LOCAL PLAN VIABILITY ASSESSMENT ______________________________________________________________________ PREPARED ON BEHALF OF LIVERPOOL CITY COUNCIL OCTOBER | 2018 TABLE OF CONTENTS _________________________________________________________ 1.0 INTRODUCTION ...................................................................................................... 1 2.0 PLANNING POLICY CONTEXT ..................................................................................... 3 3.0 METHODOLOGY ..................................................................................................... 16 4.0 OVERVIEW OF LIVERPOOL ...................................................................................... 35 5.0 FINANCIAL APPRAISAL ASSUMPTIONS ..................................................................... 77 6.0 VIABILITY TESTING RESULTS ................................................................................. 96 7.0 PLAN VIABILITY AND DELIVERY .............................................................................. 126 Appendices Appendix 1 Allocations Analysis Appendix 2 Planning Application Analysis Appendix 3 New Build Housing Sales/Asking Prices Appendix 4 Hotel Transactions Appendix 5 Commercial Land Sales Appendix 6 Site Allocations – Assumptions and Results Appendix 7 QS Construction Cost Report Appendix 8 Liverpool City Council Completions Data (Zone 1) 1.0 INTRODUCTION 1.0 INTRODUCTION ____________________________________________________________________ 1.01 Liverpool City Council (‘the Council’) approved the Pre-Submission Draft of the Local Plan 2013-2033 for final public consultation on 24 January 2018. The new Local Plan will provide the framework for the future development in the City, containing the policies and a policies map that will guide development until 2033. The new Local Plan provides a long term spatial vision, strategic priorities and detailed policies to manage development and land allocations for housing, employment and mixed use developments. 1.02 Keppie Massie have been instructed by the Council to consider the cumulative impact of the policies and proposals contained within the new Local Plan on viability and deliverability. This Report therefore provides an assessment of the viability of the Local Plan in terms of both policies and allocations. 1.03 Overall, the aim of the study is to satisfy the tests of viability and deliverability laid down in the National Planning Policy Framework (NPPF) and the National Planning Practice Guidance (NPPG). Format of Report 1.04 The Report is structured based on the following sections:- Section 2 – Planning Policy Context 1.05 Here we have provided an overview of the Strategic Policies, Development Management Policies, and Site Allocation Policies with an outline of the key strategic themes and plan policies which impact on viability and delivery. Section 3 – Methodology 1.06 In this section we outline the methodology that has been adopted for the study and the viability assessments, together with details of the development scenarios tested. Section 4 – Overview of Liverpool 1.07 This section provides general information about the social and economic characteristics of Liverpool, together with an overview of the residential and commercial property markets. Page | 1 1.0 INTRODUCTION Section 5 – Financial Appraisal Assumptions 1.08 This section outlines the key assumptions that we have made in preparing our financial assessments including details of how we have addressed specific Local Plan Policies. Section 6 –Viability Testing Results 1.09 This section provides an overview of the results from the viability testing together with a commentary on the results and also the impact of the Local Plan policies on viability. We also consider the viability of the proposed allocations. Section 7 – Plan Viability and Deliverability 1.10 At Section 7 we provide our conclusions about the key policies that have implications for economic viability and comment on the viability and deliverability of Liverpool’s Local Plan. Page | 2 2.0 PLANNING POLICY CONTEXT 2.0 PLANNING POLICY CONTEXT ____________________________________________________________________ Background 2.01 The Council published the Pre-Submission Draft Local Plan in January 2018. This sets out a long term spatial vision, strategic priorities and policies for future development in the City over the next 15 - 20 years, specifically with regard to the quantity and location of new homes, employment provision, shops, facilities and other services, transport and other infrastructure provision, climate change mitigation and adaption and the conservation and enhancement of the natural and historic environment. 2.02 The plan sets out:- Development Management Policies that guide the delivery of development in the City and in particular provide detailed advice on matters such as scale, design, accessibility, sustainability etc of proposals; Site Allocations for residential, employment, retail and other land uses across the City and; Designations where specific policies apply for example in relation to District or Local Centres 2.03 This section identifies the key policies contained within the Pre-Submission Draft Local Plan (January 2018) that could potentially impact on development viability within the City. These impacts may be in terms of location, physical form or the level of planning contributions. Pre-Submission Draft Liverpool Local Plan January 2018 (‘the Local Plan’) Overview 2.04 The Local Plan includes Strategic Policies, Development Management Policies and Site Allocation Policies which will inform decisions on development within the City. Strategic Policies set the overall framework for the City. The Development Management Policies deal with detailed matters that need to be addressed by development proposals and as such will apply to all planning applications including planning applications on allocated sites where relevant. The Allocation Policies allocate land for specific uses. We have provided a short summary of those policies most relevant to the study in the paragraphs below. Page | 3 2.0 PLANNING POLICY CONTEXT Strategic Policies STP2 Sustainable Growth Principles and Managing Environmental Impacts 2.05 This policy sets out a requirement that new development should:- As a first priority, be located on previously developed land and/or re-use an existing building, seek to use secondary materials such as recycled aggregates and where appropriate aim to secure the remediation of contaminated sites; 2.06 The aim of the policy is to utilise land efficiently by requiring the use of previously developed land and buildings first to meet the City’s objectively assessed needs for employment and housing. STP5 Infrastructure Provision 2.07 Reflecting the theme in policy STP2 the policy states that:- New developments should primarily be located on previously developed land in accordance with Policy STP2 and then in areas with the best infrastructure capacity to maximise the use of existing facilities, minimise the need for new provision and reduce the need to travel. 2.08 The policy goes on to say that:- Where new development is likely to create a specific shortfall in infrastructure capacity or exacerbate existing deficiencies as identified by service providers or in the Council’s Infrastructure Delivery Programme (IDP), developers will be required to adequately mitigate or compensate for those deficiencies, in line with Policy STP6 – Developer Contributions, either through:- a. Providing new on or off-site infrastructure provision; and/or b. Making payments through a Community Infrastructure Levy or other developer contribution procedure. STP6 Developer Contributions 2.09 This policy addresses developer contributions and states that:- 1. Developer contributions will be sought to ensure that new development meets the reasonable costs of providing the on and off-site infrastructure requirements, to meet the needs for additional or improvements to existing local and strategic infrastructure, services and facilities that would mitigate and/or compensate for the impacts generated by the new development. Page | 4 2.0 PLANNING POLICY CONTEXT 2. All developments will also be expected to provide for the future maintenance of facilities provided as a result of the development. 3. Developer contributions may be secured as a planning obligation through a Section 106 Agreement, where development would otherwise be unacceptable and/or through the Community Infrastructure Levy (CIL) to enable the cumulative impacts of developments to be managed. 4. Where viability is identified as an issue, a site specific independent financial evaluation will be required to demonstrate to the Council that a development will be unviable as a consequence of the developer contributions. 2.10 The explanation to the policy also includes a provision that where developer contributions are deferred the Council will apply clauses in planning obligations relating to deferred contributions, which will seek to recover all or part of the discount in circumstances where the financial climate and economic viability of the development improves. Any recaptured discount will be limited to the full standard developer contributions for the infrastructure applicable at the time that the planning obligation for a development was signed. Development Management Policies and Site Allocations Liverpool City Centre 2.11 Policies CC1 – CC18 contain area specific policy approaches relating to new development in the City Centre. The policies address