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Delivering sustainable transport through the planning process in Southwark OPTIMUM 2 18 May 2006 Research Report Dr Marcus Enoch and Lian Zhang Loughborough University
Delivering sustainable transport through the planning process in Southwark OPTIMUM 2
18 May 2006 Research Report
Dr Marcus Enoch and Lian Zhang
Loughborough University
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Dr Marcus Enoch and Lian Zhang Department of Civil and Building Engineering, Loughborough University Leicestershire LE11 3TU United Kingdom. Tel: +44 (0)1509 223408. Fax: +44 (0)1509 223981. Email: [email protected].
Table of Contents 1. Introduction................................................................................................................4
Transport in London ..................................................................................................4 The role of Travel Plans.............................................................................................4 Delivering sustainable transport through the planning process in Southwark...........5 Structure of the report ................................................................................................5
2. The transport and planning policy framework...........................................................6 UK Transport and Planning Policy Context ..............................................................6 London Transport and Planning Policy Context........................................................6 London Borough Policy Context ...............................................................................6
3. Using the planning system to meet sustainable transport goals: Charging rationales and the policy context ....................................................................................................6
Approaches to Implementing Taxes and Charges .....................................................6 Beneficiary pays (public good and ‘economic’ rationale) .........................................7 Polluter pays (market failure and environmental rationale) ......................................7 Spreading the Burden (equity, income distribution and social inclusion) .................9 The three systems.......................................................................................................9 Approaches to Implementing Local Taxes and Charges on Developers .................10
4. Using the planning system to meet sustainable transport goals: Worldwide experience ....................................................................................................................12
Beneficiary Pays ......................................................................................................12 Polluter Pays ............................................................................................................14 Other Mechanisms ...................................................................................................17
5. Delivering sustainable transport through the planning system in Southwark..........18 Pre Application ........................................................................................................20 Informal Assessment................................................................................................20 Formal Assessment ..................................................................................................20 Post Application.......................................................................................................20 General comments ...................................................................................................21
6. References................................................................................................................23 7. Acknowledgements..................................................................................................25
Information on OPTIMUM 2...................................................................................25
Delivering sustainable transport through the planning process in Southwark
1. Introduction Transport in London
Shortly after assuming his powers as Mayor of London in July 2000, Mayor of London Ken Livingstone noted that “the single biggest problem for London and Londoners is the gridlock of our transport system” and that “remedying this will be my first priority”. Although predominantly concerned with the inadequacy of public transport in the capital, the Mayor added that “traffic speeds in central London are now just 10 miles per hour, while congestion costs London business £5 billion per year. Residents and commuters alike suffer from delays, stress, discomfort and the overall poor urban environment. Pollution from motor vehicles poisons our children and breaks air quality guidelines over much of central and inner London” (Livingstone, 2000).
In addressing this, one tool now being developed by Transport for London is the Travel Plan.
The role of Travel Plans
Travel Plans, also known as Green Transport Plans, Company Mobility Plans, or Site-Based Mobility Management, can be defined as:
‘a general term for a package of measures tailored to meet the needs of individual sites and aimed at promoting greener, cleaner travel choices and reducing reliance on the car. It involves the development of a set of mechanisms, initiatives and targets that together can enable an organisation to reduce the impact of travel and transport on the environment, whilst also bringing a number of other benefits to the organisation as an employer and to staff.’ (EEBPP, 2001)
The idea behind travel plans actually started in the USA – particularly on the West Coast - as a quick and easy response to the fuel crises during the 1970s, but was fairly slow to permeate across the Atlantic. Indeed, in the UK the first travel plans only first began to appear during the early 1990s, with the first official policy record being made in the 1998 Transport White Paper – A new deal for transport: Better for everyone (DETR, 1998).
In brief, the attractions of travel plans to Governments and local authorities are that they are reasonably quick to introduce, relatively cheap and importantly are usually politically acceptable. They are therefore often an ‘easy win’. This is in marked contrast to most other transport improvement schemes which often require high levels of investment over a long period of time and can carry a high political risk – especially in the short term as conditions frequently deteriorate while improvements are being carried out. Indeed, studies have shown at the site level that UK plans combining both incentives to using alternatives to the car, together with disincentives to drive, can achieve a 15-30 per cent reduction in drive alone commuting (DTLR, 2001), while Knapp and Ing (1996) reported a 20 per cent average reduction at sites in the Netherlands and the USA. Meanwhile Schreffler (1998) noted that some exceptional case studies in the USA reported trip reduction rates of 50 per cent and more.
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Although these figures are impressive, unfortunately they are not typical of travel plans across the board. However, one way of ensuring that travel plans stand an improved chance of securing such shifts in travel behaviour is to build travel plans into the design or planning stage, rather than applying them retrospectively as usually occurs. Hence the idea of using the planning system as a tool to ‘persuade’ developers to design and build developments that exhibit sustainable transport characteristics as far as possible.
Delivering sustainable transport through the planning process in Southwark
The London Borough of Southwark is currently in the process of drawing up a Supplementary Planning Document on Transport. This is designed to set out and explain a new approach to the use of Planning Obligations in the Borough to a number of interest groups: namely council officers, local politicians, residents, businesses and most crucially, prospective developers.
Broadly, it is proposed that the imminent adoption of the new Unitary Development Plan by the Borough, alongside a whole raft of changes in transport and planning policies and practices at national, London and local levels has necessitated a new approach to the use of Planning Obligations, and thus a new Supplementary Planning Document (SPD) on Transport. Moreover, resources released by the Borough’s involvement in the Interreg IIIB project OPTIMUM2 together with support from Transport for London have allowed a team from Loughborough University to investigate a whole range of fairly radical approaches, from which it is intended to select the most suitable for implementation.
This document aims to set out the draft findings of the Loughborough University review.
Structure of the report
The report is structured as follows:
Chapter 2 sets out the transport and planning policy framework at the UK, London and London Borough levels.
Chapter 3 looks at the various rationales behind taxation and charging systems before looking at how these have influenced taxes and charges on developers since 1990 in the UK.
Chapter 4 summarises the results of a state-of-the-art review of cases where local planning authorities from around the world have established (or are in the process of establishing) ways of taxing or charging developers for granting planning permission.
Chapter 5 puts forward a possible approach that would be suitable for the London Borough of Southwark to adopt.
Chapters 6 and 7 contain references and acknowledgements respectively.
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2. The transport and planning policy framework This chapter sets out the transport and planning policy framework at the UK, London and London Borough levels.
UK Transport and Planning Policy Context
Reducing car dependency is a key element of Government transport policy set out in the 1998 White Paper A new deal for transport: Better for everyone (DETR, 1998) and was reinforced in the 2000 Transport Act – the first Government policy document to really formalise support for the travel plan concept - the 2000 Road Traffic Reduction Act and the 2004 White Paper The future of transport (DfT, 2004).
From the planning perspective, the most recent Planning Policy Guidance Notes 13 (Transport) issued in 2001 (ODPM, 2001), further support the car reduction agenda and particularly the use of travel plans as a tool.
London Transport and Planning Policy Context
In Greater London the Mayor has set out both transport and planning policies in two complementary documents – The Mayor’s Transport Strategy (Mayor of London, 2001) and a Spatial Development Strategy known as The London Plan (Mayor of London, 2004). Once again, as directed by national policy these documents stress the importance of reducing dependence on the private car and recommend travel plans as a means of delivering this objective.
London Borough Policy Context
At the Borough level, both national and regional directives are applied through the Local Implementation Plan (that sets out the Borough’s transport strategy over a five year period) and the Unitary Development Plan. Further details of how the planning process is to be used to deliver transport goals are to be set out in a Supplementary Planning Document to the UDP to which this report will contribute.
3. Using the planning system to meet sustainable transport goals: Charging rationales and the policy context This chapter looks at the various rationales behind taxation and charging systems before looking at how these have influenced taxes and charges on developers since 1990 in the UK.
Approaches to Implementing Taxes and Charges
Taxes and charges have emerged over thousands of years and in a wide variety of different specific situations. It is therefore not surprising that the design of these various measures has placed different emphasis on the principles and purposes of taxation. Broadly, work conducted for a Commission of the European Communities (CEC) study entitled Fair and Efficient Pricing in Transport – The Role of Charges and Taxes (Van den Branden et al, 2000), which reviewed locally earmarked
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financing streams for public transport from across the world developed a threefold categorisation of taxes and charges, and this can be applied here. Under this framework, each of the mechanisms was classed as being either based on a ‘polluter pays’, beneficiary pays’ and ‘spreading the burden’ principle. The Beneficiary Pays group appears to reflect a view that a tax or charge is to pay for collective ‘public goods’; the Polluter Pays group can be (though not always) used as an instrument of environmental/transport policy in order to discourage social harm; Spreading the Burden mechanisms tend to involve taxes or charges with a socially-driven subsidy policy. It should be noted that while some of these mechanisms display characteristics of more than one of these groups, this categorisation is still seen as being a useful structure due to it providing links to both a theoretical basis of subsidy and practicalities of policy/instrument design.
Beneficiary pays (public good and ‘economic’ rationale)
The beneficiary pays’ rationale of taxation developed to pay for public goods that cannot be provided on a market exchange basis of which defence, and emergency services are obvious examples. Transport too, can be categorised in such a way, e.g. transport investment increases economic activity in towns and cities, and allows employers to access a wider pool of potential employees. Consequently, some authorities have sought to impose a local charge or tax on the area where transport investment takes place or on employers located in that area as a way of sharing this additional benefit.
An example of a recent approach using the beneficiary pays principle is a study commissioned by the Royal Institute of Chartered Surveyors looking at how planned improvements to London’s transport infrastructure could be financed (Whelan, 2003). The basis for this is “that Government is likely to require some contribution towards certain transport schemes” and therefore the study explores “innovative funding methods” that could help fund developments. The study particularly focuses on property taxes, because the property value impacts of the public transport schemes were estimated to be significant. This includes a consideration of a business rate levy, tax incremental financing, Business Improvement Districts, land value taxation and greenfield development tax. The potential yield of the LETS considered is estimated to be between £10m - £450m (€14 – €640) per annum.
Polluter pays (market failure and environmental rationale)
The ‘polluter pays principle’ (PPP) is a more recent, and less well established, approach to both national and local taxation. Not only is it a different perspective but it is advocated by a different set of actors. Transport and environment ministries have seen such taxes as a tool of transport demand management. As a result, a new group of taxes and charges has emerged from a transport/environmental policy perspective, and these relate to a different set of public finance and economic theory issues. This centres upon the aim of ‘discouraging social harm’ by using the tax system to address environmental externalities.
The issue of external costs and benefits is long-established in economics. Transport activities are a prime example, with the costs not entirely borne by individuals involved in undertaking their travel. The costs associated with air and noise pollution for instance are not taken into account in deciding how many journeys to make, either
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because the travellers are unaware of them, or they are unwilling to do so. These external costs of transport cover a number of factors, including not only air pollution and climate change gasses, but also accident and congestion costs. Because of these externalities, the transport market is not operating in an economically efficient manner. Economic theory suggest regulation to rectify this position, or measures to internalise the external costs. The most efficient solution is the imposition of a Pigouvian tax (equal to the marginal external cost). Imposing such an ideal tax is still not politically realistic in transport practice. But, it is clear that governmental intervention is justified, in some way, to compensate for the effect of transport’s external costs.
There are several possibilities for authorities to intervene in the transport market in order to create greater efficiency in the functioning of the transport market, but in practice, taxes and charges on fuels and vehicles are the most commonly used measures.
This is the concept behind the European Commission’s green paper on Fair and Efficient Pricing for Transport (CEC, 1995) and a variety of national measures that have seen taxation varied according to environmental impact, for example, favouring lead-free petrol, more fuel-efficient vehicles, and encourage commuting by ‘greener’ travel modes.
The concept that a taxation system should be used to take full account of the external environmental costs of economic and consumption activities reaches its logical consequence in the principle of Ecological Taxation Reform (ETR). The concept of ETR was developed by German and Dutch authors in the late 1980s (von Weizsäcker, Bleijenberg and Sips) and is defined by Whitelegg (1992) as:
“based on the principle that taxes should fall most heavily on those activities and materials that produce pollution and/or environmental damage. Such taxes would replace taxes on labour and capital. ..... The total taxation burden in Europe would remain constant. ETR is not an additional tax; it is a replacement tax.”
The core of thinking behind ETR dismisses the concept that environmental concerns can simply be added on to existing fiscal structures, but that these structures themselves need to be subject to ecological reform. Our taxation and fiscal systems contain many elements that produce adverse environmental impacts; simply adding on a few ecotaxes will fail to address this structural effect.
On many different levels the current taxation systems in the EU is contrary to such ecological pricing. It is usually cheaper to develop greenfield sites than it is to re-use former industrial, military or commercial sites. It is cheaper (or perceived to be) to use the car for routine journeys than it is to use public transport. And it is cheaper to incinerate and landfill waste than it is to develop an effective materials economy where the use of virgin raw materials is seen as a last resort. The current taxation system steers the economy in a very clear direction that is largely non-sustainable. Instead of adding ecotaxes to the existing taxation regime, under ETR, the whole system of taxation would be changed to taxation according to environmental impact.
Ecological Taxation Reform has some clearly defined characteristics:
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• its objectives are to steer the whole economy in the direction of greater environmental and ecological efficiency;
• there is no increase in overall tax take;
• ecological taxes replace taxes on labour and VAT;
• new taxes are imposed on materials, waste, pollution, water and energy; and
• taxes are adjusted to favour re-use of land and discourage use of greenfield sites.
It must be noted that Ecological Taxation reform is more comprehensive and radical than the EC’s Fair and Efficient Pricing proposals, although these could be viewed as an example of Ecological Tax Reform in the transport sector. However, the whole concept of Ecological Taxation Reform is a change in the basis of taxation, rather than superimposing some new criteria on selective parts of the existing tax system. An important consideration is that an isolated charge or tax, however well designed, cannot successfully influence travel behaviour if the rest of the fiscal and regulatory system is operating contrary to it. For example changes to transport prices may be entirely counterbalanced by existing pricing making car dependent city-edge developments cheaper than low car transport dependency city centre sites.
Spreading the Burden (equity, income distribution and social inclusion)
For the remainder of taxes and charges, the major principle behind adopting particular revenue sources has been to raise as much money in as low profile and uncontroversial a way as possible. In general the rationale for transport subsidised by these taxes and charges is that of social inclusion. In consequence one might expect the sources of finance to be progressive, but in reality, the sources of income appear to be more pragmatic than adhering to a social basis of design. Although the expenditure is justified on equity grounds, the issue of whether the taxes and charges to pay for it are themselves equitable does not seem to featured in any significant way. For example, the general sales tax, the most widely used local charge in the USA for funding transport, is regressive. It falls disproportionately on the poorer in society and does not discourage social harm. However, given the legendary antipathy of United States citizens towards paying tax, especially as local referendums are often required to introduce them, such apparently contradictory pragmatism can perhaps be understood.
The three systems
The evolution of taxes and charges means that they bear a variable relationship to principles of public finance and the growing issue that the taxation system should be used to not only raise revenue, but steer the economy in the direction of sustainability and ecological efficiency. There are not surprisingly tensions between the rationales behind the three categories. The beneficiary pays and polluter pays approaches can appear to produce diametrically opposing signals. For example, the Versement Transport employer tax in France, where benefiting companies pay taxes towards new public transport infrastructure, may have the effect of persuading companies to relocate to areas less well served by public transport where the tax burden is reduced. Obviously as a result of this, one could expect an increase in car use among such
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employees, and a decline in public transport use - a very negative signal if the overall objective is to encourage people to use public transport.
By contrast, with the polluter pays mechanism, the signal operates the other way. For example, a parking charge hypothecated to public transport improvements both discourages car use and incentivises public transport use - a double dividend. However, were such a polluter pays tax or charge applied in a particular city, it could also lead to counter-productive relocation rebound effects.
This raises serious questions about the role of such taxes and charges, both in terms of them being effective policy mechanisms and also their relationship to principles of public finance.
Approaches to Implementing Local Taxes and Charges on Developers
In the case of taxes and charges on developers, it would seem that this classification can be reduced to schemes either following a beneficiary pays or a polluter pays agenda. However, it is also the case that the Spreading the Burden category applies to some degree in every example studied. Simply, planning authorities often see developers as being willing to pay for the right to develop and of having little political muscle, making them a relatively easy source of revenue to be exploited as far as possible.
Looking at the recent evolution of UK planning practice in respect to meeting transport policy goals in the light of these approaches, reveals an interesting story.
Essentially, the 1990 Town and Country Planning Act first formalised the collection of money from Planning Obligations under Section 106 (Section 75 in Scotland). Initially, these were meant to be very specifically linked to the impacts of the development and hence tended to be ad hoc arrangements based on negotiations between councils and developers. In principle therefore, the idea was that the developer paid to mitigate the additional impact s/he added to the existing infrastructure and services. However, in practice the negotiated nature of the charge effectively meant that it was often calculated along the lines of how much the developer was willing to pay the local authority for the ‘benefit’ of planning permission, without which the developer would not make money. There have also been a number of criticisms of how the charge has been used. For instance, Pedler (2004) finds that:
• Only the owners of the land coming up for development provides contribution and as the surrounding sites are already developed they do not contribute to the new infrastructure which gives them added value.
• There are also sites which are not developed and for which the owner has no immediate plans - however, these sites will also increase in value and make no S106 contribution towards the cost of the scheme from which they benefit.
• The threat of S106 may deter development proceeding.
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• The amount collected by S106 is very dependent upon the skills of the negotiators on the two sides (the planning authority versus the developer) and therefore not all landowners are treated equally.
Partly as a result of these and other criticisms, since the 1990 Act there has been a whole series of policy directives and guidance notes from various sections of the Government. In particular, Planning Policy Guidance Notes on Transport (in 1994, 1997 and 2001); consultant reports for the Office of the Deputy Prime Minister and Department for Transport in 2002 on integrating travel plans with the planning process and in 2004 on Reforming Planning Obligations: the Use of Standard Charges; and two Planning Circulars – 1/97 and 5/05. These have gradually expanded the role of Planning Obligations and Section 106 agreements away from being negotiated, ad hoc, site-based arrangements to being more standardised, transparent and area-based. Moreover, the basis for charges being levied has begun to shift away from the beneficiary pays approach towards a polluter pays approach, whereby some local authorities are now charging developers according to how much of an impact the new developments will have on existing infrastructure and services. Such mechanisms, which charge developers based on the number of car parking spaces put in place or the number of car trips generated per day for example, could therefore potentially be very helpful in delivering the Government’s stated transport policy goals, and it is these that have been explored further during the course of this research.
There are though, still uncertainties. The first is that the more ‘adventurous’ polluter pays mechanisms have yet to be legally challenged in the UK and could therefore be possibly vulnerable. On the other hand, there is a view that developers much prefer the certainty of standardised, transparent, area-based charging mechanisms because they reduce uncertainty (and hence financial risk) and are perceived as being fairer.
The second is the possible re-emergence of an entirely different form of developer tax – the Planning Gain Supplement (PGS), which arose from the Review of Housing Supply report commissioned by HM Treasury and the ODPM to identify ways of speeding up the delivery of new housing developments (Barker, 2004). Unfortunately, if implemented, PGS may severely restrict the further development of the new age of polluter pays planning charges. This is because PGS is very much a beneficiary pays mechanism that aims to ‘capture’ part of the increase in land value caused when planning permission is granted to a site for a development and so represents a totally different basis on which developers would be charged. Consequently, if such a charge were introduced then developers would (probably rightly) expect a significant diminution or even the outright removal of a polluter pays element. At the moment, Government is consulting on whether the adopt the PGS or not, and early signs are that while ministers are quite keen on the idea, planning practitioners and developers are at best ‘lukewarm’ to it. Moreover, similar mechanisms to the PGS have been tried in the UK four times in the past, and all have been removed within a few years for various reasons. It should therefore be noted that any subsequent recommendations as to what path TfL and the London Boroughs follow would need to be revisited should PGS be implemented in its current form.
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4. Using the planning system to meet sustainable transport goals: Worldwide experience This chapter is based on a state-of-the-art review of cases where local planning authorities from around the world have established (or are in the process of establishing) ways of taxing or charging developers for granting planning permission. The information is based on a series of face-to-face, telephone and email interviews supplemented with literature and internet-based evidence and looked at why the schemes were implemented, how they were designed and how they performed. The schemes were then ranked against a range of indicators to see how transferable each mechanism might be to the Southwark situation.
Beneficiary Pays
Beneficiary pays-based developer agreements are by far the most common type around the UK and around the world, and are often arranged in the form of traditional Section 106 agreements – i.e. ad hoc and negotiated (see earlier note). Table 1 shows some less common beneficiary pays-based schemes and outlines issues relating to the reasons behind the mechanisms being introduced, the scheme designs and the performances of the schemes. It also crudely attempts to assess how transferable each scheme might be to the London case.
Policy Context
Developer Contributions to Supertram, Leeds, UK
Ørestadsbanen Metro Line Land Value, Copenhagen, Denmark
Mass Transit Railway Value Capture, Hong Kong, China
Motivations behind scheme (problems to be addressed)
Originally sought to finance the Leeds Supertram. Idea then developed to fund public transport more generally
To capture share of rising land values generated by a new automated light rail system
To contribute to operating and development costs of MTR
Justification (background, history etc).
Transport enhancement increases land value at new site so public authority should capture share of this increase
Transport enhancement increases land value at new site so public authority should capture share of this increase
Partnership arrangement whereby public and private sector both benefit from increased land values caused by new Metro lines.
Lead organisations Leeds City Council City of Copenhagen, Danish Government and Ørestad Development Corporation
MTR, Hong Kong Government and private sector developers
Scheme Designa Standardised/ad hoc Standardised developer
charge Standardised Betterment Tax
Ad hoc Based on sale or lease of development rights
Continuous/one off (effective period)
One off Continuous One off
‘Levy base’ (car trips, parking spaces, floor area etc)
Contributions are based on both floor area or dwelling and distance to public transport
Floor area Floor area
Area applied to (incl. type of area e.g. CBD, ‘around rail stations’ etc)
Whole city zoned according to level of public transport access
Undeveloped area; regeneration area
Land next to or above MTR station
Land uses applied to All development All development All development Enforcement mechanism
S106 agreement Legal agreement Legal agreement
Effectiveness Practicality Practical Practical - Transferabilityb Political 4 3 2 Economic 4 4 4 Social 4 4 3 Technological 4 4 3 Legal 5 4 4 Environmental 5 3 3
Table 1: Beneficiary Pays mechanism examples
Note:
a Scheme Design: It explains that how the schemes were designed including different elements such as, if it is a standardised fee or ad hoc charge; is it a continuous scheme of a one-off payment; what the levy base the scheme is based; scheme application areas; types of land use and how to enforce the scheme.
b Transferability: It is shown by index factor 1-5, where 5 is most similar to Southwark. The six different factors represent a range of ‘contextual’ factors that often influence how policy mechanisms develop and perform.
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The above examples are premised on the fact that new developments could not go ahead without new infrastructure and services, and that previously worthless land becomes more valuable as soon as this is delivered. Consequently the justification for these charges and taxes is that the public sector should be able to reclaim a share of the increased value from developers to part cover the cost of the new infrastructure and services. Thus in the Copenhagen example, the City and the national Government decided to build a new light rail line to connect a previously inaccessible piece of land to the city and lease the land to private developers on the condition that the public sector gained some of the increase in value through a betterment tax. Similarly, in Hong Kong, the MTR builds new metro lines through areas newly developed by the private sector and recoups some of the money through selling property rights. A similar system was tried in the Docklands area of London during the 1980s and 1990s, but unfortunately failed due to a downturn in the economic cycle (Enoch, 2002).
Planning authorities can secure developer contributions by a number of different means including, standardised developer charge (Leeds), transferring land rights (Copenhagen), selling development rights (Hong Kong) or through ad-hoc negotiations (Washington D.C.). The methodology can be applied to the whole city, a dedicated area, for example, a regeneration area, areas along light rail line, or within a transport corridor. Many beneficiary pays mechanisms rely on assessed values or on use floor area-based formulae. There is a slow trend where local planning authorities are moving away from ad hoc arrangements to more standardised systems.
Measures of scheme performance are rather difficult to find, as many local authorities are unwilling to divulge what they see as being sensitive data. Moreover, it is actually very difficult to judge what is a ‘good’ amount of money to negotiate given the very site specific nature of many development schemes. Of the more radical schemes, it is known that the Hong Kong metro developments worked very well until the economic crash in the late 1990s, while the Copenhagen scheme is known to have initially struggled to raise sufficient funds.
Of the above examples the Washington DC case is actually not strictly speaking a developer charge or tax, rather existing properties instead of only new developments are levied with an extra charge. However, there is no reason why the so-called Benefit Assessment District approach could not be modified to apply only to new developments locating near to public transport modes. Having said that, the same problem of unintended consequences referred to earlier with the Versement Transport Employer Tax – where developers may choose to locate away from good public transport facilities to escape the tax – apply here too and so care would need to be taken to address this.
Finally, beneficiary pays approaches are widely accepted across the world and hence are often readily transferable with a minimum of tweaking. However, as noted there can occasionally be circumstances where the economic signals can push development away from the more desirable accessible locations instead of towards them.
Polluter Pays
From a transport planning perspective, polluter pays mechanisms are probably the more desirable. However, they tend not to be quite so well established as beneficiary pays-based systems. Table 2 illustrates a number of different examples.
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Policy Context
Developer Contributions, Wycombe, UK
Area Transport Plans, Cambridgeshire, UK
Developer Contributions for Transport, Hampshire, UK
Comprehensive Transportation Review Methodology, City of Rockville, US
Motivations behind scheme (problems to be addressed)
To mitigate environmental problems associated with increasing car use; and provide a direct link to the recognition of maximum parking standards
To solve problems of traffic congestion, delay, environment, quality of life caused by a more constrained transport network resulting from new development
To improve the accountability, efficiency, certainty and fairness of the developer contribution system
To provide more transport infrastructure and encourage alternative travel mode
Justification (background, history etc).
To make the district safer and more accessible; to improve travel alternatives and reduce congestion
To provide sufficient transport capacity for trips into and within the city
To develop a protocol for negotiating all planning related contributions
To evaluate transport impacts of new developments
Lead organisation District Council County Council County Council City Council Scheme Design Standardised/ad hoc
Standardised developer charges
Standardised developer charges
Standardised developer charges
Standardised transport impact fees
Continuous/one off (effective period)
One off One off One off -
‘Levy base’ (car trips, parking spaces, floor area etc)
Parking standards Net trips (all modes)
Vehicle trips Vehicle trips + Travel Plans
Area applied to (incl type of area e.g. CBD, ‘around rail stations’ etc)
Within identified 5 accessibility zones
Cambridge city + some surrounding villages in South Cambridgeshire
Whole county Whole city
Land uses applied to
All development within this area
All development proposals including residential, commercial and housing regardless of size
Residential development + commercial development
Enforcement mechanism
S106 agreement + exchange of letters (small scale development)
S106 agreement S106 agreement + exchange of letters (small scale development)
City Zoning Code
Effectiveness Practicality Very practical Practical Proposal Practical Transferability1 Political 5 5 5 3 Economic 4 4 4 4 Social 4 4 5 3 Technological 5 4 5 3 Legal 5 5 5 3 Environmental 4 4 4 4
Table 2: Polluter Pays mechanism examples
1 Shown by index factor 1-5, where 5 is most similar to Southwark
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The mechanisms described are designed based on a philosophy that those creating the need for, and benefiting from, the new facilities should pay for the facilities. Developer charges or transport impact fees are therefore “charged to new developments by local government in order to pay for the cost of improving the transport infrastructure for the purpose of serving the incremental traffic that the new development is going to generate” (Freilich et al., 1994).
Generally, developer charges are calculated on a basis of vehicle trips generated by the new development. But other ‘levy bases’ can be used. For example, in Wycombe the charges are related to the number of parking spaces linked to the parking standards code. Meanwhile planning authorities can also encourage the use travel plans by using incentives to encourage developers to mitigate transport impacts on their developments. Developer charges and/or transport impact fees can also exist as a fee per dwelling unit, per square floor space (foot or metre) or per trip generated. As with beneficiary pays schemes, most mechanisms are one-off levies although there is no reason why such taxes or charges could not instead be paid over a period of time or on a yearly basis.
In addition to those described in Table 2, the review also revealed many similar mechanisms adopted by planning authorities to secure developer contributions. These include:
• Stratford-on-Avon District Council Developer Contributions: based on the number of vehicle trips;
• East Sussex County Council Local Sustainable Accessibility Improvement contributions: based on the number of dwelling units and floor areas;
• West Berkshire Council SPG: based on dwelling unit and floor area;
• Nottinghamshire County Council Interim Transport Planning Statement: based on floor area;
• Leicester City Council Developer Contributions: based on a case by case assessment;
• City of West Hollywood Transport Impact Fees: based on a flat fee multiplied by the number of residential units or floor area;
• City of Los Angeles Transport Impact Assessment: based on pm peak hour trips.
Obviously an advantage of developer charges or transport impact fees is that they relieve local government of the fiscal burden by passing on public-facility charges to developers. However, Cervero et al (2002) warns that they can work against affordable housing goals. One other problem is that some schemes can be misunderstood. For example, Cambridgeshire County Council has twice been (unsuccessfully) challenged by developers, while Wycombe District Council has encountered similar problems where its planning staff did not fully understand the principals of the approach and asked developers for unreasonable contributions.
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Therefore, a careful interpretation of the methodology should be made to planning officers and developers.
Other Mechanisms
Table 3 describes two cases that do not quite fit in the beneficiary pays/polluter pays framework but which are interesting nonetheless.
Policy Context ‘Roof Tax’, Milton Keynes, UK Developer Contributions through Travel
Plans, Warwickshire, UK Motivations behind scheme (problems to be addressed)
Eastern and western expansion of the city needs huge investment in infrastructure and services
To provide an incentive to persuade companies take travel plans seriously
Justification (background, history etc).
To develop a more equitable, transparent and standardised tariff and to provide the council with some money up front.
To penalise developers who did not meet set travel plan targets
Lead organisation City Council County Council Scheme Design Standardised/ad hoc
Standardised Tariff Standardised Travel Plans
Continuous/one off (effective period)
10% paid on outline; 25% start on site; 75% on completion
One off
‘Levy base’ (car trips, parking spaces, floor area etc)
Per Dwelling + floor area Number of employee cars
Area applied to (incl type of area e.g. CBD, ‘around rail stations’ etc)
Expansion area (15,000 dwellings + 130 hectare of business land)
All developments
Land uses applied to
Expansion area: residential + business land
All developments
Enforcement mechanism
Optional, it is a standard charge beyond S106 agreement; developers still can use S106
Legal agreement under S106 / Conditions for small sized scale development
Effectiveness Practicality Very practical Proposal Transferability2 Political 5 5 Economic 4 4 Social 5 5 Technological 5 4 Legal 5 5 Environmental 4 4
Table 3: Polluter Pays mechanism examples
The Milton Keynes ‘Roof Tax’ is a tariff system which is to charge developers £18,500 per dwelling within two new large development areas in the city. Breaking with the traditional approach of ‘site by site’ negotiations via Section 106 agreements, the mechanism provides developers with the certainty they require regarding their development costs. It has not yet been introduced however, and so remains legally untested.
2 Shown by index factor 1-5, where 5 is most similar to Southwark
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Meanwhile the travel plan method proposed by the Warwickshire County Council aims to urge developers take travel plans more seriously than they do at present. It thus acts more as a penalty than as a way of securing developer contributions. It is also untried and there may well be issues with monitoring and enforcement.
5. Delivering sustainable transport through the planning system in Southwark This chapter draws on the analysis presented in the previous chapter and on guidance from the (as yet unpublished) London Travel Plan Protocol to suggest a possible approach that would be suitable for the London Borough of Southwark to adopt.
Overall, from a transport policy perspective, particularly given the steer from TfL in the LTPP, a polluter pays approach to using the planning process to deliver sustainable transport would probably be the most effective. One possible way of doing this in practice is described below.
In setting up a new polluter pays travel plan-based developer charging mechanism, it is suggested that the process be carried out in four stages, namely: Pre Application, Informal Assessment, Formal Assessment and Post Application (see Figure 1).
Figure 1: Protocol to deliver sustainable transport through the planning process
Transport Assessment TRAVL
‘Impact fee’ calculated
Acceptable to Developer?
Submits full, formal application
Agreement formalised (including Travel Plan, level
of ‘Impact Fee’ etc.)
i-Trace
Grants permission Development goes ahead
Develops travel plan
Requests monitoring study
Monitors travel plan
Evaluates travel plan
Does development meet
the set targets?
Bond retained Bond reimbursed
Pos
t-app
licat
ion
Designs development
The Developer
Issues Guidance Pack Pre-
appl
icat
ion
‘Tests’ application
The Planning Authority
Reviews application
Development Acceptable?
Form
al A
sses
smen
t In
form
al A
sses
smen
t
Pre Application
In the Pre Application stage, the developer would design the scheme and would receive a comprehensive guidance Developer Pack on first approaching the Council. This Developer Pack would include as much relevant information about the whole planning procedure as possible, including information on the suitability of location types, car parking standards, travel plans etc and how to ‘design in’ sustainable transport elements as far as possible.
Informal Assessment
The next step would be for the design of the scheme to be tested from a transport perspective using the TRAVL Transport Assessment tool. Results from this would then be used to calculate the resultant ‘impact fee’ (which could be based on predicted car trips, lorry movements, modal split, number of car parking spaces or whatever). Developers would have the option of conducting the TA and impact fee calculation themselves, or of paying a small fee to the local authority to run it on their behalf.
Here, the developer would have a choice: either s/he could agree to pay the full impact fee, or s/he could agree to look at adopting a travel plan to mitigate the transport impact of their development and hence reduce the level of their impact fee.
The reason for offering this choice to the developer is that in some cases developers may feel unhappy with devising a travel plan. While this is not ideal from the Borough/TfL policy perspective, it could be argued that if the developer agreed to pay a premium for not drawing up a travel plan then the local authority could use this ‘extra’ money as a fee for improving transport in that local area on the developer’s behalf. It could also be argued that the number of developers not choosing the travel plan option could be significantly reduced by offering some further kind of weighted financial incentive to make it even more financially attractive – perhaps through match funding or a discount arrangement.
Formal Assessment
Once the developer was satisfied with the size of the fee, s/he would then submit the planning application which would then be reviewed in the usual way, with unsuitable applications being rejected and perhaps being redesigned and acceptable schemes being granted planning permission once the agreement (including fee level and travel plan) has been formalised. At this point too, information on the travel plan and general scheme design would be fed into i-Trace, TfL’s GIS-based travel plan database.
Post Application
For some applications once planning permission has been granted and the development goes ahead, then the process is at an end. However, travel plans work best as long term instruments and experience suggests that without effective monitoring many travel plans simply wither and die. Accordingly, it is suggested that wherever possible there are monitoring facilities built in, and that these have ‘teeth’. Under such a regime, the idea would be that the developer would agree to pay a set impact fee to the local authority, of which perhaps half would be in the form of a
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bond. Thus, after one (or several) agreed period(s) of time, the developer could request that s/he be monitored by the local authority for compliance with the agreed travel plan. The local authority would then undertake a monitoring study and evaluate whether or not the targets were met, and then pay back the proportion of the bond based on the performance of the travel plan.
General comments
At this point it should be noted that TfL will soon ‘require’ that all development proposals in Greater London must be accompanied by a commitment to sustainable transport. In order to ensure that this requirement is appropriate to the scheme in terms of scale, land use(s) and end user(s), the LTPP identifies three levels of commitment.
1. Move For Action – the smallest sites would be expected to implement practical travel-enabling measures at the development which should involve actions that are simple and achievable such as cycle parking or making public transport information available. The outcome should be agreed with the planning authority.
2. Good Going – here developments must join the London travel awareness campaign Good Going. This involves a more active involvement in promoting forms of sustainable travel and involves borough transport officers.
3. Travel Plan – developments must set up and implement a travel plan.
Please note, the above Protocol would likely only apply in full to those developments requiring a travel plan. Stage 1 and Stage 2 applications meanwhile would likely follow a more streamlined protocol – not yet developed.
It should also be pointed out that there could be significant potential for using Local Travel Plan Groups under this type of scheme. In particular, the presence of an LTPG would make the travel plan ‘barrier’ far less of an issue to developers because:
• Developments would have the option of choosing to join an existing travel plan, rather than having to set up their own;
• Developments would have more influence on how their local area is treated by the council/transport operators etc if allied with like minded organisations;
• Developments would be able to influence how ‘their’ money was spent in ‘their’ local area (assuming LTPGs would be part-financed by some/all of the impact fees collected).
The idea of establishing LTPG sub areas also provides a basis to fix area boundaries of where impact fees could be spent, which is sometimes an issue with Section 106 monies for example.
Some drawbacks of the mechanism should also be noticed. These include,
• Policy context: the local authority needs to develop a strong enough justification for introducing such a mechanism. An inadequate justification may negatively affect the attractiveness of the area to a potential developer.
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• Scheme design: it needs to be as simple as possible to allow developers to understand the core principles and to aid its implementation and operation.
• Effectiveness: schemes must be as easy to monitor as possible if the approach is to be effective.
• Spending: developers will be less likely to argue about how their contribution is spent if there is a clear and transparent spending plan.
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6. References Barker K (2004) Review of Housing Supply, Delivering Stability: Securing Our Future Housing Needs, Final Report, The Stationery Office, Norwich, March.
Cambridgeshire County Council (2004) Delivering Our Transport Programme, Annual Progress Report, Cambridgeshire County Council. Visit www.cambridgeshire.gov.uk/NR/rdonlyres/35419694-36E9-4E4A-A0A4-BEB415117C2D/0/APR04C1.pdf. Last accessed 19 January 2006.
Cervero R, Ferrell C and Murphy S (2002) Transit-Oriented Development and Joint Development in the United States: A Literature Review, Research Results Digest, Transit Cooperative Research Programme, Transportation Research Board, Washington DC, October.
Commission of the European Communities (1995) Towards Fair and Efficient Pricing in Transport. Policy options for internalising the external costs of transport in the European Union. Green paper. Brussels: CEC, COM (95) 691.
Department of the Environment, Transport and the Regions (1998) A new deal for transport: Better for everyone, DETR, The Stationery Office, London, July.
Department for Transport, Local Government and the Regions (2001) Evaluation of Government Departments’ Travel Plans, Report for the DTLR, London, April. Visit www.dft.gov.uk. Last accessed 31 May 2004.
Department for Transport (2004) The future of transport, Department for Transport, The Stationery Office, London, July.
Energy Efficiency Best Practice Programme (2001) A Travel Plan Resource Pack for Employers, Energy Efficiency Best Practice Programme, Crown Copyright, The Stationery Office, London, June.
Enoch M P (2002) Recouping public transport costs from gains in land values: The cases of Hong Kong and Copenhagen, Traffic Engineering and Control, 43(9), October, 336-340.
Freilich R H and White M (1994) The Interaction of Land Use Planning and Transportation Management, Transport Policy, 1(2), 101-115.
Knapp R J J van der and Ing A G (1996) Effective TDM at worksites in the Netherlands and the US, Organisational Coaching in association with Eric N Shreffler.
Livingstone K (2000) State of London, Mayor of London, London, 20 July. Visit http://www.london.gov.uk/mayor/state/solcontents.jsp. Last accessed 11 January 2006.
Mayor of London (2001) The Mayor’s Transport Strategy, Greater London Authority, London, July.
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Mayor of London (2004) The London Plan: The Mayor’s Spatial Development Strategy, Greater London Authority, London, February.
Office of the Deputy Prime Minister (2001) Planning Policy Guidance Notes 13 (Transport), ODPM, London.
Pedler A (2004) A Transport Planners Guide to Capturing Land Value Uplift, TPS 2003/2004 Bursary Paper. Visit www.tps.org.uk/library/0304pedler.pdf. Last accessed 19 January 2006.
Schreffler, E. N. S (1998) Travel Demand Management Evaluation: Current practice and emergent issues, TDM Innovation and Research Symposium – Setting a Strategic Agenda for the Future, Transportation Research Circular, 433, 87-96.
Van den Branden, T., Potter S., Enoch M. P., and Ubbels, B. J., 2000, Fair And Efficient Pricing In Transport – The Role Of Charges And Taxes. Report for European Commission DG TREN, Oscar Faber, Birmingham, England.
Whelan J (2003) Funding London’s transport needs, Royal Institute of Chartered Surveyors London Region and Royal Institute of Chartered Surveyors Policy Unit, RICS, London, April.
Whitelegg J (1992) Traffic Congestion: is there a way out? Leading Edge, Hawes.
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7. Acknowledgements Thanks are due to the European Regional Development Fund Interreg IIIB programme-financed OPTIMUM2 Project and the London Borough of Southwark for sponsoring this research and the interviewees for their assistance in providing information for this report. Finally, the authors are grateful for the advice of Conrad Haigh at Transport for London and Simon Bevan and Diana Bunyan of the London Borough of Southwark.
Information on OPTIMUM 2
OPTIMUM2 is a European Regional Development Fund Interreg IIIB programme which aims to provide an effective approach for using Mobility Management to tackle the accessibility and mobility problems caused by congestion in urban areas. Specifically, it draws on the results of OPTIMUM, a previous Interreg project, to define five key factors, or “pillars”, which sum up the most important issues needed within a Mobility Management approach, namely that:
1. The approach must be user-oriented;
2. Mobility Management measures must be introduced as early as possible with any new development (ideally at the planning stage of any new development);
3. Effective communication and information is vital if a Mobility Management measure is to succeed;
4. Effective marketing and promotion activities are also essential ingredients;
5. The final element concerns the enforcement of Mobility Management.
The central OPTIMUM2 proposition is that if the five pillars are addressed properly, then the Mobility Management approach will provide a massive contribution to preventing mobility, accessibility and environmental problems.
The London Borough of Southwark is one of eight partners involved in the project. Here the key objective is to encourage the take up of effective mobility management measures among local traffic generators (e.g. businesses, hospitals etc) through the planning system and thus reduce energy consumption. This is to be accomplished by:
1. Establishing Local Travel Plan Groups (LTPGs) within a local community framework - e.g. the current Community Council framework recently set up by Southwark Council and/or the network of local business groups – to more effectively deliver mobility management.
2. Developing the planning financial obligation tool (Section 106 of the 1990 Town and County Act) in relation to travel planning to link more closely with LTPGs to increase the transparency of the process to local people and ensure the spend is on appropriate mechanisms.
3. Developing and testing a range of innovative mobility management tools that can be delivered through the LTPG mechanism e.g. providing pool bicycles
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for businesses, conducting street audits of local areas, and running travel awareness raising events for businesses.
4. Developing and analysing possible methods of incorporating the LTPG regime into the local political, transport and planning framework through a brief review of existing planning practice in EU member and other relevant states.
5. Determining the barriers to implementing LTPGs and methods of overcoming these.
