The Community Infrastructure Levy is coming to a town near YOU!

Tax, tax & more tax for house holder extensions - that be the answer!

Many house extensions will now be caught by this developer or land owner tax which in many cases will be the equivalent of a 10% added tax on the build cost for an extension - Yes that's right - the threshold for developer contributions for any residential development work is now attributable to householder extensions or garden outbuildings exceeding 100 square metres and as low as one new dwelling. This is to fill the funding gap for infrastructure that is created by your development.

Summary

The Community Infrastructure Levy (CIL) is a new tariff system that enables local authorities to make a charge on most forms of new development to fund infrastructure; it will largely replace s106 developer contributions as a way of securing pooled contributions towards new infrastructure and thus will be an important mechanism for securing infrastructure improvements throughout the District.   

It takes the form of a charge per square metre of net additional floorspace of development. The levy rates will have to be underpinned firstly by evidence of the infrastructure needed to support new development and secondly by evidence of development viability. 

Most councils are now preparing the evidence base for CIL prior to two phases of consultation and a public examination, culminating in the introduction of a CIL by a certain date. My own Council WDC is now about to adopt the system in Early November 2012 being only one of seven LPA's nationally to adopt the new land owner tax as a ‘frontrunner’.

Introduction  

The CIL Regulations took effect on 6th April 2010 and provision for CIL is included within the Localism Bill; a “meaningful” proportion (yet to be defined) of the funds levied will be required to be spent in the local area where they are derived from. Many Local Cabinet members supported the principle of a CIL for preparation during the coming 4 years.

CIL is intended to supplement rather than replace other funding streams and is intended to promote development rather than hinder it. (if someone can tell me how that oxymoron works I will be most enlightened).

We are told that its main advantages are that:

1 - It will be a modest (1-4% of total development costs), fixed, non-negotiable charge which is therefore transparent and predictable.  This must be an aspiration 'get out of jail free card' target figure as my own councils levy rate is £125 per square meter being around 10% of the construction cost - THEY LIE - you have been warned.

2 - It will be less time consuming and complicated than s106 planning obligations, with less negotiation with applicants and drawing up of legal agreements. When has any change in a council run system ever been more simpler & transparent?

3 - The Council will be able to use anticipated CIL receipts to secure additional borrowings to deliver capital infrastructure items - Yes, get more debt just like the last 20 years - its been most successful hasn't it?

Section 106 Agreements will still be used, but in a much more restricted way, notably they will not be able to be used towards infrastructure schemes that require contributions pooled from many different developments. Where large scale developments would, by itself, or in combination with a small number of other developments fund particular items of infrastructure then s106 Agreements are still most likely to be used.

Affordable housing will also still be secured using s106 agreements to ensure this is provided on site. Other site-specific elements such as open space and highway improvements may also continue to be secured by way of a s106 agreement.

Current progress and timetable

Many Councils have now adopted a timetable and key milestones within a programme.  Check out your own Council to see how far down the line they are with this new taxation system. A Members seminar is usually the next stage, prior to an Individual Cabinet Member Decision and public consultation on the Preliminary Draft Charging Schedule. Taking representations into account the Council will undertake further work if necessary before consultation on the Draft Charging Schedule in the new year.  That's how its meant to operate in most cases.

Infrastructure planning

Most Councils have been working with infrastructure providers since 2008 in preparing its Infrastructure Delivery Plan to support the Councils Development Framework and many are updating this document following further engagement. This will form the basis of identifying the total cost of infrastructure that can be funded from CIL.

Viability assessments

A requirement of CIL is that it should strike an appropriate balance between the desirability of funding infrastructure from the levy and the potential effects that imposing the levy may have upon the economic viability of development. 

To this end the some Councils have appointed consultants, to undertake assessments of viability of various types and scales of development across the District. Officers usually work closely with the consultants to produce the evidence required and a final report.

CIL “Frontrunners”

My own Council Wycombe DC have been selected by the Government as a ‘frontrunner’ in the development of a CIL. Officers will work mainly with the Planning Advisory Service (part of the Local Government Group funded directly by the Department of Communities and Local Government) and will receive advice and support throughout the process including workshops with other frontrunner Councils and one-to-one meetings.

Future processes

The Council will be the collecting authority for CIL in most cases, and will have a key role in collecting, monitoring and distributing the funds. It is clear from the initial background evidence work undertaken that CIL will not generate sufficient funding to pay for all the District’s major infrastructure needs and there will need to be a process of governance and prioritisation to identify when and how CIL receipts are spent.

There will also be a significant project oversight role to ensure that CIL funded projects are developed and implemented effectively. The corporate governance and operational processes needed to underpin an effective CIL process will be considered further as work on the CIL develops. 

• What is the Community Infrastructure Levy
  
  What is the Community Infrastructure Levy - An introduction to the Community Infrastructure Levy
• Benefits of the Community Infrastructure Levy
  
  Benefits of the Community Infrastructure Levy - An introduction to the Community Infrastructure Levy
• Who can charge and collect the levy
  
  Who can charge and collect the levy - An introduction to the Community Infrastructure Levy
• How will a charging authority set a rate for their levy
  
  How will a charging authority set a rate for their levy - An introduction to the Community Infrastructure Levy
• When will the levy be charged
  
  When will the levy be charged – and when won’t it? - An introduction to the Community Infrastructure Levy
• Who is liable to pay the levy and when
  
  Who is liable to pay the levy – and when? - An introduction to the Community Infrastructure Levy
• How is the levy paid
  
  How is the levy paid? - An introduction to the Community Infrastructure Levy
• What exemptions are there from paying the levy
  
  What exemptions are there from paying the levy? - An introduction to the Community Infrastructure Levy
• How will the levy affect planning obligations?
  
  How will the levy affect planning obligations? - An introduction to the Community Infrastructure Levy