlands.

Persimmon is committed to working with Walsall Council in enhancing the town through the development and provision of both market and affordable housing. Persimmon is keen and committed to ensure development requirements in Walsall can be sustainably delivered through comprehensively planned development. When preparing new planning policies and determining planning applications the NPPF makes it clear that local planning authorities must take account of market signals and changing market conditions over time and should “address potential barriers to investment” (para 21). Further on it states in paragraph 205 that “Where obligations are being sought or revised, local planning authorities should take account of changes in market conditions over time and, wherever appropriate, be sufficiently flexible to prevent planned development being stalled”.

Persimmon Homes welcome the transparency and the efficiency that the introduction of the Levy would hopefully provide. It should be noted that section 106 agreements can cause lengthy delays to a scheme and there is a desire for a shorter, more certain and simpler system, which CIL aims to deliver. We welcome the Levy as a more transparent and certain method of delivering infrastructure, providing that additional developer contributions are not also sought over and above the CIL, and developments are not ‘double-charged’. The crucial factor for developers is certainty, as this reduces the level of risk for everyone involved. If introduced and enforced correctly CIL can offer a high degree of certainty when making cost assumptions, particularly in the price developers are prepared to pay for land.

The Government has indicated its intentions to encourage use of the Levy whilst scaling back planning obligations where possible. With many authorities not grasping this concept, it is extremely positive to see Walsall Council providing guidance on the how section 106 will still be used in conjunction with CIL. UR 2369 However, it is important to remember that we should be encouraging development in order to help boost the economy. Walsall’s Levy, particularly the rate, may have the opposite effect. Effectively, local authorities who set lower levels of development contributions would possibly attract more development. Consideration needs to be given to the New Homes Bonus which is another important source of funding. This can also be spent locally and a lower Levy may result in more development, which in turn leads to more overall funding thanks to a greater New Homes Bonus receipt from the Government.

Arguably, the draft charging schedule produced by Walsall may have the opposite effect. Neighbouring authorities (of which have adopted CIL) have much lower rates (Appendix 1). As a national housebuilder, Persimmon Homes has the privilege of working with multiple authorities and has taken time to compare surrounding CIL rates within similar market areas i.e. Black Country. The result of this comparison work shows that Walsall has proposed a substantially higher Levy rate than the majority of the West Midlands, whilst Dudley Metropolitan Borough Council (DMBC) have the same top end rate of £100 per square metre (per sqm), within the ‘lower valued’ zones, DMBC do not have the nominal £5 rate that Walsall propose and allow development free of any CIL charge.

Persimmon believe the proposed Levy has been set at a significantly higher rate due to the domination of Green Belt in the district, knowing that there is currently no requirement to release this land for development. Lichfield District Council for example, also dominated by Green Belt has a Levy set at £55 per sqm. This is much more encouraging to larger developers making some sites viable that would otherwise be undevelopable. Persimmon understands that Lichfield is a much larger authority with wider areas to ‘grow’ and a higher demand to release the Green Belt for development. The shortfall of Birmingham’s housing figures over the period 2011 – 2031 as stated in Peter Brett Associate’s (PBA) Stage 3 Report of Strategic Housing Needs Study is currently projected at a total of 37,600 units. The Black Country will have to work together with Birmingham City Council as the PBA report explores and discusses ways in which this can be achieved. Zone 1 of the proposed CIL covers the proportion of Walsall that adjoins Birmingham and with a Levy rate of £100 per sqm; it gives the impression of unwillingness to aid the Black Country and Birmingham in meeting the projected housing shortfall and could potentially stifle development. This would have implications for housing delivery in not only Walsall, but the wider Birmingham and Black Country Housing Market Area.

An Authority which has set a CIL rate that encourages development is Stafford Borough Council and Persimmon believe Walsall Council would benefit substantially if a similar approach was adopted. Stafford has set a Levy of £100 per sqm. If a scheme proposes 12 or more units the £100 per sqm decreases to £70 per sqm. This is offering developers an incentive to invest in more land and develop larger schemes (where applicable). As mentioned above, the Levy rate will be crucial in the next 10 - 20 years, especially considering the Black Country requirement to cooperate with Birmingham in meetings its shortfall.

Walsall will be subject to a large amount of smaller ‘infill’ development and would gain the benefits of the £100 per sqm in zone 1. Charging a lower rate will encourage development but will not force Walsall to develop on land unnecessarily as policy constraints will remain in place. Lower CIL rates across the authority will prepare the Council for the future when the land is and has to be released. It will become more desirable to larger developers and increase the level of competition for land which in turn will potentially increase land values.

To ensure viability, the costs of any requirements such as affordable housing, development standards, and infrastructure contributions along with others, added to the usual development costs and mitigation costs, should provide competitive returns to a willing land owner and willing developer, as stated in National Planning Policy paragraph 173. It is important that the Council has mechanisms in place to take into account site specific circumstances and have methods in place that deal with the situations where individual schemes cannot achieve the targets set out in policy. This possibly creates 2 issues, firstly the issue of cost and secondly, the issue of circumstances for exceptional relief.

In terms of cost, it is important to note that market prices are set by the ‘wider market’, which is comprised predominantly of older houses. New builds are such a small percentage of the overall market, that there is a real limit to how much higher they can be priced. Developers set the sale price of their properties using local market values and knowledge, rather than the cost of development. To ensure they do not make a loss, the developer may be required to pay less for the land, thereby reflecting the cost of the Levy on the land value. A critical factor, therefore, is the question of land supply, and whether there are sufficient landowners who would be willing to bring their land forward for development at a potentially lower price. As mentioned above, a lower Levy would impact directly on the land values, driving the price up due to the competitiveness of the location and demand in the area. With increasing pressure and need to release this land for development it is questionable as to whether land owners will be prepared to sell land in the near future at a lower price. UR 2369 In terms of exceptional relief, Persimmon would strongly urge the Council for the inclusion of a policy that would see exceptional relief for specific schemes that would be classified as unviable once the full Community Infrastructure Levy charge is paid.

Concluding Comment

In setting the charging schedule, financial viability should be a key consideration in order to determine the extent to which development can bear the potential costs of meeting CIL contributions.

Planning obligations through section 106 are “intended to make acceptable development which would otherwise be unacceptable in planning terms” (ODPM Circular 05/2005). In the current economic climate whilst development may have impacts, for example, on the local highway network (where mitigation is accepted through section 106), developments that create new housing are seen to bring immediate benefits to the community. Additional obligations being imposed by the Council, such as affordable housing, open space and education contributions can bring into question the overall financial viability of the scheme. There needs to be a balance between section 106 obligations and CIL charge to ensure the viability of each individual development.

Persimmon would advise Walsall Council to take caution in setting the Levy rate so high e.g. £100 for ‘Zone 1’. A recent study undertaken by Turley Associates titled ‘Housing Update England 2014 – 19’ states that Walsall Council cannot demonstrate a five year housing land supply (currently calculated at 3.81 years). The assessment completed by Peter Brett Associates estimates Birmingham will have a shortfall of 37,600 units that need to be distributed across the Black Country and the wider Housing Market Area. Whilst Walsall Council are struggling to meet current housing targets it would be beneficial to set a Levy rate that would attract developers to the area and encourage larger sites (where applicable) to be developed. As mentioned previously, there are a substantial amount of benefits that the Local Authority receive prior and post development including new homes bonus and the numerous economic benefits that come with having a larger population. This shortfall in Birmingham will potentially increase the demand in areas such as Walsall and neighbouring authorities. This is why Walsall Council should see the current situation as an opportunity upon which to capitalise, rather than to avoid.

Persimmon would encourage the Council to be cautious in demanding a CIL charge in challenging market areas (the £5 Levy rate) and explore the option of CIL free zones, as neighbouring authorities have. We would urge the Council to be flexible and allow a ‘no-minimum’ requirement on affordable housing. This would ensure viability and facilitate deliverability.

I trust this makes our position clear. I would be happy to meet to discuss any aspect of our representation should you require any further information. I would also be grateful if you kept me informed on the progress of the document and how our concerns and those of others will be taken on board.

Yours sincerely, For and on behalf of PERSIMMON HOMES

Graduate Planner UR 2369

Appendix 1 Local Authority Walsall Cannock Dudley Sandwell Stafford Lichfield Shropshire Zone 1 £100 £40 £100 £15* £70* £55 £80 Zone 2 £75 £40 £75 £15 £40 £25 $40 Zone 3 £50 £40 £50 £15 £0 Zone 4 £5 £40 £20 £15 Zone 5 £5 £40 £0 £15

*£30 for 14 *£100 for units or 11 units or less less

*please note that each Council separate and charge differently throughout their authority area. The table is solely for comparative reasons e.g. comparing the upper and lower rates.

Thank you for completing the questionnaire.

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JLL Supermarket (Medium) Appraisal 1,500 sq m

Development Appraisal Prepared by Jones Lang LaSalle Limited JLL 30 October 2015 UR 2371 APPRAISAL SUMMARY JLL JLL Supermarket (Medium) Appraisal 1,500 sq m

Summary Appraisal for Phase 1

Currency in £

REVENUE

Rental Area Summary Initial Net Rent Initial Units ft² Rate ft² MRV/Unit at Sale MRV Supermarket (Medium) 1 16,146 14.00 226,044 226,044 226,044

Investment Valuation Supermarket (Medium) Market Rent 226,044 YP @ 5.5000% 18.1818 (0yrs 6mths Rent Free) PV 0yrs 6mths @ 5.5000% 0.9736 4,001,327

GROSS DEVELOPMENT VALUE 4,001,327

Purchaser's Costs 5.80% (232,077) (232,077)

NET DEVELOPMENT VALUE 3,769,250

NET REALISATION 3,769,250

OUTLAY

ACQUISITION COSTS Residualised Price (Negative land) (30,745) (30,745) CONSTRUCTION COSTS Construction ft² Rate ft² Cost Supermarket (Medium) 16,146 ft² 140.07 pf² 2,261,570 2,261,570

Developers Contingency 5.00% 113,079 Section 106 £30psm 16,146 ft² 2.79 pf² 45,047 158,126 Other Construction Abnormals 12.50% 282,696 282,696

PROFESSIONAL FEES Professional Fees 13.00% 294,004 294,004 MARKETING & LETTING Letting Agent Fee 10.00% 22,604 Letting Legal Fee 5.00% 11,302

ARGUS Developer Version: 6.50.002 Date: 30/10/2015 UR 2371

APPRAISAL SUMMARY JLL JLL Supermarket (Medium) Appraisal 1,500 sq m 33,907 DISPOSAL FEES Sales Agent Fee 1.00% 37,693 Sales Legal Fee 0.50% 18,846 56,539 FINANCE Debit Rate 6.500%, Credit Rate 0.000% (Nominal) Land (1,873) Construction 86,818 Total Finance Cost 84,946

TOTAL COSTS 3,141,042

PROFIT 628,208

Performance Measures Profit on Cost% 20.00% Profit on GDV% 15.70% Profit on NDV% 16.67% Development Yield% (on Rent) 7.20% Equivalent Yield% (Nominal) 5.50% Equivalent Yield% (True) 5.69%

IRR 50.87%

Rent Cover 2 yrs 9 mths Profit Erosion (finance rate 6.500%) 2 yrs 10 mths

ARGUS Developer Version: 6.50.002 Date: 30/10/2015 UR 2371

JLL Supermarket (Medium) Appraisal 2,000 sq m

Development Appraisal Prepared by Jones Lang LaSalle Limited JLL 30 October 2015 UR 2371 APPRAISAL SUMMARY JLL JLL Supermarket (Medium) Appraisal 2,000 sq m

Summary Appraisal for Phase 1

Currency in £

REVENUE

Rental Area Summary Initial Net Rent Initial Units ft² Rate ft² MRV/Unit at Sale MRV Supermarket (Medium) 1 21,528 14.00 301,392 301,392 301,392

Investment Valuation Supermarket (Medium) Market Rent 301,392 YP @ 5.5000% 18.1818 (0yrs 6mths Rent Free) PV 0yrs 6mths @ 5.5000% 0.9736 5,335,103

GROSS DEVELOPMENT VALUE 5,335,103

Purchaser's Costs 5.80% (309,436) (309,436)

NET DEVELOPMENT VALUE 5,025,667

NET REALISATION 5,025,667

OUTLAY

ACQUISITION COSTS Residualised Price (Negative land) (40,994) (40,994) CONSTRUCTION COSTS Construction ft² Rate ft² Cost Supermarket (Medium) 21,528 ft² 140.07 pf² 3,015,427 3,015,427

Developers Contingency 5.00% 150,771 Section 106 £30psm 21,528 ft² 2.79 pf² 60,063 210,834 Other Construction Abnormals 12.50% 376,928 376,928

PROFESSIONAL FEES Professional Fees 13.00% 392,006 392,006 MARKETING & LETTING Letting Agent Fee 10.00% 30,139 Letting Legal Fee 5.00% 15,070

ARGUS Developer Version: 6.50.002 Date: 30/10/2015 UR 2371 APPRAISAL SUMMARY JLL JLL Supermarket (Medium) Appraisal 2,000 sq m 45,209 DISPOSAL FEES Sales Agent Fee 1.00% 50,257 Sales Legal Fee 0.50% 25,128 75,385 FINANCE Debit Rate 6.500%, Credit Rate 0.000% (Nominal) Land (2,497) Construction 115,758 Total Finance Cost 113,261

TOTAL COSTS 4,188,056

PROFIT 837,611

Performance Measures Profit on Cost% 20.00% Profit on GDV% 15.70% Profit on NDV% 16.67% Development Yield% (on Rent) 7.20% Equivalent Yield% (Nominal) 5.50% Equivalent Yield% (True) 5.69%

IRR 50.87%

Rent Cover 2 yrs 9 mths Profit Erosion (finance rate 6.500%) 2 yrs 10 mths

ARGUS Developer Version: 6.50.002 Date: 30/10/2015 UR 2371

JLL Supermarket (Medium) Appraisal 2,500 sq m

Development Appraisal Prepared by Jones Lang LaSalle Limited JLL 30 October 2015 UR 2371 APPRAISAL SUMMARY JLL JLL Supermarket (Medium) Appraisal 2,500 sq m

Summary Appraisal for Phase 1

Currency in £

REVENUE

Rental Area Summary Initial Net Rent Initial Units ft² Rate ft² MRV/Unit at Sale MRV Supermarket (Medium) 1 26,910 14.00 376,740 376,740 376,740

Investment Valuation Supermarket (Medium) Market Rent 376,740 YP @ 5.5000% 18.1818 (0yrs 6mths Rent Free) PV 0yrs 6mths @ 5.5000% 0.9736 6,668,879

GROSS DEVELOPMENT VALUE 6,668,879

Purchaser's Costs 5.80% (386,795) (386,795)

NET DEVELOPMENT VALUE 6,282,084

NET REALISATION 6,282,084

OUTLAY

ACQUISITION COSTS Residualised Price (Negative land) (51,242) (51,242) CONSTRUCTION COSTS Construction ft² Rate ft² Cost Supermarket (Medium) 26,910 ft² 140.07 pf² 3,769,284 3,769,284

Developers Contingency 5.00% 188,464 Section 106 £30psm 26,910 ft² 2.79 pf² 75,079 263,543 Other Construction Abnormals 12.50% 471,160 471,160

PROFESSIONAL FEES Professional Fees 13.00% 490,007 490,007 MARKETING & LETTING Letting Agent Fee 10.00% 37,674 Letting Legal Fee 5.00% 18,837

ARGUS Developer Version: 6.50.002 Date: 30/10/2015 UR 2371

APPRAISAL SUMMARY JLL JLL Supermarket (Medium) Appraisal 2,500 sq m 56,511 DISPOSAL FEES Sales Agent Fee 1.00% 62,821 Sales Legal Fee 0.50% 31,410 94,231 FINANCE Debit Rate 6.500%, Credit Rate 0.000% (Nominal) Land (3,121) Construction 144,697 Total Finance Cost 141,576

TOTAL COSTS 5,235,070

PROFIT 1,047,013

Performance Measures Profit on Cost% 20.00% Profit on GDV% 15.70% Profit on NDV% 16.67% Development Yield% (on Rent) 7.20% Equivalent Yield% (Nominal) 5.50% Equivalent Yield% (True) 5.69%

IRR 50.87%

Rent Cover 2 yrs 9 mths Profit Erosion (finance rate 6.500%) 2 yrs 10 mths

ARGUS Developer Version: 6.50.002 Date: 30/10/2015 UR 2371

Report to Birmingham City Council

by Mr Philip Staddon BSc, Dip, MBA, MRTPI

an Examiner appointed by the Council

4 June 2015

PLANNING ACT 2008 (AS AMENDED)

SECTION 212(2)

REPORT ON THE EXAMINATION OF THE DRAFT BIRMINGHAM CITY COUNCIL COMMUNITY INFRASTRUCTURE LEVY CHARGING SCHEDULE

Charging Schedule submitted for examination on 4 February 2015

Examination hearings 30 April 2015

File Ref: PINS/P4605/429/8 UR 2371

Non-Technical Summary

This report concludes that the Birmingham City Council Draft Community Infrastructure Levy Charging Schedule provides an appropriate basis for the collection of the levy in the area. The Council is able to demonstrate that it has sufficient evidence to support the Schedule and can show that the levy rates would be set at levels that will not put the overall development of the area, as set out in its draft Birmingham Development Plan 2031, at risk. The proposals will secure an important funding stream for infrastructure necessary to support planned growth in the city.

Introduction

1. This report contains my assessment of Birmingham City Council’s draft Community Infrastructure Levy (CIL) Charging Schedule in terms of Section 212 of the Planning Act 2008 (as amended). It considers whether the schedule is compliant in legal terms and whether it is economically viable as well as reasonable, realistic and consistent with national guidance set out in the National Planning Practice Guidance (NPPG).

2. To comply with the relevant legislation and guidance the local charging authority has to submit a charging schedule that should set an appropriate balance between helping to fund necessary new infrastructure and the potential effect of the proposed CIL rates on the economic viability of development across its area.

3. The basis for the examination, on which Hearing sessions were held on 30 April 2015, is the ‘updated’ Draft Charging Schedule (DCS), which consolidates the originally published DCS with changes proposed through a later Statement of Modifications (SOM). The original DCS was published for public consultation between 29 September 2014 and 10 November 2014 and the SOM in the month before 4 March 2015. For the avoidance of doubt, all further references in this report to the ‘DCS’ relate to the updated version incorporating the SOM changes.

4. The DCS proposals include CIL charges for residential development, student housing, a particular type of retail development and for certain hotel developments.

5. The proposed CIL charges for ‘residential’ development relate to three residential market zones defined on a map in the DCS. The first zone relates to the ‘High’ value market value areas which comprises the northern part of the city’s administrative area (the Sutton Coldfield locality) and parts of the south-west of the city’s area (including the suburbs of Harborne, Bournville and King’s Norton); a CIL charge of £69 per square metre (psm) is proposed in this zone. The second zone is notated as ‘Green Belt

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Development’ and is drawn around a proposed urban extension west of the A38 at Langley; CIL would be zero rated in this zone i.e. £0 psm. All of the remainder of the city’s administrative area would fall within the defined ‘Low’ market value areas where it is proposed that the CIL charge would also be zero rated. The DCS makes clear that residential development by ‘Social Housing Providers registered with the HCA and Birmingham Municipal Housing Trust development’ would be zero rated for CIL; this exemption would include any market housing developed by these providers to cross subsidise affordable housing provision.

6. Student housing developments would incur a CIL charge of £69 psm in all locations except for the urban extension zone at Langley (where it would be zero rated).

7. Retail CIL charges would apply only to ‘retail convenience’ developments for schemes with a floorspace exceeding 2,000 square metres.

8. Hotel developments would be subject to a £27 psm CIL charge within a defined city centre zone. Elsewhere such developments would be zero rated.

9. For completeness, the DCS lists zero rated CIL charges for other types of retail development and for industrial / employment, offices, leisure, education, health ‘Extra Care’ and ‘all other development’.

Background evidence – the city, the development plan, infrastructure needs and economic viability evidence

Birmingham

10. Birmingham is a major city with a population of just over 1 million. Since the 1980s the city has been through economic restructuring, estate regeneration and transformation of its environment. The city is a major employment centre, drawing in workers from across the West Midlands. It is a leading European business destination with an economic output of £20bn per annum. Many international companies are based in the area, including Jaguar Land Rover, Kraft, KPMG, Deutsche Bank and GKN. The local economy is supported by five universities and six major colleges, supporting over 73,000 undergraduate and postgraduate students. Birmingham is a major centre for culture, sports, leisure and shopping with a number of world class venues and over 30 million people visiting a year. In addition to the city centre’s shopping areas, there is a network of over 70 local centres serving its urban and suburban communities. It is a major, diverse and dynamic city.

The Birmingham Plan 2031 – Submission Draft

11. The emerging Birmingham Plan 2031 sets out the Council’s vision and strategy for the sustainable growth of the city in the period to 2031. The Plan seeks to respond to identified challenges that include an anticipated

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population growth of 150,000 (estimated to result in 80,000 new households), the need to respond to climate change and the need to accommodate and deliver the longer term levels of growth needed through development beyond its existing built up and administrative areas.

12. Once adopted, the Plan will set out the statutory framework to guide decisions on development and regeneration in Birmingham up to 2031 and will replace the strategic content of earlier plans and documents. It sets out how and where new homes, jobs, services and infrastructure will be delivered and the type of places and environments that will be created.

13. The production of the Plan, by its very nature and scope, has been a complex and major endeavour. Indeed, its preparation can be traced back to 2007 and it has evolved over the years seeking to respond to new evidence, issues and changes in national planning policy. The Plan was submitted for examination in July 2014 and that ‘submission draft’ set out the following overall levels of growth:

• 51,100 additional homes.

• 2 regional investment sites (20 and 25 hecatres) and an 80 hectare strategic employment site.

• About 270,000 sq.m. gross of comparison retail floorspace (by 2026).

• A minimum of 745,000 sq.m. of office floorspace.

• New waste, recycling and disposal facilities.

14. In terms of the Plan’s housing proposals, it seeks to maximise the level of housing delivery within the built up area, with a focus on re-using existing urban land. Key locations for such development will be the city centre, a portfolio of defined ‘growth areas’ and, more generally, sites spread throughout the urban and suburban areas. However, the Plan recognises that this cannot accommodate the full levels of population growth and its associated housing requirements and proposes that land at Langley should be released from the Green Belt to accommodate a Sustainable Urban Extension (SUE) of about 6,000 new homes. The balance of growth that would not be met in the city’s area (circa 30,000 new households) is expected to be delivered beyond its administrative boundaries. The Plan explains (paragraph 4.7) that the Council will seek to work collaboratively with neighbouring authorities to achieve this end.

15. The Plan’s employment proposals seek to deliver an additional 100,000 jobs in the period to 2031, through a focus on the city centre, existing ‘core employment areas’ and the promotion of growth areas. The largest strategic employment allocations are an 80 hectare site at Peddimore and ‘regional investment sites’ at Aston and Longbridge.

16. The Plan’s approach to retail development is linked strongly to the city’s established hierarchy of centres, with most planned new floorspace directed

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to the higher tiers of the city centre itself, the sub-regional centre at Sutton Coldfield and three ‘district growth points’, with the large network of district and local centres serving specific community catchment areas.

17. The promotion of Birmingham’s significant tourism and cultural roles is set out in the Plan, along with the importance of providing supporting facilities such as hotels.

18. The Plan seeks to promote the provision of good quality student accommodation and there is policy support for purpose built student accommodation schemes on-campus and, subject to specified criteria, in off- campus locations.

The Birmingham Plan 2031 – Examination progress and CIL implications

19. The Plan was submitted for examination in July 2014. Following the Hearing sessions, the appointed Inspector issued his interim findings in January 2015. These require the Council to carry out further work before the examination can continue. The further work relates to three broad areas. First, the need for an updated and more robust objective assessment of housing need. Second, the need to undertake additional work on the Plan’s Sustainability Appraisal (SA), specifically concerning the approach to Green belt releases. Third, the need to bring forward modifications to address the housing ‘shortfall’ (that will need to be met by other Councils).

20. The Council advised that the additional work was now complete and it was awaiting the Inspector’s more detailed report setting out the need for proposed modifications to make the plan sound. A further round of public consultation on the proposed modifications and the revised SA is planned to take place over the summer. The Council hopes to be in a position to adopt a modified Plan either late this year or early in 2016.

21. The Council is keen to progress its CIL proposals now that ‘pooling’ restrictions on S.106 contributions have come into force and, more generally, to establish a funding stream for infrastructure to support its growth strategy. The progression of the CIL proposals ahead of the conclusion of the Birmingham Plan 2031 examination process raises some issues, along with some widely held misconceptions, about the CIL legislative / regulatory requirements and the associated guidance.

22. In terms of the statutory provisions, there is nothing contained within either The Planning Act 2008 or The Localism Act 2011 that makes having an up to date and adopted Plan in place a prerequisite of the implementation of a CIL regime. Many of the Councils that have adopted CIL to date have the benefit of recently examined and adopted plans, whilst others have submitted their CIL proposals for examination alongside their development plans (as suggested in paragraph 175 of the NPPF). These scenarios are at the ideal end of the spectrum and ensure, in theory at least, that the CIL proposals are conceived in terms of the most up to date strategic policy

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framework defining ‘the development of an area’1 that CIL is intended to support. However, not all prospective charging authorities will be able to present a CIL schedule alongside freshly adopted development plans, due either to the inevitably long gestation period and / or (as is the case in Birmingham) if they encounter complexities and delays in the process.

23. The important point is the evidence base itself, rather than the procedural status of the development plan (although clearly these matters are closely linked). The Birmingham Plan 2031 is a mature policy document that has been the subject of extensive public consultation and is supported by a detailed evidence base. Whilst there remain issues to be resolved, modifications to be made and further consultation to be undertaken, I am satisfied that these matters do not present any obstacle to the principle of progressing a CIL regime.

24. The ‘development’ of the city, in the terms envisaged in S.205 of the Planning Act 2008, is clear, and the strategy of concentrating most growth on largely brownfield sites within the urban area, supported by strategic Green Belt releases, is very unlikely to change. There is a sufficiently stable development plan backcloth to enable high level CIL viability assessments to be made. However, my comments should not be treated as any predetermination of the Plan’s outcome and, at the examination Hearings, the Council did concede that there could be circumstances that would require the CIL proposals to be revisited e.g. any changes to the Green Belt housing release (which has its own tightly drawn CIL zone). However, those are matters to be addressed if and when they arise.

Infrastructure planning evidence

25. The draft Birmingham Plan 2031 is supported by an Infrastructure Delivery Plan (IDP) which assesses and analyses the city’s future infrastructure needs. It is a wide ranging document that identifies and assesses a diverse range of physical, environmental and social infrastructure to enable growth to occur and to facilitate the delivery of key proposals. It includes known infrastructure costs and identifies funding sources and lead agencies. It is a ‘live’ document and the Council is continually updating it.

26. The Council has undertaken an infrastructure funding gap assessment. For the entire ‘essential’ infrastructure set out in the IDP, it assesses a net funding gap of circa £461.7 million in the plan period (to 2031). Although I am not wholly convinced by the categorisation of certain infrastructure as ‘essential’, i.e. that development and planned growth could not occur without such projects, the evidence of major infrastructure demands is compelling. The most significant funding requirements relate to transport and education.

27. The Council estimates that its CIL receipts in the plan period would be circa £90.7 million. It estimates a potential ‘average annual CIL receipt’ of circa £5.6 million, with almost half (£2.8 million) coming from convenience retail

1 S.205(2) of The Planning Act 2008

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(supermarkets), with residential development (higher value zone) generating £1.7 million and lesser amounts from city centre hotels (£0.6 million) and student housing (£0.5 million).

28. I have some reservations about the robustness of these figures which have been arrived at by looking backwards (actual past delivery in 2009 – 14) rather than forward (planned delivery) for the various CIL paying development types. This may have some credence for residential development but is unlikely to be the case for commercial developments such as hotels, supermarkets and student housing schemes, which will tend to progress when the market identifies capacity, but will cease if the finite market is considered to be sated. Furthermore, the Council’s projections have not factored in the effect of discounting CIL for existing floorspace, which is likely to be a factor on many former employment sites and will reduce receipts. In my view, the Council may have overestimated the likely CIL receipts.

29. However, these factors do not affect my overarching conclusions that the funding gap is substantial and that CIL revenue would make an important contribution to filling that gap. Taking the Council’s assessed gap and revenue estimates at face value, CIL may equate to about 20% of the gap (although I think the true figure may be less). Even allowing for a degree of caution around the definition of ‘essential’ infrastructure, the evidence provides a compelling justification for introducing a CIL regime.

30. The Council has produced a Draft Regulation 123 list that sets out the infrastructure that it intends to fund, partly or wholly, through CIL receipts. The list includes a wide variety of infrastructure types covering transport, education, arts, parks, allotments, public realm etc. The document includes a clarification note on the continued use of S.106 agreements for site specific infrastructure and further clarifies that all infrastructure requirements associated with the SUE at Langley will be secured by S.106 mechanisms (and not by CIL).

31. Whilst I do not doubt the comprehensive nature of the list, it could be improved in a number of ways. First, it would be helpful to sort the projects and initiatives into clear infrastructure types, as this would provide much greater clarity and transparency. Second, in many cases the ‘infrastructure’ needs much greater definition as some projects just appear as locations e.g. ‘Iron Lane, Stechford’ and ‘The Drum Arts Centre’; readers should be able to understand the destiny and purpose of any CIL receipts. Third, the Council’s intentions on the use of CIL in respect of education projects are not clear from the current draft; this type of infrastructure appears on the Regulation 123 but also appears as an exclusion (to be secured by S.106 agreements) on ‘large’ sites. The list did not define ‘large’, although it became clear at the Hearing sessions that the reference related only to the SUE. All of these matters were discussed with the Council at the Hearing sessions and the Council agreed to address the issues through redrafting, which I would encourage it to undertake prior to the implementation of any CIL regime.

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Economic viability evidence – methodology, data sources and assumptions

32. The Council commissioned consultants to undertake a Viability Assessment (VA) to support its CIL proposals. The VA was completed in October 2012 and has been supplemented with additional topic based viability evidence in December 2013. These supplements included additional viability testing in respect of the SUE, employment, retail and a paper covering ‘miscellaneous’ matters (an update on residential sales values and allowances for a ‘viability cushion’). The evidence also includes a letter from the Council’s consultants providing a commentary and analysis of developments relating to retirement homes, sheltered housing and ‘extra care’ schemes. Hereafter, I refer to this collective of evidence as the VA.

33. The VA employs a residual valuation approach. In simple terms, this involves deducting the total costs of the development from its end value to calculate a residual land value (RLV). That residual land value is then compared to assumed ‘benchmark’ land values (BLV) to test viability. If the RLV is higher than the BLV, the scheme would be judged viable and vice versa. Where there is a surplus above the assumed BLV this enables a maximum potential CIL value to be computed.

34. The testing of residential scheme viability included nine residential development ‘typologies’, along with a bespoke testing of the SUE assumed development. The nine typologies were devised by the Council to represent what it considered to be representative of likely future developments in the city and were informed by the sites in its Strategic Housing Land Availability Assessment (SHLAA). Four of the typologies were small schemes below the Council’s affordable housing threshold and comprised: 1 house, 2 flats, 6 houses and 10 flats. The five larger development typologies, above the affordable housing threshold, were: 15 flats, 50 flats, 15 houses, 50 houses and 200 houses. The SUE testing was based on an assumed strategic scale development of 5,000 homes (a slightly lower figure than the 6,000 contained in the draft Birmingham Plan 2031). In my view, the range of sites tested is comprehensive and well grounded.

35. To undertake the viability analysis, the modelling on residential developments entailed making assumptions about a range of development costs and revenues.

36. To establish sales value assumptions the Council’s consultants undertook a high level review of the city’s housing market and defined seven ‘market value areas’ comprising defined postcodes. For each of these areas, average house price values (psm) were established from a combination of Land Registry data, the consultants own in-house expertise and a stakeholder workshop (held in March 2012). The average sales values ranged from the lowest of £1,615 psm (postcodes B7 and B4) to the highest of £2,585 psm (postcodes B15, B17, B73, B74 and B75). Although the data set appeared to be comprehensive, it was a little dated, with most of the values being drawn from 2011 and 2012. However, the Council advised that since this time, property prices had risen by about 7% in the city, suggesting that the values employed are conservative and cautious.

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37. The establishment of robust BLVs is clearly of great importance in this type of viability modelling. The Council considers that most new housing development will come forward on land previously in employment use but it also expects some element of supply from existing residential sites, particularly in the lower value areas where developments seek to increase density and / or provide a better quality / higher value housing product.

38. The Council established BLVs based on a triangulation of Valuation Office Agency (VOA) data, known transactions and the CIL stakeholder workshop. It concluded that there were distinct differences between the higher and lower value areas of the city. In the higher value areas (market value areas 1, 2 and 3) it assessed a BLV of £1.1 million per hectare for existing employment land (which includes a premium of 20% on existing use value) and £1.9 million per hectare for existing housing land. In the lower value areas (market value areas 4, 5, 6 and 7), the figures were £595,000 per hectare and £740,000 per hectare respectively.

39. For the greenfield SUE, the Council assumed a BLV of £250,000 per hectare, which is reasonable in my view, and within the range indicated in research contained in the Department for Communities and Local Government (DCLG) study2.

40. Base build costs for residential schemes were drawn from Building Cost Information Service (BCIS) rates. The build costs for the SUE reflected the economies of scale achievable on large volume housing sites. As with sales values, the build cost assumptions were a little dated (Quarter 1 2012) and clearly do not include recent years’ inflation. However, I am satisfied that build cost changes can be considered ‘in the round’ alongside sales value increases and the viability ‘buffers’ employed in the CIL rate setting.

41. In addition to base build costs, the modelling included reasonable allowances for enabling costs and contingencies. For the SUE, much greater enabling costs are anticipated, reflecting the costs of providing infrastructure and services to a large greenfield site. The modelling assumed a cost of £20,000 per plot on the SUE, which would sit within the £17k – £23k range suggested in the Harman Report3 for ‘strategic infrastructure and utility costs.’

42. Costs assumptions in respect of fees, contingencies and finance conformed with accepted industry norms. Developer profit was assumed at 20% of Gross Development Value (GDV) on market housing and 6% of GDV on affordable housing, which I consider reasonable.

43. Affordable housing was modelled at policy compliant levels in terms of proportion (35%), tenure split and the assumed absence of grant subsidy. Lower levels of affordable housing (0% and 20%) were also modelled to

2 Cumulative Impacts of Regulations on House Builders and Landowners - Research Paper. Published by DCLG in 2011 (although commissioned by the previous Government in 2008).

3 Viability Testing Local Plans – Local Housing Delivery Group (Chaired by Sir John Harman) June 2012.

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provide sensitivity tests.

44. The modelling assumed that there would be no residual S.106 planning agreement costs, as the Council considers that CIL will largely replace the use of S.106 agreements and obligations. However, it is apparent from the Council’s Draft Regulation 123 list that some element of site specific mitigation may still be required to be secured through S.106 agreements. In most cases, this is likely to be limited but some consideration of these costs is required in the assessment of the modelling results and CIL proposals. For the SUE, substantial S.106 costs are anticipated and the modelling tested levels of £10,000 per plot and £20,000 per plot.

45. The commercial development modelling used similar assumptions and methodology. Notional schemes for care homes, offices, employment, retail, hotels, student accommodation, leisure, education and health developments were all tested. The assumptions employed for the notional commercial development schemes all appeared reasonable, including the assumed rents, yields, build costs, profit levels and BLVs.

Conclusions on background evidence

46. The Birmingham Plan 2031 provides a clear strategic planning framework to guide the sustainable growth of Birmingham. Although the Plan is yet to be adopted and more work and consultation is required, it is sufficiently mature and settled to enable the viability effects of CIL to be assessed. The Plan’s strategy has a strong growth focus on brownfield sites within the existing urban areas of the city, supplemented by some strategic Green Belt releases for housing and employment.

47. The IDP identifies the infrastructure required to support Birmingham’s planned growth in population and jobs. The evidence demonstrates a sizeable infrastructure funding gap that justifies the introduction of a CIL regime. CIL receipts will help to reduce that gap, although a significant funding shortfall will remain. There is some uncertainty over the level of CIL receipts and the Council would be wise to monitor performance closely once a CIL regime is operational.

48. Overall, the background economic viability evidence for both residential and commercial development that has been used is reasonable, robust, proportionate and appropriate. The interpretation and use of that evidence in defining the proposed CIL rates and zones is discussed more fully below.

Residential Development CIL – zones, charges and appraisal findings

The ‘High’ value CIL charging zone (£69 psm)

49. This zone comprises market value areas 1, 2 and 3 where sales values are generally acknowledged to be higher than in the remainder of the city. The modelling of the residential development typologies in these areas returned generally strong positive viability. Smaller schemes below the affordable

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housing threshold fared particularly well, with most remaining viable at theoretical CIL rates of £250 psm. Larger schemes with affordable housing at full policy target levels, returned lower theoretical rates, but still achieved an average of £90 psm.

50. Taking all of the results together, the Council assessed that a CIL charge of £115 psm represented the level that the ‘majority’ of schemes (at least 70%) could sustain. It then applied a viability buffer of 40% to arrive at its proposed CIL charge for this zone of £69 psm. In my view, that is a reasonable buffer and allows most schemes to remain viable. I have also considered the effects of increases in sales values and build costs and conclude that, overall, these are likely to increase the comfort margin.

51. At the Hearing sessions, the Council advised that the SHLAA sites in the urban area (i.e. excluding the SUE) currently totalled 33,395 potential new homes and of these 6,173 (or 18.5%) would be in the ‘High’ value zone and would incur the £69 psm charge. That is a modest but nonetheless important proportion of overall planned housing delivery. In my assessment, the evidence demonstrates that the delivery of these planned homes will not be unduly threatened by the imposition of the CIL charge. Indeed, in most cases, schemes can comfortably absorb the charge, which would fall within a range of 2 – 5 % of development costs.

The ‘Low’ value CIL charging zone (£0 psm)

52. This zone comprises market values areas 4,5,6 and 7. The modelling of the residential development typologies in these areas returned less strong viability results. Although the lowest value area 7 did not return any positive viable results, the ‘majority’ of schemes across the whole zone, including larger schemes with full policy target affordable housing levels (35%), were able to support a maximum theoretical CIL charge of £55 psm.

53. Were the same approach to buffers to be employed (as in the ‘High’ zone) this would suggest a CIL charge of £33 psm. However, the Council has elected to apply a £0 rate. At the Hearing sessions, the Council explained that its primary concern was to maintain viability and maximise affordable housing content.

54. Strictly speaking, the £0 charge is a straightforward matter. A nil charge clearly cannot threaten viability across this zone. However, some have questioned the Council’s approach that effectively exempts most new homes that are planned in Birmingham (81.5% of the SHLAA sites) from CIL charges, given that all development will contribute to infrastructure needs and the evidence does suggest that modest charges could be sustained. The Council will also need to consider the much more limited role for S.106 agreements once a CIL regime is in place.

55. At the Hearing sessions, the Council advised that it does not rule out a more widespread application of CIL charges in the future, but its immediate priority is maximising viability and delivery and avoiding any pressure to compromise on affordable housing requirements in areas where viability is

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demonstrably lower. The Planning Practice Guidance (PPG) does advise that, where evidence points to low viability, a charging authority should consider setting a low or zero levy rate in that area (Reference ID: 25-021- 20140612). The guidance further advises that there is no requirement for a proposed rate to exactly mirror the evidence (Reference ID 25-019- 20140612).

The ‘Low’ / ‘High’ zone boundary challenges

56. The Council’s two-zone CIL approach for most of the city (the SUE is dealt with separately below) does, perhaps unavoidably, create some tensions around the zoning boundaries. There were two notable challenges. First, a property estate company sought revisions to the zoning boundaries in the Hagley Road and Bristol Road areas (south-west of the city centre) i.e. to effectively move its holdings from the ‘High’ to the ‘Low’ zone. Second, a commercial site owner on Lifford Lane, similarly sought a ‘Low’ zone status and proposed that a site specific review mechanism should apply.

57. With regard to the first set of challenges, evidence was submitted which purported to show that property values in these areas were more akin to the ‘Low’ zone and revised alignments of zone boundaries (departing from their postcode origin) were promoted. I have considered these submissions carefully but I am not persuaded that the Council should be required to make the suggested modifications. There are a number of reasons that have led me to this view.

58. First, the Council’s two-zone approach, based on postcodes, is simple, supported by its evidence base and avoids ‘undue complexity’4. Second, the strategic and broad-brush approach to CIL proposed by the Council inevitably means that its two large zones will contain a range of sales values, above and below the averages adopted for the value areas. Third, the evidence presented by the representor did not convince me that sales values in these localities represented a clear value watershed. Fourth, these are densely developed urban areas and there is no development envisaged that would be critical to the delivery and implementation of planned growth in the city. Finally, it should be noted that the Council’s evidence base suggests that even in the ‘Low’ zone, the ‘majority’ of tested developments could support CIL contributions. For all of these reasons, I do not consider the suggested modifications are justified or necessary.

59. The second set of challenges were more site specific but included similar concerns about inconsistencies in sales values in the ‘High’ and ‘Low’ zones. The site lies in the southernmost section of the ‘High’ zone and may come forward for re-development post 2018. It has the capacity to deliver several hundred homes. Whilst I can understand the site owner’s desire to avoid the costs of CIL on what may be a complex development project, no viability evidence was available to suggest that CIL could not be sustained (as there is no scheme at this point in time). The suggestion of a mechanism to review the Low / High value status on a site by site basis is not workable

4 National Planning Practice Guidance - Paragraph: 021 Reference ID: 25-021-20140612

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with a CIL regime which, on adoption, is a fixed instrument (until the point of any review and revision). The Council advised that it would be reviewing its CIL regime in advance of this particular site coming forward. I am satisfied that there is no need to amend the zone boundaries and the review mechanism is a more appropriate method to address these matters, should it prove necessary.

The SUE charging zone (£0 psm)

60. The Council’s testing of the assumed SUE development at Langley used a range of enabling and S.106 costs. They are unavoidably broad brush assumptions given the relatively early life cycle stage of the proposals. However, a ‘best case’ viability scenario, employing the lowest enabling works cost (£70 million) and the lowest assumed S.106 contributions (£10,000 per plot), did not achieve the assumed greenfield BLV. The actual RLV under that scenario was, by my calculation, £205,185 per hectare, which is well below the assumed BLV of £250,000. Higher enabling and S.106 costs clearly reduce the RLV further, although a positive land value is achieved in all test scenarios.

61. The Council envisages that the SUE will come forward through a comprehensive outline planning application. Its preferred approach is to deal with the SUE’s substantial and specific infrastructure requirements in a self-contained manner through a S.106 planning agreement. This approach is reflected in its proposed CIL zone, defined around the site boundaries of the SUE, and its proposed £0 CIL charge. The evidence confirms that the development is unable to sustain CIL charges on top of the heavy burden of anticipated site enabling costs and S.106 obligations.

Specialist residential development types for older people.

62. The VA evidence suggested that residential scheme viability for retirement housing schemes falling within the C3 Use Class would display similar overall viability characteristics to conventional housing schemes. However, the Council recognised that those variants involving significant elements of support and associated facilities that led to a C2 Use Class classification were less viable. Indeed, the testing suggested that such schemes would only be viable in the highest value area.

63. I am satisfied that the Council’s approach to differentiate by Use Class, applying a £0 rate to Class C2 uses, reflects the evidence. A modification to the DCS is required to reflect the Council’s intention to apply a zero CIL rate to all Class C2 uses (rather than just the ‘Extra Care’ developments stated in the DCS). This is reflected in my recommendations.

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Commercial CIL – viability appraisal evidence and proposed CIL charges

The ‘zero –rated’ commercial development types

64. The VA’s testing of office, industrial, warehouse, education and health developments demonstrated that these could not currently support CIL charges. The evidence suggested that commercial leisure developments had some potential to support very modest CIL charges. The Council does not propose CIL charges for any of these development types at this point in time and there would be no material impact on the amount of CIL receipts, due to the very limited number of such schemes anticipated to come forward.

Retail development

65. The VA tested a range of different types of retail development, in varying locations, sizes and covenant strengths. The initial 2012 VA testing generated potential CIL rates of £380 psm for a supermarket (5,000 sq. metres); £170 psm for a ‘non food retail park’ development (9,290 sq. metres) and £150 psm for a suburban food store (400 sq. metres). The Council’s further testing in 2013 included a finer grained analysis of convenience retail types. It tested notional schemes of 1,500 sq. metres, 2,700 sq. metres and 5,000 sq. metres supermarket combined with a petrol filing station. The CIL results with a 40% buffer applied were, respectively, £0 psm, £470 psm and £260 psm (assuming 20% profit on GDV).

66. The Council’s DCS proposes to apply a retail CIL charge of £260 psm solely to ‘convenience’ stores (supermarkets) over a 2,000 sq. metre size threshold (all other retail types would be zero rated). The Council advised that the city was generally well catered for with a network of centres and supermarkets and its greater priority was increasing comparison shopping floorspace to meet modelled capacity. That said, the Council’s latest retail needs assessment suggests that, once commitments are allowed for, a growth in the range of 39,700 – 53,600 sq. metres of new convenience floorspace may be achievable in the period 2012 - 2031. The Council also acknowledged the importance of the smaller supermarket formats, and the discount operators, in terms of meeting future demands, driving consumer choice and addressing localised gaps in provision.

67. The key examination issue in respect of the proposed retail CIL charge relates to the size threshold at which it would apply. The later 2013 evidence clearly indicates that smaller format supermarket stores cannot sustain a CIL charge, whereas a 2,700 sq. metre store can sustain a quite significant CIL charge (of £470 psm). Representations from the discount supermarket sector argued that there was no clear rationale for the Council’s proposed 2,000 sq. metre threshold and that there were discount formats above this threshold and below the tested 2,700 sq. metres that simply could not sustain the CIL charge. Given that further stores of this nature are anticipated in Birmingham (one operator suggested up to ten sites were in the pipeline), it was argued that these schemes could face viability issues.

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68. This is quite a difficult area to arbitrate as the variable is not simply one of unit size and the economies of scale but of operator covenant strength (and associated rents and yields). In effect, the Council is seeking to promote a floorspace as a proxy to where low and high covenant strengths are likely to sit. Whilst there is nothing wrong with that approach, I share representor views that the evidence does not demonstrate that 2,000 sq. metres should be that watershed – it is simply a figure selected to fall in the middle ground between the unviable and viable tested schemes. At the Hearing sessions, the Council accepted that the use of 2,700 sq. metres was a more robust evidence based threshold, and indicated that it would not be unduly concerned about the use of the higher figure. I recommend that modification, as it will align the charging schedule more closely with the evidence and remove any potential risk to the viability of smaller formats of convenience retail development.

Hotel development

69. The VA testing of notional 150 bed hotel schemes indicated that there were differences in viability between city centre schemes and those elsewhere. City centre schemes generated a potential maximum CIL rate of £45 psm, whereas those elsewhere displayed weaker viability. The Council’s proposed application of a £27 psm CIL charge in its defined city centre zone is supported by the evidence. Such a charge includes a healthy (40%) buffer from the maximum and I do not consider that hotel development viability will be compromised.

Student accommodation development

70. The VA tested notional student housing schemes of 50 and 250 units and both returned maximum CIL levels of £115 psm. The proposed application of a £69 psm CIL charge (which includes a 40% buffer) is supported by the evidence. The Council indicated that, although this market is mature, there are signs of some activity and new schemes may come forward in the Plan period.

Overall Conclusions

71. The evidence demonstrates that, subject to some minor modifications, the overall planned development of Birmingham will not be put at risk if the proposed CIL charges are applied. Two minor modifications are required. The first is a clarification that all Use Class C2 development will be zero rated for CIL purposes. The second is to increase the ‘retail convenience’ size threshold, at which CIL would apply, from 2,000 sq. metres to 2,700 sq. metres. Subject to these changes, I conclude that, in setting the CIL charges, the Council has used appropriate and available evidence which has informed assumptions about land and development values and likely costs. The CIL proposals are anticipated to achieve an important income stream that will help to address a well evidenced infrastructure funding gap.

72. However, my conclusions must include some comment on the very ‘light touch’ nature of the CIL proposals. Indeed, until at least the first review, the

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vast majority of development planned in the city will not be contributing through CIL (or S.106 planning agreements) to the infrastructure requirements identified in the IDP. I understand the Council’s desire to nurture growth, particularly given its reliance on growth beyond its own administrative boundaries, but care is needed to ensure that growth is appropriately supported by infrastructure (which must be funded). Earlier in this report, I also expressed some reservations about the robustness of CIL revenue estimates and whether these will fully materialise. These are not criticisms of the Council but they are important factors for the Council to monitor and review and may assist its thinking in terms of the timing and scope of its first formal CIL review. I recommend that the Council considers undertaking such a review within three years of adoption of the schedule.

73. Overall, I conclude that, subject to my recommended modifications, the Birmingham City Council Draft Community Infrastructure Levy Charging Schedule, as modified by its Statement of Modifications, satisfies the requirements of Section 212 of the 2008 Act and meets the criteria for viability in the 2010 Regulations (as amended). I therefore recommend that the Charging Schedule be approved.

LEGAL REQUIREMENTS

National Policy / The Charging Schedule complies with national policy / Guidance guidance.

2008 Planning The Charging Schedule complies with the Act and the Act and 2010 Regulations, including in respect of the statutory Regulations (as processes and public consultation, and consistency with amended) the development plan framework for Birmingham and is supported by an adequate financial appraisal.

P.J. Staddon Examiner

Attached: Appendix A – Recommended Modifications

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Appendix A

Modifications that the Examiner specifies so that the Charging Schedule may be approved.

These modifications should be read in conjunction with Examination Document SO2 ‘Draft Charging Schedule – Version 1 – Updated January 2015.’

Modification Modification Number

EM1 Page 8 – Table – left hand column

• Delete ‘Extra Care’ and insert ’Use Class C2’

• Add footnote 3 referencing above - The Town and Country Planning (Use Classes) Order 1987 (as amended)

EM2 Page 8 – Table

Second development type ‘Retail convenience’, middle column:

• Delete ‘>2,000 sqm’ and insert ‘>2,700 sqm’

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Community Infrastructure Levy Charging Schedule

Version 3 Updated July 2015 UR 2371

Contact:

Economy Directorate Birmingham City Council

Click:

www.birmingham.gov.uk/cil

Call:

Visit: Office: 1 Lancaster Circus Birmingham B4 7DJ

Post: PO Box 28 Birmingham B1 1TU

You can ask for a copy of this document in large print, another format or another language. We aim to supply what you need within ten working days.

Call 0121 303 4820

If you have hearing difficulties please call us via Typetalk 18001 0121 303 4820 or email us at the address above.

Plans contained within this document are based upon Ordnance Survey material with the permission of Ordnance Survey on behalf of the Controller of Her Majesty’s Stationery Office.

Birmingham City Council CIL Draft Charging Schedule Page 2 UR 2371

1.0 What is the Community Infrastructure Levy? ...... 5 2.0 CIL and other planning documents ...... 5 3.0 The Infrastructure Development Plan ...... 6 4.0 The Community Infrastructure Levy Preliminary Draft Charging Schedule – Viability Study (GVA) ...... 6 5.0 The Draft Charging Schedule ...... 6 5.1 Additional Retail Testing ...... 6 5.2 Additional Employment Testing, including Sustainable Urban Extension (Peddimore Employment Proposal) ...... 7 5.3 Additional Miscellaneous Testing and Analysis ...... 7 5.4 Residential Urban Extension ...... 7 5.5 Affordable Housing Providers and Birmingham Municipal Housing Trust 7 6.0 The CIL Examination Process ...... 8 7.0 CIL Charges ...... 9 7.1 Charging Zone Maps ...... 10 8.0 Regulation 123 list ...... 15 9.0 What will be liable for CIL?...... 15 10.0 What will be exempt from CIL? ...... 15 11.0 Calculation ...... 16 12.0 Who pays? ...... 16 13.0 When and how will I pay? ...... 16 14.0 Can I pay my CIL in kind? ...... 17 15.0 Instalments ...... 18 16.0 Developer contributions and S106 Agreements ...... 19 16.1 Section 106 agreements ...... 19 16.2 Section 278 agreements ...... 19 17.0 Percentage to neighbourhoods ...... 20 18.0 Review ...... 20 19.0 Monitoring ...... 21 20.0 Sustainability ...... 21 Glossary and Further Information/FAQs...... 22 Is CIL payable if existing buildings are being demolished or converted? ..... 22 Is CIL payable if my scheme does not need planning permission?...... 22 Do charities have to pay CIL? ...... 22

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What if I am building social housing? ...... 23 What if I am building my own home? ...... 24 What about residential extensions or annexes? ...... 24 How do you decide if a building has been abandoned? ...... 24 What about phased developments? ...... 24 What happens if I want to alter my permission? Do I pay twice? ...... 25 Can I appeal against a CIL decision? ...... 25 What happens if I have overpaid? ...... 25 What if no one assumes liability for the development? ...... 25 What happens if I don’t pay? ...... 25 Can CIL be spent outside the Birmingham boundary? ...... 26 Links to other relevant information: ...... 27

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1.0 What is the Community Infrastructure Levy?

The Community Infrastructure Levy (CIL) is a charge on new buildings in England and Wales. It is a mechanism to ensure certain types of new development contribute to the infrastructure needed to support that development. This infrastructure will support the growth aspirations for Birmingham as outlined in the Birmingham Development Plan which includes proposals for over 50,000 new homes and 100,000 new jobs. This infrastructure could include new schools, roads, parks and public transport improvements.

The charge provides a greater level of certainty for developers and land owners regarding their contributions and will be charged per net square metre of new development.

We will need approval from Full Council to begin charging a CIL, and subject to this approval, we intend to commence charging on Monday 4th January 2016.

2.0 CIL and other planning documents

To adopt a CIL, we need bring together “relevant evidence” which shows our aspirations for growth, the infrastructure needed to support that growth and its cost. We also need to show that the proposed charge will not discourage new developments from being built.

These documents are available on our website at www.birmingham.gov.uk/cil and www.birmingham.gov.uk/plan2031/evidencebase and include the following:

 The CIL Charging Schedule  CIL Charging Maps  CIL Economic Viability Assessment (GVA report) – October 2012  The Birmingham Development Plan (Pre Submission Version)  The Birmingham Development Plan Policies Map  Site Delivery Plan  Infrastructure Delivery Plan  Preliminary Draft Charging Schedule information and consultation responses  Regulation 123 list

The Birmingham Development Plan (BDP) was submitted to the Secretary of State for Examination on July 1st 2014, and the Examination Hearing Sessions have now finished. It is anticipated that the BDP will be adopted in 2016.

You can find the Birmingham Development Plan here www.birmingham.gov.uk/plan2031

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3.0 The Infrastructure Development Plan

The Infrastructure Delivery Plan (IDP) identifies the infrastructure needed to support the growth of the City. This document helps to identify the types and costs of infrastructure, the delivery timetable and gaps in funding. The IDP is a collaborative effort and we have worked with a wide range of departments and stakeholders who have a role in delivering that infrastructure. The IDP clearly demonstrates a funding gap for the delivery of critical infrastructure which CIL will help to address. You can find the latest version of the IDP here

4.0 The Community Infrastructure Levy Preliminary Draft Charging Schedule – Viability Study (GVA)

We appointed GVA to carry out a viability study. We wanted this study to look at the viability of various hypothetical developments across the City. When assessing viability, GVA considered planning policy requirements (e.g. standards for sustainable buildings) which can add to the cost of a new development. This study shows possible CIL charges across the City, with different charges by type and location of those developments.

5.0 The Draft Charging Schedule

Following the Preliminary Draft Charging Schedule consultation, a number of responses raised specific issues regarding retail use categories, residential assumptions and values and charges specifically in relation to the Green Belt proposals in the Birmingham Development Plan. We requested GVA conduct further analysis to address the concerns mentioned.

In addition to supplementary testing, we have further amended the charges to take into account the current economic situation. While the economy is no longer in recession, the recovery is delicately balanced. CIL charges should not prejudice this recovery, and must strike an appropriate balance between funding for infrastructure and CIL’s impact on economic viability. The proposed charges contained within the CIL also take into account unforeseen costs, additional planning policy requirements and on site Section 106 (S106) contributions. Once adopted, there is the possibility of an early review and potential amendment to CIL charges as the economy continues to recover.

5.1 Additional Retail Testing

Additional, hypothetical development schemes were tested (specifically convenience stores, city centre retail and convenience store with petrol station). The scenarios tested are high level and cannot be used as an example of what an individual developer or operator would be prepared to pay for land at any given location. The appraisals assume a zero contribution towards S106 costs. The paper can be found here.

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5.2 Additional Employment Testing, including Sustainable Urban Extension (Peddimore Employment Proposal)

Additional employment scenarios were tested, specifically in relation to industrial development on a greenfield site and offices in the prime and fringe of the city centre, to demonstrate potential charges for employment use. The scenarios tested are high level and cannot be used as an example of what an individual developer or operator would be prepared to pay for land at any given location. To test the viability of a range of schemes on Green Belt employment land, three different scenarios were tested – pre-let industrial use, speculative industrial use and speculative business park use. The papers can be found here.

5.3 Additional Miscellaneous Testing and Analysis

This paper updates the initial viability testing from October 2012. This paper reviews the original, proposed CIL rates and gives a greater viability “cushion” for CIL charges. This ensures the CIL will remain viable even with the varying circumstances for each development scheme. The paper can be found at here.

5.4 Residential Urban Extension

Additional testing was undertaken for a large, strategic scale development of 5,000 units. This is a hypothetical example which mirrors the potential characteristics of the scheme recommended in the Sustainable Urban Extension (SUE). It is assumed that developments will be undertaken by large regional and national developers who benefit from economies of scale.

The testing assumes there will be significant on-site mitigating requirements for such a large scale development, and therefore S106 contributions are unlikely to be pooled with S106 agreements for other schemes.

Testing was undertaken assuming S106 contributions equivalent to £10,000 and £20,000 per dwelling. Further tests also assumed 20% and 35% affordable housing. In all cases, the assumptions adopted give a positive residual land value which suggests the scheme is deliverable; however the appraisals do not equal or exceed the adopted base land values. Therefore, the testing recommends a zero charge for residential development in the Green Belt. The paper can be found at here.

5.5 Affordable Housing Providers and Birmingham Municipal Housing Trust

Amended guidance for the CIL was published on the Planning Practice Guidance website on 12 June 2014, and this replaced the previous standalone guidance that was published in February 2014.

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This guidance states that we may offer further, discretionary relief for affordable housing types which do not meet the criteria required for mandatory social housing relief and are not regulated through the National Rent Regime.

The majority of Birmingham Municipal Housing Trust (BMHT) schemes deliver socially rented housing. These properties are funded through a mixture of internally generated resources, grant funding and recycled surpluses from house sales with the land being provided to the scheme at no cost. There is no developer profit achieved on a BMHT scheme as any surpluses created from the homes for sale are reinvested into new homes for rent or into community benefits such as road improvements or public open space.

Therefore it is proposed to exempt BMHT developments from CIL charges. This paper can be found at here.

Similarly, we propose to exempt all social housing providers registered with the Homes and Communities Agency from CIL charges.

6.0 The CIL Examination Process

We submitted our CIL Draft Charging Schedule to the Planning Inspectorate on Wednesday 4th February 2015 for public examination. Our CIL Examination was held at our offices at Lancaster Circus on Thursday 30th April 2015 and all information relating to the Examination, including the Full Report, can be found here.

The Inspector’s Report concludes that our Charging Schedule provides an appropriate basis for the collection of the levy, that the charges are set at levels which will not put the overall development of the Birmingham area at risk, and will secure an important funding stream for infrastructure necessary to support planned growth in the city.

Following the Examination, we now need Full Council approval to adopt a CIL, and subject to this approval, we intend to adopt our CIL and commence charging on Monday 4th January 2016.

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7.0 CIL Charges

Development Type Detail Charge/sqm Retail convenience1 <2,700 sqm £0 Retail convenience1 >2,700 sqm £260 Retail2 All other £0 Retail2 Greenbelt Development (Sustainable £0 urban extension) Industrial/Employment All areas £0 Offices All areas £0 Residential Value zones 1,2 & 3 (High value £69 area) Residential Value zones 4,5,6 & 7 (Low value £0 area) Residential Green Belt Development (Sustainable £0 urban extension) Residential Social Housing Providers registered £0 with HCA and Birmingham Municipal Housing Trust developments Student housing All areas, except Green Belt £69 Development (Sustainable urban extension) Student Housing Green Belt Development (Sustainable £0 urban extension) Hotel City centre £27 Hotel Green Belt Development (Sustainable £0 urban extension) and rest of city Leisure All areas £0 Education All areas £0 Health All areas £0 Use class C23 C2 use £0 All other development All areas £0

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1. Retail convenience can also include non-food floorspace as part of the overall mix of the unit. 2. Retail - This category will include those retail units selling good not bought on a frequent basis. 3. The Town and Country Planning (Use Classes) Order 1987 (as amended) defines Use Class C2 Residential Institutions as – residential care homes, hospitals, nursing homes, boarding schools, residential colleges and training centres.

7.1 Charging Zone Maps

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Please note – where the residential charging zone dissects a building on the above plan, the postcode used for the planning application site address will determine which charging zone the application falls under.

For clarity, the following post codes were identified in the GVA CIL Economic Viability Assessment report (October 2012):

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Market Value Area High Low 1 2 3 4 5 6 7 Postcodes B15, B30, B1, B2 B3, B9, B5, B6, B7, B4 B17, B29, B13, B18, B8, B73, B72, B12, B19, B11, B74, B76 B14, B28, B16, B75 B20, B10, B21, B27, B26, B25, B24, B44 B34, B38, B35, B45, B36, B23, B42 B31, B32, B33

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8.0 Regulation 123 list

The Regulation 123 list (R123) is a list of infrastructure projects which we hope to fund or part fund through CIL. We have published a list and you can find this here. We can revise this list at any time following the adoption of CIL, subject to appropriate consultation.

The projects on this list have been chosen as they support the development of Birmingham, as outlined in the Birmingham Development Plan. We can use the CIL to provide new infrastructure, increase the capacity of existing infrastructure or repair failing infrastructure, if it is necessary to support development.

9.0 What will be liable for CIL?

CIL may be payable on a development which creates net additional floor space, where the gross internal area of new build exceeds 100 sq.m. If the development creates a new dwelling, CIL is usually payable, irrelevant of size. CIL applies to all types of planning consent, including Local Development Orders and Neighbourhood Development Orders.

10.0 What will be exempt from CIL?

 Developments of less than 100 sq.m., unless it is a new house or flat. If it is a new house or flat, CIL is payable.  Houses, flats, residential extensions or residential annexes which are built by self-builders, and will be occupied by those self-builders.  Social housing  Charitable development  Buildings into which you do not normally go  Buildings where you only go intermittently, for inspecting/maintaining fixed plant, machinery etc.  Any structures which aren’t buildings such as pylons  Any development with a £0 charge as defined in the Charging Schedule  Vacant buildings brought back into the same use  Mezzanine floors of less than 200 sq.m. unless they form part of a wider planning permission providing other works.

For detailed, up to date information on the various exemptions, please see the CIL Regulations 2010 (as amended) and also the CIL Planning Practice Guidance.

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11.0 Calculation

The formula used to calculate CIL liability is defined within the CIL regulations. This involves multiplying our CIL charging rate by the net increase in Gross Internal Area (GIA) and adjusting for inflation.

R x A x Ip Ic

R – the CIL rate for that use

A – the deemed net area chargeable at rate R

Ip – the index figure for the year in which planning permission was granted

Ic – the index figure for the year in which the charging schedule took effect

The All-In Tender Price Index is an inflation index published by the Royal Institute of Chartered Surveyors Building Cost Information Service and the figure for any given year is the figure for November of the previous year.

CIL calculations leading to a liability of less than £50 are treated as zero rated and are not payable.

Further detail on calculating the amount due is contained in the CIL regulations, including how to calculate the net chargeable area of the development.

If you need any help or advice calculating your CIL liability, please contact Hayley Anderson at [email protected] or 0121 303 4820.

12.0 Who pays?

Landowners are liable for payment of CIL, but other parties can take on the liability to pay their CIL contribution. If no one assumes liability, or payment is not forthcoming from other parties, the liability will automatically default to the landowner.

13.0 When and how will I pay?

• When planning permission is granted through a decision notice (or appeal decision) on or after the date of publication of a CIL Charging Schedule for that area; or • When development is permitted by a ‘general consent’ (e.g. permitted development).

Please note CIL will be chargeable on all relevant applications at the time planning permission first permits development. This is in accordance with Regulation 40 of the CIL Regulations 2010 (as amended).

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There are a number of stages in the CIL collection process which we must follow:  If you are applying for planning permission, you must include a completed copy of the Additional CIL Information Form with your application to help us calculate the sum payable  If your development is granted planning permission by way of a general consent (such as General Permitted Development Orders or Local Development Orders), you must submit a Notice of Chargeable Development if the development is liable for CIL  Someone must also assume liability for payment by submitting an Assumption of Liability Form. This could be the developer, landowner or another interested party  We will then issue a Liability Notice which sets out the charges due and the payment procedure  Whoever assumes liability must then send us a Commencement Notice stating when development will start  We will send a Demand Notice which states the payments and due dates for payment in line with our payment and instalment procedures  When development starts, and payments are received in line with the procedures, we will issue a receipt for all payments received.

14.0 Can I pay my CIL in kind?

It may be possible to pay your CIL liability in kind, through either land or infrastructure, and we will assess each application and make a decision on a case by case basis. Please contact Hayley Anderson at [email protected] or 0121 303 4820 for further information.

Please note, should we agree to an in kind payment of CIL liability, these payments must be agreed through a land or infrastructure agreement before starting on site and can be full or part payment of the CIL liability.

Land or infrastructure must be valued by an independent valuer to ascertain open market value of land or the cost of the infrastructure to decide how much of the CIL liability will be paid by the in kind payment.

Further information regarding in kind payments is contained within the CIL regulations.

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15.0 Instalments

We have introduced an Instalment Policy which will take effect when the CIL is adopted.

Total CIL payment Payment Terms due Less than £30,000 Total payable within 60 days of commencement £30,000 - £100,000 25% payable within 60 days of commencement 75% payable within 240 days of commencement (c. 8 months) £100,001 - £500,000 25% payable within 60 days of commencement 25% payable within 240 days of commencement (c. 8 months) 50% payable within 365 days of commencement (c. 1 year)

NB Full payment is due if full occupation/opening of development is earlier than the dates set out above. £500,001 - 20% payable within 60 days of commencement £1,000,000 20% payable within 240 days of commencement of development (c. 8 months) 30% payable within 365 days of commencement (c. 1 year) 30% payable within 540 days of commencement (c. 18 months)

NB Full payment is due if full occupation/opening of development is earlier than the dates set out above. More than 20% payable within 60 days of commencement £1,000,001 20% payable within 240 days of commencement of development (c. 8 months) 20% payable within 365 days of commencement (c. 1 year) 20% payable within 540 days of commencement (c. 18 months) 20% payable within 730 days of commencement (c. 2 years)

NB Full payment is due if full occupation/opening of development is earlier than the dates set out above.

If these instalment terms are broken, we will issue a Demand Notice which requires full payment immediately.

Similarly, if no Commencement Notice is received and we have to determine the “deemed commencement” date, we will issue a Demand Notice for CIL liability, which must be paid immediately in full.

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16.0 Developer contributions and S106 Agreements

You could be asked to contribute towards infrastructure in different ways. This could be through CIL, S106 agreements, S278 highway agreements and any conditions which may be attached to your planning permission.

However, these different types of developer contribution all serve different purposes and the regulations will limit any perceived or actual “double dipping” with developers paying twice for the same thing.

16.1 Section 106 agreements

The CIL should provide infrastructure to support the development of the whole area covered by the Development Plan. However, some site specific issues or mitigation might still be needed to make sure planning permission is granted.

When we have adopted CIL, Section 106 requirements should be scaled back to those matters which are directly related to a specific site, and are not set out in a Regulation 123 list.

Whilst the majority of our viability appraisals assume a zero CIL liability, there may still be a need for on-site requirements, and these will be assessed on each planning application. The CIL “viability cushion” should still allow for an on-site S106 contribution if required.

You should note that while S106 agreements will remain, they will continue to be negotiable and therefore will be negotiated after the CIL contribution has been calculated.

S106 agreements should continue to be; (a) necessary to make the development acceptable in planning terms; (b) directly related to the development; and (c) fairly and reasonably related in scale and kind to the development

From April 2015 we can’t pool unlimited S106 agreements for infrastructure. If we have signed five or more obligations for a specific type of infrastructure or project since 6 April 2010, and you can also fund that piece of infrastructure or project through the CIL, we cannot sign any more of those S106 agreements. This also includes S106 agreements signed against applications made under Section 73 to vary a planning condition.

If you can’t fund a piece of infrastructure through the CIL (such as affordable housing), we can pool unlimited S106 agreements, as long as we have regard to wider policies on planning obligations set out in the National Planning Policy Framework.

16.2 Section 278 agreements

Section 278 agreements are agreements between the highway authority and someone who agrees to pay all or part of the highways works. Section 278 agreements cannot be used for works which are included on the Regulation

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123 list (i.e. works which could be funded by CIL). However, unlike S106 agreements, there is no limit on pooling S278 agreements.

17.0 Percentage to neighbourhoods

We have to pass on a percentage of CIL receipts to those communities affected by new developments.

15% of CIL receipts must be passed to Parish and Town Councils where development has taken place. This is capped at £100 per council tax dwelling, per year.

If there is a Neighbourhood Plan or a Neighbourhood Development Order (including a Community Right to Build Order) in place, the amount passed to that Neighbourhood Plan area is increased to 25%, with no annual cap.

Parish Council  Parish Council  Neighbourhood Plan  Neighbourhood Plan 

= 25% uncapped, paid to Parish = 15% capped at £100/dwelling, paid to Parish

Parish Council  Parish Council  Neighbourhood Plan  Neighbourhood Plan 

= 25% uncapped, local authority = 15% capped at £100/dwelling, local consults with community authority consults with community

These percentages will still apply if there are no Neighbourhood Plans or Parish Councils, but we will keep these contributions, and engage with local communities to determine how best to spend the money. The funds will be passed on every six months, at the end of October and April.

If a developer has contributed in kind CIL payments in the form of infrastructure, we will ensure a cash equivalent contribution to local communities.

The percentage passed to neighbourhoods can be spent on a wider range of infrastructure than the rest of CIL, as long as it still supports the development of the area.

18.0 Review

The CIL viability study can only demonstrate viability at a moment in time and cannot forecast future changes in the market. Therefore we will keep our CIL charges under review to make sure they remain appropriate. If market conditions change significantly, or the infrastructure funding gap changes, we will review and alter the CIL charges as necessary. Any proposed changes to

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the CIL charge will be posted on the CIL pages on our website, and you will have the opportunity to comment before any changes are made.

We can decide to stop charging a CIL at any time. If we were to do this, any CIL liability relating to a development which hasn’t started would be dissolved and no CIL would be payable.

19.0 Monitoring

Regulations state we must let you know how we’re spending any CIL income. We will publish a report (at least) annually (by 31 December each year, for the previous financial year) explaining how much we’ve received in CIL payments, how much we’ve spent, and on what, and how much we’re carrying over into future years.

Town and Parish Councils must also report on their CIL spending.

20.0 Sustainability

The CIL charging schedule does not require a Sustainability Appraisal as it is a short financial document rather than a “land use planning” document.

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Glossary and Further Information/FAQs.

Is CIL payable if existing buildings are being demolished or converted?

The gross internal area of any buildings on the site that are going to be demolished or re-used may be deducted from the calculation of CIL liability. However, deductions are only applied where those buildings have been in lawful use for a continuous period of at least 6 months within the period of three years ending on the day planning permission first permits the chargeable development. In this context, “in use” means that at least part of the building has been in use.

It will be for the applicant or their agent to demonstrate that a building has been in use by providing appropriate evidence such as Council Tax records or Business Rates documentation.

The day “planning permission first permits development” is defined in the CIL regulations as the date at which development may commence. If there are any pre-commencement conditions attached to the planning permission, this date is the date at which the final pre-commencement condition is discharged. If there are no such conditions, then the date is the date of planning permission.

In relation to outline applications, subject to any phasing arrangements that may apply, development will only be permitted when the last of the reserved matters is approved.

Is CIL payable if my scheme does not need planning permission?

A CIL payment is required whether or not the development needs planning permission. If you intend to carry out development authorised by “general consent” (including permitted development) you should serve the City Council with a Notice of Chargeable Development.

Do charities have to pay CIL?

If you are a charitable institution, and you own a material interest in the land, you will get full relief from your portion of CIL where the chargeable development will be used wholly, or mainly, for charitable purposes. We can also offer discretionary relief to a charity landowner if the greater part of the development will be held as an investment and the profits applied for charitable purposes.

To qualify for charitable relief:  You must be a charitable institution  You must own a material interest in the land  You must not own this interest jointly with a person who is not a charitable institution.

And a charitable institution is defined in the regulations as:  A charity

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 A trust of which all the beneficiaries are charities  A unit trust scheme in which all the unit holders are charities

If you are providing social housing, we will also grant full relief from CIL charges, for those social housing units. This relief may also be available for those parties who are not charities.

An application for relief must be made to the City Council before commencement of the development to which it relates.

Be aware that if you claim charitable relief, you must continue to be eligible for that charitable relief for seven years following the commencement of your development. If, at any point in those seven years:  The purpose of the development changes to an ineligible use;  The owner of the interest in the land changes, and no longer qualifies for relief;  The terms of the leasehold changes, and no longer qualifies for relief.

You must inform us of this change within 14 days, and we will “clawback” the relevant parts of the relief given. If you do not notify us within 14 days, we will charge an additional 20% of the chargeable amount, or £2,500 (whichever is lesser).

The regulations regarding charitable relief can be found here.

What if I am building social housing?

Full CIL relief can be given to those parts of a development which are going to be used as social housing if a claim is submitted to the City Council by an owner of a material interest in the relevant land.

This will benefit most social rent, affordable rent, and intermediate rent accommodation provided by the Council or Private Registered Provider, and also shared ownership dwellings.

When applying for this relief, you must provide evidence that the chargeable development qualifies for social housing relief. To ensure that relief is not used to avoid CIL payments, the regulations provide that any relief must be repaid if the development no longer qualifies for the relief granted within seven years from the commencement of the development.

The regulations regarding social housing relief can be found here.

Social housing relief is calculated according to the formulas in Regulation 50.

Discretionary social housing relief applies to those affordable dwellings which meet the criteria set out in Regulation 49A (2014 Regs).

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What if I am building my own home?

If you are building your own home, or have commissioned your own home, and you are going to live in that home for a minimum of three years after completion, you don’t have to pay CIL.

You can submit your Part 1 Claim at any time as long as the work hasn’t commenced, and this exemption does not apply retrospectively. As with other exemptions, you must notify us if your circumstances change during those three years.

To claim the exemption, you will need to submit your Part 2 Claim within six months of completion.

The regulations regarding self-build housing relief can be found here.

What about residential extensions or annexes?

If you want to extend your house, and your residential extension is under 100 sq.m., you don’t have to pay CIL. You must submit this form before you start work on your extension or annex.

The regulations regarding residential extensions and annexes can be found here.

How do you decide if a building has been abandoned?

We will decide if a building has been legally abandoned. We will take into account;  The condition of the property  The period of non-use  Whether there has been an intervening use, and  Any evidence regarding the owner’s intention

What about phased developments?

It is possible to allow a planning application to be divided into “phases” for the CIL, which is especially useful for large, planned developments. This applies for both detailed and outline permissions (and therefore “hybrid” permissions too), and each phase would be treated as a separate chargeable development. This allows for payments in line with the instalment policy which we have adopted.

The principle of phased delivery must be apparent from the planning permission. For outline permissions, if the CIL is in force when the outline permission is granted, each phase of that permission is subject to CIL, or any replacement CIL charging schedules which may be introduced.

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What happens if I want to alter my permission? Do I pay twice?

If you want to revise or submit a new planning application for a development which has started but is not finished, we are able to take into account any CIL payments which can be credited against the new permission. This is called abatement. However, if your development has finished, you cannot apply for abatement.

If the revised development has a lower CIL liability than the original, no refunds will be paid.

You can only apply for abatement before development commences under the alternative permission.

Can I appeal against a CIL decision?

Yes, in certain circumstances, you can appeal against the levy calculation. Further guidance can be found here.

What happens if I have overpaid?

We will pay back any overpayment as long as the refund exceeds the administrative costs for processing that refund. We will not refund overpayments if those overpayments are the result of an in kind payment.

What if no one assumes liability for the development?

If no one assumes liability, the liability falls to the owners of the land. This also means that full payment will become due when development commences. If no one assumes liability, we may approach potential people or organisations who might want to assume liability and point out the benefits (such as payment in instalments) if they assume liability.

Liability can be transferred at any time up to the day before the final payment is due by submitting a Transfer of Assumed Liability form.

What happens if I don’t pay?

The regulations allow us to impose penalties for late payment.

If a party has assumed liability and doesn’t pay, we can issue a Default Liability Notice to the owners of any material interest in the land within the chargeable development.

If the debt still isn’t settled, we can take more direct action to recover the CIL funds due. We can stop any development on site until payment is received, and in extreme cases, we can seize and sell assets, or even apply to send the liable party to prison for up to three months.

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Can CIL be spent outside the Birmingham boundary?

Yes, if we believe that the infrastructure will benefit the development of the wider area. We can also pool our CIL receipts with other charging authorities to fund large, strategic projects which we would all benefit from.

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Links to other relevant information: DCLG CIL information Planning Practice Guidance - Community Infrastructure Levy

CIL regulations HMSO Community Infrastructure Regulations (March 2010) (Statutory Instrument 2010 no. 948): http://www.legislation.gov.uk/uksi/2010/948/pdfs/uksi 20100948 en.pdf (It should be noted that these principal regulations have been amended in part by subsequent regulations and the HMSO web site should be consulted for all relevant amendments)

Further information is available from: The Planning Portal The Planning Advisory Service - CIL CIL - How to make an appeal

CIL forms CIL Form - CIL Form Guidance Form 1: Assumption of Liability Form 2: Claiming Exemption or Relief Form 3: Withdrawal of Assumption of Liability Form 4: Transfer of Assumed Liability Form 5: Notice of Chargeable Development Form 6: Commencement Notice

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Asset Manager Our ref: Walsall Planning 2026 Network Delivery and Development Your ref Walsall Planning 2026: The Cube 199 Wharfside Street Birmingham B1 1RN Planning, Monitoring and Delivery Officer www.highways.gov.uk Walsall Council Via Email: 21 October 2015

Dear

RE: PLANNING 2026, Walsall Site Allocation Document (SAD), Town Centre Area Action Plan (AAP) and Preliminary Draft Community Infrastructure Levy Charging Schedule (CIL)

Thank you for forwarding me details of the consultation dated 7 September on the above referenced Walsall Planning 2026 documents, which comprise the Site Allocation Document (SAD), Town Centre Area Action Plan (AAP) and Community Infrastructure Levy (CIL) Preliminary Draft Charging Schedule.

HIGHWAYS ENGLAND (“we”) has been appointed by the Secretary of State for Transport as strategic highway company under the provision of the Infrastructure Act 2015 and is the highway authority, traffic authority and street authority for the Strategic Road Network (SRN). The SRN near to Walsall comprises the M6 Motorway and the A5 Trunk Road.

The SRN is a critical national asset and as such works to ensure that it operates and is managed in the public interest, both in respect of current activities and needs as well as in providing effective stewardship of its long-term operation and integrity. Highways England welcomes the opportunity to provide the following comments on the Walsall Planning 2026 documents.

With respect to the SAD, it is notable that a vast number of allocated sites are located within Regeneration Corridors previously identified within the Black Country Joint Core Strategy (BCJCS); predominantly on brownfield land. Highways England supports the regeneration of brownfield land, particularly in the case of the SAD where the local industry sites considered for release are primarily located within close proximity to Town and District Centres, adhering to the principles of sustainable development and potentially reducing the need to travel by single occupancy vehicle.

A significant quantum of new housing development is also proposed within the SAD. Highways England acknowledges that the vast majority of housing sites are to be located within Regeneration Corridors, with a number also proposed within the Housing Growth Area in Birchills previously agreed upon as part of the BCJCS. The collective impact of this quantum of housing development, coupled with the location of large clusters of housing sites in close proximity to M6 Junction 10 will nonetheless, place greater pressure on the capability of this junction to operate under capacity. The agreed improvement scheme at Junction 10 must therefore be considered imperative in order to mitigate the potential for adverse impacts on the SRN.

Registered office Bridge House, 1 Walnut Tree Close, Guildford GU1 4LZ Highways England Company Limited registered in England and Wales number 09346363

UR 2589 Community Infrastructure Levy Preliminary Draft Charging Schedule Response Form

All comments must be submitted in writing by 2nd November 2015 either by post to:

Planning Policy, Environment and Economy, 2nd Floor Civic Centre, Darwall Street, Walsall, WS1 1DG, or by email to: [email protected].

Your Details Name

Organisation (where On behalf of Walsall Council Health and Wellbeing relevant) Board Job Title (where relevant) Address (inc post code) Walsall Council

Telephone Number

Email Address

Q1. Do you have any comments to make on Walsall’s Preliminary Draft CIL Charging Schedule and supporting information?

At its meeting on 22 October 2015, Walsall Council’s Health and Wellbeing Board supported the use of CIL to maximise resources to meet the needs generated by developments.

The Board would like to think that it can be used to support and provide Health related infrastructure however, the Board does recognise resources generated are likely to be limited and would be happy to continue to work with colleagues and partners to identify priorities.

The Board supports the use of CIL monies to maintain and improve the borough’s open spaces.

Thank you for completing the questionnaire.

UR 2658

Our ref: UT/2006/000279/OR- Walsall Metropolitan Borough Council 01/PO1-L01 Regeneration Strategy Your ref: The Civic Centre Darwall Street Date: 04 November 2015 Walsall West Midlands WS1 1DG

Dear Sir,

WALSALL COMMUNITY INFRASTRUCTURE LEVY

Thank you for consulting us on this application which we received on 7 September 2015.

We support the inclusion of the proposals to initiate an early warning system for the Town Centre and the replacement of the Old Ford Brook Tunnel under the highway. We also are pleased to note the potential schemes to improve many towpaths/canal areas, and the work to improve the Local Nature Reserve of the Wyrley and Essington Canal.

Apart from one of the towpath schemes, we note that there is no funding presently available for these schemes. Potential funding options may include Flood Defence Grant in Aid (Available via DEFRA/ourselves), Local Levy, CIL or developer contributions.

Yours faithfully

Planning Specialist

Direct dial Direct e-mail

Environment Agency 9, Sentinel House Wellington Crescent, Fradley Park, Lichfield, WS13 8RR. Customer services line: 03708 506 506 www.gov.uk/environment-agency End UR 2659 Community Infrastructure Levy Preliminary Draft Charging Schedule Response Form

All comments must be submitted in writing by 2nd November 2015 either by post to:

Planning Policy, Environment and Economy, 2nd Floor Civic Centre, Darwall Street, Walsall, WS1 1DG, or by email to: [email protected].

Your Details Name

Organisation (where Savills UK Ltd on behalf of Taylor Wimpey Plc relevant) Job Title (where relevant) Director Address (inc post code) Savills Innovation Court 121 Edmund Street Birmingham B3 2HJ Telephone Number

Email Address

Q1. Do you have any comments to make on Walsall’s Preliminary Draft CIL Charging Schedule and supporting information?

Please see enclosed letter dated 2 November 2015.

Thank you for completing the questionnaire. UR 2659 2 November 2015 bc Walsall Council Planning Policy Environment and Economy 2nd Floor E: [email protected] Civic Centre DL: Darwall Street F: +44 (0) Walsall Innovation Court WS1 1DG 121 Edmund Street Birmingham B3 2HJ T: +44 (0) 121 633 3733 savills.com

Dear Sir / Madam

Walsall Council CIL Preliminary Draft Charging Schedule Representation on behalf of Taylor Wimpey

1.0 Introduction

1.1 These representations are submitted on behalf of Taylor Wimpey Plc in respect of the Walsall Council CIL Preliminary Draft Charging Schedule (PDCS).

1.2 Savills, as part of the HBF CIL Initiative, is representing house builders and landowners nationwide on emerging CIL Charging Schedules, to scrutinise available evidence, notably in respect of infrastructure provision and the testing of viability against both the emerging planning policy requirements and the housing land supply. The objective is to ensure a reasonable rate of CIL, which allows for the policy requirements for sustainability and affordable housing, and also importantly, the level of Section 106/278 and other site specific infrastructure anticipated.

1.3 This representation has been submitted to influence the emerging Community Infrastructure Levy (CIL) Charging Schedule proposed by Walsall Council. It is made in respect of the PDCS published for public consultation in the period 7 September to 2 November 2015. Our client’s particular comments relate to the proposed rates to be applied to residential development in the east of the Borough of between £75 and £100 per sq m (Zones 1 and 2) which in our view is not supported by the evidence.

1.4 Following a review of the PDCS, we wish to make the following key observations:

2.0 Savills Review of Viability Evidence

2.1 Section 211 (7a) of the Planning Act 2008 (as amended), requires Walsall Council to use “appropriate available evidence” to inform the Local Plan and Community Infrastructure Levy (CIL). Owing to the key test of Regulation 14(1)1 it is important that the viability appraisals prepared in support of the PDCS are fit for purpose, as at examination the Charging Schedule will need to be supported by “relevant evidence”2. Our client remains committed to providing evidence where this is not commercially sensitive.

2.2 Within the CIL Regulations (as amended), Local Planning Authorities (LPAs) are given a positive obligation to strike an appropriate balance between raising sufficient funds for infrastructure and having an adverse impact on the viability of housing sites. Walsall Council will subsequently be required to

1 CIL Regulations 2010 (as amended) 2 CIL Regulations 2010 (as amended) 11(1) (f) / 19(1) (e)

Offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East.

Savills (UK) Limited. Chartered Surveyors. Regulated by RICS. A subsidiary of Savills plc. Registered in England No. 2605138. Registered office: 33 Margaret Street, London, W1G 0JD UR 2659 a justify that balance with evidence at the examination, clearly showing and explaining how the rates will contribute towards the implementation of their relevant Plan3.

2.3 Through analysing the Walsall Site Allocation, CIL Deliverability and Viability Study, dated September 2015, prepared by DTZ, (herein termed the DTZ Appraisal), we have split our response in respect of the viability assessment into three parts:

 Part 1 - Summary of DTZ Appraisal Inputs  Part 2 – Areas of Concern  Part 3 – Alternative Viability Testing

2.4 The DTZ viability assessments are based on a series of residual valuation scenarios that model the Gross Development Value achievable from different uses, in different areas within the Charging Area and discounts development costs, interest costs and developer profit.

2.5 Eight residential typologies have been tested:

 Scheme 1 - 18 units  Scheme 2 – 30 units  Scheme 3 – 35 units  Scheme 4 - 42 units  Scheme 5 - 88 units  Scheme 6 - 175 units  Scheme 7 - 350 units  Scheme 8 - 11 units

2.6 The typologies have then been tested across five differential value bands within the Charging Area. With reference to the Preliminary Draft Charging Schedule for Consultation 2015, Figure 1 – Map of CIL Charging Zones, the proposed levy for residential development has been segregated into the following five geographical zones:

Table 1: Walsall Council Preliminary Draft Charging Schedule: Residential Development

Below 15 Units Above 15 Units (all Above 40 Units (all Below 40 Units (all other housing other housing housing (Flats) developments) developments) development)

Zone 1 £100 £100 £5* £100 Zone 2 £75 £50 £5* £75 Zone 3 £50 £25 £5* £50 Zone 4 £5* £5* £5* £5* Zone 5 £5* £5* £5* £5*

*£5 per sq m nominal charge

2.7 With regard to our client’s specific interest, we have provided a more robust analysis of larger schemes (notably Scheme 7 of 350 units) in charging Zones 1 and Zone 2 which would qualify for a rate of £100 and £75 per sq m respectively.

3 Paragraph 19, Reference ID: 25-019-20140612, Planning Practice Guidance, June 2014

Page 2 UR 2659 a Part 1 – Summary of DTZ Appraisal Inputs

2.8 We summarise below DTZ’s assumptions which have been derived from Part 4 – CIL Viability Study (pages 130 – 172) of the DTZ Appraisal. These assumptions have been applied to all eight typologies. Where a differential assumption is made between typologies, we have chosen to focus on the assumptions made for Scheme 7 (350 units).

Table 2: Savills Opinion on DTZ Appraisal Assumptions

Viability Appraisal DTZ Adopted Figure All Typologies Opinion Assumptions

Gross to Net Land Take

Gross to Net % Unclear. Reference Part 2 for further detail.

Values

Benchmark Value Band £ per Net Acre Disagree – reference Part 2 for Land Values Band 1 £400,000 further detail. Band 2 £350,000 Band 3 £300,000 Band 4 £250,000 Band 5 £200,000

Open Market Value Band per Sq ft per Sq m Disagree - reference Part 2 for Revenue Band 1 £240 £2,583 further detail. Band 2 £215 £2,314 Band 3 £195 £2,099 Band 4 £175 £1,884 Band 5 £165 £1,776

Affordable Affordable Rent at 60% of Open Market Value Housing (equivalent to a range of £99 - £144 per sq ft across Revenue Value Bands 1 - 5).

Dwelling Sizes

Open Market / House Type Sq ft Sq m Clarification required on the Affordable 1 Bed Flat 500 46 inclusion of garages in the GIA for Housing 2 Bed Flat 625 58 houses. 2 Bed House 750 70 3 Bed House 950 88 4 Bed House 1,200 111 5 Bed House 1,400 130

Page 3 UR 2659 a

Viability Appraisal DTZ Adopted Figure All Typologies Opinion Assumptions

Housing Mix (Scheme 7 Specifically)

Housing Mix Scheme 7 - 350 dwellings % Mix Disagree - reference Part 2 for 1 Bed Flat 0% further detail. 2 Bed Flat 0% 2 Bed House 20% 3 Bed House 50% 4 Bed House 25% 5 Bed House 5%

Density 35 dwellings per hectare with 60 dwellings per hectare Agree in principle but note that for Scheme 2 a wholly flatted typology. density should be in line with policy HOU2 of the Black Country Core Strategy.

Acquisition Costs

Acquisition 5.8%. Agree in principle. Costs

Planning Costs

Planning Fees Included within a 6% allowance on construction costs Disagree – appropriate allowance for professional fees. should be made for planning promotion costs in addition to professional fees.

Development Costs

Baseline Build Schemes of less than 40 units Disagree - reference Part 2 for Costs per Sq ft per Sq m further detail. Houses £85 £915 Flats £95 £1,023

Schemes over 40 units per Sq ft per Sq m Houses £75 £807 Flats £90 £969

Abnormals 12.5% uplift on base line build costs. Agree if based on revised baseline build costs.

Plot Externals 12% uplift on base line build costs. Agree if based on revised baseline build costs.

Page 4 UR 2659 a

Viability Appraisal DTZ Adopted Figure All Typologies Opinion Assumptions

Infrastructure No allowance. Disagree - reference Part 2 for further detail.

Contingency 5% of construction costs. Agree if based on revised base line build costs. Clarification required on whether uplift has been calculated on base line build costs or cumulative construction costs.

Professional 6% uplift on construction costs including planning. Disagree – fees are typically 8 – Fees 12%. Clarification required on whether uplift has been calculated on base line build costs or cumulative construction costs. Adequate allowance for planning promotion costs should also be made.

Section 106

Affordable 25% (affordable rent) on site of 15+ dwellings In line with HOU3 of the Black Housing Country Core Strategy the tenure sought should be on a site by site basis and may vary according to local housing need and market conditions.

S106 Financial £500 per unit Agree in principle subject to Contribution Walsall Council confirmation that this is an accurate assumption to be applied to typologies tested within the appraisals.

Section 278

Financial Nil – assumed included in above contribution. Disagree - reference Part 2 for Contribution further detail.

Page 5 UR 2659 a

Viability Appraisal DTZ Adopted Figure All Typologies Opinion Assumptions

Profit

Developer Blended rate of 17.7% on Gross Development Value Disagree - reference Part 2 for Profit (20% on open market dwellings and 6% on affordable). further detail.

Finance

Interest 6.5% on negative balance. Clarification required on calculation of finance costs including the allowance for entry, exit and monitoring fees.

Marketing Fees

Marketing, 3.5% of Gross Development Value (GDV). Agree in principle if based on sales and legal revised GDV. fees

Sale and Construction Timescales

Construction Lead in 3 months. Clarification required on the Construction / sales – staged 6 months after. adopted rate of construction. construction starts. Lead-in should be scheme typology specific with a greater allowance for larger schemes.

Sales 40 per annum per outlet Agree in principle subject to market conditions and appropriate cash flowing.

Part 2 – Areas of Concern

2.9 As stated above, there are a number of assumptions made by DTZ that cause concern. The key areas of concern include:

 Benchmark Land Values (BLVs) / Viability Buffer  Sales Values  Build Costs  Infrastructure

2.10 We explore these points in more detail below and made reference to evidence where appropriate:

Page 6 UR 2659 a Gross to Net Land Take

2.11 Large sites will be required to provide public open space and recreation space that will reduce the net residential acreage. These additional land uses are a necessary part of any planning permission and contribute towards the acceptability of the scheme from the Council’s perspective. A recommended approach is to factor in the gross land areas required for each scheme and adopt a reasonable minimum land value across the gross site area.

2.12 At point 4.2 of the DTZ Appraisal (page 141), as part of a worked example, it would appear DTZ reference 50 – 75% as being typical gross / net gross to land take ratios. However, DTZ make no specific reference to the gross to net land take assumptions for each typology tested. It is fundamental that within viability testing on the larger schemes, that an appropriate gross to net land take is modelled. Clarification is therefore required on what assumption DTZ has made for each typology, because the net to gross ratio will vary according to the scale of each residential scheme.

2.13 It is important that the gross to net land take is accurately reflected as the actual developable residential acreage will have an impact on the price a developer will pay, and thus the BLV.

2.14 It is also unclear if the BLVs adopted by DTZ are on a gross or net basis. We have assumed for the purposes of comparison that they are on a net basis and have been compared with residual land values on a net basis. Clarification is required on this point.

Benchmark Lane Values (BLVs)

2.15 There are concerns relating to the assumptions made in determining the viability threshold. DTZ have adopted the BLVs set out in Table 3 below on a net basis. No evidence is provided to support the figures adopted. Clarification is also required on whether the adopted BLV are green or brownfield.

2.16 For the purposes of comparison and using Scheme 7 as an example, we have assumed a gross to net land take of 50% for 350 units and have analysed DTZ’s net BLV on a gross acre basis.

Table 3: DTZ Adopted BLVs analysed on a Gross Basis

Value Area DTZ BLV £ / Net Acre DTZ BLV £ / Gross Acre 1 £400,000 £200,000 2 £350,000 £175,000 3 £300,000 £150,000 4 £250,000 £125,000 5 £200,000 £100,000

2.17 The table above illustrates the marked difference in value when the BLV is analysed on a gross basis for larger schemes.

2.18 Savills have researched a number of Option Agreements and the minimum price provisions set out within these in the local area. Together, they provide a good benchmark for minimum land values for greenfield land and provide a more robust evidence base than the assumptions used by DTZ. Savills sets out this evidence below, specific details remain confidential:

 Option A, West Midlands – the land is likely to accommodate approximately 1,800 dwellings and the minimum purchase price is agreed at £150,000 per gross acre.  Option B, West Midlands – approximately 1,500 dwellings. The minimum purchase price agreed is at £140,000 per gross acre.  Option C, West Midlands – the land is likely to accommodate approximately 1,500 dwellings and the minimum purchase price is agreed at £175,000 per gross acre.

Page 7 UR 2659 a

2.19 DTZ have adopted a range of £100,000 - £200,000 per gross acre. From the evidence above, it can be seen that in comparable markets, minimum land values tend to be agreed within a range of £105,000 - £175,000 per gross acre.

2.20 In the absence of supporting comparable evidence, we recommend that DTZ adopt a BLV reflecting a minimum of £175,000 per gross acre for the larger greenfield sites, with a 20% - 30% viability buffer (equating to £210,000 - £228,000 per gross acre).

Viability Buffer

2.21 It is unclear what viability buffer, if any, has been modelled by DTZ. The CIL Guidance highlights the importance of a charging authority recognising the need for an appropriate balance when determining CIL rates:

“The authority will need to be able to show why they consider that the proposed levy rate or rates set an appropriate balance…between the need to fund infrastructure and the potential implication for the economic viability of development across their area” (Section 2:2:2:4, 10th paragraph).

2.22 It is therefore important that when setting rates that the Council applies an appropriate viability ‘buffer’. We seek clarity on this point. We recommend a 20% buffer is applied to the BLV adopted across eight typologies tested.

Sales Values

2.23 DTZ have tested five value bands within their modelling. The five bands are based on average house prices achieved as recorded by HM Land Registry for all postcode sectors in Walsall over the three year period October 2011 to September 2014.

2.24 For the purposes of comparison, we set out below the capital values adopted by DTZ using a three bedroom house as an example to show the value difference across each band:

Table 4: Sales Values adopted by DTZ

3 Bedroom 3 Bedroom Band on Value Band £ / Sq ft £ / Sq m House Sq ft House Band % Capital Value increase Band 1 £240 £2,583 950 £228,000 + 10.42% Band 2 £215 £2,314 950 £204,250 + 9.30% Band 3 £195 £2,099 950 £185,250 + 10.26% Band 4 £175 £1,884 950 £166,250 + 5.71% Band 5 £165 £1,776 950 £156,750 2.25 With reference to our clients specific interest and adopting the unit sizes provided by DTZ, we calculate the capital values for Value Band 1 and Band 2 for the open market housing to be:

Table 5: Open Market Capital Values adopted by DTZ for Value Band 1 and 2

Open Value Band 1 Value Band 1 Value Band 2 Value Band 2 Sq ft Market Rate / Sq ft Capital Values Rate / Sq ft Capital Value 1 Bed Flat 500 £240 £120,000 £215 £107,500 2 Bed Flat 625 £240 £150,000 £215 £134,375 2 Bed House 750 £240 £180,000 £215 £161,250

Page 8 UR 2659 a

Open Value Band 1 Value Band 1 Value Band 2 Value Band 2 Sq ft Market Rate / Sq ft Capital Values Rate / Sq ft Capital Value 3 Bed House 950 £240 £228,000 £215 £204,250 4 Bed House 1,200 £240 £288,000 £215 £258,000 5 Bed House 1,400 £240 £336,000 £215 £301,000

2.26 DTZ have allowed a 25% provision of on site affordable housing, 100% of which is assumed to be affordable rent. In line with HOU3 of the BCCS we highlight that the tenure sought should be on a site by site basis and may vary according to local housing need and market conditions.

2.27 The revenue generated has been calculated using a 40% discount to Open Market Values in each value band.

2.28 There are a number of concerns relating to the methodology and the values adopted by DTZ, including;

 the lack of robust evidence;  the use of average prices produced by the post code areas; and  the blanket approach to the application of values with no differentiation on evidence in relation to the scale of development.

2.29 With reference to Figure 5.1 ‘Walsall Achieved Residential Values’ (page 142 of the DTZ Appraisal), DTZ highlight average achieved values ranging between £50,000 - £350,000 across the Charging Area. No evidence has been provided to support these capital values.

2.30 Like any Borough, new build sales values on a £ per sq m basis will vary depending on location, specification, size of the dwelling and the scale of development which the dwellings sits within. Smaller schemes will usually achieve a premium given the bespoke nature and limited availability of houses in the marketing period.

2.31 Larger sites will usually be marketed by releasing phased development parcels, often there are several house builders on site actively marketing separate phases at one given period. It is therefore important that the viability modelling for larger sites (notably Scheme 6 at 175 units and Scheme 7 at 350 units) take account of the diluted market place created. This is important as not only will sale values be depressed, but the rate of sale will be slower than that achieved on smaller sites. Thus, increasing the development project timeline which will impact the viability.

2.32 Savills have undertaken research in Value Bands 1 and 2. We note that there is a vast range in asking and sold prices. At the higher end of the range are large properties on generous plots including a 7 bedroom detached house which is marketed for £3,250,000 (The Manor House, Streetly Wood, Streetly, Sutton Coldfield). The majority of the 330 properties currently on the market in Value Bands 1 and 2 are large detached units (187 units), with only 27 being typically smaller terraced units.

2.33 We are concerned that the weight of the values of the larger detached houses at the higher end of the range, detracts from the more realistic values that would be achievable for large scale estate housing located in Value Bands 1 and 2.

2.34 A further area of concern is that the average price band used by DTZ is based on postcode areas which extend beyond the Charging Area, notably eastward into the highly popular and high value area of Sutton Common towards Sutton Coldfield. The average prices used for Zone 1 therefore include much higher value areas, which result in a disproportionate average value for Zone 1.

2.35 We would therefore urge that DTZ provide a robust analysis of new build sales data that reflect and

Page 9 UR 2659 a support the typology tested within the relevant Value Band.

2.36 Savills have undertaken new build sales research within the Charging Area. We note that there is very little evidence within Value Band 1 and 2 for large schemes. We have therefore considered evidence for larger scale estate housing within the wider Charging Area. We set our our evidence below:

Wards Bridge Gardens, Wednesfield WV11 3HT - A new build scheme of 217 units built by Taylor Wimpey in Wednesfield comprising two, three and four bedroom homes. Wards Bridge is located within close proximity to Wednesfield town centre. We set out below recent and relevant sales illustrating a range of £193 - £214 per sq ft. We note that at the higher end of the range is the smaller of the units at 602 sq ft:

Type Sq ft Sold Price £/sq ft Date Terrace End 866 £169,995 £196 Aug-15 Detached 1,099 £212,430 £193 Jul-15 Mid Terrace 602 £128,900 £214 Jun-15 Detached 967 £204,400 £211 Mar-15 Detached 967 £203,513 £210 Mar-15 Terrace End 753 £151,100 £201 Feb-15 Terrace End 753 £151,380 £201 Feb-15 Terrace End 753 £151,000 £201 Feb-15 Terrace End 753 £150,884 £200 Feb-15 Terrace End 753 £147,900 £196 Jan-15 Detached 931 £190,700 £205 Jan-15 Detached 1,099 £213,893 £195 Oct-14

The Bridles, Bell Lane, Bloxwich, Walsall, WS3 2JW - A scheme of 117 units built by Barratt Homes on the site of the former Bloxwich Engineering Works. This site is located within close proximity to Bloxwich Railway Station and is now fully sold. We consider that the evidence is somewhat historic, but given it falls within the same research period adopted by DTZ, we consider it relevant:

House No. Type Sq ft Sold Price £/sq ft Date 64 Terrace 624 £116,000 £186 Jun-13 68 Semi 624 £124,950 £200 Jun-13 62 Terrace 624 £124,950 £200 Jun-13 60 Terrace 829 £160,000 £193 Apr-13 62a Terrace 624 £124,950 £200 Apr-13 66 Terrace 624 £124,950 £200 Mar-13

Victoria Gardens, Harvest Grove, Bloxwich, WS3 3JY - This is a scheme of 44 two, three and four bedroom homes built by Kendrick Homes located Bloxwich. The evidence below illustrates a range of £155 - £193 per sq ft:

House No. Type Sq ft Sold Price £/sq ft Date 29 Semi 1,270 £210,000 £165 May-15 19 Detached 1,184 £229,000 £193 Apr-15 42 Semi 1,270 £197,000 £155 Mar-15 40 Semi 1,270 £210,000 £165 Jan-15

2.37 Silver Waters, Brownhills, West Midlands, WS8 6EB – A new build development of 34 two, three and four bedroom homes. The development is built by Taylor Wimpey and is located in Brownhills. We set out below recent and relevant sales of three and four bedroom homes which illustrate a range of £169 -

Page 10 UR 2659 a £193 per sq ft:

Type Sq ft Sold Price £/sq ft Date 4 Bedroom 1329 £225,085 £169 Nov-14 4 Bedroom Detached 1334 £245,499 £184 Jul-14 4 Bedroom 1289 £235,256 £183 Apr-14 4 Bedroom 1334 £238,605 £179 Jul-14 4 Bedroom Detached 1153 £215,294 £187 Apr-14 4 Bedroom 1329 £255,900 £193 Jul-14 4 Bedroom 1251 £233,595 £187 Jun-14 4 Bedroom 1251 £228,970 £183 Oct-13 4 Bedroom Detached 1334 £238,267 £179 Mar-14 4 Bedroom Detached 1334 £235,882 £177 Apr-14 3 Bedroom 900 £170,145 £189 Mar 14 3 Bedroom 900 £163,624 £182 Apr 14 4 Bedroom 1289 £230,080 £178 Aug-14 4 Bedroom 1289 £238,049 £185 Jul-14

2.38 The evidence above illustrates a range of £155 - £214 per sq ft across three large scale new developments within the Charging Area. Although our evidence is not located within Value Band 1 and 2, it illustrates the diluted average sales values achievable on larger scale development across the wider Charging Area.

2.39 Based on the evidence provided above, we urge that DTZ adopt a lower value of £2,153 per sq m (£200 per sq ft) for the larger typologies within Zone 1 and 2.

Housing Mix

2.40 Policy HOU2 ‘Housing Density, Type and Accessibility’ of the adopted Black Country Core Strategy (BCCS) states that “developments of 15 dwellings or more should provide a range of house types and size...in line with the information available from the Strategic Housing Market Assessment (SHMA) and Housing Needs Survey and standards in Table 8” within the Core Strategy.

2.41 The table highlights that in areas where density is between 34 – 45 dpa, there should be a provision of 0 – 25% flats.

2.42 With reference to Table 5.1, page 143 of the DTZ Appraisal, based on 35 dwellings per hectare, a 10% allowance for flats has been made for flats within Scheme 6 of 175 units. The following mix of housing for Scheme 7 (350 units), at the same density has been adopted:

Table 7: Adopted Housing Mix for Scheme 7 – 350 Units

House Type Sq ft Mix % 1 Bed Flat 500 0% 2 Bed Flat 625 0% 2 Bed House 750 20% 3 Bed House 950 50% 4 Bed House 1,200 25% 5 Bed House 1,400 5%

Page 11 UR 2659 a

2.43 No flats have been modelled within the provision of open market housing. Whist it is acknowledge that there is an increased emphasis on the development of open market family homes within the BCCS, given the scale of Scheme 7, it is not unreasonable to assume that a significant number of flats will be provided along side family housing to cater for the wider local demand. This is of relevance as the cost of construction of flats is higher than that of estate housing. We comment further on this point below.

Baseline Build Costs

2.44 It is vital that the baseline build cost data accurately reflects current market sentiment and is reflective of the actual costs incurred by developers. This is important as the build cost data forms the basis of other development costs with the DTZ Appraisal such as professional fees, contingency and abnormals.

2.45 Given this, and the scale of large developments, any price increases will have a significant impact on the viability. DTZ have adopted build costs based on BCIS with an adjustment made based on ‘advice provided by DTZ regional residential team’ (page 144 DTZ Appraisal). It unclear which BCIS data sample has been used and what adjustment has been made.

2.46 Two sets of build costs have been adopted with the Appraisal. A higher rate of £914 / sq m for flats and £1,022 per sq m for houses for schemes of under 40 units has been adopted to reflect the higher costs normally encountered by local house builders. A lower rate of £968 / sq m for flats and £807 / sq m for houses has been adopted for typologies of 40+ units.

2.47 Table 8 below shows the baseline build costs adopted by DTZ, compared with BCIS Q4 median data, rebased for Walsall for flats and houses ‘generally’. Notwithstanding the impact on typologies of under 40 units, we have chosen to analyse the build costs used by DTZ for scheme of 40+ units:

Table 8: DTZ Baseline Build Costs versus BCIS Build Cost Quarter 4 2015 rebased for Walsall

BCIS Build £ Difference to DTZ BCIS Development Type Cost ‘Walsall’ % Difference Build Cost per Build Cost Q4 2015 Dwelling £807 / sq m £918 / sq m Houses + 13.75% + £9,768 £75 / sq ft £85 / sq ft £969 / sq m £1,091 sq m Flats + 12.59% + £7,076 £90 / sq ft £101 / sq ft

Calculations based on dwellings sizes taken from DTZ three bedroom house and two bedroom flat

2.48 The table above illustrates a significant increase in build cost for both houses and flats. The cumulative impact of this under estimation will have a significant impact on the viability of all typologies.

2.49 Using the same housing mix as DTZ for Scheme 6 (175 dwellings with a 10% provision of flats) but applying the revised BCIS data (as at Quarter 4, 2015), the increase in base line build costs equates to an additional £1.7m in build costs, reflecting an average of an additional £9,897 per unit. This is a significant cost which is not currently reflected with the DTZ Appraisal. We would therefore urge that DTZ adopt the very latest BCIS data within their modelling across all typologies.

2.50 Further, we note that flats have been excluded from the typology of 350 units (Scheme 7). A revised housing mix with an inclusion of say 5% flats, using the the revised BCIS data, would increase the average build cost adopted by DTZ (blended across houses and flats), from £812 per sq m to £918 per sq m. This reflects an increase of 13% to baseline build costs which will have a significant impact on the overall development costs. For the reasons stated earlier, we would suggest that DTZ review the housing mix for Scheme 7 and include an element of flats. The revised mix should then be costed using the revised BCIS data across all house types.

Page 12 UR 2659 a

2.51 We also note that any typologies tested that include blocks of flats (Schemes 2 and Scheme 6), will by nature, provide communal space. This floor space will not increase the sales value and is within the GIA of the development and therefore CIL liable. This will therefore impact viability and should be appropriately modelled.

Enhanced Building Standards

2.52 The Zero Carbon Standard, which is to be introduced through amendments to the Building Regulations energy performance requirements, is anticipated in 2016. Given that this requirement will be introduced in the next year and given the long term timescales associated with the delivery of larger sites, it is appropriate that this cost is modelled now.

2.53 A report prepared by Sweett for the Zero Carbon Hub ‘Cost Analysis: Meeting the Zero Carbon Standard’ (February 2014), indicates that the cost of meeting the Zero Carbon Standard has a known and quantifiable cost above current Building Regulations (Part L1A 2013), see Table 9 below:

Table 9: Zero Carbon Standard Cost above Building Regulations (Part 1LA 2013)

Detached House Semi Detached Mid Terraced Low Rise House House Apartments Range £6,700 – £7,500 £4,100 – £4,700 £3,700 – £4,200 £2,200 – £2,400 Average £7,100 £4,400 £3,950 £2,300

Source: Sweett

2.54 There appears to be no allowance for enhanced building standards within the DTZ Appraisal. We would therefore ask that a minimum allowance of 6% uplift to baseline build costs is included in the viability testing to reflect the move towards the mandatory amendment to Building Regulations.

Infrastructure and External Costs

2.55 No allowance has been made for infrastructure within the DTZ Appraisal. An allowance of a 12% uplift to baseline build costs has been made for external costs.

2.56 It is necessary to first consider the difference between infrastructure and external costs in order to appropriately quantify a cost allowance for each.

2.57 On site infrastructure costs cover the provision of drainage, services and utilities, in essence, the infrastructure required to deliver a serviced housing parcel. The Harman Report (Viability June 2012) suggests a range of £17,000 - £23,000 per unit is appropriate for large sites.

2.58 External costs include the provision of soft and hard landscaping, such as pathways, hedgerows, trees and planting and car parking provision. These costs will vary from site to site and can usually only be accurately determined when the likely built form is known.

2.59 Given the scale of the larger typologies tested (notably Scheme 6 and 7), considerable provision is required for both infrastructure and external costs. We would therefore urge that DTZ allow at least the lower range stated in the Harman Report of £17,000 per dwelling for infrastructure in addition to a 12% uplift on base line build costs for externals costs. Developers Profit

2.60 The NPPF states that to ensure viability, developments should provide competitive returns to a willing land owner and willing developer. A competitive return to a developer is one that provides a sufficient return for the developer to continue a successful business through the economic cycle, taking account

Page 13 UR 2659 a of the risk profile of the business. It is therefore a concern that the profit margin included in the DTZ Appraisal is 20% on GDV for the private housing and 6% on GDV for the affordable housing, reflecting a blended rate in the region of 17.7% on GDV. This assumption is too low and does not take account of the minimum returns required by shareholders of quoted Plc house builders.

2.61 Taking this into account, we would therefore ask that a minimum profit level of 20% on GDV (blended) plus 25% ROCE across all tenures, subject to consideration of the risk profile of the scheme, is adopted in the DTZ Appraisal.

Part 3 Alternative Viability Testing – 500 Units

2.62 Given the concerns set out in Part 2, Savills have created a base appraisal to mirror the inputs made by DTZ for Scheme (350 dwellings). We highlight that our Base Appraisal has been created for the purposes of general testing only, based on DTZ’s assumptions.

2.63 With reference to Table 5.10 ‘Residential results at baseline costs, schemes of more than 40 units’ (page 147 of the DTZ Appraisal), the Residual Land Value (RLV) based on the assumptions made by DTZ for Scheme 7 is:

Table 10: Savills Base Appraisal Results

DTZ Residual Land Value Savills Residual Land Value 350 Units Scheme 7 - 350 Units (Zone 1) (Zone 1)

RLV £22,105,223 £22,049,595

*Excluding CIL for consistency with DTZ RLV.

2.64 Given our clients specific interest, and adopting the same assumptions, Savills have created a Revised Base Appraisal of 500 units.

2.65 Further to the concerns set out in Part 2, Savills have then re-tested using the Revised Base Appraisal of 500 units on the following key areas:

 Sales Values  Baseline Build Costs  Infrastructure  Combined Appraisal

Sales Values

2.66 Based on the transacted new build sales evidence for large scale development as set out in Part 2, we have adopted £2,153 per sq m (£200 per sq ft).

Baseline Build Costs

2.67 With regard to the most recent BCIS data (Q4, 2015), rebased for ‘Walsall’, we have adopted £918 per sq m (£85 per sq ft) for houses. We note that no flats have been modelled by DTZ within their largest typology (Scheme 7 – 350 units). For consistency we have therefore excluded flats.

Infrastructure

2.68 The lower range recommended in the Harman report of £17,000 per unit for larger sites has been adopted.

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2.69 The areas of testing are summarised below:

Table 11: Savills Areas of Testing

Appraisal Assumption DTZ Assumption Savills Assumptions

Base Appraisal As set out within the DTZ As set out within the DTZ A (with CIL) Appraisal Appraisal £240 / sq ft Zone 1 B Sales Values £200 per sq ft £215 / sq ft Zone 2 Baseline Build £807 per sq m (£75 per sq ft) £918 per sq m (£85 per sq C Costs houses (no flats modelled) ft) houses

D Infrastructure Nil £17,000 per unit

Combined E As above Incorporating A-D Appraisal

2.70 The proposed levy for charging Zone 1 is £100 per sq m and £75 per sq m for Zone 2. Given our client’s specific interest, we have modelled the impact both rates will have within the above areas of sensitivity testing. The results of the sensitivity testing for the alternative assumptions are set out in Table 12 below for Zone 1 (£100 per sq m):

Table 12: Alternative Viability Results 500 Units - Zone 1

Above Savills Difference BLV £175k Appraisal Assumption from Base per Gross Appraisal Acre Base Appraisal A (with CIL)

B Sales Values 46.39% 

Baseline Build C 22.80%  Costs

D Infrastructure 27.96% 

Combined E 97.15%   Appraisal

2.71 The results of the sensitivity testing for the alternative assumptions are set out in Table 13 below for Zone 2 (£75 per sq m):

Page 15 UR 2659 a Table 13: Alternative Viability Results 500 Units - Zone 2

Above Savills Difference BLV £175k Appraisal Assumption from Base per Gross Appraisal Acre Base Appraisal A (with CIL)

B Sales Values 19.62% 

Baseline Build C 23.47%  Costs

D Infrastructure 31.57% 

Combined E 74.66%   Appraisal

2.72 The results above highlight the impact that individual inappropriate assumptions can have on the RLV. When all of these assumptions are combined, in Appraisal E, the cumulative impact is significant and will render delivery of such a site unviable given that the RLV (per gross acre) is approximately £164,000 - £85,000 below the Savills minimum threshold land value of £175,000 per gross acre (excluding a viability buffer).

2.73 In the table below, we have modelled varying levels of CIL to determine the maximum CIL level that can be charged that still leaves a RLV above the threshold land value of £175,000 per gross acre.

Table 14: Maximum CIL Levels - Zone 1

CIL Rate (£ Above Savills Benchmark Above Savills Benchmark psm) Land Value (£175,000 / Land Value plus 20% Buffer Gross Ace) (£210,000 / Gross Acre)

£90 No No £60 No No £30 No No £10 No No £5 No No

Table 15: Maximum CIL Levels - Zone 2

CIL Rate (£ Above Savills Benchmark Above Savills Benchmark psm) Land Value (£175,000 / Land Value plus 20% Buffer Gross Ace) (£210,000 / Gross Acre)

£65 No No £35 No No £15 No No £10 No No £5 No No

Page 16 UR 2659 a 2.74 This analysis illustrates that the proposed CIL rate of £100 per sq m for Zone 1 and £75 per sq m for Zone 2 is unviable and does not adequately incorporate a viability buffer. The rate is subsequently being proposed above the margin of viability and cannot be justified. We would therefore advise that the Council reviews their viability evidence and resulting CIL rates Zones 1 and 2 to ensure that they are not set at the margins of viability. This review should also extend to all other areas of the Borough as it is clear that the deliverability of larger sites in these areas will also be above the margin of viability.

2.75 We would also urge that Walsall Council address the general points noted in this report and revise their appraisal assumptions in respect of all value bands, where relevant.

2.76 Please note that the advice provided on values is informal and given purely as guidance. Our views on price are not intended as a formal valuation and should not be relied upon as such. They are given in the course of our estate agency role. Any advice in this report or the attached documents is not in accordance with RICS Valuation – Professional Standards 2014, or any subsequent edition and neither Savills nor the author can accept any responsibility to any third party who may seek to rely upon it, as a whole or any part as such.

2.77 Moving forward, our clients would welcome a meeting with Walsall Council and its advisors to discuss the approach taken and to discuss common ground in advance of the Draft Charging Schedule or the CIL Examination.

2.78 We would like to reserve the right to be heard at Examination and to be notified when:

. the Draft Charging Schedule has been submitted to the examiner in accordance with section 212 of the PA 2008;

. the recommendations of the examiner and the reasons for these recommendations are published; and

. the Charging Schedule is approved by the charging authority.

2.79 If you have any questions related to this representation please contact me in the first instance.

Yours sincerely

Director

Page 17 UR 2660 Community Infrastructure Levy Preliminary Draft Charging Schedule Response Form

All comments must be submitted in writing by 2nd November 2015 either by post to:

Planning Policy, Environment and Economy, 2nd Floor Civic Centre, Darwall Street, Walsall, WS1 1DG, or by email to: [email protected].

Your Details Name

Organisation (where Pleydell Smithyman Limited relevant) Job Title (where Planning Consultant relevant) Address (inc post code) 20a The Wharfage, Ironbridge, Telford, TF2 9QP

Telephone Number

Email Address

Q1. Do you have any comments to make on Walsall’s Preliminary Draft CIL Charging Schedule and supporting information? We would like to ensure that garden centres are specifically excluded from the ‘Non-Food Retail Warehousing’ category as listed in the preliminary draft charging schedule. Garden centres are of a different size and scale to retail warehouses who are usually multi national chains who can afford such CIL payments as £75.00 per sq m. Garden centres tend to be small family run businesses which are located out of town centres because of their historical growing activities, not through choice.

A payment of £75 per sq m would make many garden centre developments unviable, therefore stifling local economic development.

Thank you for completing the questionnaire.

UR 2662 Community Infrastructure Levy Preliminary Draft Charging Schedule Response Form

All comments must be submitted in writing by 2nd November 2015 either by post to:

Planning Policy, Environment and Economy, 2nd Floor Civic Centre, Darwall Street, Walsall, WS1 1DG, or by email to: [email protected].

Your Details Name

Organisation (where McCarthy and Stone Retirement Lifestyles Ltd. c/o The relevant) Planning Bureau Ltd. Job Title (where Policy Planner relevant) Address (inc post 4th Floor code) 100 Holdenhurst Road Bournemouth

Telephone Number

Email Address

Q1. Do you have any comments to make on Walsall’s Preliminary Draft CIL Charging Schedule and supporting information? Please see attached letter and supporting documentation.

Thank you for completing the questionnaire.

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COMMUNITY INFRASTRUCTURE LEVY AND SHELTERED HOUSING/EXTRA CARE DEVELOPMENTS

A BRIEFING NOTE ON VIABIILITY PREPARED FOR RETIREMENT HOUSING GROUP BY THREE DRAGONS

MAY 2013

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Executive Summary

New provision of retirement housing (whether sheltered or extracare) is very patchy across the country and provision of sale housing in particular is focussed on the South East and South West with very limited delivery outside these locations.

In low to medium value areas it is already very difficult for retirement housing to compete with mainstream housing development. The introduction of CIL will have a negative impact on viability and further reduce supply. To date most local authorities have not carried out a viability appraisal of retirement housing as part of the evidence base which supports the CIL charging schedule. Those local authorities who have undertaken a viability appraisal have appraised extracare but not sheltered housing and have generally found that, like Care Homes and other C2 uses, newbuild sale extracare housing cannot support a CIL payment.

This paper seeks to provide evidence which will enable viability practitioners to appraise both types of retirement housing, even in those locations where no newbuild stock has recently been provided. It has been prepared by Three Dragons drawing on information provided by members of Retirement Housing Group.

Retirement housing schemes are generally less viable than general needs housing because of a range of factors including higher build costs per sq m, a higher proportion of communal space, lack of ability to phase development and longer selling periods. This will affect their ability to pay CIL and to provide affordable housing.

S106 obligations for retirement housing have generally been subject to negotiation to reflect both financial viability and the calls which the development makes on local facilities. CIL is a fixed charge which cannot take account of scheme viability. It is therefore important that CIL rates are set at a level which reflects the overall viability of particular types of development

Because retirement housing is higher density than general needs housing the introduction of CIL will increase the value of planning obligations sought from a development much more steeply for retirement housing than is the case for general needs family housing.

Local authorities and practitioners undertaking viability appraisal and assessing affordable housing need should therefore carry out specific case studies of older persons housing when setting CIL charging schedules and affordable housing targets. This will contribute to a robust analysis which will stand up at Enquiry.

This document deals specifically with viability appraisal and draws on general information provided by members of Retirement Housing Group (RHG) to provide broad guidelines on the costs and revenues associated with provision of sheltered and extra care housing. It will assist with viability appraisal where no locally specific information is available.

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Three Dragons was commissioned by RHG to carry out specimen viability appraisals for high, medium and low value areas outside London using the cost and revenue data provided by RHG. The viability appraisal compared general needs family housing with specialist retirement housing, both sheltered and Extracare accommodation. The chosen specimen locations were  Tunbridge Wells (high value area)  Tewkesbury (medium value area)  Coventry (low value area)

Schemes were modelled with the local authority’s target percentage of affordable housing and no s106 obligations. In all locations general needs housing was more viable than retirement housing and sheltered housing was more viable than ExtraCare. In medium and low value areas it is not possible to provide retirement housing which meets the local authority affordable housing target even before the introduction of CIL. The introduction of CIL at £100 per sq m on market housing further reduces scheme viability when compared with general needs housing.

1. Recent delivery of retirement housing for sale and rent

We analysed unpublished data from the Elderly Accommodation Counsel which looks at provision of retirement housing by region. This shows that in the period from 2010 to 2012 207 schemes were developed of which 57% were for rent.

55% of all provision of retirement housing for sale was in the South East and ‘South West (48 schemes). No other region had more than 9 schemes of retirement housing for sale.

Sa le Re nta l All sche me s sche me s sche me s

EM 2 8 10 East 9 21 30 London 5 13 18 NE 3 0 3 NW 8 13 21 SE 27 29 56 SW 21 13 34 WM 8 10 18 Y+H 5 12 17 88 119 207

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 Higher land values as schemes work best when they are close to shops, services, GP practices and transport links, where older residents wish to live.

4. Standards of viability testing required by the CIL regulations

The Regulations that guide the setting of CIL allow charging authorities to set different rates for different intended uses of development. While the use class order1 provides a useful reference point – CIL Charging Schedules do not have to be tied to it. The recent “Consultation Paper on Community Infrastructure Levy: further reforms” confirms that

Currently regulation 13 allows charging authorities to set different levy rates within their area. This can be done by reference to “zones” (regulation 13(1)(a)) and “different intended uses of development” (regulation 13(1)(b)). The revised Community Infrastructure Levy guidance has clarified that “uses” does not have the same meaning as “use class”. (para 20)

Justification for setting different rates for different uses relies on a, “comparative assessment of the economic viability of those categories of development.” 2

While local authorities will want to avoid overly complex patterns of CIL charges, it is important that their charging schedule does not, “impact disproportionately on particular sectors or specialist forms of development”.3

The Regulations therefore permit local authorities to carry out a viability assessment of all likely types of development. Just as different types of retail and leisure uses will have separate viability appraisals so too should different types of residential development including sheltered and ExtraCare housing.

5. Density and its impact on CIL and S106 obligations

Both CIL and S106 obligations bear more heavily on specialist retirement housing than on general needs housing. This is because higher density development attracts higher levels of both CIL (based on £ per sq m of market housing) and S106 obligations (based on total number of dwellings). The chart below shows the relative costs per hectare of a standard S106 contribution of £5,000 per dwelling compared with CIL of £100 per sq m and £150 per sq m at both 100% market housing and 30% affordable housing.

1 Town and Country Planning Act (Use Classes) Order 1987 2 Community Infrastructure Levy Guidance, DCLG Dec. 2012 (para 35) 3 Ibid – para 37

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Based on the parameters set out above Three Dragons was commissioned by RHG to carry out a viability appraisal of older persons housing compared with general needs housing development. Specimen sheltered and ExtraCare developments were modelled on a half hectare site in three locations:

 Tunbridge Wells (high value area)  Tewkesbury (medium value area)  Coventry (low value area)

and compared with the most viable form of general needs housing which could have been provided on the same site, family housing at 35 dph.. The three locations were chosen as typical of high, medium and low value locations outside London.

The output was a residual land value per hectare (ha) for each form of development. It was assumed that for retirement housing to compete in the land market residual land value must be equal to the residual land value achieved for general needs housing

The table below shows residual land values for the three different types of development in each of the three locations. All schemes were modelled with the target percentage of affordable housing.

Affordable housing residual land value per hectare (£) at the LA target %age

No S106 obligations general needs sheltered ExtraCare housing housing

Tunbridge Wells – 40% AH £4,000,000 £3,250,000 £2,000,000 Tewkesbury – 30% AH £1,000,000 -£1,375,000 -£3,000,000 Coventry – 25% AH -£300,000 -£3,250,000 -£3,500,000

Add CIL @ £100 per sq m on market housing Tunbridge Wells CIL £205,000 £430,000 £470,000 Residual land value £3,795,000 £2,820,000 £1,530,000 Tewkesbury CIL £240,000 £500,000 £550,00 Residual land value £760,000 -£1,875,000 -£3,550,000 Coventry CIL £255,000 £535,000 £600,000 Residual land value -£555,000 -£3,785,000 -£4,100,000

 In all locations general needs housing was more viable than sheltered or ExtraCare housing.  Sheltered housing was more viable than ExtraCare housing.

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 In Tunbridge Wells (high value area) all three schemes produced a positive land value at the local authority affordable housing target even with CIL at £100 per sq m, but residual land value was higher for general needs housing than for retirement housing.  In Tewkesbury (medium value area) retirement housing produced a negative land value at the local authority affordable housing target both with and without CIL  In Coventry all three schemes produced a negative land value at the local authority affordable housing target both with and without CIL..

7. Conclusions

The introduction of CIL has a more significant impact on retirement housing than on general needs housing because of the greater density (and hence higher sq metres) of development.

S106 requirements were also potentially more onerous for retirement housing than for general needs housing but because these were negotiable dependent on financial viability and specific requirements related to the development there was more flexibility to ensure that the planning obligations sought were related to the specific viability of the development.

The viability of older persons housing provision when compared with that of general needs housing varies by location. Local authorities and practitioners undertaking viability appraisal should therefore carry out specific case studies of older persons housing when setting CIL charging schedules. This is permitted by the CIL regulations and will contribute to a robust analysis which will stand up at Enquiry. The information provided in this document will assist with viability appraisal where no locally specific information is available.

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Retirement Housing and the Community Infrastructure Levy

This paper has been prepared on behalf of McCarthy & Stone Retirement Lifestyles Ltd and Churchill Retirement Living Ltd. The purpose of this briefing note is to address the particular issues for Community Infrastructure Levy setting with specific regard to the need, benefits and economic viability of retirement apartments 1 . McCarthy & Stone and Churchill Retirement Living are concerned that many charging schedules published across the country to date could disproportionately affect the viability of their developments given that they fail to properly consider the impact of CIL on the retirement housing market, which in turn will mean that local older home-owners will be denied the opportunity to live in specialist housing that better meets their needs and aspirations in later life. The paper makes a number of recommendations that should be taken into account by CIL practitioners and decision makers in the formulation of the evidence base, draft charging schedule and decision making process.

Specifically, it is recommended that;

1. The viability appraisal inputs referred to in Table 1 represent, as far as is possible, a “typical” retirement apartment development and should therefore be used as a basis for a development typology in the CIL viability evidence base; 2. The viability assessment to inform the draft Charging Schedule should include a consideration of the relative viability of retirement housing when set against both existing site values, and a range of alternative values for the land on which a retirement development might be situated; 3. The draft Charging Schedule should pay heed to the effect of CIL on the supply of housing for the elderly, including the wider benefits that the provision of this tenure in sufficient numbers can bring, as per the NPPF paragraphs 50 and 159;

The effect of the imposition of CIL, if not given due consideration, may be to constrain land supply. This is a significant threat to land with a high existing use value and therefore to the delivery of retirement developments, which by nature are limited to urban, centrally located previously developed sites. By following these recommendations it is hoped that the CIL schedule can be adopted in a way that does not constrain the supply of retirement housing for the elderly. The consequences of ignoring this evidence is the risk of putting the delivery of the

1 Which can be referred to as Category II Sheltered Housing (less care) and use class C3, or Extra Care housing (Higher levels of care and therefore deemed use class C2). UR 2662

development plan in jeopardy, a situation to be avoided, as Paragraph 29 of the 2012 CIL regulations published by DCLG makes it clear:

‘In proposing a levy rate(s) charging authorities should show that the proposed rate (or rates) would not threaten delivery of the relevant Plan as a whole’ (Paragraph 29).

The Developers

McCarthy & Stone Retirement Lifestyles and Churchill Retirement Living are leading providers of specialist retirement housing for older home owners in the United Kingdom. It is estimated that of the specialist housing providers currently active in this specific market (not including the out of town “retirement village” model), the two companies deliver over 80% of current supply between them. In response to the housing implications of the UK’s ageing population, both companies have ambitious investment plans which rely on being able to secure sufficient land for development.

Retirement apartments offer accommodation for home owners aged over 60 years of age. Typical facilities within a development include a communal lounge for the use of all residents for socialising and events; a Manager working full time hours at the development; an emergency call system in every apartment; laundry facilities; a guest bedroom; communal landscaped gardens; plus electric scooter charging points, communal refuse areas and parking facilities. Given the nature of the resident, appropriately located retirement schemes are built within easy walking distance of town centre facilities to enable the resident to easily access all of their needs (public transport, shops, banks & post offices, cafes, community facilities, doctor, dentist etc) without reliance on a private car. Alongside companionship and security, this is one of the main reasons a purchaser of a retirement apartment will consider downsizing from properties that are less well located relative to the required facilities. It also allows a high development density to be achieved given the low requirements for parking on-site.

There is also an Extra Care model, which by including “care”, (in not just staffing, but also within the design and specification including larger communal areas), is different from retirement housing both in its form and the costs associated with its delivery and occupation. Particularly where authorities seek to apply CIL charges to this form of development and where the Development Plan specifically seeks its delivery, it would be appropriate to specifically assess this form of development because of its different characteristics and consequent different viability factors associated with it.

Although the two companies are in direct competition with each other, the potentially serious implications to land supply of getting the CIL charging schedule wrong, and its potential for adverse impact on the delivery of retirement housing for which there is an acknowledged growing need, have spurred them into jointly preparing this paper.

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A Growing Elderly Population

By 2026 older people will account for almost half (48 per cent) of the increase in the total number of households, resulting in the addition of 2.4 million older person households than there are today. The number of people aged 85 or over will increase by 2.3 million by 2036, a 184 per cent increase. The ageing of society poses one of our greatest housing challenges.

The need to address this is reflected in the NPPF at paragraphs 50 and 159. The thrust of these paragraphs is to ensure that Local Plans properly account for the need for older persons housing (amongst other housing types). Paragraph 50 states that the planning system should be;

‘supporting strong, vibrant and healthy communities’ and highlights the need to ‘deliver a wide choice of high quality homes, widen opportunities for home ownership and create sustainable, inclusive and mixed communities. Local planning authorities should plan for a mix of housing based on current and future demographic trends, market trends and the needs of different groups in the community...such as...older people’ [emphasis added].

More recently, in March 2013, the House of Lords report entitled “Ready for Ageing?” concluded that;

“The housing market is delivering much less specialist housing for older people than is needed. Central and local government, housing associations and house builders need urgently to plan how to ensure that the housing needs of the older population are better addressed and to give as much priority to promoting an adequate market and social housing for older people as is given to housing for younger people”

The Role of CIL and setting an appropriate rate

When setting a CIL rate, Regulation 14(1) of the 2010 Community Infrastructure Levy Regulations states that “an appropriate balance” between “a) the desirability of funding from CIL (in whole or in part)” and “b) the potential effects (taken as a whole) of the imposition of CIL on the economic viability of development” should be found.

It is recognised that this does not require CIL to be set at a rate that ensures every scheme is viable. However, specific types of housing should not be rendered unviable by CIL generally and particularly where they address a need.

Paragraph 30 of the April 2013 DCLG CIL Guidance states that;

“Charging authorities should avoid setting the charge right up to the margin of economic viability across the vast majority of sites in their area. Charging authorities should show, using appropriate available evidence, including existing published data, that their proposed rates will contribute positively towards and not threaten delivery of the relevant Plan as a whole at the time of charge setting and throughout the economic cycle”

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The CIL Guidance then stresses the importance of this principle to individual market sectors that play an important role in meeting housing need, housing supply and the delivery of the Development Plan, such as specialist accommodation for the elderly. This is relevant in the context of Paragraph 37 of the Guidance:

“… However, resulting charging schedules should not impact disproportionately on particular sectors or specialist forms of development and charging authorities should consider views of developers at an early stage”.

Not properly considering the effect of CIL on this form of development where the provision of specialist accommodation for older people plays a clear role in meeting housing needs in the emerging or extant Development Plan, would result in the Council putting the objectives of the Development Plan at risk in direct contravention of Government Guidance.

Additionally, it is of vital importance that the emerging CIL does not prohibit the development of specialist accommodation for the elderly given the existing and growing need for this form of development.

It is therefore imperative that the emerging CIL rate properly and accurately assesses the viability implications of the development of specialist accommodation for the elderly

Viability

With the onus on the CIL charging authority to set a rate that has regard to available evidence on the viability of development; it is considered that this paper represents just that type of evidence.

Any CIL viability assessment should consider the effect of the imposition of CIL on a retirement apartment scheme. This effect should be quantified using appraisal inputs specific to the retirement housing product. It is not correct to simply assume that a general needs apartment scheme is comparable to a retirement apartment scheme. There are a number of key differences which will affect the land value that can be produced by each. Table 1 below summarises the residual land appraisal inputs applicable to a typical scheme on a 0.4 hectare site, a 3 storey 40 unit retirement apartments scheme. These should be tested as a separate development typology by the CIL viability assessment. Also provided (for comparison purposes only) are the applicable inputs to a typical general needs apartment scheme on a similar size land plot, such that the differences can be noted and quantified. Whilst the retirement housing product is relatively standard (specification does not necessarily depend on location), a general needs scheme could of course offer various flat types and specifications, dependant on local markets and demand (e.g. commuter belt, first time buyers, buy to let, larger family size flats in urban locations).

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As per Local Plan policy as cross referred to in the Charging As per Local Plan policy as schedule (removing the S106 Costs cross referred to in the requirement for education, sports charging schedule facilities etc)

As per Local Plan Policy – Affordable Housing typically a financial contribution As per Local Plan Policy Assumption off-site Sales & Marketing Costs Legal fees (per open £600 £600 market unit sale) Sales/marketing (% GDV) 6% 3% Finance and acquisition costs Arrangement fee (loan) 1% of max loan 1% of max loan Interest rate (%) 7% 7% Agents fees (%) of land 1.50% 1.50% Legal fees (%) of land 0.75% 0.75% Stamp Duty (%) as per applicable rate as per applicable rate Developer's return for risk Profit as % of sales 20% - 25% 17.5% revenue Existing Use Values could be - Hotel; Residential Land Assembly of 3-4 detached properties; 30,000 sq ft office. Alternative Site Value - 75 bed Site Benchmark land Care Home; Lower Density Site Specific value Housing Development; General Needs flatted scheme; Retail led Scheme all within or close to town centre location with likely higher general values Timings Month Month Planning permitted 0 0 Construction period 12 months 12 months Construction start 7 7 Construction end 19 19 First sale 19 14 Last sale (legal 58 33 completion)

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1 per month. Sales curve at 18 units in initial 12 months, 12 units 2 per month, sales curve as Selling rate in next 12 months, final 10 units per local experience sold in next 16 months Freehold sale (ground 57 33 rent payment) Overall scheme end date 57 33 Empty Property Cost Commensurate with Sales - Timing S106 payments on commencement on commencement

It is also helpful to specifically consider those inputs that are significantly different:

Communal Areas

Many forms of specialist accommodation for the elderly, such as retirement housing, provide communal areas for residents at an additional cost to developers. Specialist housing providers also have additional financial requirements as opposed to other forms of development that will only pay CIL based on 100% saleable floor space. This does not provide a level playing field for these types of specialist accommodation and a disproportionate charge in relation to saleable area and infrastructure need would be levied.

In comparison to open market flats the communal areas in specialist accommodation for the elderly are considerably larger in size, fulfill a more important function and are accordingly built to a higher specification in order to meet the needs of the elderly. Typically a mainstream open market flatted residential development will provide 16% non-saleable floor space, whereas this increases to 30% for sheltered accommodation and 40% for Extra Care accommodation.

This places providers of specialist accommodation for the elderly at a disadvantage in land acquisition as the ratio of CIL rate to net saleable area would be disproportionately high when compared to other forms of residential accommodation.

Sales Rate

In the case of retirement housing there is also a much longer sales period which reflects the specialist age restricted market and sales pattern of a typical retirement housing development. This has a significant knock on effect upon the financial return on investment. This is particularly important with Empty Property Costs, borrowing and finance costs, and with sales and marketing costs, all of which extend typically for a longer time period. Currently the typical sales rate for a development is approximately one unit per month, so a 40 unit retirement scheme (i.e. an average sized scheme) can take 3-4 years to sell out after the build phase is completed.

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As a result of this, sales and marketing fees for specialist accommodation for the elderly are typically in excess of 6% of GDV, not 3% as ordinarily applied to conventional residential development.

Empty Property Costs

Properties can only be sold upon completion of the development and the establishment of all the communal facilities and on-site house manager. These communal areas cost additional monies to construct and are effectively subsidised by the developer until a development has been completely sold out. In a retirement development the staff costs and extensive communal facilities are paid for by residents via a management / service charge. However, due to the nature of these developments the communal facilities have to be fully built and operational from the arrival of the first occupant. Therefore to keep the service charge at an affordable level for residents, service charge monies that would be provided from empty properties are subsidised by the Company (these are typically known as Empty Property Costs). This is a considerable financial responsibility because, as previously mentioned, it usually takes a number of years to fully sell a development. For a typical 40 unit Retirement scheme, the Empty Property Costs are on average £225,000.

Build Costs

The Build Costs Information Services (BCIS) shows that the Mean Average Build Costs per m² for a region. This database consistently shows that build costs vary significantly between housing types, with the cost of providing sheltered housing consistently higher than for general needs housing and apartments.

While the BCIS figures are subject to fluctuation it is our experience that specialist accommodation for the elderly tends to remain in the region of 5% more expensive to construct than mainstream apartments, and generally between 15 to 20 % more expensive than estate housing.

Land Value Considerations

A crucial element of the CIL viability appraisal will be to ensure the baseline land value against which the viability of the retirement scheme is assessed properly, reflecting the local conditions within which any retirement scheme will be located.

As such, the viability of retirement development should be assessed against both existing site values, and just as importantly, of potential alternative (i.e. competitor) uses. Our concern is that CIL could prejudice the delivery of retirement housing against competing uses on the land suitable for retirement housing schemes.

As retirement housing is an age restricted housing type, it is important that it is located within close proximity to the services that an elderly person may require. The average age of residents in this type of housing scheme is around 79 years. They are likely to have abandoned car ownership, be of lower mobility and/or rely

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on close proximity to public transport. For this reason, the major retirement housing developers will not consider land more than half a mile level walk from a town centre or local centre that has a post office, pharmacy, doctor’s surgery and a good array of shops for the elderly occupier’s likely daily needs. This should be understood as housing for the active elderly – care homes can theoretically be sited further from town as the residents of these types of accommodation typically do not rely on their own mobility to access doctor/medical care and food shops. Care and services are bought in onto these sites to a greater degree. In coastal areas this effectively halves the available land within walking distance of the town centres of the district, and therefore means that sites suitable for retirement apartments are scarce.

The result is that the retirement housing product can only be built on a limited range of sites. If the CIL schedule sets the charging rate at a level that means retirement housing schemes cannot compete in land value terms with other uses for these sites (which by nature could be reasonably built elsewhere), then no retirement housing will come forward since no suitable sites will be secured – to the detriment of the housing needs and aspirations of local older people. It is worth noting that Paragraph 27 of the April 2013 Community Infrastructure Levy Guidance recognises that brownfield sites are those where the CIL charge is likely to have the most effect, stating; “The focus should be in particular on strategic sites on which the relevant Plan relies and those sites (such as brownfield sites) where the impact of the levy on economic viability is likely to be most significant”.

Any CIL Viability Assessment should therefore consider a development scenario for a typical flatted retirement housing scheme, located on a previously developed site within 0.5 miles of a town centre.

Emerging Practice

In the context of Regulation 13 of the CIL regulations and paragraph 35 of the April 2013 Community Infrastructure Levy Guidance document produced by DCLG, this is an important point. Paragraph 35 states;

“Regulation 13 also allows charging authorities to articulate differential rates by reference to different intended uses of development provided that the different rates can be justified by a comparative assessment of economic viability of those categories of development. The definition of ‘use’ for this purpose is not tied to the classes of development in the Town and Country Planning Act (Use Classes) Order 1987, although that Order does provide a useful reference point”.

The Three Dragons consultancy is currently working with the Retirement Housing Group, (which represents a wide range of retirement housing providers, both public and private), on CIL appraisals and has also recognised this distinction.

We have seen a growing number of charging schedules that throw this into sharp relief. In Central Bedfordshire the authority set the charging rate for retirement housing at £nil in light of the non-viability of these schemes. In Dacorum Council, a

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bespoke CIL Levy rate for retirement housing has been proposed in light of the differences between this form of housing and general needs residential. Dacorum Council also exempt Extra Care housing completely on the basis of non viability.

It is also important to recognise that retirement housing sites, due largely to their location near to town and local centres, are typically built on brownfield land which in most cases is in current use (i.e. not derelict or abandoned). Paragraph 27 of the Guidance recognises that brownfield sites are those where the CIL charge is likely to have most effect.

Conclusion

It is a requirement of the CIL regulations that the imposition of CIL does not prejudice the delivery of the development plan. For this reason alone, it is of the utmost importance that charging authorities consider this form of housing when drafting charging schedules. Retirement housing brings with it many environmental, economic and social benefits. These attributes further embed the notion that retirement housing is a distinct housing market type deserving of special consideration within the Development Plan. These are set out at Appendix 1 to this letter.

The experience of McCarthy and Stone and Churchill Retirement Living on recent planning application schemes throughout the country is such that, at best, viability is challenging. There is a ready supply of evidence to prove this in a Development Control setting.

Below at Table 2 is a summary of the agreed affordable housing provision secured via off-site affordable housing and s106 payments at recent (2013) Churchill and McCarthy and Stone planning applications throughout the country. This reflects the viability of schemes against the most up to date housing market conditions at the time of writing. As is shown, in the vast majority of cases, the provision of the full policy requirement for affordable housing was not possible because of its effect on the economic viability of the scheme;

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Table 2 – Planning application decisions made in 2013 on developments by Churchill Retirement Living and McCarthy & Stone Affordable Viability Local Housing & Existing Site Units Issue? Date Authority s106 Land Use (Yes/No) contributions Redundant CRL and vacant East Herts Mar Bishop’s 52 £565,300 No commercial DC ‘13 Stortford centre. Low EUV CRL Worthing Mar Existing Care 29 £89,547 Yes Worthing BC ‘13 Home use Car showroom, CRL Tandridge Feb 35 Nil Yes workshop and Caterham DC ‘13 under-utilised offices CRL Jan Redundant 50 LB Bromley £255,500 Yes Orpington ‘13 Office Block Fire Station CRL West Jan and 2 39 £150,000 Yes Dorchester Dorset DC ‘13 residential properties Cleared development CRL Jan 60 Cornwall £300,000 Yes site, extant Penzance ‘13 hotel permission. M & S Warwick £250,000 Yes Feb 2 houses 22 Kenilworth BC ‘13 M & S 33 Craven DC £73,350 Yes Feb Mill Skipton ‘13 M & S 25 Shepway £56,086 Yes Feb Nursing home Folkestone DC ‘13 M & S 50 LB Bexley £78,979 Yes Feb 6 storey office Sidcup ‘13 block M & S 32 Braintree £17,718 Yes Mar Govt offices Braintree DC ‘13 M & S 40 IOW £216,000 Yes Mar Garage and Bembridge Council ‘13 pfs M & S 48 Salford BC Nil Yes Mar Hotel Monton ‘13 M & S 32 Stroud DC Nil Yes Mar Garage/car Stroud ‘13 repairs

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Appendix 1

The Benefits of Retirement Housing

To further embed the notion that retirement housing is a distinct housing market type that deserves special consideration within the Development Plan, it is worth setting out the benefits of retirement housing to both residents and the wider community. Sheltered housing gives rise to many social benefits by providing specialized accommodation to meet a specific housing need. In summary, sheltered housing:

 provides purpose built specifically designed housing for local elderly people  a recognised local housing need (according to the latest research by Churchill Retirement Living, of their existing sheltered housing developments, reinforcing previous findings of McCarthy & Stone, over 50% of occupants of sheltered housing move from within a 10 mile radius of the development);  helps to reduce anxieties and worries experienced by many elderly people living in housing which does not best suit their needs in retirement by providing safety, security and reducing management and maintenance concerns;  provides companionship and a community which helps to reduce isolation, loneliness and depression;  provides a form of housing which addresses the onset and increasing problems of mobility/frailty;  is very well located in relation to shops and other essential services, being within easy walking distance or readily accessible by public transport which can reduce isolation and reduce the worry of depending on a car;  helps to maintain an independent lifestyle; and  helps to maintain health and general well-being.

There are also many planning benefits which include:-  sheltered housing releases under-occupied housing and plays a very important role in the recycling of stock in general;  there is a ‘knock-on’ effect in terms of the whole housing chain enabling the more effective use of the existing housing stock;  sheltered housing maximises the use of previously-developed land;  because of its location, sheltered housing reduces the need to travel by car (the elderly living in more remote locations will remain far more dependent upon the private car); and  helping to introduce mixed land uses in town centres, revitalising such areas.

Private sheltered housing is a ‘good neighbour’ in all respects. There is a very low traffic generation, and the general lack of peak hour traffic movement ensures that

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conflict does not occur with other peak traffic movements such as school and work journeys. Residents tend to be relatively active in the local community, be a watchful eye on the local neighbourhood in terms of crime and safety, and are local shoppers/spenders.

In addition to the above retirement housing provides a number of key sustainability benefits including;

 Making more efficient use of land thereby reducing the need to use limited land resources for housing;  Providing high density housing in close proximity to services and shops which can be easily accessed on foot thereby reducing the need for travel by means which consume energy and create emissions;  Providing shared facilities for a large number of residents in a single building which makes more efficient use of material and energy resources.

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