Meeting Obligations? the Use of Section 106 Agreements

Item 5b

BOROUGH OF POOLE

SERVICE PROVISION SCRUTINY AND AUDIT COMMITTEE

7 FEBRUARY 2008 Meeting Obligations? – The Use of Section 106 Agreements

1.0 PURPOSE OF REPORT

1.1 To consider proposals and to look at the methodology for the scrutiny of the Use of Section 106 Agreements by the Borough of Poole.

2.0 RECOMMENDATIONS

2.1 It is recommended that

2.2 the Committee adopt the Terms of Reference detailed in paragraph 4.

2.3 The scrutiny be undertaken by the a task and finish group in sessions inviting the witnesses identified in paragraph 5.2

3.0 BACKGROUND

3.1 The Use of Section 106 Agreements by the Borough of Poole has been identified by the Council’s Scrutiny Board as a priority for scrutiny by this Committee.

3.2 The Committee is invited to consider the manner in which it wishes to carry out this Scrutiny

4.0 TERMS OF REFERENCE

4.1 To complete a scrutiny of progress made with the Use of Section 106 Agreements by the Borough of Poole including identification of;

 consider the Audit Commission’s Report on Affordable Housing (use of S106 Agreements);  consider Allocation of Funds;  consider Implications of any claw back. . 5.0 FORMAT

5.1 It is suggested that this scrutiny can be completed best in sessions of a task and finish group.

5.2 Witnesses to be invited to give evidence to the scrutiny could include;

 The Portfolio Holders

Service Provision Scrutiny and Audit Committee 7 February 2008 1  The Strategic Director  Head of Planning  Appropriate unit heads  Audit Commission  The aim will be to focus on a number of case studies rather than interviewing all.

6.0 OTHER ISSUES

6.1 Other issues that the scrutiny would wish to examine would include equalities issues

7.0 RECOMMENDATIONS

7.1 It is recommended that  the Committee adopt the Terms of Reference detailed in paragraph 4 above.  The scrutiny be undertaken by a task and finish group in sessions inviting the witnesses identified in paragraph 5.2

T M Martin Head of Legal and Democratic Services

Contact Officer Keith Gordon Tel 01202 633018 Email [email protected] Date 20 December 2007

2 Service Provision Scrutiny and Audit Committee 7 February 2008 Appendix 1

Service Provision Scrutiny and Audit Committee – 3 January 2008

Planning Obligations Briefing Note

1. Background

1.1Section 106 of the 1990 Planning Act allows developers to enter into a voluntary legal agreement with the local planning authority in order to provide a public benefit, either on-site or off-site, when their proposals are granted planning permission. Known as planning obligations, the requirement for such a benefit should be the subject of a number of tests. Government guidance, most recently issued in Circular 5/05, has emphasised that obligations are not a tax on development, enabling the community to share in the developer’s profit, but they are to enable a development that would otherwise be unacceptable. The five tests require an obligation to be:  Relevant to planning;  Necessary to make the development acceptable in planning terms;  Directly related to the proposed development;  Fairly and reasonably related in scale and kind to the proposed development; and  Reasonable in all other respects.

1.2These tests were originally introduced in Circular 1/96 because some local planning authorities had granted planning permissions, having negotiated obligations that were totally unrelated to the development. In these cases, the public perception had been that the obligation had in effect been a bribe. In one celebrated case planning permission had been granted for a superstore, with an accompanying S106 obligation to provide a public swimming pool in another part of the town. Generally, though, obligations tended to relate to the provision of enabling infrastructure; highway capacity, off-site drainage improvements, and the like. Poole has always used this power in a proper fashion. However, even here, developers were not above courting popularity by including community facilities in their schemes even when this was not a requirement to be met through a S106 agreement.

1.3From 1990 onwards, local planning authorities, including Poole, began to interpret the guidance more broadly. This applied particularly to necessity and relationship tests, recognising that development imposed a burden on the local population in terms of demand for community capital. In particular, it was more widely recognised that the cumulative impact of a large number of small developments required obligations to make them acceptable. In 1994, Poole was at the forefront of this when, despite a direction from GOSW, the Secretary of State was forced to acknowledge that our recreational obligations policy represented a proper use of the system.

1.4To a considerable degree, however, it was the Government itself that prompted the broader interpretation of the tests with its own guidance,

Service Provision Scrutiny and Audit Committee 7 February 2008 3 encouraging local planning authorities to secure a proportion of new residential developments as affordable housing. The justification for this, in terms of the necessity test, was that it was Government policy to achieve balanced housing markets. When this was introduced in the early 90s, the cynical view suggested that planning was an entirely inappropriate mechanism for achieving these ends and that the Government was merely wanting to be seen as doing something about the housing problem without itself allocating the necessary resources.

1.5The development of affordable housing guidance has itself become ever more onerous for developers. Site size thresholds have reduced, and the proportions required have increased. Between 1994, when the Council’s affordable housing obligations policy was set out in the deposit version of the first Poole Local Plan, and 2000 only two residential planning permissions had yielded affordable housing (25 units in one case) or a financial contribution (£450k in the other). The more recent policy, set out in the Local Plan First Alteration, has been much more successful, as acknowledged in preliminary feedback from the recent CPA inspection.

1.6The notion that obligations are not a tax on development has been increasingly hard to justify, with the Government consulting on a different approach (Planning Gain Supplement) and authorities such as Milton Keynes and Swindon experimenting with a “roof tax”. Following extensive consultation, the Government has now decided to introduce a Community Infrastructure Levy, though not before 1 April 2009. This is, in effect, a roof tax, the level of which will be determined by local planning authorities on the basis of community infrastructure needs set out in their Local Development Frameworks. The Levy will NOT include the need for affordable housing, which will be negotiated separately, as will site specific requirements. Although detailed guidance has yet to be issued, it can be assumed that the Levy will, like obligations, have a planning purpose; it will support necessary infrastructure to enable new development to take place. The Levy will, of course, be subject to development viability.

2. Obligations in Poole: Current Situation

2.1Obligations can broadly be divided into three types. The first relates to site- specific infrastructure without which the proposed development could not physically take place. Examples might be a highway connection or drainage improvements. These would be generally negotiated, as required, when planning applications are determined.

2.2The second are underpinned by general policies in the Poole Local Plan. Examples here are:  Policy T13, which requires remedial measures to mitigate the impact of development on the transport network;  Policy CF6, which allows for contributions to the provision of necessary social infrastructure such as schools.

4 Service Provision Scrutiny and Audit Committee 7 February 2008 2.3Finally, there are specific types of obligation, also underpinned by policies in the Local Plan and usually covered by Supplementary Planning Guidance. Examples here are:  Policy H5 and associated SPG, relating to affordable housing;  Policy L17 and associated SPG, relating to recreation;  Policies in Chapter 14 and associated SPG, relating to the Regeneration Area.

2.4Since the Local Plan was adopted, there have been two instances where new types of obligation have been introduced:  An Interim Heathland Planning Framework has been introduced to mitigate the adverse impacts of new development on the Dorset Heathlands Special Area of Conservation, pending the preparation of a Local Development Document.  A Transportation Contributions Policy has to some extent regularised the obligations collected under Policy T13.

2.5Clearly, some of these obligations are “must haves”, otherwise a refusal of planning permission is inevitable, whilst others are more discretionary, although as in the case of affordable housing these may be very important. Viability will always act as a constraining factor in negotiations and where “must haves” result in significant top slicing, difficult choices have to be made in prioritising discretionary elements.

3. Conclusion

3.1Obligations have become very complicated and the manner in which they have evolved, both nationally and locally, requires a more consistent approach. Nationally, the Government intend to achieve this through the Community Infrastructure Levy.

3.2In Poole, we will respond to the Levy by identifying infrastructure needs through the Local Development Framework, and by preparing an Obligations Local Development Document, simplifying the present system. Work on the latter has already started. It will have regard to recent Audit reports and the need to ensure that negotiations are underpinned by necessary viability assessments.

David Ralph

Head of Strategic Planning

December 2007

Service Provision Scrutiny and Audit Committee 7 February 2008 5