Future of LondonDEVELOPMENT & RENEWAL

9 June 2011

Engaging the private sector to deliver development and renewal in London

Short presentation title here / November 2010 gva.co.uk

Agenda8:30 Welcome – Gerry Hughes, GVA (Chair)

8:40 The London LEP – Mark Kleinman, Assistant Director Economic and Business Policy at the GLA

Community Infrastructure Levy – the charge setting process and the challenge of balancing the need to deliver investment in infrastructure and encourage growth in an area - Andy Pack and Mike Taylor, GVAThe developer view of the emerging public policy landscape for development in London – Richard Upton, Managing Director, Cathedral Group

10:00 Q&A/Panel discussion

10:30 Close

Short presentation title here / November 2010 gva.co.uk

Our Development and Renewal Programme

Public sector asset rationalisation and investment – making Total Capital work November

Financing mechanisms to pump-prime infrastructure delivery January

Housing delivery in the new policy environment February

Town centre and neighbourhood centre regeneration March

Delivering localism through the planning system May

Engaging the private sector to deliver development and renewal in London

June

Short presentation title here / November 2010 gva.co.uk

The London LEP

Mark Kleinman, GLA, Assistant Director Economic and Business Policy

9th June 2011

Future of London

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gva.co.uk

Community Infrastructure LevySecuring infrastructure delivery and encouraging growth

Andy Pack, DirectorMike Taylor, Director

9th June 2011

Future of London

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gva.co.uk

What is the problem?

“Funding our fundamental infrastructure needs is the most significant barrier to regeneration in the current economic climate”

Regeneration to enable growth, CLG

“Infrastructure is often cited as the most significant barrier to progress in delivering development and regeneration… it is essential that

new innovative financing methods are found to address this issue”

All Party Urban Development Group – Providing a holistic approach to sustainable communities

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gva.co.uk

Why?…• Government austerity

measures

– Lack of central government support for infrastructure

– Lack of grant through traditional sources

– Agencies internally focussed rather than delivery

• Failure in the development market

– Reduced market capacity - number / size of developers

– Banking debt finance hard to source

– No one willing to take risk on up front costs and infrastructure

– Traditional model of cross-subsidisation has failed

The Result – A Need for Innovation…

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What tools do we have to address this?

CILs106TIF

Prudential

BorrowingCharge over

landJESSICA

Loan Guarante

eEnterprise

Zones

Infrastructure Bank

Local Retention of Business Rates

Capital Disposals

Self Developm

ent

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STRATEGY

What needs to be funded?Schools Roads Broadband Utilities Energy

How can we fund it up front?Borrow Internal resources Income

Partnerships?

Repayment?CIL s106 TIF

CoL NNDR

DEVELOP STRATEGY

IMPLEM

ENT

CILCornerstone -

SecuritiseCosted Infrastructure Plan

Viability Analysis

Charging ScheduleConsultation Areas Evidence Review

Powerful part of broader

strategies… revolving

fund?

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gva.co.uk

Is a fund the answer?

Revolving Infrastructure

Fund

Kick off resources

• Unsupported Prudential Borrowing (CTax/CIL)

• Existing capital resources / Land holdings

Repayment methods

• CIL / section 106

• Charge over land / TIF

Scheme 1 Scheme 2 Scheme 3 Scheme 4

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gva.co.uk

CIL – Some challenges?• Strategic approach – up front/timely funding and delivery of

infrastructure vs. profile of CIL receipts and other income

• Early engagement with business to prepare and secure support

• S106 is not dead – how can you make the most of site specific s106 contributions and CIL without duplication or omission

• How effective are we at collecting it?– Can only borrow with a degree of certainty

• Cross boundary strategy for major infrastructure?

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CIL – Practical considerations for successful implementation

gva.co.uk

gva.co.ukShort presentation title here / November 2010

What is CIL and Why Have One?

• A Levy that Local Authorities can choose to charge new development to provide needed infrastructure

• Basis in 2008 Act and CIL Regulations

• Access to other funding restricted

• Changes to existing regime – 2014 deadline to stop pooled S106 contributions

gva.co.ukShort presentation title here / November 2010

Basic Ingredients

• Development Plan must be up-to-date

• Evidence of infrastructure gap

• Evidence of viability effect

gva.co.ukShort presentation title here / November 2010

Setting CIL: Key Ingredients

CIL

ViabilityStrategicLand & Sale ValuesAll uses

Other FundingPublicPrivate

Development ScaleType

ScaleLocation

Infrastructure NeedsIdentified Need

Delivery ProgrammeCosts

gva.co.ukShort presentation title here / November 2010

Applying and Charging the Levy

• Charged per sqm additional floorspace• Index linked• Due from date development commences• Levy is a charge over the land/property• Applies to all development >100sqm GIA• Single dwellings included• Any development with permission

gva.co.ukShort presentation title here / November 2010

Infrastructure & Regulation 123 List• Broadly identify and cost infrastructure needed –

Indicative List

• Identify aggregate funding gap

• Prepare list of projects to be CIL funded (R123 list)

• Cannot charge S106 on CIL infrastructure

gva.co.ukShort presentation title here / November 2010

Testing Viability of CIL Rates• Strategic view

• Model viability effects on whole area

• Some development may be at risk of non-delivery

• Test opportunities for differential CIL rates:– Geography– Type of use– Both

gva.co.ukShort presentation title here / November 2010

GVA CIL Model1. Establishing the

BaseTrend land & sale valuesPolicy basisCost assumptions 2. Test & Validate

Development typologiesMarket scenariosSensitivities

3. ForecastCIL viability by use, areaConfirm variationsExemptions, exceptions and relief

4. Charge ScheduleConfirm charge/zonal boundariesPrepare Schedule

gva.co.ukShort presentation title here / November 2010

Balancing the CIL evidence

• Desirability of funding infrastructure gap

• Likely effects on development viability over time

gva.co.ukShort presentation title here / November 2010

Issues• Interplay between London Mayoral CIL &

Borough-level CIL

• Mayoral Development Corporation as Charging Authority

• Strategic infrastructure and cross-borough boundary working

• CIL and Neighbourhood Planning – “meaningful contribution”?

Richard UptonCEO

For information about the Future of London Programme please visit our website:

www.futureoflondon.org.uk