Public Document Pack
AGENDA FOR THE COUNCIL
Your attendance is requested at a meeting of the Council in the Council Chamber - Deanes on Thursday, 21 July 2016, at 6.30 pm.
Melbourne Barrett Chief Executive
For more information please contact the Democratic Services team: 01256 844844 Or email: democratic.services@basingstoke.gov.uk Visit: www.basingstoke.gov.uk/meetings
Public Participation Scheme If members of the public wish to address the meeting they should notify Democratic Services before 12 noon on Tuesday of the week of the Council meeting.
The public participation scheme is available to access through the council’s website - www.basingstoke.gov.uk/participation
Members are encouraged to obtain any points of clarification on the reports on the Agenda in advance of the meeting.
COMMITTEE PAPERS If you need this information in a different format, such as large print, please contact Democratic Services.
Alternatively all documents associated with this agenda can be accessed through the Council’s website on www.basingstoke.gov.uk/meetings
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AGENDA
1. APOLOGIES FOR ABSENCE
2. DECLARATIONS OF INTEREST
3. MINUTES OF THE MEETING HELD ON THE 26TH MAY 2016 9 - 20
4. ANNOUNCEMENTS
5. THE MAYOR TO MAKE PRESENTATIONS OF CERTIFICATES OF PUBLIC SERVICE TO FORMER MEMBERS OF THE COUNCIL
6. QUESTIONS FROM MEMBERS OF THE PUBLIC
To receive and answer any questions from the public. (Questions must be received in writing by Democratic Services no later than noon on Tuesday 19th July 2016).
1) Dr Debra Rolfe
Do you agree that if the unelected Overton Neighbourhood Plan committee has not followed correct procedures, that their plan is open to challenge in the courts, and should not be adopted? Do you trust your colleagues, the elected Borough Councillors for Overton, who have both publicly stated that the Overton Neighbourhood Plan committee have not followed correct procedures? And if so, do you not have a duty to throw out, or at the very least postpone adoption of the Overton Neighbourhood Plan, until these concerns have been fully investigated?
2) Dr Debra Rolfe
A planning application has been submitted to build 165 new homes in Overton on a site excluded from this neighbourhood plan (called the Great North Field)? Are you aware that the Overton neighbourhood plan site selection process excluded this land and refused to talk to the developer, on the basis of comments apparently written by residents on post-it notes, and questionnaires posted into an unmonitored box? Did you know that whilst approximately 240 people have submitted objections to development on the Great North Field, a far higher number, 1149 residents voted "No" to the Overton neighbourhood plan? Do you agree that the developer would have a good chance of a successful legal challenge to this neighbourhood plan?
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If they were successful, who would pay their legal costs?
3) Dr Debra Rolfe
Are you concerned that land assessed by your planning officers for the Strategic Housing Land Availability Assessment (updated in August 2015), and deemed unsuitable for development, has been included in this neighbourhood plan, despite the only access to the site being down a very narrow lane past the primary school, which would inevitably increase the risk of child road accidents?
4) Dr Debra Rolfe
Overton has a history of making strong and numerous objections to any new housing development in the village. Are you surprised that people in Overton have (albeit narrowly) just voted for 29 acres of new housing in the village? Those promoting the plan said it was for only 150 houses, and it would prevent planning permission being granted for new houses on Overton's Great North Field? Can you guarantee that there would be only 150 houses built on these 29 acres, or that the neighbourhood plan would prevent new homes being built on the Great North Field, and if not, do you accept that the campaign for Overton neighbourhood plan has been misleading, and the result of the vote is therefore invalid?
7. PETITIONS
To receive petitions. (Notice of petitions must be received in writing by Democratic Services, no later than noon on Tuesday 19th July).
8. RESIGNATIONS AND APPOINTMENTS 21 - 22
a) to receive resignations from Committees and to make any necessary re-appointments
b) to receive resignations from Outside Bodies and to make any re- appointments and fill any existing vacancies.
9. PROPERTY AND ALTERNATIVE INVESTMENT STRATEGY - 23 - 76 INVEST TO GROW FUND
Recommendation from the Cabinet Meeting held on the 28th June 2016
That Council approve: 1) The Invest to Grow Fund Investment Strategy. 2) Allocation of the earmarked Alternative Investment Strategy funding of £25m to the Invest to Grow Fund.
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10. ADOPTION OF NEIGHBOURHOOD PLAN FOR OVERTON 77 - 138
Recommendation from the Cabinet Meeting held on the 28th June 2016.
That Full Council, under section 38A(4) of the Planning and Compulsory Purchase Act 2004, make the Overton Neighbourhood Plan with immediate effect, with the consequence that it becomes part of the statutory development plan for Basingstoke and Deane Borough.
11. 2015/16 REVENUE AND CAPITAL OUTTURN 139 - 194 Recommendation from the Cabinet Meeting held on the 28th June 2016.
That Council:
1) Note the revenue outturn for 2015/16 was a net surplus of £626,100.
2) Agree the carry forward requests, new funding requests for strategic budgets and the contributions to and from revenue reserves as shown in the shaded areas of Appendix 1(a) and 1(b) of the report.
3) Note that any on-going revenue impacts identified from a detailed review of the outturn, will be included in budget monitoring reports for 2016/17 and the budget strategy for 2017/18.
4) Note the capital outturn and agree the revised capital programme detailed in Appendix 8 of the report.
12. TREASURY MANAGEMENT ANNUAL REPORT 2015/16 195 - 216 Recommendation from the Cabinet Meeting held on the 28th June 2016.
That Council note:
1) The Treasury Management Annual Report for 2015/16 which includes the Prudential Indicator Actuals for 2015/16;
2) That the Capital Financing Requirement and the Minimum Revenue Provision requirement are both nil.
13. COMMUNITY INFRASTRUCTURE LEVY - DRAFT CHARGING 217 - SCHEDULE 412
Subject to a recommendation from Cabinet to be held on 18 July 2016
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14. CALENDAR OF MEETINGS 413 - 414 To approve the committee calendar for the 2017/18 municipal year.
15. NOTICE OF MOTION - EU RESIDENCY
Mover: Councillor M Westbrook Seconder: Councillor P Harvey
EU Residency
EU citizens living in Basingstoke & Deane work here, run businesses here, their children go to school here, they contribute hugely to our community and are valued members of society.
Full council is concerned that recent comments made within national political debates may have increased the anxiety felt by EU citizens living in the UK and also of British citizens living in the EU. This language may have had the effect of putting the residency rights of EU citizens in doubt.
Full council needs to play its part in giving these residents certainty of their position.
We ask that the leader writes to the Prime Minister and expresses full councils opinion that there should be a clear and unambiguous statement that there should be no changes in residency of EU citizens living in the UK and of British citizens living in the EU.
16. NOTICE OF MOTION - MANAGEMENT COMPANIES AND THE NON ADOPTION OF ROAD AND THE ENVIRONMENT IN DEVELOPMENT
Mover: Councillor L James Seconder: Councillor I Tilbury
Management Companies and the Non Adoption of Road and the Environment in Development
Council acknowledges:
The growing concern of both members and residents about the increasing issue of the non adoption of roads and the environment in development.
That the non adoption of roads and the environment is leading to charges being placed on residents from private management companies. These charges reflect services that residents already pay for in their Council Tax - this is double taxation.
These charges are levied on Basingstoke & Deane residents through increased rents and/or directly billed charges which add considerably
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to their costs of living.
In 2014 a motion was brought to full council outlining the concern from residents regarding management company charges. Since that time members have seen a further increase in the use of management companies by developers and also an increase in casework from residents regarding them.
Recently, there was cross party concern expressed at the Development Control Committee that one of our Social Landlords was choosing to promote development where the roads and environment would not be given over for adoption.
Council recommends:
Full council asks that given the increasing concern of members and residents about the growing trend of non adoption of roads and the environment in development that a committee undertakes a thorough examination. In particular, the committee should look at changes in the market place over the past 12 months in the use of management companies and the solutions being implemented elsewhere.
17. TO RECEIVE THE MINUTES OF THE FOLLOWING MEETINGS
Please can Members refer to the page number of the minute book when asking questions on the en-bloc minutes at the Council Meeting.
Meeting Committee Pages Date Development Control 06/04/2016 7215 - 7228 Development Control 11/05/2016 7229 - 7309 Council 12/05/2016 7310 - 7326 Cabinet 16/05/2016 7327 - 7332 Council 19/05/2016 7333 - 7334 Council 26/05/2016 7335 - 7346 Community Environment & 08/06/2016 7347 - 7351 Partnerships Manydown Overview 13/06/2016 7352 - 7355 Scrutiny 14/06/2016 7356 - 7359 Development Control 15/06/2016 7360 - 7380 Scrutiny 21/06/2016 7381 - 7383 Audit & Accounts 27/06/2016 7384 - 7388 Manydown Executive Committee 28/06/2016 7389 - 7391 Cabinet 28/06/2016 7392 - 7398
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18. QUESTIONS FROM MEMBERS OF THE COUNCIL ON NOTICE
19. EXCLUSION OF PRESS AND PUBLIC
To consider whether, in view of the nature of the remaining items on the agenda, any of them are likely to involve the disclosure of exempt or confidential information within the terms of Schedule 12A of the Local Government Act 1972.
20. CONFIDENTIAL/EXEMPT ITEMS FOR INFORMATION
Item 9 - Property and Alternative Investment Strategy - Invest to Grow fund
Confidential Appendix 3
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BASINGSTOKE AND DEANE BOROUGH COUNCIL
Minutes of the meeting of the Basingstoke and Deane Borough Council held at the Civic Offices, London Road, Basingstoke on Thursday 26 May 2016 at 18:30
Members of the Council in attendance: The Worshipful the Mayor Councillor J Frankum and the following Councillors:-
C Ashfield, R Bean, M Bound, S Bound, J Bowyer, R Burgess, A Court, J Cousens, O Cubitt, S Day, H Eachus, L Edwards, G Falconer, P Frankum, S Frost, S Godesen, H Golding, R Golding, P Harvey, G Hood, J Izett, L James, G James, S Keating, D Leeks, P Lonie, P Miller, S Parker, C Phillimore, D Putty, N Pierce, D Potter, K Rhatigan, C Regan, T Reid, J Richards, N Robinson, T Robinson, V Rowland, M Ruffell, C Sanders, D Sherlock, J Smith, E Still, R Tate, D Taylor, M Taylor, I Tilbury, M Tucker, G Watts, K Watts, J Westbrook, M Westbrook
22/16 Apologies for Absence [Item 1]
Councillors R Gardiner, R Hussey, A Jones, A McCormick, R Musson, C Pinder
23/16 Declarations of Interest [Item 2]
No declarations were made.
24/16 Minutes [Item 3]
The minutes of the meetings held on 12 and 19 May 2016 were confirmed as a correct record and signed by the Mayor.
25/16 Announcements [Item 4]
1) The Mayor expressed thanks for donations received for her charity.
2) The Chief Executive provided an update regarding devolution and options for unitary local government. He advised members that Hampshire County Council’s Cabinet would consider a report at its meeting on the 6 June 2016 that proposed option D of the commissioned Deloitte report as its preferred option. He explained that option D was a county based unitary local authority to provide services to 1.3 million residents. He further added that the view of officers of BDBC was that the Deloitte report was too narrowly drawn to form the basis of a detailed consideration of options for unitary local government for Hampshire, and in particular for Basingstoke and Deane. Leaders and Chief Executives across the Heart of Hampshire authorities had met and agreed that a more holistic options appraisal process should be undertaken and that the work would be led by BDBC in collaboration with other local authorities.
Page 9 26/16 Questions from members of the public [Item 5]
No questions were asked
27/16 Petitions [Item 6]
No petitions were received.
28/16 Resignations and Appointments [Item 7]
RESOLVED: That Councillor Rhatigan replace Councillor Still as a reserve member of the Manydown Overview Committee.
29/16 Councillor R Musson [Item 8]
RESOLVED: That
In accordance with Section 85 of the Local Government Act 1972 (a) it be noted that, due to ill health, Councillor Musson has been unable to attend any meetings of the Council, its Committees or outside bodies since 10 December 2015 (b) it be accepted that this is a reason which shall nullify the disqualification to hold office should it continue for a six month period and (c) it be agreed that a new six month period shall commence with immediate effect.
30/16 Adoption of Oakley and Deane Neighbourhood Plan [Item 9]
The Cabinet Member for Planning and Infrastructure introduced the report which following a positive referendum result, recommended that the Oakley and Deane Neighbourhood Plan be ‘made’ by Council. He explained that once the plan was ‘made’ it would become part of the statutory development plan for its area and would be used alongside local and national planning policy and guidance. He paid tribute to those who brought the plan together and commended them for their work and attention to detail, together with the officer team for the support given to the Neighbourhood Planning Group. He further added that this was the borough’s first Neighbourhood Plan and set an example to other villages on how such a plan can be produced.
RESOLVED: That Council
Under section 38A(4) of the Planning and Compulsory Purchase Act 2004, make the Oakley and Deane Neighbourhood Plan with immediate effect, with the consequence that it becomes part of the statutory development plan for Basingstoke and Deane Borough.
31/16 Local Plan Adoption [Item 10]
The Cabinet Member for Planning and Infrastructure introduced the report which set out modifications to the plan proposed by the Local Plan Inspector and sought approval for the adoption of the Local Plan 2011 – 2029. He
Page 10 2 of 7 thanked residents of the borough for their engagement in the process, officers for their hard work, the Environmental, Planning and Performance Committee for its work in helping to redraft the policies and all councillors for their engagement in the process. He highlighted some key areas of the plan such as the housing figure and 40% affordable housing figure which were sound, the assessment of housing land supply, and the policies shaped by members which included reference to a western bypass, infrastructure, landscape character and strategic gaps. He concluded by asking member to support the Local Plan.
Members were invited to debate the Local Plan. A number of comments were made both in support and against the recommendation to adopt the Local Plan. Some members who were not supportive of the Local Plan raised concerns including inadequate strategic gaps, unsatisfactory consultation, villages left unprotected and not reflecting the needs of local residents, lack of planning for real infrastructure needs, windfall sites not included in the plan and concerns regarding the 5 year housing land supply and affordable housing. Other members were supportive of the plan although some considered that the Local Plan wasn’t perfect but there was a need to move forward to allow for infrastructure planning, give certainty to residents and that having a sound plan was better than no plan.
The recommendation was put to the vote where a recorded vote was requested with 32 votes in favour and 20 votes against. (Appendix 1)
RESOLVED: That Council
1) In accordance with Section 23 Planning and Compulsory Purchase Act 2004 and regulation 26 of the Town and Country Planning (Local Planning) (England) Regulations 2012, adopts the Basingstoke and Deane Local Plan, incorporating the main modifications as set out in Appendix B of the report, together with minor updates and drafting changes authorised by the Portfolio Holder for Planning and Infrastructure, together with the Head of Planning and Infrastructure;
2) Withdraw the saved policies of the Adopted Basingstoke and Deane Borough Local Plan (1996-2011).
32/16 Devolution across Hampshire and the Isle of Wight [Item 11]
The Leader of the Council introduced the report which set out the progress of devolution proposals. He stated that the initial key objectives of the proposal was to improve the quality of services delivered to residents and to safeguard the assets and resources that enable the delivery of those services that are highly rated by the borough’s residents. He added that with local authority funding pressures there was a growing demand to do more for less and therefore a need to look at how the effectiveness of local government could be improved. The possibility of a combined authority was a way of achieving better service delivery to residents with minimal cost and disruption but at the same time securing funding guarantees from central government to provide
Page 11 3 of 7 the infrastructure required. He further added that the Heart of Hampshire proposal could not proceed due to the reluctance of Hampshire County Council (HCC) to participate. He stated that the performance of HCC was not as good as it should be with the problem areas being those where the decision making was too far away from the point of delivery. In areas such as transport, supporting people and early years provision, the borough had to step in to support key services that were the responsibility of HCC. He added that a fundamental review of service delivery and who was best to provide that service was required stating that the HCC proposal to create a mega authority was localism in reverse and had many floors failing to address many key issues.
The Leader of the Council put forward an amendment to the recommendation seconded by Councillor Harvey to commission a piece of work to look at a more holistic review of the options for unitary local government supported by the Heart of Hampshire local councils. He added that should the amendment be agreed he would ensure that all members would be kept fully informed of progress.
In seconding the amendment, Councillor Harvey stated that the HCC bid would wipe out the second tier of local authority with the creation of a mega authority which would result in major and drastic changes to the borough and the proposal was not in the favour of the residents of the borough.
The amendment was put to the vote. A recorded vote was requested with 51 votes in favour of the amendment and 2 abstentions with the amendment being carried. (Appendix 2)
The amended recommendation was discussed with comments raised regarding the HCC proposal and the cuts that had been imposed by them on services such as libraries, children’s centres and supporting people. Views were also expressed that the HCC proposal was undemocratic and it was not in the interest of the residents of Basingstoke to hand over significant assets of BDBC and that BDBC should take the lead in shaping what was best for the borough. There was also a need to recognise partnership working with officers of HCC however it was considered that HCC’s lack of openness and breach of trust made engagement on further proposals with them impossible.
A recorded vote was taken with 51 votes in favour and 3 abstentions. (Appendix 3)
RESOLVED: that Council:
1) Note and comment on the updated Heart of Hampshire proposals and related matters, including matters related to unitarisation outlined within the report.
2) Note the Leader and Chief Executives’ continued work alongside colleagues in Hampshire and the Isle of Wight to develop a model for devolution that meets local needs.
Page 12 4 of 7 3) Note Hampshire County Council’s alternative indicative proposals for the creation of a single unitary local authority across Hampshire supported by the Deloitte LLP Executive Summary report, circulated by HCC, in which it can be noted:
that the research appeared to be commissioned solely by HCC and had an apparent preference for maintaining as much of Hampshire County Council’s existing infrastructure in the new arrangements as possible.
all options that involved abolishing the county council produced a saving compared to the current two tier arrangements.
the lack of a bottom up approach focusing on the needs of residents and local democratic accountability.
that the 7 options presented in the County Council/Deloitte report will cost taxpayers between £184m and £440m to implement with a maximum payback period of over 7 years.
that the County Council/ Deloitte report anticipates average council tax in this borough to rise from between £92 and £202 from today's levels due to harmonisation of council tax rates across the County
that the County Council/Deloitte report provides no safeguards for the protection of our local, tailored services, our assets and our policies
4) Does not support the County Council proposal for a mega unitary council for the whole of Hampshire
5) Approve a budget of up to £200,000, to be allocated from the Stability and Resilience Reserve, to be delegated to the Executive Director of Finance and Resources, in consultation with the Leader, to undertake work, either in isolation or in partnership with other similarly interested local authorities, to identify the issues and options for unitary local government, to include a focus on strengthening democratic accountability for local residents.
6) Note that a number of local authorities across Hampshire have indicated that they will make a financial contribution to the work that Basingstoke and Deane will commission for a more holistic review of the options for unitary local government
7) Note the Leader’s ongoing commitment to keep Members abreast of development in relation to devolution and options for unitary local government.
Page 13 5 of 7 33/16 Appointment of Temporary Councillors of Wootton St Lawrence Parish Council [Item 12]
RESOLVED: That Council note
The Deputy Monitoring Officer be given delegated authority to:
1) Appoint temporary parish councillors to Wootton St Lawrence parish council by order under Section 91 of the Local Government Act 1972.
2) To implement the powers under Section 39(4) Representation of the People Act 1983.
34/16 Notices of Motion [Item 13]
The Leader of the Council raised a point of order, stating that as there was the opportunity to vote in a future referendum in his opinion the motion was an intrusion into his privacy and his ability to a private vote and therefore left the meeting for the item. A number of other members also left the meeting.
The following motion was moved by Councillor Gavin James and seconded by Councillor Keith Watts.
EU Membership
Council Notes: The Referendum on UK membership of the European Union being held on Thursday 23rd of June.
Council believes: That Basingstoke and Deane benefits from membership of the EU and that the UK is stronger in the EU.
Council resolves: To write to the Prime Minister to inform him of the contents of this motion and the outcome of this vote.
Members debated the motion with a range of comments both in support of remaining in the EU and leaving.
The motion was put to a recorded vote with 22 votes in favour, 7 against and 2 abstentions. (Appendix 4)
The Mayor announced that the motion was advised as not an executive matter but a matter for Council and that under 14.4b of the constitution could only be actioned immediately should there be no votes against. As there were votes against, it was the convention of council that the Mayor had discretion to determine the outcome and stated that the motion had failed as there was nowhere to refer it.
Page 14 6 of 7 RESOLVED: That the motion be rejected.
35/16 To receive the minutes of the following meetings [Item 14]
There were no minutes for noting:
36/16 Questions from Members of the Council on notice [Item 15]
No questions were received.
The meeting ended at 20:43
______Mayor
Page 15 7 of 7 Appendix 1
26/05/2016 19:32:05 30/16 Local Plan Adoption Confirmation presences: 54
Yes : 32 Cllr Bean Ms : 1 Cllr Bound M : 1 Cllr Bound S : 1 Cllr Bowyer Mrs : 1 : 32 Cllr Burgess Mrs : 1 Cllr Court : 1 Cllr Cubitt Mrs : 1 Cllr Day : 1 Cllr Eachus Miss : 1 Cllr Edwards : 1 Cllr Falconer : 1 Cllr Frost : 1 Cllr Godesen : 1 Cllr Golding Miss H (null) : 1 Cllr James : 1 Cllr Leeks : 1 Cllr Miller : 1 Cllr Parker : 1 Cllr Reid Mrs : 1 Cllr Rhatigan : 1 Cllr Richards : 1 Cllr Robinson N : 1 Cllr Robinson T : 1 Cllr Rowland : 1 Cllr Ruffell : 1 Cllr Sanders : 1 Cllr Sherlock : 1 Cllr Smith : 1 Cllr Still Mrs : 1 Cllr Tate : 1 Cllr Tucker Mrs : 1 Cllr Watts K : 1
No : 20 Cllr Ashfield : 1 Cllr Cousens : 1 Cllr Frankum P Deputy Mayor : 1 Cllr Golding R : 1 Cllr Harvey : 1 Cllr Hood : 1 Cllr James Mrs : 1 Cllr Keating : 1 Cllr Lonie : 1 Cllr Phillimore : 1 Cllr Pierce : 1 Cllr Potter : 1 Cllr Putty : 1 Cllr Regan : 1
1 of 2
Page 16 Cllr Taylor M : 1 Cllr Taylor Mrs : 1 Cllr Tilbury : 1 Cllr Watts G : 1 Cllr Westbrook J : 1 Cllr Westbrook M : 1
Abstained : 0
2 of 2
Page 17 Appendix 2
26/05/2016 19:44:59
Devolution across Hampshire and Isle of Wight Amendment Confirmation presences: 54
Yes :51 :Cllr Ashfield :1 Cllr Bean Ms :1 : : Cllr Bound M :1 Cllr Bound S :1 Cllr Bowyer Mrs :1 Cllr Court :1 Cllr Cousens :1 Cllr Cubitt Mrs :1 Cllr Day :1 Cllr Eachus Miss :1 Cllr Edwards :1 Cllr Falconer :1 Cllr Frankum P Deputy Mayor :1 Cllr Frost :1 Cllr Godesen :1 Cllr Golding Miss H (null) :1 Cllr Golding R :1 Cllr Harvey :1 Cllr Hood :1 Cllr Izett :1 Cllr James :1 Cllr James Mrs :1 Cllr Keating :1 Cllr Leeks :1 Cllr Lonie :1 Cllr Miller :1 Cllr Parker :1 Cllr Phillimore :1 Cllr Pierce :1 Cllr Potter :1 Cllr Putty :1 Cllr Regan :1 Cllr Reid Mrs :1 Cllr Rhatigan :1 Cllr Richards :1 Cllr Robinson N :1 Cllr Robinson T :1 Cllr Rowland :1 Cllr Ruffell :1 Cllr Sanders :1 Cllr Sherlock :1 Cllr Smith :1 Cllr Tate :1 Cllr Taylor M :1 Cllr Taylor Mrs :1 Cllr Tilbury :1 Cllr Tucker Mrs :1 Cllr Watts G :1 Cllr Watts K :1 Cllr Westbrook J :1 Cllr Westbrook M :1
No :0
:2 Cllr Frankum J Mayor :1 Cllr Still Mrs :1
Abstained Page 18
Appendix 3
26/05/2016 20:03:15
Devolution across Hampshire and the Isle of Wight Confirmation presences: 54
Yes : :51 Cllr Ashfield :1 : Cllr Bean Ms :1 51 Cllr Bound M :1 Cllr Bound S :1 Cllr Bowyer Mrs :1 Cllr Court :1 Cllr Cousens :1 Cllr Cubitt Mrs :1 Cllr Day :1 Cllr Eachus Miss :1 Cllr Edwards :1 Cllr Falconer :1 Cllr Frankum P Deputy Mayor :1 Cllr Frost :1 Cllr Godesen :1 Cllr Golding Miss H (null) :1 Cllr Golding R :1 Cllr Harvey :1 Cllr Hood :1 Cllr Izett :1 Cllr James :1 Cllr James Mrs :1 Cllr Keating :1 Cllr Leeks :1 Cllr Lonie :1 Cllr Miller :1 Cllr Parker :1 Cllr Phillimore :1 Cllr Pierce :1 Cllr Potter :1 Cllr Putty :1 Cllr Regan :1 Cllr Reid Mrs :1 Cllr Rhatigan :1 Cllr Richards :1 Cllr Robinson N :1 Cllr Robinson T :1 Cllr Rowland :1 Cllr Ruffell :1 Cllr Sanders :1 Cllr Sherlock :1 Cllr Smith :1 Cllr Tate :1 Cllr Taylor M :1 Cllr Taylor Mrs :1 Cllr Tilbury :1 Cllr Tucker Mrs :1 Cllr Watts G :1 Cllr Watts K :1 Cllr Westbrook J :1 Cllr Westbrook M :1
No :0
Abstained :3 Cllr Burgess Mrs :1 Cllr Frankum J Mayor :1 Cllr Still Mrs :1 Page 19
Appendix 4
26/05/2016 20:41:11 33/16 Notices of Motion - EU Membership Confirmation presences: 50
Yes : 22 :Cllr Ashfield : 1 Cllr Bound M : 1 Cllr Cousens : 1 Cllr Day : 1 Cllr Frankum P Deputy Mayor : 1 Cllr Harvey : 1 Cllr Hood : 1 Cllr James : 1 Cllr James Mrs : 1 Cllr Keating : 1 Cllr Lonie : 1 Cllr Parker : 1 Cllr Phillimore : 1 Cllr Pierce : 1 Cllr Potter : 1 Cllr Regan : 1 Cllr Smith : 1 Cllr Taylor M : 1 Cllr Watts G : 1 Cllr Watts K : 1 Cllr Westbrook J : 1 Cllr Westbrook M : 1
No : 7 Cllr Cubitt Mrs : 1 Cllr Falconer : 1 Cllr Godesen : 1 Cllr Miller : 1 Cllr Rhatigan : 1 Cllr Robinson T : 1 Cllr Ruffell : 1
Abstained : 2 Cllr Frankum J Mayor : 1 Cllr Tilbury : 1
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Agenda Item 8 Appendix B
Outside Bodies - Appointments that are necessary
Outside Body Current/continuing No to be Term of representative(s) appointed office
Festival Management Board (sub- Councillor Mrs Reid 1 1 Year group of Destination Basingstoke) Vacant Councillor N Pierce Relate North Hampshire Councillor N Pierce, 1 1 Year Vacant *Vyne Community School Community Councillor Ms James 2 1 Year Management Committee Councillor P Harvey
* Term of office has expired and re-appointment is necessary.
Page 21 This page is intentionally left blank Agenda Item 9
Report to Cabinet 28 June 2016 Portfolio Holder Presenting: Portfolio Holder for Property and Development and Portfolio Holder for Finance, Service Delivery and Improvement
Property and Alternative Investment Strategy – Invest to Subject: Grow fund
Status: Open Report ref: Ward(s): All Key Decision: Yes
Key Decision / Ref: Portfolio Holder for Property and Development Report of: Portfolio Holder for Finance, Service Delivery and Improvement
Kevin Jaquest, Executive Director of Finance and Resources Contact officer: Telephone: 01256 845513 Email: [email protected]
Appendix 1 – Full final CBRE feasibility report Appendix 2 – Invest to Grow Fund Investment Strategy Appendices: Confidential Appendix 3 – Investment Pipeline Examples (confidential as of paragraph 3 of schedule 12a of the Local Government Act) Appendix 4 – Residual Risk Assessment Summary Papers relied on to Cabinet Report 15 march 2016 - Property and Alternative produce this report: Investment Fund Feasibility
1 Executive Summary
1.1 The report proposes the establishment of a Council based Invest to Grow Fund with the overarching objective to stimulate job creation, deliver new homes, and attract significant inward investment into the Borough.
1.2 This report outlines the outcome of the detailed feasibility and fund design work undertaken, following the Cabinet decision on 15 March 2016, on the establishment of an invest to grow fund in support of the council’s approved Property and Alternative Investment Strategy to assist delivery of its socio- economic and financial objectives.
1.3 The report also highlights key areas for consideration and proposes appropriate governance and monitoring arrangements.
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2 Recommendation
2.1 It is recommended that Cabinet :
2.1.1 Approve the establishment of an Invest to Grow fund as detailed in this report and endorse the fund vision and principles.
2.1.2 Delegate the detailed fund setup to the Executive Director of Finance and Resources, funded from the Strategic projects revenue budget, in consultation with the Portfolio Holder for Property and Development and the Portfolio Holder for Finance, Service Delivery and Improvement.
2.1.3 Approve the proposed scheme of delegation to the Executive Director of Finance and Resources for the administration of the fund (set out in section 7) noting that this will operate within the Council approved Invest to Grow Fund Investment Strategy.
2.1.4 Note that the ‘primary purpose’ of establishing the Invest to Grow Fund is to support the council in meeting its socio economic duties and objectives.
2.1.5 Note the financial implications, s151 officer comments and risk assessment
2.1.6 Recommend Council to approve:
2.1.6.1 the Invest to Grow Fund Investment Strategy.
2.1.6.2 allocation of the earmarked Alternative Investment Strategy funding of £25m to the Invest to Grow Fund.
PRIORITIES, IMPACTS AND RISKS Contribution to Council Priorities This report accords with the council’s Budget and Policy Framework and directly supports the Council Plan priority/priorities of improving economic vitality and supports the development of an effective and efficient council.
GLOSSARY OF TERMS Term Definition FCA Financial Conduct Authority
MAIN CONSIDERATIONS
3 Background
3.1 Full Council has agreed a Property and Alternative Investment Strategy and earmarked funding of £25m of long term invested funds to support its implementation.
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3.2 The objective of the strategy is to support the Council's socio-economic objectives; to stimulate local commerce and investment to support local economic growth; and to improve the Council’s medium term financial position and financial resilience to support the Council’s functions and service delivery.
3.3 The primary purpose of the Invest to Grow Fund would therefore be to help stimulate local commerce and investment to support local economic growth in line with the Council Plan priority of preparing for controlled and sustainable growth. Returns generated by the Fund would be recycled (after meeting funding costs) and be used to support Council plan priorities including economic development and wider service delivery.
3.4 In March 2016 Cabinet considered a report on the Property and Alternative Investment Fund feasibility work undertaken to date and approved that officer’s progress with the detailed fund design work supported by external specialist consultants.
3.5 This report provides Cabinet with the outcome of the further detailed fund design work and proposes appropriate governance arrangements.
4 Summary of findings of the final feasibility report
4.1 The final feasibility and fund design report is attached as Appendix 1. This covers the following areas;
4.1.1 Objectives – summarises the Council’s overarching objectives for allocating £25m of capital resources within the evolving local economic and political landscape.
4.1.2 Context – an overview of the local economic and political environment in which a potential fund will operate.
4.1.3 Identification of investment options – a review of different approaches to deploying the £25m of allocated capital and the extent to which they meet the Council’s objectives.
4.1.4 Recommended approach – based on the above findings sets out the optimum delivery structure for investing locally. This section also sets out the role of the Fund, types of intervention, investment strategy, project appraisal process and overall governance proposals.
4.1.5 Indicative project pipeline, fund model and output forecasts – analysis of potential investment opportunities identifying potential ‘early wins’.
4.1.6 Preliminary financial analysis in the form of an indicative fund model, identifying potential overall fund level returns.
4.1.7 Key considerations and next steps – concluding the work of the study, setting out the key risk considerations, proposed marketing and engagement strategy and next steps towards implementation.
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5 The Proposal
5.1 The Government’s localism and devolution agenda is creating a shift of control, financial autonomy and responsibility away from central to local government. Increasingly, local authorities are being incentivised to drive forward their local economies and being granted greater fiscal and legal powers to do so. Changes to the local government finance system will see local government funded from business rates income from 2020.
5.2 This Council is in a strong position to capitalise on these current themes and has been exploring innovative mechanisms to attract inward local investment whilst delivering risk assessed market returns.
5.3 Therefore following review of the detailed fund design report from the external specialists it is proposed that the council establishes an Invest to Grow Fund to support delivery of the Council Plan objective of preparing for controlled and sustainable growth and to help meet the objectives of the economic master plan through securing inward investment and leveraging additional funds whilst generating risk based returns for the Council to support the delivery of Council services and promote local economic growth.
5.4 The fund would be established utilising the Alternative Investment Strategy £25m earmarked resources and would be a ‘block of finance’ council fund and not a separate company structure. It would be operated in accordance with a Council agreed Invest to Grow Investment Strategy by external specialist fund managers.
5.5 The result of the investment options review is that the fund would consider investment by way of debt (loans) or equity. This would provide property backed loans or direct equity participation in projects, where Council intervention may support the case for regeneration and local economic growth.
5.6 Fund Vision
5.6.1 ‘to provide capital to stimulate local development activity and leverage private sector investment in support of local socio-economic growth’
5.6.2 The overarching objective of the Fund is to stimulate job creation, delivery of new homes and attract significant inward investment into the Borough. In order to achieve this vision, the Fund will target key investment areas, aligned with the Property and Alternative Investment Strategy.
5.7 Key Principles
5.7.1 The proposed key principles of the fund are;
The Fund to be set up as a council ring-fenced fund block of finance (not a separate corporate structure) managed by external FCA regulated fund managers.
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Investments made into viable projects either directly or as loans or equity
The fund will not provide grants
All investments subject to appropriate risk, business case assessment and due diligence
State Aid compliant investment at rates equal or above councils risk adjusted ‘cost of capital’ with financing costs returned to the general fund
Returns above cost of capital and the repayment of capital to be recycled through the fund
5.8 Pipeline Opportunities
5.8.1 Appendix 3 provides some examples of investment opportunities that could be covered by the fund. These cover short and medium term opportunities both within the council owned estate and third party schemes. There could also be longer term early stage infrastructure opportunities on Manydown and renewable investment opportunities.
5.8.2 Discussions with key local stakeholders are on-going and the external specialists are confident additional opportunities will be identified prior to any formal ‘fund launch’ as the development pipeline is progressed.
6 Investment Strategy
6.1 The purpose of the Investment Strategy is for the Council to set out the vision and objectives of the fund along with key investment criteria to provide a tool for the Fund Manager to assess projects and administer the fund.
6.2 The proposed investment strategy is detailed in appendix 2 which has a fund vision ‘to provide capital to stimulate local development activity and leverage private sector investment in support of local socio-economic growth’
6.3 It is proposed that this is recommended for approval by Full Council and will be subject to appropriate review as the fund is established and develops.
6.4 The following proposed investment criteria are part of the Investment Strategy and would form the basis of selection for investments by the Fund:
Project selection is focussed on producing the maximum possible impact on development and regeneration opportunities, whilst at the same time delivering market level commercial returns.
Investments are to be made either directly, in partnership with the private sector as equity, or project based loans.
Investments are to be made in line the Council’s Property & Alternative Investment Strategy and could include investments in the Council’s existing property portfolio, commercial property, housing and regeneration and renewable energy schemes.
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Investments are to be within the Borough as a priority although the Fund could exceptionally consider investment options within Hampshire and wider South East where ‘additive’ to the Borough.
The underlying principles are: project is viable; carries appropriate risk; and the terms are equal to or above the Council’s risk assessed opportunity cost of capital.
Investments must be State Aid compliant and meet commercial market returns.
Limited appetite for risk exposure. However a variety of risk positions may be considered but will be subject to risk mitigation measures being put in place by the Fund manager on a case by case basis.
Investments will be considered in context of the portfolio level risk criteria not to exceed 70% loan to cost and 60% loan to value. Investments outside of these risk covenants will be assessed on a case by case basis
No more than 30% of the total Fund capital in each project (e.g. based on a Fund size of £25m, the maximum loan size would be £7.5m)
No more than 40% of the Fund lent to one borrow or group of borrowers (e.g.based on a Fund size of £25m, the maximum loan size would be £10m).
Investment minimum size to be £1m. Target maximum 3 year finance period.
6.5 All investments will be subject to appropriate risk, business case assessments and due diligence by an appointed Fund Manager and must fulfil the requirements of this Investment Strategy.
7 Governance Arrangements
7.1 The governance structure of the block of finance fund is critical to the success of the proposal and to secure market confidence in the fund. The fund will need to operate flexibly and efficiently within the Member agreed Investment Strategy to encourage socio-economic development within the borough. Externally the market will look to see that there is a clear delegated decision making process that can respond in a timely way.
7.2 A number of options have been considered (detailed in Appendix 1) during the feasibility work ranging from full in house management and delivery to complete third party delegated management.
7.3 Following the option appraisal the proposed governance approach is as follows:
The vision and principles of the fund to be agreed by full Council via approval of the Invest to Grow Fund Investment Strategy.
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Cabinet to approve an annual Invest to Grow Fund business plan to support delivery of the Council approved Invest to Grow Investment Strategy.
Individual investment decisions (which must be within the Investment Strategy parameters) delegated by Cabinet to the Executive Director of Finance and Resources, acting as ‘Investment Manager’ in consultation with the Portfolio Holder for Property and Development and Portfolio Holder for Finance, Service Delivery and Improvement.
An external FCA regulated fund manager with an advisory mandate to be procured to manage the day to day activities of the fund and to provide investment advice, source opportunities, carry out due diligence, make recommendations to the ‘Investment Manager’ and implement agreed decisions.
Regular Fund monitoring reports to be provided to Cabinet and the Audit and Accounts Committee.
7.4 The fund manager would make recommendations to the Investment Manager based upon their analysis and project appraisal and would confirm that the investment opportunity satisfies the Invest to Grow Fund Investment Strategy.
7.5 There will also be a ‘double lock’ in that the Investment Manager decisions must be based on recommendations from the fund manager and fund manager implementation requires Investment Manager approval.
8 Performance Monitoring of the Fund
8.1 In accordance with standard fund management practice, it will be important to ensure the performance of the Fund is monitored on a regular basis. In view of the Fund objectives, this will comprise both economic and financial performance monitoring.
8.2 Economic Output Measures are likely to include measures such as third party inward investment attracted and business rates generated.
8.3 Financial Performance Monitoring will include areas such as loan to value, sector weighting, capital recycled, annual financial return and capital recycled.
8.4 Regular monitoring reports will be provided to Cabinet and the Audit and Accounts Committee.
9 Options Analysis
9.1 In light of the feasibility work undertaken (which has included specific investment and fund option appraisal) the high level options for Cabinet are:
9.1.1 Option A – no further development of the concept of an Invest to Grow Fund as outlined in this report. Cabinet could determine that following the feasibility work undertaken and proposals in this report it does not wish to pursue the fund concept as detailed further. This option would mean that further development of delivery of the alternative investment strategy would need to
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be undertaken in house with a view to producing a direct standing investment or alternative approach.
9.1.2 Option B –approve the establishment of an Invest to Grow fund as proposed. This will require Council approval of the Investment Strategy, appointment of fund managers to establish and ultimately run the fund including the necessary fund marketing and identification of suitable pipeline opportunities.
9.2 It is proposed that option B is pursued to enable implementation of the ‘invest to grow fund’.
10 Corporate Implications
10.1 Financial Implications
10.1.1 As agreed by Council as part of the annual budget report and the Property and Alternative Investment Strategy, there is budget of £25 million for the Invest to Grow Fund. This will be funded by a transfer of strategic, long term cash balances from the council’s Treasury Management Strategy to the Invest to Grow Fund, as new investments are made.
10.1.2 Based upon current market conditions, strategic cash balances are expected to yield approximately 2.5%. In comparison, the anticipated return from the Invest to Grow Fund is in the region of 3.5% net of fees. Once £25 million is fully invested through the Invest to Grow Fund (after approximately 3 years), this 1% improvement in return would result in additional annual income of £250,000. In accordance with the proposed Invest to Grow Strategy any return achieved in excess of the council’s risk adjusted cost of capital will be reinvested in the fund.
10.1.3 The higher return from the fund, compared to long term cash investment, reflects a higher level of risk and reduced liquidity. The fund’s investments will typically be for a period of 2 – 3 years and the fund is expected to operate for a period of 10 years in order to become established and to justify the initial set-up costs.
10.1.4 The council will incur fund management fees which are expected to consist of a fixed element to cover the core work and a variable element depending on the new investments undertaken. The fees for managing the fund are expected to be in the region of 0.5% to 1% of the fund value i.e. £125,000 to £250,000 per annum. Initially it is proposed to appoint CBRE as fund manager to set up the fund. After an initial implementation period of no longer than 6 months, the long term management of the fund will then be subject to a competitive tendering process.
10.1.5 The on-going cost of the annual fund management fees will be funded from the returns achieved by the fund and from arrangement fees charged to borrowers. The initial costs of setting up and launching the fund will be met from the budget agreed by Council as part of the Property and Alternative Investment Strategy and the 2016/17 annual budget.
10.1.6 Investments made by the Invest to Grow Fund will be subject to a risk analysis, business case and due diligence. Any investments that are approved will be capital expenditure and will therefore appear in the council’s capital
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programme and balance sheet. Interest on loans or dividends from any equity investment will be revenue income and the repayment of investments will be a capital receipt.
10.1.7 Monitoring of the performance of the fund will be reported regularly, alongside the Treasury Management Strategy, to the Cabinet and the Audit and Accounts Committee. This report will cover the socio-economic benefits resulting from investments and the direct and indirect financial returns. The indirect financial returns will include additional business rates income generated by investments.
10.2 s151 Officer Comments
10.2.1 The primary objective of a Fund would be to support delivery of the council’s socio-economic objectives in line with the Council Plan priority of preparing for controlled and sustainable growth.
10.2.2 The fund will provide loans/equity to viable schemes at commercial market rates. Returns (net of fees) generated by the Fund would be used to support Council plan priorities and service delivery and/or recycled into the fund.
10.2.3 The feasibility report identifies that potential returns above money market rates and inflation could be obtained but that this will be flexible depending on the nature and risk profile of the investment.
10.2.4 Cabinet will need to consider the increased risk profile of this proposal and ensure that full due and proper consideration is given to the balance achieved between risk and reward and the underlying security of the investments in the fund design to ensure that the financial standing of the council is protected.
10.3 Risk Issues
10.3.1 A risk assessment has been carried out in accordance with the Councils risk management policy and a summary of the main medium and high residual risks that cannot be fully minimised by the fund design and governance structure are summarised in Appendix 4.
10.3.2 The main risks are reputational concerning the perception of the fund, financial relating to possible loan default and project exit timing and property based linked to the impact of future market conditions and project based costs and valuations.
10.3.3 These risks will be managed at a fund level through the proposed fund design and the criteria and limits included in the Investment Strategy and at a project level by the fund manager including through the loan agreements and via robust loan monitoring.
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10.4 Legal Implications
10.4.1 Vires Considerations
10.4.2 The Council has the ability to establish and participate in an ‘Invest to Grow’ fund under the following powers:
Section 1 of the Localism Act 2011 - general power of competence
Section 12 of the Local Government Act 2003 – power to invest
Section 111 of the Local Government Act 1972 ("Incidental Power") – provides that a local authority shall have power to do anything (whether or not involving the expenditure, borrowing or lending of money) which is calculated to facilitate, or is conductive or incidental to, the discharge of any of their functions.
Section 1 of the Local Government Act 2003 – provides local authorities a power to borrow for any purpose relevant to their functions under any enactment or for the purpose of the prudent management of its financial affairs
10.4.3 The Fund needs to be a public sector fund with no private sector investment made directly into it. However, parallel private sector funding may be directly invested into individual projects or via a subsidiary public private joint venture.
10.4.4 It is important to note that the ‘invest to grow’ fund proposal is that the ‘primary purpose’ is for the council to act to support its socio economic duties and objectives and not for the Council to act for a commercial purpose
10.4.5 State Aid
10.4.6 The investment which the Fund offered would need to be on market terms to ensure state aid compliance.
10.5 Equalities
10.6 An equalities impact assessment (EQIA) screening has been completed in accordance with the Council’s EQIA methodology and this concluded that the proposal will have no differential impact on any of the protected characteristics groups; therefore a full EQIA has not been carried out.
11 Communication and Consultation
11.1 The Property and Alternative Investment MAP has received updates on the ‘invest to grow’ fund proposals and the detailed fund design and governance proposals were considered by the Audit and Accounts Committee on 27 June 2016.
12 Portfolio Holder Comment
12.1 It is important that we continue as a council to seek out alternative ways to invest council resources for the benefit of our residents. This Invest to Grow fund will enable us to make investments through debt and equity directly into
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the borough. It is right that this council should be innovative and seek to act as a catalyst for new investment, together with the private sector, in bringing new jobs, homes and infrastructure to the borough.
12.2 It is entirely consistent with and supportive of our Council Plan and our priorities for residents. Considerable preparatory work has been done in establishing the principles and governance of the fund and I look forward to its successful launch
13 Conclusion
13.1 Work on the detailed feasibility of the council establishing an ‘invest to grow’ fund has been concluded and a proposal produced. A Cabinet decision on whether or not to set up the ‘invest to grow fund’ is now sought.
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BASINGSTOKE INVEST TO GROW FUND FINAL REPORT JUNE 2016 Note to reader: Certain commercially sensitive data has been removed 1 from this report CONFIDENTIAL & COMMERCIALLY SENSITIVE CONTENTS
01 Introduction 3
02 Objectives 4
03 Context 5
04 Investment Options 6
05 Recommended Approach 9
06 Examples of Investments & Fund in Practice 12 Page 36 Page 07 Investment Strategy 18
08 Governance and Operational Model 19
09 Project Appraisal Process 21
10 Project Prioritisation & Performance Monitoring 23
11 Marketing & Engagement Strategy 25
12 Risk Considerations 27
13 Next Steps to Implementation 29
2 INTRODUCTION
Basingstoke & Deane Borough Council (“BDBC” or the “Council”) has allocated £25m of funding to invest into property and alternative investment opportunities within the Borough. CBRE Capital Advisors have been appointed to review how best to deploy this capital in line with the Council’s socio-economic and financial objectives. This report explores the opportunity for an arm’s length managed investment platform, drawing together public and private investment to promote significant inward investment into the Borough in support of local socio-economic growth. The intention is for this document to provide the framework for Fund set-up, Fund Manager appointment, implementation and the operation of the ‘Invest to Grow Fund’.
TERMS OF REFERENCE REPORT STRUCTURE In summary the broad terms of reference and objectives of this report are to: In addressing the Terms of Reference, the report contains the following sections:
Page 37 Page . Review the landscape in which a fund will operate, having regard to . Objectives – summarises the Council’s overarching objectives for deploying macro/micro factors and the Council’s identified Property & Alternative £25m capital within the evolving local economic and political landscape. Investment Strategy. . Context – an overview of the local economic and political environment in . Consider the range of investment options by which the capital can be which a potential fund will operate. deployed and the extent these different approaches meet the Council’s . Identification of investment options – a review of different approaches to overall objectives. deploying the £25m of allocated capital and the extent they meet the . Provide recommendations for the most suitable operational model and Council’s objectives. proposed investment strategy for a fund. . Recommended approach – based on the above findings set out what is the . Define a project appraisal methodology, prioritisation, and performance optimum delivery structure for investing locally. This section also sets out the monitoring process to include examples of indicative pipeline projects. role of the Fund, types of intervention, investment strategy, project appraisal . Define a potential socio-economic output criteria for a Fund to include jobs, process and overall governance proposals. number of homes, brownfield land regenerated and private sector . Indicative project pipeline, fund model and output forecasts – analysis of investment. potential investment opportunities identifying potential ‘early wins’. . Consider risks and mitigations associated with a fund. Preliminary financial analysis in the form of an indicative fund model, identifying potential overall fund level returns. . Outline a recommended marketing and engagement strategy for a fund. . Key considerations and next steps – concluding the work of the study, setting Opposite is a summary of the report structure to illustrate where these objectives out the key risk considerations, proposed marketing and engagement are covered. strategy and next steps towards implementation.
3 OBJECTIVES
The Government’s localism and devolution agenda is creating a shift of control, financial autonomy and responsibility away from central to local government. Increasingly, local authorities are being incentivised to drive forward their local economies and being granted greater fiscal and legal powers to do so. The Council is in a strong position to capitalise on these current themes and is seeking to explore innovative mechanisms to attract inward local investment whilst delivering risk assessed market returns. This section summarises the Council’s overarching objectives for deploying its £25m capital in the context of an evolving local economic and political landscape.
COUNCIL OBJECTIVES PROPERTY & ALTERNATIVE INVESTMENT STRATEGY A series of workshops were carried out with Council officers during early 2016. The Council’s established ‘Property & Alternative Investment Strategy’ identifies four The following primary objectives were identified. key areas for investment.
Page 38 Page . Establish a strategy to leverage additional public and private inward 1. Council’s existing property portfolio investment into the Borough with the aim of driving future socio-economic 2. Commercial property investment growth. 3. Housing, regeneration and alternative investment . Invest in a range of activities under the four identified strands of the Council’s ‘Property & Alternative Investment Strategy’. 4. Renewable (green) alternative investment . Ensure all investments are equal to or above the Council’s opportunity cost The above target investment areas are to be the core focus areas in the context of of capital. establishing an overall investment strategy for a fund. The broader objectives are to create a platform that will: Further reference has been made to the Council’s ‘Economic Masterplan for . Offer a credible response to the Government’s localism and devolution Basingstoke’. The document outlines how it will plan for future prosperity, secure agenda. investment and ensure that residents benefit from economic growth and improved employment opportunities and enhanced infrastructure. The masterplan and soon to . Provide a platform and brokerage service to connect private sector interest be adopted Local Plan set the following output targets: with a future pipeline of public and private schemes across the Borough. . 4,000 new jobs (the Local Plan identifies 450 to 700 new jobs per annum) . Provide the Council with specialist advice to ensure investments are made on a commercial and appropriately risk assessed basis. . £233m Gross Value Added per annum The overall aim was further refined to establish an actively marketed fund, . 13,400 new homes (the Local Plan identifies 850 per annum) known as the “Invest to Grow Fund” to act as a ‘front door’ for investors and These targets, along with the Council’s recent Local Plan objectives are a key developers contemplating doing business in Basingstoke. consideration in the context of the Council’s overarching ambitions for local socio- economic growth.
4 CONTEXT
Local authorities are no longer being seen as solely enablers but are being empowered as leaders and innovators in driving local economic growth. The changing attitude of investors into the UK regions, alongside leadership roles that local authorities are adopting provides the ideal environment for growth in Basingstoke.
LOCAL AUTHORITIES DRIVING GROWTH MARKET CONTEXT There has been a marked change in local authorities taking investment Basingstoke has excellent infrastructure in place with transport links to London positions on projects to encourage investment into their area and drive (45 minutes by train to London Waterloo) and the South East (off junction 6 on economic growth. This change is occurring in line with the devolution of powers the M3 between London and Southampton). from central to local government. Basingstoke is in position to capitalise on It also has a very educated and growing population, the primary catchment these current economic and political themes. including a relatively high proportion of adults aged 25-44 and an The Government’s localism agenda is enabling local authorities to have more unemployment rate that is roughly half the national average. It is an affordable autonomy in their decision making and presents opportunities for: place to live comparative to the South East, with median income higher and Page 39 Page . More innovation – with scope for a variety of solutions to challenges faced by average house prices lower, than the surrounding region. authorities across the country. The retail and shopping offer is very strong in Basingstoke, with Festival Place . Stronger focus on local economies – with authorities already able to keep located at the town centre and the largest co-located Waitrose and John Lewis 50% of additional rates generated it has also been proposed that authorities (the UK’s leading supermarket and department store) in Basing View. The town will be able to keep the equivalent of 100% of rates income in the future. is also home to national and international occupiers such as; Barclays, The AA, Sony, Tech Data, Virgin Media, Axa Sun Life, Sarco Group and Motorola. . Improved value for money – as authorities have a greater understanding of their services and can find greater cost savings through partnering and However, the town is facing a challenge. Competing locations such as Reading taking increasingly managed risk positions. continue to grow, attracting new occupiers and investing in infrastructure. At the same time, Basingstoke faces an oversupply of poor quality office Within Basingstoke, budgetary pressure has occurred not solely because of accommodation and a lack of Grade A space. The town has not seen government funding cuts but also due to increasing costs associated with speculative office development for over 8 years. delivering services and fluctuating or declining rent and interest income. As with the office market, the industrial market in Basingstoke has no space The Council is therefore considering new and innovative ways to drive the local currently under construction, therefore unable to meet the estimated demand of economy whilst creating new opportunities for long term funding streams in c. 300k sq ft per annum. There is also a lack of residential supply in the town order to reduce reliance on more traditional funding sources from central centre both for sale and to rent with high levels of demand for apartments in the government and its existing asset base. town centre with good access to the rail station and amenities in town. This includes the potential to invest directly or co-invest in development and Across the majority of sectors in Basingstoke there is a lack of development and working on other forms of investment and partnerships across the borough to investment occurring, despite improved take up and low vacancy levels. help fulfil its financial and broader socio-economic objectives.
5 INVESTMENT OPTIONS
Access to real estate investment can be via a range of methods. Each with varying risk and return profiles. This section considers the range of approaches to the deployment of capital and the extent they meet the Council’s objectives.
INVESTMENT OPTIONS The table below compares the range of different investment options and the extent they meet the Council’s agreed objectives. In considering the different methods of investment, the Council’s options include whether to invest in direct or indirect activities. The difference between each of Potential Local Economic Inward Investment these options is summarised below. Returns Outputs Potential Leveraged . Direct – relates to investment in property whether it is the purchase of the Direct High Limited Limited whole or purchase of part of an existing real estate asset i.e. often when there is ‘direct’ ownership of property. Indirect High None or Limited None . Indirect – defined as investing in a product that invests in property i.e. not investing directly in the real estate itself. Indirect investment activities include: Debt Medium High (Development Debt) High (Development Debt) Page 40 Page private real estate funds; Real Estate Investment Trusts; or actively managed to High Low (Investment Debt) Low (Investment Debt) specialist funds. Equity High High High Beyond whether to invest on a direct or indirect basis, it is also necessary to consider the balance of exposure between equity and debt. . Equity – is where the investor is a shareholder in a specific property, with INVESTMENT OR DEVELOPMENT? their stake proportionate to the amount invested. Returns can be realised in different ways e.g. share of rental income, appreciation of value or All of the above options can relate to either investment or development development profit – depending on the nature of the investment. Equity activities. Typically investing in development commands greater returns due to investments offer greatest levels of return although at the same time are the associated construction, sales, letting risks. higher risk with equity investors typically first in line to suffer from poor Both equity and debt investors require specialist underwriting to ensure that performance. investments are provided on the right type of property and on the right terms, . Debt – is where the investor acts as a lender to the property owner or deal thus ensuring that risks are understood and controlled. ‘sponsor’. Investors receive a fixed rate of return determined by the interest All investments (whether direct or indirect) can be made in isolation or in rate on the loan and the amount invested. The loan is typically secured by partnership with wider investment partners. the property itself. Debt traditionally provides a lower risk compared to Following a series of workshops with Council officers, and given the limited equity investing and a more stable return profile. The debt investor is initial capital allocation i.e. £25m, it was agreed the Council should focus on typically at the bottom of the capital stack which means they are less at risk direct property development activities by way of debt or equity investment in the in the event of poor performance of the real estate asset. pursuit of local economic growth. The appetite for development debt or equity is considered in further detail overleaf.
6 MARKET APPETITE FOR DEVELOPMENT DEBT & EQUITY
Following completion of the investment options review, it was agreed to further consider investment by way of debt or equity as the Council’s preferred method of deployment. In short, this is to provide property backed loans or direct equity participation in projects, where Council intervention may support the case for regeneration and local economic growth.
DEVELOPMENT DEBT MARKET CONTEXT Some of the forms of direct investment for the Fund to participate in will include:
Typical Criteria Senior Development Higher leverage Senior Mezzanine The last year has seen a number of new entrants to the lending market. This Equity has led to downward pressure on the interest rates being provided by lenders, Loan Development Loan Development Loan although leverage levels (Loan to Value or Cost) in the senior debt market Type Lower return, low risk Medium returns for Intermediate finance, First loss equity. increased risk by Highest returns have remained restrained. However, the appetite from private institutions and funding. subordinated to offering “whole loans” senior debt, but banks to provide development debt is still limited to prime and core locations that are senior but ranks ahead of such as London and key regional cities (e.g. Manchester and Birmingham). provide developers with equity. Potential for greater leverage
Page 41 Page high returns The market for development finance in areas such as Basingstoke remains Examples of Lloyds, Santander, Pramerica, Pramerica The developer challenging, for commercial uses in particular. Borrowers face a challenge in Typical Private HSBC, Barclays, RBS, Guggenheim, LaSalle IM community active evidencing occupier demand. Typically only the strongest schemes by the most Finance Wells Fargo, PBB Daiwa Investec in the South West credit-worthy sponsors can attract forms of finance and often not enough to Typical return % 4% – 6% 5% - 10% 7% – 12% Development fully fund the development. Credible schemes can encounter difficulties in on investment upside, typically securing finance. Lenders remain particularly selective regarding which profit share Typically, optimal First loss schemes and developers will be funded. Security and Typically, optimal Weaker. Second Protections security: first charge security: first charge charge / lower over the asset and In 2015 for example, Bank allocations for development finance were less than over the asset and ranking security contracts contracts half the historical peak. At present, Bank lending is adverse to speculative 1 – 4 years Until exit development in all but the most prime locations, often demanding significant Time frame 1 – 4 years 2 – 8 years pre-sales schedules for residential and meaningful pre-letting for commercial. Financial Up to 40% LTV on Up to 60% LTV on 50% – 85% LTV n/a Leverage completion completion 70% - 90% LTC BASINGSTOKE MARKET APPETITE FOR FINANCE 50 - 70% LTC during 60 - 80% LTC during during development development development
A number of local agent and investor consultations have taken place as part Exit Refinanced post- Refinanced post- Disposal proceeds, Typically on of the study analysis. It is evident from these discussions, the financing for (repayment of completion completion usually only after disposal or Conversion to refinancing to development schemes is particularly challenging locally with only the fully let loan) Conversion to repayment of all investment facility investment facility other loans release equity schemes or corporate loan facilities already in place enabling development to occur. In line with the Council’s objectives, the recommendation is for the Risks Development risk First charge security, First loss (after Absolute first fund to be able to provide a range of financial instruments to unlock mitigated by security with risks dependent equity). Ranks after loss, with security on asset and low LTC upon the amount of senior debt in favour of any development opportunities and ultimately local growth. equity. lenders
7 LOCAL DEBT INVESTMENT VEHICLES
Having demonstrated the demand, this section considers the positives and negatives of pursuing development debt investment activities. The commentary serves to support the case for establishing a local authority led debt investment vehicle.
WHY LOCAL AUTHORITY LED DEBT FUNDING? Greater Manchester and the North West has been particularly successful through the North West Evergreen Fund, though many other city regions such As noted in the previous section, securing financing for schemes remains as Sheffield, Liverpool, Glasgow, Newcastle and Leeds are also benefiting challenging, with traditional funding sources comfortable only with prime from access to a similar product. developments with a high degree of pre-let, and even then a relatively low loan to cost level. Importantly, public sector financing also helps align objectives and improving visibility between the public and private sector. Developers have more Speculative development is returning, but many of these schemes have been confidence in a scheme when they know that the Council is committing a partly funded or otherwise supported by the public sector and often only substantial amount of capital and investing its fund manager’s time in speculative in the very best of locations. While developers and their equity structuring an appropriate investment – it keeps the scheme on the Council’s Page 42 Page have an appetite for speculative development, they are short of the senior agenda and gives them a tangible stake in its success. and/or mezzanine debt necessary to fully finance schemes. Public sector development debt funding has become increasingly important in Set out below are the key positive and negatives associated with making debt providing the supply of business employment space and housing that is much investments. When investing in real estate debt, the investor i.e. the Council is needed. Such funding is not providing cheap debt to undercut banks, nor are acting as a lender to the property owner or the deal sponsor. The loan is they grants; they are providing debt in the absence of banks. They typically do secured by the property itself and the Council receives a fixed rate of return so at market rates to viable, good quality schemes which would not otherwise determined by the interest rate on the loan and how much they have happen without significant pre-letting. invested.
POSITIVES NEGATIVES . Generally lower risk compared to direct equity investments. Loan is . Limited ‘capped’ returns defined by interest rate on the loan. secured by the property, which acts as ‘insurance’ against repayment. . Specialist and requires relevant skills, resources and experience. . Council in position to control their desired risk / return profile. . Requires access to suitable opportunities. . Steady income stream due to predictable amount and frequency of . Complexity and technical aspects specific to certain asset classes returns typically paid on a monthly or quarterly basis. require specialist understanding and risk mitigation. . Shorter hold time, typically 12-36 months for development debt enabling . Ongoing monitoring and loan management requires appropriate cash to be recycled into other projects. monitoring infrastructure to be in place. . Scalability enables investments to be built up into a portfolio over time. . Key opportunity to drive forward regeneration and economic growth. . Leverage private sector investment into the area.
8 RECOMMENDED APPROACH
We set out below our recommended approach to deployment of capital into property and alternative investment activities. This is based on past work we have undertaken and ‘accepted good practice’ on local authority led debt investment funds. It also reflects BDBC’s objectives to invest in line with its Property & Alternative Investment Strategy. The proposed approach also ensures the forecast revenue within the General Fund is retained in accordance with the Council’s existing treasury management policy.
KEY PRINCIPLES The diagram opposite sets out the broad structure of the proposed ‘Invest to Grow Fund’. The purpose of the Fund is: to provide capital General Fund Capital Allocation Benchmark to stimulate local development activity and leverage private investment Revenue in support of local socio-economic growth. Return
Page 43 Page The proposed approach assumes a capital allocation (in this case £25m) is made via the Council’s General Fund. The key principles of the proposed model are as follows: Invest to Grow Fund . Funds are drawn down as required directly into projects in accordance with the agreed Investment Strategy. Investment Strategy . Investments are made either directly or in partnership with the private sector as equity or project based loans. Debt or . All investments are subject to appropriate risk, business case Equity assessment and due diligence in accordance with standard market Funding Commercial practice. recycled Returns Property & Alternative . Investments must be State Aid compliant and on terms equal to or Investments above the Council’s opportunity cost of capital or ‘benchmark revenue return’ (as identified on the diagram). . Benchmark revenue returns are returned to the General Fund on A B C an agreed basis having regard to the quantum and profile of capital drawn down. . Surplus profits as well as initial capital funding are recycled into future projects.
9 DEBT VS EQUITY INVESTMENTS
It is proposed the Fund could make investments by way of Debt or Equity. Financial returns are therefore either through fixed rate interest on debt investments and/or profit share on equity investments. Examples of such interventions are set out below.
DEBT INVESTMENT EQUITY PARTICIPATION . Council acts as a lender to the property owner or deal sponsor. . Council enters into project level joint venture partnership via a Special . Loan is secured against the real estate and underwritten in a Purpose Vehicle (SPV). commercial loan agreement. . Council commits equity to project(s) in accordance with Participation . Council receives a fixed rate of return determined by the interest Agreement. rate on the loan and how much they have invested. . Council receives fixed rate of return (coupon) and/or profit share . Loan is repaid in accordance with the terms of the loan agreement, determined by how much they have invested and wider role in the project.
Page 44 Page typically at practical completion or when the scheme is partially or . Equity is repaid at point of exit or when scheme is refinanced. fully let.
Invest to Grow Invest to Grow
Equity Coupon Loan Loan Participation plus Profit Security Interest Participation Agreement Agreement Share
Developer SPV / JV
10 INFRASTRUCTURE INVESTMENT
The Fund could also make a debt or equity investment in a piece of infrastructure that releases development potential on a site (or number of sites). Returns can be captured through land value uplift through onward sale of serviced sites, or a contractual relationship with a joint venture partner.
General KEY PRINCIPLES Invest to Grow Fund Capital . Council enters into project level joint venture partnership via Fund Allocation a Special Purpose Vehicle (SPV). . Council commits debt or equity funding depending on Investment Return nature of partnership arrangement and risk profile of investment.
Page 45 Page . SPV procures infrastructure provider / contractor to deliver SPV / JV works. . Council receives fixed rate of return and/or profit share determined by nature and quantum of investment and Infrastructure wider role in the project. Returns through plot Contractor . Debt or equity is repaid with interest in accordance with sales and/or land loan or equity participation agreement i.e. at point of exit or value uplift when scheme is refinanced. . Typically the investment horizon for an equity investment is likely to be longer than that of a loan.
Infrastructure / Enabling Works
11 EXAMPLES OF INVESTMENTS IN PRACTICE
The role of the Fund should be to ‘place’ its investments in projects in such a manner that they complement existing funding and mitigate key risks that are preventing project progress. The Fund could make investments with a view to capturing both financial and socio-economic returns through a number of different mechanisms. Examples of such interventions that have occurred elsewhere are set out below.
INFRASTRUCTURE LOAN, MANCHESTER SCHEME PLAN CAPITAL STACK . Senior loan of £5.00 million provided to the developer to undertake the enabling works and infrastructure to enable the development of a Total Development Cost wider mixed use development site in the City Centre. (enabling works and infrastructure) . Borrower with an established track record and relevant guarantees provided to de-risk the Fund position. Capital Stack Security
Page 46 Page . The Fund position de-risked by a low leverage position and security over two development plots with outline planning permission in place. . The wider development once complete (anticipated to be in 2023) will Developer Equity deliver a total of 2.3 million sq ft of accommodation consisting of 1.25 million sq ft of commercial, 62,000 sq ft of retail and 1 million sq ft of residential space. . A strategically important site, the overall scheme can deliver up to 11,000 additional jobs to the City. Senior Loan . Investment has funded upfront infrastructure in order to unlock the value of the scheme and to make the whole site immediately available. . Loan is repaid following the earlier of plot sales or refinance in accordance with loan agreement.
12 EXAMPLES OF INVESTMENTS IN PRACTICE CONT’D
The below example highlights the role the Fund can play in recycling capital and leveraging private sector investment to drive local economic growth.
DEVELOPMENT LOAN, BARNSLEY FACILITY A – PHASE 1 FACILITY B – PHASE 2 Barnsley Metropolitan Borough Council faced similar problems to Total Development Cost - £6.00m Basingstoke with limited industrial employment land being brought Total Development Cost - £4.00m forward for development. Developers found it difficult to source funding Capital Stack Security from banks and private institutions in large part due to limited evidence of Capital Stack Security occupational demand and take-up. However, the developer had significant experience in the local market and Equity Equity believed there was demand for industrial accommodation through discussions with the occupier community. The project was challenging
Page 47 Page from a funding perspective, due to the fully speculative nature of the proposed development. Fund Loan Fund Loan Working with Barnsley Council (who significantly de-risked the position of the lender by entering into an agreement for lease with the developer) the Local Debt Fund (administered by Sheffield City Council) provided a £4.90 million senior loan. The loan was drawn down and development completed within 12 months of the loan being granted. On completion of the unit there was significant occupier demand to sublet from Barnsley Council and this led the developer to re-finance with a revolving credit facility. The developer has subsequently decided bring forward a second phase (Phase 2) speculatively which the Sheffield City Region Fund is financing.
13 EXAMPLES OF INVESTMENTS IN PRACTICE CONT’D
The below example outlines a highly structured capital stack that has been deployed to enable the development of Grade A office accommodation in Sheffield City centre. The fund provided a mezzanine loan along with three other sources of funding to deliver the speculative office.
DEVELOPMENT LOAN (OFFICE), SHEFFIELD Sheffield has a distinct lack of Grade A office accommodation. The developer in this case had secured a bank loan (however this was limited to only 42% of the total costs). In addition to limited equity the developer faced a shortfall in completing the capital stack. The fund provided a mezzanine loan with a significant element of grant funding also being provided to complete the fund stack and enable delivery of the development. . Mezzanine Loan from the Local Authority funding the gap between equity / grant and debt. . Fund loan protected by: − Corporate security provided by the ultimate parent company.
Page 48 Page − Strong inter-creditor negotiated with the Bank. − Equity and Grant to be invested into the scheme prior to any fund drawdowns. − Relatively low loan-to cost for a mezzanine / junior loan.
SCHEME DESIGN CAPITAL STACK
Total Development Cost
Capital Stack Security
Developer Equity
Grant
Fund Loan
Bank Loan
14 EXAMPLES OF INVESTMENTS IN PRACTICE CONT’D
The Fund will aim to enable development and investment in Basingstoke. There are examples across the UK of government backed regeneration funds working alongside local authorities to de-risk and therefore drive forward speculative development. A good example of which is profiled below: DEVELOPMENT LOAN (OFFICE), CHESTER The distinct lack of Grade A accommodation in Chester meant occupiers could not find suitable accommodation and were leaving the city. The difficulty for Chester was not only proving occupier demand but developers securing funding as a result of risk averse banks. The Council sought to de-risk the project and the Evergreen Fund (owned by various local authorities) provided loan funding to help bring forward a speculative Grade A mixed-use office and retail development that recently reached practical completion. CBRE was actively involved in helping to manage the Fund loan to secure additional LEP Grant Funding enabling the development to come forward. The development transaction details are outlined below: . Viability issues meant a structured and joint approach amongst all stakeholders was required to bring this scheme forward. . Senior Evergreen debt funding in the absence of bank appetite de-risked by low leverage and first charge security. Page 49 Page . Cheshire West and Chester agreed to a purchase of last resort buy-out to effectively underwrite the transaction at below development cost and de-risk it. . Muse Developments as sponsor committed significant equity.
SCHEME DESIGN CAPITAL STACK
Total Development Cost
Capital Stack Security
ERDF Grant
Local Authority Buy Out Position Developer Equity
Evergreen Senior Loan
15 EXAMPLE OF THE FUND IN PRACTICE
A key benefit of the Fund is the ability to recycle investment into future projects. The diagram below sets out the revolving nature of the Fund that recycles an initial investment through a series of funding rounds. This maximises the ability to leverage private sector inward investment and socio-economic outputs. Each of the phases assumes a 3 year financing period.
Phase One Phase Two Phase Three
General Fund General Fund General Fund
Page 50 Page Capital Revenue Capital Revenue Capital Revenue Net Return Net Return Allocation Return Allocation Return Allocation Return Reinvested Reinvested
Invest to Grow Invest to Grow Invest to Grow
£3m return £8.7m return £5.3m return £4.5m loan £2m equity (incl. profit £7m loan (incl. interest) (incl. interest) 6% interest share) 8% interest
Commercial Enabling Development Works / Renewables Opportunity Infrastructure
Economic Outputs e.g. jobs, new homes, brownfield land regenerated etc.
16 INVESTMENT STRATEGY This section summarises the key principles for the Fund’s overarching Investment Strategy. The purpose of the ‘strategy’ and integrated investment criteria is to provide a tool for the Fund Manager to assess projects. It will also be used when making recommendations for investments and as a reference document for approving those investments. The strategy will inevitably evolve throughout the Fund life, as a better understanding of the type of projects in the area is garnered, the local priorities vary and as the public and private sector funding landscape changes overtime.
FUND VISION INVESTMENT CRITERIA The foundation of the Invest to Grow Fund is: The following proposed investment criteria form the basis of selection for “to provide capital to stimulate local development activity and leverage investments by the Fund: private sector investment in support of local socio-economic growth.” . Investments are to be made either directly, in partnership with the private sector The overarching objective of the Fund is to stimulate job creation, delivery as equity, or project based loans.
Page 51 Page of new homes, and attract significant inward investment into the Borough. . Investments are to be made in line the Council’s Property & Alternative Investment Strategy. KEY PRINCIPLES . Investments are to be within the Borough as a priority although the Fund will consider investment options within Hampshire and wider South East where The Fund is being set up as an instrument to support the delivery of the ‘additive’ to the Borough. Council’s economic priorities, by providing finance for certain projects . The underlying principles are: project is viable; carries appropriate risk; and the where bank funding is not available (referred to as “funding gap”, distinct terms are equal to or above the Council’s opportunity cost of capital. from “grant funding” where a scheme is not viable). . Investments must never supplant private finance, be State Aid compliant and The Fund can provide equity or debt, structured to meet the particular meet commercial market returns. needs of a project. All investments will be fully repayable and reinvested in further projects which meet the Fund’s investment criteria. The Fund will . Portfolio level risk criteria for debt investments 70% loan to cost and 60% loan not provide grants. to value, with no individual investment to exceed 80% loan to cost. This does not stop the Fund making a profit. However, the generation of . No more than 30% of the total Fund capital in each project (e.g. based on a profits is not the primary objective and all profits are to be retained by the Fund size of £25m, the maximum loan size would be £7.5m) Fund and re-invested pursuant to local socio-economic priorities. . No more than 40% of the Fund lent to one borrow or group of borrowers (e.g. based on a Fund size of £25m, the maximum loan size would be £10m). Based on our experience of managing similar funds across the country, the Investment minimum size to be £1m. Target maximum 3 year finance period. ‘strategy’ needs to be commercial, sufficiently flexible and actively managed to cater for a changing political and economic environment. All investments will be subject to appropriate risk, business case assessments and Therefore we would advise the Fund Investment Strategy is reviewed due diligence by an appointed Fund Manager and must fulfil the requirements of annually. this Investment Strategy.
17 INVESTMENT MANAGEMENT
As part of the workshop discussions, the full range of governance models have been explored. There are three widely recognised approaches to the management of a fund of this nature. These three options (Delegated, Advisory, In-house) can be summarised as having varying degrees of client involvement and oversight. The diagram below shows the variances between the three different approaches.
INVESTMENT MANAGEMENT OPTIONS The option offering the lowest level of on-going management input from BDBC would be the Delegated mandate. Under this arrangement the appointed manager would be delegated full discretion to implement the investment strategy without further reference to the client, periodically reporting results against the target Page 52 Page benchmark, perhaps annually. This approach would enable the vehicle to be attractive to wider public or private sector investors at ‘Fund Level’ given the independent nature of investment decisions. By contrast, the option requiring the highest level of input from the Council would be the In-House route. Here BDBC would be responsible for all investment and investment management decisions, together with all oversight and reporting. The third alternative is that of the Advisory mandate. This option would ensure BDBC has full oversight and also retains key final decision making, based upon clear recommendations from its appointed independent professional investment advisor. We propose the Fund is formulated and driven with the support of a long term private sector partner who will act as Investment / Fund Advisor acting in an ‘Advisory’ function. The Fund Advisor will require the necessary skill set to appraise opportunities and make recommendations to the Investment Board/Manager.
18 GOVERNANCE AND OPERATIONAL MODEL
The diagram below provides an overview of the proposed operational and governance structure for the Invest to Grow Fund. Further detail is provided within Pinsent Masons fund governance proposals provided separately to this report.
General Fund Capital Allocation ‘Block of Finance’
Investment Invest to Grow Board/Manager Fund Page 53 Page FUND OBJECTIVES INVESTMENT STRATEGY Recommendation
Approval Fund Manager Projects from Project selection, underwriting and loan pricing Gateway
Loan SPV / JV Equity
Project Project Project Project
19 GOVERNANCE & DECISION MAKING
The diagram below sets out the proposed decision making mechanism. The intention is to provide a “Practical and balanced solution” with clear delegated authority whilst allowing for prompt decision making in line with the approved Investment Strategy.
Cabinet Decision ‘Exceptional Cases’ can be referred
Recommendation Approval
Executive Director of Finance Page 54 Page (in consultation with portfolio holder for Property and Development) Delegated Authority to Approve Investments Investment Strategy “Control” exercised through Council approved Investment Strategy and must be scheme Recommendation Approval recommended by Fund Manager
Fund Manager Project selection, underwriting and loan pricing
Project Project Robust investment monitoring procedures Monitoring reports to Audit Committee
20 PROJECT APPRAISAL PROCESS (1)
A clear project appraisal process is fundamental to establishing a fund that is efficient and successful, whilst making investments that are properly underwritten and risk assessed. This section sets out the proposed project appraisal process. The process commences from origination and early sighting of investment opportunities to final legal documentation and release of capital. In the first instance, opportunities are passed through an initial ‘gateway process’. This involves an initial review of the project (undertaken by the Fund Manager) against the Fund objectives and investment strategy. This is outlined below.
Introduction Page 55 Page
Suitability
Source Due Diligence appropriate opportunity Assess if in line Financial with Fund Analysis Investment Strategy Evaluate scheme viability, business Issue Gateway plan and Recommendation investment structuring Evaluate if the potential returns are acceptable for the level of risk
21 PROJECT APPRAISAL PROCESS (2)
Once projects have passed the gateway for the Fund, a subsequent more detailed project appraisal process that will take the project to investment decision is undertaken. This process requires the Fund Manager to undertake detailed due diligence and underwriting, within a clear reporting format and governance structure to allow decision making to be implemented.
Negotiation of Stage 1 Legal documentation optimal funding Scheme viability Recommendation and negotiation, Approved Gateway structure and business plan inter-creditor Recommendation report, highlighting variation from initial agreements, report guarantees Terms &
Page 56 Page Structure Due Diligence Stage 1 Report Ongoing borrower Loan management, reporting, board Docs oversight Stage 2 Report Capital Investment Deployment Exit & Return Management of Capital
Credit Committee, Clearing of pre- Governance, Board conditions for funding Approvals drawdown
22 PERFORMANCE MONITORING FOR THE FUND
In accordance with standard fund management practice, it will be important to ensure the performance of the Fund is monitored on a regular basis. In view of the Fund objectives, this will comprise both economic and financial performance monitoring. These are considered in further detail below.
ECONOMIC OUTPUT MEASURES FINANCIAL PERFORMANCE MONITORING Whilst the main investment strategy addresses the type of investments, it is The monitoring of the financial performance is critical to supporting the important to recognise the extent to which local value is created by smooth and effective running of the Fund. Financial performance investments in local assets. The contribution of projects should be defined monitoring should be undertaken in accordance with standard market against the Council's economic priorities and measured at Fund level. practice. Economic output measures will vary depending upon the specific The Fund manager will be responsible for ensuring investments underwritten importance of key indicators to the Council and will evolve in line with the meet the minimum return requirements for the Fund and monitor the Investment Strategy for the Fund. cumulative returns to the Council. Page 57 Page The intention of these output measures is to demonstrate the added value of There will be risk management and mitigation processes in place (see ‘Risk the Fund and socio-economic benefits to the Borough. Statistics could then Considerations’ section of the report) for the Fund to ensure investments be used to build the case for securing additional public funding for entered into enable the Council to meet the minimum financial return investment in the Fund. requirements. In preparing recommended economic output measures for the Fund we The financial performance metrics that will be monitored include: have had regard to the Council’s economic priorities (Basingstoke Economic . Weighted average Loan to value / Loan to cost ratios Masterplan 2033), the Council’s soon to be adopted Local Plan as well as wider regional economic priorities. . Weighting of the sectors of real estate In view of the above, we propose the following output measures for regular . Total capital available performance monitoring by the Fund: . Capital recycled . Jobs created (or safeguarded) by the provision of real estate . Capital employed . Homes delivered . Return on capital employed . Amount of Grade A or equivalent employment space provided (including . Net present value enabling works) . Average margin . % leverage of third party inward investment . Annual financial return . Brownfield land re-use . Energy performance and savings
23 PROJECT PRIORITISATION
The Fund output objectives can be used to drive a project prioritisation process. The matrix below shows how a prioritisation process can be used to select projects that offer the most in terms of outputs, but are still appropriate to the Fund. This shows the importance that outputs can be given in comparison to other factors that a Fund Manager may consider when pricing a loan. This matrix shows the key characteristics that will be analysed as part of the Stage 1 and 2 underwriting reports. Further detail on both outputs and financial criteria is provided within the Fund Investment Strategy.
Area Considerations (but not limited to) Employment and . Placemaking Regeneration (outputs) . Output numbers in specified areas (Grade A space, jobs etc) . Specific focus on support for local employment generation and community economic development
Page 58 Page . Brownfield site regeneration . Delivery of new homes . Timing and ability to recycle loan into additional regeneration projects . Demonstration of contribution to skills training . Energy performance and savings Scheme Feasibility . Experience generally and specifically relating to the proposed project . Integrity of the borrower. . Resource capability, quality and commitment . How many other projects are being undertaken and what is the time line of these . Financial status and analysis of key balance sheet, P&L and cash ratios Construction & Market . Location – development being delivered into a liquid market with good tenant demand Characteristics . Building quality – suitability for end users, BREEAM rating etc . Project Team – Quality of the project team, including the main and sub contractors . Availabilities of warranties and duties of care for the team . Type of building contract being employed
Capital and Leverage . Quantum . Financial leverage . Additionality . Feasibility
24 MARKETING & ENGAGEMENT STRATEGY
The Fund launch is proposed to be Autumn 2016. However, the marketing and engagement strategy of the Fund will need to be clear prior to launch and will play a key role as the Fund sources projects to invest. Building a distinct brand for the Fund will be of critical importance to its success as has been demonstrated in the success of other Funds in the UK. This section of the report outlines the Marketing and Engagement Strategy proposed up to Fund launch and the process for continuing to identify projects for investment.
MARKETING STRATEGY LOCAL AUTHORITY PRIVATE SECTOR The marketing strategy for the Fund should be a two phase process. Prior to launch this will be to developers, private sector local stakeholders and the Council, to enable a pipeline of investments to be developed (as Determine Interrogate Local Agents / outlined in the graphic opposite). Once the Fund is launched and has a Local Plan Investors and Developers track record of established investments it will work to bring opportunities Page 59 Page forward with the project sponsor and potential third party funders at Identify Face to Face Strategic Consultations project level. Sites
Determine LOCAL AUTHORITY ENGAGEMENT Follow Up Site Workshops Engagement with the Council by way of meetings with key Council officers Ownerships has already begun. The aim of the engagement with the officers is to Engage Fund Launch understand which sites within the Borough are of strategic importance, Event and Land Associated either for housing, employment land and renewable energy. Once these Owners Press sites are outlined, the process will involve identifying the land owners and engaging them to determine the Fund’s role in bringing these forward.
PRIVATE SECTOR ENGAGEMENT The event will also be important to let the market know that the Council is open for business. The private sector engagement and project pipeline at launch and For the private sector a number of face to face meetings have already particularly through the first year of the Fund will be vital for credibility. Press occurred. Continuous market engagement will ensure the Fund meets the announcements around successful investment will also reinforce the Fund’s brand. needs of the investor market and can deliver the objectives of the Council. Building awareness and a clear brand for what the Fund has been created to It is proposed that the Fund hosts a launch event with advertisements in achieve will ensure that it enters the thought process of anyone investing in the the local and national press. The press coverage and a launch event will development or intending to deliver development in the area. Such an approach provide the Fund with a local, regional and national platform to attract will need to be continued through the various stages of the Fund’s lifecycle. investment into the Borough.
25 ATTRACTING WIDER SOURCES OF CAPITAL
During the initial phase the overarching fund will be capitalised by the Council’s own capital reserves. Once initial investments have been made, and depending on the nature and size of these investments, we understand the Council may consider the use of additional borrowing or seek to attract wider public sector investment to support the future growth of the Fund. Alternative sources of capital are also likely to emerge as the Fund expands over time. Wider funding sources are considered below.
PUBLIC SECTOR CAPITAL In the meantime, the Fund Manager should be encouraged to work with the Government policy has long reflected financial instruments such as that other public sector partners to attract additional recyclable fund capital for proposed are encouraged. The proposed governance arrangements are investment in the borough – or potentially the wider county area. This may such that the Fund is structured in such a way to enable the LEP and other include HCA, ERDF and/or Growing Places funds as a result of demonstrating public sector bodies to deploy their own capital at project level. robust governance and fund management procedures.
Page 60 Page It should also be possible to encapsulate grant funding that becomes PRIVATE SECTOR CAPITAL available from central government and can be used either to bolster the Fund or individual projects on a case by case basis to de risk or make projects The Fund is unlikely to either be able to or wish to attract Fund level private viable. sector investment at this stage. We would however recommend the structure of the Fund is such that it is designed to be able to work alongside another investor, and so that project level investment is encouraged. RECAPITALISING THE FUND Once all or the majority of the initial £25m of capital has been deployed, the OTHER FUNDING STREAMS Fund Manager will be tasked to explore options to recapitalise the Fund to enable further local investments to be made. The Council may use the ‘Fund Platform’ as a channel when making bids for Central Government and/or EU Structural Funds. It may be that a sub Potential purchasers of the loan portfolio may include local or regional fund, or ring fenced fund needs to be created in order to protect any pension funds looking to create a balanced fund portfolio, whilst also holding additional capital, but a Fund Manager should be procured so that this is investments in support of local socio-economic growth. An increasing possible. number of local and regional pension funds are seeking opportunities and mechanisms to make local investments that align meet local economic It is also possible to subsequently create a wider fund under the Limited priorities. Partnership (LP) model to invest in schemes once the Fund is well established. For this reason, it is important the Fund is structured as an CBRE Capital Advisors (as Fund Manager for the North West Evergreen Fund) arm’s length vehicle to enable wider public funds to be invested in the area. is currently in discussion with Manchester Pension Fund in relation to recapitalisation of four loans within the fund portfolio creating circa £20m of capital to re-invest locally.
26 RISK CONSIDERATIONS (1)
We have identified the following risks. We would recommend that these risks are considered on an on-going basis as part of an annual review. Project level risks will be mitigated to a large extent through loan agreements and robust loan monitoring procedures.
RISK KEY CONSIDERATIONS Fund Risks Attracting sufficient private Consider investment at project level at a different risk reward points. Appoint a well-respected FCA regulated Fund Manager with sector interest in the Fund daily experience of raising capital. Competition for investment The current proposed funding allocation inherently means that on first use of this capital only a limited number of schemes can from the Invest to Grow Fund be funded. This creates a risk that the Invest to Grow Fund is oversubscribed and cannot fund otherwise eligible schemes. Property Risks Projects that are not viable Fund to work alongside other potential funding sources to make projects viable within the State Aid context. Alternative local authority intervention measures may also be considered. Page 61 Page Development risk: Delays Delays to the development programme, may impact the underlying scheme e.g. in terms of its feasibility in the property market Development risk: Cost- Cost-overruns can be an issue, where the development costs increases. Risk can be mitigated through effective loan underwriting overruns and monitoring procedures. Development risk: completion The risk that the borrower runs out of funding to complete the scheme may mean that the Fund has a charge over an incomplete asset, that may not have sufficient value to repay the loan and/or may require further funding to complete it. Planning risk Planning consent would typically be a condition of a loan. However, should planning not be achieved then any committed loans may not be drawn, meaning the allocated capital may need to be deployed elsewhere. Valuation risk If the value achieved by the built asset is below expectations this can erode the underlying security to the loan. All loans will be made subject to a formal 3rd party bank valuation as a condition to the loan. Variations to the scheme Often developments require variations to both the scheme and or funding package, due to alterations in the underlying design or other factors. This can impact on the overall scheme, with consequences for the underlying asset security, as well as potentially impacting eligibility. Sufficient development contingency allowance will be required as a condition to the loan. Letting risk For many property asset classes, ensuring an acceptable lettings profile id often crucial in creating significant value. This creates various risk points. Certain asset classes are highly specialised by their inherent nature (e.g. scientific properties) and can be harder to find appropriate tenants for. This risk is greater where the loan underwriting is more dependent on full or partially let value to derive enough value to facilitate a loan exit. VP value will be lower and offer less value by way of security. Developer / contractor risk If the developer or any of its key contractors should be inappropriate or undergo financial difficulties (e.g. bankruptcy) then the development may be at risk in terms of quality timing and actually completing.
27 RISK CONSIDERATIONS (2) RISK KEY CONSIDERATIONS Financial Risks Borrower / guarantor default risk Should the borrower and /or guarantor legal entities fail or breach their undertakings / legal commitments, then the loan could be at risk of default with implications for their ability to undertake their duties in relation to the development. Loan structure risk The financial structure of the loans themselves may carry inherent risk, for example the amount of leverage and loan to value or the interest charged may put the scheme under stress. Legal documentation risk If the loan documentation (including the facility agreement and others such as inter-creditor agreements) is not adequate then the loan may not operate as expected, with possible consequences for the security. Repayment and exit risk The Fund’s ability to be able to exit from the loan commitment at an appropriate point (e.g. final loan, maturity or earlier as appropriate) is vital. Such reasons may include project delays or lack of refinancing possibilities. Any factors that inhibit the Fund’s exit means that its capital may not returned as expected. Funding Risks Public funding risks Co-funding for scheme (e.g. grant or other public funding) may be contingent or subject to provisions that may prevent it from being drawn, thereby risking leaving schemes co-funded with the Invest to Grow Fund without sufficient capital
Page 62 Page Private funding risk ( e.g. senior or The Fund could encounter schemes that have some third party capital sourced from the private sector, e.g. bank debt junior debt) (senior to the Fund’s capital) or junior debt (subordinated to the Fund’s capital). This carries risks to the security structure and can impact any enforcement action. For example, other forms of funding come with their own conditions and covenants, which can have impacts on the availability on such third-party funding. Borrower equity The ability for the borrower to invest its equity into the scheme, both the amounts agreed as its committed minimum at the outset of the transaction as well as its ability to fund cost overruns etc. can be a direct risk in the context of developer solvency and ability to complete the development. Public Sector Funding Risks Economic Output risks There is a risk that the expected regenerative / economic outputs are not delivered in the quantum expected by individual schemes. This could adversely impact the Fund-Level totals achieved by the Fund. Defrayment risk If the Fund must adhere to a set time period to deploy its funding, then any matters such as delays on-site on developments or construction delays, could adversely impact the Fund’s outputs. Reputational Risks Corporate and personal liability, These are key risks that BDBC need to consider. The governance structure is designed to alert BDBC through the Board of public perception of investments any risks. The Board will make the ultimate decisions. and responsible investing *Market, economic and political risks should also be considered throughout the life of the Fund. These risks cannot be mitigated to the full extent and it is these risks (alongside specific property risks) that is delivering an economic and financial return above that of a risk free investment. It is therefore important to have regular reviews of the strategy. **The above table excludes legal risks for the Fund. These risks are addressed separately under legal advice provided by Pinsent Masons.
28 NEXT STEPS TO IMPLEMENTATION
This report alongside the proposed Investment Strategy, has been prepared to provide the framework document for approval for Fund set-up, interim and long term Fund Manager appointments, implementation, operation and on- going fund management of the ‘Invest to Grow Fund’. We set out below key considerations in relation to next steps towards implementation.
DELIVERY & IMPLEMENTATION Fund Management Costs The following are typical activities will be required to be undertaken: Fund Manager Appointment Base Fund Management fees vary depending on the value of the Fund. Typically the management . Providing information to enable other funding Typical fund management mandates of this nature fee for a £25m fund would range from 0.5% - 1% parties (public and private) to assess scheme vary from 5 to 15 years depending on the pa of the Fund value depending on the overall viability anticipated life of the Fund and overarching scope of service and levels of transaction flow. investment strategy. For the Invest to Grow Fund, . Participation in calls and updates with other Additional costs also include fund administration, funders as necessary
Page 63 Page following the Fund launch, we would recommend a legal, accounting and audit, website hosting, minimum appointment of 5 years. . Briefing borrowers how a co-lending marketing and branding. The proposed timeframe enables the following arrangement would work in practice Interim Arrangements to Implementation efficiencies to be delivered as the Fund builds . Ensuring all other funder’s terms and conditions momentum in the market place: It will be important to gain early traction on projects are contained within the relevant terms and . Capital immediately available to the Fund to be to establish a track record to facilitate early negotiating these where appropriate discussions with the market and wider public sector deployed On-going Management stakeholders where additional investment may be . Create an established investment criteria sought. Once investments have been made, there will be a number of ‘post-investment’ work streams required . Develop a track record of investments The implementation of the initial investments will to safeguard the performance of the initial . Management structure and branding to mature require an interim Fund Advisory appointment to investment. These include: It is important to ensure a close working draw upon the analysis of potential ‘early wins’ and . arrangement between the Fund Manager and the prepare for the launch of the Fund. Investment and project monitoring Council’s existing external advisory appointment in Transaction Delivery . Financial reporting relation to the on-going asset management, and We would anticipate that other sources of public . Economic output analysis development of the Council’s Investment Portfolio. and private capital may be invested alongside the . Repayment, exit and recycling strategy There will be considerable benefits to the two Fund’s capital at project level. Should this be the parties working closely with one another to . Loan servicing on debt investments case, the Fund Advisor should be procured to maximise the future pipeline of investment satisfy the criteria needed to deploy this additional The long term Fund Manager should be procured opportunities. funding. to undertake the above additional activities.
29 Page 64 Page
This report is addressed to Basingstoke & Deane Borough Council.
The contents are commercially sensitive, provided on a confidential basis and are exempt from disclosure, in part or full, under the provisions set out in Section 41 and Section 43 of the Freedom of Information Act 2000 and should not be made available to any other party without prior agreement from CBRE. 34 INVEST TO GROW FUND
Basingstoke & Deane Borough Council Investment Strategy
June 2016
Page 65 CBRE | INVEST TO GROW FUND
Investment Strategy
Fund Vision The foundation of the Invest to Grow Fund is: “to provide capital to stimulate local development activity and leverage private sector investment in support of local socio -economic growth .” The overarching objective of the Fund is to stimulate job creation, delivery of new homes, and attract inward investment into the Borough. In order to achieve this vision, the Fund will target key investment areas, aligned with the following four identified strands of the Council’s ‘Property and Alternative Investment Strategy’. 1. Council’s existing property portfolio 2. Commercial property investment 3. Housing, regeneration and alternative investment 4. Renewable (green) alternative investment
Key Principles of the Fund The Fund is being set-up as an instrument to support the delivery of the Council’s socio- economic priorities, by providing finance for projects where bank funding is either limited or not available. Investments will be able to compete with private market finance. However
1 the focus will be to provide finance where there is limited appetite from private finance. Page Investments will be structured on a State Aid compliant basis providing commercial, risk
adjusted market returns. The Fund can provide equity or debt, structured to meet the particular needs of a project. All investments will be fully repayable and reinvested in further projects which meet the Fund’s investment criteria and risk adjusted returns. The Fund will not provide grants. This does not stop the Fund making a profit. However, the generation of profits is not the primary objective and all profits are to be retained by the Fund and re-invested pursuant to local socio-economic priorities.
Purpose of the Investment Strategy The purpose of the Investment Strategy (“the Strategy”) is to provide a tool for the Fund Manager to assess projects and to allow the Council’s Executive Director of Finance and Resources to make investment decisions in consultation with the Portfolio Holder for Property and Development within the parameters of the Strategy. The main considerations in selecting investments made by the Fund will be to: æ Determine how projects will assist in delivering one or more of the Council’s economic priorities, including a contribution to the overarching ambition of jobs, homes and investment. æ Ensure the scheme is viable with an appropriate risk vs return profile – where it is not viable to engage with the project sponsor to consider how it could be assisted outside of the Fund. æ Provide a comparison of the proposed investment against other potential investments by the Fund; including the schemes proposed contribution to the Council’s economic priorities per £ of investment; and the comparative risks of delivery and repayment.
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CBRE | INVEST TO GROW FUND
Investment Strategy
The Strategy will evolve throughout the life of the Fund, as a better understanding of the type of projects in the area is garnered, the local priorities vary and as the public and private sector funding landscape changes overtime. The Strategy is therefore prepared on the basis that it is commercial, sufficiently flexible and actively managed to cater for a changing political and economic environment. On the establishment of the Fund full Council shall: æ approve the Investment Strategy; æ confirm which areas of the Investment Strategy may be subject to an annual review; and æ delegate authority to the Council's s.151 Officer in consultation with the Portfolio Holder for Property and Development to approve the investments within the parameters of the Strategy. The Investment Strategy may be reviewed annually (or at such time deemed reasonably necessary by the Cabinet) with such review limited to those areas of review set out on the establishment of the Fund. The annual amendments shall be subject to approval by Cabinet. The Fund manager will make a recommendation each year on the Fund Strategy.
Economic Priorities The Council’s ‘Economic Masterplan for Basingstoke 2033’ and recently adopted ‘Local
2 Plan’ outlines how it will plan for future prosperity, secure investment and ensure that Page residents benefit from economic growth and improved employment opportunities and
enhanced infrastructure. The overarching ambitions for the Masterplan and Local Plan are to deliver: æ 4,000 new jobs (the Local Plan identifies 450 to 700 new jobs per annum) æ £233m Gross Value Added per annum æ 13,400 new homes (the Local Plan identifies 850 per annum) These output targets, along with the Council’s wider Local Plan objectives form the basis of the economic priorities for the Fund. In order to cater for future growth of the Fund, investment decisions will also give due consideration to the Local Enterprise Partnership (Enterprise M3) economic priorities.
TRANSPORT INNOVATION SKILLS HOUSING Improve & ENTERPRISE Develop skills Facilitate and connectivity better to suit the Creation of 200 accelerate the between needs of the new companies, delivery of ‘Growth and economy. 8,000 additional housing across Step-up Towns’, Achieve target of jobs and £2bn the region, and increase increasing of export address capacity and employment to markets from affordability gap unlock new businesses reach 80% housing and business sites
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CBRE | INVEST TO GROW FUND
Investment Strategy
Sourcing Projects The appointed Fund Manager, reporting to the Council's Executive Director for Finance and Resources, will be responsible for delivering the Investment Strategy. Full details of the proposed governance arrangements for the Fund are set out in the accompanying legal report. The Fund Manager will work closely with the local authority in identifying, appraising and delivering investment in projects through the life of the Fund. This will combine the commercial property and financial expertise of the Fund Manager with the local knowledge and regeneration experience of the local authority to form an effective partnership with the range of skills needed to deliver the Fund’s vision. The local authority will be active at project level, working with developers at the early stage of project development, identifying potential opportunities and referring projects to the Fund for appraisal. The Fund Manager will also be tasked with delivery of the agreed marketing and engagement strategy for the Fund. A project appraisal process will then be applied to determine only those projects which are most suitable for support, namely: æ Sites that are viable but unable to access commercial finance; æ Sites that meet the Council’s ‘Property and Alternative Investment Strategy’; æ Sites close to, or have the potential to provide, employment to areas of regeneration
3 priority; and Page
æ Sites that are sustainable in environmental and socio-economic terms. In the addition to the above, the approach to project selection is focussed on producing the maximum possible impact on development and regeneration opportunities, whilst at the same time delivering market level commercial returns. The approach therefore recognises the Fund is not just about the allocation of its initial budget, but the deployment of financing which is then recycled for the benefit of future socio-economic growth. The Fund’s approach is reflected on the basis of an initial 10 year lifespan. This enables both economic outputs and financial returns to be monitored and forecast. This approach is predicated on the basis that the critical drivers of success over 10 years are: æ The number of times that each £ the Fund has at its disposal on day one gets deployed; æ What each £ deployed delivers in terms of the outcomes the Fund is targeting; and æ What additional financing capacity the Fund secures through project returns that exceed the Fund’s cost of capital and/or by drawing in new financing capacity. A key attribute of the Fund, is that its focus is not simply on its financial success, but the additionality it delivers on the ground. The fact that the Invest to Grow Fund is a public sector Fund means that its primary interest is not to use the Fund’s scarce capacity to substitute for financing which projects could have secured elsewhere. Instead, through the application of a robust project appraisal process, the Fund will ensure the impact of the investment will maximise the net inward investment into the local area.
Investment Criteria The following criteria form the basis of selection for investments by the Fund:
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CBRE | INVEST TO GROW FUND
Investment Strategy
æ Investments are to be made either directly, in partnership with the private sector as equity, or project based loans. æ Investments are to be made in line the Council’s Property & Alternative Investment Strategy. æ Investments are to be within the Borough as a priority although the Fund will consider investment options within Hampshire and wider South East where ‘additive’ to the Borough. æ The underlying principles are: project is viable; carries appropriate balance of risk vs return; and the terms are equal to or above the Council’s risk adjusted opportunity cost of capital (at the time of each individual investment). æ Investments will be able to compete with private market finance however the focus will be to provide finance where there is limited appetite from private finance. Investments must be State Aid compliant with an appropriate risk adjusted return. æ Limited appetite for risk exposure. However a variety of risk positions may be considered but will be subject to risk mitigation measures being put in place by the Fund manager on a case by case basis. æ Risk criteria for debt investments is not to exceed 70% loan to cost and 60% loan to value at portfolio level, with no individual investment to exceed 80% loan to cost. Investments outside of these risk covenants will be assessed on a case by case basis.
4
æ No more than 30% of the total Fund capital in each project at any one time e.g. based
on a Fund size of £25m, the maximum loan size would be £7.5m. Page
æ No more than 40% of the Fund lent to one borrower or group of borrowers e.g. based on a Fund size of £25m, the maximum loan size would be £10m. æ Investment minimum size to be £1m. æ Target maximum 3 year finance period for debt investments. All investments will be subject to appropriate risk, business case assessments and due diligence by an appointed Fund Manager and must fulfil the requirements of this Investment Strategy.
Financial Criteria The Financial Criteria is a merit based method for assessing projects for potential support. The key financial considerations for Fund investments are: æ Coupon – allocated on a project by project basis, having regard to the EC Reference Rate methodology (2008/C 14/02) æ Draw down profile – to correspond with Fund headroom æ Payback period/exit arrangements – to enable funding to be recycled æ Loan security – to include external credit rating of prospective partners, schemes and collateralisation factors æ Risk profile and sensitivity analysis – related to the status of the development partner and scheme viability æ Quantum of loan – related to the Fund and scheme size
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CBRE | INVEST TO GROW FUND
Investment Strategy
æ Leverage – private sector capital released through the Fund intervention Providing deliverability and financial considerations are satisfied, investment will then be prioritised on the basis of: æ Comparative regenerative impact – measured against local economic priority outputs æ Sector distribution – according to the Council Property and Alternative Investment Strategy æ Nature of investment activity – managing the risk profile between equity and debt investments
Terms and conditions for on-lending The Fund will make loans or equity investments into regeneration projects. Loans will be provided on an interest bearing basis at the best rate reasonably attainable having regard to the State Aid guidance available from time to time. Equity investments will be made in accordance with a suitable coupon and/or profit share mechanism. Where feasible, given the structure of the project, the amount of the loan and collateral that may be available, the loan will be secured. Any security will be reflected in the applicable interest rate. In the event of EU State Aid rules permitting other forms of investment, the Fund may consider making alternative forms of investment in projects. The appointed Fund Manager will be responsible for the State Aid position with appropriate
5
support from its legal advisors, to ensure the Fund is always operated within State Aid
guidelines. The Fund Manager will also be tasked to ensure that all options are considered Page
in identifying the most appropriate form of investment in projects on behalf of the Fund.
Where Schemes have a Viability Gap The Fund will not fill viability gaps. However, the Fund Manager working in conjunction with the local authority may need to consider complementary methods of improving the viability. The Fund manager will therefore be expected to work with other sources of finances. These include but are not limited to: ERDF grant; Local Growth Fund; and Growing Places (and successors to those schemes) intervention.
Page 70
By virtue of paragraph(s) 3 of Part 1 of Schedule 12A of the Local Government Act 1972.
Document is Restricted
Page 71 This page is intentionally left blank Appendix 4 - High and Medium Residual Risks Summary
Mitigated Risk ansalysis Risk type Risk Details Likelihood Reputational Public perception of investments made Low
Reputational External negative market perception of fund Low
Borrowers default risk and associated loss of fund Financial Low capital
Financial Fund unable to exit investment at planned point Low
Fund unable to attract appropriate pipeline Service Provision Possible opportunities.
Regulatory legislative and policy changes Low
Inadequate availability of skilled personnel to People Low deliver funds objectives Development delays impacting on feasibility of Property Low projects Cost overruns increasing development cost of Property Low projects
Risk of value of the investment being less than Property Possible valuation at the start
Property Property Market 'crash' Possible
Page 75 Mitigated Risk ansalysis Impact Overall Score Mitigation/Comments Marginal Medium Risk Clear council agreed fund objectives Clear fund brand identity and robust fund Marginal Medium Risk management
Fund manager and due diligence processes and Critical Medium Risk analysis, appropriate use of guarantor, maximum loan values set in Investment Strategy etc
Critical Medium Risk Due diligence process and loan documentation
Fund manager appointed with finance raising and Marginal Medium Risk fund development experience, Investment strategy to allow a range of risk/return projects
Regular monitoring and annual review of Marginal Medium Risk investment strategy
Management and governance structure of the Marginal Medium Risk fund and individual project arrangements
Marginal Medium Risk Project selection and due diligence process
Effective loan underwriting and monitoring Critical Medium Risk procedures. Loan to value restrictions on the fund via the Critical Medium Risk Investment Strategy and third party valuations as part of due diligence. Monitoring of market conditions, fund manager Catastrphic High Risk risk management , mixed portfolio of investments and phased implementation.
Page 76 Agenda Item 10
Supplementary Report for Cabinet 28 June 2016
Subject: Adoption of Neighbourhood Plans for Overton. Status: Open Report Ref: Ward(s): Overton Key Decision: No Key Decision Ref: Cllr Mark Ruffell – Portfolio Holder for Planning and Report of: Infrastructure Jill Fisher – Planning Policy and Implementation Manager email: [email protected] tel: 01256 845318 or Ext 2318 Contact: Joanne Brombley – Planning Policy Team Leader email: [email protected] tel: 01256 845410 or Ext 2410
Neighbourhood Planning Protocol - Updated (June 2014) Papers relied on to Localism Act 2011 produce this report The Neighbourhood Planning (General) Regulations 2012
1 Executive Summary
1.1 Following a positive referendum result regarding the Overton Neighbourhood Plan, the report recommends that the plan is ‘made’ by the Council. Once a neighbourhood plan is ‘made’ it becomes part of the statutory development plan for that area and will be used, alongside local and national planning policy and guidance, to determine planning applications.
1.2 The making of the Plan is the culmination of a number of years work by the local community and particularly the Neighbourhood Planning Group. The Council commends them on their hard work and considers that they should be proud of producing the borough’s second Neighbourhood Plan.
2. Recommendation
2.1 It is recommended that Cabinet:
i. recommends to Full Council, under section 38A(4) of the Planning and Compulsory Purchase Act 2004, to make the Overton Neighbourhood Plan with immediate effect, with the consequence that it becomes part of the statutory development plan for Basingstoke and Deane Borough.
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1 of 4 PRIORITIES, IMPACTS AND RISKS Contribution to Council Priorities This report accords with the council’s Budget and Policy Framework and directly supports the Council Plan priorities of: Create jobs and opportunities by supporting new and existing businesses. Support provision of quality homes, affordable to all through growth and regeneration. Invest in our Infrastructure. Maintain and enhance our built and natural environment. Promote strong communities.
GLOSSARY OF TERMS Term Definition BDBC Basingstoke and Deane Borough Council DCLG Department for Communities and Local Government LPA Local Planning Authority NPG Neighbourhood Planning Group ONP Overton Neighbourhood Plan EIA Equalities Impact Assessment
MAIN CONSIDERATIONS
3 Background
3.1 As set out in the initial report, the Localism Act 2011 introduced a mechanism for local communities to produce neighbourhood plans for their area. The production of a neighbourhood plan must follow a statutory regulatory process. Overton Neighbourhood Plan has now reached the final stage of the process which relates to the ‘making’ of the Plan.
Overton Neighbourhood Plan
3.2 A local referendum was held in Overton on 23 June 2016. From the votes recorded, 1,293 out of 2,442 (53%) of those who voted were in favour of the plan. The turnout of electors was 71%.
3.3 The Council has assessed and concluded that the plan, including its preparation, does not breach, and would not otherwise be incompatible with, any EU obligation or any of the Convention rights (within the meaning of the Human Rights Act 1998).
4 Options Analysis and Next Steps
4.1 Paragraph 38A(4)(a) of the Planning and Compulsory Purchase Act 2004 requires the Council to make a Neighbourhood Plan if more than half of those voting in a referendum have voted in favour of the Plan being used to help to decide planning applications in the area. As this was the case for the Overton Page 78
2 of 4 Neighbourhood Plan, it should be ‘made’ by the Council. The Council has no option but to ‘make’ a plan once a positive vote has been received.
4.2 Once the plan is ‘made’, it will be published on the Council’s website, along with relevant supporting information including a decision statement, in line with the regulations. Notification will also be sent to the qualifying bodies and all those asked to be notified of the decision. The Plan will be available to purchase and to view at Basingstoke and Overton libraries.
4.3 The Plan will be used in the determination of planning applications that fall within the parish of Overton. Its effectiveness will be monitored as part of the authority monitoring report which is produced annually by the Local Planning Authority. The need to review the plan in due course will be considered as part of this process.
5 Corporate Implications
5.1 Financial Implications
5.1.1 There are no significant financial implications arising from the Plan being ‘made’.
5.2 Risk Issues
5.2.1 Upon being ‘made’, the Plan will be subject to a statutory period of time (six weeks) within which a legal challenge can be lodged.
5.3 HR Issues
5.3.1 There are no HR issues as a result of this report.
5.4 Equalities
5.4.1 The Examiner’s Report confirms that the plan has had regard to fundamental rights and freedoms guaranteed under the European Convention on Human Rights (ECHR) and comply with the Human Rights Act 1998.
5.4.2 When considering the Public Sector Equality Duty under the Equality Act 2010, the Neighbourhood Planning Group has also undertaken an Equalities Impact Assessment (EIA). This assessment concluded that the plan is generally positive for a range of protected interested groups. The subsequent BDBC EIA has confirmed this finding.
5.5 Legal Implications 5.5.1 In accordance with the position as set out in this report, the making of the Plan is a mandatory legal requirement following the positive outcome of the referendum (save for in narrow circumstances as set out in paragraph 4.1 of this report). As such the LPA are under a statutory duty to adopt and thus ‘make’ the plan.
5.5.2 Following adoption the plan will form part of the statutory development plan for the borough and therefore the implementation of the policies contained within them will need to be considered when reaching planning decisions made in the borough, specifically in relation to Overton parish. Page 79
3 of 4 6 Comment from Portfolio Holder
6.1 The Portfolio Holders welcomes the result of the referendum and considers that the people of Overton can be proud that they are the second area in the borough to have a supported neighbourhood plan. The Council is very supportive of communities preparing neighbourhood plans, so that they can help shape the future of their area. The decision reflects the hard work undertaken by the local community.
7 Communication and Consultation
7.1 Following the Full Council decision, Overton Parish Council, and others who asked to be informed, will be notified that the plan has been ‘made’. The Plan and supporting documents will be published on the Council’s website and made available in line with the regulations and the Council’s adopted Statement of Community Involvement. The Council will also publicise the decision.
8 Conclusion
8.1 Following the positive outcome of the referendum for Overton, the Neighbourhood Plan should be ‘made’ by the Council and, as such, become part of the statutory development plan for the borough. The Plan will therefore help to set the planning framework for the borough and will assist in delivering the objectives of the corporate plan.
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4 of 4
Cabinet 28 June 2016
Subject: Adoption of Neighbourhood Plan for Overton. Status: Open Report Ref: Ward(s): Overton Key Decision: No Key Decision Ref: Cllr Mark Ruffell – Portfolio Holder for Planning and Report of: Infrastructure Jill Fisher – Planning Policy and Implementation Manager email: [email protected] tel: 01256 845318 or Ext 2318 Contact: Joanne Brombley – Planning Policy Team Leader email: [email protected] tel: 01256 845410 or Ext 2410 Appendices: Appendix 1: Overton Neighbourhood Plan (2016-2029)
Neighbourhood Planning Protocol - Updated (June 2014) Papers relied on to Localism Act 2011 produce this report The Neighbourhood Planning (General) Regulations 2012
1 Executive Summary
1.1 The Overton Neighbourhood Plan (ONP) has now reached an advance stage of production and a local referendum on the Plan is due to be take place on 23 June 2016. If more than 50% of the votes made at the referendum are in favour of the plan (i.e. it is supported by the local community) then the Plan should be ‘made’. Once a neighbourhood plan is ‘made’ it becomes part of the statutory development plan for that area and will be used, alongside local and national planning policy and guidance, to determine planning applications.
1.2 Due to reporting deadlines, this report has been written in advance of the referendum results being known A supplementary report will be taken to 28 June Cabinet to report the outcome of the referendum. If there is a majority yes vote, the report will go to Council on 21 July to enable the Plan to be ‘made’ as early as possible. If less than 50% of the votes made at the referendum are in favour of the plan (i.e. it is not supported by the local community) then the report will be withdrawn and the Plan will not be ‘made’.
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1 of 4 2. Recommendation
2.1 The supplementary report will include a recommendation to make the Plan, subject to the outcomes of the forthcoming referendum.
PRIORITIES, IMPACTS AND RISKS Contribution to Council Priorities This report accords with the council’s Budget and Policy Framework and directly supports the Council Plan priorities of: Create jobs and opportunities by supporting new and existing businesses. Support provision of quality homes, affordable to all through growth and regeneration. Invest in our Infrastructure. Maintain and enhance our built and natural environment. Promote strong communities.
GLOSSARY OF TERMS Term Definition BDBC Basingstoke and Deane Borough Council DCLG Department for Communities and Local Government LPA Local Planning Authority NPG Neighbourhood Planning Group ONP Overton Neighbourhood Plan EIA Equalities Impact Assessment
MAIN CONSIDERATIONS
3 Background
3.1 The Localism Act 2011 introduced a mechanism for local communities to produce neighbourhood plans for their area. The production of a neighbourhood plan must follow a regulatory process and the Town and Country Planning Act 1990 as amended (by the Localism Act 2011) and Neighbourhood Planning (General) Regulations 2012 set out key stages in the preparation of such plans and the process for them becoming part of the development plan. The key stages are summarised below.
3.2 The Overton Neighbourhood Plan (ONP) is the second most advanced neighbourhood plan in the borough and has now reached stage f), which is highlighted in bold:
a) Designation of a neighbourhood area - The area covered by the neighbourhood plan needs to be agreed by the borough council. b) Preparation of a draft neighbourhood plan - The ‘qualifying body’1, then prepares the draft neighbourhood plan and evidence base.
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2 of 4 c) Pre-submission publicity and consultation - The Plan is submitted for Pre- submission publicity and consultation for a minimum of 6 weeks. d) Submission of the draft plan - The ‘qualifying body’ formally submits the neighbourhood plan to the local planning authority (LPA). The LPA checks whether the plan accords with the relevant legislation, publicises the Plan for 6 weeks and appoints an Independent Examiner. e) Independent Examination - The neighbourhood plan is examined by an Independent Examiner to assess whether the Plan meets the basic conditions. The Examiner then issues a report, if the report is positive and the borough council agrees with it, the Plan is then subject to referendum. f) Referendum - The borough council organises a referendum, and then publishes the results. g) Adoption – The Plan is ‘made’ by the borough council.
Overton Neighbourhood Plan
3.3 In July 2013 BDBC designated the Overton Neighbourhood Area for the purpose of preparing a Neighbourhood Plan. The plan area covers the parish of Overton and lies solely within the Basingstoke and Deane Local Planning Authority Area. Overton Parish Council, the qualifying body, submitted the draft Neighbourhood Plan and supporting documents to BDBC in August 2015. Consultation on the submission plan took place from September to October 2015.
3.4 Following the consultation, the Council, with the consent of Overton Parish Council, appointed an independent examiner to review the Plan. The Examiner’s Report recommended that, subject to a number of proposed modifications which were required to ensure that the Plan meets the basic conditions set out in the legislation, the Plan should proceed to referendum. A local referendum is due to be held in Overton on 23 June 2016.
3.5 Following the outcomes of the referendum, and in line with the relevant regulations, the Council will assess whether the plan, including its preparation, breaches or would be incompatible with any EU obligation or any of the Convention rights (within the meaning of the Human Rights Act 1998).
4 Options Analysis and Next Steps
4.1 Paragraph 38A(4)(a) of the Planning and Compulsory Purchase Act 2004 requires the Council to make a Neighbourhood Plan if more than half of those voting in a referendum have voted in favour of the Plan being used to help to decide planning applications in the area. If a positive outcome is received, the Neighbourhood Plan should be ‘made’ by the Council. The making of a Plan is a mandatory legal requirement following a positive outcome of a referendum (save for in narrow circumstances as set out in paragraph 3.5 of this report). As such, if a positive result was gained the LPA would be under a statutory duty to adopt and thus ‘make’ the plan.
5 Corporate Implications
5.1 Financial Implications
5.1.1 There are no significant financial implications arising from the report.
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3 of 4 5.2 Risk Issues
5.2.1 If the Plan is made it will be subject to a statutory period of time (six weeks) within which a legal challenge can be lodged.
5.3 HR Issues
5.3.1 There are no HR issues as a result of this report.
5.4 Equalities
5.4.1 The Examiner’s Report confirms that the plan has had regard to fundamental rights and freedoms guaranteed under the European Convention on Human Rights (ECHR) and comply with the Human Rights Act 1998.
5.4.2 When considering the Public Sector Equality Duty under the Equality Act 2010, the Neighbourhood Planning Group has also undertaken an Equalities Impact Assessment (EIA). This assessment concluded that the plan is generally positive for a range of protected interested groups. The subsequent BDBC EIA has confirmed this finding.
5.5 Legal Implications 5.5.1 This will be updated, depending on the outcome of the referendum.
6 Comment from Portfolio Holder
6.1 The Portfolio Holder awaits the outcome of the referendum but commends the local community on the work completed to date.
7 Communication and Consultation
7.1 This will be updated, depending on the outcome of the referendum.
8 Conclusion
8.1 The Overton Neighbourhood Plan (ONP) has now reached an advance stage of production and a local referendum on the Plan is due to be take place on 23 June 2016. If more than 50% of the votes made at the referendum are in favour of the plan (i.e. it is supported by the local community) then the Plan should be ‘made’. A supplementary report will be taken to 28 June Cabinet if a positive outcome is reached at the referendum.
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4 of 4 OVERTON
HAMPSHIRE
Photograph by permission of Sue Teagle
NEIGHBOURHOOD DEVELOPMENT PLAN 2016-2029
The Plan is designed to be read as a whole.
1 Page 85 CONTENTS
FOREWORD AND INTRODUCTION
SECTION 1: THE PROCESS Neighbourhood Plan area Page 4 Plan structure Page 6 Community Engagement: a summary Page 6 Preparing the Evidence Base Page 8 Sustainable development Page 8 Site selection process: a summary Page 9 Developer contributions Page 11 About Overton Page 11 Overton: Strengths and weaknesses Page 16
SECTION 2: OUR VISION FOR OVERTON Our vision for Overton Page 17 What is a village? Page 18
SECTION 3: OBJECTIVES AND POLICIES Landscape, the Built Environment and Local Distinctiveness Page 19 Housing Page 25 Working Page 29 Shops and services Page 30 Learning and skills Page 32 Getting around Page 33 Community services Page 37 Enjoyment and recreation Page 38
SECTION 4: THE ALLOCATED SITES Policies for all allocated sites Page 41 Allocated Site Plans and Site Specific Policies Page 42
SECTION 5: MONITORING AND REVIEW Monitoring and review Page 46
GLOSSARY Page 46 APPENDICES Page 48 REFERENCES Page 51
Photographs are by Richard Waldram unless otherwise stated.
2 Page 86
FOREWORD
From Overton Parish Council
This Plan has been produced by the Overton Neighbourhood Plan Group2 at the request of the Parish Council. They are all volunteers and we commend them for their hard work, commitment and persistence. We would also like to thank those landowners and developers who have been prepared to work with us within the Neighbourhood Plan to arrive at acceptable and workable solutions.
This is the first time we have had the opportunity to shape our own future and the village has grasped it with enthusiasm. As you will see, residents have been fully involved at every stage and their views have been fully and fairly represented.
The Plan sets out clearly what we want our village to be in fifteen years’ time and how it will achieve what the village wants and needs – a number of smaller developments with the least possible harm to the landscape we value so highly.
The process of selecting site has been rigorous and the Plan shows how the new housing required by the Borough will be delivered.
We commend the Plan to you.
INTRODUCTION
Welcome to the Overton Neighbourhood Plan, referred to here as ‘the Plan’ or ‘NP’. It is a revision of the Submission Plan issued in August 2015 to include the Examiner’s recommendations.
The Plan allocates sites for approximately 150 dwellings. This figure is reflective of information supporting the emerging Basingstoke and Deane Local Plan (2011-2029). This emerging Local Plan contains a policy (SS5) suggesting the allocation of approximately 150 homes in Overton.
Brian Elkins, Project Manager.
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SECTION 1: THE PROCESS
Neighbourhood Plan area
The plan area agreed with the Borough Council is Overton Civil Parish3,4
.
The Plan period runs from 2016 to 2029.
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OVERTON VILLAGE
The existing Overton settlement boundary in the Adopted Local Plan is enclosed by heavy continuous black lines. The principal routes are shown in red. The River Test is shown in blue.
Winchester Street
Photograph by permission of Overton Pictures
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Plan structure
Writing a Neighbourhood Plan must follow a logical process.
CONSULTATION WITH RESIDENTS AND STAKEHOLDERS
DESCRIPTION OF THE PARISH COMPILING THE EVIDENCE BASE
A VISION FOR OVERTON IN 15 YEARS’ TIME
OBJECTIVES FOR ACHIEVING THE VISION
POLICIES FOR DECISION MAKERS AND DEVELOPERS TO FOLLOW
The Plan will demonstrate that the vision and objectives have been derived from the consultations, the evidence base and the strengths and weaknesses of Overton as it is now. It must also show how the Plan will deliver economic, social and environmental benefits contributing to sustainable development.5
Summary of Community Engagement
Public consultations were undertaken for the Village Design Statement6 in 2002, confirmed by Overton Vision 2020 in 2010 7 and up-dated in ‘Overton Futures’, 20128. Whilst these remain valid, it was important to check that there had been no significant shifts in public opinion since.
In all communications, we have used plain English, free of jargon and technical words, so that residents can clearly understand the process involved, what a Neighbourhood Plan can and cannot do and what is being proposed.
Community engagement has been conducted in five phases.82
The initial public consultation lasted from 21st May-31st July, 2014. At a number of events, residents were asked for their views with three open questions.52 The things I value most and want to see conserved and enhanced are….. The things I would most like to see improved are…. Any other comments?…
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The questionnaire The results enabled the NP Group to construct a questionnaire11 which was sent to every household in the Parish on 30th June, 2014. 600 completed questionnaires were received.12 The opinions expressed were fully in line with previous consultations.6.7.8
Public consultation: November 1st –November 30th, 2014 From the responses, the NP Group was able to write a draft plan.1 A summary31 was sent to every household in the Parish and comments were invited. At two exhibitions, residents could see the sites available for housing, our proposed Vision and Objectives and the proposed strategic options for selecting sites for housing. They were asked to comment on these and to say which three of eight possible selection criteria were most important to them. Comments were also invited on individual sites. 248 people attended and all the proposals were strongly endorsed.14
January 24th, 2015. At a further public exhibition (illustrated below), 438 parishioners saw revised strategic options for housing sites and developers’ outline proposals. Residents were asked to choose between three scenarios or to propose an alternative.15
The Pre-submission Plan80 was published on February 16th 2015 and was followed by a six week period when residents could make comments. 236 did so and 205 (78%) ticked a box to indicate, ‘There is nothing I want you to change.’ There were 318 comments and 14 revisions were made to the policies and supporting text.
Full details of community engagement can be found in the supporting document entitled ‘Consultation Statement’.82
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Preparing the evidence base
Our Neighbourhood Plan is based on evidence from a variety of local, area and national sources including the results of research and consultations done by members of the Evidence Base Team with stakeholders.
Local knowledge was used to make contact with businesses including retailers, public houses, farmers, tradespeople and businesses advertising locally. Landowners were invited to individual meetings.
Information was gathered from the utility and public transport companies serving the parish. Housing information was obtained from estate agents, the 2011 census, Borough Housing Officers and the Community Survey.
Other sources include Overton Parish Council documents including the Overton Village Design Statement6, Overton Community Plan (Overton Futures, 2020)8 and Overton Biodiversity Action Plan16. Basingstoke & Deane Borough Council, especially the emerging Local Plan documents.17 Hampshire County Council18, including specific consultation with the Schools Policy Officer.19 Data from the Office of National Statistics.20 The Environment Agency,21 English Heritage22 and Natural England.23
The references at the end of this document constitute the evidence base.
Sustainable development
We have followed the National Planning Policy Framework (NPPF)24 and the Basingstoke & Deane Borough Council’s Neighbourhood Planning Protocol (updated, June, 2014).25 Whilst not ignoring any of the guidance, we have stressed the things that apply particularly to Overton and matter most to those who live and work here.
Sustainability is the key to the whole planning process and has guided our thinking from the start. Sustainability is the central theme of our vision statement, our objectives and policies. Our Plan describes how proposed developments will bring sustainable economic, social and environmental benefits to the whole community. Each policy is followed by a statement to show that the aim is to provide an economic, social or environmental benefit or any combination of these.
An independent Sustainability Appraisal (SA)83 has been carried out and is a supporting document to this plan. The SA has informed the revisions to the NP.
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The process of housing site selection: a summary
This Plan allocates land for approximately 150 homes. Having reviewed national and local policy and guidance, a methodology was agreed. Sites must be available, suitable, sustainable, viable and deliverable. For neighbourhood plans they must also be acceptable to residents. Two public consultations in November 2014 confirmed that residents placed the highest value on small sites and choosing sites with the least possible adverse impact on the landscape.
Following due process meant Having regard to national policy and guidance and being in general conformity with the strategic policies of the Adopted Local Plan. Searching for suitable sites in the parish and making a public call for sites to landowners. Using a standard sustainability checklist to ensure that no relevant factors were missed on site visits. Giving clear and justifiable reasons for rejecting sites. More detailed consideration of the remaining sites to determine the ‘reasonable alternatives’ for inclusion in the Plan.
Determining the reasonable alternatives included the sustainability considerations. Many items in the site checklist applied equally to all the sites available in Overton and were therefore not useful in distinguishing one site from another. The most useful criteria were Impact on Landscape Character. Biodiversity impact and green space provision. Impact on heritage assets. Proximity of sustainable transport modes -the railway station and a Stagecoach bus stop. Proximity of village centre amenities and the primary school. Relationship to the settlement boundary.
Thus far, the analysis had only considered empty sites. There were then further discussions with landowners/developers to understand the viability and infrastructure issues. With this information, coupled with the sustainability assessments from the site checklists, it was possible to define the reasonable alternatives for inclusion in the NP and to nominate reserve sites in case of unforeseen circumstances.
In the event, it was not possible to satisfy the public preference for small sites entirely but it was possible to construct three alternative site combinations or ‘scenarios’ to deliver the 150 dwellings required. These were presented at a further public consultation in January 2015. The sites allocated reflected the public choice between the reasonable alternatives.
An independent Sustainability Appraisal (SA) was carried out by AECOM Ltd. The SA and responses to the Pre-submission Plan from the statutory and other consultees resulted in the removal of two small sites from the list of reasonable alternatives on sustainability grounds. Dwellings were added to another allocated site. The diagram on the next page shows why and when decisions were made. Full details of the process can be found in the supporting document.81
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ACTIVITY DECISION RESULT
DISCOVERY (June/July 2014) SHLLA Sites LONG LIST OF 33 SITES Google earth Call for sites
DEFINITION (June/July 2014) 12 sites removed because the Identify landowner landowner could not be identified REDUCED LIST OF 21 Willingness to develop? SITES or was not willing to develop. Plot size
EVALUATION (Aug/Sept 2014) 4 sites removed because they Site sustainability/ viability were obviously unsustainable- LIST OF 17 assessment checklist & on the flood plain or had ALTERNATIVE SITES photographs insuperable access problems.
SELECTING FROM THE ALTERNATIVES (Sept/Oct 2014) In the event, site scores were Developing a site scoring system not used to select or remove
Determining the strategic options sites. Sustainability scoping
PUBLIC CONSULTATION November 2014
Nov 2014-Dec 2014 Responding to 4 sites removed as they failed SHORT LIST OF 13 NEW INFORMATION to meet requirements further ALTERNATIVE SITES including developers’ to consultation and proposals assessment.
Two sites withdrawn THE REASONABLE Dec 2014-Jan 2015 following discussion with two ALTERNATIVES AND DISCUSSIONS WITH developers on grounds of RESERVES SITES LANDOWNERS/DEVELOPERS viability/deliverability/ sustainability.
Considering various ways of THREE SCENARIOS OF delivering 150 homes 7 SITES
PUBLIC CONSULTATION Scenario A selected. January 2015 PRE-SUBMISSION PLAN
PRE-SUBMISSION PLAN CONSULTATION Two 10small sites removed. Page 94 SUBMISSION PLAN Feb – March 2015 Reserve sites amended.
Developer Contributions and Infrastructure
‘Infrastructure’ can mean roads, sewers and other utilities, schools, health centres, green spaces, play areas, affordable housing and community facilities.
In the questionnaire6, residents expressed great concern that the infrastructure in Overton would not support more housing.
Development can provide opportunities to deliver infrastructure either through planning obligations or through the community infrastructure levy (CIL). At present, the Borough Council secures developer contributions towards infrastructure through planning obligations when new housing is built. A tariff-based approach has been applied to sites of more than 10 units, whereby developers are generally required to pay for the infrastructure needed to support it. In the future Basingstoke & Deane will be introducing a Community Infrastructure Levy to help fund infrastructure and this will largely replace planning obligations, especially on smaller sites. When this happens and if there is an adopted neighbourhood plan, 25% of the levy is handed over to the Parish Council. The Parish Council must then decide how the money will be spent, but it must be used to support the development of the local area.
The neighbourhood portion of the levy can be used to fund specific infrastructure projects and it can also be spent on a wider range of things, provided that it meets the requirement to ‘support the development of the area’. It will be for Overton Parish Council to propose projects to be supported by the levy at the appropriate time. There is a list of projects currently being considered in the Appendices and this is likely to be amended over time.
If there is no NP in place, the amount of levy received by the parish council will only be 15%, so this is one of the many advantages of having a Neighbourhood Plan.
About Overton
Location
Overton Parish lies in North Hampshire, 9 miles west of Basingstoke, 11 miles east of Andover, 19 miles north of Winchester and 14 miles south of Newbury. It is within the Borough of Basingstoke & Deane.
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Topography
The River Test is the defining feature of the village which lies within the valley, surrounded by rolling downland used mainly for arable farming. There are small outlying settlements at Southington, Quidhampton, Polhampton, Litchfield and Ashe which are rural and tranquil.
Southington Photograph by permission of Overton Pictures
History
There was a settlement in Overton in Anglo-Saxon times when the village was centred round St Mary’s Church, north of the river.
In about 1218, the Bishop of Winchester established seven new market towns across Hampshire and Overton was one of them. The new town was built south of the river and included the main highway between London and Exeter.29 The pattern of roads remains to this day. Winchester Street is a wide thoroughfare, designed for fairs and markets.
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The weirs and leats dating from Anglo-Saxon times gave sufficient fall of water for four historic mills. Those at Quidhampton, Town Mill and Southington survive and contribute to the character of the parish.
Until 1933, the Parish of Ashe was separate from Overton Parish with its own parish church. Historically, the Parish of Overton was divided into four manors or ‘tithings ’ indicating that in medieval times they were more or less equal in population. Overton Borough was the bishops’ new town. The tithing of Southington is a settlement along the river Test to the west and the manors of Quidhampton and Polhampton are in the valley to the east. These settlements retain their own distinctive characters to this day.
In 1587, Overton lost its charter as a town ‘through neglect’ and reverted to being a village.29 However, it still retains one characteristic of a small market town as it has many shops serving those from surrounding settlements. Overton was famous for the annual July sheep fair, held in Winchester Street, when thousands of animals changed hands.29 The ‘White Hart’, which existed in 1442, became an important coaching inn on the London – Exeter road until the coming of the railways30.
In 1724, a Huguenot refugee from France, Henri Portal, obtained the contract to make bank note paper for the Bank of England. In 1922, the main operation moved from Laverstoke Mill to Portal’s Overton Mill by the station, now owned by De la Rue, where bank note paper is still made for the Bank of England.
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The natural environment
The area north of the London-Exeter railway is part of the North Wessex Downs Area of Outstanding Natural Beauty32 (outlined in green on the map). The river Test rises in the Parish and flows to the west. The river and its banks are a Site of Special Scientific Interest (SSSI).33 Overton Conservation Area34 (outlined in blue) includes land within the Test Valley Environmentally Sensitive Area35 and the post-medieval core of the village. Some of the land near the river lies within the flood plain.36 There are many Sites of Importance for Nature Conservation (SINCs) in the Parish. Overton has an active Biodiversity Society37.
Flood Risk Map Flood Risk Zone 3 is shown in dark blue (1% chance per year). Flood risk Zone 2 is shown in pale blue (0.1% chance per year). Courtesy of Environment Agency
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Landscape
Because the village lies in a valley, landscape and views are of great importance. Landscape impact will therefore be a high priority in selecting sites for housing. More details about landscape character and the historic environment can be found in Section 3.
Demography
The population is ageing.38 To remain sustainable, Overton needs to attract people in the younger age groups which means we shall need homes that first-time buyers can afford and more primary school places. Given the ageing population, more homes to the ‘Lifetime Homes’ standard39 will also be needed, along with more smaller homes for ‘downsizers.’ The standard means they are adapted or adaptable to the needs of elderly people and others living with disabilities.
Infrastructure
Development is not sustainable if the infrastructure will not support it. The questionnaire revealed great concern about waste water/sewage disposal, as well as traffic and road safety in the village centre, parking and the capacity of the school and surgery. This Plan seeks to address these concerns wherever possible.
Deprivation and social inclusion
Multiple deprivation scores are very low. About 90% of areas with similar populations in England are more deprived.38 There are no particular streets or roads in the Parish in need of regeneration.
Shops and businesses
Overton is an economic hub, providing services both to residents and people from the surrounding area41. This includes shops, people working from home and businesses providing services, pubs, restaurants and takeaways. We need to sustain the retail/business sector.
Planned developments elsewhere
The planned new housing in Whitchurch42, Andover43 and west of Basingstoke44 and the Bombay Sapphire gin distillery and visitor centre at Laverstoke45 will generate more traffic on the B3400.
More details about the Parish are given in each of the Objectives sections below.
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Overton: Strengths and weaknesses
Key messages from the public consultations.12
The strengths are Village setting in outstanding countryside A long and valued heritage A strong community spirit Overton Recreation Centre Good transport links The range of shops and businesses Good community facilities An outstanding primary school Low crime and deprivation.
The weaknesses are Road system not designed for modern traffic and HGVs Traffic and road safety in the village centre Insufficient parking Trains at full capacity Inadequate sewerage system Lack of housing that local people can afford An increasingly ageing population. To remain sustainable, Overton needs to attract younger residents.
This Plan aims to build on the strengths and, wherever possible, address the weaknesses.
The National School (1867) is now the Community Centre, Library and a nursery school. Photograph by permission of Overton Pictures.
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SECTION 2: OUR VISION AND OBJECTIVES
The NP Group have distilled the responses to the questionnaire and previous consultations into a short statement of how residents want the quality of life to be improved over the next 15 years. This is followed by a set of objectives for achieving it. The vision and objectives statements are preceded by evidence from the questionnaire. The objectives also show how our plan contributes to sustainable development, including Protecting the global environment. Protecting and enhancing the local environment. Maintaining the balance of young and old in the community. Providing the infrastructure required to support new housing.
What people said about Overton More than 90% valued Overton as a compact village set in countryside within the valley. 98% said Overton is a good place to live and want to keep it that way. 88% are concerned about more housing development. 30% fear that village character will be lost and 65% that the infrastructure will not support it.
OUR VISION FOR OVERTON To conserve and enhance the things people value most about living in Overton. To do all in our power to improve the quality of life in the Parish, not only for ourselves but for future generations as well. That means everything we plan to do must be sustainable.
V1 Above all, we want Overton to remain a village, set in its open landscape. We therefore want to ensure that new housing has the least possible adverse impact on the features we value most, whilst welcoming new residents to our community. V2 In 2029 we want Overton to continue to be a place where people of all ages and abilities can thrive, feel safe and be healthy, with opportunities to learn, work, be part of our community, take exercise, enjoy our rural landscape and heritage and lead fulfilling lives. V3 We want to enhance the village environment and play our part in protecting the global environment.
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What is a village?
If 98% said that living in a village is the thing they value most, we have to explain what it means. The word ‘village’ has no specific meaning in planning terms. The Borough Council refer to Overton as a ‘District Centre’.41
HOUSING A village is defined as ‘a compact settlement in rural surroundings with about 300-5000 HOUSING inhabitants which does not have a street market (which would make it a market town).46 HOUSING It is interesting that the new settlement of 1218 was laid out as a market town with a wide HOUSING street for fairs and markets. Nevertheless, it is clear from the questionnaire that residents perceive that they live in a village and place the highest value on its character/identity as a compact settlement within the valley and its relation with the surrounding countryside. Though the number of dwellings in the Parish has doubled since 197047 without apparent loss of these features, our Plan must respond to the fear that, with more housing COMMUNITY development, the village will lose its distinctive character. FACILITIES Our vision for Overton is about all aspects of village life.
LANDSCAPE, THE BUILT SHOPS & ENVIRONMENT, SERVICES LOCAL DISTINCTIVENESS GETTING AROUND LEARNING
WORKING ENJOYMENT & RECREATION
The objectives described in the next section support the vision and are grouped under these headings.
SECTION 3: THE OBJECTIVES AND POLICIES DERIVED FROM THE VISION
The objectives of the Neighbourhood Plan are followed by policies to deliver the vision for the future development of Overton. Policies are only necessary for developments requiring planning permission. Decision makers must apply all relevant policies when considering whether a proposal should be approved.
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LANDSCAPE, THE BUILT ENVIRONMENT AND LOCAL DISTINCTIVENESS
The questionnaire12 revealed that residents not only have a very strong ‘sense of place and history’ but also a strong ‘pride of place’. Significantly, residents placed an even higher value on village character, the countryside, landscape and views than they did on village amenities. Overton as a compact settlement connected to the surrounding countryside was highly valued by over 90% of respondents to the questionnaire.12 The questionnaire11 also revealed a widespread fear that further housing development will result in the loss of the features they value most.
The landscape The main landscape feature of the parish is the valley of the River Test which runs from east to west across the central portion of the area. To the north of the valley, there is a distinct character area of open rolling chalk downland with large open arable fields which is part of the North Wessex Area of Outstanding Natural Beauty (AONB) covering approximately 40% of the area of the Parish. The southern boundary of the AONB is placed somewhat artificially at the railway line. To the south of the valley, the landscape is similar in the western part but to the east the fields are smaller with more hedgerow and woodland giving a more enclosed feel. This area contains a high proportion of ancient semi-natural woodland, some woods being classified as SINCs. Throughout the parish, the field patterns reveal the historic stages of field enclosures from the 16th to 19th centuries.16
Aerial view looking north towards Overton village showing areas of ancient semi-natural woodland. Photograph by permission of Overton Biodiversity Society.
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The rural views from the village to the surrounding hills are highly valued especially the view of St Mary’s Church and the hills behind it to the north.6,12 Other cherished views are of the village from the surrounding hills and vice versa.6
The viewpoints are derived from residents’ responses to the questionnaire in July 2014.
St Mary’s Church from the Bridge Street Recreation Centre
Walking to school. View looking W from Kingsclere Road.
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River Test at Quidhampton Mill
Winchester Street looking north to St Mary’s Church
Great North Field from Little Meadow
W S o u t h S o Southington Lane Photograph by permission of Overton Pictures
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There are 10 green areas within the village
The built form 100 years ago, only three streets were built up on both sides; Winchester Street, the High Street and Bridge Street.48 In 1911, there were 360 dwellings in the parish housing 1,570 people.47 Overton now has three times more people and six times more houses as occupancy rates have fallen.49 Until recently, ‘estates’ of houses have been built in the ubiquitous style of the time without regard to local traditional themes. In the past ten years, however, architects have made more effort to respect the styles of the past.50 The new estates have occupied the higher slopes of the valley and some encroach upon the skyline51, especially Overton Hill, which residents consider to be visually intrusive.8 Overton has 42 buildings listed as being of historical importance, mainly from the 15th- 17th centuries. It is highly unusual that three of these at Berrydown Court are Grade I and five are grade II* (Church of St Mary, Court Farmhouse, Polhampton Farmhouse, the Barn at Litchfield Grange and the Norman Chapel at Quidhampton.)22 There are also 26 other listed structures, non-listed buildings of local importance, 6 scheduled monuments and one registered historic park and garden (Laverstoke Park), part of which lies in the parish.
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The boundary of the Conservation Area is shown in blue. There are other listed buildings elsewhere in the parish.
Most of the houses in the centre of the village front directly on to the street with Georgian or Victorian facades with sash windows, often concealing a post-medieval timber-framed dwelling. Elsewhere, the traditional style is vernacular in brick and flint with porches and gables often with tile-hung walls on the upper floor.50
Southington High Street
High street
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The distinctive features of Overton Parish are The village lying within the valley of the River Test. The river and wild-life habitats and historic mills along its banks. Winchester Street – a broad street for markets and fairs. The traditional and historic buildings in the core of the village and elsewhere in the parish. The separation of the village from St Mary’s Church which lies in more rural surroundings. The beauty of the chalk downland beyond the Test valley within and beyond the AONB. The outlying settlements of Southington, Quidhampton, Polhampton and Ashe which retain their distinctive characters and are tranquil and rural in nature.
Key issues for landscape and the built environment To maintain Overton as a compact settlement connected to the surrounding countryside. To conserve existing views within, to and from the village. To respect the settings of listed buildings, especially the Grade I and II* buildings. New developments must respond to the local context and distinctiveness in terms of design and location.
OBJECTIVES FOR LANDSCAPE, THE BUILT ENVIRONMENT AND LOCAL DISTINCTIVENESS To conserve views within the village and to/from the open countryside. New developments must fit into the context in terms of design and location, contributing to the character of the village.
Photograph by permission of www.overtonpictures .com.
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Policy LBE1: Development proposals should demonstrate, where appropriate, that they conserve or enhance the character of the landscape and built environment. Where possible, proposals should demonstrate how they have taken into account the Overton Village Design Statement6, the Overton Conservation Area Appraisal34 and the CABE Building for Life standards64. Applicants are strongly encouraged to engage with the community before and during the planning application process.
Conserving landscapes, views and local distinctiveness will contribute to sustainability, providing social environmental and economic benefits. This policy is strongly supported by public opinion expressed in the questionnaire. Views within the village and to the countryside beyond were highly valued by 85%.12
HOUSING: PEOPLE AND HOMES
The Parish is home to 4,315 people in 1,885 dwellings with an average occupancy of 2.3 people per dwelling.49 There have been no major developments since the 2011 census. Adding 270 new homes will increase the number of dwellings by 14%. Overton has a lower proportion of houses in Council Tax bands A, B, and C than the Borough average and a higher proportion in bands F, G and H.38 Sold prices for two bedroom terraced houses are 15% higher in Overton than in Basingstoke Town. A 3-bedroom terraced house is 27% more.53 This suggests that Overton is attractive to new residents and developers but it makes homes less affordable for local people. There are 376 units of affordable housing. 69% of dwellings are owned by the occupier. Of the 506 rented properties, 315 are ‘social rents’ and 191 are privately rented.38 Overton has a higher proportion of people over 45 than the Borough average and a correspondingly lower proportion of people under 45.38 The predictions for the current population of Overton, Laverstoke & Steventon to 2019 are that the proportion of people over 65 will increase by 3.1% to 23.1%54. There are no predictions to 2029. There were 95 people on the local council list in housing need in September 201455
HOUSING NEED – Affordable homes The only objective measure of housing need (as opposed to overall housing demand) is the Local Authority List of those in social housing need. Affordable homes are allocated according to BDBC policy based on a points system. Points are awarded to those with local connections. However, some affordable homes in Overton will be occupied by those with no local connection and some with local connections will be housed elsewhere.
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During the Plan period, 120 homes will be built on Overton Hill, 40% affordable (48). The NP will deliver 150 homes, 40% affordable (60). The total number of affordable homes will therefore be 108.
Current need. In September 2014, there were 95 applicants on the BDBC Housing List in ‘general need’. No new affordable homes have been built in Overton since 2008 so this figure represents the balance between those coming on to the list and those whose needs have been satisfied from the currently available stock. However, the figure of 95 applicants indicates that the planned number of affordable homes is broadly sufficient to meet current need without being excessive.
Future need. Calculating future housing need is very difficult. The small area population forecast for Overton, Laverstoke and Steventon Ward indicates a natural increase of 1.5% from 2013 to 2020. There are no forecasts to 2029. At the census of 2011, the total population of Overton Civil Parish stood at 4315. An increase of 1.5% would bring the figure to 4380. An additional 270 dwellings at an average occupancy rate of 2.3 will add about 620 persons, bringing the total to 5000, an overall increase of 16% up to 2029. It is possible to predict that the need for affordable homes will show a modest increase over the plan period. However, it cannot be known how many present and future occupants will move into market housing or move away from the Parish. Nor can it be known how many of the affordable homes to be built will be occupied by those with local connections.
Key issues for new housing There is an assessed need for more housing for local people.55,12 The priority for deciding the mix of housing provided should be local need.17 The available evidence8,12,55,68 is that the majority of new homes (both market and affordable) should have two or three bedrooms. The expressed need for one-bedroom homes is small. There is little expressed desire for dwellings of four or more bedrooms. Affordable homes should not all be of one and two bedrooms: some of those in housing need require larger properties. Reference should be made to the most recent housing needs survey. The questionnaire revealed strongly held views deploring the fact that young people who have grown up in Overton have to look elsewhere when they want to form a household because house prices in Overton are high relative to Basingstoke and Andover.12 It would be very desirable to provide homes for ‘downsizers’ because it would free up larger properties and make better use of the existing housing stock. It is difficult to assess how large the need is. Those wishing to ‘downsize’ to two or three bedroom properties may be frustrated because such properties come on the market rarely and are bought very quickly. The need for one bedroom homes for the elderly may be low.68
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Because of past experience of large developments built over a short period, there is a very strong public preference for small developments to provide a steady supply of affordable housing for Overton people.8,12 Because the population is ageing, opportunities should be taken to provide homes for the elderly and those living with disabilities to the Lifetime Homes standard39. To be sustainable, new housing must efficiently conserve natural resources, reduce pollution and promote biodiversity. It is recognised that private gardens make an important contribution to biodiversity and wildlife corridors. The infrastructure must be able to support the new homes built. There are particular concerns about the capacity of the sewers and flooding that need to be addressed. Much of the flow in the sewers is surface water run-off. The infrastructure must be able to support the new homes built.
OBJECTIVES FOR HOUSING New housing will respond to the needs of local residents. New housing will be phased over the plan period. New housing will be sustainable and efficiently conserve natural resources, restrict pollution and promote biodiversity. Housing developments must be fully supported by adequate infrastructure.
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Objective. New housing will respond to the needs of local residents
Policy H1: Residential development within the existing built-up area of Overton and on the sites allocated in this Plan will be supported subject to: 1) The provision of 40% affordable homes in developments of 11 or more (6 or more in the AONB); 2) the provision of a mix of dwelling sizes; 3) demonstrating that, where affordable housing is provided, consideration has been given to local need; 4) demonstrating that consideration has been given to the guidelines set out in ‘Secured by Design’ (ACPO).71
Responding to local need will provide social and economic benefits.
Policy H2: This Plan allocates land for approximately 150 dwellings. Policies for all allocated sites are included later in the plan.
Objective: New housing will be sustainable and efficiently conserve natural resources, restrict pollution and promote biodiversity.
Policy H3: Applications for residential development should demonstrate how they have have taken account of best practice in energy efficiency and generation; and should demonstrate that landscaping responds positively to the character of the area, is well related to the design of the proposed development and, where possible, conserves or enhances biodiversity.
This policy aims to provide environmental economic and social benefits contributing to sustainability.
Objective: Housing developments must be fully supported by adequate infrastructure.
Policy H4: Grey water recycling and the utilization of sustainable drainage systems (SuDS) will be supported. Applicants are encouraged to maximise opportunities for grey water recycling and utilise SuDS wherever practical and viable.
New and improved utility infrastructure for water supply, surface water drainage and foul water will be encouraged and supported in order to meet the identified needs of the community.
This policy aims to provide environmental economic and social benefits contributing to sustainability.
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WORKING
Overton, Laverstoke and Steventon is estimated to provide 2,500 jobs.38 Some of these are filled by people who live elsewhere. In 2011, 2,049 people were in work of whom 327 were self-employed.49 Of those in work, 71% go by car or motorbike, 10% by public transport and 19% go on foot or by bicycle or work from home. Of the 1,447 who go by car, 91 are passengers.49 The major employers in the parish are De La Rue (430 employees, about 30 of whom live in the parish), small businesses, retail outlets, the primary school and farmers. There are 10 light industrial units around the station and 6 at Quidhampton. There are 6 businesses operating at Ashe Warren Farm. Overton has a thriving business sector. Overton Business Association has 62 members58 but not all businesses are members. Overton is fortunate to have 27 shops selling goods and services. With the exception of the Co-op, they are all independent small businesses and more than half the proprietors live in the parish.59 There are also many pubs, restaurants and take-aways providing local employment. The White Hart in Overton has recently re-opened as a fully refurbished hotel/restaurant.
As the population rises in Whitchurch, Overton and Oakley there is a considerable economic opportunity for retail and hospitality in Overton.
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Key issues for working There is strong public support for more local jobs.12 Employment sites must be for uses and on a scale appropriate to the context of Overton. There is potential and strong public support for encouraging visitors and tourism as a way of supporting local jobs.12,76 We recognise that many people now run small businesses from home or in small local premises76 and this is to be encouraged.
OBJECTIVES FOR WORKING To support proposals leading to more local jobs for local people. To support local employment by making the village more attractive to tourists and visitors.
SHOPS AND SERVICES
Overton is fortunate to have 27 shops selling goods and services and the range of goods for sale has expanded in recent years. Some specialist shops attract customers from a very wide area. Overton now has a greengrocer, a butcher and a baker as well as two small supermarkets. With the exception of the Co-op, all the shops are independent small businesses and more than half the proprietors live in the parish.59 Unlike some town centres where many shops stand empty, Overton has only two shops unoccupied at the time of writing. There is a Home Producers Market once a week. It is not necessary to travel beyond the village for basic needs. Overton has a greater proportion of elderly residents than the borough average and many of them are more dependent on local shops than younger people to satisfy their needs. The more shops and services can be expanded locally the less the need to travel will be. There are four public houses all of which serve food and several restaurants and cafés. All of these attract visitors from the surrounding area.
Late night shopping, Christmas 2014
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Key issues for shopping and services Local shops and businesses were highly valued by 83% of residents in the questionnaire12 and need to be sustained. To attract more custom, car parking 12, 76 near the village centre needs to be improved.
OBJECTIVE FOR SHOPS AND SERVICES To support shops and services in the parish.
Policy S1: Local shops Proposals to improve existing shops and/or provide new shops in Winchester Street and High Street will be supported, subject to respecting local character.
‘Improvements’ include accessibility, enlargement and modernisation. The aim of this policy is to increase trade and provide a wider range of goods and services on sale in the village. It aims to promote local prosperity and reduce the need for travel outside the village thereby achieving economic social and environmental benefits.
The policy will also bring environmental benefits if car journeys to buy goods elsewhere are reduced. The policy may also bring social and environmental benefits if visitors travel fewer miles to shop in Overton than they would to reach main shopping centres in Basingstoke, Andover, Winchester and Newbury. However, the lack of parking near the village centre is currently a disincentive. Opportunities to increase and improve parking will be pursued as a project.
Policy S2: Shops, change of use Proposals requiring planning permission to change the use from retail to private dwellings in the Conservation Area will not be supported unless it can be demonstrated that, further to 12 months active marketing, a retail use is no longer economically viable.
This policy aims to prevent any loss of retail premises, to sustain local shopping and reduce the need to travel thereby bringing social, economic and environmental benefits.
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LEARNING AND SKILLS
There are three nursery schools and activities for parents and carers with babies and toddlers. Overton Primary School has ‘outstanding’ Ofsted reports. Overton Primary School has 357 pupils enrolled and has capacity for 420.19,60 The school has enough land for future expansion. However, specific restrictions for infant classes mean that places are not currently available. There is great concern in the village that arrangements decided by HCC when new developments are built will mean that very young children will have to be bussed to Whitchurch which is not locally acceptable.
Overton Primary School at Court Drove
For secondary education, children mainly go on to Testbourne Community School in Whitchurch which is also rated as ‘outstanding’ by Ofsted.61 The school age population is not predicted to change significantly up to 2019 54 but the figures take no account of the new houses to be built. Overton U3A (University of the Third Age) is thriving with 100 members and a wide variety of interest groups. Overton Library is open on three days a week with a public access computer and wifi. However, the premises within the Community centre are too small for a village of this size and the services it provides are limited.
Key issues for learning and skills To ensure that the nursery schools and Overton Primary School have the capacity to meet the needs of an increased population. To encourage opportunities for adult learning.
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OBJECTIVE FOR LEARNING AND SKILLS To support life-long learning.
Policy L1. The development of existing and new nursery schools that results in an increased number of nursery school places and that respects local character and does not harm residential amenity, will be supported.
Community Action. The Parish Council will seek, where possible, to allocate developer contributions to projects that ensure that Overton Library has premises adequate for the projected Parish population growth, including publically accessible internet access.
The aims of the above are to improve skills and educational attainment both for personal development and job prospects which will provide social and economic benefits.
GETTING AROUND
Overton Station is about 1.4km (0.8miles) from the village centre and provides services to Basingstoke, London Waterloo, Andover, Salisbury and Exeter. There is concern that
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the trains are very crowded at peak hours, parking at the station is inadequate and the area is poorly lit.12 Stagecoach provides bus services to Basingstoke, Whitchurch, Andover and Winchester half-hourly. A village bus service runs to the train station on three mornings a week. Traffic flow on the B3400 between Whitchurch and Basingstoke is very slow at peak hours especially in Overton High Street. There is particular concern about the numbers of HGVs on country roads and village centre roads not designed for them. There is public concern about road safety and that current speed restrictions are inadequate. There are calls for the time restriction on parking which apply in the High Street to be extended to the London Road car park and the lower end of Winchester Street. However, provision of multi-use paths will encourage residents to walk or cycle to the village centre rather than to go by car.
Overton High Street cannot be adapted to 21st century traffic.
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Key issues for getting around Capacity of the roads to accommodate yet more traffic.12 The numbers of HGVs.12 Road safety.12 The need to discourage short car journeys. Car parking at the station and in the village centre.12
Although traffic congestion and the number of HGVs are key issues, this Plan has no objective to deal with them. This is because they are matters for Hampshire County Council and an issue which cannot be regulated through neighbourhood planning.
Some respondents have suggested placing new developments to the east of the village since traffic leaving for Basingstoke would not have to pass through the traffic lights at the village centre. However, a traffic study of Overton Hill showed that more vehicles leave this site and travel west towards the village centre than travel east towards Basingstoke.74
Since there are six routes out of the village, it may also be beneficial in this respect to disperse new developments rather than using one large site.
OBJECTIVES FOR GETTING AROUND To encourage walking and cycling and the use of public transport and to reduce reliance on cars. To improve provision of parking facilities in the village and at Overton Station.
Objective: To encourage walking and cycling and the use of public transport and to reduce reliance on cars.
Policy T1: The provision of multi-use* paths is supported.
*Paths should be well signed and useable by walkers, cyclists and those with mobility scooters, wheel chairs, prams and those with disabilities. Dropped kerbs will be provided on multi-use paths at crossing points.
The aim of this policy is to reduce short car journeys which will result in environmental benefits. It should also reduce the pressure on parking in the village centre and at the station which is a social benefit.
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Objective: To improve provision of parking facilities in the village and at Overton Station.
There are complex long-standing problems with parking at the station. These include land ownership, that Station Approach is not an adopted road and the absence of lighting. Whilst no easy solution is available now, OPC will engage with stakeholders to seek one and this may need investment. The village centre lies in the valley. Those with restricted mobility may be able to walk from their homes to the centre but find it difficult to return with heavy shopping. Parking near the village centre is not adequate. Several Overton not-for-profit organisations have parking areas used by residents for other purposes. They include St Mary’s Church, Town Meadow pavilion (used by parents of young children going to and from Overton Primary School) and the Community Centre. They therefore provide a community benefit beyond their primary purpose. When this plan and the Local Plan are ‘made’, it is expected that Overton Parish Council will receive 25% of CIL with the power to decide how to spend it.
Community Action. The Parish Council will seek, where possible, to allocate developer contributions to the creation of parking opportunities throughout the village and to upgrading community car parking.
This is an example of the sustainability objectives potentially being in conflict. If it is easier to park in the village it will encourage people to use the car for short journeys which is a negative for the environment and for health. However, it will encourage people who live in the parish and those from further afield to shop in Overton rather than travel further to reach a main centre. This is both an environmental and an economic benefit.
Overton village lies in the valley and as the village expands it necessarily means that the residents of new developments will have to climb the hill to get home with heavy shopping. Better parking provision in the village centre will mean that the elderly and those with restricted mobility will be able to shop in the village more easily and that is a social benefit supported by NPPF, para 40.24 On balance, ONP Group considers that the sustainability benefits outweigh the disadvantages. More cycle stands in the village centre will be encouraged as a project.
The aim of this policy is to reduce the pressure on parking in the village centre and at the station which is a social benefit.
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COMMUNITY SERVICES
Overton Surgery is part of the Overton & Oakley Partnership and is close to the village centre. Residents can pick up their prescriptions at Overton Pharmacy. Overton Dental Practice provides non-NHS services. The Post Office is located in the Co-operative supermarket. Overton Library is open three half-days a week. Overton does not have a police station but is served by a Police Community Support Officer. Levels of reported crime and anti-social behaviour are low.62
Key issues for community services Residents are generally satisfied with community services but there is concern about the capacity to meet future needs.12 Although there is some concern about the capacity of the surgery,12 the Practice has assessed that their premises and staffing will be adequate for future needs.63
OBJECTIVE FOR COMMUNITY SERVICES* To ensure that our community services continue to meet the needs of an expanding and ageing population. *Includes: parish office, surgery, dentist, pharmacy, post office, library, police, fire station, allotments, cemetery.
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Policy CS1: Community Services Planning permission will not be granted for development which would result in the loss of essential local services and facilities which are considered to be important to the local community, including local shops, the post office, Overton Pharmacy, public houses and Beech Tree Nursing Home, unless 1. there is adequate alternative local provision; or 2. it is shown that it is no longer practical or desirable to retain them; or 3. it is a part of changes by a public service provider which will improve the overall quality or accessibility of public services in the parish.
This policy complies with Saved Policy C8 (Protection of essential services) It aims to provide social benefits. The pharmacy, dentist and post-office are commercial enterprises but they provide services to the community on which many people depend, especially the elderly. If they become at risk at some time in the future it is possible that financial contributions under the control of Overton Parish Council might enable them to continue in the same or alternative locations.
ENJOYMENT AND RECREATION
Overton Recreation Centre (ORC) is a registered membership charity run by volunteers providing sporting and recreational facilities at Berrydown, Bridge Street and Town Meadow. ORC actively encourages youth sports. The three pavilions also provide a home for Overton Scouts and Guides, a nursery school and a variety of clubs and societies. Income from memberships is the main source of revenue for ORC which is also supported financially by the Borough and Parish Councils. Overton has facilities for football, rugby, cricket, golf, tennis, swimming, short mat bowls and a running club. Apart from the ORC pavilions, there are five halls and meeting rooms used by clubs and societies for a variety of activities. Overton Memorial Institute is a licenced social club. There are ten green open spaces in the village including five playgrounds with public access. There are three active churches – St Mary’s C of E, Methodist and the Community Church which meets at St Luke’s Hall. Amongst services for the elderly are Town Mill (residential accommodation), Beech Tree (nursing home), Kingfisher Day Centre in Laverstoke, Lady Rosemary Portal Club, the Darby & Joan Club and a weekly Lunch Club. Overton surgery is ‘Dementia Friendly’.
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Golf at Town Meadow Overton hosts regular events including the Overton Harriers road races, the Rugby Festival, the Scarecrow Festival, Wheelbarrow Racing, Inter-street football, St Mary’s Church Fete and the Car Fest. The Overton Sheep Fair every four years attracts thousands of visitors. All of these are supported with enthusiasm. Youth activities include the Army Cadets, Scouts, Guides, Brownies and Cubs. There is a youth social club at the football pavilion. Residents place a high value on the Conservation Area, the River Test Site of Special Scientific Interest, land near the river which is part of the Test Valley Environmentally Sensitive Area, the Sites of Importance for Nature Conservation (SINCs) and land north of the London to Exeter railway which is part of the North Wessex Downs Area of Outstanding Natural Beauty.
Overton Sheep Fair, 2012
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Key issues for enjoyment and recreation Residents are generally satisfied with the cultural and sporting facilities available and say that the village halls are adequate.12 People value the environmentally designated areas as opportunities for exercise and quiet reflection.12 Footpaths within and beyond the village are highly valued12 but can be improved.
OBJECTIVES FOR ENJOYMENT AND RECREATION To support social, sporting and recreational facilities in the village for people of all ages and abilities. To work with statutory bodies and partner organisations to protect areas of the parish designated for their environmental and heritage value and their settings. To encourage access to the countryside for walkers and cyclists and the use of these facilities.
Flashetts
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SECTION 5: THE ALLOCATED SITES
POLICIES FOR ALL ALLOCATED SITES
Policy SS1 The development of approximately 150 homes will be permitted on the following sites: SITE F: S OF TWO GATE LANE, approximately 70 dwellings SITE J: W OF SAPLEY PLAYING FIELD, approximately 55 dwellings SITE A: NW OF OVERTON PRIMARY SCHOOL, approximately 11 dwellings SITE B: E OF COURT DROVE, approximately 14 dwellings
Policy SS2. Where a Design and Access Statement is required, the supporting information should, where relevant, provide sufficient detail to enable the following topics to be considered; design; transport; heritage; landscaping and provision of green space; and public benefits.
SS2. Guidance on producing best practice Design and Access Statements can be found at CABE 2006 Guide on Design and Access Statements 78 with an example from Devon 79 The requirement for consultation is covered under policy LBE1.
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LOCATION PLANS
SITE SPECIFIC POLICIES
SITE F: S OF TWO GATE LANE 6.8 HECTARES, 16.8 ACRES APPROXIMATELY.
70 DWELLINGS WITHIN THE AREA BOUNDED IN RED
The boundary marked in blue is the approximate extent of the site for 70 dwellings. The boundary marked in red is the built area. The area shown in green is designated green space. If required, the site boundary may be extended towards the dotted blue line.
Site Plan F: indicative only
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Site F specific policies 1. Access will be to the B3400. 2. There will be a multi-use footpath with public rights of way (PRoW) from the development to the lower end of Two Gate Lane.
SITE J: W OF SAPLEY PLAYING FIELD 2.65 HECTARES, 6.5 ACRES APPROXIMATELY.
55 DWELLINGS The boundary marked in blue is the extent of the site for 55 dwellings. The boundary marked in red is the built area. The area shown in green is designated green space.
Site Plan J: indicative only
Site J specific policies 1. Access will be to the C29. 2. There will be a multi-use footpath with public rights of way (PRoW) from the development linking the development to Pond Close.
The Parish Council would like to see provision of a Community Shop on the site and would like allotments to be gifted to the Parish Council.
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SITE A : NW OF OVERTON PRIMARY SCHOOL 1.8 HECTARES, 4.45 ACRES APPROXIMATELY.
11 DWELLINGS
The boundary marked in blue is the extent of the site for 11 dwellings. The boundary marked in red is the built area.
Site Plan A: indicative only
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SITE B: E OF COURT DROVE 0.46 HECTARES, 1.14 ACRES APPROXIMATELY.
14 DWELLINGS
The boundary marked in blue is the extent of the site for 14 dwellings. The boundary marked in red is the built area.
Site B Plan: indicative only
Site B specific policies 1. Six of the units will be available for self-build. 2. Proposals must demonstrate that landscaping will screen development in a way that protects local character.
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MONITORING AND REVIEW OF THE PLAN
The Neighbourhood Plan Group is concerned to ensure that this Neighbourhood Plan is actively managed. The Plan will be reviewed to ensure that it takes into account possible changes in National Planning Policy or to the Basingstoke & Deane Local Plan. Responsibility for providing the leadership for the Overton Neighbourhood Plan will rest with Overton Parish Council.
Following implementation of the Plan, each Annual Parish Council meeting will include a detailed report on the progress of the Plan in the previous year and the likely progress in the coming year. The Parish Council website will carry an up to date report on the progress of the Plan during its lifetime.
In 2020 and 2025 there will be thorough five year reviews of progress by a Steering Group having a wider community base. The purpose of these reviews will be to guide the Parish Council in its stewardship of the Overton Neighbourhood Plan, and to consider the need for proposing amendments to the Plan to Basingstoke & Deane Borough Council.
In 2027 the Parish Council will again recruit a new NP Group from the community to undertake a review and decide on the need for a subsequent Neighbourhood Plan and, if so decided, to overview the development of the subsequent 15 year plan.
GLOSSARY
AFFORDABLE HOUSING Social rented, affordable rented and intermediate housing, provided to eligible households whose needs are not met by the market. Eligibility is determined with regard to local incomes and local house prices. Affordable housing should include provisions to remain at an affordable price for future eligible households. CONSULTATION The dynamic process of dialogue between individuals or groups, based upon a genuine exchange of views, and normally with the objective of influencing decisions, policies or programmes of action. COMMUNITY ENGAGEMENT Developing and sustaining a working relationship between those making plans for change and the local community to help them both to understand and act on community needs. DEVELOPER CONTRIBUTIONS Monies paid by landowners to the Local Planning Authority to pay for the infrastructure to support developments where these are necessary to make the development acceptable. The money raised can be used to fund a wide range of infrastructure such as transport, schools, health and social care facilities, parks, green spaces and leisure facilities. This may be through a Community Infrastructure Levy at rates fixed for the Borough, or A ‘Section 106 agreement’ which is a legal agreement with the developer of a specific site which may include the provision of affordable housing. EVIDENCE BASE The evidence upon which a development plan is based, principally the background facts and statistics about an area and the views of stakeholders. HERITAGE ASSET A building, monument, site, place, area or landscape identified as having a degree of significance meriting consideration in planning decisions because of its heritage interest. Designated heritage assets include Listed Buildings.
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HOUSING ASSOCIATION Private, non-profit making organisations providing low-cost social housing for people in need of a home. In England, housing associations are funded and regulated by the Homes and Communities Agency (HCA). HOUSING NEEDS REGISTER The Borough Register is the central point of contact for all those wishing to apply for a social housing tenancy, including supported / older persons accommodation within the borough of Basingstoke and Deane. HOUSING NEEDS SURVEY A survey designed to assess future housing need in an area. INFRASTRUCTURE Basic services necessary to enable and sustain living conditions. In the context of planning, infrastructure can include water, gas, electric power, sewerage, roads and telecommunications as well as schools, playing fields, green areas and community facilities. LANDSCAPE An area, as perceived by people, whose character is the result of the action and interaction of natural and/or human factors. The concept of landscape has natural, aesthetic, perceptual, cultural and historic dimensions. LOCAL PLAN The plan for the future development of the local area, drawn up by the local planning authority in consultation with the community under the Planning and Compulsory Purchase Act 2004. Current core strategies considered to be development plan documents form part of the Local Plan. In this case the local area is the Borough of Basingstoke & Deane. MULTI-USE PATH Paths should be well signed and useable by walkers, cyclists and those with mobility scooters, wheel chairs, prams and those with disabilities. Dropped kerbs will be provided on multi-use paths at crossing points. NATIONAL PLANNING POLICY FRAMEWORK The policies set by central government for the preparation of Local and Neighbourhood Plans. NEIGHBOURHOOD PLAN A plan prepared by a Parish Council or Neighbourhood Forum for a particular neighbourhood area (made under the Planning and Compulsory Purchase Act 2004). OBJECTIVE A specific result to be achieved within a time frame with available resources. POLICY A statement of intent expressed as a system of principles to guide decisions and achieve rational outcomes. PROJECT A development not requiring planning permission (permitted development) which may be funded by developer contributions. SETTING The immediate context in which a building is situated. For example, the setting of a listed building could include neighbouring land or development with which it is historically associated, or the surrounding townscape of which it forms a part. SINC. Site of Importance for Nature Conservation. STAKEHOLDERS People, bodies or groups who have an interest in an organisation or process including residents, business owners and government. SUSTAINABLE DEVELOPMENT Development that meets the needs of the present without compromising the ability of future generations to meet their own needs including economic development, social development and environmental protection. SUSTAINABILITY APPRAISAL An assessment of the environmental, social and economic impacts of a Local or Neighbourhood Plan to check that the plan accords with the principles of sustainable development, including biodiversity, the effects of climate change, flood risk, land, soil and water resources, historic environment and heritage, population and community, health and wellbeing, economy and enterprise. VILLAGE DESIGN STATEMENT A document that describes the distinctive characteristics of the locality and provides design guidance to influence future development and improve the physical qualities of the area. A VDS may have the status of Supplementary Planning Guidance which developers are required to follow. The Overton VDS has this status. WILDLIFE CORRIDOR Areas of habitat connecting wildlife populations.
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APPENDICES
APPENDIX 1
Potential projects to be funded from developer contributions
These projects are not prioritised or costed. This list is to inform Overton Parish Council (OPC) of suggested ways to address issues raised during development of the Overton Neighbourhood Plan
Learning and Skills
Ongoing provision of adequate premises for Overton Library for the projected Parish population growth, including publicly accessible internet access. OPC to work with Library and Statutory Agencies.
Investigate opportunities for adult learning to improve of knowledge and skills and promote lifelong learning. To include suitable location(s) with internet access for meetings or individual work and setting up e.g. Job Club, Skills Hub. OPC to work with Library and Statutory Agencies.
Getting Around
Support and seek to extend village bus service (74), to serve new developments. OPC.
Provide signposting of ‘safe’ routes for walking and cycling from Overton village centre to link with adjoining settlements without using A or B classified roads, wherever possible. OPC to work with landowners and adjacent Parish Councils.
Improve knowledge of and signage for multi-use paths and alleyways within the village. OPC.
Improve accessibility to local shops and services and around the village centre with additional dropped kerbs on either side of Greyhound Lane where it joins Winchester St and by the gate to the GP Surgery. Modify pavement corner at the East side of Bridge Street / High Street. OPC to work with HCC and OBA.
Provide more bicycle racks in village centre. OPC. Seek additional secure bicycle storage at Overton train station. OPC and Railtrack. Seek opportunities to increase and improve parking in the village centre. OPC.
Investigate time-limited parking on Winchester Street below Battens Avenue and in London road car park. OPC with HCC Highways.
Investigate provision of ‘walking buses’ to and from Overton Primary School morning and afternoon. OPC with Overton Primary School. Work with Overton Primary School and HCC to
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increase on-site parking for staff and helpers to maximise public parking outside the school. OPC.
Enjoyment and Recreation
Increase the quality and range of existing social, sporting and recreational facilities and public green spaces in the parish. OPC with Overton Recreation Centre (ORC), developers and others, as appropriate.
Identify opportunities for improved public access to the countryside for walkers and cyclists. OPC with local landowners.
Obtain more permissive paths to link together existing footpaths and established rights of way to facilitate further circular walk routes. These will integrate the village with the countryside with publicity to encourage walking for health and leisure. OPC to work with landowners.
Promote local visitor opportunities; information and signposting. OPC to work with OBA, ORC, Library etc.
Upgrade Town Meadow Hut for use by Scouting and Guiding movements and improve car park. Overton Recreation Centre with OPC.
Expand athletic facilities at Berrydown and develop Sports Barn for indoor activities. ORC with OPC.
APPENDIX 2
Saved Local Plan Policies D6 New residential accommodation in the countryside D8 Rural exceptions D9 Rural brownfield sites E1 Development control E2 Buildings of historic or architectural interest E6 Landscape character E7 Nature/biodiversity conservation EC1 Employment areas EC2 Re-use of employment sites EC5 Live work units EC6 The re-use of buildings in the countryside EC7 Farm diversification EC8 Rural tourism C2 Affordable housing C3 Housing mix C4 Housing for the elderly and those with special needs
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C7 The protection, enhancement and replacement of existing liesure and community facilities or open space C8 Protection of essential services C9 New leisure facilities or open spaces A1 Car parking A2 Encouraging walking, cycling and the use of public transport A3 Infrastructure improvements A5 Recycling A6 Renewable energy A7 Water and sewerage infrastructure.
Emerging Local Plan Policies Policy CN1 Affordable Housing Policy CN2 Rural Exceptions for Affordable Housing Policy CN3 Housing Mix for Market Housing Policy CN4 Housing for older people / Specialist housing Policy CN6 Infrastructure Policy CN7 Essential Facilities and Services Policy CN8 Community, Leisure and Cultural Facilities Policy CN9 Transport Policy EM1 Landscape Policy EM4 Biodiversity, Geodiversity and Nature Conservation Policy EM5 Green Infrastructure Policy EM6 Water Quality Policy EM7 Managing Flood Risk Policy EM9 Sustainable Water Use Policy EM10 Delivering High Quality Development Policy EM11 The Historic Environment Policy EM12 Pollution Policy EP1 Economic Growth and Investment
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REFERENCES
1 1st Draft Plan October http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents 2014 2 List of NP Group http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents members 3 NP Area Map http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents
4 NP Application form http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents
5 Benefits of a NP https://www.gov.uk/government/publications/national-planning-policy-framework--2
6 Overton Village Design http://overtontc.users31.interdns.co.uk/documents-and-publications/planning-documents/village-design- Statement statement/ 7 Overton 2020 http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents
8 Overton Futures http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents
11 Questionnaire http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents
12 Responses to the http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents questionnaire 14 November 2014 http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents consultation event 15 January 2015 http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents consultation event 16 Overton Biodiversity http://www.overton-biodiversity.org/society/bap.html Society Action Plan 17 Emerging Local Plan http://www.basingstoke.gov.uk/browse/environment-and-planning/planning/emerging-local-plan/
18 HCC Hampshire key facts http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents
19 Schools Policy Officer http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents conversation 20 Office for National http://www.ons.gov.uk/ons/regional-statistics/index.html _Statistics Statistics 21 Environment Agency https://www.gov.uk/government/organisations/environment-agency 22 English Heritage http://www.english-heritage.org.uk/ 23 Natural England https://www.gov.uk/government/organisations/natural-england 24 National Planning Policy https://www.gov.uk/government/publications/national-planning-policy-framework--2 Framework 25 BDBC Neighbourhood http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents Planning Protocol 29 Overton history Deveson, A. Overton: 1000 years of history, (2000) ISBN-10: 0953333515 ISBN-13: 978-0953333516
30 History of the White http://www.overtonparishcouncil.gov.uk/parish-council/ Hart 31 Summary 1st draft NP, http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents Nov 2014 32 AONB www.northwessexdowns.org.uk/ 33 River Test SSSI http://www.sssi.naturalengland.org.uk/citation/citation_photo/2000170.pdf
34 Overton Conservation http://www.basingstoke.gov.uk/browse/environment-and-planning/conservation/caa/overton.htm Area Appraisal and map 35 Test Valley http://www.legislation.gov.uk/uksi/1998/2178/contents/made Environmentally Sensitive Area 36 Flood Plain Map http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents
37 Overton Biodiversity http://www.overton-biodiversity.org
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Society 38 Ward Profile http://www.basingstoke.gov.uk/Resources/6/6/%7B669C604E-A28E-44CE-B422- 531FB2BEF28D%7D/Documents/Overton,%20Laverstoke%20and%20Steventon%20Ward%20Profile.pdf
39 Lifetime homes www.lifetimehomes.org.uk 41 Economic Hub para 3.8 http://www.basingstoke.gov.uk/Resources/E/E/%7BEE36A71B-F561-4314-8CAF- C12B5F1996B5%7D/Documents/1%20Local%20Plan/02%20Submission%20Local%20Plan.pdf
42 Whitchurch housing http://www.basingstoke.gov.uk/Resources/E/E/%7BEE36A71B-F561-4314-8CAF- para 4.18 C12B5F1996B5%7D/Documents/1%20Local%20Plan/02%20Submission%20Local%20Plan.pdf
43 East of Andover housing http://www.testvalley.gov.uk/resident/planningandbuildingcontrol/planningpolicy/local-development- framework/dpd/ 44 West of Basingstoke http://www.basingstoke.gov.uk/Resources/E/E/%7BEE36A71B-F561-4314-8CAF- housing C12B5F1996B5%7D/Documents/1%20Local%20Plan/02%20Submission%20Local%20Plan.pdf
45 Bombay Sapphire http://distillery.bombaysapphire.com/
46 Definition of village http://en.wikipedia.org/wiki/Village 47 Number of dwellings http://www.visionofbritain.org.uk/ 48 Built up streets 1910 Map, Ordnance Survey, 6"/mile, 1910 49 Dwelling numbers 2011 http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents
50 Housing Development in http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents Overton 51 Skyline, LDF page 21 http://www.basingstoke.gov.uk/NR/rdonlyres/1DA6A9D0-B70F-4A4F-8E4E- D121A15F22C1/0/14219Appendix14screen.pdf 52 Communication & http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents response form May/June 2014 53 House prices www.rightmove.com, 2012-2014. 54 Population Forecast http://www3.hants.gov.uk/planning/factsandfigures/population-statistics/small-area-pop-stats.htm
55 Housing need http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents
58 Overton Business www.overton-business.uk Association 59 Survey of Shops http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents
60 Overton Primary School http://overtonprimary.co.uk/ 61 Testbourne www.testbourne.hants.sch.uk/?attachment_id=571 62 Crime statistics http://www.ukcrimestats.com/Neighbourhood/1637 63 Future capacity of http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents surgery notes
64 Building for Life http://www.designcouncil.org.uk/knowledge-resources/guide/building-life-12
68 Estate agent interviews http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents
71 Secured by design http://www.securedbydesign.com/
74 Traffic study Overton Hill http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents 76 Business responses http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents
52 Page 136
78 CABE Guide Design and http://www.designcouncil.org.uk/knowledge-resources/guide/design-and-access-statements-how-write- Access Statements read-and-use-them 79 Example Design and http://www.devon.gov.uk/plandoc_21_4117.pdf Access statement 80 Pre-submission Plan http://www.overtonparishcouncil.gov.uk/wp-content/uploads/2015/02/DRAFT-NP-FINAL-PRINT-v2.pdf
81 Site Assessment http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents 82 Consultation processes http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents 83 Sustainability Appraisal http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents
53 Page 137 This page is intentionally left blank Agenda Item 11
Report to: Cabinet 28 June 2016 Portfolio Holder Presenting: Cabinet Member for Finance, Service Delivery and Improvement
Subject: 2015/16 Revenue and Capital Outturn Status: Open Ward(s): All Key Decision: No Key Decision Ref: n/a Cabinet Member for Finance, Service Delivery and Report of: Improvement Head of Financial Services – Phillip Hood (01256) 845660 or email: [email protected] Contact: Principal Accountant - Paul Mahoney - (01256) 845598 or email: [email protected] Appendix 1a - Summary of Outturn Variances Appendix 1b – Outturn Reconciliation to Statement of Accounts Appendix 2 - Explanations of Outturn Variances by Portfolio Appendix 3 - Business Units Outturn Appendix 4 - Carry Forward Requests Appendices: Appendix5 - Additional Budget Requests Appendix 6 - Summary Capital Outturn Appendix 7 - Explanations of Variations Over £20,000 on Capital Expenditure Appendix 8 - Revised Capital Programme Appendix 9 - Capital Programme Changes Appendix 10 – Manydown outturn figures Papers relied on to
produce this report
1 Executive Summary
1.1 This report compares the final revenue and capital position for 2015/16 with the budget and identifies the reasons for variances. The report then goes on to recommend transfers to and from reserves.
1.2 The net revenue outturn was £626,100 under the latest budget with expenditure achieving 99.38% and income achieving 100.80% of their respective budgets.
1.3 After allowing for requested carry forwards of £137,800 and a contribution to the Interest Risk Reserve of £325,000 to replenish balances in accordance with the councils financial policies, there is a remaining surplus of £163,300 which it is recommended be used to provide additional budget provision for strategic budgets including Manydown, Leisure Park and Corporate Governance assurance.
Page 139 1.4 Final capital expenditure was £5,664,000 or 81% of the latest budget. This leaves a surplus of £1,335,000, consisting of £983,000 in delayed expenditure and £352,000 in savings.
1.5 The delayed expenditure is proposed to be re-phased into future years. The savings will be used to fund future capital schemes, with the exception of savings of £106,000 which were funded from revenue savings and are therefore recommended to be used to provide further revenue budget for the strategic budgets referred to above.
2 Recommendation
It is recommended that Cabinet requests Council to:
2.1 note the revenue outturn for 2015/16 was a net surplus of £626,100.
2.2 agree the carry forward requests , new funding requests for strategic budgets and the contributions to and from revenue reserves as shown in the shaded areas of Appendix 1(a) and 1(b).
2.3 note that any on-going revenue impacts identified from a detailed review of the outturn, will be included in budget monitoring reports for 2016/17 and the budget strategy for 2017/18.
2.4 note the capital outturn and agree the revised capital programme detailed in Appendix 8.
Page 140 PRIORITIES, IMPACTS AND RISKS
Contribution to Council Priorities This report accords with the council’s Policy and Budget Framework and supports the development of an effective and efficient council.
GLOSSARY OF TERMS Term Definition Capital outturn Actual expenditure in the year on long term fixed assets such as land, buildings or equipment (or grants for such items). Capital receipts Income from the sale of fixed assets Capital charges or capital financing Charges to reflect the cost of the Council holding costs capital assets e.g. depreciation. Capital charges are reversed in the accounts and therefore have no impact on Council Tax. Commuted sums One off lump sums paid by property developers to cover on-going maintenance costs associated with new developments e.g. open space maintenance. Revenue outturn Actual expenditure on day to day items Carry forward requests Requests to use unspent budget in one year to fund additional expenditure in the next. This is usually due to a delay in spending from one year to the next. Transfer Payments Expenditure on areas such as housing benefits where the council is making welfare payments Business Unit Recharges Recharges of staff and their related costs e.g. offices and IT.
3 2015/16 Revenue Outturn
3.1 The final revenue outturn was £626,100 under the latest budget approved in December which included the use of £350,000 from the Interest Risk reserve to make up for reduced investment income. The final outturn consisted of expenditure savings of £294,400 (0.62% of expenditure budgets) and additional income of £331,700 (0.80% of income budgets).
3.2 Many services were at or close to budget e.g. rent income from the council’s property portfolio was within £40,800 or (0.25%) of the budget of £16.1 million. The only areas in which there were budget variances greater than £100,000 were increased planning income of £278,500 and rental income from Festival Place was £114,000 lower than the revised budget due to a reduction in the level of forecast income following external audit of Festival Place accounts. After this adjustment the Festival Place income received was still £43,000 higher than the original budget.
Page 141 3.3 Further details of the final spend figures for each portfolio, along with reasons for variations over £10,000, are provided as Appendices 2 (services) and 3 (business units).
3.4 The table below breaks down the revenue outturn by portfolio. A more detailed analysis of the revenue outturn is shown in Appendices 1a and 1b.
Table 1 – Analysis of revenue outturn by portfolio
Latest Final Final Outturn Budget Outturn Variance* 15/16 15/16 15/16 £000’s £000’s £000’s Portfolio Services: Communities, Service Delivery and Improvement (217.5) (163.8) 53.7 Finance and Resources 1,909.2 1,910.9 1.7 Housing & Regeneration 451.6 346.6 (105.0) Leader 606.5 622.4 15.9 Partnerships 2,926.3 2,865.0 (61.3) Planning and Infrastructure (237.9) (622.6) (384.7) Regulatory Services and the Environment 3,945.0 3,886.6 (58.4) Agency Accounts (2,307.7) (2,415.2) (107.5) Holding Accounts 2,674.6 2,635.7 (38.9) Business Units 22,081.0 22,011.9 (69.1) Net cost of services 31,831.1 31,077.6 (753.5) Investment Property Trading Accounts (14,502.3) (14,412.6) 89.7 Interest & Investment Income (3,150.0) (3,081.1) 68.9 Disposal costs of fixed assets 0.0 3.4 3.4 Business Rates (3,392.0) (3,392.0) 0 Council Tax (6,637.0) (6,637.0) 0 Government Grants (8,642.8) (8,677.4) (34.6) Corporate Income (36,324.1) (36,196.7) 127.4 Total net cost of services before reserve (4,493.0) (5,119.2) (626.1) movements Contributions to Reserves 4,493.0 5,119.2 626.1 Net movement in General Fund Balance 0 0 0
*Note: In this table and throughout this report income, surpluses and favourable variances are shown as negative numbers (i.e. in brackets) and expenditure, deficits and unfavourable variances are shown as positive numbers.
3.5 Most of the outturn variations were forecast in the budget monitoring process and have been taken into account in developing the Council’s budget strategy and reserves strategy (e.g. the rent risk reserve, the interest rate risk reserve).
Page 142 3.6 The following table shows services with income or expenditure variations of more than £10,000 (detailed explanations can be seen in Appendix 2):
Table 2 – Main revenue forecast variations by portfolio
Final Outturn Portfolio Budget Book Service Area Variance £ Communities, Service Delivery & Improvement Car Parking 48,651 Highways Maintenance And Improvement 25,547 Community Support and Development (12,882) Finance & Resources Local Tax Collection 51,578 Council Tax Support Scheme (35,071) Housing & Regeneration Homelessness (58,965) Housing Strategy (30,553) Housing Benefits (11,786) Leader Economic Development 16,138 Partnerships Sports And Recreation (39,306) Planning & Infrastructure Planning Development (317,657) Parks & Open Spaces (62,742) Building Control (34,838) Local Land Searches 11,211 Planning Policy 19,891 Regulatory Services & The Environment Cemeteries (34,911) Street Cleansing (16,757) Elections (13,577) Environmental Protection (12,513) Kerbside Recycling & Bring Bank Sites 56,272 3.7 At the end of quarter 3 there was a forecast net surplus of £128,600 before replenishing the Interest Risk Reserve. The final revenue surplus of £626,100 was therefore £497,500 better than expected. Although this was a good performance further work will continue to further improve forecasting accuracy.
3.8 Detailed analysis of the outturn, including identification of further savings opportunities, will be undertaken with senior budget managers over the next 2 months, in order to identify any on-going budget implications for inclusion in the budget strategy and monitoring reports.
4 Additional Budget Requests and Carry Forward Requests
4.1 As detailed in Appendices 4 and 5, there are the following requests for budget carry forwards and additional budget totalling £407,100. Carry forward requests relate to unspent budget in 2015/16 which is now expected to be spent in 2016/17. The additional budget requests relate to areas that require additional funding.
Tables 3 &3a – Additional budget requests and carry forward requests
3. Additional Budget £ Requests Strategic budgets: Manydown Contingency & Corporate Governance 159,300 Assurance Leisure Park 90,000 Basing View - Breaking Barriers 20,000 Total budget requests* 269,300 * Includes funding of £106,000 of revenue funding for capital purposes savings Page 143
3a. Carry Forward Requests £ Planting in Town Centre areas 64,000 Homelessness 31,000 Housing Strategy 30,000 Youth Hub Feasibility 12,800
Total carry forwards 137,800
5 Proposed Contributions to and from Reserves
5.1 For the reasons explained below, the following allocations, totalling £407,100 are recommended to specific reserves. In accordance with Financial Regulations, funding may be released from reserves by: heads of service (up to £50,000), portfolio holders (up to £100,000), cabinet (up to £250,000) and Council (over £250,000).
Table 4 - Proposed carry forwards, new budget requests and contributions to and from Reserves
£ Net revenue outturn savings (626,100) Less: Replenishment of Interest Risk reserve (Note 1) 325,000 Net revenue outturn savings after replenishing Interest Rate Risk (301,100) reserve Revenue funding for capital purposes saving (Note 2) (106,000) Available for allocation (407,100) Allocations: Additional funding requests – Strategic budgets, including Manydown Contingency, Governance Assurance, Leisure Park and Basing View – 269,300 Breaking Barriers Carry forward requests 137,800 Total proposed allocations 407,100 Remaining balance 0
Notes:
1. This figure consists of £69,000 draw down from the reserve to cover the shortfall on interest income and a £394,000 replenishment of the risk reserve in accordance with the councils approved financial policy.
2. This is in respect of savings arising from capital programme schemes that had been funded from revenue in 2015/16.
5.2 As shown in appendices 1a and 1b a sum of £68,000 on the Operational Asset Maintenance Reserve will be moved into the Efficiency, Transformation and Digital reserve to provide funding of up to £451,000 for the Digital project, as agreed by Council on 25 February 2016.
Page 144 6 2015/16 Capital Outturn
6.1 Total capital expenditure in 2015/16 was £5,664,000. This is £1,335,000 less than the latest capital programme of £6,999,000 (excluding capital programme provisions) agreed as part of the budget report in February 2016. The table below shows that the variance from the revised programme was a combination of savings, delays, advanced and additional spend.
Table 5 – Reasons for capital variations
Reasons for £000’s Variance: Additional Spend 109.0 Advanced Spend 41.0 Delayed Spend (1,024.0) Savings (461.0) Total (1,335.0)
6.2 Appendix 7 summarises the final spend on schemes by portfolio and compares this against the latest programme.
6.3 The main variations on capital relate to the following schemes: Existing Satisfactory Purchases (£363,500), ICT Replacement (£227,000), Basing View – Infrastructure & Public Realm (£138,000) Housing Renewal Grants (£136,000) and AMP Works – Various (£102,000). Detailed reasons for variances against the latest programme are explained in Appendix 6.
7 Main Capital Programme Achievements
7.1 40 capital schemes were either commenced or completed during 2015/16 delivering a wide range of improvements for residents.
7.2 Disabled Facilities Grants
202 Mandatory Disabled Facilities Grants were approved in 2015/16 to assist with adapting homes for disabled residents to support independent living.
The adaptations funded by the Mandatory Disabled Facilities Grants included:
124 bathroom adaptations; 48 stair lift installations; 16 Major adaptations including construction of extensions and provision of new facilities within existing dwellings; 3 ceiling hoists installations; 25 improvements to access into and around dwellings.
7.3 Existing Satisfactory Purchases
Funding of £262,500 was used as a loan to assist Sentinel Housing Association to secure 7 units of accommodation under an ESP (Existing Satisfactory Purchase) scheme. The properties enabled the council to ensure a significant decrease in the use of bed and breakfast for accepted homeless households. Page 145 7.4 Parking & Access
During 2015/16 a further nine sites were investigated and eight projects completed as part of the council’s prioritised Parking in Residential Areas programme. This included the construction of approximately 40 additional parking spaces within the four cul-de-sacs off Grampian Way, Buckskin, which are now fully occupied following flooding in 2014. In all, up to 100 new spaces were constructed in the following streets:
Prescelly Close/Quantock Close/Exmoor Close/Bodmin Close (Buckskin) Renoir Close (Grove) Malvern Close (Buckskin) Wessex Close (Brookvale & Kings Furlong) Sunny Mead (Oakley)
In addition, drop kerbs were provided at approximately 20 locations to help improve access for disabled people.
8 Review of Existing Capital Programme 2016/17 – 2019/20
8.1 The capital programme, which was approved as part of the Policy and Budgetary Framework by Council in February 2016, has been revised to reflect actual capital expenditure in 2015/16 and the latest position on capital schemes. The revised programme is attached at Appendix 8. Details of changes made at scheme level are included as Appendix 9.
Table 6 – Summary of latest proposed capital programme
Total 2015/16 2016/17 2017/18 2018/19 2019/20 Programme £000 £000 £000 £000 £000 £000 Latest Approved Programme excl Capital Programme Provisions (March 2016) 6,999 6,904 6,481 3,691 3,455 27,530
2015/16 Advance Spend 41 (41) 0 0 0 0 2015/16 Delayed Spend (1,024) 1,023 1 0 0 0 Net Scheme Savings (461) 96 78 67 9 (211) Scheme Additions 109 (33) (3) 0 0 73 Scheme Virements 0 125 0 0 (225) (100) Other Scheme Rephasings 0 (222) 46 23 153 0 Additions Funded From S106 Developer Contributions 0 0 3 0 138 141 Additions Funded From New External Funding 0 5 0 0 0 5 New Proposed Programme excl Capital Programme Provisions June 2016 5,664 7,857 6,606 3,781 3,530 27,438
Page 146 9 Capital Receipts
9.1 Capital receipts are monitored and reviewed monthly. The table below shows actual receipts received in 2015/16.
Table 7 – Capital Receipts
Outturn Type of Receipt 2015/16 £ Receipts 100% available for Capital Programme:
Vehicles 124,200 Property 135,100 Loan Repayment 2,200
Total Capital Receipts 261,500 9.2 Total capital receipts received in 2015/16 were £261,500 which mainly related to proceeds from property land disposals and lease restructuring of £135,000 and vehicle sales of £124,000.
9.3 These new capital receipts will provide additional funding for future capital. schemes. Capital receipts generated are required to fund the existing capital programme.
10 Joint Committees
10.1 The Joint Manydown Committee’s (JMC) final position for 2015/16 was net income of £137,400 compared to a budget of £128,900 (see appendix 10). The variance was due to a lower charge than estimated for the one off cost of seed collection. Estimates have been made for Crown estates charges and tree works and maintenance as figures were not available from Hampshire County Council at year end.
10.2 The net income was divided equally between the council and HCC, with this council’s share included in Industrial & Commercial income.
10.3 The final accounts for the JMC are shown in Appendix 10. In addition, a separate report, drawing together all aspects of Manydown, will be reported to the Audit and Accounts Committee.
11 Corporate Implications
11.1 Financial Implications
11.1.1 The financial implications are included throughout the report.
11.2 Risk Issues
11.2.1 There are no risks arising from this report as it is concerned with the reporting of historic factual information.
Page 147 11.3 HR Issues
11.3.1 There are no significant issues.
11.4 Equalities
11.4.1 No significant implications
11.5 Legal Implications
11.5.1 No significant implications
11.6 Any Other Implications
11.6.1 No significant other implications.
12 Communication and Consultation
12.1 Consultation will be through the cabinet report and consultation process.
13 Portfolio Holder Comments
13.1 This report shows that over the past year the council has successfully managed and controlled its finances within the agreed budget. In addition, through the early identification of savings and additional income in the mid- year monitoring report to Cabinet in December 2015, the council has also been able to fund an extension of the grant programmes for disabled facilities grants and the purchase of existing dwellings to provide temporary accommodation for those at risk of homelessness.
13.2 Budgets in areas such as planning have already been adjusted to reflect the higher level of income experienced in 2015/16 and a further analysis of the outturn will be undertaken as part of the budget strategy process to ensure that any on-going implications are reflected in future years’ budgets.
13.3 Whilst we will continue to strive for improved budgeting and forecasting accuracy, it should be recognised that many areas are demand led and difficult to accurately forecast as they are beyond the council’s immediate control e.g. interest rates and income from planning applications. In light of this I believe the Council’s performance in keeping expenditure within budgets and achieving nearly 101% of income budgets demonstrates strong financial management and control.
14 Conclusion
14.1 It is pleasing to report that overall revenue expenditure was £294,400 below budget whilst income exceeded the budget by £331,700. Furthermore, the early identification of savings enabled new initiatives to be agreed in December such as support for the EU rural business grant programme, increasing capital funding for Disabled Facilities Grants and funding for the purchase of existing properties to support homeless families as well as providing funding to the Basing View Reserve.
14.2 Capital expenditure in 2015/16 was £5,664,000 which included significant investment in housing and improvements to the built environment.
Page 148 Appendix 1a
Variances on Monitored Budgets (i.e. excluding centrally controlled and statutory items) Reconciled to the Original Budget and presented in the Statement of Accounts Format
Centrally Monitored Restated Controlled Monitored Approved Monitored Variance Original Original Original Budget Latest Monitored (Under)/ Budget Budget Budget Virements Budget Actual Overspend
INCOME AND EXPENDITURE STATEMENT 2015/16 2015/16 2015/16 2015/16 2015/16 2015/16 2015/16 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Portfolios Leader 2,238 1,721 517 89 606 622 16 Housing and Regeneration 4,397 4,175 222 230 452 347 (105) Communities,Service Delivery and Improvement 4,746 4,985 (239) 22 (217) (164) 53 Finance and Resources 2,566 1,520 1,046 863 1,909 1,911 2 Partnerships 5,035 2,076 2,959 (33) 2,926 2,865 (61) Planning and Infrastructure 6,696 6,701 (5) (233) (238) (623) (385) Regulatory Services and the Environment 9,801 5,848 3,953 (8) 3,945 3,887 (58) Portfolio Totals 35,479 27,026 8,453 930 9,383 8,845 (538)
Business Units 0 (21,888) 21,888 193 22,081 22,012 (69) Agency and Holding Accounts 0 (637) 637 (269) 368 221 (147) Cost of Services 35,479 4,501 30,978 854 31,832 31,078 (754)
Corporate Items Investment Property Trading Account (12,996) 1,779 (14,775) 273 (14,502) (14,412) 90 Interest and Investment Income (3,500) 0 (3,500) 350 (3,150) (3,081) 69 Pension Fund Return on Assets and Interest Costs 2,850 2,850 0 0 0 0 0 Income from Council Tax (6,637) 0 (6,637) 0 (6,637) (6,637) 0 Net Income from Business Rates (3,028) 0 (3,028) (365) (3,393) (3,393) 0 Net Loss on Disposal of Property, Plant and Equipment 0 0 0 0 0 3 3 Capital Grants Income (566) (566) 0 0 0 0 0 Non-Ringfenced Government Grants Income (7,815) 0 (7,815) (828) (8,643) (8,677) (34) Net (Surplus) / Deficit on the Provision of Services 3,787 8,564 (4,777) 284 (4,493) (5,119) (626)
Adjustments between accounting basis and regulation Revenue Funding of Capital Expenditure 8,093 8,093 0 0 0 0 0 Pension Fund Reserve (2,850) (2,850) 0 0 0 0 0 Capital Charges (6,802) (6,802) 0 0 0 0 0 Net (Surplus) / Deficit before Reserve Movements 2,228 7,005 (4,777) 284 (4,493) (5,119) (626)
Financing of Capital from Revenue Reserves Revenue Reserve for Capital Purposes (General) (4,505) (4,505) 0 0 0 0 0 Local Infrastructure Fund Reserve (1,000) (1,000) 0 0 0 0 0 Strategic Infrastructure Reserve (1,600) (1,600) 0 0 0 0 0
Contributions to/(from) Earmarked Reserves Revenue Reserve for Capital Purposes 94 0 94 588 682 576 (106) Local Infrastructure Fund (LIF) Reserve 1,876 0 1,876 (41) 1,835 1,835 0 Strategic Infrastructure Reserve 1,877 0 1,877 0 1,877 1,877 0 Green Investment Reserve (50) 0 (50) 0 (50) (50) 0 Rent Risk Reserve 587 0 587 0 587 587 0 Interest Risk Reserve 925 0 925 (350) 575 900 325 Corporate Bond Reserve (500) 0 (500) 0 (500) (500) 0 Stability and Resilience Risk Reserve 116 0 116 0 116 116 0 Business Rate Risk Reserve 466 0 466 365 831 831 0 Economic Development & Capital Priorities Reserve 867 0 867 (71) 796 796 0 Invest to Save Reserve 0 0 0 0 0 0 0 Invest to Grow Reserve 0 0 0 (90) (90) (90) 0 Basing View Reserve 0 0 0 89 89 89 0 Manydown Reserve (665) 0 (665) (403) (1,068) (1,068) 0
Efficiency, Transformation and Digital Reserve (17) 0 (17) 0 (17) 51 68 Local Plan Reserve (22) 0 (22) 0 (22) (22) 0 Trees Maintenance Reserve (100) 0 (100) 0 (100) (100) 0 Operational Asset Maintenance Reserve (167) 0 (167) (100) (267) (335) (68) Transport Reserve (101) 0 (101) 0 (101) (101) 0 Climate Change Reserve (20) 0 (20) 0 (20) (20) 0 Budget Carry Forward Reserve (389) 0 (389) (271) (660) (522) 138 Budget Carry Forward Reserve (Additional Budget Requests) 0 0 0 0 0 269 269 Commuted Sums Reserve 100 100 0 0 0 0 0 Total Contributions to/(from) Reserves (2,228) (7,005) 4,777 (284) 4,493 5,119 626 Net (Surplus) / Deficit after Reserve Movements 0 0 0 0 0 0 0
Page 149 This page is intentionally left blank Appendix 1b Reconciliation Between Monitored Actuals and Actuals Reported in the Statement of Accounts
Capital Other Pension Accounting Support Statutory Statement Monitored Adjust- Adjust- Services Adjust- of Accounts Actual ments ments Recharges ments Actual INCOME AND EXPENDITURE STATEMENT 2015/16 2015/16 2015/16 2015/16 2015/16 2015/16 £'000 £'000 £'000 £'000 £'000 £'000
Portfolios Leader 622 75 1,777 2,474 Housing and Regeneration 347 1,399 3,091 4,837 Communities,Service Delivery and Improvement (164) 900 2,175 2,911 Finance and Resources 1,911 (1,478) 1,592 2,025 Partnerships 2,865 (439) 990 3,416 Planning and Infrastructure (623) 160 6,902 6,439 Regulatory Services and the Environment 3,887 3 91 6,132 10,113 Portfolio Totals 8,845 (1,475) 2,186 22,659 0 32,215
Business Units 22,012 1,455 5 (23,437) (35) 0 Agency and Holding Accounts 221 1,081 (1,302) 0 Cost of Services 31,078 (20) 3,272 (2,080) (35) 32,215
Other Operating Expenditure Payments to Parishes 0 1,128 1,128
Financing and Investment Income and Expenditure Investment Property Trading Account (14,412) (5,738) 2,080 (18,070) Interest and Investment Income (3,081) 14 (3,067) Net Interest on Pension Liability 0 2,360 2,360 Net Gain on Disposal of PPE Assets 3 7 10 Taxation and Non-Specific Grant Income Council Tax Income (6,637) (1,085) (7,722) Net Business Rates Income (3,393) 524 (2,869) Capital Grants and Contributions 0 (670) (670) Non-Ringfenced Government Grants (8,677) (8,677)
Net (Surplus) / Deficit on the Provision of Services (5,119) 2,340 (3,115) 0 532 (5,362)
Adjustments between accounting basis and regulation Pension Fund Reserve 0 (2,340) (2,340) Collection Fund Adjustment Account 0 (567) (567) Paid Absences Adjustment Account 0 35 35 Revenue Funding of Capital Expenditure 0 1,897 1,897 Capital Grants and Contributions Unapplied 0 104 104 Revaluation of Investment Property 0 5,738 5,738 Disposal of Investment Property 0 0 Disposal of Property, Plant and Equipment 0 (7) (7) Investment Premiums 0 (14) (14) Capital Charges 0 (3,937) (3,937)
Net (Surplus) / Deficit before reserve movements (5,119) 0 666 0 0 (4,453)
Financing of Capital from Revenue Reserves Revenue Reserve for Capital Purposes (General) 0 (110) (110) Revenue Reserve for Capital Purposes (Green Investment) (69) (69) Affordable Housing Reserve 0 0 Strategic Infrastructure Reserve 0 0 Community Infrastructure Reserve 0 (520) (520) Contributions to/(from) Earmarked Reserves Commuted Sums Reserve 0 33 33 Previously Approved Contributions to Reserves 4,493 4,493
Proposed Contributions to Reserves (see appendix 1a) 626 626 Movement in General Fund Balance 0 0 0 0 0 0
Page 151 This page is intentionally left blank APPENDIX 2
Explanations of Outturn Variances by Portfolio
(Note in the following tables, favourable variations are shown as negative figures and unfavourable variances are shown as positive figures)
Communities, Service Delivery & Improvement Portfolio – £53,700 unfavourable variance
Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Car Parking (1,720,500) (1,671,849) 48,651 Community Safety 232,700 225,000 (7,700) Community Support And Development 739,400 726,518 (12,882) Core Funding to Community Groups 12,100 10,855 (1,245) General Parish Grants 112,200 112,037 (163) Highways Maintenance And Improvement 175,600 201,147 25,547 Public Conveniences 26,200 27,709 1,509 General Grants Bequests & Donations 204,800 204,780 (20) Grand Total (217,500) (163,803) 53,697
Explanations for variations over £10,000
Car Parking - £48,700 unfavourable variation
Mainly due to additional expenditure, in line with forecasts, for resurfacing works, gritting, and line marking the Alencon Link car park partially offset by additional income from season tickets sales.
Community Support & Development - £12,800 favourable variation
This variation is due to:
Additional expenditure of £2,600 in respect of the council’s liability for payment of business rates for Winklebury Community Centre
Reduced insurance commission income of £3,200 due to the lower insurance premiums paid by the council following a change in the councils insurance provider.
This is offset by one-off income due to the recharge of prior-year running costs for community centres to the occupiers.
Highways Maintenance & Improvement - £25,500 unfavourable variation
This is mainly due to the payment to Hampshire County Council for 2014/15 street lighting energy and maintenance being higher than the amount accrued for in the council's 2014/15 accounts. Additional expenditure for traffic management was also incurred.
Page 153 APPENDIX 2
Finance & Resources Portfolio- £1,700 unfavourable variance
Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Council Tax Support Scheme 0 (35,071) (35,071) Local Tax Collection (296,600) (245,022) 51,578 Markets 10,500 2,374 (8,126) Non Distributed Costs 1,482,200 1,477,699 (4,501) Other Council Property (106,900) (109,038) (2,138) CLG Studies 820,000 820,000 (0) Grand Total 1,909,200 1,910,942 1,742
Explanations for variations over £10,000
Council Tax Support Scheme - £35,100 favourable variation
The council tax benefit scheme ended in March 2013 and was replaced by the locally agreed council tax support scheme, which is accounted for separately as part of the Collection Fund. This variance arises from technical adjustments relating to the old scheme & comprises a £4,400 reduction in the allowance for doubtful debts, overpayment invoices raised for £2,000 and a £28,600 adjustment for prior year overpayments/underpayments.
Local Tax Collection - £51,600 unfavourable variation
New computer software was purchased at a cost of £20,000 which enabled customers to manage their accounts online as the existing software was no longer fit-for-purpose.
Court fees income was lower by £36,700 and this is due to less court action being required for the recovery of debt.
Page 154 APPENDIX 2
Housing & Regeneration Portfolio - £105,000 favourable variance
Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Enabling Affordable Housing 15,000 14,860 (140) Homelessness 218,700 159,735 (58,965) Housing Benefits (55,100) (66,886) (11,786) Housing Needs And Advice 15,200 18,334 3,134 Housing Strategy 60,700 30,148 (30,552) Private Sector Housing Renewal 0 401 401 Private Sector Housing Standards Enforcement 700 (5,077) (5,777) Top Of The Town 196,400 195,109 (1,291) Grand Total 451,600 346,624 (104,976)
Explanations for variations over £10,000
Homelessness - £59,000 favourable variation
Funding was earmarked during 2015/16 to provide initiatives which support implementation of the newly devolved supporting people commissioning arrangement. The initiatives will be “one off” and include rolling out essential bespoke staff and partner training, facilitation of crowd fund raising platform and initiation of Making Every Adult Matters (MEAM) approach. These services have been commissioned but completed delivery will not take place until Quarters 1 and 2 of 2016/17, and therefore there is an underspend of £31,000, which is requested to be carried forward to 2016/17.
Of the remaining favourable variance £3,800 is due to a reduction in the provision for doubtful debts and £24,200 being additional income due to a higher level of invoicing for rent and deposit loans. It is however difficulty to predict the recovery rate for these debts, so future bad debt provision adjustments may be required.
Housing Benefits - £11,800 favourable variation
Rent Allowances
The overall increase in net costs compared to budget (£13.8k for the year is due to an increase in eligible overpayments, including particularly the continuing roll-out of the first-time RTI. These adjustments cause loss of subsidy/income prior to the overpayments being recovered. The increase in overpayments compared to estimates has however been largely offset by additional recovery of overpaid benefit from on-going benefits and invoiced debt. The original estimates were prepared before RTI had been rolled out.
Rent Rebates
There is an overall reduction in net costs compared to budget (-£32.7k) is due to a significant reduction in the use of bed and breakfast accommodation in 2015/16. This is mainly as a result of the impact of ESP properties (providing family sized accommodation).
The remaining unfavourable variance is due to additional costs of £5,200 in supplies and
Page 155 APPENDIX 2
services, which is funded by additional income which is held in another area of the council’s accounts.
Housing Strategy - £30,500 favourable variation
Funding was earmarked during 2015/16 to support the review, consultation, development and implementation for a revised housing strategy. This has been an express requirement by Cabinet / SMB following significant and sustained acceleration of central government policy regarding planning and affordable housing delivery.
The funding also supports the investigation, feasibility and analysis of windfall opportunities for potentially high profile and innovative initiatives becoming available which support delivery of the Council’s revised Housing and Homelessness Strategy.
Whilst the Council has committed to pursuing work on both these areas and has already commenced, full and completed delivery will not take place until 2016/17, and therefore there is an underspend of £30,500, and a carry forward request has been made for £30,000.
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Leader Portfolio - £15,900 unfavourable variance
Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Corporate Management 288,700 294,624 5,924 Economic Development 279,900 296,038 16,138 Emergency Planning 23,200 22,051 (1,149) Strategic Partnerships 1,400 792 (608) Tourism 13,300 8,845 (4,455) Grand Total 606,500 622,351 15,851
Explanations for variations over £10,000
Economic Development - £16,100 unfavourable variation
Overspend represents a grant to Destination Basingstoke which has been offset by grant savings in other portfolios. Budget provision has been made for 2016/17.
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Partnerships Portfolio – £61,300 favourable variance
Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Arts & Heritage 1,448,600 1,439,839 (8,761) Events & Public Entertainment 193,900 192,054 (1,846) Health Improvement 8,900 8,445 (455) Public Transport Support To Operators 534,500 530,481 (4,019) Sport And Recreation Participation And Development 137,900 134,065 (3,835) Sports And Recreation 598,100 558,794 (39,306) Transportation Policy & Strategy 4,400 1,322 (3,079) Grand Total 2,926,300 2,865,000 (61,300)
Explanations for variations over £10,000
Sports & Recreation - £39,300 favourable variation
This is due to an on-going saving of £28,000 in respect of insurance premiums payable for leisure facilities due to a change in the council's insurance provider, partly offset by a £5,900 reduction in insurance commission income.
In addition there is a reduction in the management fee at Aquadrome and Tadley Pool as a result of utility costs being lower than anticipated.
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Planning & Infrastructure Portfolio – £384,700 favourable variance
Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Building Control (427,800) (462,638) (34,838) Land Drainage 31,700 31,180 (520) Local Land Searches (273,500) (262,289) 11,211 Parks & Open Spaces 1,202,200 1,139,458 (62,742) Planning Development (1,006,400) (1,324,057) (317,657) Planning Policy 235,900 255,791 19,891 Grand Total (237,900) (622,554) (384,654)
Explanations for variations over £10,000
Building Control - £34,800 favourable variation
The most significant impact has been from additional income received above the budget and this relates mainly to an increase in the number of applications received.
Local Land Searches - £11,200 unfavourable variation
There is a slight reduction in income compared to budget which relates to a downturn in the number of search requests. It is unclear whether this relates to any specific market trends in the property market. There are some additional supplies and service costs which largely relate to a necessary audit of the case management system from the service provider in preparation for the proposed Land Registry takeover of the Land Charges function.
Parks & Open Spaces - £62,700 favourable variation
A one off refund due, following an investigation of water charges, paid by the council.
Planning Development - £317,700 favourable variation
Additional income of £278,500 has been received for a number of large developments throughout the year. This includes the Critical Care Unit at Ganderdown Copse which incurred a fee of approximately £94,000. In addition there have been a significant number of planning applications for residential development in light of the council’s 5 year housing land supply position during the 15/16 period together with a number of large scale reserved matters applications for residential developments that have previously received outline planning permission eg. Razors Farm, Kennel Farm, Chapel Hill. As has been reported previously following some analysis of the timescales associated with these types of development it is difficult to predict when they are likely to be submitted as they do not all relate to the timing of any pre-application and in some instances are not subject to pre-application engagement at all. The position will however be monitored closely on a monthly basis through the budget monitoring process.
The cost of defending planning appeals was £31,400 less than expected, and there were also supplies and services savings of £7,800.
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Planning Policy - £19,900 unfavourable variation
In quarter 3, a saving of £40,000 was identified against the budget and was given up. This was based on assumed consultancy, legal fees and planning inspectorate costs. However, the planning inspectorate costs/hours have now been confirmed as part of the outturn and there will now be an overspend on the planning policy service area.
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Regulatory Services & the Environment Portfolio - £58,400 favourable variance
Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Cemeteries (76,000) (110,911) (34,911) Commercial Waste Collection 0 (5,718) (5,718) Democratic Representation 705,600 702,408 (3,192) Elections 289,100 275,523 (13,577) Environmental Health Initiatives 25,300 18,187 (7,113) Environmental Health Licensing (177,100) (173,678) 3,422 Environmental Protection 12,100 (413) (12,513) Food Safety (9,800) (5,822) 3,978 Household Residual Waste 2,117,800 2,111,088 (6,712) Kerbside Recycling & Bring Bank Sites 984,100 1,040,372 56,272 Pest Control 41,400 34,121 (7,279) Private Hire & Hackney Carriages (144,000) (152,021) (8,021) Public Health 24,900 16,995 (7,905) Street Cleansing 113,400 96,643 (16,757) Sustainable Development Strategies 38,300 39,647 1,347 Trees & Forestry Policy (100) 163 263 Grand Total 3,945,000 3,886,584 (58,416) Explanations for variations over £10,000
Cemeteries - £34,900 favourable variation
Additional income, as a result of higher number of burials during 15/16 particularly in relation to pre-purchases and income recovered for public burials.
Elections - £13,600 favourable variation
Net savings of £7,000 on local elections across a number of budget heads and £6,000 on electoral registration being unspent grant receipts.
Environmental Protection - £12,500 favourable variation
This is largely attributable to additional income of £10,300 arising from recharges for sampling and analysis charges associated with private water supplies.
Kerbside Recycling & Bring Bank Sites - £56,300 unfavourable variations
There is additional spend of £26,000 in respect of replacement bins which are issued free of charge in accordance with council policies. In addition recycling credit received from HCC was £32,000 less than budgeted for.
Street Cleansing - £16,800 favourable variation
A £7,000 underspend for parish litter grants has been identified and the budget has been adjusted for 2016/17.
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In addition to this, extra income has been received from owners paying to recover vehicles (collection, storage and delivery costs) after they have been removed by the council.
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Analysis of Outturn Variances for Trading Accounts - £89,700 unfavourable variance
Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Basing View Regeneration 199,200 199,234 34 Festival Place (686,000) (571,549) 114,451 Industrial And Commercial (12,258,700) (12,348,458) (89,758) Leisure Park (290,700) (290,981) (281) Manydown Development 739,700 739,624 (76) The Malls (2,141,300) (2,071,752) 69,548 CLG Studies 0 0 0 Manydown Operations (64,500) (68,711) (4,211) Grand Total (14,502,300) (14,412,593) 89,707 Explanations for variations over £10,000
Festival Place - £114,500 unfavourable variation
A one-off budget virement was processed after notification was received from the lessee of Festival Place in October 2015 that an amount of £166,000 was due to the council following completion of the final accounts for 2013/14 and 2014/15.
The council was subsequently advised in December 2015 that the amount due was only £56,800. This has resulted in a budget variance of £109,200. In addition, one-off fees payable to the council for landlord's consent in respect of occupation changes etc were £5,000 lower than budgeted.
Industrial & Commercial - £89,800 favourable variation
This is mainly due to:
(i) additional on-going rental income of £57,700 which was achieved through the net impact of rent reviews at various sites and higher than budgeted occupancy levels at the council's multi-let sites such as Bear, Eagle & Lion Court. This reflects successful action by Property Services in respect of agreeing new leases, achieving lettings of vacant units and settling rent reviews
(ii) a one-off favourable adjustment of £49,700 to the council's bad debt provision.
(iii) reduced income of £46,000 as the lower insurance premiums paid by the council following a change in the councils insurance provider reduced the amount to be recovered from tenants.
The Malls - £69,500 unfavourable variation
Mainly due to planned maintenance expenditure of £15,300 which cannot be recovered from tenants and reduced income of £54,200 which is due to an adjustment to the councils bad debt
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provision of £47,500 and the impact of various occupation changes and rent reviews which has resulted in reduced net income of £6,700.
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Analysis of Outturn Variances for Holding & Agency Accounts
Holding Accounts - £38,900 favourable variation
Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Council Offices 1,191,600 1,178,687 (12,913) IT Hardware And Software Maintenance Costs 868,500 870,354 1,854 Other Holding Accounts 0 0 0 Vehicles 614,500 586,678 (27,822) Grand Total 2,674,600 2,635,720 (38,880)
Explanations for variations over £10,000
Council Offices - £12,900 favourable variation
The under-spend is mainly due to the planned replacement of I.T. equipment being put on hold until a review of future requirements has been completed by the I.T. team.
Vehicles - £27,800 favourable variation
A saving on fuel costs across the operation team fleet, were partially offset by purchase of hedge/brush cutters plus hire of sweeper for leaf clearing at Hart.
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Agency Accounts - £107,500 favourable variance
Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Agency - BDBC Parking Control (134,400) (140,820) (6,420) Agency - BEST Schemes 0 (31) (31) Agency - Central Government Elections And Referenda 0 0 0 Agency - Hart Customer Services (168,400) (230,902) (62,502) Agency - Hart Economic Development (54,200) (31,773) 22,427 Agency - Hart Grounds Maintenance (409,600) (435,961) (26,361) Agency - Hart Legal Services (267,000) (267,000) 0 Agency - Hart Licensing (133,100) (124,060) 9,040 Agency - Hart Street Cleansing (534,300) (562,325) (28,025) Agency - Highways (582,200) (594,817) (12,617) Agency - Hart Internal Audit (24,500) (24,500) 0 Agency - County Council Elections 0 0 0 Agency - Hart Telephony 0 (3,000) (3,000) Grand Total (2,307,700) (2,415,188) (107,488)
Explanations for variations over £10,000
Hart Customer Services - £62,500 favourable variation
Implementation costs for the contact centre shared service were incurred in the previous year and then recharged during 15/16. This has resulted in a saving for 15/16.
Hart Economic Development - £22,400 unfavourable variation
This is due to the post becoming vacant in October and it was agreed with Hart not to recruit a replacement. This resulted in reduced income and the unfavourable variance is offset by a favourable variance in the business unit accounts.
Hart Grounds Maintenance - £26,400 favourable variation
This is due to extra income from Hart for additional works, including the first flourish and weed control of HCC areas.
Hart Street Cleansing - £28,000 favourable variation
Additional income from Hart for additional leaf clearing works and increased pension costs
Highways - £12,600 favourable variation
Primarily as a result of the reduced cost of the weed control contract
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Business Units Outturn 2015/16 - £69,100 favourable variance
Latest Actuals To Outturn Budget Date Variation Subjective Heading £ £ £ Employees 21,300,800 21,067,800 (233,000) Supplies & Services 993,100 1,099,300 106,200 Income (212,900) (155,200) 57,700 Grand Total 22,081,000 22,011,900 (69,100)
Explanations for variations over £10,000
Employees – £233,000 favourable variation
The following table shows the main categories of budget variations:
Description Variation Comments £ Net vacant post savings after meeting savings targets and one-off employee costs Payroll costs (272,900) incl agency staff, redundancy/retirement costs/car users allowance.
Staff Advertising 93,800 Costs of staff advertising & recruitment.
Increased expenditure on the corporate Staff training 7,100 training programme
Supplies & Services - £106,200 unfavourable variation
This variation is mainly due to additional expenditure on external advice and professional services to provide support to teams such as electoral services where key officer posts were vacant.
Income - £57,700 unfavourable variation
This is mainly due to less than planned chargeable capital work being undertaken by Property Services (£43,500) and Community Design & Regeneration (£10,100) staff resulting in reduced charge to the capital programme.
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Carry Forward requests 2015/16
Homelessness – £31,000
This funding was earmarked during 2015/16 to provide initiatives which support implementation of the newly devolved supporting people commissioning arrangement. The initiatives will be “one off” and include rolling out essential bespoke staff and partner training, facilitation of crowd fund raising platform and initiation of Making Every Adult Matters (MEAM) approach. These services have been commissioned but completed delivery will not take place until Quarters 1 and 2 of 2016/17. If funding were to be drawn down from 2016/17 budgets it would have to be taken out of front line service commissioning. The resulting loss of services commissioned would reduce the level of support available for vulnerable residents and could lead to increases in homelessness
Housing Strategy - £30,000
Funding was earmarked during 2015/16 to support the review, consultation, development and implementation for a revised housing strategy. This has been an express requirement by Cabinet / SMB following significant and sustained acceleration of central government policy regarding planning and affordable housing delivery. The funding also supports the investigation, feasibility and analysis of windfall opportunities for potentially high profile and innovative initiatives becoming available which support delivery of the Council’s revised Housing and Homelessness Strategy. Whilst the Council has committed to pursuing work on both these areas and has already commenced, full and completed delivery will not take place until 2016/17. There is no on-going funding identified to otherwise support these strategically significant and mandated pieces of work.
Planting in Town Centre areas - £64,000
Approval for a carry forward of £64,000 to complete landscaping works outside of the railway station and along part of Churchill Way central reserve is requested. There have been unforeseen delays in implementing the scheme and in addition more detailed costs have been established which have significantly increased the overall cost of the scheme.
Funding of £45,000 was secured from a forecast corporate underspend in 2015/16 to replant the landscaped areas in question. The purpose of this was to improve the appearance of the public realm at these two key locations, to complement other works carried out within the town (e.g. Top of the Town, Basing View), and to replace landscaped areas where planting had become over-mature and towards the end of its life. I am advised that the original works proposed were estimated to have cost in the region of £90,000 and that the scheme was reduced in scale in order to meet the lower budget of £45,000.
The intention had been to undertake this work during the 2015/16 period, and officers had been liaising with Hampshire County Council (who are responsible for much of the land in question) on the details of the planting and a timeframe for the completion of the work.
However, due to on-going road works elsewhere in the town (specifically Black Dam Roundabout and at the A33/A339 junction) HCC has only recently agreed to reserve the
Page 169 APPENDIX 4 road space to allow these planting projects to happen. This means that the works in question have been delayed and cannot be undertaken until April, in the new 2016/17 financial year.
Additionally, in developing the proposals it has become apparent that the costs for the works have increased. This is primarily due to the need for more extensive traffic management than was originally anticipated but also due to the works being priced according to more detailed tendered rates within the Landscape Framework Contract which have provided a greater certainty over costs.
Youth Hub Feasibility works- £12,800
Phase 1 of this feasibility has been completed however if the decision is made to progress to the next phase (Identification of premises and business case) a carry forward will be required.
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Additional Budget Requests 2016/17
Manydown & Corporate Governance Assurance Contingency - £159,300
There are potential cost pressures resulting from additional archaeological survey work that may be required ahead of the submission of the outline planning permission for Manydown. Additional contingency budget is also required for specialist third party advice to provide appropriate corporate assurance associated with strategic projects which are complex, large scale and require innovative solutions and careful risk management.
Leisure Park Fees - £90,000 Additional budget is required for additional work on viability which will require additional input from external consultants and for a S123 valuation of the final terms by an independent valuer.
In the event a Development Agreement is completed with New River Retail, the council will receive £100,000 towards its incurred costs of the agreement. (Abortive fees are not covered)
Basing View - Breaking Barriers - £20,000 Funding is required to appoint consultants to determine whether Basingstoke is a suitable location for a public sector service hub and attract government departments that are de-centralising from London. The consultants are uniquely positioned to undertake this specialist study.
Page 171 This page is intentionally left blank 2015/16 CAPITAL PROGRAMME MONITORING REPORT Appendix 6
ANALYSIS BY PORTFOLIO
Spend as at 31st March 2016
Final Outturn % of Variation Latest Latest Budget Final Outturn Portfolio against Latest Budget Budget Spent
£000s £000s £000s %
Communities, Service Delivery & Improvement 1,182 1,065.7 (116.3) 90% Page 173 Page Planning & Infrastructure 233 249.6 16.6 107%
Regulatory Services & The Environment 796 734.4 (61.6) 92%
Housing & Regeneration 2,297 1,726.4 (570.6) 75%
Partnerships 454 358.7 (95.3) 79%
Leader 0 0.0 0.0 0%
Finance & Resources 2,037 1,529.6 (507.4) 75%
TOTAL 6,999 5,664.4 (1,334.6) 81%
APPENDIX 6 APPENDIX This page is intentionally left blank APPENDIX 7
Explanations of Capital Variations over £20,000
Communities, Service Delivery & Improvement Portfolio - £116,300 favourable variation
Final Outturn Capital Scheme Title Latest Budget Final Outturn Variation to (per Capital Programme) £000's £000's Latest Budget £000's Beggarwood Community Facility 22.0 22.8 0.8 CCTV 115.0 57.5 (57.5) Developers Contributions for 116.0 114.2 (1.8) EastropReplacement/Refurbishment Community Facility of Community 45.0 25.1 (19.9) Leisure Facilities and Community Buildings 62.0 61.6 (0.4) Grants Local Infrastructure Fund 522.0 520.5 (1.5) Parking And Access Schemes 300.0 263.9 (36.1) Grand Total 1,182.0 1,065.7 (116.3)
CCTV - £57,500 delayed spend
There have been some delays to the upgrade due to some issues with compatibility of the cameras originally proposed as well as a number of blockages and damage to the existing cable ducts, which needed to be repaired. This work has now been completed, replacement cameras have been purchased and new fibre has been installed to each of the camera sites. We are currently waiting on confirmation of a licence to replace the cable running through Festival Place to the control room, at which stage these cameras will be replaced.
Eastrop Community Facility - £19,900 delayed spend/saving
There were delays in replacing the internal doors due to contractor availability and the lead in time to manufacture the doors. These works are scheduled to be completed before the end of May ‘16. There was also a saving on the scheme however this was funded from S106 monies therefore options for enhancement s to the building are currently being investigated in line with the S106 agreement.
Parking & Access Schemes - £36,100 delayed spend
This variance is as a result of delays on two schemes;
• Landscaping works at Buckskin originally planned to for the final quarter of the financial year were unable to be completed. • Although works have commenced at Sunnymead in Oakley they were unable to be fully completed by the 31 March 2016.
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Finance & Resources Portfolio - £507,400 favourable variation
Final Outturn Capital Scheme Title Latest Budget Final Outturn Variation to (per Capital Programme) £000's £000's Latest Budget £000's AMP Works (various sites) 250.0 147.7 (102.3) AMP: Parks - Down Grange Irrigation Work 3.0 2.5 (0.5) Basing View - Infrastructure & Public Realm 529.0 390.7 (138.3) Basing View Pedestrian Bridge 0.0 70.5 70.5 Estates Management System 38.0 0.0 (38.0) ICT Replacement Programme 427.0 199.6 (227.4) Invest to Grow - Bear, Eagle, Lion Court and 0.0 3.5 3.5 PaddockFormer Oil Road Depot Medical Site Centre 32.0 10.8 (21.2) Photovoltaic Panels: Pilot Project 0.0 -1.0 (1.0) Re-Letting Works - Investment Property 140.0 146.2 6.2 Replacement of Council Owned Vehicles 530.0 510.2 (19.8) Replacement of Council Owned Vehicles - Hart 51.0 45.8 (5.2) The Malls: Re-letting Works 37.0 3.2 (33.9) Grand Total 2,037.0 1,529.6 (507.4)
AMP Works (various sites) - £102,300 delayed spend
The budget of £250k covers essential maintenance work at various properties. The variance is due to the following delayed work:
£80k in respect of the replacement roof covering for Westside Community Centre. Changes to the specification were required to reflect future use of the building and this delayed commencement of the tender process.
£22.3k in respect of the upgrade of the electrical distribution boards and sub-meters at Beresford Centre. The scheme was delayed as the scope of the work and its funding required review due to the new smart meters costing more than anticipated. As the work requires the shutdown of the power supply to the building, the exact timing for completion of the work needs to be agreed with tenants.
These budgets will be re-phased to 2016/17.
Basing View – Infrastructure & Public Realm - £138,300 saving
£82k needs to be transferred back to the Basing View reserve as this is no longer required for the Public realm capital project, due to project savings and not using contingency amounts.
Delayed spend of £56.3k will be re-phased into 2016/17 to cover works not initiated or completed in 2015/16. These mainly relate to additional or supplementary works associated with the creation of the public realm, namely re-grassing of some of the verges, improvements and new signage at Loddon Parade shops, and the replacement of new lighting heads on the public road element of the Network rail campus.
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Estates Management System - £38,500 delayed spend
The 2015/16 cost of the dedicated project manager was funded from the business unit staffing budget rather than the capital budget as anticipated.
The budget will be re-phased to 2016/17 and used towards the overall cost of the project.
ICT Replacement Programme - £227,400 saving
Moving the majority of the council’s server environment to a virtualised one has significantly reduced the cost of replacement servers and a number of printers were procured at a lower cost than anticipated. Officers are requesting that this saving be re-phased into future years to minimise future new capital budget requests.
Whilst the saving is good news, officers will undertake a review of the basis used for setting the IT capital programme to improve the accuracy of budget allocations.
Basing View Pedestrian Bridge - £70,500 additional spend
Expenditure increased created as a result of prior year netting off of a capital receipt. This expenditure is therefore fully funded by a forecast capital receipt for works completed and paid for by BDBC on behalf of Network Rail.
Paddock Road Medical Centre - £21,200 delayed spend
The demolition of the building was delayed as planning permission was required. Demolition works are now in progress and the budget will be re-phased to 2016/17.
Replacement of Council Owned Vehicles - £19,800 saving
During 2015/16 our fleet of mowers were replaced. Purchasing them all at the same time enabled an overall procurement saving to be made.
The Malls Re-Letting Works - £33,900 delayed spend
This budget was available to fund any work required to units due to changes in occupation as needs and/or opportunities arose.
It was anticipated that the 2015/16 budget would be used to achieve a letting for the vacant unit in Loddon Mall but negotiations with the potential tenant were not completed by 31st March. The budget will be re-phased to 2016/17.
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Housing & Regeneration Portfolio – £570,600 favourable variance
Final Outturn Capital Scheme Title Latest Budget Final Outturn Variation to (per Capital Programme) £000's £000's Latest Budget £000's Community Heritage and Environment Fund 44.0 40.4 (3.6) Discretionary Housing Grants 175.0 159.8 (15.2) Environmental Renewal Schemes 10.0 13.9 3.9 Existing Satisfactory Purchases 626.0 262.5 (363.5) Home Repair Grants 0.0 2.4 2.4 Mandatory Disabled Facilities Grants 1,300.0 1,179.5 (120.5) Town Centre Improvements 142.0 67.8 (74.2) Grand Total 2,297.0 1,726.4 (570.6) Housing Renewal Grants - (Discretionary Housing Grants - £15,200 delayed spend & Mandatory Disabled Facilities Grants - £120,500 delayed spend)
The original budget for disabled facilities grants (DFGs) of £850,000 for 2015/16, consisted of £800,000 for mandatory and £50,000 for discretionary grants.
In light of increasing demand, the budget was increased during the year through capital monitoring process to £1,440,000 (£140,000 of this being for discretionary grants).
202 Mandatory Disabled Facilities Grants were approved in 2015-16, compared with 225 in the previous year. This slight reduction in demand is likely to be as a result of changes to Hampshire County Council’s Occupational Therapist service which affected the number of OT assessments that were being carried out and led to a reduction in the number of referrals during the year.
At the end of the financial year there was an underspend against the discretionary grant budget of £15,200. This relates to works which were underway but not completed before 31 March 2016. This budget will be re-phased into the 2016-17 budget.
For the reasons highlighted above there was an underspend against the mandatory budget of £120,500. It is proposed to use £13,800 of this underspend to be re-phased into the discretionary disabled facilitates grants, but given the council has already committed significant levels of capital investment in the DFG grant programme from 2016-17 the remaining money is not required and can be put back into the capital programme for other priorities.
Existing Satisfactory Purchases - £363,500 delayed spend
This scheme provides grants to Sentinel towards the purchase of existing properties for letting as affordable housing. Funding of £262,500 was used as an investment to assist Sentinel Housing Association to secure 7 units of accommodation under an ESP (Existing Satisfactory Purchase) scheme. The properties enabled the Council to ensure a significant decrease in the use of bed and breakfast for accepted homeless households.
The remainder of the budget is allocated for 8 units with two of the properties due to for completion in April 2016/17. The remaining 6 properties were delayed due to Sentinel finding it difficult to find suitably priced properties to purchase, as asking prices have been too high.
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Town Centre Improvements - £74,200 delayed spend/savings
This favourable variation is made up of delayed spend of £52.7k and savings of £21.5k.
The delayed spend relates to shop front grants applied for and awarded but not recovered £33.9k, Landscaping of Toilet block site New Road, £5.4k Town Centre signage £7.0k and Planting and installation of new bins £6.3k. All have been committed to under purchase order but works had not commenced before the year end.
The release of £21.5K is genuine savings on demolition of toilets £9.9k, alley way refresh £7.9k, signage and landscaping £3.7k.
Page 179 APPENDIX 7
Partnerships Portfolio - £95,300 favourable variation
Final Outturn Capital Scheme Title Latest Budget Final Outturn Variation to (per Capital Programme) £000's £000's Latest Budget £000's Bramley Recreation Facilities 55.0 38.9 (16.1) Down Grange - Sports Complex 25.0 10.3 (14.7) Down Grange Track and Pitch 0.0 -3.1 (3.1) Play Area Improvements (S106) 237.0 173.7 (63.3) Play Areas - Borough Risk Areas 52.0 51.5 (0.5) Sport & Rec Improvements (S106) 85.0 87.3 2.3 Grand Total 454.0 358.7 (95.3)
Play Area Improvements - £63,300 delayed spend
This variance relates to a delay on works at Rooksdown Park, where remedial works are awaited. In addition to this works to the wet play splash pad at Chineham Park, Popley have started but are not due to be complete until the end of May 2016.
Page 180 APPENDIX 7
Planning & Infrastructure Portfolio - £16,600 unfavourable variation
Final Outturn Capital Scheme Title Latest Budget Final Outturn Variation to (per Capital Programme) £000's £000's Latest Budget £000's Allotment Improvements 105.0 128.4 23.4 Open Space Improvements (S106) 53.0 46.3 (6.7) Rural Broadband (Match Funded) 75.0 75.0 0.0 Grand Total 233.0 249.6 16.6 Allotment Improvements - £23,400 advanced spend
Works at South view allotments that were originally scheduled for 2016/17 were able to be completed ahead of schedule.
Page 181 APPENDIX 7
Regulatory Services and the Environment Portfolio - £61,600 favourable variation
Final Outturn Capital Scheme Title Latest Budget Final Outturn Variation to (per Capital Programme) £000's £000's Latest Budget £000's Council Offices 248.0 181.6 (66.4) Future Cemetery Provision 496.0 481.3 (14.7) Green Initiatives 50.0 67.7 17.7 Invest to Grow - Solar PV's 0.0 1.4 1.4 Website Content Management System 2.0 2.5 0.5 Grand Total 796.0 734.4 (61.6) Council Offices - £66,400 delayed spend
This budget includes funding for the re-surfacing of the upper deck of Parklands' car park which has been delayed to 2016/17. Whilst the layout for the car park has been provisionally agreed and the work has been procured under an existing framework contract, the work cannot commence until planning permission has been granted for the new bicycle shed required by the police. The budget will be re-phased to 2016/17.
Page 182 APPENDIX 8
Appendix 8
CAPITAL PROGRAMME 2015/16 to 2019/20
PRIOR YEARS TOTAL TOTAL CAPITAL PROGRAMME BY PORTFOLIO TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
LEADER 0 0 300 1,300 0 0 1,600 1,600 COMMUNITIES AND COMMUNITY SAFETY 16,133 903 1,593 1,585 1,159 773 6,013 22,146 REGULATORY SERVICES AND THE ENVIRONMENT 140 735 308 400 0 0 1,443 1,583 HOUSING AND REGENERATION 27,563 1,726 3,255 1,555 1,550 1,550 9,636 37,199 FINANCE, SERVICE DELIVERY AND IMPROVEMENT 9,348 1,277 923 935 745 1,089 4,969 14,317 PROPERTY AND DEVELOPMENT 6,891 774 1,078 642 285 0 2,779 9,670 PLANNING AND INFRASTRUCTURE 1,077 249 400 189 42 118 998 2,075 CAPITAL PROGRAMME PROVISIONS 0 0 5,334 5,374 3,640 4,118 18,466 18,466
TOTAL CAPITAL PROGRAMME 61,152 5,664 13,191 11,980 7,421 7,648 45,904 107,056
LEADER PORTFOLIO
PRIOR YEARS TOTAL CAPITAL SCHEME TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
TRANSPORT INFRASTRUCTURE SCHEMES New Transport Infrastructure ² 300 1,300 1,600 1,600
TOTAL TRANSPORT INFRASTRUCTURE SCHEMES 0 0 300 1,300 0 0 1,600 1,600
GRAND TOTAL 0 0 300 1,300 0 0 1,600 1,600
Notes: 2 Includes funding from specific external grants, contributions or capital receipts.
Page 183 APPENDIX 8
COMMUNITIES AND COMMUNITY SAFETY PORTFOLIO
PRIOR YEARS TOTAL CAPITAL SCHEME TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
COMMUNITY FACILITIES Beggarwood Community Facilities ¹ 4 23 393 101 517 521 Developers Contributions - Replacement / Refurbishment of Community Facilities ¹ 1,120 114 224 287 427 21 1,073 2,193 Eastrop Community Facility ¹ 261 25 20 45 306 TOTAL COMMUNITY FACILITIES 1,385 162 637 388 427 21 1,635 3,020
PLAY AREAS AND YOUTH PROVISION Play Area Improvements ¹ ² 5,067 225 384 256 223 156 1,244 6,311 TOTAL PLAY AREAS AND YOUTH PROVISION 5,067 225 384 256 223 156 1,244 6,311
SPORTS FACILITIES Bramley Recreation Facilities ¹ 49 39 16 55 104 Down Grange - Sports Complex 10 15 25 25 Down Grange - Track and Pitch 700 (3) (3) 697 Sport and Recreation Improvements (S106) ¹ 54 87 144 231 170 276 908 962 The Vyne School AGP (S106) ¹ 367 367 367 TOTAL SPORTS FACILITIES 803 133 175 598 170 276 1,352 2,155
COMMUNITY SAFETY CCTV 57 58 115 115 TOTAL COMMUNITY SAFETY 0 57 58 0 0 0 115 115
LEISURE FACILITIES AND COMMUNITY BUILDINGS
Leisure Facilities and Community Buildings Grants 988 62 39 0 0 0 101 1,089 TOTAL LEISURE FACILITIES AND COMMUNITY BUILDINGS 988 62 39 0 0 0 101 1,089
TRAFFIC AND TRANSPORT Parking and Access Schemes ¹ ² 7,890 264 300 343 339 320 1,566 9,456 TOTAL TRAFFIC AND TRANSPORT 7,890 264 300 343 339 320 1,566 9,456
GRAND TOTAL 16,133 903 1,593 1,585 1,159 773 6,013 22,146
Notes: 1 Includes funding from S106 developer contributions 2 Includes funding from specific external grants, contributions or capital receipts.
Page 184 APPENDIX 8
REGULATORY SERVICES AND THE ENVIRONMENT PORTFOLIO
PRIOR YEARS TOTAL CAPITAL SCHEME TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
OPERATIONAL LAND AND BUILDINGS Asset Management Plan Council Offices Council Offices 99 182 84 266 365 TOTAL OPERATIONAL LAND AND BUILDINGS 99 182 84 0 0 0 266 365
OPERATIONAL EQUIPMENT Website Development Website Content Management System 27 2 3 5 32 TOTAL OPERATIONAL EQUIPMENT 27 2 3 0 0 0 5 32
CEMETERIES Future Cemetery Provision 14 481 50 531 545 TOTAL CEMETERIES 14 481 50 0 0 0 531 545
GREEN INITIATIVES Green Initiatives 70 171 400 641 641 TOTAL GREEN INITIATIVES 0 70 171 400 0 0 641 641
GRAND TOTAL 140 735 308 400 0 0 1,443 1,583
Page 185 APPENDIX 8
HOUSING AND REGENERATION PORTFOLIO
PRIOR YEARS TOTAL CAPITAL SCHEME TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
HOUSING AND RENEWAL Discretionary Housing Grants 1,679 162 129 100 100 100 591 2,270 Mandatory Disabled Facilities Grants ² 15,571 1,180 1,355 1,350 1,350 1,350 6,585 22,156 Community Heritage and Environment Fund 3,526 40 0 0 0 0 40 3,566 Environmental Renewal Schemes ² 5,644 14 92 100 100 100 406 6,050 TOTAL HOUSING AND RENEWAL 26,420 1,396 1,576 1,550 1,550 1,550 7,622 34,042
AFFORDABLE HOUSING Existing Satisfactory Purchases 921 263 1,363 1,626 2,547 TOTAL AFFORDABLE HOUSING 921 263 1,363 0 0 0 1,626 2,547
TOWN CENTRE IMPROVEMENTS Town Centre Improvements 174 67 310 377 551 TOTAL TOWN CENTRE IMPROVEMENTS 174 67 310 0 0 0 377 551
ARTS AND HERITAGE Per Cent For Art Projects (S106) ¹ 48 6 5 11 59 TOTAL ARTS AND HERITAGE 48 0 6 5 0 0 11 59
GRAND TOTAL 27,563 1,726 3,255 1,555 1,550 1,550 9,636 37,199
Notes: 1 Includes funding from S106 developer contributions 2 Includes funding from specific external grants, contributions or capital receipts.
Page 186 APPENDIX 8
FINANCE, SERVICE DELIVERY AND IMPROVEMENT PORTFOLIO
PRIOR YEARS TOTAL CAPITAL SCHEME TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
OPERATIONAL VEHICLES, PLANT AND EQUIPMENT ICT Replacement Programme ICT Replacement Programme 5,773 200 346 490 490 579 2,105 7,878 Replacement Of Council Owned Vehicles Replacement of Council Owned Vehicles ² 3,019 510 472 335 145 400 1,862 4,881 Replacement of Council Owned Vehicles - Hart 471 46 14 60 531 Depot Equipment Wade Road - Red Diesel Tank 15 15 15 TOTAL OPERATIONAL VEHICLES, PLANT AND EQUIPMENT 9,263 756 847 825 635 979 4,042 13,305
LOCAL INFRASTRUCTURE FUND Local Infrastructure Fund ² 85 521 76 110 110 110 927 1,012 TOTAL LOCAL INFRASTRUCTURE FUND 85 521 76 110 110 110 927 1,012
GRAND TOTAL 9,348 1,277 923 935 745 1,089 4,969 14,317
Notes: 2 Includes funding from specific external grants, contributions or capital receipts.
Page 187 APPENDIX 8
PROPERTY AND DEVELOPMENT PORTFOLIO
PRIOR YEARS TOTAL CAPITAL SCHEME TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
OPERATIONAL LAND AND BUILDINGS Asset Management Plan AMP Works (various sites) ¹ 17 148 477 535 285 1,445 1,462 Down Grange - Irrigation Works 67 2 2 69 Photovoltaic Panels: Pilot Project 52 (1) (1) 51 Chineham House Chineham House 102 102 102 TOTAL OPERATIONAL LAND AND BUILDINGS 136 149 579 535 285 0 1,548 1,684
OPERATIONAL EQUIPMENT Estates Management IT System Estates Management IT System 250 250 250
TOTAL OPERATIONAL EQUIPMENT 0 0 250 0 0 0 250 250
INVESTMENT PROPERTY Asset Management Plan Industrial and Commercial Bear, Eagle and Lion Court ² 1,363 22 22 1,385 Paddock Road Medical Centre 11 21 32 32 Re-Letting Works - Investment Property 72 146 50 196 268 Town Centre Re-Letting Works - The Malls ² 389 3 50 53 442 TOTAL INVESTMENT PROPERTY 1,824 160 143 0 0 0 303 2,127
BASING VIEW REGENERATION SCHEMES Basing View - Public Realm ² 2,758 391 56 447 3,205 Basing View - Pedestrian Bridge ² 1,548 71 71 1,619 TOTAL BASING VIEW REGENERATION SCHEMES 4,306 462 56 0 0 0 518 4,824
ALTERNATIVE INVESTMENT / INVEST TO GROW SCHEMES
Bear, Eagle, Lion Court and Former Oil Depot Site ² 625 3 50 107 160 785 TOTAL ALTERNATIVE INVESTMENT / INVEST TO GROW SCHEMES 625 3 50 107 0 0 160 785
GRAND TOTAL 6,891 774 1,078 642 285 0 2,779 9,670
Notes: 1 Includes funding from S106 developer contributions 2 Includes funding from specific external grants, contributions or capital receipts.
Page 188 APPENDIX 8
PLANNING AND INFRASTRUCTURE PORTFOLIO
PRIOR YEARS TOTAL CAPITAL SCHEME TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
COMMUNICATION IMPROVEMENT AND TECHNOLOGY INFRASTRUCTURE Rural Broadband 150 75 75 225 Communication Improvement and Technology Infrastructure (Pilot) 175 175 175 TOTAL COMMUNICATION IMPROVEMENT AND TECHNOLOGY INFRASTRUCTURE SCHEMES 150 75 175 0 0 0 250 400
PARKS AND OPEN SPACES Allotment Improvements ¹ ² 22 128 57 143 328 350 Open Spaces (S106) ¹ 905 46 168 46 42 118 420 1,325 TOTAL PARKS AND OPEN SPACES 927 174 225 189 42 118 748 1,675
GRAND TOTAL 1,077 249 400 189 42 118 998 2,075
Notes: 1 Includes funding from S106 developer contributions 2 Includes funding from specific external grants, contributions or capital receipts.
Page 189 APPENDIX 8
CAPITAL PROGRAMME PROVISIONS
PRIOR YEARS TOTAL CAPITAL SCHEME TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 CAPITAL PROGRAMME PROVISIONS
OPERATIONAL LAND AND BUILDINGS
Council Offices 2,115 2,115 2,115 TOTAL OPERATIONAL LAND AND BUILDINGS 0 0 0 2,115 0 0 2,115 2,115
OPERATIONAL EQUIPMENT
Replacement Financial System 50 300 350 350 TOTAL OPERATIONAL EQUIPMENT 0 0 50 300 0 0 350 350
INVESTMENT PROPERTY
Industrial and Commercial Re-Letting Works - Investment Property 50 50 44 144 144 Town Centre Re-letting Works - The Malls ² 50 50 50 49 199 199 TOTAL INVESTMENT PROPERTY 0 0 50 100 100 93 343 343
BASING VIEW REGERATION SCHEMES
Basing View Regeneration 1,500 1,500 1,500 TOTAL BASING VIEW REGENERATION SCHEMES 0 0 1,500 0 0 0 1,500 1,500
ALTERNATIVE INVESTMENT SCHEMES Alternative Investment Strategy (formerly Invest To Grow Schemes) ² 1,450 1,500 2,500 2,800 8,250 8,250 Green Initiatives 259 259 259
TOTAL ALTERNATIVE INVESTMENT SCHEMES 0 0 1,450 1,759 2,500 2,800 8,509 8,509
FUTURE CEMETERY PROVISION
Future Cemetery Provision 65 100 40 225 430 430 TOTAL FUTURE CEMETERY PROVISION 0 0 65 100 40 225 430 430
LOCAL INFRASTRUCTURE FUND
Local Infrastructure Fund ² 2,128 1,000 1,000 1,000 5,128 5,128 TOTAL LOCAL INFRASTRUCTURE FUND 0 0 2,128 1,000 1,000 1,000 5,128 5,128
TOTAL CAPITAL PROGRAMME PROVISIONS 0 0 5,243 5,374 3,640 4,118 18,375 18,375
CAPITAL RISK CONTINGENCY
Capital Risk Contingency (Tender Returns) 91 91 91 TOTAL CAPITAL RISK CONTINGENCY 0 0 91 0 0 0 91 91
GRAND TOTAL 0 0 5,334 5,374 3,640 4,118 18,466 18,466
Notes: 2 Includes funding from specific external grants, contributions or capital receipts.
Page 190 APPENDIX 9
CAPITAL PROGRAMME 2015/16 - 2019/20 (excl Capital Programme Provisions) Capital Programme Changes - All Portfolios 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL £'000 £'000 £'000 £'000 £'000 £'000 DETAILED CHANGES FOR ALL PORTFOLIOS Latest Approved Programme excl Capital Programme Provisions (March 2016) 6,999 6,904 6,481 3,691 3,455 27,530
2015/16 Advance Spend Allotment Improvements 23 (23) 0 Green Initiatives 18 (18) 0 41 (41) 0 0 0 0 2015/16 Delayed Spend Future Cemetery Provision (15) 15 0 Existing Satisfactory Purchases (363) 363 0 Play Areas (64) 64 0 Replacement CCTV (58) 58 0 Mandatory Disabled Facilities Grants (14) 14 0 Discretionary Housing Grants (15) 15 0 Eastrop Community Facility (20) 20 0 Bramley Recreation Facilities (16) 16 0 Down Grange Complex (15) 15 0 Parking and Access Schemes (36) 36 0 Council Offices (84) 84 0 AMP Works (various sites) (102) 102 0 AMP Works - Paddock Road Medical Centre (21) 21 0 Estates Management IT System (38) 38 0 Re-Letting Works - The Malls (34) 34 0 Basing View - Regeneration Works (56) 56 0 Town Centre Improvements (55) 55 0 Other Small Scheme Delayed Spend (18) 17 1 0 (1,024) 1,023 1 0 0 0 Scheme Savings Mandatory Disabled Facilities Grants (106) (106) ICT Replacement Programme (227) 93 78 47 9 0 Replacement Vehicles (20) 20 0 Basing View - Regeneration Works (82) (82) Town Centre Improvements (20) (20) Other Small Scheme Savings (6) 3 (3) (461) 96 78 67 9 (211) Scheme Additional Costs Basing View Pedestrian Bridge 71 71 Council Offices 18 (18) 0 Other Small Scheme Additional Costs 20 (15) (3) 2 109 (33) (3) 0 0 73 Scheme Virements (from capital programme provisions) Future Cemetery Provision 35 (225) (190) Council Offices 18 18 Re-Letting Works - The Malls 16 16 Provisions - Re-Letting Works - Investment Property 56 56 0 125 0 0 (225) (100) Other Scheme Rephasings Beggarwood Community Facilities (100) 100 0 Developers Contributions For Replacement/Refurbishment Of Community Facilities 1 30 (31) 0 Sport and Recreation Improvements (S106 Monies) (12) (7) 19 0 Parking and Access Schemes (36) 18 18 0 Red Diesel Tank 15 (15) 0 ICT Replacement Programme (162) (8) 17 153 0 AMP: Bear, Eagle Lion Court 22 (22) 0 Invest To Grow - Bear, Eagle Lion Court and Former Oil Depot Site 50 (50) 0 0 (222) 46 23 153 0 Additions Funded From S106 Developer Contributions Open Space Improvements (S106) 56 56 Beggarwood Community Facility 2 2 Developers Contributions For Replacement/Refurbishment Of Community Facilities (4) 21 17 Play Areas 12 12 Sport and Recreation (S106) 5 49 54 0 0 3 0 138 141 Additions Funded From New External Funding Discretionary Housing Grants 5 5 0 5 0 0 0 5
Latest Approved Programme excl Capital Programme Provisions (June 2016) 5,664 7,857 6,606 3,781 3,530 27,438
Page 191 This page is intentionally left blank APPENDIX 10
Joint Manydown Committee – Final outturn position
Page 193 This page is intentionally left blank Agenda Item 12 Report to: Cabinet 28 June 2016 Portfolio holder presenting: Cabinet Member for Finance, Service Delivery and Improvement
Subject: Treasury Management Annual Report 2015/16 Status: Open Ward(s): All Key Decision: No Key Decision Ref: n/a Report Of: Cabinet Member for Finance, Service Delivery and Improvement Executive Director of Finance and Resources – Kevin Jaquest Tel. 01256 845513 or Email [email protected] Head of Financial Services – Phillip Hood Tel. 01256 845660 or Contact: Email [email protected] Accountancy Manager - Dean Pletts Tel. 01256 845506 or Email [email protected] Appendix 1 – Treasury Management Income 2015/16 Appendix 2 – Investment Holdings Appendix 3 – Benchmarking (Risk and Return) Appendices: Appendix 4 – Unrealised Valuation Gains and Losses Appendix 5 – Compliance with Strategy Limits and Prudential Indicators Papers relied on to produce this None report
1 Executive Summary
1.1 This report shows the activity within the council’s treasury management function for the year ending 31 March 2016.
1.2 This summary contains the information required for members to discharge their responsibilities for the monitoring of the treasury management function. Detailed information in support of this summary is contained in the main body of this report.
1.3 In accordance with the Local Authority (Capital Financing and Accounting) Regulations 2003 the council is required to have regard to the Treasury Management Code of Practice. The code requires the council to receive three treasury management reports as part of an annual cycle: a strategy report prior to the start of the year; a mid-year report and an annual report after the end of the year.
1.4 At over £3 million in 2015/16, interest earnings from investments and cash balances are a very important source of income in enabling the council to achieve its corporate priorities. Page 195
1 of 21 1.5 The key points to note on the performance for this year are as follows:
Overall Impact on Forecast Income (£68,000 Adverse Variance)
. Net interest and investment income was £3.082 million before the use of reserves, compared to budgeted income of £3.150 million. This was £68,000 less than estimated. A breakdown of the variance is shown in Appendix 1.
. The forecast shortfall will be met by a contribution from the Interest Rate Risk Reserve which was set up specifically to deal with in-year variances in accordance with the council’s financial policies.
. The budget for interest and investment income was revised to £3.150 million from £3.500 million. This followed a Council approved budget transfer of £350,000 from the Interest Risk Reserve in December 2015 and the figures in this report compare the outturn with this revised budget.
. Income from Strategic Investments was £61,000 lower than estimated. This was mainly due to returns from the council’s externally managed funds, which were £76,000 less than estimated.
. Income from Operational Investments was £48,000 lower than estimated. This was mainly due to interest from floating rate supranational bonds where the continuation of low interest rates resulted in £64,000 less income than estimated.
. Income from Liquidity Cash was £32,000 higher than expected due to higher than estimated cash balances during the year.
Overall Position of the Investment Portfolio and Returns
. At 31 March 2016 the council had cash investments of £160.5 million having started the year with investments of £163.3 million. The average balance held during the year was £175.0 million.
. Details of the investments held at 31 March 2016 can be seen in Appendix 2.
. The overall return for the year was 1.80% compared to the estimate of 1.86%. Within this, strategic investments returned 2.29%, operational investments returned 1.45% and liquidity cash returned 0.44%.
. Despite being lower than anticipated the overall return still remains significantly higher than other local authorities’ average returns and this has been achieved with one of the lowest levels of credit risk.
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2 of 21
Investment Criteria
. The council’s investment criteria are a reflection of the council approved Investment Strategy for the year.
. Adjustments to the council’s investment criteria can be made by the Chief Financial Officer (Executive Director of Finance and Resources) during the year based on changes in risk indicators and on advice from Arlingclose Limited (the council’s treasury advisors). There were no changes to the investment criteria during the year.
Compliance with Policy, Strategy Limits and Prudential Indicators
. All transactions during the year have complied with the council’s agreed policy statement, approach to ethical investment, treasury management strategy limits, treasury management practices and all accounting codes of practice.
. All types of investments remained within the agreed strategy target ranges and approved prudential indicator limits and the council complied with its Capital Financing Requirement (the need to borrow to finance capital expenditure) and its Minimum Revenue Provision (MRP) requirement (the need to set aside funds to repay debt).
1.6 This report does not require a decision but is to be noted in accordance with the council’s constitution, treasury management practices and accounting codes of practice.
1.7 Detailed information in support of this summary is contained in the remainder of this report.
2 Recommendation
2.1 It is recommended that Cabinet recommends Council to note:
2.1.1 The Treasury Management Annual Report for 2015/16 which includes the Prudential Indicator Actuals for 2015/16;
2.1.2 That the Capital Financing Requirement and the Minimum Revenue Provision requirement are both nil.
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3 of 21 PRIORITIES, IMPACTS AND RISKS
Contribution To Council Priorities This report accords with the Council’s Budget and Policy Framework and supports the development of an effective and efficient council.
GLOSSARY OF TERMS
Term Definition Corporate Bonds These are very similar in nature to gilts except that rather than being issued by the Government they are issued by other organisations eg banks and commercial companies in order to raise capital. Counterparties These are the organisations responsible for repaying the Council’s investment upon maturity and making interim interest payments. Debt Management Agency Deposit facility A facility run by part of the HM Treasury which accepts (DMADF) deposits at fixed rates for periods up to 6 months. Gilts (Treasury Bonds) These are issued by the UK Treasury in order to finance public expenditure. Gilts are generally issued for a set period and pay a fixed rate of interest for that period. At the end of the set period the investment is repaid (at face value) by the Treasury. However, during the life of a gilt it will often be traded (bought and sold) at a price decided by the market. Local Authority Bonds Similar to gilts, these are issued by some UK local authorities rather than the Treasury in order to raise capital. Diversified Credit Funds Externally managed pooled investment schemes investing in wide ranging mix of credit instruments including Gilts, Corporate Bonds, Investment Grade Credit, Asset Backed Securities, Senior Mortgages, Leverage Loans and High Yield Bonds. Money Market Funds Externally managed pooled investment schemes investing in short term cash instruments. Enhanced Cash Funds Similar to Money Market Funds but containing cash instruments with a longer duration to enhance the yield. Reverse Repurchase Agreements (Repo) An agreement to purchase a security from a counterparty, typically a bank, and then sell the security back to the bank on a predetermined date for the principal amount plus interest. The security is collateral to be used in the event of a default by the counterparty. Supranational Bonds These are very similar in nature to gilts except that rather than being issued by the Government they are issued by supranational bodies such as the European Investment Bank. Term Deposits These are loans to banks or other counterparties which are for a fixed period and at a fixed rate of interest. T-Bills (Treasury Bills) These are short dated, tradeable instruments issued by the UK Treasury at a discount. Whilst no interest is paid the discount results in a capital gain that is the effective yeild.
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4 of 21 MAIN CONSIDERATIONS
3 Background Information
3.1 Treasury management in local government is governed by the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Treasury Management in the Public Services and in this context is concerned with “the management of the council’s cash flows, its banking and its capital investments; the effective control of the risks associated with those activities and the pursuit of optimum performance consistent with those risks”.
3.2 The council has adopted the code and complies with its requirements, one of which is that interim operational reports are provided to members and that mid-year and annual reports are presented to full Council on the treasury management activity each financial year.
3.3 Given the current situation in the financial markets it is worth reminding members of the council’s treasury management policy objectives which are:
. To invest prudently having regard to the security of investments. . To maintain liquidity in the investment portfolio to meet the council’s spending plans. . To aim to achieve the optimum return on investments commensurate with the proper levels of security and liquidity and predictability of returns.
3.4 In accordance with the code of practice the first objective is deemed to be the primary objective and the others are secondary considerations.
3.5 The code also requires that local authorities have a separate body or committee responsible for the monitoring and scrutiny of the treasury function. The council has delegated this responsibility to the Audit and Accounts Committee and a copy of this report will be scrutinised by the committee on 27 June 2016.
4 Investment Strategy
4.1 In order to understand and put into context the performance of the council’s investment portfolio, it is also necessary to appreciate the council’s approved strategy for investments.
4.2 The council has three different types of cash balances.
4.3 Strategic Cash – These relate to reserves that the council has decided that it wishes to invest for the foreseeable future and has no plans to spend. These balances, estimated at £87 million, can be invested in the longer term (up to 10 years). The strategic cash investments yielded an average for the year of 2.29%.
4.4 Operational Cash – These relate to reserves that the council has either already committed to spend in its Capital Programme or has made available to fund future spending plans. These balances, estimated at £60 million, can only be invested in the medium to short term as they need to be available if and when required. The operational cash investments yielded an average for the year of 1.45%. Page 199
5 of 21 4.5 Liquidity Cash – These relate to cash balances required in order to manage the council’s day to day cash flow requirements. These balances estimated at £14 million can only be invested in very short dated instruments and are currently represented by Money Market Funds. Liquidity cash yielded an average for the year of 0.44%.
4.6 The investment types and amounts in each investment segment as at 31 March 2016 are shown in the following chart:
4.7 Details of the council’s specific investment holdings as at 31 March 2016 showing the names of the counterparties, their credit ratings (where applicable) and the amounts invested can be seen in Appendix 2.
5 Financial Market Conditions
5.1 In order to understand and put in context the performance of the council’s investment portfolio, it is necessary to appreciate the key changes in the interest rate environment and the market’s assessment of credit risk (the risk that an investment will default and will not be repaid).
5.2 The Bank of England continued to hold the UK Bank Rate at 0.50%. Conflicting economic data from the world’s major economies, particularly indications of a sharp slowing of growth in the Chinese economy, caused the US Federal Reserve to delay its much anticipated rate rise until December 2015 which introduced a large amount of volatility into financial markets. Volatility intensified at the start of 2016 as concerns of an impending economic slowdown grew. This caused a sharp fall in the price of risk assets such as equities and corporate bonds and an increase in the price of perceived safe assets such as government debt. Market interest rates fell significantly as expectations of future interest rate rises by central banks were re-evaluated. A fragile improvement in sentiment was seen during March which caused a small increase in market rates and restored some confidence in the outlook for credit risk.
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6 of 21 5.3 The following chart shows the movement in interest rates over the last 12 months.
Interest Rates (Last 12 Months) 2.50
2.00
1.50 10yr Gilt % 5yr Gilt % 12-month rate % 1.00 3-month rate % 7-day rate % 0.50 Bank Rate %
0.00
31 Jul 15
31 16 Jan
30 Jun 15
31 15 Oct
30 Apr 15
30 15 Sep 29 16 Feb
31 Dec 15
31 Aug 15
30 15 Nov
31 Mar 16 31 15 May
6 Treasury Management Activity during 2015/16
6.1 Below is a summary of investment activity during the year:
INVESTMENT PORTFOLIO ACTIVITY (at cost)
Holding Investments Investments Holding 31/03/15 Made Realised 31/03/16 £'000 £'000 £'000 £'000 Strategic Investments Government Gilts 33,066.6 0.0 0.0 33,066.6 Local Authority Bonds 4,059.5 0.0 0.0 4,059.5 Diversified Credit Funds 20,000.0 10,000.0 0.0 30,000.0 Deposit Accounts 13,500.0 0.0 (13,500.0) 0.0 Supranational Bonds 0.0 10,004.3 (10,004.3) 0.0 Cash Plus Funds 15,000.0 0.0 (5,000.0) 10,000.0 Corporate Bonds 4,089.0 0.0 (4,089.0) 0.0 Local Authority Deposits 0.0 30,000.0 (20,000.0) 10,000.0 Operational Investments Government Gilts 15,916.0 5,113.6 (4,476.0) 16,553.6 Local Authority Deposits 16,000.0 5,000.0 (8,000.0) 13,000.0 Supranational Bonds 0.0 19,578.9 0.0 19,578.9 Deposit Accounts 0.0 9,500.0 0.0 9,500.0 Bank Deposit (LAMS) 1,000.0 0.0 0.0 1,000.0 Treasury Bills 19,986.4 63,449.7 (83,436.1) 0.0 Fixed Loans 7,000.0 10,000.0 (17,000.0) 0.0 Liquidity Cash Money Market Funds 13,650.0 117,200.0 (117,150.0) 13,700.0 Treasury Bills 0.0 5,697.5 (5,697.5) 0.0 Total Investments 163,267.5 285,544.0 (288,352.9) 160,458.6 Page 201
7 of 21 6.2 No short term borrowing was undertaken during the year as part of daily cash flow management.
7 Changes to the Investment Portfolio
7.1 The chart below shows the changes to the investment portfolio during the year by comparing the percentage of the portfolio that was invested in the different types of instrument over the preceding twelve months:
7.2 The main changes during the year were the additional use of other bonds (supranational) and an increase in the amount placed within diversified credit funds. Treasury bills and money market funds were used to accommodate cash receipts as a replacement for bank deposits which were reduced in line with the council’s approved strategy.
8 Investment Portfolio Benchmarking
8.1 The council takes part in a quarterly investment benchmarking service provided by its treasury management advisors, Arlingclose Ltd. This highlights the effect of changes in the council’s investment portfolio and compares the council against other Arlingclose clients on the basis of size of investments, length of investments and the amount of credit risk being taken.
8.2 The results of the quarterly client benchmarking at 31 March 2016 are shown in Appendix 3.
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8 of 21 8.3 The graphical format used for the benchmarking can be interpreted with reference to the diagram below.
High Low risk / High return High risk / High return (optimal position) (risk rewarded)
Low risk / Low return High risk / Low return
Investment Returns Investment (risk averse) (worst position)
Low
Low Credit Risk High 8.4 Typically, the council would aim to be in the top left corner of the chart where a higher return is achieved for less risk. The most recent benchmarking results show that the council is within this area of the chart and also has a return well above the “best fit” or “linear trend line” of all other authorities measured.
8.5 It should be noted that the benchmarking shows a snap-shot of the average running yield on internally managed investments held including short term cash. Investments managed by external fund managers are not included. It shows the council’s running yield at 1.98%. This differs from the annual performance for the investment portfolio due to returns from investments that are held and mature throughout the course of the year.
8.6 At 31 March 2016 the average credit rating of the internally managed investment portfolio was approximately AA+ (risk score 2.2) on a value weighted basis and AA+ (risk score 1.6) on a time weighted basis, which indicates that less credit risk is being taken with longer term investments. The average period to maturity was 1.8 years.
8.7 Although the council’s interest and investment income has reduced over recent years the benchmarking results do demonstrate that its returns are still more than double those of many other local authorities. These returns are also being achieved whilst taking a much lower amount of indicated credit risk than most other authorities as defined by the average credit risk scores.
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9 of 21 9 Investment Income Performance Compared to Estimate
9.1 A summary of the performance of investments is shown below:
INVESTMENT PERFORMANCE SUMMARY for 2015/16 Revised Actual Estimate Return 2015/16 2015/16 Strategic Investments Gilts 3.70% 3.68% Local Authority Bonds 6.65% 6.59% Corporate Bonds 4.65% 4.65% Diversified Credit Funds 2.30% 2.04% Short Term Investments 0.45% 0.61% Average Strategic Investments 2.33% 2.29%
Operational Investments Gilts 2.24% 2.16% Supranational Bonds 1.00% 0.78% Long Term Loans 2.25% 2.26% Short Term Investments 0.45% 0.45% Average Operational Investments 1.47% 1.45%
Liquidity Cash 0.45% 0.44%
Average Overall Return 1.86% 1.80%
9.2 The overall return on investments was 1.80% compared to an estimate of 1.86%.
9.3 Returns for the year were affected by the continuation of low interest rates with long term rates actually falling over the course of the year (see 5.3).
9.4 Strategic investments returned an average yield of 2.29% compared to the budget estimate of 2.33%.
9.5 Operational investments returned an average yield of 1.45% compared to the budget estimate of 1.47%.
9.6 Liquidity cash yielded 0.44% compared to the budget estimate of 0.45%.
10 Performance of Externally Managed Funds
10.1 Externally managed funds can generate returns through income distributions and have the potential for capital growth through changes in the value of the units. Combining these two elements gives the total return for the fund.
10.2 The council invested in diversified credit funds primarily in order to gain access to the income distributions that they generate. In addition to the income distributions there is also the possibility of gains in capital value which, when realised, would add to the total return. Unrealised short term fluctuations in capital value have no impact on the council’s annual income and the council anticipates holding these funds for a minimum of 3 to 5 years as part of its strategic cash investments.
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10 of 21 10.3 Externally managed funds include the M&G Alpha Opportunities Fund and the M&G Total Return Credit Investment Fund. The combined income distribution for these funds was 2.33% which consisted of income distributions of £239,000 and £226,000 respectively.
10.4 A further investment of £10 million was made in externally managed funds at the end of October 2015, specifically, Blackrock’s Fixed Income Global Opportunities Fund. The council did not receive any income distributions from this fund as the income generated was accumulated to the value of the holding.
10.5 The combined income return from all of the council’s diversified credit funds was 2.04% for the year compared to the budget estimate of 2.30%.
10.6 The nature of these funds means that returns are more volatile and more difficult to predict than many of the council’s other investments and as they are part of the council’s strategic investments their performance should be viewed over a long term period (3 to 5 years).
10.7 Total performance information for these funds, including income distributions and any capital appreciation, is available quarterly and is supported with half- yearly comparative information and analysis by KPMG Investment Advisory who will be reporting separately to the Audit and Accounts Committee.
10.8 The latest fund valuations as at 31 March 2016 are shown in Appendix 4.
11 Unrealised Valuation Gains and Losses
11.1 Some of the council’s longer term investments are tradable and have quoted market values that can vary over the life of the investment. These valuation changes are not recognised as income until they are realised (i.e. sold or mature).
11.2 The unrealised valuation gains and losses as at 31 March 2016 for the council’s investments with quoted market prices are set out in Appendix 4.
11.3 Concerns of a slowdown in global growth as mentioned in section 5 have affected the valuations for corporate debt, impacting on the council’s holdings in externally managed funds which showed an unrealised loss of £630,858 (-1.6% versus original cost) at 31 March 2016.
11.4 Conversely, the valuation of the council’s internally managed bonds and gilts showed an unrealised gain of £4.134 million.
11.5 The valuation gains and losses on the council’s investments would only be realised if the council chose to sell them or disinvest.
12 Compliance with Strategy Limits for 2015/16
12.1 As part of the strategy for 2015/16 approved by Council on 26 February 2015, limits were set for different types of investment.
12.2 All types of investment have remained within the agreed strategy and limits during the year and a breakdown of the investment portfolio as at 31 March 2016 compared to the strategy limits is shown in Appendix 5.
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11 of 21 13 Prudential Indicator Limits
13.1 Under the prudential capital finance system the council determines, at a local level, its capital expenditure and borrowing provided that it can demonstrate that its plans are affordable, prudent and sustainable. Under the Prudential Code of Practice there is a statutory requirement to set, monitor and report Prudential Indicators and Limits.
13.2 The Prudential Indicator Limits relating to treasury management and the compliance with those limits are set out in Appendix 5.
13.3 The fixed and variable rate exposure limits allow the council to manage the extent to which it is exposed to changes in interest rates and the limit for amounts invested beyond a year was set at £131 million and ensures that the council keeps enough short term cash for operational purposes at all times.
13.4 The Head of Resources is required under the Prudential Code to report to council the 2015/16 actuals for the following non-treasury management prudential indicators.
. Actual capital expenditure - for 2015/16 was £5,664,422. . Actual ratio of financing costs to net revenue stream – for 2015/16 was minus 19%. . Actual external debt - as at 31/03/16 was £66,400. . Actual net borrowing - as at 31/03/16 was minus £160,392,100 (this figure is negative because the council has net investments rather than net borrowing). . Actual capital financing requirement - as at 31/03/16 was nil. . Actual minimum revenue provision requirement – as at 31/03/16 was nil. 13.5 The purpose of the ratio of financing costs to net revenue stream is to identify what proportion of net revenue costs relate to the financing of debt. However, as the council has large investments and no long term debt, the ratio is negative and shows that interest income is the equivalent of 19% of the council’s net revenue expenditure.
13.6 External debt is made up of borrowing and other long term liabilities. Parish council deposits with the council were £66,400 and are deemed to be temporary borrowing.
13.7 Net borrowing is the difference between borrowing (£66,400) and investments (£160,458,500). This represents net investments for the council.
13.8 The capital financing requirement is the council’s underlying need to borrow to finance capital expenditure that has not been financed by its own resources. As all of the council’s capital expenditure has been financed through the use of capital receipts and contributions or through revenue reserves, the capital financing requirement is nil as is the minimum revenue provision requirement (i.e. the council’s need to set aside amounts to repay borrowing).
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12 of 21 14 Investment Criteria
14.1 Selecting suitable investment criteria within the limits set by Council is the responsibility of the Chief Financial Officer (Executive Director of Finance and Resources).
14.2 At present new long term investments can only be made using the following council approved instruments: government issued bonds (Gilts); supranational bonds with AAA credit ratings; deposits or bonds with other local authorities. Highly secured repurchase agreements with banks or building societies are also possible, subject to individual evaluation.
14.3 Short term investments can only be made using the following council approved instruments: Treasury Bills; Local Authority loans; AAA rated money market funds and enhanced cash funds; the HM Treasury’s Debt Management Agency Deposit Facility. Overnight deposits with highly rated banks are allowed and the council operates a select list of those available which is monitored for any risk indicators on an on-going basis.
14.4 The use of collective investment funds has also been approved for both long term and short term investments with funds approved for use specialising in fixed income, short term cash and diversified credit.
14.5 During April 2015 and May 2015 a number of bank ratings were updated to reflect changes made following reviews by all of the major rating agencies. However, there were no changes to the council’s investment criteria as a result of these reviews.
15 External Service Providers
15.1 Arlingclose Limited is appointed to provide treasury management advice and KPMG Investment Advisory is appointed to act as an advisor on asset allocation and fund manager selection and fund manager performance monitoring in respect of the council’s long term investment strategy.
15.2 The council is clear as to the services Arlingclose and KPMG provide under their respective contracts and is also clear that responsibility for treasury management remains with the council.
16 Training
16.1 The treasury management code of practice requires the Chief Financial Officer to ensure that all members tasked with treasury management responsibilities, including the scrutiny of the function, have access to appropriate training relevant to their needs and understand fully their roles and responsibilities.
16.2 Treasury workshops are provided for members of the Audit and Accounts Committee and are open to all members of the council. The workshops are delivered by a combination of external training providers, council officers and Arlingclose Limited. A ‘Treasury Management for Elected Members’ training session was held in June 2015 and was provided by Arlingclose Limited. A treasury management strategy workshop was provided by officers in February 2016. The workshops were attended by members and reserves of the Audit and Accounts Committee.
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13 of 21 16.3 Officers responsible for treasury management attend external workshops and seminars as part of their continued professional development.
17 Events since the Reporting Date
17.1 The total value of the council’s diversified credit funds, at the latest valuation date on 30 April 2016, was £29,784,642. This represents an improvement in the valuation of £397,814 since 31 March 2016 and reduces the current unrealised loss to £215,358 (-0.7% versus original cost). There have been no significant amendments to the investment portfolio since 31 March 2016 and all investment sums due to mature since the reporting date have been received as expected.
18 Financial Implications
18.1 All of the activities and returns in this report culminate in a financial impact on the council’s interest and investment income. An analysis of the forecast interest and investment income compared to the estimate for 2015/16 is shown in Appendix 1.
18.2 The net effect of all of the activities is a forecast reduction of interest and investment income of £68,000 compared to the budget which will be met from the Interest Risk Reserve in accordance with the council’s financial policy.
18.3 In accordance with the council’s financial policies the reserve will need to be replenished by way of a first call on any outturn surplus reported in the council’s revenue monitoring outturn report for 2015/16.
19 Risk Issues
19.1 There are considerable risks associated with investments. The main risks are credit risk (the risk of default by the counterparty) and interest rate risk or market risk (the risk that interest rates in the financial markets will move adversely).
19.2 The investments in diversified credit funds have an increased exposure to credit risk in order to generate enhanced returns, but reduce the council’s exposure to interest rate risk. This additional exposure to credit risk is managed by external fund managers who have the necessary expertise and resources to ensure that an appropriate level of risk is taken.
19.3 Returns from these externally managed funds are expected to be more volatile than returns from the council’s internally managed investments and there is the possibility that the value of the investment could reduce in the short term and therefore the fund holdings should be seen as medium to long term investments with a 3 to 5 year time horizon.
19.4 All investment risks are constantly monitored and are also reviewed annually along with all the other risks as part of formulating the council’s annual Treasury Management Strategy. The annual review of the strategy includes examination of alternative types of investment.
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14 of 21 19.5 The significant risks relating to Treasury Management are recorded on the council’s Corporate Risk Register with details of how these risks are mitigated.
20 Other Issues
20.1 There are no Human Resources, Equalities or Legal Implications.
21 Communications and Consultation
21.1 None required.
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15 of 21 Appendix 1
TREASURY MANAGEMENT INCOME for 2015/16
Estimate Actual Variance 2015/16 2015/16 2015/16 £'000 £'000 £'000 Interest and Investment Income
Strategic Cash Interest from Gilts 1,396 1,396 0 Amortisation of Premiums Gilts (Non-capital) (269) (265) 4 Interest from Local Authority Bonds 265 262 (3) Amortisation of Premiums on LA Bonds (Capital) (14) (14) 0 Interest from Corporate Bonds 51 51 0 Distributions from Diversified Credit Funds 575 499 (76) Interest from Short Term Cash Investments 163 177 14 Sub Total 2,167 2,106 (61)
Operational Cash Interest from Gilts 487 487 0 Amortisation of Premiums on Gilts (Non-capital) (135) (129) 6 Interest from Supranational Bonds 213 149 (64) Amortisation of Premiums on Supranational Bonds (86) (86) 0 Interest from Long Term Fixed Investments 360 360 0 Interest from Short Term Cash Investments 70 80 10 Sub Total 909 861 (48)
Liquidity Cash Interest from Short Term Cash Investments 68 100 32
Miscellaneous Interest Received 8 5 (3)
Total Interest and Investment Income 3,152 3,072 (80)
Interest Paid (16) (4) 12
Appropriations (Reserve Movements) From Capital Adjustment Account for Premiums on Bonds (Capital) 14 14 0
Total Income for Treasury Management 3,150 3,082 (68)
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16 of 21 Appendix 2 Investment Holdings as at 31 March 2016 Credit Rating Cost Amount Type of Investment Yield (%) Rating Agency Start Date Maturity Date (£) Strategic Cash Gilts UK Treasury 5.00% coupon 3.01 Aa1 Moody's 28/07/2010 07/03/2018 3,403,200 UK Treasury 5.00% coupon 2.87 Aa1 Moody's 05/08/2010 07/03/2018 5,721,500 UK Treasury 4.50% coupon 4.00 Aa1 Moody's 09/02/2009 07/03/2019 5,986,497 UK Treasury 4.75% coupon 3.88 Aa1 Moody's 16/11/2009 07/03/2020 10,730,000 UK Treasury 3.75% coupon 3.37 Aa1 Moody's 05/08/2010 07/09/2020 7,225,400 Local Authority Bonds City of Leicester 7.00% coupon 6.34 Not Rated N/A 16/06/1998 25/01/2019 976,100 City of Salford 7.00% coupon 6.34 Not Rated N/A 16/06/1998 25/01/2019 976,100 Dudley MBC 7.00% coupon 6.34 Not Rated N/A 16/06/1998 01/02/2019 976,100 LAB Investments 7.125% coupon 6.36 Not Rated N/A 16/06/1998 18/02/2019 1,131,208 Diversified Credit Funds
Page 211 Page M&G Alpha Opportunities Fund variable Not Rated N/A 01/12/2014 1 month notice 10,000,000 M&G Total Return Credit Investment Fund variable Not Rated N/A 26/11/2014 3 days notice 10,000,000 BlackRock Fixed Income Global Opportunities Fund variable Not Rated N/A 22/11/2015 3 days notice 10,000,000 Strategic Cash Total 67,126,105
Strategic Cash (pending Alternative Investment Programme) Local Authority Deposits Birmingham City Council 0.50 Not Rated N/A 22/01/2016 22/04/2016 5,000,000 Sheffield City Council 0.45 Not Rated N/A 29/01/2016 29/04/2016 5,000,000 Cash Funds Insight Liquidity Plus Fund variable AAAf S&P 31/01/2015 4 days notice 5,000,000 Royal London Cash Plus Fund variable AAA Fitch 31/01/2015 3 days notice 5,000,000 Strategic Cash (Alternative Investments) Total 20,000,000
17 of 21 Appendix 2 (continued)
Investment Holdings as at 31 March 2016 Credit Rating Cost Amount Type of Investment Yield (%) Rating Agency Start Date Maturity Date (£)
Operational Cash Gilts UK Treasury 4.00% coupon 2.61 Aa1 Moody's 28/07/2010 07/09/2016 3,234,000 UK Treasury 4.00% coupon 2.51 Aa1 Moody's 05/08/2010 07/09/2016 3,251,700 UK Treasury 1.75% coupon 1.93 Aa1 Moody's 10/03/2014 22/07/2019 4,954,257 UK Treasury 2.00% coupon 1.53 Aa1 Moody's 24/06/2015 22/07/2020 5,113,616 Supranational Bonds European Investment Bank Floating Rate Note 0.59 Aaa Moody's 06/11/2015 22/02/2017 5,012,145 European Investment Bank Floating Rate Note 0.68 Aaa Moody's 06/11/2015 25/05/2018 5,018,550 European Investment Bank 4.75% coupon 1.11 Aaa Moody's 27/10/2015 15/10/2018 5,528,619 European Investment Bank Floating Rate Note 0.69 Aaa Moody's 09/10/2015 16/04/2019 4,019,540 Local Authority Deposits Swindon Borough Council 2.25 Not Rated N/A 07/11/2011 07/11/2016 5,000,000 Page 212 Page Lancashire County Council 2.25 Aa2 Moody's 15/11/2011 15/11/2016 5,000,000 Middlesbrough Council 2.36 Not Rated N/A 25/11/2011 25/11/2016 3,000,000 Fixed Deposits (Banks) Lloyds Bank (LAMS Scheme) 1.68 A1 Moody's 16/01/2013 16/01/2018 1,000,000 Deposit Accounts Svenska Handelsbanken 0.40 Aa3 Moody's 30/08/2015 On Call 4,750,000 Santander UK plc 0.40 A2 Moody's 30/08/2015 On Call 4,750,000 Operational Cash Total 59,632,427
Liquidity Cash Money Market Funds Goldman Sachs Liquid Reserves variable AAAm S&P 31/01/2016 On Call 2,000,000 SSgA GBP Liquidity variable AAAm S&P 31/01/2016 On Call 1,000,000 Blackrock Sterling Liquidity variable AAAm S&P 31/01/2016 On Call 3,700,000 Morgan Stanley Sterling Liquidity variable AAAm S&P 31/01/2016 On Call 2,000,000 Deutsche Managed Sterling variable AAAm S&P 31/01/2016 On Call 2,000,000 Invesco Short Term Liquidity Portfolio variable AAAm S&P 31/01/2016 On Call 1,500,000 BNP Paribas Insticash Sterling variable AAAm S&P 31/01/2016 On Call 1,500,000 Liquidity Cash Total 13,700,000
Grand Total 160,458,532
18 of 21 Appendix 3
Page 213 Page
19 of 21 Appendix 4
Unrealised Valuation Gains and Losses as at 31 March 2016
Written Un-realised Nominal Purchase down Value Market Gain/(Loss) Holding Value (£) (£) Value (£) (£)
Externally Managed Funds (Long Term) Shares M&G Alpha Opportunities 97,893 10,000,000 10,000,000 9,681,573 (318,427) M&G Total Return Credit Investment 99,874 10,000,000 10,000,000 9,814,637 (185,363) BlackRock Fixed Income Global Opportunities 1,018,200 10,000,000 10,000,000 9,890,618 (109,382)
Total 1,215,967 30,000,000 30,000,000 29,386,828 (613,172)
Externally Managed Funds (Short Term) Shares Insight Liquidity Plus Fund 5,073,876 5,000,000 5,000,000 4,988,279 (11,721) Royal London Cash Plus Fund 4,987,586 5,000,000 5,000,000 4,994,035 (5,965)
Total 10,061,462 10,000,000 10,000,000 9,982,314 (17,686)
Total External Fund Holdings 11,277,429 40,000,000 40,000,000 39,369,142 (630,858)
Internally Managed Bonds (Long Term) £ Government Gilts 46,750,000 49,620,171 47,584,397 51,259,050 3,674,653 Local Authority Bonds 3,764,000 4,059,508 3,804,815 4,263,106 458,291 Supranational Bonds 19,000,000 19,578,854 19,492,935 19,494,310 1,375
Total Long Term Bonds 69,514,000 73,258,533 70,882,147 75,016,466 4,134,319
Total Unrealised Gain 3,503,461
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20 of 21 Appendix 5
Compliance with Strategy Limits as at 31 March 2016 2015/16 Holding Holding Strategy 31/03/16 31/03/16 Limits Approved Instruments £m % Government Gilts 49.6 30.9% Max 95% Treasury Bills 0.0 0.0% Max 95% HM Treasury (DMADF) 0.0 0.0% Max 100% Supranational Bonds 19.6 12.2% Max £50m Local Authority Loans/Bonds 27.1 16.9% Max £40m Money Market Funds 13.7 8.5% Max £25m Collective Investments: Short Term Cash Funds 10.0 6.2% Max £15m Collective Investments: Diversified Credit & Bond 30.0 18.7% Max £50m Bank/Building Society Repurchase Agreements 0.0 0.0% Max £25m Bank Ovenight Call Accounts 9.5 5.9% Max £15m Bank Fixed Loans (LAMS) 1.0 0.6% Max £5m Corporate Bonds (direct) 0.0 0.0% Max £5m Total 160.5 100.0%
Long Term Investments (beyond 365 days) 117.3 73% Max 95% Short Term Investments (up to 365 days) 52.5 27% Min 5% Total 169.8 100.0%
Compliance with Prudential Indicators for 2015/16 2015/16 Indicator Limit as at 31/03/16 External Debt Indicators Authorised Borrowing Limit £50,000,000 £66,400 Operational Borrowing Boundary £25,000,000 £66,400 Treasury Management Indicators Upper Limit on Fixed Rate Exposure 100% 52% Upper Limit on Variable Rate Exposure 100% 48% Sums Invested Beyond One Year (Nominal) £131,000,000 £83,514,000 Upper Limit on Long Term Investments Maturing (Nominal) in one year £25,000,000 £24,000,000 in two years £25,000,000 £9,000,000 in three years £25,000,000 £19,514,000 in four years £25,000,000 £19,000,000 in five years £25,000,000 £12,000,000 in six years £15,000,000 £0 in seven years £15,000,000 £0 in eight years £15,000,000 £0 in nine years £15,000,000 £0 in ten years £15,000,000 £0 Note: External Debt consists of Parish Deposits but there has been no requirement for short- term borrowing for cash flow purposes in 2015/16.
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21 of 21 This page is intentionally left blank Agenda Item 13
Report to Cabinet 18 July 2016
Subject: Community Infrastructure Levy - Draft Charging Schedule Status: Open Report Ref: Ward(s): All Key Decision: Yes Key Decision Ref: Cllr Mark Ruffell – Portfolio Holder for Planning and Report of: Infrastructure Matthew Evans – Head of Planning and Infrastructure, Ext: 2356; Tel: 01256 845356; [email protected] Jill Fisher – Policy Manager (Planning Policy and Infrastructure), Ext: 2318; Tel: 01256 845318; [email protected] Contact officer: Mark Lambert – Design Environment and Infrastructure Team Leader; Ext: 2750; Tel: 01256 845750; [email protected] Alison Young – Senior Planning Officer – Infrastructure, Ext 2469; Tel: 01256 845469; [email protected] Appendix 1 – CIL Draft Charging Schedule Appendix 2 – Draft Regulation 123 List Appendix 3 –Basingstoke and Deane Residential and Non- Appendices: Residential CIL Viability Report (Three Dragons, March 2016) Appendix 4 – Infrastructure Delivery Plan Schedule Appendix 5 – CIL Briefing Note Report on CIL to Economic Planning and Housing Committee, 14 July 2016 Report on CIL to Economic Planning and Housing Committee, 24 September 2015 Basingstoke and Deane Community Infrastructure Levy Papers relied on to Draft Charging Schedule (November 2014) produce this report Basingstoke and Deane Adopted Local Plan 2011-2029 (May 2016) National Planning Policy Framework and Planning Practice Guidance Viability Testing Local Plans - Advice for planning practitioners (Harman Report, June 2012)
1 Executive Summary
1.1 The council is seeking to implement a Community Infrastructure Levy (CIL) charging schedule which will set out levy rates to be paid per square metre for new development in the borough. A charging schedule must be prepared in Page 217
accordance with the Community Infrastructure Levy Regulations 2010 (as amended). The local authority must demonstrate a funding gap for infrastructure and then set a rate which does not threaten the ability to develop viably the sites and scale of development identified in the Local Plan. The money that is collected will be spent on funding infrastructure to support the development of the area.
1.2 In late November 2014, the council consulted on its CIL Draft Charging Schedule, which was based on viability work undertaken in 2013 and 2014. The council was unable to progress this Draft Charging Schedule at that time because the Local Plan examination was on-going. Since then, an update to the viability evidence has been undertaken, reflecting the changes in values and costs over this time. This report presents a revised CIL Draft Charging Schedule based on the updated viability evidence for consultation, after which it would be submitted for independent examination, which could lead to CIL being introduced in the borough in July 2017.
1.3 Having reported this issue to the Economic, Planning and Housing committee on 14 July, the purpose of this report is to update Cabinet on the committee’s views and seek approval of the CIL Draft Charging Schedule and accompanying documents for consultation. During the consultation, the council will seek comments on the Draft Charging Schedule and the Draft Regulation 123 List of infrastructure to be funded by CIL. These will be supported by background documents comprising the Basingstoke and Deane Residential and Non-Residential CIL Viability Report (Three Dragons, March 2016); and an updated Infrastructure Delivery Plan Schedule.
Recommendation
1.4 It is recommended the Cabinet: i. Considers the comments made by the Economic Planning and Housing Committee on 14 July in respect of the CIL Draft Charging Schedule and associated documents. ii. Notes the findings of the Basingstoke and Deane Residential and Non- Residential CIL Viability Report, as set out in appendix 3. iii. Recommends to Council that it approves the Community Infrastructure Levy Draft Charging Schedule, as set out in appendix 1, for consultation under regulation 16 and subsequent submission for examination in accordance with regulation 19 of the Community Infrastructure Levy Regulations 2010 (as amended). iv. Recommends to Council that it approves the Draft Regulation 123 list as set out in appendix 2 for consultation. v. Endorses the proposals for public consultation on the Community Infrastructure Levy Draft Charging Schedule and the Draft Regulation 123 list. vi. Recommends to Full Council that delegated authority be given to the Portfolio Holder for Planning and Infrastructure to agree minor changes (as required) to the Draft Charging Schedule up to publication of the examiner’s recommendations.
vii. Recommends to Full Council that delegated authority be given to the Portfolio Holder for Planning and Infrastructure to agree minor changes Page 218
(as required) to the Draft Regulation 123 list and the draft instalments policy up to adoption.
PRIORITIES, IMPACTS AND RISKS Contribution to Council Priorities This report accords with the council’s Budget and Policy Framework and directly supports the Council Plan priorities of improving economic vitality, increasing skills and employment, creating neighbourhoods where people feel safe and want to live and supporting active healthy and involved communities.
GLOSSARY OF TERMS Term Definition AONB Area of Outstanding Natural Beauty BCIS Building Cost Information Service BLV Benchmark Land Value CIL Community Infrastructure Levy DCS Draft Charging Schedule EPH Economic, Planning and Housing Committee HCC Hampshire County Council IDP Infrastructure Delivery Plan LEP Local Enterprise Partnership NPPF National Planning Policy Framework S106 Section 106 agreement S278 Section 278 agreement SPD Supplementary Planning Document Sq m Square metres
MAIN CONSIDERATIONS
2 Background
2.1 Community Infrastructure Levy (CIL or the levy) is a tool for local authorities to help deliver infrastructure to support the development of the area. The CIL Regulations 2010 (as amended in 2011, 2012, 2013 and 2014) set out the process for implementing a charging schedule. When a CIL charging schedule has been approved by an independent examiner and brought into effect, the charging authority is able to charge a levy on new developments within their area which are greater than 100 square metres (sq m) of floorspace (net) or where a new dwelling is created, even if it is less than 100 sq m. Around 30% of local authorities are charging CIL at present. A briefing note on CIL is included in appendix 5.
2.2 The council is seeking to implement a Community Infrastructure Levy (CIL) in order that CIL can be charged on new developments built within the borough and the levy income can contribute towards funding infrastructure to support the development of the area. Page 219
2.3 This represents a shift away from the previous approach whereby infrastructure was secured through section 106 planning obligations (S106). The use of S106 could not continue in this way because there have been significant restrictions since 6 April 2015, whereby it is not permitted to pool five or more separate planning obligations (entered into on or after 6 April 2010) to deliver a particular piece of infrastructure.
2.4 S106 will continue to be used at a scaled back rate on smaller sites to provide some site-specific infrastructure such as children’s play, kickabout space and some local transport improvements, as well as providing substantial infrastructure on strategic sites, such as the provision of new schools. The advantage of using S106 on strategic sites is that it provides greater flexibility than CIL in terms of setting trigger points for key infrastructure, ensuring that the right infrastructure is delivered at the right time as part of the development scheme on our largest sites. Provision through S106 provides greater certainty that the infrastructure would be delivered as it removes the risk of a possible funding shortfall that could result if insufficient funds were collected through CIL. This approach is supported by Hampshire County Council.
Update to the viability assessment
2.5 A borough wide viability study was published in November 2013 and formed the basis of the CIL rates proposed in the Preliminary Draft Charging Schedule (January 2014). Additional site specific viability appraisals were undertaken to demonstrate the viability of the largest strategic sites allocated in the Local Plan and to take into account the higher S106 infrastructure costs associated with these sites. The Manydown and Golf Course Viability Report was prepared in July 2014 and informed the CIL rates proposed in the Draft Charging Schedule for these sites. A further viability report for Hounsome Fields and the Golf Course was published in May 2015 to support the allocation of Hounsome Fields as a main modification to the Local Plan.
2.6 An update to the viability study has been undertaken by consultants Three Dragons, to reflect 2016 information, and is presented in appendix 3. It assesses the amount of CIL that development can afford and whether there are differences in viability across the borough, to justify differential CIL rates. This work has allowed the latest assumptions to be modelled and it has also provided the opportunity to ensure that up to date market values and costs can be taken into account.
2.7 As previously highlighted to Cabinet, it is important to note the advice of the NPPF that ‘the costs of any requirements likely to be applied to development, such as affordable housing, and other standards and infrastructure contributions should, when taking account of the normal cost of development and mitigation, provide competitive returns to a willing land owner and willing developer to enable the development to be deliverable’. This is also clearly set out in the Harman Report of 2012, the Viability Testing of Local Plans. This ensures that development can continue to be delivered and infrastructure provided without impacting on the viability of the scheme.
2.8 Like the earlier viability assessment, the update assessment uses a residual value approach which is the standard accepted approach and recommended by the Harman report. Residual value is the value of the completed development less the costs of undertaking the development. It requires a Page 220
number of assumptions to be made including the costs of building, professional fees, finance, planning obligations and return to the developer, as well as assumptions about value of the development.
2.9 In order to calculate the viability of CIL, the consultants have had to establish a suitable benchmark land value (BLV) which is an estimate of the lowest value that a landowner may accept for the land. After viability modelling, the residual value is compared to the BLV. If the residual value is less than the BLV, then the scheme is unlikely to be brought forward for development and it is considered unviable. If the residual value exceeds the benchmark, then it can be considered viable.
2.10 Provision of 40% affordable housing has been factored into the viability assessment, in accordance with policy CN1 of the Adopted Local Plan, although since the viability appraisals have been undertaken, the government has introduced a national policy that affordable housing should not be sought on small-scale developments of 10 dwellings or fewer. A lower threshold of five dwellings or fewer applies in the AONB. This is likely to improve the viability of small-scale development below the thresholds, but this has not yet been modelled for CIL purposes. In addition, the government has recently concluded a consultation on starter homes.
2.11 The key assumptions that have been updated since the initial work was undertaken are outlined below: Market values for dwellings have increased, based on price paid data from Land Registry. Affordable housing values have increased, based on information provided by registered providers. Build costs have increased and are derived from the most recent Building Cost Information Service (BCIS) data. Local build costs for non-residential development have been applied in the viability appraisals. Finance costs have decreased. Further detail on the costs and timing of delivery of infrastructure for strategic sites.
2.12 In order to provide a site specific approach, viability testing has been undertaken on key allocated sites in the Local Plan, including Manydown, Basingstoke Golf Course, Hounsome Fields, East of Basingstoke and Upper Cufaude Farm. This is because they are strategic sites with various specific infrastructure requirements which will be provided through S106 including: Site access from the highway Pedestrian and cycle links Bus subsidy Travel plan Primary school Secondary school (Manydown only) Open space Allotments Sports facilities Page 221
Community facilities
The significant extra S106 costs associated with the strategic sites clearly has an impact on their ability to support higher rates of CIL and it is important that these costs are taken into account.
2.13 It should be noted that the work undertaken by Three Dragons to inform this report represents the position of the Borough Council as Local Planning Authority.
3 Community Infrastructure Levy
3.1 The revised CIL Draft Charging Schedule (appendix 1) contains a number of changes from the previous Draft Charging Schedule which was published in November 2014. These changes reflect updated information available from the infrastructure delivery plan on infrastructure requirements and costs, further viability assessment work that has been undertaken and advice from the council’s consultants.
The Infrastructure Delivery Plan and the Funding Gap
3.2 The infrastructure that is needed to support the growth in the Local Plan is set out in the Infrastructure Delivery Plan (IDP) schedule (appendix 4). The IDP schedule is a live document that has been updated to support the revised CIL draft charging schedule. The key changes to the IDP since the previous version was published in March 2015 are: Projects that have been delivered have been removed from the infrastructure schedule Updated to reflect where funding is now in place as a result of successful funding bids to the LEP and some sites now have planning permission which has resulted in infrastructure/funds being secured through planning obligations Updated costs and delivery timescales information from Hampshire County Council Further clarification around what will be delivered/funded through planning obligations or CIL
3.3 Infrastructure requirements identified in the IDP are to be funded from a wide range of sources including CIL and S106 in addition to other sources, such as the New Homes Bonus, Hampshire County Council, the Borough Council, Local Enterprise Partnership (LEP) and the Government.
3.4 Each infrastructure project is assigned a level of priority: essential or place- shaping. Essential infrastructure is that which is essential to enable or support development in the Local Plan. Place-shaping infrastructure is needed in order to build sustainable communities.
3.5 In order to implement a charging schedule, the authority must demonstrate that there is a funding gap between the total cost of the infrastructure required and the amount of funding available for its delivery. The Infrastructure Delivery Plan demonstrates a substantial funding gap of around £114m. It is
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not expected that CIL receipts will fill this gap, which reflects the situation in the majority of other local authority areas in the country.
Residential Development Rates
3.6 The findings of the Viability Study 2016 indicate that the viability of residential development has improved since the last study was undertaken in 2014, so all sites can afford to pay higher CIL rates than were set in the previous Draft Charging Schedule.
Non-Strategic Sites
3.7 Three Dragons have undertaken viability testing for a number of 1ha. typical types of development and a number of typical development case studies in order to identify appropriate CIL charges for residential development that is not part of a strategic site. Previous analysis had identified two main value areas in the borough – ‘Basingstoke and Tadley’ where sales values are typically lower than the ‘rest of the borough’. As a result, the viability study identifies that it would be appropriate to set different rates in Basingstoke and Tadley to elsewhere in the borough. Strategic sites are dealt with separately below.
3.8 Residential development in Basingstoke and Tadley is able to accommodate a CIL charge of £140/sq m whereas development in the rest of the borough could afford to pay £200/sq m. These rates take into account a buffer of at least 30% which allows for any additional costs over and above those factored into the modelling.
3.9 A report produced for the Federation of Small Businesses in August 2015 identified higher build costs associated with small sites. These have been factored into the viability assessments and the impact is that single dwelling developments are unable to support a CIL, so a nil rate is recommended.
3.10 The viability study identifies that sheltered housing and care homes, as well as wholly flatted schemes are unable to support a CIL due to higher build costs associated with un-saleable communal space.
Manydown
3.11 Manydown is the largest site allocated in the Local Plan and will accommodate 3,400 homes. The latest viability assessment factored in the estimated site specific S106 costs of 40% affordable housing, site access, two primary schools, a secondary school, open space, allotments, community and sports facilities, a library and a bus service. Further detail arising from discussions with the landowners and masterplanning has informed the work. The findings of the viability study indicate that as with other sites, Manydown’s viability has improved since the last study, and that it is now able to support 40% affordable housing, together with the required S106 infrastructure costs and a CIL charge of £60 per square metre.
3.12 If a planning application for Manydown is approved before the introduction of CIL, then no CIL will be levied on the site and all of the infrastructure will be provided for through S106.
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Hounsome Fields
3.13 Hounsome Fields was allocated in the Mid-Examination proposed changes to the Local Plan for 750 dwellings. The site is adjacent to Basingstoke Golf Course and as such the council requires a comprehensive approach to site planning and infrastructure provision in south-west Basingstoke. A viability study was undertaken for both sites in May 2015 to demonstrate the site’s viability and this assumed a fair cost distribution across both sites but with infrastructure being provided in a comprehensive manner.
3.14 Since then, masterplanning work has progressed significantly for Hounsome Fields and a planning application has been submitted (15/04503/OUT). Equalisation of infrastructure provision between Hounsome Fields and Basingstoke Golf Course has not been achieved, so Hounsome Fields is planning to provide all of the infrastructure necessary to support its development. This means that it will be burdened with a disproportionately high S106 bill. The biggest infrastructure cost on the site is the proposed roundabout access, which HCC estimate will cost around £5.5million.
3.15 As a result of these costs, the site is less able to support CIL than other strategic sites, and so the viability study advises a CIL rate of £30 per square metre. If however, the planning application is approved before the introduction of CIL, then no CIL will be levied on the site and all of the infrastructure will be provided for through S106.
Basingstoke Golf Course, East of Basingstoke and Upper Cufaude Farm
3.16 Basingstoke Golf Course is the second largest site to be allocated in the Local Plan and is set to deliver 1,000 homes. There are a number of site specific infrastructure requirements including contributions towards a primary school (which will be delivered on adjacent Hounsome Fields) to be funded through S106. Nonetheless, it has the lowest infrastructure requirement on a per dwelling basis because it has been assumed that the majority of the strategic transport costs for accessing the site will have already been delivered by Hounsome Fields. This results in a strong picture of viability at Basingstoke Golf Course and the site is able to support a theoretical maximum CIL of £178 per sq m at a benchmark land value of £400,000 per hectare.
3.17 The landowners of Basingstoke Golf Course have put forward the view that the BLV for the site should be higher than for other strategic sites because, as a golf course, it already has an existing use value which is higher than agricultural value. Three Dragons undertook sensitivity testing of the Golf Course’s viability against higher BLVs and found that it remained viable at a BLV of £700,000 per hectare, but not at a BLV of £1million per hectare.
3.18 The Golf Course supplied a site valuation and analysis by Three Dragons indicates that the difference between the existing use value as a golf course and the BLV of £400,000 per hectare still represents a significant uplift, so it would be reasonable to base the CIL rate on the established BLV.
3.19 Strategic sites at East of Basingstoke (450 dwellings) and Upper Cufaude Farm (390 dwellings) are both required to provide a range of infrastructure through S106, including reserving a site for a primary school, so site specific viability assessments were undertaken. The viability study reports that East of Page 224
Basingstoke is able to support a theoretical maximum CIL of £144 per sq m and Upper Cufaude Farm is able to support a theoretical maximum CIL of £178 per sq m.
3.20 It is standard practice to apply a buffer following viability appraisals in order to ensure that CIL rates are not set at the margins of viability. For residential development, a buffer of 30% has often been accepted by CIL examiners. It is considered appropriate to apply a more substantial buffer to these strategic sites to take into account any potential changes in costs. As a result, these three sites are able to support CIL of £80 per sq m, after applying a significant buffer of at least 44%.
3.21 The residential charge rates proposed in the Draft Charging Schedule are set out in table 1 below:
Table 1: Proposed CIL rates – Residential Development Location / type of residential development Recommended Charge Rate (£ per square metre) Zone 1 – Hounsome Fields £30 Zone 2 – Manydown £60 Zone 3 – Basingstoke Golf Course; East of £80 Basingstoke; Upper Cufaude Farm Zone 4 – Basingstoke and Tadley £140 Zone 5 – Rest of the Borough £200 Care homes / extra care / sheltered housing £0 Single dwellings £0 Wholly flatted schemes1 £0
Commercial Development Rates
3.22 The viability study tests a range of non-residential forms of development including: Out of centre offices Town centre offices Industrial / warehouse Town centre comparison retail Out of centre comparison retail Small convenience retail Supermarket Budget hotel Leisure
3.23 The results of these viability assessments indicate worsening viability for non- residential development since 2013. This can be explained by a significant increase in build costs combined with a much smaller rise in values. There is only potential to charge CIL on out of centre comparison retail (theoretical maximum charge £104/sq m) and budget hotels (theoretical maximum charge
1 This rate applies where 100% of the dwellings on site are flats. This excludes flats which are part of the housing mix on a larger development site. Page 225
£80/sq m). Previously, convenience retail was also able to support a CIL charge.
3.24 After applying a buffer of at least 50%, it is proposed that the following rates are applied to those non-residential uses that are considered to be viable:
Table 2: Proposed CIL rates – Non-Residential Development Type of development Recommended Charge Rate (£ per square metre) Comparison retail shop outside of Basingstoke town £40 centre / Retail warehouses Budget hotel2 £40 All other types of development £0
Regulation 123 List
3.25 The council must produce a regulation 123 list setting out the infrastructure that it intends to fund through CIL receipts. Planning obligations through S106 cannot be entered into for any item included on the R123 list.
3.26 The draft regulation 123 list (appendix 2) reflects the updated IDP and the key changes are: Inclusion of additional junctions that it is not intended to fund through section 106 because more than one development site will impact on the junction Clarification that new schools at strategic sites will be delivered through section 106 Clarification that new community facilities at strategic sites will be delivered through section 106 Further detail included to specify sports projects that it is not intended to fund through section 106.
3.27 As part of the annual budget process, the council, in consultation with HCC, will need to prioritise the spending of CIL income against items on the regulation 123 list, taking account of other available funding sources because CIL income will not be sufficient to fill the funding gap. This revised draft helps to move the council towards the final regulation 123 list, which must be published when the charging schedule is adopted.
Instalments Policy
3.28 The CIL regulations allow for phased payments of the levy in accordance with an instalment policy set out by the charging authority on its website. This was felt to be particularly important to support developers’ cash flow on large scale sites where the CIL liability could be quite high. It would help to encourage the timely delivery of development and reflects the current process whereby developer contributions are triggered at different stages of the development.
2 Budget hotels are defined by the British Hospitality Association Trends and Developments Report 2012 as a property without an extensive food and beverage operation, with limited en-suite and in-room facilities, low staffing and service levels and a Pageprice markedly 226 below that of a full service hotel.
A number of other authorities have implemented instalments policies to facilitate the early stages of development.
3.29 The instalments triggers must relate to a period of time after the date which the development has commenced, so unlike S106 agreements, they cannot be triggered by completion or occupation of a quantum of development.
3.30 The council published a draft instalments policy in November 2014 alongside the Draft Charging Schedule which seeks to secure funding at the appropriate time in relation to the size of the development. It is intended that the council implements this instalments policy when CIL charging begins.
Payment in kind
3.31 The CIL regulations allow for the charging authority to, at its discretion, accept land and/or infrastructure from the person liable, instead of money to satisfy the charge arising from the levy as follows:
Payment in Kind - Reg 73(1): A charging authority may accept one or more land payments in satisfaction of the whole or part of the CIL due in respect of a chargeable development; and, Infrastructure Payments - Reg 73A(2): An infrastructure payment is the provision of one or more items of infrastructure by a person who would be liable to pay CIL in respect of a chargeable development on commencement of that development.
3.32 It may therefore be appropriate for the council to include a ‘Payments in Kind’ Policy which states that the borough council may exceptionally accept ‘payments in kind’ of land or infrastructure in lieu of the whole or part of the CIL due in respect of a chargeable development subject the provision being over and above what is required to ensure an acceptable development. The council would retain discretion as to whether it accepts ‘payment in kind’ of land or infrastructure in lieu of financial payments.
Allocation of CIL Receipts
3.33 The borough council has greater flexibility about how CIL funds are spent than is currently the case with section 106 contributions and can prioritise infrastructure investment according to its own priorities in order to support the development of the area, in accordance with regulation 59:
“A charging authority must apply CIL to funding the provision, improvement, replacement, operation, or maintenance of infrastructure to support the development of its area.” - Regulation 59(1).
3.34 The draft Regulation 123 list (appendix 2) sets out the infrastructure types and projects that the council intends to fund from CIL, as opposed to from section 106 contributions. The Regulation 123 list can be updated periodically as required. The allocation of CIL to particular schemes will be agreed annually as part of the budget process. Agreement will also need to be reached with HCC on the process by which CIL funding is allocated to county schemes included on the Regulation 123 list. Page 227
3.35 It should be noted that the borough council does not retain control of all CIL receipts. A minimum of 15% must be passed to parish councils (see paragraph 4.5) and the borough council can spend up to 5% of CIL receipts on administration.
3.36 Once the charging schedule has been implemented (potentially July 2017) CIL funds will start to accumulate slowly as CIL-liable planning permissions are commenced and developed out. CIL will eventually form a steady income stream and this will provide a pool of funds for infrastructure expenditure. Further consideration and decisions on the governance arrangements for establishing a process for prioritising CIL spend will be required, and this is likely to function alongside the council’s annual budget setting process.
4 Other Considerations
Pooling of S106 contributions
4.1 Under the existing planning obligations process, S106 contributions are collected from numerous development sites and spent on the provision of infrastructure. Since 6th April 2015, the CIL regulations have restricted the pooling of S106 obligations meaning a maximum of five separate planning obligations (entered into on or after 6 April 2010) can be used to fund any particular piece of infrastructure. As a result of the pooling restrictions, it will be necessary to scale back the use of S106 planning obligations, but they will not be replaced by CIL altogether as some S106 requirements will remain, e.g. open space on site.
4.2 Some site specific infrastructure will continue to be funded and delivered through S106 but it will have to meet the three tests set out in paragraph 204 of the NPPF: necessary to make a development acceptable in planning terms; directly related to a development; and fairly and reasonably related in scale and kind to a development.
4.3 On the strategic sites, there are benefits to using S106 to secure on site infrastructure in terms of ensuring certainty of delivery at the time that it is required. This does however raise the concern of pooling. The approach that has been tested in the Viability Report assumes that a number of the infrastructure requirements will be fulfilled through S106 obligations. This includes the on-site provision of access, new schools, open space and as well as community facilities and a bus service.
4.4 Despite the fact that there would only be one development site contributing towards each of the on-site infrastructure items in 4.3; the pooling restriction remains a concern. This is because it is the number of planning obligations for an infrastructure item which counts, and therefore a site which is phased or has multiple developers on board can result in several S106 agreements. As such, S106 agreements will need to be carefully drafted to ensure that they are specific to the infrastructure that they intend to fund.
Affordable Housing Thresholds
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4.5 The government has introduced national site-size thresholds for seeking affordable housing and tariff-based contributions through a Written Ministerial Statement and changes to the Planning Practice Guidance3. The purpose of these thresholds is to reduce the burdens placed on small-scale developments. These national thresholds mean that affordable housing cannot be sought on sites below the following site sizes:
Within the Area of Outstanding 6 dwellings Natural Beauty
Outside of the Area of Outstanding 11 dwellings or 1000 square metres Natural Beauty combined gross floorspace
4.6 The new Local Plan (adopted 26 May 2016) policy CN1 introduces a requirement for all developments with a net increase in dwellings to provide 40% affordable housing, however as the local planning authority is obliged to have regard to national policy and guidance, it is considered that the PPG requirements supersede the thresholds established in policy CN1 of the Adopted Local Plan.
4.7 This means that sites that fall below the threshold will not be expected to make affordable housing contributions, even though the Three Dragons evidence indicates that it is viable to do so. In due course, it may be possible to revise the CIL Viability evidence by undertaking further viability appraisals to assess whether it may be possible to levy a higher CIL on smaller sites to take advantage of the potential improvement in viability afforded by the new national thresholds.
Planning Obligations SPD
4.8 The council will continue to seek planning obligations for affordable housing and infrastructure to support development proposals where they meet the national site size thresholds and the three tests set out in paragraph 204 of the NPPF and Regulation 122 (see paragraph 4.2).
4.9 In order to provide clarity for developers about the council’s expectations and approach, a Supplementary Planning Document (SPD) on Planning Obligations will operate alongside the CIL Charging Schedule once it is adopted. The main purpose of this SPD is to support the Local Plan by detailing the council’s approach towards seeking affordable housing, infrastructure and other planning obligations required to make new development proposals acceptable. It will also contribute towards ensuring that the council is not seeking S106 contributions for infrastructure that will be funded or part funded by CIL, known as ‘double-dipping’.
4.10 A draft SPD was published for consultation alongside the Draft Charging Schedule in November 2014 and this will need to be revised to take account
3 These were previously the subject of a successful judicial review by Reading Borough Council and West Berkshire Council. The Government subsequently challenged the judge’s decision through the Court of Appeal. Their appeal was upheld on 11 May 2016, resulting in the Government re-introducing the relevant sections of the Planning Practice Guidance on 19 May 2016 (Paragraph: 031 Reference ID: 23b-031-20160519). Page 229
of any changes to national planning policy regarding the definition of affordable housing.
Neighbourhood Portion
4.11 Once a charging schedule is adopted and the borough council starts collecting the levy, it has a duty to pass to the parish council a proportion of any CIL receipts collected from chargeable development built within that parish. In non-parished areas, this money is retained by the Local Planning Authority who will enter into discussions with the local community to identify priorities for future spending.
4.12 The amount that the parish council will receive depends on whether it has a neighbourhood plan in place or not. If a neighbourhood plan is in place, the parish will receive 25% of all the CIL receipts but if there is not a neighbourhood plan in place, the parish can expect to receive 15% of the CIL receipts, and this is capped each year at a maximum of £100 per existing dwelling in the parish.
4.13 The Oakley and Deane Neighbourhood Plan was formally “made” on 26 May and the Overton Neighbourhood Plan is due to be made at Full Council on 21 July following a majority vote in favour of the plan at referendum. The neighbourhood plans for Whitchurch and Bramley are at a relatively advanced stage in preparations and several other neighbourhood plans are under way. It is therefore envisaged that a number of parishes will adopt plans in the coming years and as a result, they will also receive a greater proportion of the levy collected from their area in due course.
4.14 The neighbourhood portion of the levy can be spent on a wider range of things than the rest of the levy, provided that it meets the requirement to ‘support the development of the local council’s area’ (see Regulation 59C for details). The wider definition means that it can be spent on things other than infrastructure, for example, on affordable housing. If a parish council does not spend its levy share within five years of receipt, or does not spend it on initiatives that support the development of the area, the charging authority may require it to repay some or all of those funds.
4.15 Parish councils will not receive any levy receipts on any development which is approved before a charging schedule is adopted, and this could represent a significant loss of income in cases where strategic sites are granted planning permission within the next twelve months, while the CIL rate setting process is undergoing consultation and examination.
4.16 The Borough Council will need to develop a process for distributing the neighbourhood portion of the levy and it is proposed that further consideration is given to this matter as a CIL spend process is developed.
5 Corporate Implications
Financial Implications
5.1 CIL will be a flat rate charge based on six differential rates proposed for residential and two differential rates proposed for non-residential development. The rates will vary from area to area across the borough. This differs from S106 which is negotiated on a project basis and which will still be Page 230
used for strategic site infrastructure and in a more limited way for other on-site requirements.
5.2 Local authorities must spend CIL on infrastructure needed to support the development of their area. The levy is intended to focus on the provision of new infrastructure however, the levy can be used to increase the capacity of existing infrastructure or to repair failing existing infrastructure, if that is necessary to support development.
5.3 Local authorities must allocate at least 15% of levy receipts on priorities that are agreed with the local community in areas where development is taking place. At least 15% of CIL receipts are passed on directly to Town or Parish Councils where they exist. This can increase to a minimum of 25% where neighbourhood plans are in place.
5.4 Cabinet should note that the Infrastructure Delivery Plan and draft regulation 123 list do not constitute a confirmation of expenditure on a specific project. The council will need to determine CIL funding priorities as part of the annual budget process and include them in the capital programme as appropriate.
5.5 Once CIL receipts start to be generated up to 5% of the income can be used to support the cost of administering the scheme.
5.6 Depending on when planning applications are submitted for the major development sites and when CIL is introduced, it is anticipated that CIL from residential developments could generate income of up to £39m over the plan period before account is taken of the amount to be passed on to the relevant Parish Council (which amounts to around £8m). The income from CIL must be balanced against a reduction in the level of future S106 income to the council. This is an increase of £12m from the £27m that was forecast in 2014 based on the rates in the Draft Charging Schedule, mainly due to CIL now being proposed to apply to Manydown following the updated viability assessment explained in this report.
5.7 The updated IDP shows a gross infrastructure cost of approximately £233m over the period to 2029. After allowing for funding of £38m from the Local Enterprise Partnership and Pinch Point funding and a further £81m through section 106 contributions, mainly on strategic sites, this leaves a net IDP funding gap of approximately £114m. However, this does not factor in additional grants that may be forthcoming and capital receipts.
5.8 The proposed CIL rates are estimated to result in income of £39m in the period to 2029, so it is not expected that the IDP funding gap will be filled by CIL alone.
5.9 This is supported by the experience of other authorities CIL examinations and reflects the need to bid for future government funding to secure infrastructure and to agree a prioritised programme for delivering improvements each year in consultation with HCC.
5.10 If a policy is agreed for the payment of CIL by instalments, this will result in a loss of interest to the council. For example if half of CIL was to be paid upfront and the balance 6 months later, this would result in the loss of interest income of approximately £17,000 per annum, compared to the levels of Page 231
interest that would accrue if all CIL was paid at commencement. This is in addition to a potential increase in the risk of defaults and higher admin costs, however the council can use up to 5% of CIL receipts to cover administration of the levy.
5.11 It is expected that CIL receipts will commence from July 2017 and leading up to this date, detailed work will be undertaken to allow us to understand when receipts are likely to occur. Work is also being undertaken to develop an annual process for consulting on the allocation of CIL to capital schemes in the IDP, prior to a recommendation from Cabinet and a final decision by Council as part of the annual budget process.
Risk Issues
5.12 In terms of risk, Cabinet should be aware that CIL levels should be set appropriately, such that they are not so high that they undermine viability of development and delay the delivery of homes and infrastructure. In addition, they should not be set at a level which results in a lack of funds to provide the necessary infrastructure to serve new development.
5.13 If the adoption of a CIL Charging Schedule is delayed, the council’s ability to collect money for the provision of infrastructure will be affected on two accounts: firstly, any sites that receive planning permission before the a charging schedule takes effect will not be liable to pay CIL; and secondly, the pooling of planning obligations is significantly restricted by regulation 123. Too many generic S106 agreements could result in reaching the pooling limit before enough funds are secured to deliver the infrastructure.
5.14 It should be noted that unlike planning obligations, CIL is non-negotiable and therefore more certain. As affordable housing is secured through planning obligations, there is a risk that if the development is not viable, the level of affordable housing may be negotiated down but the CIL will still be payable.
HR Issues
5.15 The future introduction of CIL will require officer time to establish the system of charging, and then subsequent administration and collection of money. This will be met through existing resource. It is likely to also require an approach to ensuring that overdue debts are collected, amongst other administrative and financial processes. Once CIL is implemented the number of S106 agreements being required is likely to decline and / or be less detailed in nature. In addition, there is likely to be less time spent on negotiations associated with S106 agreements for planning applications on smaller sites, given that CIL is non-negotiable. Up to 5% of CIL receipts can be spent on administering the CIL.
Equalities
5.16 An Equality Impact Assessment was undertaken to consider the implications of the introduction of CIL for the Public Sector Equality Duty and the impact on the protected characteristics groups (Equality Act 2010). As CIL is not a policy document and account is only taken of economic viability across the borough, no differential impact on any groups has been identified to date. It was noted that all residents will benefit from improvements to infrastructure in their local area and the borough as a whole. Page 232
5.17 The rates proposed in the Draft Charging Schedule have changed since the previous Draft stage to take account of further viability evidence and in many cases the levy rates have increased. The impact of this will be a higher CIL income than was forecast previously, which is positive for local communities.
5.18 Once this issue has been considered by Council, it is proposed that the Draft Charging Schedule and accompanying documents are published for a six week formal consultation. Following this the charging schedule will be submitted for examination and once approved, the Council can adopt it and begin charging. The current timetable indicates that charging could take effect in summer 2017. The Equality Impact Assessment will be re-visited after the consultation has closed to consider any equalities implications that may arise.
Legal Implications 5.19 There are legal issues to consider in progressing the Local Plan, its associated policies and CIL. In respect of CIL, it is necessary to consider whether the charging schedule (during its preparation, consultation, examination, adoption and then implementation) is compliant in legal terms; whether it is economically viable as well as reasonable, realistic and consistent with national guidance. Thus far the steps taken to progress the charging schedule (including the elements contained within this report) has met the legal requirements and this will continue to be monitored throughout the process.
5.20 Once the charging schedule has been adopted and implemented it will be necessary to monitor the Reg 123 list and use of s106 in order to avoid “double-dipping;” this being the situation whereby funds are collected under both the charging schedule and s106 which would be unlawful.
6 Views of the Economic Planning and Housing Committee
6.1 A report will be prepared following EPH committee on 14 July to summarise the views expressed. This will be made available to Cabinet as a supplementary report.
7 Communication and Consultation
7.1 Subject to Cabinet’s recommendation, the Draft Charging Schedule will be considered by Council on 21 July 2016. Council will be asked to formally approve the publication of the Draft Charging Schedule (DCS) (appendix 1) for a seven week period of consultation and for subsequent submission for ‘examination’. A number of related and supporting documents will also be published alongside the DCS including:
Draft Regulation 123 list (appendix 2) Residential and Non-Residential CIL Viability Report (appendix 3) Infrastructure Delivery Plan schedule (appendix 4)
7.2 It is proposed that the consultation period will begin on 8 August 2016 and run for seven weeks, closing on 26 September 2016. The following consultation methods will be used:
Notification to all those on the Local Plan database (email or letter) Publication on the council’s website Page 233
Publication of a statutory notice in the local press Press release to local media and community publications Hard copies made available in the council offices and distributed to all libraries in the borough A standard survey response form will be made available both online and in hard copy to anyone who wishes to respond.
7.3 Following the consultation, the Draft Charging Schedule will then be submitted for examination along with copies of the representations, a summary of the main issues raised and copies of the relevant evidence. It is proposed that CIL is progressed in line with the following timetable:
Stage Date
Consultation 8 August – 26 September
Submission for Examination November
Examination January 2017
Inspector’s Report March 2017
Implementation July 2017
8 Conclusion
8.1 This report has set out and explained the rates proposed for the Borough Council’s Draft Charging Schedule. The rates have changed since the previous Draft stage to take account of further viability evidence and, in many cases, the levy rates have increased. The impact of this will be a higher CIL income than was forecast previously.
8.2 Once this issue has been considered by Council, it is proposed that the Draft Charging Schedule and accompanying documents are published for a seven week formal consultation. Following this the charging schedule will be submitted for examination and once approved; the Council can adopt it and begin charging. The current timetable indicates that charging could take effect in summer 2017. It is necessary to keep the Charging Schedule under review to take account of any changes in market conditions which may affect development viability.
Page 234
Appendix 1
Community Infrastructure Levy Revised Draft Charging Schedule Public Consultation
August 2016
Page 235 Consultation
Basingstoke and Deane Borough Council is charging authority under the Community Infrastructure Levy (CIL) Regulations. This consultation document – the Revised CIL Draft Charging Schedule is published for public consultation in accordance with regulation 16 of the CIL Regulations 2010 (as amended).
It follows consultation on a Preliminary Draft Charging Schedule in January 2014, and a Draft Charging Schedule in November 2014. Comments received during these consultation periods have been taken into account in preparing this Revised Draft Charging Schedule.
This consultation provides a further opportunity for representatives from the development sector, industry and commerce, Town and Parish Councils, community groups and organisations, neighbouring authorities, and any member of the public that may have an interest to make representations on the borough council’s CIL.
The consultation runs for seven weeks from 8 August to 26 September 2016.
Comments can be submitted via the following methods:
Online using the response form by following the link http://www.basingstoke.gov.uk/CIL
By email to [email protected]
In writing to: Planning Policy and Infrastructure Team Basingstoke and Deane Borough Council Civic Offices London Road Basingstoke RG21 4AH
Please note that comments received during this consultation cannot be treated as confidential so please do not include any personal information within your comments. Responses will be published on the borough council’s website, together with the name and/or organization name of the respondent.
The Revised Draft CIL Charging Schedule is supported by the following documents:
Residential and Non-Residential Viability Study (Three Dragons, March 2016); Infrastructure Delivery Plan Schedule (June 2016); Draft Regulation 123 list; Draft Instalments Policy;
Page 236 Adopted Basingstoke and Deane Local Plan 2011-2029
For any enquiries please call 01256 845469 or 845750.
Page 237 Contents Page
1 Introduction 1
2 Infrastructure Needs 2
3 Viability Testing 2
4 Proposed CIL Rates 3
5 Payment Terms 4
6 How CIL is Spent 4
7 Next Steps 5
Appendix 1 – Geographical Coverage of the Proposed Charging Areas
Map A CIL Charging Zones for Residential Development – A1 Basingstoke and Deane Borough
Map B Charging Zones for Residential Development – A2 Basingstoke
Map C CIL Charging Zones for Residential Development - A3 Tadley
Map D CIL Charging Zones for Non-Residential Development – A4 Basingstoke Town Centre
Page 238 1 Introduction
1.1 The Community Infrastructure Levy (CIL) is a levy that local authorities can charge on new development in their area. The money raised can be used to fund a wide range of infrastructure such as transport schemes, schools, community facilities, parks, green spaces and leisure facilities.
1.2 The CIL will apply to ‘chargeable development’. This is defined as:
all new buildings, but excluding buildings into which people do not usually or only occasionally go (e.g. only to inspect machinery or structures such as electricity pylons or substations). development delivering 100 square metres or more of additional gross internal floorspace the creation of one additional dwelling even if the gross internal floorspace is less than 100 square metres some developments not requiring planning permission (permitted development) will also be liable for CIL if they do not fall into the exemption criteria.
1.3 CIL is not charged on affordable housing, buildings used for charitable purposes and self-build housing.
1.4 CIL is a non-negotiable fixed charge, which means applicants and developers will be clear about how much they will need to pay. Levy rates are expressed as pounds per square metre and should be set at a level which does not threaten the ability to develop viably the sites and scale of development identified in the Adopted Local Plan.
1.5 Basingstoke and Deane Borough Council currently secures planning obligations from development through Section 106 legal agreements (S106), however S106 is restricted to site specific impacts and the provision of affordable housing. It is also not possible to pool more than five planning obligations in respect of a specific infrastructure project tor a type of infrastructure.
1.6 The levy will give councils and local communities more flexibility about how infrastructure is funded and it will allow more strategic infrastructure issues to be resolved through the use of CIL funding.
1.7 It is intended that S106 contributions will not be completely replaced but their use will be scaled back once a CIL charge is adopted. The exception to this will be large scale development where facilities and infrastructure are required to be delivered on site, or where impacts are directly related to a particular site, including enabling works such as site access.
1 Page 239 2 Infrastructure Needs
2.1 Significant investment in infrastructure is required to support the development that is planned for in the Adopted Local Plan. This will include providing for new schools and additional school places, community and other local needs, improvements to the transport networks, additional healthcare facilities, investment in the borough-wide leisure and recreational facilities and open space.
2.2 The Local Plan makes provision for 15,300 homes over the plan period. The majority of this development will primarily take place in Basingstoke town with lower levels of growth in the smaller settlements of Whitchurch, Overton, Bramley, Kingsclere and Oakley.
2.3 The Council’s Infrastructure Delivery Plan (IDP) sets out the additional infrastructure requirements to support the Local Plan. Throughout the preparation of the Local Plan and IDP, the Council has worked with key infrastructure and service to identify the infrastructure required to support the growth proposed for the town and rural settlements.
2.4 It is clear that the cost of the required infrastructure exceeds the known available funds, leaving a funding gap which justifies the preparation of a CIL Charging Schedule. Revenue from CIL will be used to fund the delivery of infrastructure and will be directed to address the identified funding gap.
3 Viability Testing
3.1 CIL Regulation 14 sets out that the charging authority, in setting levy rates, must strike an appropriate balance between the desirability of funding from the levy and the potential effects (taken as a whole) of the imposition of CIL on the economic viability of development across its area.
3.2 The council commissioned consultants to carry out a viability assessment to inform the CIL rates. This evidence assesses the viability of a sample of different types of development across the borough to gauge the potential effects that the introduction of CIL would have on development viability taken as a whole.
3.3 The analysis uses a residual land value appraisal, which involves the assessment of the value of the completed development (Gross Development Value) from which is deducted the development costs to calculate a residual land value. The outputs identify either a positive or negative residual value. If a
2 Page 240 positive residual value exists, there is scope to charge CIL, if it is negative the development is not considered to be viable.
3.4 Levels of CIL have been tested in combination with the council’s planning requirements as set out in the Adopted Local Plan, including 40% affordable housing for all sites.
4 Proposed CIL Rates
4.1 Based on the findings and outcomes of the Viability Assessment the following rates of CIL are proposed:
Table 1: Proposed CIL rates – Residential Development
Location / type of residential development Recommended Charge Rate (£ per square metre) Zone 1 – Hounsome Fields £30 Zone 2 – Manydown £60 Zone 3 – Basingstoke Golf Course; East of £80 Basingstoke; Upper Cufaude Farm Zone 4 – Basingstoke and Tadley £140 Zone 5 – Rest of the Borough £200 Care homes / extra care / sheltered housing £0 Single dwellings £0 Wholly flatted schemes1 £0
Table 2: Proposed CIL rates – Non-Residential Development
Type of development Recommended Charge Rate (£ per square metre) Comparison retail shop outside of Basingstoke town £40 centre / Retail warehouses Budget hotel2 £40 All other types of development £0
4.2 The geographical coverage of the proposed CIL charging area is set out in Appendix 1.
1 This rate applies where 100% of the dwellings on site are flats. This excludes flats which are part of the housing mix on a larger development site.
2 Budget hotels are defined by the British Hospitality Association Trends and Developments Report 2012 as a property without an extensive food and beverage operation, with limited en-suite and in-room facilities, low staffing and service levels and a price markedly below that of a full service hotel.
3 Page 241 5 Payment Terms
5.1 There will be no CIL charge for Change of Use applications unless additional floorspace is created and no charge for the subdivision of existing dwellings, self-build and extensions. In cases of redevelopment, the charge will only be levied on any net additional floorspace created.
5.2 CIL is payable within 60 days of commencement of development, although the Borough Council is proposing to introduce an instalments policy to enable phased payments on larger schemes.
5.3 The responsibility to pay the levy lies with the owner of the land, unless liability is assumed as set out in Regulations 31 and 39 (as amended), and the amount payable will be calculated in accordance with Regulation 40 (as amended).
5.4 The chargeable rate will be index linked, which is the national All-in Tender Price index published from time to time by the Building Cost Information Service of the Royal Institute of Chartered Surveyors.
5.5 The council may accept ‘payment in kind’ of land and/or infrastructure in exceptional circumstances. Essentially, this means the total CIL amount payable will be reduced accordingly.
6 How CIL is Spent
6.1 The Council has published a draft list of infrastructure projects or types of infrastructure that it intends will be, or may be, wholly or partly funded by CIL. This is known as the “Regulation 123 list”. Infrastructure projects included in this list cannot be secured via Section 106 legal agreements in order to avoid double charging. The draft Regulation 123 list is being made available alongside this draft charging schedule during this consultation. The Regulation 123 list is likely to be updated periodically, in line with the IDP, as infrastructure projects are completed, or new requirements identified.
6.2 The Regulations require the Council to allocate a proportion of the revenue from CIL receipts to the neighbourhood within which the CIL chargeable development took place. Communities with a Neighbourhood Plan will receive 25% of the revenue from the CIL and neighbourhoods without a plan will receive a 15% share of the levy revenue, subject to a cap of £100 per council tax dwelling per year.
4 Page 242 7 Next Steps
7.1 The Council is now consulting on the Revised Draft CIL Charging Schedule. If modifications are required to the Draft Charging Schedule following the public consultation, the Council will make these changes available in a Statement of Modifications. The Draft Charging Schedule will then be submitted for examination by an independent Examiner. Details of the examination will be made available on the Council’s website and sent to those that submit representations and wish to be kept informed.
7.2 The table below sets out the anticipated time scale for adopting a CIL Charging Schedule.
Table 3: Timescale for adoption of a CIL Charging Schedule
Submit Draft Charging Schedule to November 2016 independent Examiner
Examination January 2017
Examiner’s report March 2017
Adoption of CIL Charging Schedule May 2017
Implementation of CIL Charge July 2017
7.3 The Council is also required to monitor the level of CIL receipts received and spent and to publish annually such information. As required by the regulations, the Council will also monitor the CIL Charging Schedule to ensure that this remains appropriate over time. It may be appropriate to undertake a review in light of changing market conditions, which may affect development viability.
7.4 The Council has reviewed the status of the current ‘S106 Planning Obligations and Community Infrastructure Guidance’ and intends to replace it with a Planning Obligations Supplementary Planning Document. This document would operate alongside CIL to provide clarity about the council’s requirements for securing site specific infrastructure through S106 planning obligations.
5 Page 243 Appendix 1 Geographical Coverage of the Proposed Charging Areas
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A1
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A2
Appendix 1 Geographical Coverage of the Proposed Charging Areas
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A3
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A4
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Appendix 2
Basingstoke and Deane
Community Infrastructure Levy (CIL)
Draft Regulation 123 List
This Regulation 123 list will be valid from [insert date of charging schedule adoption]. This draft list sets out those infrastructure projects or types of infrastructure that Basingstoke and Deane Borough Council, as CIL charging authority, may wholly or partly fund by the levy.
Regulation 123 of the Community Infrastructure Levy Regulations 2010 (as amended) prohibits the use of planning obligations for infrastructure that will be funded by CIL. Infrastructure types or projects that are listed below will not be secured through planning obligations. This is to ensure there is no duplication between the funding of infrastructure through CIL and planning obligations secured through section 106 agreements. This list should be read in conjunction with the Draft Planning Obligations Supplementary Planning Document (SPD) which sets out the borough council’s approach towards seeking planning obligations.
In accordance with regulation 59 of the CIL Regulations 2010 (as amended); the Borough Council as charging authority will spend CIL funds on “the provision, improvement, replacement, operation or maintenance of infrastructure to support the development of its area.” The inclusion of a project or type of infrastructure on this list does not signify a commitment from the Borough Council to fund (either in whole or in part) the listed project or type of infrastructure through CIL. Nor does the order of infrastructure items within the list imply or signify any order of preference or priority for CIL funding.
The Council will review this list annually, as part of its monitoring of CIL collection and spend.
1 Page 249
Transport
Infrastructure to be funded from CIL Exclusions receipts
Improvements to junction at Aldermaston Road A340 / Ringway A339 A339 / Ringway West roundabout junction improvements Provision of A33 link to Cufaude Lane / Chineham distributer road A33 / Bramley Road junction improvements Improvements to junction and signals at A30 Ringway South / A339 Hackwood Road Roundabout A30 Kempshott roundabout junction improvements Hatch Warren roundabout (A30 / Wallop Drive) junction improvements Improvements to junctions on B3400 throughout Laverstoke and Freefolk and improved pedestrian and traffic management Construction and implementation of Chineham railway station Transport and access improvements at Basingstoke Top of the Town
Education
Infrastructure to be funded from CIL Exclusions receipts
Provision of additional primary school New primary school provision to serve places in existing schools Manydown, Basingstoke Golf Course, Hounsome Fields, East of Basingstoke and Upper Cufaude Farm as required Expansions to existing secondary New secondary school provision to serve schools Manydown
2 Page 250
Community
Infrastructure to be funded from CIL Exclusions receipts
Improvements to existing community New community facilities to serve facilities Manydown, Basingstoke Golf Course, Hounsome Fields, East of Basingstoke and Upper Cufaude Farm Improvements to existing libraries On-site library provision at Manydown Cemetery Healthcare infrastructure
Sports
Infrastructure to be funded from CIL Exclusions receipts
New and improved facilities at Down Grange Sports Complex Artificial Turf Pitch at The Vyne Community School Artificial Turf Pitch at Testbourne Community School Artificial Turf Pitch at Tadley Improvements to swimming provision Improvements to indoor tennis facilities New indoor sports halls Refurbish / re-provide football pavilion at Bramley FC Refurbish existing hard court area at Fieldgate, Kingsclere Provide floodlights and pavilion at Kingsclere Tennis Club Refurbish / re-provide cricket pavilion at Oakley Cricket Club 2 new rugby pitches and 4 team changing rooms at Overton RFC Refurbish 2 tennis courts in Overton Refurbish / provide 2 new tennis courts in Whitchurch
3 Page 251
Green Infrastructure
Infrastructure to be funded from CIL Exclusions receipts
Delivery of a country park at Manydown Land for the country park to serve the wider local area Strategic habitat creation and restoration Specific habitat creation or restoration secured through S106 and required to make the development acceptable Strategic open space provision (including On-site provision of open space (or in parks, informal kickabout areas and play the vicinity of the site) secured through areas) S106 and required to make the development acceptable Strategic allotment provision On-site provision of allotments (or in the vicinity of the site) secured through S106 and required to make the development acceptable
Flooding and Water
Infrastructure to be funded from CIL Exclusions receipts
Strategic flood alleviation schemes and Site specific flood risk management flood prevention measures including SuDS secured through S106 and required to make the development acceptable. Projects to support meeting the aims of the Water Framework Directive
This draft Regulation 123 list was drawn up in June 2016. The exclusions list does not cover any infrastructure that has already been secured through S106 planning obligations prior to this time.
4 Page 252 BASINGSTOKE & DEANE BOROUGH COUNCIL VIABILITY STUDY
Residential and Non- residential Community Infrastructure Levy Viability Final Report
Three Dragons March 2016
Page 253 Basingstoke & Deane CIL Viability Study
This report is not a formal land valuation or scheme appraisal. It has been prepared using the Three Dragons toolkit and non-residential model and is based on district level data supplied by Basingstoke and Deane Borough Council, consultation and quoted published data sources. The toolkit provides a review of the development economics of illustrative schemes and the results depend on the data inputs provided. This analysis should not be used for individual scheme appraisal.
No responsibility whatsoever is accepted to any third party who may seek to rely on the content of the report unless previously agreed.
Final Report Page 2 March 2016 – Three Dragons Page 254 Basingstoke & Deane CIL Viability Study
CONTENTS
CONTENTS EXECUTIVE SUMMARY ...... 4 1 Introduction ...... 8 2 Context for the Analysis ...... 10 3. Viability Approach and Key Assumptions – Residential Development ...... 18 4 Viability Testing – notional 1 ha tile ...... 25 5 Residential viability testing –Basingstoke and Tadley Smaller Case Study Sites ...... 35 6. Residential Viability Analysis – Rest of Borough Smaller Case Study Sites ...... 42 7 Strategic Site Case Studies ...... 46 8 Residential Viability Conclusions ...... 54 9. Non-residential ...... 57 ANNEX 1 - Local Plan Policy Viability Implications ...... 73 ANNEX 2 - Development Industry Workshops ...... 74 ANNEX 3 - Residential Modelling Assumptions ...... 91 ANNEX 4 - Benchmark Land Value...... 97 ANNEX 5 - 1ha residual values ...... 105 ANNEX 6 - Case study characteristics ...... 107 ANNEX 7 - Case study residual values ...... 113 ANNEX 8 - Non-residential Viability Tests ...... 116
Final Report Page 3 March 2016 – Three Dragons Page 255 Basingstoke & Deane CIL Viability Study
EXECUTIVE SUMMARY
1. The Basingstoke and Deane Viability Study provides the Council with evidence to assist it in drawing up a revised Community Infrastructure Levy (CIL) Draft Charging Schedule1. The evidence has been prepared in consultation with the development industry and has followed the relevant regulations and guidance as well as being in line with the National Planning Policy Framework. This assessment also takes into account the policies in the new Local Plan and its supporting evidence base. This work provides information for the CIL charging schedule for both residential and non-residential uses. Residential uses 2. House prices show that the Borough can be divided into two market value areas with noticeable differences in average market values. The two areas are Basingstoke/Tadley and the Rest of the Borough. Development costs do not vary across the Borough in the same way as house prices. 3. The testing undertaken uses a standard residual value approach, using the Three Dragons Toolkit for residential development and the Three Dragons Non-residential Model for the non- residential development. The residual value of development (total value less all development and policy costs, including planning obligations) is compared to a land value benchmark and the scheme is said to be viable if the residual value exceeds the benchmark. Note that the benchmark land value is an estimate of the lowest value that a landowner may accept, and does not preclude the possibility that some schemes may have enough value to pay more for land. The main residential benchmark land value generally used is £1 million per hectare, with a lower benchmark (£400,000 per hectare) for large-scale greenfield sites which have additional costs to meet. These benchmarks have been used as part of the evidence base for the new Local Plan, which is currently in the later stages of Examination. The report also provides some commentary on the residual value against an upper benchmark of £1.3m/ha and a sensitivity test of £1.5m/ha for small and medium sites. 4. Three types of residential testing were undertaken and the results from all these stages are brought together in the study conclusions. The first set of tests used a notional 1 ha tile with different densities of development, in both the Basingstoke/Tadley and ‘Rest of Borough’ market areas. These tests provide a picture of the underlying viability of residential development. The second set of tests was a series of generic case studies that were specific to each market value area and were selected to represent the type of development likely to be brought forward over the life of the Local Plan. The case studies highlight where a certain type of site has different viability characteristics compared with the average (as shown in the 1ha testing). The third set of tests covers a set of strategic sites case studies. These are
1 The original Draft Charging Schedule was published for consultation November-December 2014
Final Report Page 4 March 2016 – Three Dragons Page 256 Basingstoke & Deane CIL Viability Study
representative of the strategic sites identified in the new Local Plan and include costs specifically associated with this type of large scale development on greenfield land. 5. A number of policy approaches indicated by the Council have had an impact on the testing undertaken and the results of that testing. The key factors include: 40% affordable housing with 70% affordable rent and 30% intermediate. Sensitivity testing is undertaken to determine the effect of including some social rent. Accessibility standards, with 15% of all housing required to provide enhanced accessibility; and water efficiency standards. Green space standards, which have an impact on the land budgets and other costs for the larger sites. A requirement for some local mitigation to be delivered through s106/278 agreements. However, these will be significantly scaled-back and the testing undertaken reflects this. Policies relating to the strategic sites, which result in additional costs that need to be taken into account in assessing the viability of these large-scale greenfield sites e.g. provision of a primary school. Self-build is also expected to be delivered on some strategic sites. 6. Since the viability testing in 2013 there have been some significant changes in the values and costs for residential development. In particular, the values that are now achievable for new build market dwellings are considerably higher than in the 2013 testing (by around 20%). In addition to this the increased affordable rents and the capitalisation rate for affordable housing means that the submarket dwellings are also worth considerably more to the development. Set against this, there has been a significant increase in build costs, partly mitigated by a lower cost of finance and reduced allowance for marketing fees in a strong market. As a result of these changes development is considerably more viable than it was in 2013. However, there is a need for caution in responding to this improved viability as in general terms there may be changing expectations about land values; and for the strategic sites in particular there may be potential risks about changing costs of development. We have therefore adopted generous buffers in suggesting potential CIL rates. The residential viability testing 7. The viability testing shows that if the Council wish to continue using the rates proposed in the Draft Charging Schedule, then with some adjustment these rates remain within the development viability reported here. However, the improved viability for residential development allows some higher CIL rates, even allowing for some upward pressure on land value expectations. This would use £140/sq m for Basingstoke and Tadley and £200/sq m for the Rest of Borough, with a zero rate for single dwellings, wholly flatted schemes and sheltered accommodation; and £30/sq m for Hounsome Fields, £60/sq m for Manydown and £80/sq m for the other strategic sites.
Final Report Page 5 March 2016 – Three Dragons Page 257 Basingstoke & Deane CIL Viability Study
New rates Proposed CIL rate/sq m Hounsome Fields strategic site £30 Manydown strategic site £60 Other strategic sites £80 Care homes/sheltered housing/extra care £0 Single dwellings £0 Wholly flatted schemes £0 Other development in the Basingstoke and Tadley value area £140 Other development in the Rest of Borough £200
8. If the new rates set out above are used, then it is likely that the combined CIL/residual s106/278 amount would be higher than the current typical s106 requirement. 9. Compared to neighbouring authorities a Basingstoke and Tadley rate of £140/sq m would be in the range of neighbouring area rates. A Rest of Borough rate of £200/sq m would also be in the range of neighbouring area rates, including the rates for higher value areas in each district. Non-residential uses 10. The viability testing has included non-residential uses likely to come forward under the new Local Plan. These are: Retail Offices Industrial Warehouse Hotels Mixed leisure Care homes 11. Costs and values for these uses were collated from published sources and refined through discussion in the non-residential development industry workshop in 2015. Part of the information from the development industry workshop related to build costs based on recent local schemes. These were mostly higher than the standard BCIS costs although one was lower. Testing has used both BCIS and local costs. The testing has also included a premium over standard build cost to take account of the required water efficiency and has included an allowance for s106/278 costs to make the development acceptable in planning terms. The non-residential viability testing 12. The analysis shows that only out of centre retail uses and budget hotels are currently able to support a CIL rate of approximately £40-£50/sq m (including a ‘buffer’ of approximately 50%), based on standard BCIS build costs. If the locally derived build costs are used, then no non- residential development is able to support a CIL. The Council may decide that the combination of the locally provided build costs and the likely limited amount of retail warehouse and budget
Final Report Page 6 March 2016 – Three Dragons Page 258 Basingstoke & Deane CIL Viability Study
hotel development in the short term means that the case for a CIL on these uses is not clear and therefore the rate for all non-residential development should be £0. 13. In 2013 other retail uses were able to support a CIL. However, the changes in BCIS build costs have rendered these types of development unviable currently.
Final Report Page 7 March 2016 – Three Dragons Page 259 Basingstoke & Deane CIL Viability Study
1 INTRODUCTION
1.1 The viability evidence provided in this report is to assist Basingstoke and Deane Borough Council prepare a Community Infrastructure Levy (CIL) charging schedule for residential and non-residential uses. This report follows earlier viability work undertaken to inform the Local Plan (currently within Examination in Public) and the CIL Preliminary Draft Charging Schedule (PDCS - published for consultation January-February 2014) and Draft Charging Schedule (DCS - published for consultation November-December 2014). The DCS proposed the following CIL rates: Table 1.1 Draft Charging Schedule 2014 CIL rates
Location/type of development Recommended Charge Rate (£ per square metre) Manydown (zone 1) £0 Basingstoke Golf Course; East of Basingstoke; Upper Cufaude Farm (zone 2) £65 Basingstoke and Tadley (zone 3) £70 Rest of the Borough (zone 4) £150 Care homes / extra care / sheltered housing £0 Large convenience retail shop / Supermarkets/ Large comparison retail shop £150 outside of Basingstoke town centre / Retail warehouses Small scale convenience retail; Small scale comparison retail outside of £35 Basingstoke town centre; Comparison retail within Basingstoke town centre (any size); Financial and professional services (Use class A2); Restaurants and cafes (Use class A3); Drinking establishments (Use class A4); Hot food takeaways (Use class A5) Budget hotel £35 All other types of development £0
1.2 The earlier viability studies used to inform the PDCS and the DCS are: Basingstoke and Deane Residential and Non-residential Viability Study 2013 Manydown and Golf Course Viability Report 2014 A subsequent viability study was undertaken to provide evidence to support the allocation of Hounsome Fields during the Local Plan Examination – the Golf Course and Hounsome Fields Viability Report 2015 1.3 These earlier viability studies included consultation with the development industry active in the Borough (including developer workshop, individual interviews and consultation representations) and the information has been incorporated within this 2016 work. 1.4 The viability testing for this report has been designed to assess: The amount of CIL that residential and non-residential development can afford. Whether there are differences in viability across the borough or between different types of development that are sufficient to justify different CIL rates.
Final Report Page 8 March 2016 – Three Dragons Page 260 Basingstoke & Deane CIL Viability Study
1.5 The research which has been drawn on for the analysis includes: A review of the types of sites planned for development in the Local Plan. A review of the policies in the Local Plan and central government guidance that may have implications for development viability. A review of recent developer contributions with Council officers. Desk research to form initial views on the values and costs of residential and non-residential development in Basingstoke and Deane and how these vary across the borough. Consultation with the development industry, active in the borough firstly through two workshops (one for residential development and one for non-residential development). A note of the workshop discussions is shown at Annex 2. Subsequently, Three Dragons contacted a number of participants to explore specific points raised at the workshop. The Council also subsequently conducted a survey of Registered Providers (RPs) to get detailed advice on the affordable housing assumptions to be used. With agreement of the Council to the assumptions used, operation of the Three Dragons residential and non-residential viability models to undertake the viability testing set out in this report.
Final Report Page 9 March 2016 – Three Dragons Page 261 Basingstoke & Deane CIL Viability Study
2 CONTEXT FOR THE ANALYSIS
National Policy Context 2.1 The National Planning Policy Framework (NPPF) paragraph 173 sets out how Government expects viability to be considered in planning: 2.2 ‘Pursuing sustainable development requires careful attention to viability and costs in plan- making and decision-taking. Plans should be deliverable. Therefore, the sites and the scale of development identified in the plan should not be subject to such a scale of obligations and policy burdens that their ability to be developed viably is threatened. To ensure viability, the costs of any requirements likely to be applied to development, such as requirements for affordable housing, standards, infrastructure contributions or other requirements should, when taking account of the normal cost of development and mitigation, provide competitive returns to a willing land owner and willing developer to enable the development to be deliverable.’2 2.3 Planning Practice Guidance3 (PPG) provides further detail about how the NPPF should be used. PPG contains general principles for understanding viability (which are relevant to CIL viability) as well as specific CIL viability guidance4. It also notes that there is a range of sector-led guidance available5. In order to understand viability, a realistic understanding of the costs and the value of development is required and direct engagement with development sector may be helpful6. Evidence should be proportionate to ensure plans are underpinned by a broad understanding of viability, with further detail where viability may be marginal or for strategic sites with high infrastructure requirements7. However not every site requires testing and site typologies may be used to determine policy8. For private rented sector, self build and older people’s housing, the specific scheme format and projected sales rates (where appropriate) may be a factor in assessing viability9. 2.4 PPG requires that a buffer should be allowed and that current costs and values should be used (except where known regulation/policy changes are to take place)10. On retail and commercial development, broad assessment of value in line with industry practice may be necessary11. Generally, values should be based on comparable, market information, using average figures and informed by specific local evidence12. For an area wide viability assessment, a broad assessment of costs is required, based on robust evidence which is reflective of local market
2 DCLG, 2012, NPPF Para 173 3 DCLG, Planning Practice Guidance 4 PPG Paragraph: 003 Reference ID: 10-003-20140306 5 PPG Paragraph: 002 Reference ID: 10-002-20140306 6 PPG Paragraph: 004 Reference ID: 10-004-20140306 7 PPG Paragraph: 005 Reference ID: 10-005-20140306 8 PPG Paragraph: 006 Reference ID: 10-006-20140306 9 PPG Paragraph: 018 Reference ID: 10-018-20150326 10 PPG Paragraph: 008 Reference ID: 10-008-20140306 11 PPG Paragraph: 012 Reference ID: 10-012-20140306 12 PPG Paragraph: 012 Reference ID: 10-012-20140306
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conditions. All development costs should be taken into account, including infrastructure and policy costs as well as the standard development costs13. 2.5 Land values should reflect emerging policy requirements and planning obligations including any Community Infrastructure Levy charge, and provide a competitive return to willing developers and land owners. Where possible land values should be informed by comparable, market- based evidence but excluding transactions above the market norm14. Assumptions about brownfield land values should clearly reflect the levels of mitigation and investment required to bring sites back into use15. 2.6 Developer returns should be proportionate to risk16. The return to the landowner will need to provide an incentive for the land owner to sell in comparison with the other options such as current use value or policy compliant alternative use value17. 2.7 CIL is payable on development which creates net additional floor space, where the gross internal area of new build exceeds 100 square metres (this limit does not apply to new houses or flats)18. Self-build is exempt, along with social housing, charitable development, buildings into which people do not normally go and vacant buildings brought back into the same use19. 2.8 CIL rates should be set so that they do not threaten the viability of the sites and scale of development identified in the Local Plan20. Instead an appropriate balance should be set between the desirability of funding infrastructure from the levy and the potential viability impact21. 2.9 At examination the charging authority should also set out any known site-specific matters for which section 106 contributions may continue to be sought22. 2.10 For the purposes of CIL, a charging authority should use an area-based approach, involving a broad test of viability across their area. This should use appropriate available evidence, recognising that the available data is unlikely to be fully comprehensive. A sample of site types should be used, with a focus on strategic sites. More fine grained sampling may be required where differential CIL rates are set. Rates should be reasonable and include a buffer, but there is no requirement for a proposed rate to exactly mirror the evidence23. 2.11 Differential rates may be set in relation to geography, development type and/or scale. However undue complexity should be avoided and disproportionate impact avoided. The
13 PPG Paragraph: 013 Reference ID: 10-013-20140306 14 PPG Paragraph: 014 Reference ID: 10-014-20140306 15 PPG Paragraph: 025 Reference ID: 10-025-20140306 16 PPG Paragraph: 015 Reference ID: 10-015-20140306 17 PPG Paragraph: 015 Reference ID: 10-015-20140306 18 PPG Paragraph: 002 Reference ID: 25-002-20140612 19 PPG Paragraph: 003 Reference ID: 25-003-20140612 20 PPG Paragraph: 008 Reference ID: 25-008-20140612 21 PPG Paragraph: 009 Reference ID: 25-009-20140612 22 PPG Paragraph: 017 Reference ID: 25-017-20140612 23 PPG Paragraph: 019 Reference ID: 25-019-20140612
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charging authority should consider a zero CIL rate for locations, strategic sites and specific development types with low, very low or zero viability (subject to state aid compliance)24. Other Guidance on Viability Testing for Residential Development 2.12 Guidance has been published to assist practitioners in undertaking viability studies for policy making purposes – “Viability Testing Local Plans - Advice for planning practitioners”25. The Foreword to the Advice for planning practitioners includes support from DCLG, the LGA, the HBF, PINS and POS. PINS and the POS26 state that: “The Planning Inspectorate and Planning Officers Society welcome this advice on viability testing of Local Plans. The use of this approach will help enable local authorities to meet their obligations under NPPF when their plan is examined.” 2.13 The approach to viability testing adopted for this study follows the principles set out in the Advice. The Advice re-iterates that: “The approach to assessing plan viability should recognise that it can only provide high level assurance.” 2.14 The Advice also comments on how viability testing should deal with potential future changes in market conditions and other costs and values and, in line with PPG, states that: “The most straightforward way to assess plan policies for the first five years is to work on the basis of current costs and values”. (page 26) But that: “The one exception to the use of current costs and current values should be recognition of significant national regulatory changes to be implemented………”(page 26) Local Plan Policies 2.15 The NPPF is clear that viability testing should take into account, ‘…the costs of any requirements likely to be applied to development,…’ (Para 173). Therefore a planning policy review has been undertaken. 2.16 The Local Plan is currently proceeding through examination and will be the main planning document for Basingstoke and Deane. It will set out the overarching spatial strategy and development principles for the area together with more detailed policies to help determine planning applications. The main elements of the Local Plan are: Strategic objectives for the area Overarching strategy for the location of new development
24 PPG Paragraph: 021 Reference ID: 25-021-20140612 25 The guide was published in June 2012 and is the work of the Local Housing Delivery Group, chaired by Sir John Harman, which is a cross-industry group, supported by the Local Government Association and the Home Builders Federation. 26 Acronyms for the following organisations - Department of Communities and Local Government, LGA Environment and Housing Board, Home Builders Federation, Planning Inspectorate, Planning Officers Society
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Scale of new employment, housing and retail provision Identification of new strategic scale development sites Extent of new infrastructure required Key environmental constraints and opportunities Set of detailed policies to guide consideration of new development proposals 2.17 The Local Plan is currently in the latter stages of examination. The 2013 Viability Study undertook a detailed review of policies in the then draft Local Plan, and this has been refreshed to take account of changes to date. Detailed analysis of the policies is shown in the separate Annex 1. The key impacts on development viability relate to: Affordable Housing proportion and tenure (CN1). The target affordable housing proportion is 40% across the Borough with a mix of affordable rent, social rent and shared ownership (70% rented and 30% intermediate). Discussion with Council Planning and Housing officers indicates that in most cases the rental component of the affordable housing will be affordable rent; but there may be circumstances where a proportion of social rent may be needed. The viability testing incorporates these targets and undertakes some sensitivity testing (using the 1ha tiles) to explore the impact of having some social rent as part of the affordable housing tenures. CN1 states that the affordable housing provision is subject to viability. Accessibility CN1 and CN3 requires that 15% of affordable housing and market housing should provide enhanced accessibility standards. On advice from the Council this has been tested at Part M(4) 2. Policies CN3 and CN4 consider housing for older persons and this is included in the viability testing case studies. Provision of infrastructure (CN6). The approach to the funding of infrastructure required to support the planned development has been discussed as part of this study. In line with the funding strategy in the Infrastructure Delivery Plan, it is planned that infrastructure will be funded through CIL and third party funding rather than being a direct cost to development, except for the strategic sites identified as part of the Local Plan. Work has been undertaken to identify the site specific infrastructure costs and to include them in the strategic site viability testing. The Council considers the anticipated residual level of s106/278 sought from development will therefore fall to £1,500 per dwelling on average and this figure has been used in the viability assessments. There are some exceptions relating to the larger urban extensions and these are discussed in Section 7. Green Infrastructure (EM5) requires development to provide suitable green infrastructure. The Council has provided advice on the implementation of this policy and some of the smaller case studies have adjusted net to gross developable areas in order to comply with this policy; and specific allowances have been made in the land budgets for the strategic sites.
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Sustainable Water (EM9) requires that new homes meet a water efficiency standard of 110 litres or less per person per day and that non-residential developments meet BREEAM ‘excellent’ standards for water consumption. Allowances have been made in the residential and non-residential viability testing for the development costs to meet these standards. 2.18 In addition, there are a set of policies that have an impact on viability for some developments only: Housing mix (CN1 and CN3) – there may be some developments where the housing mix sought by the Council may differ from a market focused mix. Viability testing has used dwelling mixes agreed with the Council and discussed at the development industry workshop in 2015. Thames Basin Heath Special Protection Area (EM3). A limited amount of development may be obliged to mitigate impacts on the Special Protection Area through provision of Suitable Alterative Natural Green Space and Strategic Access Management and Monitoring. It is understood that the scale of development requiring this mitigation is likely to be small and as a result of the limited scale and scope of the policy as it affects viability, it has not been included in the viability testing. Employment development and town centre policies (EP1, SS8 and EP3) directs non- residential development towards Basingstoke town centre and existing employment areas (such as Basing View etc.). The non-residential viability testing takes account of these locations. Site allocations (SS3) sets out the scale and type of sites in different locations in the borough, including factors that may affect the gross to net land take. This will have an impact on viability in terms of value areas and values and costs associated with different scale sites; and this is taken account of in the development of the strategic case studies chosen by the Council for the viability testing. Policies SS3.8 to SS3.12 set out the policy requirement for the strategic sites specifically tested in this study; and the infrastructure costs and land budget implications have been included in the strategic site viability testing. Feedback from the Preliminary and Draft Charging Schedules 2.19 Representations were received as part of the consultation on the Preliminary Draft Charging Schedule (PDCS) and the Draft Charging Schedule (DCS). This viability study provides up to date evidence to inform a new DCS, taking into account the representations received. The following concerns were included in the representations:
Values Benchmark land values, with comments that they are too low and too high The house prices are unrealistic and house price value zones used are not representative Non-residential values are unrealistic
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Costs The base residual s106/278 of £1,500 is insufficient Build costs are too low Other development costs such as professional fees insufficient Further detail about how the larger residential schemes costs and values are cash- flowed over time Strategic sites specific infrastructure requirements not taken into account Inclusion of contingency costs 20% return for affordable housing development instead of the 6% contractor’s return
Development characteristics The amount of non-saleable circulation space allowed for in flatted development Housing delivery rates too high Net to gross developable area on larger greenfield sites is too high Whether the case studies used are representative of the development likely to come forward, particularly developments of about 400 dwellings that are not strategic sites. Inclusion of regeneration schemes
CIL The proposed CIL in the PDCS being too high, including the need to set a £0 rate for strategic sites in recognition of the high infrastructure costs involved. The need to consider a viability ‘buffer’ when setting CIL rates (30% was suggested by the consultee). The viability testing used to underpin the proposed retail CIL charges is not detailed enough The proposed CIL for retail warehousing is too high Regeneration of Basing View strategic site may be jeopardised by CIL 2.20 These comments have been taken into account within this viability study as follows: Benchmarks have been discussed as part of the July 2015 development industry workshop and further land transaction evidence has been considered. House prices have been updated using price paid data for new build dwellings and these values have been discussed as part of the July 2015 development industry workshop. Rents and yields for non-residential development have been updated with further transaction evidence and the values have been discussed as part of the July 2015 development industry workshop.
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Basingstoke and Deane Borough Council has confirmed that the base residual s106/278 of £1,500 is a robust estimate of a typical s106/278 per dwelling for small scale site specific mitigation post introduction of CIL. This estimate does not preclude the possibility that individual sites may be required to pay more or less than this amount, depending on specific site circumstances. Build costs are drawn from BCIS which is a publically available recognised source. Other development costs such as external works, opening up costs for larger sites and site specific infrastructure for strategic sites are also included in the viability testing. The range of development costs such as professional fees, finance, agents etc., was discussed as part of the July 2015 development industry workshop. This report and its annexes provide detail about the extent and timing of site specific infrastructure requirements that will be a cost to development on the strategic sites. Contingency costs are not included within the testing. There is no requirement for contingency within the guidance for area wide viability studies and a ‘buffer’ is used to take account of variations in costs and values. The guidance in PPG requires that developer returns should be proportionate to risk and it is for this reason that the lower risk affordable housing component of residential schemes include a 6% on cost developer return rather than the 20% of value used for the market dwellings. The terms of the affordable housing sales are typically confirmed before construction and therefore affordable housing is substantially less risky than market housing. A return of 6% on cost for affordable housing is accepted at examination and recent local examples would include the Test Valley CIL. Circulation space is included within flatted developments – 10% for low rise 2 storey flats and 15% for 3-5 storey flats. Housing delivery rates on strategic sites have been derived from the August 2015 Updated Housing Land Supply Statement produced by the Council as part of the Local Plan examination evidence. Further work on the land budgets for strategic sites has been undertaken by the Council to ensure that the gross site areas are sufficient to include the greenspace and other policy obligations. The Council has confirmed that the range of case studies used is representative of the development proposed in the new Local Plan. Regeneration schemes have not been included within the viability testing because these are undertaken outside the normal residential development process. These regeneration schemes typically involve renewal of affordable housing stock though inclusion of market housing within higher density schemes, with the market housing and third party funding used to subsidise the process. These schemes often come forward in exceptional circumstances such as the provision of land by the Borough Council (as in recent examples). The policies within the Local Plan do not include specific proportions of market and affordable housing in these schemes and the details of any cross-subsidisation and other funding are not available.
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CIL rates have been reviewed based on this latest viability testing. The recommended rates include an explicit buffer. Further retail testing has been undertaken to inform retail CIL rates.
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3. VIABILITY APPROACH AND KEY ASSUMPTIONS – RESIDENTIAL DEVELOPMENT
Principles and approach 3.1 The Advice for planning practitioners summarises viability as follows: ‘An individual development can be said to be viable if, after taking account of all costs, including central and local government policy and regulatory costs and the cost and availability of development finance, the scheme provides a competitive return to the developer to ensure that development takes place and generates a land value sufficient to persuade the land owner to sell the land for the development proposed. If these conditions are not met, a scheme will not be delivered.’ (page 14) 3.2 Reflecting this definition of viability, and as specifically recommended by the Advice for planning practitioners27, we have adopted a residual value approach to our analysis. Residual value is the value of the completed development (known as the Gross Development Value or GDV) less the costs of undertaking the development. The residual value is then available to pay for the land. The value of the scheme includes both the value of the market housing and affordable housing. Scheme costs include the costs of building the development, plus professional fees, scheme finance and a return to the developer. Scheme costs also include planning obligations (including affordable housing, direct s106 costs and CIL) and the greater the planning obligations, the less will be the residual value. Details of the assumptions about values and costs are discussed later in this section and set out in full in Annex 3. 3.3 The residual value of a scheme is then compared with a benchmark land value. If the residual value is less than the benchmark value, then the scheme is unlikely to be brought forward for development and is considered unviable for testing purposes. If the residual value exceeds the benchmark, then it can be considered viable in terms of policy testing. Figure 3.1 below illustrates this relationship.
27 See page 25 – “We recommend that the residual land value approach is taken when assessing the viability of plan-level policies and further advice is provided below on the considerations that should be given to the assumptions and inputs to a model of this type.”
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Figure 3-1: Relationship of residual value and benchmark land value
Benchmark land value
Residual land value
Negative land value
% Affordable Housing + CIL
Scheme with affordable housing + CIL – RV exceeds benchmark – viable Scheme with affordable housing + CIL – RV below benchmark – not viable
RV – residual value Assumptions used in the testing 3.4 A full set of assumptions used in the testing is set out in Annex 3. This includes the market values for the sale housing. These are based on an analysis of Land Registry data for new house prices, and discussed at the July 2015 development industry workshop. The prices were reviewed in January 2016 to determine whether further changes were necessary, but were left unchanged for this analysis. 3.5 The borough is divided into two value areas – Basingstoke and Tadley and the Market towns/villages – see Figure 3.2 below. Table 3.2 then sets out the indicative market values for new build properties we have used. Within both value areas, there will be local variations in selling prices. 3.6 Small scale “one-off“ developments (up to three dwellings) are also known to support higher values, related to the bespoke nature of this scale of development. While some one-off developments with special design and space standards will produce very high values, this viability assessment has sought to model dwellings that are similar to the types of dwellings that may also be built as part of larger developments. Based on experience, it has been assumed that these dwellings will command a 5% premium over their estate counterparts.
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Figure 3-2: Basingstoke and Deane residential market value areas
Figure 3-3: Market values used in testing
GIA SQ M 160 130 100 120 100 120 95 67 63 51 Semi- Detached detached Terrace Flats 5 Bed 4 Bed 3 Bed 4 Bed 3 Bed 4 Bed 3 Bed 2 Bed 2 Bed 1 Bed Basingstoke & £459,000 £363,000 £310,000 £328,000 £272,000 £324,000 £266,000 £221,000 £167,000 £145,000 Tadley Rest of £536,000 £425,000 £372,000 £377,000 £313,000 £355,000 £286,000 £244,000 £192,000 £167,000 Borough Basingstoke & £2,870 £2,790 £3,100 £2,730 £2,720 £2,700 £2,800 £3,300 £2,650 £2,840 Tadley Rest of £3,350 £3,270 £3,720 £3,140 £3,130 £2,960 £3,010 £3,640 £3,050 £3,270 Borough
3.7 It is apparent that the values that are now achievable for new build development are considerably higher than in the 2013 testing – for example a Basingstoke and Tadley three bed semi was modelled at £230,000 in 2013 and is now estimated to be worth £272,000 (+18%); and a four bed detached was £300,000 in 2013 and is now estimated to be worth £363,000 (+21%). Similar increases are apparent in most of the other dwelling types and locations, apart from flats where values have not changed to the same extent.
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3.8 Other key assumptions used in the testing are: All of the testing includes policy compliant 40% affordable housing with the affordable tenures 70% rented and 30% shared ownership. The main tests have all of the affordable components as affordable rent, but there is some sensitivity testing in the 1 ha tiles to include a 25% social rent:75% affordable rent split within the rented component. This takes account of circumstances where social rent may be required. The Council has specified the type of affordable housing dwellings it is likely to require and this mix has been used. Rental values and capitalisation have been checked with Registered Providers active in the Borough. As well as the improved house prices (which increase the value of shared ownership dwellings to RPs), the increased rents and particularly stronger capitalisation rates mean that the affordable rented housing is now modelled at a significantly higher value than in 2013 – for example, a two bed affordable rent flat is now estimated to be worth £108,000 to a RP compared to £76,000 in 2013. Basic build costs are derived from Building Cost Information Service (BCIS) data, are adjusted to take into account the location factor for the borough and include an allowance of 15% for external works. This equates to just over £580,000 for 1 hectare scheme of 35 dwellings. Different costs are used for different dwelling types and by scale of development, acknowledging the higher build costs associated with very small developments. Single dwellings used the BCIS ‘one-off’ costs and developments of 2 and 3 dwellings used a 5% premium over standard build costs28. Build costs have increased since 2013, with the cost for houses and external works rising from £1,033/sqm in 2013 to £1,195 in the current modelling (+16%). Build costs are also adjusted to take account of the new security requirements forming Part Q of building regulations and the water efficiency standard required as part of the Local Plan policies. Further costs are allowed for the Local Plan policy requirement that 15% of dwellings are built to Part M(4)2 accessibility standards. These costs vary by dwelling and tenure, and are detailed in Annex 3. We assume development will still have to meet a residual s106 and s278 cost29 and, on advice from the Council, we have used a figure of £1,500 per dwelling to cover on site provision for open space and local transport improvements. All education provision, other community provision, major open space and other transport improvements are assumed to be paid for by CIL or other public funding, except where it is specifically required to mitigate impacts from the large strategic sites. The costs of providing this
28 Correspondence with BCIS has confirmed the it is single dwellings that are likely to have significantly increased build costs. 29 Section 278 agreements allow developers to either pay for or undertake works relating to public highways. Typically this will relate to the works necessary to connect development to the highway network but it may also include offsite works. S278 may also include a bond to ensure works are undertaken.
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infrastructure for strategic sites have been included within the specific case studies. Details of the costs are discussed in Section 7. Strategic sites (400 or more dwellings) are assumed to incur additional costs of £200,000 per net hectare for opening up the sites and providing serviced parcels of land for development. These are in addition to the external works allowance of 15% of construction costs. The larger non-strategic case study sites used in the testing have an allowance £50,000 - £100,000 for opening up costs. Combining the external works for a 35dph scheme of £580,000/ha plus the opening up costs would provide over £0.75m/ha in addition to the base build costs for strategic sites. 3.9 Affordable housing values were discussed in the development industry workshop in July 2015 and then re-tested through a mini survey of the key housing associations active in the Borough in January 2016. This takes account of the changes to rents and benefits announced in the Summer 2015 budget. 3.10 It is clear that there have been some important changes in the values and costs used in the modelling since 2013. The key changes have been an increase in the value of most market dwelling types and the values of affordable housing to RPs, and increases in build costs. However it is apparent that the increases in values have been more substantial than the increases in build costs. Land Value Benchmarks 3.11 The land value benchmark is an estimate of the lowest cost that a willing landowner would sell land for development. The concept of a benchmark land value attempts to balance two factors: a) land can only be worth what the highest value permissible development can afford to pay for it; and b) landowners will require some premium over the existing use value in order to incentivise a sale. Note that where development is able to pay more for land, then it is likely that transactions will be above the benchmark land value, particularly when different developers are competing for the same piece of land. 3.12 Based on a review of the available evidence, the benchmark land values examined as part of the local plan examination remain valid. There is some recent evidence which supports them and it is clear that they have similarities with the range of benchmarks used in similar viability exercises in nearby authorities. However, there are also indications that land is transacted at higher values locally, although this does not necessarily constitute a benchmark for this type of viability exercise. 3.13 It is therefore proposed to maintain the existing set of benchmark land values used as part of the local plan evidence base and discussed at the development industry workshop in 2015. In recognition that the house price and build cost changes may have allowed land values to increase we also provide a higher benchmark of £1.5m as a sensitivity test for urban/urban edge sites. This figure is chosen as it is closer to some of the transaction evidence and the other local benchmarks, as well as forming part of the discussion in the 2013 development industry workshop. However, there is no equivalent sensitivity benchmark for strategic greenfield land nor any clear metric for generating one. Therefore, we apply a cautious
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approach to CIL rates for strategic sites later on in this report. The benchmark land values used in the residential testing are therefore: A main benchmark for urban/edge of urban sites of £1m/gross ha (as used in the Local Plan evidence base). A secondary benchmark for urban/edge of urban sites of £1.3m/gross ha (as used in the Local Plan evidence base). A greenfield strategic site benchmark of £400,000/gross ha (as used in the Local Plan evidence base). An intermediate benchmark of £700,000/gross ha for medium/large sites with higher development costs (as used in the Local Plan evidence base). A higher sensitivity test benchmark of £1.5m/ha for urban/edge of urban sites. 3.14 Where non-residential developments are anticipated to be on vacant industrial or office land the benchmark is considered to be £740,000/ha. This would apply to developments on locations such as Basing View and to non-residential developments anticipated to be on new/existing employment allocations. 3.15 The exception to this is for uses known to generate high values, where landowner expectations will require a premium to provide an incentive to sell. The testing has used the £1m/ha urban residential benchmark for small convenience shops, a benchmark land value of £2m per ha for out of centre comparison retail and £4m per ha for supermarkets, recognising that the latter two are well above the residential benchmark land value. Testing undertaken 3.16 The viability testing undertaken is split into three types: Using a notional 1 ha development scheme with different densities of development. For each density tested, there is a different mix of dwelling types with more smaller dwellings (including flats) in the higher density schemes. A series of case studies that represent the types of development provided for in the new Local Plan, but which might be brought forward as windfall schemes or smaller allocations in due course. The case studies were informed by the draft Local Plan as well as experience of past development patterns and the views of the development industry explored at the workshop. The case studies range in size from 1 dwelling to 100 dwellings. Strategic sites testing, based on the sites identified in the Local Plan. Basingstoke and Deane Borough Council has advised on the choice of sites to be tested as well as providing details of policy compliant land budgets and the costs of providing the site specific infrastructure. These infrastructure costs are in addition to the base build, costs, external works and opening up costs discussed above. 3.17 The 1 ha tile and case study/strategic sites testing are complementary. The 1 ha tiles provide a picture of the underlying viability of residential development and what this means for different densities of development and potential CIL, as well as the impact of providing a proportion of
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social rent within the affordable housing rented tenure. The case studies then highlight where site types differ in their viability compared with the average of the 1 ha tiles and this is then used to review the potential CIL rate. The testing for the strategic sites is then used to determine whether site specific CIL rates may be appropriate in response to the particular infrastructure and other costs for on these sites.
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4 VIABILITY TESTING – NOTIONAL 1 HA TILE
Introduction 4.1 This section of the report sets out the viability assessments for the 1 ha notional tiles. These are used to explore the underlying viability trends across the borough and arrive at a high level assessment of the amount of CIL that can be sustained at a policy compliant level of affordable housing (40%). The findings are then used to refine the assumptions in the case study assessments later on in the report. Types of tile tested 4.2 Eight notional 1 ha schemes were tested as follows: At 20 dph, 30 dph, 35 dph and 45 dph in Basingstoke/ Tadley – these reflect densities likely to be applicable in both Basingstoke’s urban extensions and in the more urban parts of the towns. Also at 20 dph, 30 dph, 35 dph, 45 dph in the remainder of the borough (i.e. in the market towns and rural areas) – whilst the lower densities are more likely to be applicable in these areas, the higher densities have been included for comparison. 4.3 The mix of market and affordable dwellings for each is set out in Annex 3. The higher density schemes have a greater number of smaller units, whilst in the 20 dph scheme, 75% of the market units are assumed to be 4 and 5 bed detached houses. 4.4 In all tests the affordable housing element has been modelled at a policy compliant 40% of total dwellings, split as 70% rented and 30% shared ownership. There are then two options for provision of the 70% affordable rented housing. In the first set of tests (i) Affordable Rent makes up 100% of the rented element while in the second test (ii), Affordable Rent makes up 75% of the rented element with the remaining 25% at social rent. Test (i) reflects the Council’s assessment of need for affordable housing generally and the fact that Affordable Rent has been identified by the Homes and Communities Agency as the ‘the main type of new housing supply’30. Test (ii) identifies the opportunity to increase social rented provision if viability permits and this is required to meet housing needs. All results for the testing of the 1 ha tiles (at all of the different densities and mixes of affordable housing) are set out in Annex 3. 4.5 The primary modelling is against the established £1m/ha and upper £1.3m/ha benchmarks. However, we also comment about values in relation to the sensitivity benchmark of £1.5m/ha. 1 ha tile – Basingstoke/Tadley results 4.6 The results presented below show the residual value of the 1 hectare scheme against the main benchmark land value of £1 million per hectare. The upper benchmark land value of £1.3m per hectare and the sensitivity benchmark of £1.5m are also shown. The different coloured columns represent the differing mix of affordable rented housing tested.
30 http://www.homesandcommunities.co.uk/ourwork/affordable-rent
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Figure 4-1: Basingstoke/Tadley – Notional 1 ha scheme at 20 dph 30 dph, 35 dph and 45 dph– Residual value per hectare in £000s, with affordable housing at 40% and showing the rental element at both i) 100% Affordable Rent and ii) 75% Affordable Rent / 25% social rent (NO CIL)
£2,500
£2,000
£1,500
£1,000
£500
£0 20 dph 30 dph 35 dph 45 dph Residual Residual Valueper Hectare in£000s Density
100% Affordable Rent 75% Affordable Rent / 25% Social Rent
Main Land Value Benchmark at £1.0m per hectare Upper Land Value Benchmark at £1.3m per hectare Sensitivity Land Value Benchmark at £1.5m per hectare
4.7 Commentary (noting that the results above do not allow for any CIL): Residual values vary with the density of development: the highest residual values are achieved with the 35 dph scheme and the lowest values with the 20 dph scheme. However, it is development at around 30 dph which will be more typical of future schemes in Basingstoke, especially the strategic sites, and this needs to be borne in mind in reviewing the results for the Basingstoke/Tadley market area. All scenarios, as tested at 40% affordable housing, exceed the main £1m/ha land value benchmark. At 20 dph, where residual values are lowest, the benchmark is exceeded by £346,000 (100% Affordable Rent) or £302,000 (75% Affordable Rent) against the main land value benchmark. The upper benchmark of £1,300,000 is also exceeded in all scenarios, although at 20 dph this is marginal at £46,000 (100% Affordable Rent) or £2,000 (75% Affordable Rent). When considering the £1.5m/ha sensitivity land value benchmark there is a negative residual land value of -£154,000 (100% Affordable Rent) and -£198,000 (75% Affordable Rent) at 20dph. However, at other densities the £1.5m/ha land value benchmark is exceeded. At 30 dph this is by £350,000 (100% Affordable Rent) or £283,000 (75% Affordable Rent), rising to £553,000 or £455,000 respectively at 35 dph.
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In all scenarios, residual values are marginally reduced when affordable rented housing includes a 25% element as social rent. 4.8 The results shown above do not allow for any CIL payment. The chart below shows the theoretical maximum amount of CIL that can be sought and the scheme remain viable. The following tables then detail the theoretical maximum CIL against the main £1m/ha benchmark (which is the key determinant of viability), the upper £1.3m/ha benchmark and the sensitivity test £1.5m benchmark. Figure 4-2a: Basingstoke/Tadley - Maximum CIL rates for the notional 1 ha scheme at 40% affordable housing – showing the rental element at both i) 100% Affordable Rent and ii) 75% Affordable Rent / 25% social rent
£500 £450 £400 £350 £300 £250 £200
Value) £150 £100 £50 £0 20 dph 30 dph 35 dph 45 dph
Maximum Maximum (Main CIL Benchmark Land Density
100% Affordable Rent 75% Affordable Rent / 25% Social Rent
(Main benchmark land value of £1m per hectare)
Figure 4-2b: Basingstoke & Tadley - Maximum CIL rates per sq m for the notional 1 ha scheme at affordable housing of 40% - with i) 100% of affordable rented housing as Affordable Rent and ii) 75% Affordable Rent / 25% Social Rent – Table of results based on main benchmark land value of £1m per hectare
Affordable 20 dph 30 dph 35 dph 45 dph Housing (40%) 100% Affordable £219 £403 £450 £410 Rent 75% Affordable £191 £371 £416 £369 Rent/25% Social Rent
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Figure 4-2c: Basingstoke & Tadley - Maximum CIL rates per sq m for the notional 1 ha scheme at affordable housing of 40% - with i) 100% of affordable rented housing as Affordable Rent and ii) 75% Affordable Rent / 25% Social Rent – Table of results based on upper benchmark land value of £1.3m per hectare
Affordable 20 dph 30 dph 35 dph 45 dph Housing (40%) 100% Affordable £29 £261 £319 £288 Rent 75% Affordable £1 £229 £285 £247 Rent/25% Social Rent
Figure 4-2d: Basingstoke & Tadley - Maximum CIL rates per sqm for the notional 1 ha scheme at affordable housing of 40% - with i) 100% of affordable rented housing as Affordable Rent and ii) 75% Affordable Rent / 25% Social Rent – Table of results based on sensitivity benchmark land value of £1.5m per hectare
Affordable 20 dph 30 dph 35 dph 45 dph Housing (40%) 100% Affordable - £98 £166 £232 £207 Rent 75% Affordable -£125 £134 £198 £166 Rent/25% Social Rent
Figure 4-2e: Basingstoke & Tadley - Maximum CIL rates per sqm for the notional 1 ha scheme at affordable housing of 40% - with i) 100% of affordable rented housing as Affordable Rent – results based on all benchmark land values
£500
£400
£300
£200
£100 Values) Values) £0 20 dph 30 dph 35 dph 45 dph (£100)
(£200)
Maximum Maximum (All CIL Benchmark Land Density
Main Benchmark @ £1,000,000 Upper Benchmark @ £1,300,000 Sensitivity Benchmark @ £1,500,000
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4.9 Commentary - The level of achievable CIL differs depending upon density as well as benchmark land value. As a very broad indicative average across the 4 development densities, a maximum CIL of around £191/£219 per sq m is realistic when using the main land value benchmark. This does not take into account the need to avoid setting a CIL rate that is at the margins of viability and that ‘a buffer’ should be allowed. The level of CIL that would be achievable for a 20dph scheme using the £1.3m/ha higher land value benchmark is marginal with a maximum of between £1 to £29 per sq m. Again this is not taking account of the need to avoid setting a CIL rate at the margins of viability and that a buffer should be used. However, higher densities are capable of supporting a CIL of at least £229/sq m against this upper benchmark. CIL is not shown to be achievable at 20dph against the sensitivity land value benchmark of £1.5m per hectare. However, higher densities are capable of supporting a CIL of at least £134/sq m against this benchmark. The level of CIL that could be charged will be lower in situations where the Council wants to provide some social rented housing. 1 ha tile – Rest of borough results 4.10 Residual values for the ‘Rest of the Borough’ for the 1 hectare scheme against the main benchmark land value of £1m per hectare; against the higher benchmark land value of £1.3m and the sensitivity benchmark of £1.5m are shown in the following charts, again with the different Affordable Rent levels of 100% and 75%.
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Figure 4-3: Rest of borough – Notional 1 ha scheme at 20 dph 30 dph 35 dph and 45 dph – Residual value per hectare in £000s, with affordable housing at 40% and showing the rental element at both i) 100% Affordable Rent and ii) 75% Affordable Rent / 25% social rent (NO CIL)
£3,500
£3,000
£2,500
£2,000
£1,500
£1,000
£500
£0 Residual Residual Hectare per Value in £000s 20 dph 30 dph 35 dph 45 dph Density
100% Affordable Rent 75% Affordable Rent / 25% Social Rent
Main Benchmark Land Value at £1.0m per hectare Upper Benchmark Land Value at £1.3m per hectare Sensitivity Benchmark Land Value at £1.5m per hectare
4.11 Commentary (noting that the results above do not allow for any CIL): Residual values again vary with the density of development and the highest residual values are achieved with the 35 dph scheme and the lowest at 20 dph. Both mixes of affordable rented housing comfortably exceed the main land value benchmark at all 4 densities. They are also in excess of the higher and the sensitivity land value benchmarks.
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Figure 4-4a: Rest of borough - Maximum CIL rates per sq m for the notional 1 ha scheme at affordable housing of 40% - with i) 100% of affordable rented housing as Affordable Rent and with ii) 75% Affordable Rent / 25% Social Rent – results based on main £1m/ha benchmark land value
£900 £800 £700 £600 £500 £400
£300 Value) £200 £100 £0 20 dph 30 dph 35 dph 45 dph
Maximum Maximum (Main CIL Benchmark Land Density
100% Affordable Rent 75% Affordable Rent / 25% Social Rent
Figure 4-4b: Rest of borough - Maximum CIL rates per sq m for the notional 1 ha scheme at affordable housing of 40% - with i) 100% of affordable rented housing as Affordable Rent and with ii) 75% Affordable Rent / 25% Social Rent – Table of results based on main benchmark land value of £1m per hectare
Affordable 20 dph 30 dph 35 dph 45 dph Housing (40%) 100% Affordable £620 £787 £841 £724 Rent 75% Affordable £592 £755 £807 £683 Rent/25% Social Rent
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Figure 4-4c: Rest of Borough - Maximum CIL rates per sqm for the notional 1 ha scheme at affordable housing of 40% - with i) 100% of affordable rented housing as Affordable Rent and with ii) 75% Affordable Rent / 25% Social Rent – Table of results based on upper benchmark land value of £1.3m per hectare
Affordable 20 dph 30 dph 35 dph 45 dph Housing (40%) 100% Affordable £430 £644 £711 £602 Rent 75% Affordable £402 £613 £677 £561 Rent/25% Social Rent
Figure 4-4d: Rest of Borough - Maximum CIL rates per sq m for the notional 1 ha scheme at affordable housing of 40% - with i) 100% of affordable rented housing as Affordable Rent and with ii) 75% Affordable Rent / 25% Social Rent – Table of results based on sensitivity benchmark land value of £1.5m per hectare
Affordable 20 dph 30 dph 35 dph 45 dph Housing (40%) 100% Affordable £304 £550 £624 £521 Rent 75% Affordable £275 £518 £590 £480 Rent/25% Social Rent
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Figure 4-4e: Rest of Borough - Maximum CIL rates per sqm for the notional 1 ha scheme at affordable housing of 40% - with 100% of affordable rented housing as Affordable Rent – results based on all land value benchmarks
£900 £800 £700 £600 £500 £400 £300 Values) Values) £200 £100 £0 20 dph 30 dph 35 dph 45 dph
Maximum Maximum (All CIL Benchmark Land Density
Main Benchmark @ £1,000,000 Upper Benchmark @ £1,300,000 Sensitivity Benchmark @ £1,500,000
4.12 Commentary: For the rest of the Borough outside of Basingstoke and Tadley, a level of CIL is possible at all scheme densities tested and for both mixes of Affordable Rented housing. The maximum amount of CIL varies with density: the lowest is at 20 dph with 75% Affordable Rented housing and the highest at 35dph with 100% Affordable Rented housing. The maximum amount of CIL that could be charged is £592/£620 using the main benchmark land value. This would be reduced to £402/£430 if the upper benchmark was used as comparator or £275/£304 if the sensitivity benchmark was used. These figures do not take into account the need to avoid setting a CIL rate that is at the margins of viability and with a ‘buffer’. 4.13 The level of CIL that could be charged will be lower if the Council wants to achieve a higher level of social rented housing. As a broad guide, if rented affordable housing includes 25% social rent the maximum CIL rate would be about £28 per sq m less than with 100% Affordable Rent. (See Annex 5 for details). Implications for CIL 4.14 The key determinant of the ability to support CIL is the viability against the standard £1m/ha benchmark. Overall, the viability testing for the 1 ha tiles clearly suggests that there should be separate rates for Basingstoke/Tadley and the Rest of the Borough. The higher values in the Rest of the Borough result in stronger viability across all of the densities tested. 4.15 Against the standard benchmark and with social rent included in the affordable housing tenures, a theoretical maximum CIL rate of £191/sq m can be supported in Basingstoke and Tadley. Approximately this level of CIL can also be supported against the upper benchmark,
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except for low density development; and a theoretical maximum rate of £134/sq m can be supported against the £1.5m/ha sensitivity test benchmark, again except for low density development. 4.16 Taking this into account, a CIL rate for Basingstoke and Tadley based on these 1ha tiles of £140/sq m may be reasonable as this provides over a 30% buffer for the lowest density (and least viable) 20 dph development against the standard £1m/ha benchmark. In addition, it would allow some social rent affordable housing within all but the 20 dph development at the upper benchmark; and would also allow higher density development (35dph and 45dph) to support this CIL and meet the higher sensitivity land benchmark of £1.5m/ha. 4.17 For the Rest of the Borough, a theoretical maximum CIL rate of £592/sq m can be supported against the standard benchmark and with social rent included in the affordable housing tenures. Approximately this level of CIL can also be supported against the upper benchmark, except for low density development; and a theoretical maximum rate of £275/sq m can be supported against the £1.5m/ha sensitivity test benchmark. 4.18 Taking this into account a CIL of £200/sq m may be reasonable in the Rest of the Borough: This provides over a 30% buffer against the upper benchmark. It can be supported by all except the lowest density development against the higher sensitivity benchmark of £1.5m/ha, with at least a 30% buffer. 4.19 These potential CIL rates are then considered against the case studies in the following sections of this report.
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5 RESIDENTIAL VIABILITY TESTING –BASINGSTOKE AND TADLEY SMALLER CASE STUDY SITES
Introduction 5.1 The viability assessments use a number of case study sites which reflect typical sites likely to be brought forward in the borough. The case studies were derived in consultation with the Council and draw on information about recent planning permissions and the type of development identified in the draft Local Plan. The large scale strategic sites are tested separately and reported later in this report. 5.2 Chapter 3 of this report discusses the two different value areas31 in the borough, and these value differentials are also used to help inform the case studies and how they are presented. This chapter discusses the case studies in Basingstoke and Tadley, which between them form one of the two value areas in the borough. The case studies in the remainder of the borough are discussed in the next chapter of the report. 5.3 Figure 5.1 below sets out the case study sites used for testing in Basingstoke and Tadley. Figure 5-1: Basingstoke and Tadley case study sites
Case Type Location Total Density (dph) Site Size Study Dwellings ha (net) 1 Single unit Basingstoke urban 1 33 0.03 2 Two units Basingstoke urban 2 50 0.04 3 Three units Basingstoke edge 3 33 0.09 4 Four units Basingstoke edge 4 36 0.11 5 Ten units Basingstoke edge 10 34 0.29 6 Fifty-Five units Basingstoke urban 55 45 1.22 7 Intermediate Development Basingstoke Edge 100 30 3.33 8 High density flatted scheme Basingstoke Urban 90 180 0.50 9 Sheltered housing scheme Basingstoke Urban 100 125 0.80 Flatted scheme (undercroft 10 Basingstoke Urban 100 143 0.70 parking) 11 Flatted Scheme (surface parking) Basingstoke Urban 100 95 1.05
5.4 There are various cost and value differences around the smallest case studies and therefore the case study testing is undertaken either side of the differences. These differences have been discussed in more detail in section 3 and are summarised as: Higher build costs for single dwellings, using BCIS ‘one off development’ build costs. 5% build cost premium for 2 and 3 dwelling developments. 5% ‘exclusivity’ premium for 1-3 dwellings.
31 Based on price paid data for new dwellings from Land Registry.
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5.5 Further detail about the profile of these case studies can be found in Annex 6. 5.6 The viability tests have been undertaken at 40% affordable housing, with the affordable tenures split 70% affordable rent and 30% intermediate. It is assumed that if provision is not made on site (e.g. smaller sites) then a commuted sum to the equivalent value is provided for provision elsewhere. 5.7 Residual values from the case studies are compared to the benchmark land values discussed in chapter 3. All case studies are compared to the standard Basingstoke and Deane benchmark of £1m per gross hectare and case studies 7, 8 and 9 are also compared to an intermediate benchmark of £0.7m. If the residual land value from a scheme is above the benchmark land value, then the scheme is considered viable and able to proceed. Commentary is also provided against the other benchmarks where appropriate. A full set of results for the case studies, across both market areas, is found in Annex 7. 5.8 The Basingstoke and Tadley discussion below is split into smaller case studies (numbered 1-5) of 10 dwellings or fewer and medium case studies (6-11) of 55 – 100 dwellings. Case studies 1-5 are assumed to be delivered within a year. Basingstoke and Tadley case study findings
Smaller Case Studies – Case Studies 1 - 5 5.9 The case study testing includes a number of smaller schemes in order to explore the viability implications of the higher build costs often associated with smaller sites. Figure 5.2 below illustrates the residual value per hectare for the smaller case study schemes. Overall, urban schemes (which are at a higher density) tend to have better values than the edge of settlement schemes; however the single urban dwelling was tested at 33dph and is clearly not viable, whilst the scheme of 2 dwellings on an urban site produces the highest residual value per hectare of the 5 smaller schemes but has a land take at 50 dph. Indeed, sites above 1 dwelling are in all cases comfortably above the main land value benchmark whether urban or edge. 5.10 With the exception of Case study 1 (single dwelling), all of the Basingstoke and Tadley case studies are also viable against the upper benchmark of £1.3m/ha and the sensitivity benchmark of £1.5m/ha, with viability headroom to support a CIL.
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Figure 5-2: Viability of small Basingstoke/Tadley schemes at 40% affordable housing
3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0
Residual Residual Valueper Hectare (500,000) (1,000,000) Case Study 1: Case Study 2: Case Study 3: Case Study 4: Case Study 5: 1 dwelling 2 dwellings 3 dwellings 4 dwellings 10 dwellings (BU) (BU) (BE) (BE) (BE) Case Study
BE = Basingstoke Edge; BU = Basingstoke Urban = Main Land Value Benchmark of £1m per Hectare
Implications for CIL for smaller sites 5.11 The viability testing considers the opportunities to charge CIL at different affordable housing proportions. In considering these theoretical maximum rates, it should be noted that the guidance suggests “Charging authorities should avoid setting a charge right up to the maximum of economic viability across the vast majority of sites in their area”32. 5.12 The analysis indicates that, with the exception of case study 1 (single dwelling), the case study sites have the capacity to pay significant CIL at 40% affordable housing. For these four schemes the theoretical ‘headroom’ varies from approximately £378 per sq m to £767 per sq m. 5.13 The 1 ha tile testing considered that a CIL rate of £140/sq m may be reasonable, taking into account a generous buffer. This rate can clearly be supported by these smaller case studies in Basingstoke and Tadley, with the exception of Case study 1 (single dwelling).
32DCLG, 2012, Community Infrastructure Levy Guidance para 30
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Figure 5-3 Summary of Basingstoke and Tadley smaller sites case studies
Case study Residual Benchmark land Theoretical value/ha value maximum CIL rate CS 1: 1 dwelling - -533,333 £1,000,000 -£590 urban CS 2: 2 dwellings - 3,300,000 £1,000,000 £767 urban CS 3: 3 dwellings - 2,188,889 £1,000,000 £457 edge CS 4: 4 dwellings - 2,254,545 £1,000,000 £500 edge CS 5: 10 dwellings 1,854,383 £1,000,000 £378 - edge
Medium Case Studies (case studies 6 – 11) 5.14 The medium case studies are intermediate sized schemes of between 55 and 100 dwellings and include 3 flatted schemes and a sheltered scheme, as well as mixed schemes of 55 and 100 dwellings. These schemes are indicative of the sorts of medium sized sites which are likely to be developed in Basingstoke. All are tested at 40% affordable housing. 5.15 Case study 6 (urban 55 dwelling scheme) includes an allowance of £50,000/net ha for decontamination/site clearance and Case study 7 (100 dwelling scheme) includes an allowance of £100,000 per net ha for opening up/site servicing. 5.16 Case studies 10 and 11 are the same number and type of dwellings, with Case study 10 having undercroft car parking and Case study 11 having surface car parking. Case study 10 has a smaller land take but additional costs while Case study 11 has a greater land take to accommodate the surface parking but without the higher undercroft parking cost. 5.17 Case study 9 is sheltered accommodation. This case study has been prepared in accordance with the RHG guidance relating to values and the relatively high proportion of common/circulation space, as well as specific BCIS build costs. 5.18 Figure 5.4 below illustrates the residual value per hectare for these case studies which, without CIL, and excepting the flatted schemes with parking (case studies 10 & 11), produce residual values above main £1m/ha land value benchmark. Case study 6 (55 dwellings) and Case Study 9
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(sheltered scheme) also exceed the sensitivity benchmark of £1.5m/ha and, along with Case study 7, exceed the £1.3m/ha upper benchmark. Figure 5-4: Viability of Basingstoke and Tadley medium case studies
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
(500,000)
Residual Residual Valueper hectare (1,000,000)
(1,500,000) CS6: 55 CS7: 100 CS8: 90 high CS9: CS10: 100 CS11: 100 dwellings dwellings density flats Sheltered flats (u'croft flats (BU) (BE) (BU) 100 flats parking) (surface (BU) (BU) parking) (BU) Case Study
BU = Basingstoke Urban: BE = Basingstoke Edge Main Land Value Benchmark of £1m
Implications for CIL for medium case studies 5.19 The viability testing has considered the opportunities to charge CIL for a range of medium sized developments. In considering these theoretical maximum rates, it should be noted that the guidance suggests “Charging authorities should avoid setting a charge right up to the maximum of economic viability across the vast majority of sites in their area”33. 5.20 Some, but not all, of the medium case studies are able to support CIL using a main land value benchmark of £1m per hectare and the results are shown in figure 5.5 below. Three sites were also compared with a sensitivity benchmark of £0.7m and these results are also illustrated below. Case studies 6 - 9 are able to support a maximum theoretical CIL between £20 per sq m and £390 per sq m (bearing in mind the guidance suggests that the rate charged should not be at these theoretical maximums). Case studies 10 and 11 (100 flats with either undercroft or surface parking) are not able to support CIL. 5.21 At the sensitivity land value benchmark of £0.7m applied to case studies 7 – 9 (100 dwellings; 90 high density flats; sheltered scheme of 100 flats respectively) CIL is able to be supported at £63 - £371 per sqm.
33DCLG, 2012, Community Infrastructure Levy Guidance para 30
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5.22 Overall it can be seen that of these medium case studies, ‘standard’ development in Case study 6 (55 dwellings) and Case study 7 (100 dwellings) is able to support the CIL rate of £140/sq m discussed within the 1 ha tiles. However, this rate cannot be supported by flatted schemes or sheltered accommodation. Summary of Basingstoke and Tadley medium scheme case studies Figure 5.5: Summary of Basingstoke and Tadley residual values and theoretical maximum CIL rates
Case study Theoretical Theoretical maximum CIL maximum CIL Affordable Residual Benchmark land rate per sq m rate per sq m housing value/ha value Main Sensitivity Benchmark Benchmark CS 6: 55 40% 1,962,610 £1,000,000 £390 dwellings (BU) (Main) CS 7: 100 £1,000,000 40% 1,430,984 £219 £371 dwellings (BE) (Sensitivity) £700,000 (Main) CS 8: 90 high £1,000,000 40% 1,144,774 £20 £63 density flats (BU) (Sensitivity) £700,000 (Main) CS 9: sheltered £1,000,000 scheme 100 flats 40% 1,641,176 £105 £154 (Sensitivity) (BU) £700,000 CS 10: 100 flats undercroft 40% -1,326,546 £1,000,000 -£413 parking (BU) CS 11: 100 flats surface parking 40% 605,701 £1,000,000 -£105 (BU)
Summary 5.23 The majority of case study schemes tested exceed the main land value benchmark of £1m. The schemes that are not clearly viable when the benchmark is applied are: The single dwelling on an urban site at 33 dph equivalent. The urban flatted schemes of 100 flats, either with undercroft or with surface parking. 5.24 The viability of the urban high density flatted scheme of 90 flats is weak, especially against the main land value benchmark. 5.25 The smaller case studies of 2 – 10 dwellings are the most viable and produce the highest theoretical CIL values of between £378 - £767 per sqm. The larger case studies fall below this, producing theoretical CIL values of £20 - £390 per sqm.
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5.26 The potential CIL rate of £140/sq m can be supported by most of the Basingstoke and Tadley case studies, except for single dwellings, flatted schemes and sheltered accommodation. Local Plan policy CN1 provides flexibility on affordable housing where sites are not viable and so it is still likely that these types of schemes will be able to progress. 5.27 It is likely that single dwelling developments will come forward as self-build schemes, which would be exempt from CIL.
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6. RESIDENTIAL VIABILITY ANALYSIS – REST OF BOROUGH SMALLER CASE STUDY SITES
Introduction 6.1 Following the discussion of the case study sites in Basingstoke and Tadley in the previous chapter, this chapter discusses the case studies in the Rest of the Borough. The table below sets out the case study sites used for testing in the Rest of the Borough. Figure 6-1: Rest of Borough case study sites
Case Type Total Density (dph) Site Size Study Dwellings ha (net) 12 1 dwelling 1 25 0.04 13 2 dwellings 2 25 0.08 14 3 dwellings 3 25 0.12 15 4 dwellings 4 25 0.16 16 Edge of small town/ village 10 10 34 0.29 dwellings
17 55 dwellings 55 35 1.57 18 Market town urban 100 35 2.86 extension 100 dwellings
6.2 Further detail about the profile of these case studies can be found in Annex 6. 6.3 The viability tests for the Rest of Borough schemes use policy compliant 40% affordable housing split 70% affordable rent and 30% intermediate. Again, it is assumed that if provision is not made on site (e.g. smaller sites) then a commuted sum to the equivalent value is provided for provision elsewhere. 6.4 Smaller case studies (numbers 12 to 16 in table 6.1 above) are assumed to be delivered within a year. The larger case studies (numbers 17 and 18 in table 6.1 above) are assumed to take more than one year to deliver. Benchmark Land Values
6.5 Residual values from the case studies are compared to the benchmark of £1m per gross hectare. If the residual land value from a scheme is above the benchmark land value, then the scheme is considered viable and able to proceed. Rest of Borough Case Study Findings 6.6 Figure 6.2 below illustrates the residual value per hectare for the Rest of Borough study schemes. With the exception of the single dwelling (case study 12) all of the schemes in the Rest of the borough are viable, being comfortably above the main land value benchmark, with the ten dwelling schemes (case study 16) showing the strongest viability.
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Figure 6-2: Rest of Borough schemes at 40% affordable housing
3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0
CS12: 1 CS13: 2 CS14: 3 CS15: 4 CS16: CS17: 55 CS18: Residual Residual Valueper Hectare dwelling dwellings dwellings dwellings Edge of dwellings Market small town town/ urban village 10 extension dwellings 100 dwellings Case Study (number & description)
Main land value benchmark of £1m
Implications for CIL for Rest of Borough sites
6.7 Figure 6.3 below illustrates the theoretical maximum CIL rate for the different Rest of Borough scheme case studies. Again, in considering these theoretical maximum rates, it should be noted that the guidance suggests “Charging authorities should avoid setting a charge right up to the maximum of economic viability across the vast majority of sites in their area”34. 6.8 With the exception of the single dwelling scheme, all of the schemes tested are able to support a CIL payment, with theoretical CIL of between £599 per sq m and £854 per sq m. The larger of the Rest of borough schemes (the 100 dwelling market town extension) has a theoretical maximum CIL rate of £599 per sq m and 10 dwelling schemes has a theoretical maximum CIL rate of £854 per sq m.
34DCLG, 2012, Community Infrastructure Levy Guidance para 30
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Figure 6-3 Potential for CIL for Rest of borough schemes
£1,000
£800
£600
£400
£200
Maximum Maximum rate CIL £0
(£200)
(£400) CS12: 1 CS13: 2 CS14: 3 CS15: 4 CS16: Edge CS17: 55 CS18: dwelling dwellings dwellings dwellings of small dwellings Market town/ town village 10 urban dwellings extension 100 dwellings Case Study (number & description)
Summary 6.9 The types of schemes anticipated to come forward in the Rest of the Borough show strong viability, with the exception of the 1 dwelling scheme. There is a set of scheme types (including the smaller and larger scheme types expected to come forward) in the Rest of the borough with sufficient viability to support a maximum CIL of between £599 per sqm and £854 per sqm. 6.10 Table 6.3 below summarises the maximum theoretical CIL rates for the different Rest of Borough case studies, along with the residual value per hectare.
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Figure 6-4: Summary of Rest of Borough residual values and theoretical maximum CIL rates
Case study Residual Benchmark Theoretical maximum value/ha land value CIL rate CS12: 1 dwelling £575,000 -£177 £1,000,000
CS13: 2 dwellings £2,812,500 £1,000,000 £833
CS14: 3 dwellings £2,433,333 £1,000,000 £735
CS15: 4 dwellings £2,625,000 £1,000,000 £747
CS16: Edge of small town/ village 10 £3,324,138 £1,000,000 £854 dwellings
CS17: 55 dwellings £2,526,746 £1,000,000 £665
CS18: Market town urban £2,372,840 £1,000,000 £599 extension 100 dwellings
6.11 The 1 ha tile testing considered that a CIL rate of £200/sq m may be reasonable in the Rest of Borough value area, taking into account a generous buffer. This rate can clearly be supported by these smaller case studies, with the exception of Case study 12 (single dwelling), which is not able to support a CIL. 6.12 Again, it is likely that single dwelling developments will come forward as self-build schemes, which would be exempt from CIL.
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7 STRATEGIC SITE CASE STUDIES
Introduction 7.1 Much of the housing proposed under the new Local Plan will be on strategic sites around Basingstoke. A number of the allocated sites have already come forward through the development control process and have been able to meet the policy requirement to provide 40% affordable housing. Of the remaining sites, many are planned to be large scale developments on greenfield sites and the Council has advised that the following strategic sites will provide representative typologies for the CIL viability testing: Manydown (SS3.10) Golf Course (SS3.11) Hounsome Fields (SS3.12) East of Basingstoke (SS3.9) Upper Cufaude Farm (SS3.8) 7.2 The strategic sites are tested at policy compliant 40% affordable housing, split 70% affordable rent 30% shared ownership. 7.3 The strategic sites will take some years to build out with revenues and costs occurring at different stages. The modeling therefore uses a discounted cash flow for the strategic sites, which takes account of the credit and debit balances as well as the time cost of money35.
Benchmark Land Value 7.4 The strategic sites are tested against the £0.4m/gross ha benchmark land value. This benchmark takes account of the low proportion of net developable land as well as the infrastructure and servicing costs associated with strategic sites. Unlike the smaller sites which include commentary against possible higher benchmarks, there is no evidence to suggest what a sensitivity test strategic site benchmark land value would be. Therefore, we take a cautious approach to suggesting CIL rates for the strategic sites. Site Characteristics 7.5 The new Local Plan has specific requirements for each of these sites and it is anticipated that each will require specific infrastructure. This infrastructure will be at a cost to development, either as part of the development process or through s106/278. The Council has worked with service providers to estimate the timing and costs of provision and these have been included within the viability testing. These specific costs are in addition to an allowance for ‘opening- up’, where £200,000 per net ha has been allowed for site servicing etc. This is in addition to the standard allowance for external works and for the residual s106/278 allowance of £1,500 per dwelling for local play etc.
35 Using the 3.5% Treasury rate
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7.6 The strategic sites will also provide greenspace and land for other uses, and the Council has provided a policy-compliant land budget for each site. All of the strategic sites have about 60% net developable area. 7.7 The timing of the housing delivery on these sites has an impact on viability. Delivery rates have been taken from the Updated Housing Land Supply Statement produced in 2015 by the Council as part of the Local Plan evidence base36. For some sites this will mean more than one developer providing houses at any one time. 7.8 Table 7.1 summarises the infrastructure requirements, land budgets and delivery rates for the five strategic site case studies, as provided by the Council.
36 http://www.basingstoke.gov.uk/content/doclib/1006.pdf
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Table 7.1 Strategic Site Characteristics
Site Total Total Density Net Self-build Gross Net to Housing Benchmark Opening up Site specific infrastructure dwellings self- site proportion site gross Delivery land costs/net Yr 0 = pre-delivery preparation. build size ha of net size Yr 0 = pre- value/gross ha Yr 1 = 1st year of delivery area ha ha delivery ha preparation. Yr 1 = 1st year of delivery Manydown 3,400 68 30 dph 113.33 2.27 183.56 62% 50 in yr1, £400,000 £200,000 £58,582,000 (£17,230/dwg) 200 in yr 2, 25% in 1st £1.5m strategic transport by 1st 300 in yr3, year and dwg 320pa 25% in 2nd Remaining £4.8m strategic thereafter year. transport over next five years then 310 Remainder £2.2m bus spread years 1-5 spread year £9.6m education in yr1, £7.6m 4 onwards in yr4, £7.6m in yr7 and £11.2m in yr8 Page 300 Page Remainder in line with development Golf Course 1,000 20 35 dph 28.57 0.57 46.95 62% 50 in yr1, £400,000 £200,000 £11,620,000 (£11,620/dwg) 100 in yr2, 25% in 1st £1.3m junction by 1st dwg 150pa year and £0.7m bus spread years 1-5 thereafter 25% in 2nd £2.5m education in yr1, £2.5 then 100. year. in yr2. Remainder Remainder in line with spread year development 4 onwards Hounsome 750 15 35 dph 21.43 0.43 42.78 58% 50 in yr1, £400,000 £200,000 £13,975,000 (£18,633/dwg) Fields 70pa 25% in 1st £5.5m junction by 1st dwg thereafter year and £0.525m bus spread years 1-5 25% in 2nd £1.9m education in yr1, £1.9m year. in yr2. Remainder Remainder in line with spread year development 4 onwards
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Site Total Total Density Net Self-build Gross Net to Housing Benchmark Opening up Site specific infrastructure dwellings self- site proportion site gross Delivery land costs/net Yr 0 = pre-delivery preparation. build size ha of net size Yr 0 = pre- value/gross ha Yr 1 = 1st year of delivery area ha ha delivery ha preparation. Yr 1 = 1st year of delivery East of 450 9 30 dph 15.00 0.30 26.28 59% 60 in yr1, £400,000 £200,000 £6,547,000 (£14,549/dwg) Basingstoke 110pa 25% in 1st £1m junction by 1st dwg thereafter year and £0.3m bus spread years 1-5 then 60 25% in 2nd £2.5 education in yr1. year. Remainder in line with Remainder development spread year 3 onwards Upper 390 0 30 dph 13.00 0.00 22.26 60% 50 in yr1, £400,000 £150,000 £4,557,000 (£11,684/dwg) Cufaude 70pa 25% in 1st £2.1m education in yr1 Farm thereafter year and £0.25m bus spread years 1-5 nd Page 301 Page then 60. 25% in 2 Remainder in line with year. development Remainder spread year 3 onwards
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Self Build 7.9 The strategic sites are expected to provide some self-build housing. For the purposes of this testing it is assumed that the density of the self-build plots will be the same as for the rest of the site (35 dph). In the absence of more detailed planning it is assumed that the land required for these self- build plots will be passed to a third party developer(s). Clearly the basis of these transfers will be subject to a commercial negotiation but for the purposes of this modelling we have assumed the urban sites benchmark land value of £1m/ha, which is equivalent to about £28,500 per plot to the strategic site main developer. Discussions with self-build developers elsewhere in England suggest that £28,500/plot is a conservative estimate of the value of self-build plots and we have assumed that any additional costs can be covered by additional value. Set against the value of the self-build plot will be the initial costs of the land and the servicing costs. For the initial costs we have assumed the same strategic greenfield benchmark land value of £400,000/ha and the £200,000/net ha opening up costs(site servicing), both of which will apply to the land used for self-build. It has been assumed that the self-build plots are free from any developer obligations. Strategic Sites Viability Findings 7.10 Taking the infrastructure/s106 costs into account, all of the five strategic sites tested achieve residual values above the strategic sites benchmark of £0.4m/ha and can therefore be considered viable, with some headroom to support a CIL. The Golf Course, which has the lowest infrastructure requirement on a per dwelling basis, has the strongest viability (residual value of just under £800,000/gross ha), closely followed by Upper Cufaude Farm (£776,000/gross ha). Hounsome Fields is the least viable of the strategic sites with a residual value of £520,000/gross ha.
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Figure 7.1 Strategic Sites Residual Value/gross ha
Strategic Site Land Value Benchmark at £0.4m per hectare
7.11 The theoretical maximum CIL that can be supported by the strategic sites varies between £54/sq m for Hounsome Fields and £178/sq m for the Golf Course and Upper Cufaude Farm. Figure 7.2 Theoretical Maximum CIL rate for the Strategic Sites
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Figure 7-3: Summary of strategic site residual values and theoretical maximum CIL rates
Case study Residual Benchmark Theoretical maximum value/ha land value CIL rate Manydown £617,581 £400,000 £105 Golf Course £799,351 £400,000 £178 Hounsome Fields £520,332 £400,000 £54 East of Basingstoke £697,466 £400,000 £144 Upper Cufaude Farm £775,802 £400,000 £178
Golf Course Benchmark Land Value 7.12 As part of the discussions in the 2015 development industry workshop, developers have argued that the Golf Course should be tested against a higher benchmark land value because it has a higher existing use value. Although the strategic site benchmark is considerably in excess of the Golf Course existing use value37 we have also tested the Golf Course against the £700,000/ha intermediate land value benchmark and the £1,000,000/ha standard urban sites benchmark. Against the £0.7m/ha benchmark the site remains viable and able to support a theoretical maximum CIL of £44/sq m Against the £1.0m/ha benchmark the site is not viable and is unable to support a CIL. However, the £1.0m/ha benchmark is appropriate for sites with a high net to gross developable area, unlike the Golf Course, which has 62% net developable area. If the benchmark is applied to the residual value per net developable area, then the site remains viable and able to support a theoretical maximum CIL of £139/sq m. Implications for CIL Rates 7.13 It is reasonable to take a cautious approach to setting a CIL rate for the strategic sites as they are important for the delivery of the Local Plan and it is possible that further costs may legitimately be borne by these sites as plans progress. As discussed above the increases in house prices may have raised landowner expectations but there is no clear evidence about what a sensitivity benchmark may be. Based on the analysis above and taking into account a significant ‘buffer’ it seems reasonable to consider CIL rates for the strategic sites as follows: Hounsome Fields £30/sq m. This represents a buffer of 44% against the theoretical maximum rate for this site. Manydown £60/sq m. This represents a buffer of 43% against the theoretical maximum rate for this site. Other Strategic sites £80/sq m. This represents a buffer of 44% for East of Basingstoke and higher buffers for the Golf Course and Upper Cufaude Farm (c.55%).
37 A 2015 independent valuation of the Golf Course has been provided by the developers on a confidential basis.
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7.14 These buffers of c.44% are substantially above the 30% buffer often seen as part of CIL charge setting, and reflect the importance of these sites, the potential changes in site costs and the possible land value expectations. 7.15 The potential CIL rate of £80 /sq m for the Golf Course also represents a buffer of 43% against the £1.0m/net ha benchmark.
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8 RESIDENTIAL VIABILITY CONCLUSIONS
Introduction 8.1 The 2014 Draft Charging Schedule (DCS) proposed residential CIL rates as follows: Development Type DCS proposed CIL rate Manydown £0/sq m Other strategic sites £65/sq m Other locations in the Basingstoke and Tadley value area £70/ sq m Rest of Borough £150/sq m Care homes/sheltered housing/extra care £0/sq m
8.2 Since that time the key changes have been in terms of values and costs. In particular, market house prices have risen in the Borough, as they have elsewhere. The value of affordable housing has also increased compared to the testing undertaken in 2013, partly due to increased rents but also the capitalisation – despite some current concerns about the value of affordable housing following the 2015 budget and the Housing and Planning Bill. The value of shared ownership has also increased as the sold component has increased in value with market housing. Adjustments to some dwelling sizes and dwelling mix have meant that the built floor area has also increased slightly, which provides more revenue per ha of land. Against this, build costs have also increased significantly although finance rates have fallen, reflecting the very low cost of borrowing. Marketing costs have fallen slightly in the strong market. For very small sites (single dwellings) much higher build costs are now used reflecting national concerns about the costs faced by these types of development. 8.3 More locally there has been considerably more work to estimate the direct and land costs of policy compliant development on strategic sites. This provides more detail for the testing of development on these types of locations. 8.4 The net effect of these changes is that development is more viable in Basingstoke and Deane than it was when originally tested in 2013. 8.5 The viability headroom from which CIL (or other planning obligations) are drawn is the difference between the scheme residual value and the land value. The main benchmark land values used in the testing have remained the same as in 2013, despite these other changes noted above. The viability evidence used to support the Local Plan through examination in 2015-16 relied upon these benchmarks and it would make little sense to discard them at this stage. However, the increases in net values of residential development will have fuelled landowner’s expectations of land values and it is prudent to take this pressure into account when considering CIL rates. Implications for Residential CIL Rates 8.6 The testing of 1 ha tiles suggested that a Basingstoke and Tadley residential CIL rate of £140/sq m and a Rest of Borough residential CIL rate of £200/sq m could comfortably be supported. The case study testing then confirmed that these rates could be supported by most development, with notable exceptions being:
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Single dwelling developments, which are unable to support any CIL in Basingstoke and Tadley, or in the Rest of Borough Flatted schemes in Basingstoke and Tadley, where of the three schemes tested, one was marginal, one was unviable and one was able to support a lower CIL Sheltered accommodation in Basingstoke and Tadley, which is able to support a lower CIL The strategic sites tested, which were able to support a variety of different lower CIL rates. The site with the least ability to support a CIL is Hounsome Fields (because of the higher infrastructure costs) although it is understood that this site may come forward before CIL is introduced. 8.7 If the Council wish to continue using the rates proposed in the Draft Charging Schedule then with some adjustment these rates remain within the development viability reported here. However, rates can be increased in line with the strengthened viability, taking into consideration the likely upward pressure on land value expectations. This would use the main £140/sq m for Basingstoke and Tadley and £200/sq m for the Rest of Borough, with a zero rate for single dwellings, wholly flatted schemes and sheltered accommodation; and £30/sq m for Hounsome Fields, £60/sq m for Manydown and £80/sq m for the other strategic sites. All of these rates include a buffer to take account of variations in values and costs, and to ensure development is not jeopardised. 8.8 It should be noted that proposed national policy changes that will broaden the definition of affordable homes to include starter homes (80% of market value is proposed) will further strengthen the viability of development and provide additional value to the landowner. 8.9 These potential new rates are summarised in the table below. Potential new rates Proposed CIL Notes rate/sq m Hounsome Fields strategic site £30 New rate Manydown strategic site £60 New rate Other strategic sites £80 New rate Care homes/sheltered housing/extra care £0 New rate Single dwellings £0 New rate Wholly flatted schemes £0 New rate Other development in the Basingstoke and Tadley value £140 As DCS area Other development in the Rest of Borough £200 New rate
8.10 A separate, low rate of CIL could be charged for sheltered housing, if required. 8.11 Regard might also be given to neighbouring CIL rates, although this should be undertaken with caution as planning policies (especially affordable housing) as well as local values will have an impact; and not all these rates have been through examination: The highest neighbouring rates are in Wokingham and are between £300-£365/sq m Many of the other rates are c.£100 to £180/sq m There are zones in most neighbouring authorities that are under £90/sqm
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8.12 In this context a Basingstoke and Tadley rate of £140/sq m would be in the range of neighbouring area rates, albeit at the top end of the rates for lower value areas in each district. A Rest of Borough rate of £200/sq m would also be in the range of neighbouring area rates, including the rates for higher value areas in each district. Monitoring and review 8.13 The analysis in this report has used current values and costs, as promoted in the guidance. But we and the Council are aware that both can change over time. It is important that the Council keeps values and costs under review. We recommend that the main build costs and market and rental values are monitored regularly (at least annually) using published sources and that the development industry is consulted on these and other changes that can affect viability (e.g. interest rates and developer returns). A sustained change in the key variables should trigger a review of CIL and/or the affordable housing policy. In any case, the Council should consider a regular review of CIL (say in 3 to 5 years’ time) but noting that a review does not have to lead to a revised rate.
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9. NON-RESIDENTIAL
Introduction 9.1 The non-residential viability testing covers the following uses: Retail Offices Industrial Warehouse Hotels Mixed leisure Care homes 9.2 These uses have been tested through the following case studies, which have been developed in discussion with Basingstoke and Deane Borough Council officers to be representative of the types of development likely to come forward under the draft Local Plan. 9.3 Values have been based on transactions listed by Co-Star Suite (lettings and investments). Where possible these have been Basingstoke and Deane specific transactions (comparison retail, office and industrial/warehouse) but for some uses data had been drawn from analogous developments in other areas (convenience retail, care homes, leisure) in order to broaden the base for the estimates used here. Build costs have been drawn from BCIS. 9.4 These uses, along with the costs and values, were discussed at the non-residential development industry workshop in 2015 and some values have been amended to reflect these discussions. Where specific alternative build costs based on recent local experience were put forward by the development industry we have modelled these as well as the BCIS build costs. BCIS costs have been updated to January 2016 where used. 9.5 It is notable that BCIS build costs have increased significantly for non-residential development and this has had some impact on viability. For example, in the 2013 viability testing the build costs for small convenience was £730/sq m, which has now risen to £1,350/sq m; and supermarkets have risen from £944/sq m to £1,722/sq m.
Retail 9.6 Retail case studies include convenience and comparison, in and out of town centre. 9.7 Basingstoke town centre has a strong retail offer and we note that Festival Place sold in December 2015 with a value per sq m of £213/sq m and a yield of 6.02%. 9.8 In the past leases to the main supermarket operators have commanded a premium with investment institutions. Although there are some small regional variations on values, they are reasonably standard across the country with investors focusing primarily on the strength of the operator covenant and security of income. As a result, it is reasonable to use a broad geographical evidence base for convenience retail.
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9.9 There has been a structural change in convenience retailing in recent years with an end to the expansion of the largest format convenience retailing and more emphasis on smaller supermarket formats (as used by both discount and premium convenience operators) and greater provision of small format stores, often within the Sunday trading threshold (280 sq m display floor area), also often in existing floorspace. These changes reflect the alterations in shopping habits. Town Centre Comparison Retail - The case study is a two storey development of 800 sq m, which may be split into two or more units within Basingstoke town centre38. Based on discussion within the development industry workshop this retail development is tested at premium values (as seen in Festival Place in Basingstoke), at 2nd tier values (Wote Street) and at third tier values (‘top of the town’, London Road and Winchester Street, plus Basing View). The potential locations for development in the premium and 2nd tier locations are likely to be already built sites and so the land values used have been existing use values for lower density schemes attracting the next tier’s values. So for example, the existing use of an extension to the premium tier will be the value of 2nd tier retail at a half the density of development, and so on. For the third tier town centre retail scheme, an industrial land value has been assumed based on the potential site uses. Out of Centre Comparison Retail/Retail Warehouse - The case study is a development of retail warehouse multiple units totalling 6,000 sq m over one storey, located on a new or existing retail park (such as those at Hatch Warren or Brighton Hill)39. These have been tested using the appropriate build costs from BCIS as well as build costs provided as part of the development industry workshop. Small Convenience Retail - A development of 300 sq m (which fits within the Sunday trading threshold40of maximum 280 sq m floor area for serving customers). This may be in a variety of locations including the proposed urban extensions (some of which provide for local centres)41. Supermarket – A development of 1,100 sq m in an out of town centre location or as part of one of the urban extensions. Superstores/supermarkets are defined as shopping destinations in their own right where weekly food shopping needs are met and which can also include non-food floorspace as part of the overall mix of the unit42.
38 In terms of what constitutes a retail ‘centre’, Basingstoke and Deane Borough Council has undertaken separate work as part of the Local Plan process identifying town centre boundaries on a functional basis, and these could be used as suitable boundaries for a charging schedule. 39 Retail warehouses are large stores specialising in the sale of household goods (such as carpets, furniture and electrical goods), DIY items and other ranges of goods, catering for mainly car-borne customers. This definition was suggested as part of the Wycombe CIL examination report December 2012 40 Sunday Trading Act 1994 41 New small convenience retail may take place in town centre locations although this is often in existing premises and therefore exempt from CIL. 42 This definition builds upon a Competition Commission investigation into supermarkets (Supermarkets: A report on the supply of groceries from multiple stores in the United Kingdom, 2000, Competition Commission – section 4), and was also suggested as part of the Wycombe CIL examination report December 2012.
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Offices 9.10 Office case studies include business park and town centre. Town centre offices – the case study is a four storey development of 2,000 sq m which may be split into two or more units. In line with the emerging Local Plan it is expected that this may take place on Basing View. These have been tested using the appropriate build costs from BCIS as well as build costs provided as part of the development industry workshop. Out of Centre Offices – the case study is a two storey development of 1,500 sq m which may be split into two or more units. In line with the emerging Local Plan it is expected that this may take place on one of the existing employment locations such as Chineham. These have been tested using the appropriate build costs from BCIS as well as build costs provided as part of the development industry workshop.
Industrial and Warehouse 9.11 We have tested two schemes which cover these types of development. Smaller industrial/warehouse – 1,600 sq m over one storey on an existing or new business park (such as Kingsland). These have been tested using the appropriate build costs from BCIS as well as build costs provided as part of the development industry workshop. Larger warehouse/industrial– 5,000 sq m over one storey on an existing or new business park (such as Kingsland). 9.12 While some forms of this development can be larger still such as logistics centres (with some local examples), Basingstoke and Deane is not a focus for this type of activity and none is planned in the emerging Local Plan.
Hotels 9.13 Nationally, there has been significant growth in the provision of budget hotels43, with relatively few full service hotels outside the major conurbations. The most likely hotel development in Basingstoke is a budget hotel and the testing has used a budget hotel development of 70 rooms over two storeys (total 2,450 sq m), in an out of centre location (business park or Basing View). This has been tested using the appropriate build costs from BCIS as well as build costs provided as part of the development industry workshop.
Mixed Leisure 9.14 The mixed leisure case study is a 3,800 sq m development with cinema and other leisure uses, in an out of centre location.
43 The British Hospitality Association Trends and Developments Report 2012 indicates that budget hotels are defined as a property without an extensive food and beverage operation, with limited en-suite and in-room facilities (limited availability of such items as hair dryers, toiletries, etc.), low staffing and service levels and a price markedly below that of a full service hotel.
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Care Homes 9.15 There has been significant private sector investment in care homes in the past, fuelled by investment funds seeking new returns. However, there have been concerns about the occupancy rates and the ability to sustain prices. 9.16 The care home case study is a 3000, sq m 60 bedroom development in an out of centre location. Land values for non-residential development 9.17 The approach taken for non-residential benchmark land values is based on existing use values with a premium as appropriate. This takes into account the likely location for this development and whether it is likely to have a cleared site or an existing occupied use. The available information on land values is discussed in section 3. Based on this discussion we have used industrial values for offices, industrial;/warehouse, third tier comparison shopping, leisure, care homes and budget hotels. Supermarkets are tested against £4m/ha based on the development industry workshop discussion, small convenience stores are tested against the £1m/ha lower residential benchmark and retail warehouses are tested against £2m/ha as in the 2013 testing. 9.18 For town centre retail development it is reasonable to expect that any site will be occupied by another user. Therefore the benchmark land value will be the existing use value and there will be demolition costs etc. Town centre retail viability therefore uses the costs of making the site available (EUV plus demolition and transaction costs) as the benchmark rather than any per ha equivalent. Local Plan policy viability implications 9.19 Section 2 of this report considers the emerging Local Plan policies and their viability implications. This highlighted that non-residential development should meet BREEAM Excellent standard for water. This aims to reduce the consumption of potable water for sanitary use in new buildings from all sources through the use of water efficient components and water recycling systems. 9.20 A review of costs associated with BREEAM Excellent44 notes that there can be significant variances, although when the standards are built in from an early part of the design process the uplift is lower. Generally, the evidence suggests an uplift in building costs is between 1.5% and 2.5% for BREEAM Excellent. Basingstoke and Deane Borough Council standards relate to sustainable water only, and no evidence has been uncovered as to what proportion of the total expected uplift in costs might be attributed to this aspect. An allowance has been made of 2% of base build costs to meet this water efficiency standard, which is a generous estimate. 9.21 Based on discussion with Basingstoke and Deane Borough Council allowances have been made in the viability testing for s106/s278 obligations that may remain post CIL. These obligations have been included as costs to development in the viability testing.
44 Target Zero, RICS, Price of Sustainable Schools, EC Harris, BRE/Cyril Sweett, Bristol City Council
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Non-residential values 9.22 Non-residential values in Basingstoke and Deane have been estimated based on lease and sale transaction data drawn from Focus Suite. Where there has been a reasonable number of local transactions (such as comparison shops, offices and offices) the estimates have been able to rely on a specific local perspective. For some uses such as supermarkets, care homes and leisure the data has had to be drawn from further afield. Non-residential costs and values 9.23 The tables below summarise the values and costs used in the viability testing.
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Figure 9-1: Non-residential values and costs
Out of centre Out of centre Town centre Town centre Industrial/ Industrial/ offices BCIS offices local offices BCIS offices local warehouse warehouse Warehouse/ costs costs costs costs units BCIS costs units local costs industrial units Floorspace sqm 1,500 1,500 2,000 2,000 1,600 1,600 5,000 Storeys 2 2 4 4 1 1 1 Site coverage 40% 40% 75% 75% 40% 40% 40% Rent/sqm £151 £151 £156 £156 £86 £86 £86 Yield 7.50% 7.50% 8.25% 8.25% 7.50% 7.50% 7.50% Purchaser costs % GDV 5.80 5.80 5.80 5.80 5.80 5.80 5.80 Build costs/sqm including water efficiency £1,439 £1,683 £1,767 £1,836 £826 £791 £702 External works % of base build costs 10% 10% 10% 10% 10% 10% 10%
Page 314 Page Professional fees 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% Sales and letting costs % of GDV 3% 3% 3% 3% 3% 3% 3% Allowance for s106 (not covered by CIL) £20,000 £20,000 £0 £0 £20,000 £20,000 £50,000 Finance costs 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% Build and void period (months) 46 46 50 50 20 20 32 Developer return % GDV 20% 20% 20% 20% 20% 20% 20% SDLT & agent fees/sqm (if viable) £0 £0 £0 £0 £0 £0 £0
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Out of centre Out of centre Town centre Town centre Town centre comparison comparison Small comparison comparison comparison shops BCIS shops local convenience shops tier 1 shops tier 2 shops tier 3 costs costs store Supermarket Floorspace sqm 800 800 800 6,000 6,000 300 1,100 Storeys 2 2 2 1 1 1 1 Site coverage 80% 80% 80% 40% 40% 40% 40% Rent/sqm £213 £165 £130 £194 £194 £150 £175 Yield 6.02% 7.00% 8.50% 7.00% 7.00% 7.50% 5.50% Purchaser costs % GDV 5.80 5.80 5.80 5.80 5.80 5.80 5.80 Build costs/sqm including water efficiency £1,264 £1,264 £1,264 £842 £1,020 £1,350 £1,722 External works % of base build costs 10% 10% 10% 10% 10% 10% 10% Professional fees 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% Sales and letting costs % of GDV 3% 3% 3% 3% 3% 3% 3% Page 315 Page Allowance for s106 (not covered by CIL) £0 £0 £0 £500,000 £500,000 £0 £100,000 Finance costs 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% Build and void period (months) 24 24 24 26 26 6 20 Developer return % GDV 20% 20% 20% 20% 20% 20% 20% SDLT & agent fees/sqm (if viable) £14 £0 £0 £38 £24 £0 £0
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Budget hotel Budget hotel Leisure BCIS costs local costs Care home development
Floorspace sqm 2,450 2,450 3,000 Floorspace sqm 3,800 Storeys 3 3 2 Storeys 2 Site coverage 50% 50% 40% Site coverage 80% Capital value per room £87,500 £87,500 £118,000 Rent/sqm £90 Purchaser costs % GDV 5.80 5.80 5.80 Yield 8.00% Purchaser costs % Build costs/sqm including water efficiency £1,260 £1,894* £1,670 GDV 5.80 Build costs/sqm including water External works % of base build costs 10% 10% 10% efficiency £1,513 External works % of
Page 316 Page Professional fees 12.00% 12.00% 12.00% base build costs 10% Sales and letting costs % of GDV 3% 3% 3% Professional fees 12.00% Sales and letting costs Allowance for s106 (not covered by CIL) £10,000 £10,000 £75,000 % of GDV 3% Allowance for s106 Finance costs 6.0% 6.0% 6.0% (not covered by CIL) £20,000 Build and void period (months) 16 16 12 Finance costs 6.0% Build and void period Developer return % GDV 20% 20% 20% (months) 12 Developer return % SDLT & agent fees/sqm (if viable) £7 £0 £0 GDV 20% *The workshop discussion provided a cost per room, which we have expressed on a SDLT & agent sq m basis fees/sqm (if viable) £0
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Summary viability assessments 9.24 The tables below summarise the results from the detailed assessments for each non-residential development type. They provide the following information Net value per square metre. Net costs per square metre - including an allowance for land cost and s106 to deal with site specific issues (e.g. On-site highways, travel plan etc. to make development acceptable). Residual value per sq m (i.e. Value less costs). The land value benchmark for that use - presented £s per sq m of development to take into account differences in site coverage and the number of storeys for the notional developments. The viability headroom and maximum potential for CIL. 9.25 It is important to note that the analysis considers development that might be built for subsequent sale or rent to a commercial tenant. However, there will also be development that is undertaken for specific commercial operators, either as owners or pre-lets. In these circumstances the economics of the development relate to the profitability of the enterprise accommodated within the buildings rather than the market value of the buildings.
B Class Uses – Offices, industrial and warehouses 9.26 The viability assessments indicate that all of these B class uses produce a negative residual value, and that it makes no difference in outcome between the costs from BCIS or those provided at the workshop. There is no possibility of charging CIL. The lack of viability for B class uses is common across many areas of the country. Figure 9-2: Offices
Out of Out of centre centre Town centre Town centre offices BCIS offices local offices BCIS offices local costs costs costs costs Value per sq m £1,808 £1,808 £1,698 £1,698 Costs per sq m £2,638 £3,014 £3,147 £3,256 Residual per sq m -£830 -£1,206 -£1,450 -£1,558 Land benchmark per sq m £93 £93 £25 £25 Viability 'headroom' per sq m – theoretical maximum CIL -£923 -£1,299 -£1,474 -£1,583
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Table 9-3 Industrial and Warehouses
Industrial/ Industrial/ warehouse units warehouse units Warehouse/ BCIS costs local costs industrial units Value per sq m £1,031 £1,031 £1,031 Costs per sq m £1,378 £1,329 £1,259 Residual per sq m -£348 -£299 -£229 Land benchmark per sq m £185 £185 £185 Viability 'headroom' per sq m – theoretical maximum CIL -£533 -£484 -£414
Retail uses 9.27 The viability of retail development will depend primarily on occupier demand and the type of retail being promoted. For this reason we have tested different types of retail provision. 9.28 Supermarkets and local convenience – convenience retailing is defined as the provision of everyday essential items, including food, drinks, newspapers/magazines and confectionery; and within this larger stores provide the range required for weekly shops and smaller stores provide more of a ‘top-up’ function. 9.29 In 2013, convenience retail was considered sufficiently viable to support a CIL. However, this is no longer the case, mainly due to a significant increase in build costs. Figure 9-4: Convenience retail
Small convenience store Supermarket Value per sq m £1,796 £2,857 Costs per sq m £2,166 £3,100 Residual per sq m -£370 -£243 Land benchmark per sq m £250 £1,000 Viability 'headroom' per sq m – theoretical maximum CIL -£620 -£1,243
9.30 Town centre comparison retail –we have tested town centre retail in three value areas and in none of them is the viability strong enough to support a CIL. The highest value location does produce a positive residual value but insufficient to meet the benchmark. 9.31 Retail warehouse – on the advice of the development industry retail warehouses have been tested at BCIS costs and at locally provided costs. Based on BCIS costs the development is viable and able to support a theoretical maximum CIL of just over £104. However, if the locally derived higher build costs are used then the development is not viable. A positive residual value is produced under both cost bases.
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Figure 9-5: Town centre comparison retail
Town Centre tier Town Centre tier Town Centre tier 1 2 3 Value per sq m £3,177 £2,117 £1,373 Costs per sq m £2,496 £2,237 £2,075 Residual per sq m £681 -£121 -£702 Land benchmark per sq m £1,326 £908 £46 Viability 'headroom' per sq m – theoretical maximum CIL -£645 -£1,029 -£748 Tier 1 Festival Place; Tier 2 Wote Street; and Tier 3 ‘top of the town’, London Road and Winchester Street, plus Basing View.
Figure 9-6: Out centre comparison retail/retail warehouse
Retail Retail Warehouse Warehouse BCIS costs local costs Value per sq m £2,484 £2,484 Costs per sq m £1,881 £2,115 Residual per sq m £604 £370 Land benchmark per sq m £500 £500 Viability 'headroom' per sq m – theoretical maximum CIL £104 -£130
Other Uses 9.32 The other uses tested include hotels, mixed leisure developments and care homes. 9.33 Hotels –budget hotels were tested. Under the BCIS costs development is viable and able to support a CIL. However, using the higher locally derived build costs suggest that it is not viable. 9.34 Mixed leisure – the mixed leisure scheme is not viable and is unable to support a CIL 9.35 Care homes – the care home case study scheme tested here is not viable and is unable to support a CIL. Figure 9-7: Other uses
Budget hotel Budget hotel Leisure BCIS costs local costs development Care home Value per sq m £2,363 £2,363 £1,010 £2,231 Costs per sq m £2,233 £3,083 £2,236 £2,730 Residual per sq m £130 -£721 -£1,225 -£499 Land benchmark per sq m £49 £49 £46 £93 Viability 'headroom' per sq m – theoretical maximum CIL £80 -£770 -£1,272 -£592
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Sensitivity 9.36 It is likely that costs and values will change in the future and a set of sensitivity tests have been run to determine at what point viability changes. This indicates that: A 10% increase in values would see the viability become stronger but the only change in viability is retail warehousing, which becomes viable even under the higher locally-derived costs. A 15% increase in values would further improve viability again but no other uses have become viable at this stage. A 20% increase in values would further improve viability again but no other uses have become viable at this stage. A 5% increase in costs reduces viability and only the retail warehousing with BCIS costs remains marginally viable. A 10% increase in costs would see all non-residential development unviable. A 5% decrease in costs would see viability strengthen but no other uses become viable at this stage. Other Uses 9.37 The viability testing has been based on the development expected to come forward and discussions with the development industry. It is acknowledged that there are other uses that could arise and it is recommended that the following approach is taken: A2 Financial and Professional Services – treat as A1 in viability terms as many of these uses are likely to occupy the same sorts of premises as some town centre retail. A3 Restaurants and Cafes – again treat as A1 in viability terms as many of these uses are likely to occupy the same sorts of premises as some town centre retail. A4 Drinking Establishments - again treat as A1 in viability terms as many of these uses are likely to occupy the same sorts of premises as some town centre retail. A5 Hot Food Takeaways - again treat as A1 in viability terms as many of these uses are likely to occupy the same sorts of premises as some town centre retail. Selling and/or displaying motor vehicles - sales of vehicles are likely to occupy the same sorts of premises and locations as many B2 uses and therefore the viability will be covered by the assessment of the viability of B2 uses. Retail warehouse clubs – these retail uses are likely to be in the same type of premises as the out of town A1 retail uses and covering the same purchase or rental costs. Nightclubs – these uses are likely to be in the same type of premises as A1 town centre retail uses and covering the same purchase or rental costs. Scrapyards – there may be new scrapyard/recycling uses in the future, particularly if the prices of metals and other materials rise. These are likely to occupy the same sorts of premises as many B2 uses and therefore the viability will be covered by the assessment of the viability of B2 uses.
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Taxi businesses – these uses are likely to be in the same type of premises as A1 town centre retail uses and covering the same purchase or rental costs. Therefore, they are covered by this viability assessment. Amusement centres – these uses are likely to be in the same type of premises as A1 town centre retail uses and covering the same purchase or rental costs. Therefore, they are covered by this viability assessment. 9.38 For community facilities that are ultimately paid for by the public sector such as community centres, health centres, hospitals and schools there is a relatively simple approach. The commercial values for community uses are £0 but there are build costs of around £2,400 to £2,900 per sq m45 plus the range of other development costs; with a net negative residual value. Therefore, we recommend a £0 CIL for these uses. Summary and Ability to Support a CIL Charge 9.39 The graph below summarises the viability ‘headroom’ for each of the non-residential uses tested. 9.40 When considering the graph below it should be noted that, while the testing suggests that some types of development are not viable, developments of these types may still be brought forward for individual occupiers to meet their specific requirements.
45 Based on BCIS September 2013 – Hospitals, Community Centres, Schools and Libraries
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Figure 9-7: Non-residential viability summary – viability ‘headroom’ in £s per sq m
Ability to support a CIL 9.41 The decision on the level of CIL needs to be informed by this evidence but ultimately taken by Basingstoke and Deane Borough Council. In theory the amount a scheme can afford to contribute CIL is to a maximum of all of the difference between the residual value and the threshold land value after taking into account all costs. However, it is clear from the guidance that it is not appropriate to charge up to the maximum viability headroom in order to allow for
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margins of error and the likelihood of different costs and values affecting different locations and sites. 9.42 The analysis above has demonstrated that of the non-residential development types considered, only out of centre retail uses and budget hotels are currently able to support a CIL based on standard BCIS build costs. If the locally derived build costs are used, then no non- residential development is able to support a CIL. 9.43 In 2013 other retail uses were able to support a CIL. However, the changes in BCIS build costs have rendered these types of development unviable currently. 9.44 Basingstoke and Deane Borough Council, in deciding on the CIL rates it wishes to set, should take into account the suggested maximum rates set out in the figure and individual appraisal tables above, along with an allowance for variations in costs and values. It would be possible to set a CIL rate of approximately £40-£50/sq m CIL (based on a ‘buffer’ of approximately 50%46) for out of centre retail uses and budget hotels although this would require that the locally-provided build costs are put aside. Alternatively, the Council may decide that the combination of the locally provided build costs and the likely limited amount of retail warehouse and budget hotel development in the short term means that the case for a CIL on these uses is not clear and therefore the rate for all non-residential development should be £0.
46 Note that this is an arbitrary amount based on prudence rather than informed by specific requirements, although the CIL guidance is clear that some ‘buffer’ is required.
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ANNEX 1 - LOCAL PLAN POLICY VIABILITY IMPLICATIONS
This annex is presented separately due to its size. The findings are summarised within Section 2 of the report.
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ANNEX 2 - DEVELOPMENT INDUSTRY WORKSHOPS
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Basingstoke and Deane Borough Council –Community Infrastructure Viability Study Notes of the Development Industry Workshop – Monday 13th July 2015 Two workshops were held – in the morning focusing on residential development and in the afternoon on commercial land uses – this note covers the residential session. Morning workshop – Residential
Attending Jill Fisher Basingstoke and Deane Borough Council (JF) Mark Lambert Basingstoke and Deane Borough Council (ML) Alison Young Basingstoke and Deane Borough Council (AY) Tim Davis Basingstoke and Deane Borough Council (TD) Dominic Houston Three Dragons (DH) Lin Cousins Three Dragons (LC) Affinity Sutton Aster Homes Basingstoke & Deane Borough Council Boyer Planning Champion Builders Goodall Barnard Construction Hampshire County Council Homes & Communities Agency Romans Sentinel Housing Association Ltd Simmons and Sons Simmons and Sons Sovereign Housing Association Ltd Stonewater Limited (Raglan + Jephson) Wates Development
Introductions AY welcomed everyone to the workshop and explained its purpose. She explained that a PDCS and DCS had already been published but this was a little while ago. The council has therefore decided to refresh the charging schedule and will publish a revised schedule later this year, anticipating its CIL examination early next year DH introduced Three Dragons. He explained the presentation will show assumptions Three Dragons is intending to use and will give time for further comment. DH explained that there would be a note of the workshop circulated in draft for further comment. The final version of the note would be included in the study report which would be published. The meeting note would identify organisations attending but not individuals. The workshop is undertaken using the Chatham House rule
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i.e. views expressed at the workshop will be recorded but not attributed to a specific organisation/individual. Workshop participants agreed to this. Background and principles DH set out the principles underlying CIL and made reference to the slide shown below. He also explained that the viability testing will need to take into account all policies in the local plan and be consistent with the NPPF.
No questions were raised by the workshop. Approach to viability testing DH explained that the viability testing undertaken would use residual value approach which assessed the difference between the value of development in a scheme and its cost and this would be compared with a benchmark land value. He illustrated this using the slide shown below
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Workshop agreed that approach set out is acceptable but important that assumptions are set out and there is maximum transparency. Benchmark land values DH set out the benchmark land values proposed for the study. He explained the role of the benchmarks and that if a scheme’s residual value fell below the benchmark, it would not be considered viable. DH explained that DCLG has produced a series of land value benchmarks and for Basingstoke and Deane this is approximately £1.9m per hectare - but this is for a clean serviced site without any affordable housing, s106 or CIL contributions. Taking into account the opportunity costs for providing affordable housing, DH estimated that this roughly equates to the borough-wide figures being put forward.
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Comments from the workshop as follows: Golf course benchmark should reflect its current use value and should be increased to £1m as per rest of Basingstoke- agreed to have a separate discussion – Savills have prepared a EUV for the Golf Course which will be provided to the Council; Agriculture value is now £10k per acre – there has been a recent uplift in values so a BLV for strategic greenfield at 20 times this be higher. DH explained that the mathematical relationship set out in the slide is not an exact science and that £400,000/ha remains reasonable. DH set out the argument that larger sites can require significant infrastructure to service them and therefore a lower benchmark is suitable.
Testing approach DH set out the type of scheme proposed for testing. These would be a mix of notional 1 ha tiles and a series of case study sites as shown in the slide below. Testing will use a policy compliant assessment of % of sites available for development (the net to gross ratio) and assumed site opening up costs.
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Comments from the workshop as follows: Smaller sites – in response to a question from LC re any issues methodology OK but site specific issues vary a great deal for smaller sites. DH explained that this testing cannot substitute for site specific appraisals. Affordable housing will take the ‘hit’ because CIL is non-negotiable and the AH contribution is negotiable; Dwelling sizes and Development Mixes DH set out the dwelling sizes to be assumed in the testing. He explained that they were based on the previous study with some adjustment (increase for larger – 4 bed dwellings). These are not consistent with the optional DCLG nationally described space standards because the council is choosing not to adopt these. DH explained that for the 35 dph mix gives a site coverage of about 3,200 sq m per hectare which is representative of recently schemes in Basingstoke.
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Comments from the workshop as follows: Will be movement towards the national standards especially for AH – certainly for those which are grant funded. (DH noted that modelling will be on basis £0 grant and therefore HCA standards will not apply). JF explained that the council is not planning to adopt the nationally described space standards but this may change during the course of the plan examination. 3D may test the nationally described space standards as a sensitivity test – to be confirmed with B&DBC; Market houses are about the right size for this borough. No comments on the dwelling mixes – densities shown are right for this area and there is no point in testing a higher density mix as the market is not seeking to deliver them. Market values and value areas DH explained that Three Dragons had reviewed market values and the value areas in detail in 2013. Further updates of this had been undertaken for today’s presentation – using Land Registry price paid data for 2014 and the first part of 2015. He showed the map of value areas and said that are proposing to continue with the same value areas and a slide of the market values proposed to be used (clarifying that these are for new build properties).
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Comments from the workshop as follows: There will be a huge variation in zone 2 (RoB) values; DH stated that the amount of data for the Rest of the Borough is smaller than for Basingstoke, reflecting the lower volume of new builds away from the main urban area. 4 bed detached will sometimes include a 3rd storey but smaller dwellings are moving away from 3 storey and 3 storey dwellings are in the minority and used for specific sites e.g. as an a ‘feature’ at a scheme entrance; Developing at 2 or 3 storey properties makes a big difference in values, with less value associated with the third storey. However three story dwellings are a minority and the proportions have not changed over time. DH explained that the Land Registry price paid data will have included three story development as well as other house types and therefore the values presented will include an appropriate proportion of three storey dwelling values. Values generally seen to be reasonable;
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Apartment market is less popular – an over-supply at the moment so not seeking to include in current new build schemes. Development costs DH introduced the following slide and explained the source of the build costs as being BCIS (adjusted for this area) and are the 5 year median value with an additional 15% for external work. Other factors taken from industry norms for use in this type of study and DH explained that are not assuming any cost for zero carbon but small allowances for security and water as shown below.
Comments from the workshop as follows: Build costs for smaller schemes (say 4 -10 range) look about 15% light – because of higher fixed costs. However, also acknowledged that this could also be balanced by higher market value; 3D agreed to ask BCIS if there is data that could inform a differential cost on smaller sites Another participant indicated that the build costs for other schemes were also a bit light as costs have risen due to availability of materials; But other participants indicated that they felt the build costs were a reasonable figure to use and data quoted from a survey of recent large-scale developments nationally suggests that costs shown are on the high side;
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Finance costs may be a bit light at 6% and questioned why there had been a reduction from 7% in the previous study. DH responded that there had been a reduction in risk and this justified the use of 6%; Marketing fees have been at 4% locally – DH responded that the increasing strength of the market suggested that marketing costs are reducing; For flats – what allowance for circulation space? DH said 10% is added for circulation; Big ticket items for the strategic sites (e.g. schools) – how will you account for these and estimate they will be c£10k per plot – DH explained that these will be specifically identified and taken into account within the appropriate case studies; Developer return – 20% is a about the ‘right territory’ but a comment that a higher figure is sought (say 20-25%); Where developers have the choice of where to develop (because of scale and variety of land holdings) they will first look to use internal rates of return on which to base their decision about where to build and these may be above the 20%; Market at any one time for new homes on large-scale development is finite and only so many dwellings can be brought forward on schemes; Sales rate of about 1 a week per outlet for market housing generally agreed; How are you dealing with ‘abnormal’ costs? DH explained that if this involves some kind of contamination or other issue that is known about before the site is purchased e.g. scheduled monument within a site – this will be taken into account in the land value. If it is strategic infrastructure required through s106 then it will be taken into account in the case study viability assessments. Affordable housing assumptions DH illustrated the proposed assumptions for modelling affordable housing with the following slide.
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Comments from the workshop as follows: Testing at £0 grant is correct; There is a danger that this modelling approach will underestimate the value attributed to affordable housing – agreed that Three Dragons will contact on a confidential basis the RPs attending to check on values likely to be achieved; Use a 5% capitalisation rate as this produces a more realistic housing association payment; Shared ownership – 40% share size is more realistic. 2.5% cost for the rental portion should be used as some rental portions at 2.75% are not affordable to residents47; The council (TD) will provide a new mix of affordable housing that should be modelled as it seems there are too many two bed properties in the proposed mix. It was noted that the cost of borrowing is the biggest variable, which is based on credit ratings. Concluding comments DH thanked participants for their contribution and re-iterated that the notes will be circulated for comment. Tim Davis added that the council has also commissioned a process for defining commuted sums in lieu of on-site affordable housing which will need to be consistent with the CIL viability assumptions. In answer to a question, AY explained that there is no programmed update of the CIL but
47 Post meeting note – affordable housing costs and values were further explored with RPs and as a result the testing has used 2.75%.
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the council will monitor market changes (including costs, values and finance costs etc.) that would signal the need for an update.
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Basingstoke and Deane Borough Council –Community Infrastructure Viability Study Notes of the Development Industry Workshop – Monday 13th July Two workshops were held – in the morning focusing on residential development and in the afternoon on commercial land uses – the note is covers the non-residential session. Afternoon workshop – non-residential uses Attending Alison Young Basingstoke and Deane Borough Council (AY) Dominic Houston Three Dragons (DH) Lin Cousins Three Dragons (LC) Basingstoke & Deane Borough Council London Clancy Hampshire County Council (Economic Development) Champion Builders Lamron Estates Hollis Hockley Woodford & Company Baker Davidson Thomas
Introductions AY welcomed everyone to the workshop and explained its purpose. She explained that a PDCS and DCS had already been published but this was a little while ago. The council has therefore decided to refresh the charging schedule and will publish a revised schedule later this year, anticipating its CIL examination early next year DH introduced Three Dragons. He explained will show assumptions intending to use and will give time for further comment. DH explained that there would be a note of the workshop circulated in draft for further comment. The final version of the note would be included in the study report which would be published. The meeting note would identify organisations attending but not individuals. The workshop is undertaken using the Chatham House rule i.e. views expressed at the workshop will be recorded but not attributed to a specific organisation/individual. Workshop participants agreed to this. Uses for testing DH set out the intended uses to be tested as shown in the slide below.
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No comments from the workshop. List is reasonable – other uses e.g. trade counters and tyre fitters can be included in industrial use (with rent c£115 psm and yield 7%). Petrol Filling Stations – assume retail use for the ‘shop’ but rest of PFS would not attract CIL. 4* hotel (full service hotels) not being tested – agreed that is reasonable and unlikely to be able to afford CIL. However this will be difficult to separate out for CIL charging purposes and the council will need to carefully define budget hotels which may be chargeable development. Workshop did not identify any other uses for testing. Rents and yields DH presented proposed rents for different uses and yields as in the following slide. He commented that where possible data is specific to Basingstoke for some uses (supermarkets, care homes and leisure) there is little local evidence and needed to rely on national figures adjusted for the local market. He noted that town centre offices and retail are primarily in Basingstoke as opposed to other smaller centres in the borough; and out of centre offices, industrial and warehouse uses were in accessible locations. Other uses e.g. small convenience stores might be found across the borough. DH clarified that rents and yields are at current values and for new development. Headline rates and for retail at whole store with yields at freehold. Rents per sq m clarified (correctly titled amended slide shown below).
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Comments from the workshop as follows: Basingstoke market will have different yields for freehold and leasehold development. In the town centre much of the development is ground lease but in other places in the borough e.g. Chineham will be freehold, with a stronger (i.e. lower) yield. Town centre comparison retail – will depend on the location. o Prime = Festival Place and the Malls. Rent of £220 psm and yield of 7%. Note that within these centres rents will vary around this figure according to specific location/footfall. o Second tier town centre retail – Wote Street only. Rent around 75% of prime or c £165 psm o Third tier town centre – including ‘top of the town’, London Road and Winchester Street. Rents of £130 psm and 8.5% yield. These rents will also apply to Basing View and the remaining areas of the town centre, o Post meeting note – a map has been produced to illustrate the zones described above – see the end of these notes Noted that there is very little room for any expansion of the town centre – next area for expansion will be Basing View or a car park site. ‘Vision for Top of the Town’ document is showing this area for improvement but some years away to influence rents etc; DH/LC offered that an option for testing would be to not distinguish a higher value town centre area and test overall at 8.5% yield and £130 psm rents. Retail warehouses – e.g. Brighton Hill – complicated again by freehold v leasehold development- rents and yields shown are acceptable; Small convenience stores – rent should be lower at c£150 psm and 7.5% yield; Supermarket – DH explained that it is not proposed to distinguish between different sizes of supermarkets. Rents and yields shown are acceptable; Leisure – rates shown would not be achieved for smaller schemes where picking up industrial units. Rents shown are much higher than achieved and should use £90 psm and an 8% yield. Care homes – DH acknowledged that limited evidence – no knowledge from the workshop. Budget hotel – rents are not increasing but yields gone up since previous study. Based on recent developer experience values are 5% yield and £4,500 to £5,000 rental per room. £87,500 per room is a reasonable assumption. Benchmark land values Comments from the workshop as follows: Few examples available;
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Recent sales of industrial/warehousing land at c£500,000 per acre in recent years equivalent to £1.25m per ha. Noted that this was a direct sale to a specialised operator and implied that this site for industrial development was at a higher rate than for residential use. Furthermore, understood that at these values commercial development is likely to be unviable; Noted that lack of development opportunities for commercial uses has pushed up land values. Rents across the area are being held back by the scale of low value premises remaining on the market – in time, these may be replaced by higher value uses with stronger rents; EUV/site value for retail – Very few freehold land opportunities around the borough; £2.5m to £3m per hectare put forward by DH – workshop considered £4m per ha may be more realistic (see Tesco site on Smith Industries site in Winchester Road ( £18m - 8 acres or £5.5m per ha)- but market has turned down since then. Build costs DH presented build costs as shown below:
Comments from the workshop were that there has been a significant recent increase in build costs, as follows: TC offices - £1800 psm/£2,000 psm – reflecting a sharp upturn in costs of labour and material – although the examples given were from Redhill and Woking. Out of centre offices - £1650-£1700 psm Industrial - £775 psm TC comparison – no comments, no knowledge of recent constructions Retail warehousing - £1,000 psm Supermarket – costs shown are acceptable Hotel - £65k per bedroom Leisure – e.g. bowling alleys, cinemas – no comments, no knowledge of recent constructions
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Care home – no specific figures but may be similar to hotels – no information to suggest an alternative. Miller Homes (Viables) scheme may provide an example. Development costs DH presented the following proposed development costs
Comments from the workshop as follows: Void period – offices 18-24 months to let + then up to 3 years rent free Prof fees – can be up to 15% - because of increased requirements for different studies to support applications; Developer return – 20% is acceptable Finance costs 6% is acceptable Marketing fees – Instead of 3% of GDV for sales and lettings costs, may use a % of annual rental – suggest 15% + 5% legal for developer disposal costs Concluding comments DH thanked participants for their contribution and re-iterated that the notes will be circulated for comment.
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ANNEX 3 - RESIDENTIAL MODELLING ASSUMPTIONS
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Market Housing House Prices
GIA SQ M 160 130 100 120 100 120 95 67 63 51 Detached Semi-detached Terrace Flats 5 Bed 4 Bed 3 Bed 4 Bed 3 Bed 4 Bed 3 Bed 2 Bed 2 Bed 1 Bed Basingstoke & £459,000 £363,000 £310,000 £328,000 £272,000 £324,000 £266,000 £221,000 £167,000 £145,000 Tadley Rest of £536,000 £425,000 £372,000 £377,000 £313,000 £355,000 £286,000 £244,000 £192,000 £167,000 Borough Basingstoke & £2,870 £2,790 £3,100 £2,730 £2,720 £2,700 £2,800 £3,300 £2,650 £2,840 Tadley Rest of £3,350 £3,270 £3,720 £3,140 £3,130 £2,960 £3,010 £3,640 £3,050 £3,270 Borough
Market House dwelling mix Type 20dph 30dph 35dph 45dph 180 dph
1 bed flat 35%
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Type 20dph 30dph 35dph 45dph 180 dph
2 bed flat 4% 20% 65%
2 bed terrace 5% 10% 13% 20%
3 bed terrace 15% 10% 24%
4 bed terrace 10%
3 bed semi 10% 10% 20% 16%
4 bed semi
3 bed detached 10% 15% 20%
4 bed detached 40% 30% 16% 10%
5 bed detached 35% 20% 17%
Affordable housing 40% affordable housing. All affordable housing comprises 70% affordable rented and 30% shared ownership (i.e. 28% affordable rented, 12% shared ownership overall) Primary testing is rented as 70% affordable rent/ 30% shared ownership (i.e. 60% market, 28% affordable rent, 12% shared ownership overall) Sensitivity 25% social rent / 75% affordable rent (i.e. 60% market, 7% social rent, 21% affordable rent, 12% shared ownership overall)
Affordable housing rents Affordable Social rent rent 1 bedroom flat £100 £128 2 bedroom flat £120 £155 2 bedroom terrace £130 £160 3 bedroom terrace £150 £190 4 bedroom terrace £170 £235
Affordable housing dwelling mix Affordable Central Basingstoke Towns/Villages Housing Basingstoke /Rural Development Case Study 14 Mix House only – high Type density flatted scheme
1 bed flat 35% 35% 25%
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Affordable Central Basingstoke Towns/Villages Housing Basingstoke /Rural Development Case Study 14 Mix House only – high Type density flatted scheme
2 bed flat 65% 25% 15%
2 bed terrace 25% 40%
3 bed terrace 10% 15%
4 bed terrace 5% 5%
For rental properties. Management and maintenance £1,000 Voids/bad debts 3.00% Repairs reserve £600 Capitalisation 5% For shared ownership Share size 40% Rental charge 2.75% Capitalisation 5%
Dwelling sizes House type description Affordable sq m Market sq m 1 bedroom sheltered flat 50 50 2 bedroom sheltered flat 75 75 1 bedroom flat 50 50 2 bedroom flat 61 61 2 bedroom terrace 70 70 3 bedroom terrace 85 95 4 bedroom terrace 97 120 3 bed semi detached 85 100 4 bed semi detached 97 120 3 bed detached 100 4 bed detached 130 5 bed detached 160 Dwelling size compliant with Nationally Described Space Standards An allowance of 10% of floor area will be added to the 1-2 storey flats used in the 1ha tile testing for circulation and common areas. An allowance of 15% of floor area will be added to the 3-5 storey flats used in the Central Basingstoke 180dph scheme (Case Study 14). For sheltered housing, a 30% allowance will be applied for common areas and circulation space.
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Development Costs Type Cost Flats (1-2 storeys) £1,355 sq m includes 15% for external works Flats (3-5 storeys) £1,500 sq m includes 15% for external works Sheltered Flats (3-5 £1,635 Sq m includes 15% for external works storeys) Houses £1,195 sq m includes 15% for external works One-off houses £2,035 sq m includes 15% for external works Professional fees 8%-12% 10 units or less – 12% 11 – 50 units – 10% 51 – 100 units – 9% 101+ units – 8% Finance 6% of development costs (net of inflation) Marketing fees 3% of GDV Marketing Fees – 6% of GDV Sheltered Developer return 20% of GDV Contractor return 6% of build costs Residual s106/278 £1,500 Per dwelling for children’s play/informal greenspace/minor local transport Strategic £100,000 net ha for larger sites infrastructure costs / £200,000 Void Costs – £100,000 to account for void periods during longer sales Sheltered scheme period after construction Agents and legal 1.75% Security £320 Per dwelling (part Q) Water £9 Per dwelling 15% of all dwellings to meet enhanced accessibility standards – Part M(4) 2. This does not apply to the sheltered flats which are assumed to be constructed to these standards. Part M(4) Cat 2 House type costs/house type 1bf affordable £1,662 2bf affordable £1,629 2bt affordable £1,967 3bt affordable £2,687 4bt affordable £2,687 1bf market £1,229 2bf market £1,196 2bt market £1,101 3bt market £1,387 3bs market £1,387 3bd market £1,386
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Part M(4) Cat 2 House type costs/house type 4bd market £1,386 5bd market £1,386
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ANNEX 4 - BENCHMARK LAND VALUE
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Land Value Benchmarks 1. The land value benchmark is an estimate of the lowest cost that a willing landowner would sell land for development. The concept of a benchmark land value attempts to balance two factors: a) land can only be worth what the highest value permissible development can afford to pay for it; and b) landowners will require some premium over the existing use value in order to incentivise a sale. Note that where development is able to pay more for land, then it is likely that transactions will be above the benchmark land value, particularly when different developers are competing for the same piece of land. Establishing suitable land value benchmarks is an important part of any viability testing and the Advice for planning practitioners48 sets out a preferred approach in the following extract from page 29: “We recommend that the Threshold Land Value is based on a premium over current use values and credible alternative use values (noting the exceptions below…….).” 2. The exceptions referred to in the Advice for planning practitioners reflect the significant differences in the types of current use found within settlements and on greenfield land adjoining settlements. The exceptions are summarised as: Larger scale sites for urban extensions on greenfield land where the uplift on current use value (agricultural land) sought by the landowner will be significantly higher than in an urban context. Edge-of-settlement greenfield sites, where landowners’ required returns will be more like those for sites within the settlement. 3. Advice for planning practitioners states that reference to market values can still provide a useful ‘sense check’ on the benchmark values that are being used for testing, but it is not recommended that these are used as the basis for the input to a model. This is an important concept and explains why the land value benchmark used to test plan policies (and CIL rates) can be less than the value at which land is being traded in the market. This point was highlighted in the London Mayoral CIL examiner’s report49:
4. In addition to the guidance advocating the use of premium over existing use value (particularly the Local Housing Delivery Group, 2012), recent RICS research50 highlights the issues with using market values to set land benchmarks – “If market value is based on comparable evidence
48 Local Housing Delivery Group, 2012, Viability Testing Local Plans 49 Report to The Mayor of London, by Keith Holland January 2012 50 RICS, 2015, Financial Viability Appraisal in Planning Decisions: Theory and Practice
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without proper adjustment to reflect policy compliant planning obligations, this introduces a circularity, which encourages developers to overpay for sites and try to recover some or all of this overpayment via reductions in planning obligations”. Furthermore, there are tangible differences between the types of appraisals supporting market values and those used for area wide viability appraisals such as this CIL study. These differences further highlight the issues with using market value comparables to set benchmarks: Appraisal Input Area-wide viability study Developer appraisal to inform land purchase Sales values Current day Potentially inflated to take into account of market rises Build costs Current day full BCIS cost Value engineered Profit Full target applied Competitive and not necessarily at target level Planning requirements Applied in full Potentially squeezed Site costs Extensive None/limited Development Lengthy Short Programme
5. Therefore, the basis for establishing the land values is a rounded view including the benchmarks established as part of the local plan process, published reports on land values, consultation with the development industry and a review of the sale price information available from land transactions. 6. Annex 1 (Transparent Viability Assumptions) to the Homes and Communities Agency guidance for its Area Wide Viability Model published in August 2010 states that in relation to the required premium above existing use value (EUV): “Benchmarks and evidence from planning appeals tend to be in a range of 10% to 30% above EUV in urban areas. For greenfield land, benchmarks tend to be in a range of 10 to 20 times agricultural value”. (page 9)51 7. Another report in 2011 undertaken for the Department for Communities and Local Government52 suggested that a premium of 25% over existing use value was required to bring forward industrial land for redevelopment. The premium for greenfield land was said to be higher, recognising that while the existing use value base is low, the costs normally associated with realising new development on unserviced greenfield land are considerable.
51 Homes and Communities Agency, 2010, Annex 1 (Transparent Viability Assumptions) 52 Turner Morum, 2011, Cumulative impacts of regulations on house builders and landowners
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8. For residential land, current use value is taken as industrial land for urban sites and agricultural land for strategic sites/urban extensions, with appropriate uplifts applied. Sites are taken as being suitable for development but not necessarily consented. 9. The benchmarks refer to sites suitable for development i.e. not constrained by abnormal conditions such as contamination from previous uses or archeological or topographical constraints etc. Where these abnormal constraints can reasonably be judged to form part of any due diligence we have assumed that they will feature in any negotiations about purchasing the land and the price adjusted accordingly. It is of course possible that in some circumstances the costs of dealing with the constraints is greater than any uplift in value from the new use. In these situations, it may be best that either the site remains in its existing use or that if it is strategically important, third party funding is sought to assist redevelopment. Implications for Benchmark Land Values in Basingstoke 10. The key factors to be taken into consideration are: The land values used for the 2013 Local Plan and CIL Viability Study (along with the supplementary viability studies for Manydown, Golf Course and Hounsome Fields in 2014 and 2015), which were examined in 2015 as part of the Local Plan EiP. Published research reports on land values Benchmark land value discussion at the development industry workshop in 2015 Evidence from transactions, where available. Local Plan Viability 11. The Local Plan is currently proceeding through the latter stages of examination following public hearings in October and November 2015. The evidence base for this plan included the 2013 Local Plan and CIL Viability Study, the 2014 viability study for Manydown and the Golf Course; and the 2015 study for Hounsome Fields and the Golf Course. The discussion at the public examination and subsequent initial feedback from the inspector did not suggest any serious concerns with the benchmark land values used, which were: A main benchmark for urban/edge of urban sites of £1m/gross ha, based on a premium of 30% over for industrial land existing values of £740,000/ha, rounded up to £1,000,000/gross ha. A secondary benchmark for urban/edge of urban sites of £1.3m/gross ha, based on a 26% reduction on residential land values for Basingstoke from values given in the Valuation Office Agency 2009 Property Market Report53. A greenfield strategic site benchmark of £400,000/gross ha, based on approximately 20 times agricultural values.
53 26% is derived from a research report from Savills in May 2013, Demand for Residential Development Land. This estimated the fall in residential land values from peak. http://www.savills.co.uk/research_articles/141285/146005-0
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An intermediate benchmark of £700,000/gross ha, to take account of medium/large sites with higher development costs. £700,000 was chosen as a mid-point between the £1m and £0.4m benchmarks. Published research reports on land values 12. DCLG has published estimates of residential land values for policy purposes, with an estimate of £2.34m/ha54 for residential development land in Basingstoke and Deane. Note that this value is a nominal figure for market housing development only (i.e. the cost of providing affordable housing is not included) without any s106/278 or CIL; and that the development costs are lower than the standard costs used here (e.g. the DCLG estimates use lower quartile build costs and lower developer return). The DCLG report also estimated that agricultural land in SE England was £22,000/ha and that industrial land in SE England was £1.1m/ha. 13. It is possible to adjust the DCLG residential land estimate by applying the costs of policy compliant affordable housing and s106. The costs of providing policy compliant 40% affordable housing is estimated by testing 1 ha schemes at 30 and 35 dph both with the affordable housing and then with no affordable housing. This takes into account the opportunity cost of not providing market housing as well as the specific costs of providing the affordable housing. Through this process it is estimated that the average cost is £63,000-£69,000 per affordable dwelling. The Council estimates that current typical s106 costs are £9,000/dwelling. Applying these adjustments gives an estimate of £1.15m/ha at 35 dph and £1.25m/ha at 30 dph. 14. CIL viability assessments have been undertaken in surrounding locations and these use residual value viability assessments with benchmark land value estimates. Some of these have variations by location/site typology. The table below illustrates the range of benchmarks used. When considering these benchmarks, it is important to note that land value benchmarks will be affected by different affordable housing policies, s106 requirements and house prices in the various authorities. The single high value benchmark in Waverly relates to the small sites that are anticipated to come forward. Table 3.1 Benchmark Land Values in surrounding authorities Location CIL status Date Benchmark Benchmark Benchmark Benchmark Strategic 1 £/ha 2 £/ha 3 £/ha 4 £/ha sites benchmark £/ha Wokingham Adopted 2013 £1,500,000 £500,000 £300,000 Rushmoor PDCS 2012 £1,600,000 £880,000 £600,000 £250,000 East Hampshire Examined 2014 £2,772,000 £2,016,000 £1,386,000 £945,000 £450,000 Winchester Adopted 2012 £2,200,000 £1,500,000 £900,000 £450,000 Test Valley Examined 2014 £1,700,000 £1,145,000 £350,000 West Berkshire Adopted 2013 £2,000,000 £850,000 £750,000 £500,000 £250,000
54 DCLG, 2015, Land estimates for policy appraisal
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Location CIL status Date Benchmark Benchmark Benchmark Benchmark Strategic 1 £/ha 2 £/ha 3 £/ha 4 £/ha sites benchmark £/ha Waverley CS 2012 £2,600,000 submitted Bracknell Forest Adopted 2012 £1,325,000 £900,000 £450,000 £300,000
15. Research published by Savills suggests that development land has increased in value in recent years, although this is most apparent in London55, and that in the short term there has been little change56. Demand is flattening as housebuilders have enough consented land for their needs, with on average the listed housebuilders have 5.3 years’ worth of land to build out at existing build rates. 16. Research published by Knight Frank in 201557 states that development land prices are also moderating, reflecting the increased costs of development, with a sharp rise in the cost of materials and labour in recent years. The research showed an increase in value to late 2013 followed by a fall in value of development land in 2015. 17. Colliers estimates that industrial land may be worth £1.48m/ha in 201558. These values are stated to apply to sites of over 4ha in prime locations. Development industry feedback 18. Benchmark land values were discussed during the June 2013 and July 2015 development industry workshops. In 2013 the feedback stated: The Borough is quite uniform in terms of land values. For residential development, a ‘going rate’ of £1.46m per ha (£0.59m per acre) for larger sites to £1.8 m- £1.98m per ha (£0.75m/£0.8m per acre) for smaller sites was put forward. Larger greenfield sites attract lower values for residential; development - £420,000 per gross ha (£170,000 per gross acre) was acceptable. For industrial land, a figure of around £740,000 per hectare (or c£300,000 per acre) was a reasonable estimate of current land values. Land for developments such as supermarkets may reach approximately £4.9m per ha (£2m per acre) in some cases, reflecting the ability of this sector to generate value. 19. In July 2015 the feedback stated:
55 http://pdf.euro.savills.co.uk/uk/residential---other/market-in-minutes-development-land-september-2015.pdf 56 http://pdf.euro.savills.co.uk/uk/residential---other/market-in-minutes-uk-residential-development-land-november- 2015.pdf 57 http://content.knightfrank.com/research/955/documents/en/developmentopportunities2015-3368.pdf 58 http://www.colliers.com/en-gb/uk/insights/industrial-rents-map
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The golf course should have a separate benchmark to reflect its current use value. Agriculture value is now £10,000 per acre (£24,700/ha) which may mean that the strategic site benchmark should rise. Evidence from transactions 20. In the 2013 Viability Study it was noted that some urban serviced sites had been sold for residential for between £1.5m and £1.8m per net ha, although this includes a site where public funding was to be used to bring forward residential development. There had also been a sale of land for a midrange size urban residential site for £0.96m per gross ha. There had been few recent industrial land sales on which to build a broad picture although there had been a land purchase in the region of £1.5m per hectare for a specific occupier (i.e. site value relates to the business activity rather than predicated upon property development values). 21. More recent local sales include a site for over 2ha was valued at £1.8m/ha but sold for over £2m/ha; and a smaller site for under 5 dwellings was sold for £1.9m/ha. 22. Information from CoStar covers 22 development land transactions/land for sale since 2008 in Basingstoke and Deane, West Berkshire, Wokingham, East Hampshire, Hart, Rushmoor, Test Valley, and Winchester. Excluding some very high value small sites (over £5m/ha) the median value was £1.1m/ha. For the sites under £5m/ha that had sold (rather than offered for sale), the median value was just under £740,000/ha. Benchmark land value summary 23. The range of land factors considered suggests that the benchmark land values examined as part of the local plan examination remain valid. There is some recent evidence which supports them and it is clear that they have similarities with the range of benchmarks used in similar viability exercises in nearby authorities. However, there are also indications that land is transacted at higher values locally, although this does not necessarily constitute a benchmark for this type of viability exercise. 24. It is therefore proposed to maintain the existing set of benchmark land values used as part of the local plan evidence base and discussed at the development industry workshop in 2015. In recognition that the house price and build cost changes may have allowed land values to increase we also provide a higher benchmark of £1.5m as a sensitivity test. This figure is chosen as it is closer to some of the transaction evidence and the other local benchmarks, as well as forming the lower end of the land value range in the 2013 development industry workshop. However, there is no equivalent sensitivity benchmark for strategic greenfield land or any clear metric for generating one. Therefore we apply a cautious approach to CIL rates for strategic sites later on in this report. The benchmark land values used in the residential testing are therefore: 25. A main benchmark for urban/edge of urban sites of £1m/gross ha. A secondary benchmark for urban/edge of urban sites of £1.3m/gross ha A greenfield strategic site benchmark of £400,000/gross ha.
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An intermediate benchmark of £700,000/gross ha for medium/large sites with higher development costs. A higher sensitivity test benchmark of £1.5m/ha for urban/edge of urban sites. 26. Where non-residential developments are anticipated to be on vacant industrial or office land the benchmark is considered to be £740,000/ha. This would apply to developments on locations such as Basing View and to developments anticipated to be on new/existing employment allocations. As the assumption is that land is unoccupied there is no premium built in to provide an incentive for a sale. 27. The exception to this is for uses known to generate high values, where landowner expectations will require a premium to provide an incentive to sell. In particular, this will apply to convenience shops and out of centre comparison retail. In the absence of transaction evidence and based on experience elsewhere the testing has used the £1m/ha urban residential benchmark for small convenience shops, a benchmark land value of £2m per ha for out of centre comparison retail and £4m per ha for supermarkets, recognising that the latter two are well above the residential benchmark land value.
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ANNEX 5 - 1HA RESIDUAL VALUES
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Basingstoke/ Tadley – 1ha results
Area/ DPH/ SR-AR split/ %AH RESULTS %AH Benchmark values Upper Main Social % RV less RV less Benchmark Benchmark /Affordable Marke Afford Total Mkt Residual Upper Main upper main Max CIL Max CIL Housing Market Area DPH % t % able % Sq m Value Benchmark Benchmark benchmark benchmark (£/sq m) (£/sq m)
Basingstoke & Tadley 20 0%/100% 60% 40% 1,578.00 1,346,000 1,300,000 1,000,000 46,000 346,000 £29 £219 Basingstoke & Tadley 30 0%/100% 60% 40% 2,110.50 1,850,000 1,300,000 1,000,000 550,000 850,000 £261 £403 Basingstoke & Tadley 35 0%/100% 60% 40% 2,294.90 2,033,000 1,300,000 1,000,000 733,000 1,033,000 £319 £450 Basingstoke & Tadley 45 0%/100% 60% 40% 2,462.40 2,009,000 1,300,000 1,000,000 709,000 1,009,000 £288 £410
Basingstoke & Tadley 20 25%/75% 60% 40% 1,578.00 1,302,000 1,300,000 1,000,000 2,000 302,000 £1 £191 Basingstoke & Tadley 30 25%/75% 60% 40% 2,110.50 1,783,000 1,300,000 1,000,000 483,000 783,000 £229 £371 Basingstoke & Tadley 35 25%/75% 60% 40% 2,294.90 1,955,000 1,300,000 1,000,000 655,000 955,000 £285 £416 Basingstoke & Tadley 45 25%/75% 60% 40% 2,462.40 1,909,000 1,300,000 1,000,000 609,000 909,000 £247 £369
Rest of Borough - 1 Ha results Area/ DPH/ SR-AR split/ %AH RESULTS %AH Benchmark values Upper Main Social % RV less RV less Benchmark Benchmark /Affordable Marke Afford Total Mkt Residual Upper Main upper main Max CIL Max CIL Housing Market Area DPH % t % able % Sq m Value Benchmark Benchmark benchmark benchmark (£/sq m) (£/sq m)
Rest of Borough 20 0%/100% 60% 40% 1,578.00 1,979,000 1,300,000 1,000,000 679,000 979,000 £430 £620 Rest of Borough 30 0%/100% 60% 40% 2,110.50 2,660,000 1,300,000 1,000,000 1,360,000 1,660,000 £644 £787 Rest of Borough 35 0%/100% 60% 40% 2,294.90 2,931,000 1,300,000 1,000,000 1,631,000 1,931,000 £711 £841 Rest of Borough 45 0%/100% 60% 40% 2,462.40 2,783,000 1,300,000 1,000,000 1,483,000 1,783,000 £602 £724
Rest of Borough 20 25%/75% 60% 40% 1,578.00 1,934,000 1,300,000 1,000,000 634,000 934,000 £402 £592 Rest of Borough 30 25%/75% 60% 40% 2,110.50 2,593,000 1,300,000 1,000,000 1,293,000 1,593,000 £613 £755 Rest of Borough 35 25%/75% 60% 40% 2,294.90 2,853,000 1,300,000 1,000,000 1,553,000 1,853,000 £677 £807 Rest of Borough 45 25%/75% 60% 40% 2,462.40 2,682,000 1,300,000 1,000,000 1,382,000 1,682,000 £561 £683
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ANNEX 6 - CASE STUDY CHARACTERISTICS
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Case Type Location Total Density Site Size Site Dwelling Opening up Benchmark Delivery Notes Study Dwellings (dph) ha (net) size Mix costs Land gross Value/ha ha 1 Single dwelling Basingstoke urban 1 33 0.03 0.03 4bd £1,000,000 Yr 1 BCIS 0ne-off development costs; +5% in value 2 2 dwellings Basingstoke urban 2 45 0.04 0.04 2x3bd £1,000,000 Yr 1 +5% development costs, +5% in value 3 3 dwellings Basingstoke edge 3 35 0.09 0.09 3x4bd £1,000,000 Yr 1 +5% development costs, +5% in value 4 4 dwellings Basingstoke edge 4 35 0.11 0.11 2x3bd, £1,000,000 Yr 1 2x4bd 5 10 dwellings Basingstoke edge 10 35 0.29 0.29 35dph £1,000,000 1 yr to first mix completion then 10pa 6 55 dwellings Basingstoke urban 55 45 1.22 1.22 45dph £50,000 de- £1,000,000 1 yr to first mix contamination completion then 35 in Page 360 Page yr 1 and 20 in yr2 7 Intermediate development Basingstoke edge 100 30 3.33 3.91 35dph £100,000 £1,000,000 1 yr to first Gross to net mix and completion adjustment to sensitivity then 50pa incorporate £700,000 greenspace requirement 8 High density flatted Basingstoke Urban 90 180 0.50 0.50 180dph £1,000,000 Yr 1 build Assume in 2 x 5 scheme mix and 45; Yr2 sell story blocks of 45. sensitivity 45 and 15% circulation £700,000 build 45, instead of the 10% year 3 sell assumed for low 45. rise flats 9 Sheltered housing scheme Basingstoke Urban 100 125 0.80 0.80 50x1bf, £1,000,000 Plus 30% 50x2bf and circulation/common sensitivity areas £700,000 10 Flatted scheme Basingstoke Urban 100 143 0.70 0.70 35x1bf £1,000,000 Yr 1 build 3 storey flats. and 50; Yr2 sell Undercroft car 65x2bf, in 50 and parking of 3,500 sq two build 50, m blocks of year 3 sell 50. 50.
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Case Type Location Total Density Site Size Site Dwelling Opening up Benchmark Delivery Notes Study Dwellings (dph) ha (net) size Mix costs Land gross Value/ha ha 11 Flatted scheme Basingstoke Urban 100 143 1.05 1.05 35x1bf £1,000,000 Yr 1 build 3 storey flats. and 50; Yr2 sell Surface car parking 65x2bf, in 50 and two build 50, blocks of year 3 sell 50. 50. 12 Single unit Rest of Borough 1 25 0.04 0.04 5bd £1,000,000 Yr 1 13 2 dwellings Rest of Borough 2 25 0.08 0.08 1x4bd, £1,000,000 Yr 1 1x5bd 14 3 dwellings Rest of Borough 3 25 0.12 0.12 3x4bd £1,000,000 Yr 1 15 4 dwellings Rest of Borough 4 25 0.16 0.16 2x4bd, £1,000,000 Yr 1 2x5bd 16 Edge of small town/village Rest of Borough 10 25 0.29 0.29 25dph £1,000,000 1 yr to first mix completion
Page 361 Page then 10pa 17 55 dwellings Rest of Borough 55 35 1.57 1.74 35dph £50,000 £1,000,000 1 yr to first Gross to net mix completion adjustment to then 35 in incorporate yr 1 and 20 greenspace in yr2 requirement 18 Market town urban Rest of Borough 100 35 2.86 3.35 35dphmix £100,000 £1,000,000 1 yr to first Gross to net extension completion adjustment to then 50pa incorporate greenspace requirement
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Case Site Total Total Density Net site Self-build Gross Net Housing Benchmark Opening up Site specific infrastructure Study dwellings self- size ha proportion site size to Delivery land costs/net ha Yr 0 = pre-delivery preparation. build of net ha gross (assume 1 yr to value/gross Yr 1 = 1st year of delivery area ha first ha completion) 19 Manydown 3,400 68 30 dph 113.33 2.27 183.56 62% 50 in yr1, 200 in £400,000 £200,000 £58,582,348 (£17,230/dwg) yr 2, 300 in yr3, 25% in 1st £1.5m strategic transport by 1st 320pa year and dwg thereafter 25% in 2nd Remaining £4.8m strategic year. transport over next five years Remainder £2.2m bus spread years 1-5 spread year £9.5675m education in yr1, 4 onwards £7.5675m in yr4, £7.5675m in yr7 and £11,186,123 in yr8 Remainder in line with development 20 Golf Course 1,000 20 35 dph 28.57 0.57 46.95 62% 50 in yr1, 100 in £400,000 £200,000 £11,619,820 (£11,620/dwg) yr2, 150pa 25% in 1st £1.3m junction by 1st dwg thereafter year and £0.7m bus spread years 1-5 Page 362 Page 25% in 2nd £2.5m education in yr1, £2,496,620 year. in yr2. Remainder Remainder in line with spread year development 4 onwards 21 Hounsome 750 15 35 dph 21.43 0.43 42.78 58% 50 in yr1, 70pa £400,000 £200,000 £13,974,842 (£18,633/dwg) Fields thereafter 25% in 1st £5.5m junction by 1st dwg year and £0.525m bus spread years 1-5 25% in 2nd £1.875m education in yr1, year. £1,872,465 in yr2. Remainder Remainder in line with spread year development 4 onwards 22 East of 450 9 30 dph 15.00 0.30 26.28 59% 60 in yr1, 110pa £400,000 £200,000 £6,546,842 (£14,549) Basingstoke thereafter then 25% in 1st £1m junction by 1st dwg 60 year and £0.3m bus spread years 1-5 25% in 2nd £2,456,973 education in yr1. year. Remainder in line with Remainder development spread year 3 onwards
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Case Site Total Total Density Net site Self-build Gross Net Housing Benchmark Opening up Site specific infrastructure Study dwellings self- size ha proportion site size to Delivery land costs/net ha Yr 0 = pre-delivery preparation. build of net ha gross (assume 1 yr to value/gross Yr 1 = 1st year of delivery area ha first ha completion) 23 Upper Cufaude 390 0 30 dph 13.00 0.00 22.26 60% 50 in yr1, 70pa £400,000 £150,000 £4,556,595 (£11,684/dwg) Farm thereafter then 25% in 1st £2,129,376 education in yr1 60. year and £0.25m bus spread years 1-5 25% in 2nd Remainder in line with year. development Remainder spread year 3 onwards
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Final Report Page 111 March 2016 – Three Dragons Basingstoke & Deane CIL Viability Study
Hounsome East of Upper Cufaude Manydown Golf Course Fields Basingstoke Farm Source No. of dwellings 3400 1000 750 450 390 Local Plan Strategic transport £6,300,000 £1,300,000 £6,200,000 £1,350,000 £150,000 BDBC / Hampshire Highways BDBC / Stagecoach / Razors Bus £2,200,000 £700,000 £525,000 £300,000 £250,000 Farm example Hampshire County Council Travel Plan £1,000,000 £350,000 £300,000 £170,000 £170,000 estimate Hampshire County Council Primary school £17,618,623 £4,996,620 £3,747,465 £2,456,973 £2,129,376 Education Authority Secondary Hampshire County Council school £18,270,000 £0 £0 £0 £0 Education Authority Open space £7,850,000 £2,470,000 £1,850,000 £1,100,000 £960,000 BDBC Allotments £554,880 £163,200 £122,400 £73,440 £63,648 BDBC Artificial turf pitch £600,000 £0 £0 £0 £0 BDBC / FA Playing pitches £300,000 £171,429 £128,571 £0 £0 Sport England Page 364 Page Tennis / MUGA £320,000 £182,857 £137,143 £96,429 £83,571 Sport England Community facilities £3,000,000 £1,285,714 £964,285 £1,000,000 £750,000 BDBC Library £568,845 £0 £0 £0 £0 Hampshire County Council TOTAL £58,582,348 £11,619,820 £13,974,864 £6,546,842 £4,556,595 Total per dwelling £17,230 £11,620 £18,633 £14,549 £11,684
Final Report Page 112 March 2016 – Three Dragons Basingstoke & Deane CIL Viability Study
ANNEX 7 - CASE STUDY RESIDUAL VALUES
Final Report Page 113 March 2016 – Three Dragons Page 365 Basingstoke & Deane CIL Viability Study
RV less Main Sensitivity Total Gross Residual Total Sensitivity Sensitivity Benchmark Benchmark Case Study Total market sq Density Net Site Site area Gross to Value per Residual Value Market Sq Market Sq m Main bench RV less main benchmark Max CIL Max CIL Ref Type HMA MVA dwgs % AH m (dph) area (ha) (ha) net toolkit per ha m per ha Benchmark mark test benchmark test (£/sq m) (£/sq m) Basingstoke/ 1 1 dwelling Basingstoke urban 1 40% 78.0 33 0.03 0.03 100% -16,000 -533,333 78.0 2,600.00 1,000,000 -1,533,333 -£590 Tadley
Basingstoke/ 2 2 dwellings Basingstoke urban 2 40% 120.0 50 0.04 0.04 100% 132,000 3,300,000 120.0 3,000.00 1,000,000 2,300,000 £767 Tadley
Basingstoke/ 3 3 dwellings Basingstoke edge 3 40% 234.0 33 0.09 0.09 100% 197,000 2,188,889 234.0 2,600.00 1,000,000 1,188,889 £457 Tadley
Basingstoke/ 4 4 dwellings Basingstoke edge 4 40% 276.0 36 0.11 0.11 100% 248,000 2,254,545 276.0 2,509.09 1,000,000 1,254,545 £500 Tadley
Basingstoke/ 5 10 dwellings Basingstoke edge 10 40% 655.7 34 0.29 0.29 100% 537,771 1,854,383 655.7 2,261.03 1,000,000 854,383 £378 Tadley
Basingstoke/ 6 55 dwellings Basingstoke urban 55 40% 3,009.6 45 1.22 1.22 100% 2,394,384 1,962,610 3,009.6 2,466.89 1,000,000 962,610 £390 Tadley
Intermediate dev Basingstoke/ 7 Basingstoke edge 100 40% 6,556.8 30 3.33 3.91 85% 5,592,929 1,430,984 6,556.8 1,969.01 1,000,000 700,000 430,984 730,984 £219 £371 100 dwellings Tadley
Basingstoke/ 8 90 high density flats Basingstoke urban 90 40% 3,553.2 180 0.50 0.50 100% 572,387 1,144,774 3,553.2 7,106.40 1,000,000 700,000 144,774 444,774 £20 £63 Tadley
Sheltered housing Basingstoke/ 9 Basingstoke urban 100 40% 4,890.0 125 0.80 0.80 100% 21,970 27,463 4,890.0 6,112.50 1,000,000 700,000 -972,538 -672,538 -£159 -£110 100 flats Tadley
Page 366 Page Flatted scheme (u'croft Basingstoke/ 10 Basingstoke urban 100 40% 3,948.0 143 0.70 0.70 100% -928,582 -1,326,546 3,948.0 5,640.00 1,000,000 -2,326,546 -£413 parking) 100 flats Tadley
Flatted scheme (surface Basingstoke/ 11 Basingstoke urban 100 40% 3,948.0 95 1.05 1.05 100% 635,986 605,701 3,948.0 3,760.00 1,000,000 -394,299 -£105 parking) 100 flats Tadley
12 1 dwelling Rest of Borough Rest of Borough 1 40% 96.0 25 0.04 0.04 100% 23,000 575,000 96.0 2,400.00 1,000,000 -425,000 -£177
13 2 dwellings Rest of Borough Rest of Borough 2 40% 174.0 25 0.08 0.08 100% 225,000 2,812,500 174.0 2,175.00 1,000,000 1,812,500 £833
14 3 dwellings Rest of Borough Rest of Borough 3 40% 234.0 25 0.12 0.12 100% 292,000 2,433,333 234.0 1,950.00 1,000,000 1,433,333 £735
15 4 dwellings Rest of Borough Rest of Borough 4 40% 348.0 25 0.16 0.16 100% 420,000 2,625,000 348.0 2,175.00 1,000,000 1,625,000 £747
Edge of small town/ 16 Rest of Borough Rest of Borough 10 40% 789.0 34 0.29 0.29 100% 918,215 3,166,259 789.0 2,720.69 1,000,000 2,166,259 £796 village 10 dwellings
17 55 dwellings Rest of Borough Rest of Borough 55 40% 3,606.2 35 1.57 1.74 90% 4,397,995 2,526,746 3,606.2 2,296.94 1,000,000 1,526,746 £665
Market town urban 18 Rest of Borough Rest of Borough 100 40% 6,556.8 35 2.86 3.35 85% 7,946,514 2,372,840 6,556.8 2,292.59 1,000,000 1,372,840 £599 extension 100 dwellings
Final Report Page 114 March 2016 – Three Dragons Basingstoke & Deane CIL Viability Study
Main Case Gross Residual Total Benchmark Study Total Density Net Site Site area Gross to Value per Residual Market Sq Market Sq m DCF Main RV less main Max CIL Ref Type HMA MVA dwgs % AH (dph) area (ha) (ha) net toolkit Value per ha m per ha applied Benchmark benchmark (£/sq m) Strategic site (inc 68 Basingstoke/ 19 Manydown 3,332 40% 29 113.33 183.56 62% 113,363,217 617,581 234,406.2 2,068.35 Yes 400,000 217,581 £105 self build units) Tadley
Strategic site (inc 20 Basingstoke/ 20 Golf Course 980 40% 34 28.57 46.95 61% 37,529,526 799,351 64,256.6 2,249.09 Yes 400,000 399,351 £178 self build units) Tadley
Strategic site (inc 15 Basingstoke/ 21 Hounsome Fields 735 40% 34 21.43 42.78 50% 22,259,788 520,332 48,192.5 2,248.83 Yes 400,000 120,332 £54 self build units) Tadley
Strategic site (inc 9 Basingstoke/ 22 East of Basingstoke 441 40% 29 15.00 26.28 57% 18,329,404 697,466 31,024.4 2,068.29 Yes 400,000 297,466 £144 self build units) Tadley
Basingstoke/ 23 Upper Cufaude Farm Strategic site 390 40% 30 13.00 22.26 58% 17,269,351 775,802 27,436.5 2,110.50 Yes 400,000 375,802 £178 Tadley
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Final Report Page 115 March 2016 – Three Dragons Basingstoke & Deane CIL Viability Study
ANNEX 8 - NON-RESIDENTIAL VIABILITY TESTS
Final Report Page 116 March 2016 – Three Dragons Page 368 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model Office development of two storeys out of town (a/c multiple units) - BCIS costs
Size of unit (GIA) 1500 sq m Ratio of GEA to GIA 100.0% User input cells GEA 1500 sq m Produced by model NIA as % of GIA 95% Key results NIA 1425 sq m GEA Gross external area Floors 2 GIA Gross internal area Site coverage 40% NIA Net internal area Site area 0.19 Hectares
SCHEME REVENUE Headline annual rent (in £s per sq m) £151 Rent premium 0% Headline annual rent (in £s per sq m) with BREEAM premium £ 151 Annual rent for assesment (total) - NIA £ 215,175 Yield 7.50% (Yield times rent) £ 2,869,000 Less purchaser costs 5.80 % of yield x rent Gross Development Value £ 2,711,720
SCHEME COSTS Build costs £ 1,411 per sq m £ 2,116,500 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 42,330 External costs 10% of base build costs £ 211,650 Total construction costs £ 2,370,480 Professional fees 12.00% of construction costs £ 284,458 Sales and lettings costs 3% of GDV £ 81,352 S106 costs (not covered by CIL) £ 20,000 Total 'other costs' £ 385,809 Finance costs 6.0% Interest rate Build period 10 Months Finance costs for 100% of construction and other costs £ 137,814 Void finance/rent free period (in months) 36 Months £ 496,132 Total finance costs £ 633,947
Developer return 20% Scheme value £ 542,344 Total scheme costs £ 3,932,580 RESIDUAL VALUE Gross residual value -£ 1,220,860 Less purchaser costs 0.00 % Stamp duty land tax £ - 2.00 % Agent/legal purchase fees £ -
Residual value For the scheme -£ 1,245,277 Equivalent per hectare -£ 6,641,476 Not viable
Potential for CIL
Benchmark land value (per hectare) £ 740,000 Equivalent benchmark land value for site £ 138,750
Potential for CIL for the scheme -£ 1,384,027 Potential per sq m NONE Final Report Page 117 March 2016 – Three Dragons Page 369 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model Office development of two storeys out of town (a/c multiple units) - local costs
Size of unit (GIA) 1500 sq m Ratio of GEA to GIA 100.0% User input cells GEA 1500 sq m Produced by model NIA as % of GIA 95% Key results NIA 1425 sq m GEA Gross external area Floors 2 GIA Gross internal area Site coverage 40% NIA Net internal area Site area 0.19 Hectares
SCHEME REVENUE Headline annual rent (in £s per sq m) £151 Rent premium 0% Headline annual rent (in £s per sq m) with BREEAM premium £ 151 Annual rent for assesment (total) - NIA £ 215,175 Yield 7.50% (Yield times rent) £ 2,869,000 Less purchaser costs 5.80 % of yield x rent Gross Development Value £ 2,711,720
SCHEME COSTS Build costs £ 1,650 per sq m £ 2,475,000 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 49,500 External costs 10% of base build costs £ 247,500 Total construction costs £ 2,772,000 Professional fees 12.00% of construction costs £ 332,640 Sales and lettings costs 3% of GDV £ 81,352 S106 costs (not covered by CIL) £ 20,000 Total 'other costs' £ 433,992 Finance costs 6.0% Interest rate Build period 10 Months Finance costs for 100% of construction and other costs £ 160,300 Void finance/rent free period (in months) 36 Months £ 577,078 Total finance costs £ 737,378
Developer return 20% Scheme value £ 542,344 Total scheme costs £ 4,485,714 RESIDUAL VALUE Gross residual value -£ 1,773,993 Less purchaser costs 0.00 % Stamp duty land tax £ - 2.00 % Agent/legal purchase fees £ -
Residual value For the scheme -£ 1,809,473 Equivalent per hectare -£ 9,650,525 Not viable
Potential for CIL
Benchmark land value (per hectare) £ 740,000 Equivalent benchmark land value for site £ 138,750
Potential for CIL for the scheme -£ 1,948,223 Potential per sq m NONE Final Report Page 118 March 2016 – Three Dragons Page 370 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model Office development of four storeys town centre (a/c ) - BCIS costs
Size of unit (GIA) 2000 sq m Ratio of GEA to GIA 100.0% User input cells GEA 2000 sq m Produced by model NIA as % of GIA 95% Key results NIA 1900 sq m GEA Gross external area Floors 4 GIA Gross internal area Site coverage 75% NIA Net internal area Site area 0.07 Hectares
SCHEME REVENUE Headline annual rent (in £s per sq m) £156 Rent premium 0% Headline annual rent (in £s per sq m) with BREEAM premium £ 156 Annual rent for assesment (total) - NIA £ 296,400 Yield 8.25% (Yield times rent) £ 3,592,727 Less purchaser costs 5.80 % of yield x rent Gross Development Value £ 3,395,772
SCHEME COSTS Build costs £ 1,732 per sq m £ 3,464,000 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 69,280 External costs 10% of base build costs £ 346,400 Total construction costs £ 3,879,680 Professional fees 12.00% of construction costs £ 465,562 Sales and lettings costs 3% of GDV £ 101,873 S106 costs (not covered by CIL) £ - Total 'other costs' £ 567,435 Finance costs 6.0% Interest rate Build period 14 Months Finance costs for 100% of construction and other costs £ 311,298 Void finance/rent free period (in months) 36 Months £ 800,481 Total finance costs £ 1,111,779
Developer return 20% Scheme value £ 679,154 Total scheme costs £ 6,238,048 RESIDUAL VALUE Gross residual value -£ 2,842,275 Less purchaser costs 0.00 % Stamp duty land tax £ - 2.00 % Agent/legal purchase fees £ -
Residual value For the scheme -£ 2,899,121 Equivalent per hectare -£ 43,486,815 Not viable
Potential for CIL
Benchmark land value (per hectare) £ 740,000 Equivalent benchmark land value for site £ 49,333
Potential for CIL for the scheme -£ 2,948,454 Potential per sq m NONE Final Report Page 119 March 2016 – Three Dragons Page 371 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model Office development of four storeys town centre (a/c ) - local costs
Size of unit (GIA) 2000 sq m Ratio of GEA to GIA 100.0% User input cells GEA 2000 sq m Produced by model NIA as % of GIA 95% Key results NIA 1900 sq m GEA Gross external area Floors 4 GIA Gross internal area Site coverage 75% NIA Net internal area Site area 0.07 Hectares
SCHEME REVENUE Headline annual rent (in £s per sq m) £156 Rent premium 0% Headline annual rent (in £s per sq m) with BREEAM premium £ 156 Annual rent for assesment (total) - NIA £ 296,400 Yield 8.25% (Yield times rent) £ 3,592,727 Less purchaser costs 5.80 % of yield x rent Gross Development Value £ 3,395,772
SCHEME COSTS Build costs £ 1,800 per sq m £ 3,600,000 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 72,000 External costs 10% of base build costs £ 360,000 Total construction costs £ 4,032,000 Professional fees 12.00% of construction costs £ 483,840 Sales and lettings costs 3% of GDV £ 101,873 S106 costs (not covered by CIL) £ - Total 'other costs' £ 585,713 Finance costs 6.0% Interest rate Build period 14 Months Finance costs for 100% of construction and other costs £ 323,240 Void finance/rent free period (in months) 36 Months £ 831,188 Total finance costs £ 1,154,428
Developer return 20% Scheme value £ 679,154 Total scheme costs £ 6,451,296 RESIDUAL VALUE Gross residual value -£ 3,055,523 Less purchaser costs 0.00 % Stamp duty land tax £ - 2.00 % Agent/legal purchase fees £ -
Residual value For the scheme -£ 3,116,634 Equivalent per hectare -£ 46,749,509 Not viable
Potential for CIL
Benchmark land value (per hectare) £ 740,000 Equivalent benchmark land value for site £ 49,333
Potential for CIL for the scheme -£ 3,165,967 Potential per sq m NONE Final Report Page 120 March 2016 – Three Dragons Page 372 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model Four industrial/warehouse units in a block of 1,600 sqm edge of town - BCIS
Size of unit (GIA) 1600 sq m Ratio of GEA to GIA 100.0% User input cells GEA 1600 sq m Produced by model NIA as % of GIA 95% Key results NIA 1520 sq m GEA Gross external area Floors 1 GIA Gross internal area Site coverage 40% NIA Net internal area Site area 0.40 Hectares
SCHEME REVENUE Headline annual rent (in £s per sq m) £86 Rent premium 0% Headline annual rent (in £s per sq m) with BREEAM premium £ 86 Annual rent for assesment (total) - NIA £ 130,842 Yield 7.50% (Yield times rent) £ 1,744,555 Less purchaser costs 5.80 % of yield x rent Gross Development Value £ 1,648,917
SCHEME COSTS Build costs £ 810 per sq m £ 1,296,000 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 25,920 External costs 10% of base build costs £ 129,600 Total construction costs £ 1,451,520 Professional fees 12.00% of construction costs £ 174,182 Sales and lettings costs 3% of GDV £ 49,468 S106 costs (not covered by CIL) £ 20,000 Total 'other costs' £ 243,650 Finance costs 6.0% Interest rate Build period 8 Months Finance costs for 100% of construction and other costs £ 67,807 Void finance/rent free period (in months) 12 Months £ 101,710 Total finance costs £ 169,517
Developer return 20% Scheme value £ 329,783 Total scheme costs £ 2,194,470 RESIDUAL VALUE Gross residual value -£ 545,553 Less purchaser costs 0.00 % Stamp duty land tax £ - 2.00 % Agent/legal purchase fees £ -
Residual value For the scheme -£ 556,464 Equivalent per hectare -£ 1,391,160 Not viable
Potential for CIL
Benchmark land value (per hectare) £ 740,000 Equivalent benchmark land value for site £ 296,000
Potential for CIL for the scheme -£ 852,464 Potential per sq m NONE Final Report Page 121 March 2016 – Three Dragons Page 373 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model Four industrial/warehouse units in a block of 1,600 sqm edge of town - local costs
Size of unit (GIA) 1600 sq m Ratio of GEA to GIA 100.0% User input cells GEA 1600 sq m Produced by model NIA as % of GIA 95% Key results NIA 1520 sq m GEA Gross external area Floors 1 GIA Gross internal area Site coverage 40% NIA Net internal area Site area 0.40 Hectares
SCHEME REVENUE Headline annual rent (in £s per sq m) £86 Rent premium 0% Headline annual rent (in £s per sq m) with BREEAM premium £ 86 Annual rent for assesment (total) - NIA £ 130,842 Yield 7.50% (Yield times rent) £ 1,744,555 Less purchaser costs 5.80 % of yield x rent Gross Development Value £ 1,648,917
SCHEME COSTS Build costs £ 775 per sq m £ 1,240,000 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 24,800 External costs 10% of base build costs £ 124,000 Total construction costs £ 1,388,800 Professional fees 12.00% of construction costs £ 166,656 Sales and lettings costs 3% of GDV £ 49,468 S106 costs (not covered by CIL) £ 20,000 Total 'other costs' £ 236,124 Finance costs 6.0% Interest rate Build period 8 Months Finance costs for 100% of construction and other costs £ 64,997 Void finance/rent free period (in months) 12 Months £ 97,495 Total finance costs £ 162,492
Developer return 20% Scheme value £ 329,783 Total scheme costs £ 2,117,199 RESIDUAL VALUE Gross residual value -£ 468,282 Less purchaser costs 0.00 % Stamp duty land tax £ - 2.00 % Agent/legal purchase fees £ -
Residual value For the scheme -£ 477,648 Equivalent per hectare -£ 1,194,119 Not viable
Potential for CIL
Benchmark land value (per hectare) £ 740,000 Equivalent benchmark land value for site £ 296,000
Potential for CIL for the scheme -£ 773,648 Potential per sq m NONE Final Report Page 122 March 2016 – Three Dragons Page 374 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model Warehouse/industrial unit of 5,000 sqm edge of town, accessible location
Size of unit (GIA) 5000 sq m Ratio of GEA to GIA 100.0% User input cells GEA 5000 sq m Produced by model NIA as % of GIA 95% Key results NIA 4750 sq m GEA Gross external area Floors 1 GIA Gross internal area Site coverage 40% NIA Net internal area Site area 1.25 Hectares
SCHEME REVENUE Headline annual rent (in £s per sq m) £86 Rent premium 0% Headline annual rent (in £s per sq m) with BREEAM premium £ 86 Annual rent for assesment (total) - NIA £ 408,880 Yield 7.50% (Yield times rent) £ 5,451,733 Less purchaser costs 5.80 % of yield x rent Gross Development Value £ 5,152,867
SCHEME COSTS Build costs £ 688 per sq m £ 3,440,000 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 68,800 External costs 10% of base build costs £ 344,000 Total construction costs £ 3,852,800 Professional fees 12.00% of construction costs £ 462,336 Sales and lettings costs 3% of GDV £ 154,586 S106 costs (not covered by CIL) £ 50,000 Total 'other costs' £ 666,922 Finance costs 6.0% Interest rate Build period 8 Months Finance costs for 100% of construction and other costs £ 180,789 Void finance/rent free period (in months) 24 Months £ 542,367 Total finance costs £ 723,156
Developer return 20% Scheme value £ 1,030,573 Total scheme costs £ 6,273,451 RESIDUAL VALUE Gross residual value -£ 1,120,584 Less purchaser costs 0.00 % Stamp duty land tax £ - 2.00 % Agent/legal purchase fees £ -
Residual value For the scheme -£ 1,142,996 Equivalent per hectare -£ 914,396 Not viable
Potential for CIL
Benchmark land value (per hectare) £ 740,000 Equivalent benchmark land value for site £ 925,000
Potential for CIL for the scheme -£ 2,067,996 Potential per sq m NONE Final Report Page 123 March 2016 – Three Dragons Page 375 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model Town centre comparison retail 800 sqm Tier 1
Size of unit (GIA) 800 sq m Ratio of GEA to GIA 100.0% User input cells GEA 800 sq m Produced by model NIA as % of GIA 95% Key results NIA 760 sq m GEA Gross external area Floors 2 GIA Gross internal area Site coverage 80% NIA Net internal area Site area 0.05 Hectares
SCHEME REVENUE Headline annual rent (in £s per sq m) £213 Rent premium 0% Headline annual rent (in £s per sq m) with BREEAM premium £ 213 Annual rent for assesment (total) - NIA £ 161,880 Yield 6.02% (Yield times rent) £ 2,689,037 Less purchaser costs 5.80 % of yield x rent Gross Development Value £ 2,541,622
SCHEME COSTS Build costs £ 1,239 per sq m £ 991,200 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 19,824 External costs 10% of base build costs £ 99,120 Total construction costs £ 1,110,144 Professional fees 12.00% of construction costs £ 133,217 Sales and lettings costs 3% of GDV £ 76,249 S106 costs (not covered by CIL) £ - Total 'other costs' £ 209,466 Finance costs 6.0% Interest rate Build period 12 Months Finance costs for 100% of construction and other costs £ 79,177 Void finance/rent free period (in months) 12 Months £ 79,177 Total finance costs £ 158,353
Developer return 20% Scheme value £ 508,324 Total scheme costs £ 1,986,288 RESIDUAL VALUE Gross residual value £ 555,335 Less purchaser costs 0.00 % Stamp duty land tax £ - 2.00 % Agent/legal purchase fees £ 11,107
Residual value For the scheme £ 544,446 Equivalent per hectare £ 10,888,918 Go to next stage
Potential for CIL
Benchmark land value (per hectare) £ 21,215,494 Equivalent benchmark land value for site £ 1,060,775
Potential for CIL for the scheme -£ 516,329 Potential per sq m NONE Final Report Page 124 March 2016 – Three Dragons Page 376 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model Town centre comparison retail 800 sqm Tier 2
Size of unit (GIA) 800 sq m Ratio of GEA to GIA 100.0% User input cells GEA 800 sq m Produced by model NIA as % of GIA 95% Key results NIA 760 sq m GEA Gross external area Floors 2 GIA Gross internal area Site coverage 80% NIA Net internal area Site area 0.05 Hectares
SCHEME REVENUE Headline annual rent (in £s per sq m) £165 Rent premium 0% Headline annual rent (in £s per sq m) with BREEAM premium £ 165 Annual rent for assesment (total) - NIA £ 125,400 Yield 7.00% (Yield times rent) £ 1,791,429 Less purchaser costs 5.80 % of yield x rent Gross Development Value £ 1,693,222
SCHEME COSTS Build costs £ 1,239 per sq m £ 991,200 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 19,824 External costs 10% of base build costs £ 99,120 Total construction costs £ 1,110,144 Professional fees 12.00% of construction costs £ 133,217 Sales and lettings costs 3% of GDV £ 50,797 S106 costs (not covered by CIL) £ - Total 'other costs' £ 184,014 Finance costs 6.0% Interest rate Build period 12 Months Finance costs for 100% of construction and other costs £ 77,649 Void finance/rent free period (in months) 12 Months £ 77,649 Total finance costs £ 155,299
Developer return 20% Scheme value £ 338,644 Total scheme costs £ 1,788,101 RESIDUAL VALUE Gross residual value -£ 94,880 Less purchaser costs 0.00 % Stamp duty land tax £ - 2.00 % Agent/legal purchase fees £ -
Residual value For the scheme -£ 96,777 Equivalent per hectare -£ 1,935,542 Not viable
Potential for CIL
Benchmark land value (per hectare) £ 14,526,363 Equivalent benchmark land value for site £ 726,318
Potential for CIL for the scheme -£ 823,095 Potential per sq m NONE Final Report Page 125 March 2016 – Three Dragons Page 377 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model Town centre comparison retail 800 sqm Tier 3
Size of unit (GIA) 800 sq m Ratio of GEA to GIA 100.0% User input cells GEA 800 sq m Produced by model NIA as % of GIA 95% Key results NIA 760 sq m GEA Gross external area Floors 2 GIA Gross internal area Site coverage 80% NIA Net internal area Site area 0.05 Hectares
SCHEME REVENUE Headline annual rent (in £s per sq m) £130 Rent premium 0% Headline annual rent (in £s per sq m) with BREEAM premium £ 130 Annual rent for assesment (total) - NIA £ 98,800 Yield 8.50% (Yield times rent) £ 1,162,353 Less purchaser costs 5.80 % of yield x rent Gross Development Value £ 1,098,632
SCHEME COSTS Build costs £ 1,239 per sq m £ 991,200 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 19,824 External costs 10% of base build costs £ 99,120 Total construction costs £ 1,110,144 Professional fees 12.00% of construction costs £ 133,217 Sales and lettings costs 3% of GDV £ 32,959 S106 costs (not covered by CIL) £ - Total 'other costs' £ 166,176 Finance costs 6.0% Interest rate Build period 12 Months Finance costs for 100% of construction and other costs £ 76,579 Void finance/rent free period (in months) 12 Months £ 76,579 Total finance costs £ 153,158
Developer return 20% Scheme value £ 219,726 Total scheme costs £ 1,649,205 RESIDUAL VALUE Gross residual value -£ 550,573 Less purchaser costs 0.00 % Stamp duty land tax £ - 2.00 % Agent/legal purchase fees £ -
Residual value For the scheme -£ 561,584 Equivalent per hectare -£ 11,231,686 Not viable
Potential for CIL
Benchmark land value (per hectare) £ 740,000 Equivalent benchmark land value for site £ 37,000
Potential for CIL for the scheme -£ 598,584 Potential per sq m NONE
Final Report Page 126 March 2016 – Three Dragons Page 378 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model Out of centre comparison retail multiple units totalling 6,000 sqm - BCIS costs
Size of unit (GIA) 6000 sq m Ratio of GEA to GIA 100.0% User input cells GEA 6000 sq m Produced by model NIA as % of GIA 95% Key results NIA 5700 sq m GEA Gross external area Floors 1 GIA Gross internal area Site coverage 40% NIA Net internal area Site area 1.50 Hectares
SCHEME REVENUE Headline annual rent (in £s per sq m) £194 Rent premium 0% Headline annual rent (in £s per sq m) with BREEAM premium £ 194 Annual rent for assesment (total) - NIA £ 1,103,976 Yield 7.00% (Yield times rent) £ 15,771,086 Less purchaser costs 5.80 % of yield x rent Gross Development Value £ 14,906,508
SCHEME COSTS Build costs £825 per sq m £ 4,950,000 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 99,000 External costs 10% of base build costs £ 495,000 Total construction costs £ 5,544,000 Professional fees 12.00% of construction costs £ 665,280 Sales and lettings costs 3% of GDV £ 447,195 S106 costs (not covered by CIL) £ 500,000 Total 'other costs' £ 1,612,475 Finance costs 6.0% Interest rate Build period 14 Months Finance costs for 100% of construction and other costs £ 500,953 Void finance/rent free period (in months) 12 Months £ 429,389 Total finance costs £ 930,342
Developer return 20% Scheme value £ 2,981,302 Total scheme costs £ 11,068,119 RESIDUAL VALUE Gross residual value £ 3,838,390 Less purchaser costs 4.00 % Stamp duty land tax £ 153,536 2.00 % Agent/legal purchase fees £ 76,768
Residual value For the scheme £ 3,621,122 Equivalent per hectare £ 2,414,081 Go to next stage
Potential for CIL
Benchmark land value (per hectare) £ 2,000,000 Equivalent benchmark land value for site £ 3,000,000
Potential for CIL for the scheme £ 621,122 Potential per sq m £ 104 Final Report Page 127 March 2016 – Three Dragons Page 379 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model Out of centre comparison retail multiple units totalling 6,000 sqm - local costs
Size of unit (GIA) 6000 sq m Ratio of GEA to GIA 100.0% User input cells GEA 6000 sq m Produced by model NIA as % of GIA 95% Key results NIA 5700 sq m GEA Gross external area Floors 1 GIA Gross internal area Site coverage 40% NIA Net internal area Site area 1.50 Hectares
SCHEME REVENUE Headline annual rent (in £s per sq m) £194 Rent premium 0% Headline annual rent (in £s per sq m) with BREEAM premium £ 194 Annual rent for assesment (total) - NIA £ 1,103,976 Yield 7.00% (Yield times rent) £ 15,771,086 Less purchaser costs 5.80 % of yield x rent Gross Development Value £ 14,906,508
SCHEME COSTS Build costs £1,000 per sq m £ 6,000,000 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 120,000 External costs 10% of base build costs £ 600,000 Total construction costs £ 6,720,000 Professional fees 12.00% of construction costs £ 806,400 Sales and lettings costs 3% of GDV £ 447,195 S106 costs (not covered by CIL) £ 500,000 Total 'other costs' £ 1,753,595 Finance costs 6.0% Interest rate Build period 14 Months Finance costs for 100% of construction and other costs £ 593,152 Void finance/rent free period (in months) 12 Months £ 508,416 Total finance costs £ 1,101,567
Developer return 20% Scheme value £ 2,981,302 Total scheme costs £ 12,556,464 RESIDUAL VALUE Gross residual value £ 2,350,044 Less purchaser costs 4.00 % Stamp duty land tax £ 94,002 2.00 % Agent/legal purchase fees £ 47,001
Residual value For the scheme £ 2,217,023 Equivalent per hectare £ 1,478,015 Go to next stage
Potential for CIL
Benchmark land value (per hectare) £ 2,000,000 Equivalent benchmark land value for site £ 3,000,000
Potential for CIL for the scheme -£ 782,977 Potential per sq m NONE Final Report Page 128 March 2016 – Three Dragons Page 380 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model Small Convenience Store 300 sqm
Size of unit (GIA) 300 sq m Ratio of GEA to GIA 100.0% User input cells GEA 300 sq m Produced by model NIA as % of GIA 95% Key results NIA 285 sq m GEA Gross external area Floors 1 GIA Gross internal area Site coverage 40% NIA Net internal area Site area 0.08 Hectares
SCHEME REVENUE Headline annual rent (in £s per sq m) £150 Rent premium 0% Headline annual rent (in £s per sq m) with BREEAM premium £ 150 Annual rent for assesment (total) - NIA £ 42,750 Yield 7.50% (Yield times rent) £ 570,000 Less purchaser costs 5.80 % of yield x rent Gross Development Value £ 538,752
SCHEME COSTS Build costs £ 1,350 per sq m £ 405,000 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 8,100 External costs 10% of base build costs £ 40,500 Total construction costs £ 453,600 Professional fees 12.00% of construction costs £ 54,432 Sales and lettings costs 3% of GDV £ 16,163 S106 costs (not covered by CIL) £ - Total 'other costs' £ 70,595 Finance costs 6.0% Interest rate Build period 6 Months Finance costs for 100% of construction and other costs £ 15,726 Void finance/rent free period (in months) 0 Months £ - Total finance costs £ 15,726
Developer return 20% Scheme value £ 107,750 Total scheme costs £ 647,671 RESIDUAL VALUE Gross residual value -£ 108,919 Less purchaser costs 0.00 % Stamp duty land tax £ - 2.00 % Agent/legal purchase fees £ -
Residual value For the scheme -£ 111,097 Equivalent per hectare -£ 1,481,292 Not viable
Potential for CIL
Benchmark land value (per hectare) £ 1,000,000 Equivalent benchmark land value for site £ 75,000
Potential for CIL for the scheme -£ 186,097 Potential per sq m NONE Final Report Page 129 March 2016 – Three Dragons Page 381 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model Supermarket of 1,100 sqm
Size of unit (GIA) 1100 sq m Ratio of GEA to GIA 100.0% User input cells GEA 1100 sq m Produced by model NIA as % of GIA 95% Key results NIA 1045 sq m GEA Gross external area Floors 1 GIA Gross internal area Site coverage 40% NIA Net internal area Site area 0.28 Hectares
SCHEME REVENUE Headline annual rent (in £s per sq m) £175 Rent premium 0% Headline annual rent (in £s per sq m) with BREEAM premium £ 175 Annual rent for assesment (total) - NIA £ 182,875 Yield 5.50% (Yield times rent) £ 3,325,000 Less purchaser costs 5.80 % of yield x rent Gross Development Value £ 3,142,722
SCHEME COSTS Build costs £ 1,688 per sq m £ 1,856,800 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 37,136 External costs 10% of base build costs £ 185,680 Total construction costs £ 2,079,616 Professional fees 12.00% of construction costs £ 249,554 Sales and lettings costs 3% of GDV £ 94,282 S106 costs (not covered by CIL) £ 100,000 Total 'other costs' £ 443,836 Finance costs 6.0% Interest rate Build period 8 Months Finance costs for 100% of construction and other costs £ 100,938 Void finance/rent free period (in months) 12 Months £ 151,407 Total finance costs £ 252,345
Developer return 20% Scheme value £ 628,544 Total scheme costs £ 3,404,341 RESIDUAL VALUE Gross residual value -£ 261,619 Less purchaser costs 0.00 % Stamp duty land tax £ - 2.00 % Agent/legal purchase fees £ -
Residual value For the scheme -£ 266,851 Equivalent per hectare -£ 970,369 Not viable
Potential for CIL
Benchmark land value (per hectare) £ 4,000,000 Equivalent benchmark land value for site £ 1,100,000
Potential for CIL for the scheme -£ 1,366,851 Potential per sq m NONE Final Report Page 130 March 2016 – Three Dragons Page 382 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model 70 bedroom budget hotel out of town - BCIS costs
Size of unit (GIA) 2450 sq m Ratio of GEA to GIA 100.0% User input cells GEA 2450 sq m Produced by model NIA as % of GIA 95% Key results NIA 2327.5 sq m GEA Gross external area Floors 3 GIA Gross internal area Site coverage 50% NIA Net internal area Site area 0.16 Hectares
SCHEME REVENUE Capital value per room £ 87,500 Rooms 70 Gross capital value £ 6,125,000 Less purchaser costs 5.80 % of gross capital value Gross Development Value £ 5,789,225
SCHEME COSTS Build costs £ 1,235 per sq m £ 3,025,750 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 60,515 External costs 10% of base build costs £ 302,575 Total construction costs £ 3,388,840 Professional fees 12.00% of construction costs £ 406,661 Sales and lettings costs 3% of GDV £ 173,677 S106 costs (not covered by CIL) £ 10,000 Total 'other costs' £ 590,338 Finance costs 6.0% Interest rate Build period 10 Months Finance costs for 100% of construction and other costs £ 198,959 Void finance/rent free period (in months) 6 Months £ 119,375 Total finance costs £ 318,334
Developer return 20% Scheme value £ 1,157,845 Total scheme costs £ 5,455,357 RESIDUAL VALUE Gross residual value £ 333,868 Less purchaser costs 3.00 % Stamp duty land tax £ 10,016 2.00 % Agent/legal purchase fees £ 6,677
Residual value For the scheme £ 317,970 Equivalent per hectare £ 1,946,753 Go to next stage
Potential for CIL
Benchmark land value (per hectare) £ 740,000 Equivalent benchmark land value for site £ 120,867
Potential for CIL for the scheme £ 197,103 Potential per sq m £ 80
Final Report Page 131 March 2016 – Three Dragons Page 383 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model 70 bedroom budget hotel out of town - local costs
Size of unit (GIA) 2450 sq m Ratio of GEA to GIA 100.0% User input cells GEA 2450 sq m Produced by model NIA as % of GIA 95% Key results NIA 2327.5 sq m GEA Gross external area Floors 3 GIA Gross internal area Site coverage 50% NIA Net internal area Site area 0.16 Hectares
SCHEME REVENUE Capital value per room £ 87,500 Rooms 70 Gross capital value £ 6,125,000 Less purchaser costs 5.80 % of gross capital value Gross Development Value £ 5,789,225
SCHEME COSTS Build costs £ 1,857 per sq m £ 4,549,650 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 90,993 External costs 10% of base build costs £ 454,965 Total construction costs £ 5,095,608 Professional fees 12.00% of construction costs £ 611,473 Sales and lettings costs 3% of GDV £ 173,677 S106 costs (not covered by CIL) £ 10,000 Total 'other costs' £ 795,150 Finance costs 6.0% Interest rate Build period 10 Months Finance costs for 100% of construction and other costs £ 294,538 Void finance/rent free period (in months) 6 Months £ 176,723 Total finance costs £ 471,261
Developer return 20% Scheme value £ 1,157,845 Total scheme costs £ 7,519,863 RESIDUAL VALUE Gross residual value -£ 1,730,638 Less purchaser costs 0.00 % Stamp duty land tax £ - 2.00 % Agent/legal purchase fees £ -
Residual value For the scheme -£ 1,765,251 Equivalent per hectare -£ 10,807,660 Not viable
Potential for CIL
Benchmark land value (per hectare) £ 740,000 Equivalent benchmark land value for site £ 120,867
Potential for CIL for the scheme -£ 1,886,118 Potential per sq m NONE
Final Report Page 132 March 2016 – Three Dragons Page 384 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model Edge of centre mixed leisure development
Size of unit (GIA) 3800 sq m Ratio of GEA to GIA 100.0% User input cells GEA 3800 sq m Produced by model NIA as % of GIA 95% Key results NIA 3610 sq m GEA Gross external area Floors 2 GIA Gross internal area Site coverage 80% NIA Net internal area Site area 0.24 Hectares
SCHEME REVENUE Headline annual rent (in £s per sq m) £90 Rent premium 0% Headline annual rent (in £s per sq m) with BREEAM premium £ 90 Annual rent for assesment (total) - NIA £ 324,900 Yield 8.00% (Yield times rent) £ 4,061,250 Less purchaser costs 5.80 % of yield x rent Gross Development Value £ 3,838,611
SCHEME COSTS Build costs £ 1,483 per sq m £ 5,635,400 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 112,708 External costs 10% of base build costs £ 563,540 Total construction costs £ 6,311,648 Professional fees 12.00% of construction costs £ 757,398 Sales and lettings costs 3% of GDV £ 115,158 S106 costs (not covered by CIL) £ 20,000 Total 'other costs' £ 892,556 Finance costs 6.0% Interest rate Build period 12 Months Finance costs for 100% of construction and other costs £ 432,252 Void finance/rent free period (in months) 0 Months £ - Total finance costs £ 432,252
Developer return 20% Scheme value £ 767,722 Total scheme costs £ 8,404,178 RESIDUAL VALUE Gross residual value -£ 4,565,568 Less purchaser costs 0.00 % Stamp duty land tax £ - 2.00 % Agent/legal purchase fees £ -
Residual value For the scheme -£ 4,656,879 Equivalent per hectare -£ 19,607,912 Not viable
Potential for CIL
Benchmark land value (per hectare) £ 740,000 Equivalent benchmark land value for site £ 175,750
Potential for CIL for the scheme -£ 4,832,629 Potential per sq m NONE Final Report Page 133 March 2016 – Three Dragons Page 385 Basingstoke & Deane CIL Viability Study
Non-residential Viability Assessment Model Care home 60 bedrooms
Size of unit (GIA) 3000 sq m Ratio of GEA to GIA 100.0% User input cells GEA 3000 sq m Produced by model NIA as % of GIA 95% Key results NIA 2850 sq m GEA Gross external area Floors 2 GIA Gross internal area Site coverage 40% NIA Net internal area Site area 0.38 Hectares
SCHEME REVENUE Capital value per room £ 118,000 Rooms 60 Gross capital value £ 7,080,000 Less purchaser costs 5.80 % of gross capital value Gross Development Value £ 6,691,871
SCHEME COSTS Build costs £ 1,637 per sq m £ 4,911,000 Additional build costs £ - per sq m £ - Water efficiency 2.00% of base build costs £ 98,220 External costs 10% of base build costs £ 491,100 Total construction costs £ 5,500,320 Professional fees 12.00% of construction costs £ 660,038 Sales and lettings costs 3% of GDV £ 200,756 S106 costs (not covered by CIL) £ 75,000 Total 'other costs' £ 935,795 Finance costs 6.0% Interest rate Build period 12 Months Finance costs for 100% of construction and other costs £ 386,167 Void finance/rent free period (in months) 0 Months £ - Total finance costs £ 386,167
Developer return 20% Scheme value £ 1,338,374 Total scheme costs £ 8,160,656 RESIDUAL VALUE Gross residual value -£ 1,468,784 Less purchaser costs 0.00 % Stamp duty land tax £ - 2.00 % Agent/legal purchase fees £ -
Residual value For the scheme -£ 1,498,160 Equivalent per hectare -£ 3,995,093 Not viable
Potential for CIL
Benchmark land value (per hectare) £ 740,000 Equivalent benchmark land value for site £ 277,500
Potential for CIL for the scheme -£ 1,775,660 Potential per sq m NONE
Final Report Page 134 March 2016 – Three Dragons Page 386 Appendix 4
Infrastructure Delivery Plan
Update to Infrastructure Schedule
CIL Draft Charging Schedule Version – June 2016
The infrastructure schedule sets out the infrastructure that is proposed to support the growth in the emerging Local Plan. The infrastructure schedule is a live document that will need regular updating as infrastructure projects are delivered and as new infrastructure requirements emerge. This version of the infrastructure schedule replaces the previously published version from March 2015 that supported the Main Modifications to the Submission Local Plan. The key changes to this version include: Projects that have been delivered have been removed from the infrastructure schedule Updated to reflect where funding is now in place as a result of successful funding bids to the LEP and some sites now have planning permission which has resulted in infrastructure/funds being secured through planning obligations Updated costs and delivery timescales information from Hampshire County Council Further clarification around what will be delivered/funded through planning obligations or CIL Page 387 Page The schedule outlines the infrastructure project and the Local Plan policy or site for which the infrastructure is required.
Each infrastructure project is assigned a level of priority: essential or place-shaping. Essential infrastructure is that which is essential to enable or support development in the Local Plan. Place-shaping infrastructure is needed in order to build sustainable communities.
The schedule identifies the estimated timescale for delivering the infrastructure.
Indicative costs have been included where they are available and not commercially sensitive and proposed sources of funding.
The infrastructure included in the schedule is only that which is required to support the Local Plan. Other service delivery plans also identify infrastructure projects to be delivered within the borough such as the Hampshire Strategic Infrastructure Statement and the Basingstoke Strategic Transport Infrastructure Plan produced by Hampshire County Council, the water companies’ Asset Management Plans, and Borough Council strategies such as the Green Infrastructure Strategy, Community Buildings Strategy, Playing Pitches Strategy, Built Sports Facilities Strategy and others.
Key Funding in place Part of funding has already been secured, or will be secured through S106 or other funding sources No funding has been identified / Potential for CIL funding
1
Sources of TRANSPORT Funding Funding
due Funding
Infrastructure Level of Indicative Identified through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ Funding £ S106 £ £ S106 Other Notes Victory Roundabout, A3010 Churchill Way junction improvements Essentia Transport (HCC, TA) All sites l By 2019 955,000 0 0 955,000 √ √ Eastrop Roundabout, A3010 Churchill Way junction improvements Essentia Transport (HCC, Basing View) All sites l 2017+ tbc 0 0 tbc √ √ Aldermaston Rd Rbt, Shortfall A340 / A339 Ringway potentially from North junction Essentia CIL, Local Growth Transport improvements (TA) All sites l By 2024 1,917,000 0 0 1,917,000 √ √ Fund & others Growing Places, Local Growth Page 388 Page A340 Aldermaston All sites in Essentia Fund & New Transport Road junction Basingstoke l 2016 4,500,000 4,500,000 0 0 √ √ Homes Bonus A339 / Ringway West All sites / Roundabout - Junction SS3.10 Essentia Transport Improvements (TA) Manydown l By 2024 1,282,000 0 0 1,282,000 √ √ A339 / Roman Rd / Rooksdown Avenue Rbt, junction SS3.10 Essentia Transport improvements (TA) Manydown l By 2019 515,260 0 515,260 0 √ √ Growing Places, Thornycroft 8,500,000 8,500,000 Local Growth Roundabout All sites in Essentia 2017- (total in (total in Fund & New Transport A3010 / A340 / B3400 Basingstoke l 2018+ corridor) corridor) 0 0 √ √ Homes Bonus SS3.10 Manydown, West Ham Roundabout SS9 junction improvements Basingstoke Essentia Transport (TA) Leisure Park l By 2024 667,000 0 667,000 0 √ √ B3400 Worting Road Roundabout junction SS3.10 Essentia Transport improvements (TA) Manydown, l By 2029 255,000 0 255,000 0 √ √
2
Sources of TRANSPORT Funding Funding
due Funding
Infrastructure Level of Indicative Identified through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ Funding £ S106 £ £ S106 Other Notes B3400 Worting Road/ Roman Way roundabout junction SS3.10 Essentia Transport (TA) Manydown l By 2019 294,474 0 294,474 0 √ √ SS3.10 Manydown, Fiveways Junction SS5 sites in Essentia Transport improvements (TA) Oakley l By 2021 300,000 0 300,000 0 √ √ B3400 throughout Laverstoke and Freefolk, improved pedestrian and traffic management All sites in improvements to Overton / Place- Transport 389 Page junctions (HCC) Whitchurch shaping by 2022 270,000 0 0 270,000 √ √ Winchester Rd Rbt A30 / A340 8,500,000 8,500,000 Grant from LEP, junction improvements Essentia 2016- (total in (total in plus New Homes Transport (HCC) All sites l 2017 corridor) corridor) 0 0 √ √ Bonus funding SS3.10 Manydown; SS3.11 Basingstoke Golf Course; SS3.12 A30 / Brighton Hill Rbt Hounsome Local Growth Junction improvements Fields; SS3.2 Essentia Fund & New Transport (TA) Kennel Farm l By 2019 4,000,000 4,000,000 0 0 √ √ Homes Bonus SS3.2 Kennel Farm; SS3.11 Basingstoke A30 / Kempshott Rbt Golf Course, road widening and SS3.12 junction improvements Hounsome Essentia Transport (TA) Fields l By 2019 3,696,000 0 0 3,696,000 √ √
3
Sources of TRANSPORT Funding Funding
due Funding
Infrastructure Level of Indicative Identified through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ Funding £ S106 £ £ S106 Other Notes SS3.11 Hatch Warren Basingstoke Roundabout Golf Course; A30 / Wallop Drive SS3.12 junction improvements Hounsome Essentia Transport (TA) Fields l By 2019 7,974,000 0 0 7,974,000 √ √ SS3.11 Basingstoke A30 Winchester Road Golf Course; (south of Southwood SS3.12 Farm) junction Hounsome Essentia 2017- Transport improvements (HCC) Fields l 2029 500,000 0 500,000 0 √ Hackwood Road Rbt, A30 Ringway South / Page 390 Page A339 / Hackwood Rd junction improvements All sites in Essentia Transport traffic signals (TA) Basingstoke l By 2019 1,920,000 0 0 1,920,000 √ √ SS3.4 North of Popley Fields; Local Growth A33 / A339 Reading Rd SS3.9 East of Fund & others Rbt junction Basingstoke; 7,500,000 7,500,000 S106 secured for improvements, SS3.3 Razors Essentia 2016- (total in (total in SS3.4 and New Transport traffic signals (TA) Farm l 2017 corridor) corridor) 0 0 √ √ Homes Bonus SS3.4 North of Popley Fields, SS3.8 Upper Cufaude Farm, Local Growth A33 Crockford Lane SS3.3 Razors Fund & others Rbt Farm, SS3.9 7,500,000 7,500,000 S106 secured for junction improvements East of Essentia 2016- (total in (total in SS3.4 and New Transport (HCC) Basingstoke l 2018 corridor) corridor) 0 0 √ √ Homes Bonus SS3.9 East of Basingstoke, Local Growth SS3.3 Razors Fund & others A33 Great Binfields Rbt Farm, SS3.4 7,500,000 7,500,000 S106 secured for junction improvements North of Popley Essentia 2016- (total in (total in SS3.4 and New Transport (TA) Fields l 2017 corridor) corridor) 0 0 √ √ Homes Bonus 4
Sources of TRANSPORT Funding Funding
due Funding
Infrastructure Level of Indicative Identified through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ Funding £ S106 £ £ S106 Other Notes A33 / Thornhill Way / SS3.9 East of Long Lane Basingstoke; 7,500,000 7,500,000 Local Growth junction improvements SS3.3 Razors Essentia 2018- (total in (total in Fund & New Transport (TA) Farm l 2019 corridor) corridor) 0 0 √ √ Homes Bonus Taylors Farm Rbt SS3.3 Razors A33 / Gaiger Ave Farm; SS3.8 7,500,000 7,500,000 Local Growth junction improvements Upper Cufaude Essentia 2018- (total in (total in Fund & New Transport (HCC) Farm l 2019 corridor) corridor) 0 0 √ √ Homes Bonus SS5 sites in Bramley, SS3.7 A33 / Bramley Road Redlands, junction improvements SS3.9 East of Essentia Transport (TA) Basingstoke l By 2019 373,000 0 0 373,000 √ √ Page 391 Page A33 link to Cufaude Lane/ Chineham Place- 2014- Transport distributer road (HCC) All sites shaping 2029 3,000,000 0 0 3,000,000 √ √ Access arrangements to a standard appropriate to the scale of development, including access for pedestrians and As sites cyclists, as required by are Transport - relevant policies in the Essentia develop via S278 Access Local Plan All sites l ed √ √ agreement Park & Ride NE and CN9 Transport Subject to Transport - SW corridors into / All sites in Place- 2017- outcomes of CLG Bus Basingstoke (HCC) Basingstoke shaping 2022 5,000,000 0 0 5,000,000 √ funded work
5
Sources of TRANSPORT Funding Funding
due Funding
Infrastructure Level of Indicative Identified through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ Funding £ S106 £ £ S106 Other Notes Subject to agreement with rail authorities. Funding bid has been submitted to the LEP. Revenue Transport - SS10 costs may also be Rail Chineham Station Chineham Essentia required for first (HCC) Railway Station l on-going 8,000,000 0 0 8,000,000 √ √ three years. £61,418,7 £24,500,0 £2,531,73 £34,387,0 TRANSPORT SUB-TOTAL 34 00 4 00 Page 392 Page
6
Sources of EDUCATION Funding Funding
Identified due Funding
Infrastructure Level of Indicative Funding through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ £ S106 £ £ S106 Other Notes S106 funding SS3.5 Overton secured from Hill; SS3.6 Bloswood Lane Bloswood and Overton Hill. Expansion of Lane; SS5 Govern CIL / government Education - Testbourne School by sites in Overton Essentia 2015- ment funding to make Secondary 150 places and Whitchurch l 2020 3,815,500 868,300 0 2,947,200 √ funding up the remainder. 1FE expansion of local secondary school to SS3.8 Upper serve new communities Cufaude Farm; Govern Review of Education - in north/ east of SS3.9 East of Essentia ment catchment will be Secondary Basingstoke Basingstoke l 2019 5,100,000 0 0 5,100,000 √ funding required New 5FE secondary school at Manydown Page 393 Page and safeguarded land Govern Education - for possible expansion SS3.10 Essentia ment Secondary to 12FE Manydown l 2021 22,790,000 0 18,270,000 4,520,000 √ funding SS3.11 2FE expansion of local Basingstoke secondary school to Golf Course; serve new communities SS3.12 Govern Review of Education - in south-west Hounsome Essentia 13,700,00 ment catchment will be Secondary Basingstoke Fields l 2019 13,700,000 0 0 0 √ funding required If the additional housing results in an increase in pupils that cannot be Assumes 42 accommodated then a Govern additional Education - small expansion may SS5 sites in Essentia 2015- ment secondary school Secondary be required. Oakley l 2029 928,000 0 0 928,000 √ funding places required. Expansion of existing Govern Education - school (Park View SS3.2 Kennel Essentia 2014- ment Primary Infant and Junior) Farm l 2019 1,672,270 1,672,270 0 0 √ funding Govern Education - Expansion of local SS3.3 Razors Essentia 2014- ment Primary primary school Farm l 2019 2,149,140 2,149,140 0 0 √ funding
7
Sources of EDUCATION Funding Funding
Identified due Funding
Infrastructure Level of Indicative Funding through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ £ S106 £ £ S106 Other Notes Govern Education - Expansion of local SS3.4 North of Essentia 2014- ment Primary primary school Popley Fields l 2019 2,625,300 2,625,300 0 0 √ funding SS3.1 Swing Swang Lane; 1FE in SS3.7 2019 Redlands; and 2ha site reserved New 2FE primary SS3.8 Upper further on East of school on either East of Cufaude Farm; expansio Govern Basingstoke and Education - Basingstoke or Upper SS3.9 East of Essentia n in ment Upper Cufaude Primary Cufaude Farm Basingstoke l 2023 8,490,000 0 5,950,000 2,540,000 √ funding Farm 1FE in 2018 with 1FE Page 394 Page expansio n in 2021 and further 1FE in 2024. Second school 2 new primary schools open as Govern 1 x 3ha. site and 1 Education - at Manydown: 1 x 3FE SS3.10 Essentia 2FE in ment x 2ha site Primary and 1x 2FE Manydown l 2025 20,150,000 0 17,600,000 2,550,000 √ funding reserved on site 1FE opens in 2019 SS3.11 with 1FE Basingstoke expansio Golf Course ns in 3ha site reserved New 3FE primary and SS3.12 2024 Govern on Hounsome Education - school on Hounsome Hounsome Essentia and ment Fields to serve Primary Fields Fields l 2026 11,660,000 0 8,750,000 2,910,000 √ funding both sites
8
Sources of EDUCATION Funding Funding
Identified due Funding
Infrastructure Level of Indicative Funding through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ £ S106 £ £ S106 Other Notes Govern S106 secured Education - Further expansion of SS5 sites in Essentia 2014- ment from Minchens Primary existing school Bramley l 2029 970,944 970,944 0 0 √ funding Lane permission Govern Education - Expansion of existing SS5 sites in Essentia 2015- ment Primary school Kingsclere l 2029 252,840 0 0 252,840 √ funding Govern Education - Expansion of existing SS5 sites in Essentia 2015- ment Primary primary school Oakley l 2029 758,520 0 0 758,520 √ funding SS3.5 Overton A 1FE expansion Hill; SS3.6 has been detailed. Bloswood S106 funding Expansion of Lane; SS5 Govern secured from Education - Whitchurch Primary sites in Overton Essentia 2014- ment Bloswood Lane
Primary 395 Page School and Whitchurch l 2020 2,972,500 863,889 0 2,108,611 √ funding and Overton Hill. SS3.7 Redlands and Cost based on Education – SS3.9 East of Place- 2017- modular build, not Early Years 48 place nursery Basingstoke shaping 2023 400,000 0 0 400,000 √ including land Cost based on Education – SS3.8 Upper Place- 2020- modular build, not Early Years 32 place nursery Cufaude Farm shaping 2026 400,000 0 0 400,000 √ including land Pre-school and nursery Cost based on provision of modular build, not approximately 400 early including land. years places (4 x 70 First provision Education – place nurseries, 4 x 30 SS3.10 Place- 2017- needed by 300 Early Years place pre-schools) Manydown shaping 2029 2,600,000 0 0 2,600,000 √ homes A dedicated 70 place SS3.11 Cost based on Education – full day care nursery Basingstoke Place- 2020- modular build, not Early Years and one pre-school Golf Course shaping 2028 650,000 0 0 650,000 √ including land A dedicated 70 place SS3.12 Cost based on Education – full day care nursery Hounsome Place- 2017- modular build, not Early Years and one pre-school Fields shaping 2028 400,000 0 0 400,000 √ including land £102,485,0 £9,149,84 £50,570,00 £42,765,1 EDUCATION SUB-TOTAL 14 3 0 71
9
Sources of COMMUNITY Funding Funding
due Funding
Infrastructure Level of Indicative Identified through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ Funding £ S106 £ £ S106 Other Notes Upgrade existing Community facilities in Chineham SS3.1 Swing Place- 2015- Centres and Lychpit Swang Lane shaping 2020 144,000 0 0 144,000 √ Enhancement of Community Gabriel Park SS3.2 Kennel Essentia 2014- Centres community facility Farm l 2019 465,000 465,000 0 0 √
Community New on site 375 sqm SS3.4 North of Essentia 2014- Centres community facility Popley Fields l 2020 622,820 622,820 0 0 √ SS3.5 Overton
Page 396 Page Upgrade existing Hill and SS5 Community community facilities in sites in Place- 2014- Centres Overton Overton shaping 2020 390,000 0 0 390,000 √ SS3.6 Some funds Upgrade existing Bloswood Lane secured through Community community facilities in and SS5 sites Place- 2014- Bloswood Lane Centres Whitchurch in Whitchurch shaping 2029 217,000 108,723 0 108,277 √ S106
Community New 375 sqm on-site SS3.8 Upper Essentia 2020- Centres community facility Cufaude Farm l 2026 750,000 0 750,000 0 √ Could be shared Community New 500 sqm on-site SS3.9 East of Essentia 2018- facility with indoor Centres community facility Basingstoke l 2023 1,000,000 0 1,000,000 0 √ sports hall New 750 sqm community centre and Community two 375 sqm satellite SS3.10 Essentia 2017- Centres community centres Manydown l 2029 3,000,000 0 3,000,000 0 √
10
Sources of COMMUNITY Funding Funding
due Funding
Infrastructure Level of Indicative Identified through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ Funding £ S106 £ £ S106 Other Notes SS3.11 Basingstoke Golf Course; On site provision of one SS3.12 Community 750sqm and one 375 Hounsome Essentia 2017- To incorporate Centres sqm community facility Fields l 2029 2,250,000 0 2,250,000 0 √ changing facilities
Community Upgrade existing SS5 sites in Place- 2014- Centres facilities in Kingsclere Kingsclere shaping 2029 72,000 0 0 72,000 √ Upgrade existing Community community facilities in SS5 sites in Place- 2014- Centres Oakley Oakley shaping 2029 289,000 0 0 289,000 √ SS5 sites in
Page 397 Page Bramley; CN7 Secured through Essential S106 for Extension to Clift Facilities and Place- 2015- Minchens Lane Health Surgery, Bramley Services shaping 2019 330,000 330,000 0 0 √ development All sites; CN7 Essential May be provided Expand existing GP Facilities and Place- 2015- NHS / through better use Health practices Services shaping 2029 tbc 0 0 tbc CCG of existing estate SS3.10 Manydown; CN7 Essential New on site provision of Facilities and Essentia 2017- NHS Health GP surgery Services l 2029 3,000,000 0 0 3,000,000 England
11
Sources of COMMUNITY Funding Funding
due Funding
Infrastructure Level of Indicative Identified through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ Funding £ S106 £ £ S106 Other Notes SS3.1 Swing Swang Lane; SS3.7 Redlands; SS3.8 Upper Cufaude Farm SS3.9 East of Basingstoke; CN8 Community, Leisure and Enhancement of Cultural Place- 2015- Libraries Chineham library Facilities shaping 2029 207,000 0 0 207,000 √ SS3.10 Page 398 Page Manydown; CN8 Community, Library provision Leisure and on-site, possible New library at Cultural Place- 2017- shared facility with Libraries Manydown Facilities shaping 2029 568,845 0 568,845 0 √ community centre SS3.11 Basingstoke Golf Course; SS3.12 Hounsome Fields; SS5 sites in Oakley; CN8 Sites in east of Community, Oakley in Leisure and catchment of Enhancement of South Cultural Place- 2015- South Ham Libraries Ham library Facilities shaping 2029 360,000 0 0 360,000 √ Library.
12
Sources of COMMUNITY Funding Funding
due Funding
Infrastructure Level of Indicative Identified through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ Funding £ S106 £ £ S106 Other Notes SS5 sites in Overton; CN8 Community, Leisure and Enhancement of Cultural Place- 2014- Libraries Overton library Facilities shaping 2019 28,500 0 0 28,500 √ BDBC Capital Place- 2018/19 Progra Cemetery New cemetery All sites shaping + 4,800,000 1,000,000 0 3,800,000 √ mme Teleco ms Communica All sites; CN6 Place- compan tions ICT/Broadband Infrastructure shaping on-going tbc 0 ies Page 399 Page
£18,494,1 £2,526,54 £7,568,84 £8,398,77 COMMUNITY SUB-TOTAL 65 3 5 7
13
Sources of SPORTS FACILITIES Funding Funding
Identified due Funding
Infrastructure Level of Indicative Funding through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ £ S106 £ £ S106 Other Notes All sites; CN8 New and improved Community, Sports facilities at Down Leisure and Partner £265,000 secured Facilities – Grange Sports Cultural Place- 2016- ship from Razors Farm Strategic Complex Facilities shaping 2020 2,000,000 300,000 0 1,700,000 √ funding S106 All sites in Basingstoke; All sites; CN8 Community, Sports Artificial Turf Pitch at Leisure and Partner Facilities – The Vyne Community Cultural Place- 2016- ship
Strategic 400 Page School Facilities shaping 2018 600,000 365,000 0 235,000 √ funding All sites in Whitchurch and Overton; All sites; CN8 Community, Sports Artificial Turf Pitch at Leisure and Partner Facilities – Testbourne Community Cultural Place- 2016- ship Strategic School Facilities shaping 2020 600,000 100,000 0 500,000 √ funding All sites in north of the borough; CN8 Community, Sports Artificial Turf Pitch at Leisure and Partner Facilities – Tadley (The Hurst or Cultural Place- 2016- ship Strategic Barlows Park) Facilities shaping 2020 600,000 0 0 600,000 √ funding Some S106 All sites; CN8 money has been Improvements to Community, collected. Future Sports swimming provision Leisure and Partner funds will come Facilities – (Basingstoke Sports Cultural Place- 2020- ship from CIL and Strategic Centre) Facilities shaping 2025 1,800,000 150,000 0 1,650,000 √ funding partnership funds.
14
Sources of SPORTS FACILITIES Funding Funding
Identified due Funding
Infrastructure Level of Indicative Funding through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ £ S106 £ £ S106 Other Notes All sites; CN8 Community, Possible Sports Improvements to Leisure and Partner opportunity for Facilities – existing swimming pool Cultural Place- 2016- ship redevelopment of Strategic provision (Aquadrome) Facilities shaping 2021 5,000,000 600,000 0 4,400,000 √ funding the Leisure Park All sites; CN8 Community, Sports Leisure and Partner Facilities – Replacement Cultural Place- ship Strategic swimming pool Facilities shaping 2021+ 4,500,000 0 0 4,500,000 √ funding All sites; CN8 Community, Sports Leisure and Partner Facilities – Improvements of Cultural Place- ship Strategic 401 Page indoor tennis facilities Facilities shaping 2018+ 1,880,000 0 0 1,880,000 √ funding Sites to the east of Basingstoke; CN8 Community, Sports Indoor 4 court Leisure and Facilities – badminton hall to serve Cultural Place- 2017- Strategic the east of Basingstoke Facilities shaping 2025 2,850,000 0 0 2,850,000 √ √ Sites to the Indoor 4 court west of Sports badminton hall to serve Basingstoke; Locate within Facilities – the south-west of SS3.10 Place- 2017- secondary school Local Basingstoke Manydown shaping 2025 2,850,000 0 0 2,850,000 √ √ at Manydown Sports Facilities – Improvement to SS3.2 Kennel Essentia 2016- Local existing playing fields Farm l 2019 155,845 155,845 0 0 √ Sports Facilities – On-site provision of 2 SS3.4 North of Essentia 2015- Local tennis courts / MUGA Popley Fields l 2023 165,000 165,000 0 0 √ Sports Facilities – SS3.4 North of Essentia 2015- Local Playing fields Popley Fields l 2023 169,500 169,500 0 0 √ 15
Sources of SPORTS FACILITIES Funding Funding
Identified due Funding
Infrastructure Level of Indicative Funding through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ £ S106 £ £ S106 Other Notes SS3.5 Overton Sports Improve existing sports Hill and SS5 Some funds Facilities – provision in Overton sites in Place- 2014- secured from Local including athletics Overton shaping 2019 165,400 62,193 0 103,207 √ Overton Hill S106 SS3.6 Bloswood Some funds Sports Lane and SS5 secured from Facilities – Improve existing sports sites in Place- 2014- Bloswood Lane Local provision Whitchurch shaping 2029 215,000 44,259 0 170,741 √ S106 To be located at Upper Cufaude Farm. Where possible pitches, SS3.7 tennis courts Page 402 Page Redlands; should be SS3.8 Upper adjacent to Sports Cufaude Farm; community Facilities – On-site provision of 2 SS3.9 East of Essentia 2017- facility/shared Local tennis court / MUGA Basingstoke l 2029 180,000 0 180,000 0 √ facility Where possible pitches, tennis courts and indoor hall should be adjacent to Sports community Facilities – On-site provision of 1 SS3.10 Essentia 2017- facility/shared Local Artificial Turf Pitch Manydown l 2029 600,000 0 600,000 0 √ facility Changing Sports facilities to be Facilities – On-site provision of 4 SS3.10 Essentia 2017- accommodated in Local grass pitches Manydown l 2029 300,000 0 300,000 0 √ community centre Sports Facilities – On-site provision of 4 SS3.10 Essentia 2017- Local tennis courts / MUGA Manydown l 2029 320,000 0 320,000 0 √
16
Sources of SPORTS FACILITIES Funding Funding
Identified due Funding
Infrastructure Level of Indicative Funding through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ £ S106 £ £ S106 Other Notes To be located on SS3.11 Basingstoke Golf Basingstoke Course site. Golf Course; Where possible Sports SS3.12 pitches should be Facilities – On-site provision of 2 Hounsome Essentia 2017- adjacent to Local grass pitches Fields l 2029 150,000 0 150,000 0 √ community facility To be located on SS3.11 Hounsome Fields Basingstoke site. Where Golf Course; possible tennis Sports SS3.12 courts should be Facilities – On site provision of 4 Hounsome Essentia 2017- adjacent to Local tennis courts / MUGA Fields l 2029 320,000 0 320,000 0 √ community facility Page 403 Page Secured through Sports S106 for Facilities – Improve existing sports SS5 sites in Essentia 2014- Minchens Lane Local provision in Bramley Bramley l 2029 122,500 122,500 0 0 √ development Sports Refurbish / reprovide Facilities – football pavilion SS5 sites in Place- 2016- Local Bramley FC Bramley shaping 2029 250,000 0 0 250,000 √ Sports Refurbish existing hard Facilities – court area at Fieldgate, SS5 sites in Place- 2016- Local Kingsclere Kingsclere shaping 2029 75,000 0 0 75,000 √ Sports Provide floodlights and Facilities – pavilion at Kingsclere SS5 sites in Place- 2016- Local Tennis Club Kingsclere shaping 2029 300,000 0 0 300,000 √ Sports Refurbish / reprovide Facilities – cricket pavilion Oakley SS5 sites in Place- 2016- Local Cricket Club Oakley shaping 2029 255,000 0 0 255,000 √ Sports 2 new rugby pitches To achieve Facilities – and 4 team changing SS5 sites in Place- 2016- security of tenure Local rooms Overton shaping 2029 925,000 0 0 925,000 √ for Overton RFC Sports Facilities – Refurbish 2 tennis SS5 sites in Place- 2016- Local courts in Overton Overton shaping 2029 180,000 0 0 180,000 √
17
Sources of SPORTS FACILITIES Funding Funding
Identified due Funding
Infrastructure Level of Indicative Funding through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ £ S106 £ £ S106 Other Notes Sports Refurbish / provide 2 Facilities – new tennis courts in SS5 sites in Place- 2016- Local Whitchurch Whitchurch shaping 2029 180,000 0 0 180,000 √
£27,728,2 £2,234,29 £1,870,00 £23,623,9 SPORTS FACILITIES SUB-TOTAL 45 7 0 48
Page 404 Page
18
Sources of GREEN INFRASTRUCTURE Funding Funding
due Funding
Infrastructure Level of Indicative Identified through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ Funding £ S106 £ £ S106 Other Notes On-site and off-site EM4 Will help deliver habitat creation, Biodiversity, Green Green restoration and Geodiversity Infrastructure Infrastructur management to and Nature Strategy e - mitigate development Conservation / Essentia On- objectives and key Strategic impacts All sites l going tbc 0 tbc 0 √ principles. EM4 Will help deliver Biodiversity, Green Green Geodiversity Infrastructure Infrastructur Strategic habitat and Nature Strategy e - creation, restoration Conservation / Place- On- objectives and key Strategic and management All sites shaping going tbc 0 0 tbc √ principles. Open space - Infrastructure Page 405 Page improvements, maintenance and management for all Will help deliver strategic parks and Green Green green spaces, subject Infrastructure Infrastructur to increased visitor EM5 Green Strategy e - pressure from new Infrastructure / Place- On- objectives and key Strategic development All sites shaping going tbc 0 0 tbc √ principles. Open space - Infrastructure improvements, maintenance and EM5 Green management for Infrastructure / neighbourhood Sites within Green parks/green spaces to 5625m of the Infrastructur mitigate increased neighbourhood e - visitor pressure from park/ Place- On- Strategic new development greenspace shaping going tbc 0 0 tbc √ Green Infrastructur Open space - Strategic EM5 Green e - allotments as set out in Infrastructure / Place- On- Strategic the GI strategy All sites shaping going tbc 0 0 tbc √
19
Sources of GREEN INFRASTRUCTURE Funding Funding
due Funding
Infrastructure Level of Indicative Identified through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ Funding £ S106 £ £ S106 Other Notes Open space - Infrastructure improvements, maintenance and management of EM5 Green Neighbourhood Play Infrastructure / Green Areas to mitigate Sites within Infrastructur increased visitor 600m of the e - pressure from new neighbourhood Place- On- Strategic development play area. shaping going tbc 0 0 tbc √ Open space - Infrastructure improvements, maintenance and Page 406 Page management of Green Strategic Play Areas to Infrastructur mitigate increased EM5 Green e - visitor pressure from Infrastructure / Place- On- Strategic new development All sites shaping going tbc 0 0 tbc √ Green Infrastructur All sites / Land to be e - SS3.10 Essentia 2017- secured through Strategic Country Park Manydown l 2029 3,700,000 0 0 3,700,000 √ √ S106 Green On site provision of Costs are Infrastructur multifunctional green indicative as will e – Local space, equipped play SS3.1 Swing Essentia 2017- be provided in- and allotments Swang Lane l 2019 347,000 0 347,000 0 √ kind on-site On site provision of kickabout and equipped Permission play. Contributions granted. £331,600 towards open space for open space improvements at and £50,908 for Green Beggarwood Park and On site On site allotments Infrastructur Old Down and SS3.2 Kennel Essentia 2016- provision provision secured through e – Local allotment provision Farm l 2019 + 382,508 + 382,508 0 0 √ S106
20
Sources of GREEN INFRASTRUCTURE Funding Funding
due Funding
Infrastructure Level of Indicative Identified through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ Funding £ S106 £ £ S106 Other Notes On site provision of Green multifunctional green Infrastructur space, equipped play SS3.3 Razors Essentia 2017- On site On site Permission e – Local and allotments Farm l 2024 provision provision 0 0 √ granted On site provision of Green multifunctional green Infrastructur space, equipped play SS3.4 North of Essentia 2015- On site On site Permission e – Local and allotments Popley Fields l 2023 provision provision 0 0 √ granted On site provision of Green multifunctional green Infrastructur space and equipped SS3.5 Overton Essentia 2016- On site On site e – Local play. Hill l 2020 provision provision 0 0 √ Permission granted for 83 Page 407 Page On site provision of On site dwellings. On site multifunctional green On site + On site + provision provision will be Green space and contributions some 44,784 (to (to serve sought for Infrastructur towards equipped play SS3.6 Essentia 2017- contributio serve 83 67 outstanding 67 e – Local and allotments Bloswood Lane l 2022 ns dwellings) dwellings) 0 √ dwellings. On site provision of Costs are Green multifunctional green indicative as will Infrastructur space, equipped play SS3.7 Essentia 2017- be provided in- e – Local and allotments Redlands l 2020 447,000 0 447,000 0 √ kind on-site On site provision of Costs are Green multifunctional green indicative as will Infrastructur space, equipped play SS3.8 Upper Essentia 2020- be provided in- e – Local and allotments Cufaude Farm l 2026 1,162,000 0 1,162,000 0 √ kind on-site On site provision of Costs are Green multifunctional green indicative as will Infrastructur space, equipped play SS3.9 East of Essentia 2018- be provided in- e – Local and allotments Basingstoke l 2023 1,341,000 0 1,341,000 0 √ kind on-site On site provision of Costs are Green multifunctional green indicative as will Infrastructur space, equipped play SS3.10 Essentia 2017- be provided in- e – Local and allotments Manydown l 2029 9,500,000 0 9,500,000 0 √ kind on-site
21
Sources of GREEN INFRASTRUCTURE Funding Funding
due Funding
Infrastructure Level of Indicative Identified through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ Funding £ S106 £ £ S106 Other Notes On site provision of Costs are Green multifunctional green SS3.11 indicative as will Infrastructur space, equipped play, Basingstoke Essentia 2020- be provided in- e – Local and allotments Golf Course l 2028 2,979,000 0 2,979,000 0 √ kind on-site On site provision of Costs are Green multifunctional green SS3.12 indicative as will Infrastructur space, equipped play, Hounsome Essentia 2017- be provided in- e – Local and allotments Fields l 2028 2,234,000 0 2,234,000 0 √ kind on-site Provision of Secured through Green multifunctional green S106 for Infrastructur space, equipped play, SS5 sites in Essentia Up to On site On site + Minchens Lane e – Local and allotments Bramley l 2029 +77,000 77,000 0 0 √ development Provision of Green multifunctional green On-site provision Page 408 Page Infrastructur space, equipped play, SS5 sites in Essentia Up to through S106, off- e – Local and allotments Kingsclere l 2029 102,000 0 0 102,000 √ √ site through CIL Provision of Green multifunctional green On-site provision Infrastructur space, equipped play, SS5 sites in Essentia Up to through S106, off- e – Local and allotments Oakley l 2029 306,000 0 0 306,000 √ √ site through CIL Provision of Green multifunctional green On-site provision Infrastructur space, equipped play, SS5 sites in Essentia Up to through S106, off- e – Local and allotments Overton l 2029 306,000 0 0 306,000 √ √ site through CIL Provision of Green multifunctional green On-site provision Infrastructur space, equipped play, SS5 sites in Essentia Up to through S106, off- e – Local and allotments Whitchurch l 2029 407,000 0 0 407,000 √ √ site through CIL £22,831,0 £18,010,0 £4,821,00 GREEN INFRASTRUCTURE SUB-TOTAL 00 £0 00 0
22
Sources of FLOODING AND WATER Funding Funding
due Funding
Infrastructure Level of Indicative Identified through Shortfall CIL Type Requirement Policy / Site Priority Delivery Costs £ Funding £ S106 £ £ S106 Other Notes Strategic flood alleviation schemes All sites; EM7 and flood prevention Managing Essentia Flooding measures Flood Risk l on-going tbc 0 tbc tbc √ Depends Depends All relevant on site on site sites; EM7 specific specific Site specific flood risk Managing Essentia circumsta circumsta Flooding management / SUDS Flood Risk l on-going nces 0 nces 0 √ Projects to support meeting the aims of the Water Water Framework All sites; EM6 Essentia Quality Directive Water Quality l on-going tbc 0 0 tbc √ Upgrade to Page 409 Page Basingstoke Sewage Thames Treatment Works to Water address any changes in All sites in Asset Waste environment consents Basingstoke; Manage Water set by the Environment EM6 Water Essentia 2020- ment Agency. Quality l 2025 tbc 0 0 Plan Funding will be obtained through direct agreements between water Depends Depends companies and Sewer network on site on site developers, Waste upgrades including on All sites; EM7 As sites specific specific facilitated by Water site storage or store Managing Essentia come circumsta circumsta planning flows Flood Risk l forward nces nces √ conditions
FLOODING AND WATER SUB-TOTAL tbc 0 tbc tbc
23
OVERALL TOTAL INFRASTRUCTURE COST £232,957,158
OVERALL IDENTIFIED FUNDS £38,410,683
OVERALL FUNDS ANTICIPATED THROUGH S106 £80,550,579
OVERALL INFRASTRUCTURE FUNDING SHORTFALL £113,995,896
Page 410 Page
24
June 2016
Appendix 5 Introduction to Community Infrastructure Levy (CIL)
What is the Community Infrastructure Levy?
The Community Infrastructure Levy is a tool for local authorities to help deliver infrastructure to support the development of the area. Local authorities set a levy and then collect the charge from new developments. Levy rates are charged in £ per square metre. Different rates can be set for different types, scales and locations of development. The funds can then be spent on infrastructure.
What evidence is required to set a CIL?
In order to set a levy rate, the local authority must essentially have two forms of evidence. Firstly it must establish that there is an infrastructure ‘funding gap’ based on the infrastructure needed to support the development in the Local Plan. Secondly, viability evidence is required to inform the rates that are set and ensure they do not put the future development of the area at risk. The rates must strike an appropriate balance between the need to fund infrastructure and the potential implications for the economic viability of development.
What types of development pay CIL?
Where evidence indicates that it is viable, CIL rates can be set for the development of all new homes and all non-residential development greater than 100 square metres. For BDBC, CIL is only viable on housing, out of town retail and budget hotels. CIL is not payable on affordable housing, self-build homes and buildings that people do not normally go into.
How is CIL different to Section 106 planning obligations?
CIL and Section 106 are different, but they can both be used to fund infrastructure. The level of a CIL charge on a development is calculated by multiplying the charge rate by the development’s gross internal floor area. Once the CIL rates are set, this charge is non- negotiable. The level of a Section 106 planning obligation depends on what is required to mitigate the scheme or make it acceptable in planning terms and S106 is negotiable.
Why introduce CIL and not carry on with the existing approach of using S106 to secure infrastructure?
There are two reasons why it is not possible to continue securing S106 planning obligations in the same way we have done in the past.
Firstly, the CIL regulations restrict the use of pooled S106 contributions towards items that may be funded through the levy. This limits the council’s ability to pool funds through S106 contributions towards provision of one large piece of infrastructure and the only way round this is to implement CIL.
Secondly, the National Planning Policy Framework (paragraph 204) sets out strict rules about when a local planning authority can seek S106 planning obligations. They “should only be sought where they meet all of the following tests: Necessary to make the development acceptable in planning terms; Directly related to the development; and Fairly and reasonably related in scale and kind to the development.” Page 411 June 2016
Will some developments have to pay CIL and S106 contributions?
Yes. The majority of developments will be expected to pay CIL (unless a nil rate is set) but some sites will also still have planning obligations attached to them, where they meet the three tests above, in order to make the development acceptable.
What can the levy be spent on?
The levy can be used to fund a wide range of infrastructure, including transport, flood defences, parks, play areas, schools, sports facilities, and community and healthcare facilities. It can be used to increase the capacity of existing infrastructure or to repair infrastructure if it is necessary to support development. The council should set out what it intends to spend its CIL income on in a Regulation 123 list.
Will CIL funds make up the entire infrastructure funding gap?
No. The levy delivers additional funding to carry out a wide range of infrastructure projects that support growth and benefit the local community. It cannot be expected to pay for all of the infrastructure required, but it is expected to make a contribution.
Will the local community receive a portion of CIL?
The Borough Council has a duty to pass to the Parish Council a proportion of any CIL receipts collected from chargeable development built within that parish. This is called the ‘neighbourhood fund.’ The amount that the parish will receive depends on whether it has a neighbourhood plan in place or not. If a neighbourhood plan is in place, the parish will receive 25% of all the CIL receipts. If there is not a neighbourhood plan in place, the parish can expect to receive 15% of the CIL receipts, but this is capped each year at a maximum of £100 per existing dwelling in the parish. In areas where there is a zero CIL rate, the Parish Council will not receive CIL receipts. There is a body of work to be done around the implementation of CIL and this includes looking at the mechanism for providing the funds to parish councils.
What can Parish Councils spend the neighbourhood fund on?
The neighbourhood fund can be spent on a wider range of things than the rest of the levy, provided that it meets the requirement to ‘support the development of the local area’ (see Regulation 59C for details). The wider definition means that the neighbourhood fund can be spent on things other than infrastructure. For example, the pot could be used to fund affordable housing where it would address the demands that development places on the area.
If a parish council does not spend its levy share within five years of receipt, or does not spend it on initiatives that support the development of the local area, the charging authority may require it to repay some or all of those funds.
What is double dipping and how will it be avoided?
Double dipping occurs when a local authority seeks CIL and S106 contributions for the same piece of infrastructure. This is not permitted by the CIL regulations. In order to avoid this situation, the Council has set out a list of infrastructure that it intends to fund through CIL income, known as a Regulation 123 list. Section 106 planning obligations cannot be used to provide things on the Regulation 123 list.
Page 412 May 2017 to Apr 2018 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 Sat 1 Sun 2 1 1 Mon 1 BH 3 2 1 BH 2 BH Tue 2 4 L 1 3 2 3 Wed 3 5 2 4 DC 1 DC 3 4 Thu 4 E (p) 1 6 3 5 2 4 1 1 5 Fri 5 2 7 VP 4 VP 1 VP 6 3 1 VP 5 VP 2 VP 2 VP 6 VP Sat 6 3 8 5 2 7 4 2 6 3 3 7 Sun 7 4 9 6 3 8 5 3 7 4 4 8 Mon 8 5 10 7 4 HR 9 6 4 8 5 5 9 Tue 9 6 11 CAB 8 5 CAB 10 CAB 7 CAB 5 CAB 9 CAB 6 CAB 6 CAB 10 Wed 10 7 12 DC 9 DC 6 DC 11 8 CEP 6 DC 10 DC 7 DC 7 DC 11 DC Thu 11 C (A) 8 EPH 13 10 7 12 9 7 11 8 8 12 Fri 12 VP 9 VP 14 11 8 13 10 8 12 9 9 13 Sat 13 10 15 12 9 14 11 9 13 10 10 14 Sun 14 11 16 13 10 15 12 10 14 11 11 15 Mon 15 12 17 14 11 16 ST 13 11 AA 15 12 ST 12 16 Tue 16 13 CAB 18 15 12 17 14 S 12 16 13 13 17 Wed 17 DC 14 DC 19 CEP 16 13 CEP 18 15 13 17 CEP 14 14 CEP 18 Thu 18 C (S) 15 M 20 EPH 17 14 19 16 14 C 18 M 15 15 EPH 19 Page 413 Page Fri 19 16 21 18 15 20 17 15 19 16 16 20 Sat 20 17 22 19 16 21 18 16 20 17 17 21 Sun 21 18 23 20 17 22 19 17 21 18 18 22 Mon 22 19 ST 24 21 18 23 20 18 22 AA 19 19 23 Tue 23 CAB 20 S 25 S 22 19 S 24 21 19 23 S 20 20 S 24 Wed 24 21 26 23 20 25 22 20 24 21 21 25 Thu 25 22 27 C 24 21 M 26 C 23 EPH 21 25 EPH 22 C (B) 22 C 26 Fri 26 23 28 25 22 27 VP 24 22 26 23 23 27 Sat 27 24 29 26 23 28 25 23 27 24 24 28 Sun 28 25 30 27 24 29 26 24 28 25 25 29 Agenda Item 14 Mon 29 BH 26 AA 31 28 BH 25 AA 30 27 25 BH 29 26 HR 26 AA 30 Tue 30 27 29 26 31 L 28 26 BH 30 L 27 27 Wed 31 CEP 28 30 27 29 27 31 28 28 Thu 29 31 28 EPH 30 28 29 Fri 30 29 VP 29 30 BH Sat 30 30 31 Sun 31 C Council S Scrutiny AA Audit & Accounts Commencement Times C(A) Annual Council Mtg EPH Economic Planning Housing DC Development Control Meetings to commence at C(S) Council Selection Mtg CEP Community Environment Partnerships VP Viewing Panel 18:30 except HR meetings C(B) Council Meeting (Bud.) M Manydown Overview Committee Do not book any meetings and A & A CAB Cabinet L Licensing BH OC Bank Holiday (offices closed) HR 2.30 pm HR Human Resources AA 2.00 pm ST Standards VP 9.30 am E Elections R = Reserve Date This page is intentionally left blank