Community Infrastructure Levy
Rate Setting
July 2014
Context
The Funding Pie
The levy cannot be expected to pay for all of the infrastructure required:
• 5-10%
• Consider CIL as just one small part of a more complex blend of
funding.
Local Government
Grants
CIL
s106
Business Rate Retention
Capital reciepts
Borrowing
Regional Growth Fund
Value
The proportional impact of CIL on
development viability
1
6
11
16
21
26
31
36
£10/ sq m variance in CIL rate 10% variance in build costs 10% variance in sales values
Preparatory work
Getting started
Developing a
Working Hypothesis
What might the
schedule of rates
look like in your
area?
Charging
Authority:_________________________
Development
Type/ scale
Area 1
_______________
Area 2
_______________
Area 3
_______________
Area 4
_______________
Type 1 £ £ £ £
Type 2£ £ £ £
Type 3
£ £ £ £
Type 1, Scale A £ £ £ £
£ £ £ £
£ £ £ £
Simplicity v Complexity
Simplicity
• single rate (?)
• requires minimal evidence
• need to set near the lowest
value use / area (an
opportunity cost?)
Complexity
• differential rate (probably)
optimises income for
infrastructure
• “Progressive”: the most
profitable developments pay
more
• too complex may be off-
putting and awkward to
operate
• too complex likely to require
greater justification through
evidence.
Differential vs Single Rate
Use / Area A Use / Area B Use / Area C
CIL
Viability
levels
Differential Rate 2
income (£/time)
Single Rate
income (£/time)
Differential Rate 1
income (£/time)
Workshop
Format and considerations
• Hosted by project sponsor
• With or without members depending on level of knowledge
• Viability advisor in attendance
• CIL income projection model linked to charging schedule
• A buffer of around 25% below maximum CIL rates
• How do changes in CIL rates effect income
CIL Income Projections
Maximum CIL Rates
Summary
Summary
• Direct the viability work using your own local knowledge.
• You are required to involve developers prior to the
publication of draft rates
• Use a rate setting workshop that brings together viability
and projected income to reach an optimal solution
Questions
www.CILknowledge.com