Bracknell Forest Borough CouncilCommunity Infrastructure LevyPreliminary Draft ChargingSchedule

Bracknell Forest Borough Local Development Frameworkwww.bracknell-forest.gov.ukJune 2012

31 How to get involved

52 Introduction to the Community Infrastructure Levy

73 Infrastructure Needs and Delivery Plan

94 Viability

115 Proposed CIL Charging Rates

146 Exemptions and Payment Terms

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1 How to get involvedThe Preliminary Draft Charging Schedule is available for consultation between Monday 25June and Monday 13 August 2012. All comments must be received by 5pm on Monday13 August.

The supporting Viability Study and the Infrastructure Delivery Plan are also being made availablefor inspection. All can be viewed at the Council Offices at Time Square and EasthampsteadHouse; local libraries; and at Town/Parish Council Offices. They are also available on-line atInsert Link.

There are a number of ways in which you can make comments on the Preliminary Draft ChargingSchedule document. To save time and reduce costs, the Council would prefer you to respondelectronically by using the following link to our planning consultation portal: Insert Link thenclick on the 'view and comment' box.

If you would rather use an alternative method, the Council has produced a response form thatcan be completed and returned. You can use the form to comment on any part of the of thePreliminary Draft Charging Schedule document. An electronic version of the form can bedownloaded from Insert Link. Once you have completed the form, please email it todevelopment.plan@bracknell-forest.gov.uk. Paper copies of the form are available from theCouncil Offices at Time Square and Easthampstead House, local libraries and Town/ParishCouncil Offices or can be requested by telephoning 01344 352000. Once you have completedall, or part, of the form, please email or post it to:

Spatial PolicyEnvironment, Culture & CommunitiesBracknell Forest CouncilTime SquareMarket StreetBracknellRG12 1JD

What will happen to your comments

Any representations received will be available to view through the planning consultation portalsometime after the close of consultation. Please check Insert Link for updates.

Once the Council has considered all the representations received it will produce a Draft ChargingSchedule which will be subject to a further round of consultation. Consultation on the DraftCharging Schedule is expected to take place in November/December 2012 and it is expectedthe Council will submit the Charging Schedule for an independent public examination in January2013.

Supporting documents

The Preliminary Draft Charging Schedule is supported by a number of documents as follows:

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1. CIL Viability Study

2. Infrastructure Delivery Plan - Draft Submission Site Allocations Development PlanDocument, November 2011

Further information

If you have any queries about this document, please contact a member of the DevelopmentPlans Team using the e-mail or postal addresses above, or phone: 01344 352000.

More information on the Local Development Framework is athttp://www.bracknell-forest.gov.uk/ldf

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2 Introduction to the CommunityInfrastructure Levy2.1 The Community Infrastructure Levy (CIL) was introduced under the Planning Act 2008and is a new tariff system that enables local authorities to make a charge on most forms of newdevelopment to fund infrastructure needed to support development.The CIL Regulations cameinto effect in April 2010 and the Coalition Government, while retaining CIL, made some minoramendments to the Regulations in April 2011. Further Regulations are expected to be publishedduring 2012.

2.2 CIL will be a charge on new development, it is charged per square metre on net additionalfloorspace of development. CIL is not charged on affordable housing and buildings used forcharitable purposes. The amount payable on smaller schemes will be set at the time planningpermission is granted and payment will be due at the commencement of development. It isproposed that larger amounts will be payable in instalments over fixed time periods as describedin Section 6.

2.3 CIL is intended to complement rather than replace other funding streams and is intendedto promote development rather than hinder it. Its main advantages are that:

It is modest representing around 2-6% of total development costs and is not charged ontypes of development that cannot sustain it,

It is a fixed, non-negotiable charge and is therefore transparent and predictable.

It is less time-consuming and complicated than s106 planning obligations, with less needfor protracted negotiations with applicants and the drawing up of legal agreements.

A proportion of CIL will be passed from the Council to the Town and Parish Councils tospend in accordance with their priorities so that communities can benefit from developmentin their area (the exact proportion is expected to be set by further Regulations publishedduring 2012).

2.4 Unlike funding from legal (Section106) agreements, CIL funds can be spent on a widerange of infrastructure to support development without the need for a direct geographical orfunctional relationship with the development. Planning obligations / Section106 Agreementswill still be used, but in a more focused way to directly provide both ‘off-site’ infrastructure,through S106 contributions, and ‘on site’ improvements through planning conditions to mitigatethe direct impact of the development proposed (e.g. landscaping, access roads). Affordablehousing will still need to be secured through Section 106 agreements. Depending on furtherRegulations, CIL may be used to cover payments in lieu of on-site affordable housing.

2.5 Under CIL, developers can still, in a limited number of cases, be required to directlyprovide both ‘off-site’ infrastructure, through S106 contributions, and ‘on site’ improvementsthrough planning conditions to mitigate the direct impact of the development proposed (e.g.landscaping, access roads).

Calculation and Charging of CIL

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2.6 The local authority firstly needs to demonstrate that new or improved infrastructure isneeded to support planned development and mitigate its impacts. It must also show that thereis a 'gap' in the available funding for the necessary infrastructure that requires the use of CIL.

2.7 The local authority must also show that the proposed levy rates would not have anunacceptable adverse impact on development viability across the area as a whole. It is notnecessary to show that all developments would be viable, but that the majority of planneddevelopments would not be made unviable by the proposed CIL level. The viability assessmentneeds to take account of the costs of other on-site infrastructure including affordable housing.

2.8 The level of CIL proposed by the charging authority, will be tested by an independentexaminer. This will involve an assessment of whether a charge is justified by the need for,and cost of, new or improved infrastructure, and whether the charge will have an unacceptablenegative impact on the economic viability of development.

2.9 In setting its CIL rate the Council must: “… aim to strike what appears to the chargingauthority to be an appropriate balance between:

The desirability of funding CIL and the actual and expected costs of infrastructure requiredto support developmentThe potential effects of the imposition of CIL on the economic viability of developmentacross its area.”

2.10 Based on this evidence the Council needs to make a reasoned judgement as to theappropriate level at which to charge CIL. The following sections outline how the council hasset an appropriate rate of CIL in light of the available evidence on infrastructure (needs, costsand available funding) and viability.

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3 Infrastructure Needs and Delivery Plan3.1 Bracknell Forest's adopted Core Strategy has set a target of delivering 10,780 new homesin the Borough between 2006 and 2026. Some of these new homes are already built and othersalready have planning permission. Further homes will be built on the strategic sites alreadyidentified in the adopted Core Strategy. Sites for the remaining homes have been identified inthe Council's Site Allocations Development Plan Document (SADPD). The SADPD is presentlygoing through the process of adoption with an examination expected in the autumn of 2012.

3.2 One of the supporting documents for the SADPD is the Infrastructure Delivery Plan (IDP).This identifies all the items of new or improved infrastructure that will need to be provided tosupport growth and mitigate the impacts of the planned development. For the purposes of CILthe costs of infrastructure outlined in the IDP have been refined and updated to include up todate costs for those items of infrastructure which could be best funded by CIL. The updatedCIL information includes other elements which can be paid for from CIL such as some of thecosts of operating and maintaining infrastructure.

3.3 The table below identifies the broad items needed to support growth that have beenidentified as requiring CIL to help fill a gap in available funding.

Table 3.1

Table 3.1 Infrastructure Costs ScheduleEstimated CostRequired Infrastructure

£16,300,000Local Road Network£2,000,000Footpaths and Cycleways£6,000,000Public Transport£26,500,000Primary Education£28,000,000Secondary Education£11,600,000Special Education Needs£2,300,000Community Facilities£1,200,000Libraries£4,500,000Built Sports£20,800,000Open Space

£620,000Biodiversity£880,000Public Rights of Way

£5,100,000SANG£460,000Police

£126,260,000Total Cost

3.4 The table above does not include the costs of administering CIL for which the Councilcan use a percentage of CIL receipts. Neither does it include the significant proportion of CILreceipts that the Council will pass on to Town and Parish Councils within whose areasdevelopment takes place (the size of this proportion is expected to be set by Regulationspublished in summer 2012). More detail on infrastructure requirements is contained in theInfrastructure Delivery Plan – Draft Submission Site Allocations Development Plan Documentapproved by Council as part of the Site Allocations documentation in November 2011.

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3.5 CIL is not intended to replace mainstream funding for services. CIL is intended to reducethe gap between the cost of providing, operating and maintaining the infrastructure needed tosupport planned development and the amount of money available from other sources. Inestablishing the funding gap an estimate has been made of the likely contribution from otherfunding. The evidence used in this assessment includes:

Long term strategic delivery plans, such as the Local Transport Plan;Financial forward plans of delivery agencies; and,Specific evidence provided by delivery agencies on spending plans.

3.6 It is not possible to accurately predict the availability of public funding a long way into thefuture as this will depend, among other things, on the spending priorities of future governments.However, it is clear that in the short to medium term there is a significant gap between availablefunds from government and other agencies and the cost of infrastructure needed to supportand mitigate planned growth. The introduction of CIL in Bracknell Forest will help to fill thisfunding gap.

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4 Viability4.1 In order to ensure that CIL is set at a level that will not prevent development comingforward, the Council has commissioned a viability study. The study tested the following:

The impact on the viability of residential development of a range of CIL charging levels;

The impact of CIL on residential viability alongside the Council's other requirements foraffordable housing and other planning obligations;

The ability of commercial schemes to pay CIL; and,

Any significant geographical variations in development viability across the borough

4.2 The Community Infrastructure Levy:Viability Study has been published with this PreliminaryDraft Charging Schedule and is available to view at the same locations and on the Council'swebsite at insert link.

Methodology

4.3 The study methodology compared the residual land values of a range of genericdevelopments to a range of benchmark land values. Where a development incorporating agiven level of CIL generated a higher value than the benchmark land value, then it was judgedthat the proposed level of CIL will be viable.

4.4 The study uses the residual land value method of calculating the value of each type ofdevelopment. This involves calculating the value of the completed scheme and deductingdevelopment costs (construction, fees, finance and CIL) and developer’s profit. The residualamount is the sum left after these costs have been deducted from the value of the development.This method is widely used by developers in determining their offer price for a site.

4.5 The housing and commercial property markets are inherently cyclical and the council istesting its proposed rates of CIL at a time when values have fallen below their peak. This hasbeen allowed for by running a sensitivity analysis which inflates sales values by 10% and buildcosts by 5%. This analysis is indicative only provides an indication of the levels of CIL that areviable in today’s terms and the impact of market changes on viability. The study also tested afall in sales values of 5%, to show the impact of any adverse movements in sales values in theshort term.

4.6 The results of the study reflect current market conditions which are likely to improve overthe medium term. It is therefore important that the viability situation is kept under review sothat levels of CIL can be adjusted to reflect any future changes.

4.7 The ability of residential schemes to make CIL contributions varies depending on area,type of development and the current use of the site. Having regard to these variations, residentialschemes should be able to absorb a CIL rate of between £0 to £220 per square metre, leavinga significant margin in many areas for site-specific factors that might affect viability. Whilst themaximum rates are significantly higher than the proposed rates in some areas, the buffer willhelp to mitigate a number of risk factors (primarily the potentially adverse impact on land supplyof setting the rates at a high level and ‘shocking’ the market; a situation where landowners react

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so negatively to the reduction in land values that they cease bringing sites to the market fordevelopment). The maximum rates for different development types and locations are set outin the accompanying Community Infrastructure Levy Viability Study.

4.8 Hotel developments are viable at the current time and could and could in principle absorba maximum charge of £90 per sq metre. However, it was found that hotel development viabilityis sensitive to small movements in key variables. It is therefore proposed to set a rate of £25per sq metre throughout the Borough.

4.9 At current rent levels, office development is unlikely to come forward in the short tomedium term as the capital values generated are insufficient to cover development costs. It istherefore proposed to set a nil rate for offices.

4.10 The viability of retail developments varies significantly between high street retail, whichis just marginally viable, and supermarkets which could generate sufficient residual values toenable the payment of CIL. Based on viability evidence, it is proposed that major supermarketor retail warehouse developments outside of Inner Bracknell would pay CIL at a rate of £95 persquare metre. This allows for a 50% buffer against the maximum potential CIL charge of £190established by the Viability Study. It is proposed that a zero rate of CIL is set for all other formsof retailing.

4.11 The appraisals of industrial and warehousing development indicate that these uses areunlikely to generate positive residual land values. It is therefore proposed to set a zero rate forindustrial and warehousing floorspace.

4.12 The viability work also considered other institutional uses such as health, day nurseries,community facilities, education, museums, libraries, halls, places of worship. These fall withinuse class D1 of the Use Classes Order. This type of facility is very unlikely to be built by theprivate sector as they typically require subsidy to cover development and operating costs. Itis therefore proposed that a nil rate of CIL be set for D1 uses where a facility is developed forthe purpose of delivering a public service.

4.13 Leisure uses such as cinemas, music and concert halls, bingo halls, swimming baths,and areas for indoor or outdoor sports and recreations were also considered. These fall withinuse class D2 of the Use Classes Order. Again it was concluded that these D2 uses do notnormally generate sufficient income streams to cover their costs, as they constitute communityinfrastructure themselves. Consequently, they require some form of subsidy to operate. Thistype of facility is very unlikely to be built by the private sector. It is therefore proposed that anil rate of CIL be set for D2 uses where a facility is developed for the purpose of delivering apublic service.

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5 Proposed CIL Charging Rates5.1 The Council's proposed charging rates are set out in Table 5.1 below

Table 5.1 Preliminary Draft Charging Schedule - Proposed Charges

Proposed Rate - £ per m2LocationDevelopment Type

NILInner BracknellResidential (C3 Use Class)

£25Outer Bracknell

£220Ascot/Binfield/Warfield

£150Crowthorne/Sandhurst

NILInner BracknellResidential Care Homes

NILOuter Bracknell

£150Ascot/Binfield/Warfield

£100Crowthorne/Sandhurst

NILInner BracknellRetail over 280 sq metres(1)

£95Rest of Borough

£25Whole BoroughHotel

NILWhole BoroughOffices and Industrial

NILWhole BoroughAll other development types

5.2 The extent of the charging zones referred to in the Schedule above is shown on the mapoverleaf.

1 A store over 280 sq metres is the definition of a large shop used in the Sunday Trading Act 1994.

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5.3

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5.4

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6 Exemptions and Payment TermsExemptions

6.1 The CIL Regulations 2010 exempt the following types of development from liability forCIL.

Development by registered charities for the delivery of their charitable purposes

Those parts of a development which are to be used as affordable housing

The conversion of any building previously used as a dwelling house to two or more dwellings

Development of less than 100m2 of new build floorspace, provided that it does not resultin the creation of a new dwelling

The conversion of, or works to, a building in lawful use that affects only the interior of thebuilding

Development of buildings and structures into which people do not normally go (eg, pylons,wind turbines, electricity sub stations)

6.2 Under the Regulations the charging authority also has discretionary powers to providerelief on:

Development by charitable institutions for non-charitable purposes but which forms partof the charity's investment activities; and,

in exceptional circumstances the charging authority can also allow exemptions where allthe following criteria are met:

the cost of complying with S106 planning obligation is greater than the chargeableamount payable by a developer; and,

there is an unacceptable impact on the economic viability of a development; and,

the granting of relief would not constitute state aid.

6.3 The Council does not expect to implement any discretionary exemptions. Based onavailable evidence the Council considers the proposed charge is viable. The level of chargewill be monitored to ensure it remains viable. Should market or other conditions change theviability of development the Council will introduce a revised CIL charging schedule.

Instalments Policy

6.4 The Council is able to accept payment of CIL in instalments (under Regulation 69B ofthe Community Infrastructure Levy (Amendment) Regulations 2011). In order to assistdevelopers in financing development in the Borough the Council proposes to allow paymentof CIL by instalments depending on the total amount of the liability as set out in Table 6.1 below:

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Table 6.1 CIL Payment Instalments Policy

Payment DatesNo. ofInstalments

CIL AmountPayable

Full amount payable within 60 days of commencement.1Up to £100,000

£100,000 payable within 60 days of commencement andthe balance payable within 120 days of commencement.

2£100,000 to£250,000

£100,000 payable within 60 days of commencement andthe balance payable in two equal instalments within 120and 180 days of commencement.

3£250,000 to£500,000

£250,000 payable within 60 days of commencement andthe balance payable in three equal instalments within120, 180 and 240 days of commencement.

4Over £500,000

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Copies of this booklet may be obtained in large print, Braille, on

audio cassette or in other languages. To obtain a copy in an

alternative format please telephone 01344 352000

Development Plan Team

Planning and Transport Policy

Environment, Culture and Communities

Bracknell Forest Council

Time Square

Market Street

Bracknell

RG12 1JD

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