S106 and CIL


S106 and CIL

Planning obligations which have evolved over many years since the 1970s are the means by which communities receive benefits from development. Two of the most common planning obligations that reduce the negative impacts of development on non-highways related issues are s106 and Community Infrastructure Levy (CIL). S106 is part of the Town and Country Act 1990 and CIL was introduced in the Planning Act 2008.

The sorts of ‘infrastructure improvements’ relevant to Kelvedon that could be funded by S106 or CIL are:
• new or improved public open spaces including new play areas or sport facilities
• community buildings
• funds to improve or extend local schools and health provision
• improvements to road and pavement alignments that could ease traffic flow, new cycle paths and improvements to the footpath network

Section 106 measures are site specific - they are an agreement, signed by the landowner of a development site and local authority (BDC) setting out what will be provided to make that specific development more acceptable. The measures are usually restricted to mitigating the negative impacts of that development. Details of the measures are set out in a deed and often referenced within the Conditions which are attached to the planning decision.

S106 measures have to pass three tests to ensure that they are deemed to be appropriate, otherwise the developer can appeal against them. They have to be shown to be necessary, directly relate to the impact of the development and are fair and reasonable for the scale of the development. Developers have the right to renegotiate a S106 agreement if they can prove it no longer satisfies the tests or if circumstances have changed.

Since 2010, authorities have faced additional restrictions that limit the ‘pooling’ (or combination) of funds from more than five separate S106 planning obligations. This has led to problems with traditional tariff style planning obligations, e.g. education contributions.

S106 is commonly used to secure affordable houses at an agreed percentage of the total number of houses In a site: typically 30-40% for large sites. The S106 can provide financial contributions, or land given over, or work carried out in lieu, to provide off-site infrastructure such as road improvements, health provision, environmental and education improvements.

A S.106 agreement can also restrict the use of a site to a particular type of development or class of use. It is the responsibility of the Local Planning Authority to enforce a S.106 agreement against the landowner. Where a S.106 cannot be agreed with the Council, such as in an appeal, a unilateral undertaking may be used by the developer instead.

In 2008, the government decided to introduce the CIL to broaden the scope of infrastructure funding. S106 agreements limited improvements to those that are directly related to the site and therefore couldn’t be used for wider, possibly larger, infrastructure improvements. A CIL payment can be spent on an Infrastructure project away from the development site and doesn't have to directly alleviate a negative impact of that project. Therefore CIL payments are developer contributions for infrastructure improvements that can be applied in a broader manner.

CIL payments often can’t be used for funding affordable housing. This means that large sites would still use S.106, so leaving both systems in use. However, to avoid disadvantage to developers CIL and S106 funds can’t be used for the same infrastructure projects - that would be classed as double charging developers. CIL payments give developers a degree of certainty, especially when they are working out whether developing a site is viable or not, so they tend to like CIL.

CIL is worked out on a rate per square meter basis, which can be for houses, offices or retail etc. and the rate is index linked. Once the CIL rates are set and agreed by a Council, they are applied across a district on qualifying types of development. There is a formula to calculate the rate and the Council has to publish a Regulation 123 List of Infrastructure projects or topics that they want the CIL to be spent on.

When creating a CIL, Councils have to consider their own Infrastructure Funding Gap. They also have to provide evidence to support the viability of sites across the district so that developers can afford to pay without the CIL payments making the site unviable. Getting the rate right is quite a balancing act for local authorities. The rate can vary between geographic areas, for instance between urban and rural areas or between types and sizes of development. CIL payments are paid in the same way as S106; when a development starts on site or when certain phases are commenced depending on the size of a development.

When a development takes place in a Parish, the Parish Council will receive 15% of the CIL payment if it DOES NOT have an adopted Neighbourhood Plan in place. If there is a Neighbourhood Plan, the parish council will receive 25% of the CIL payment- the rest will be retained by the Local Authority to be possibly spent elsewhere.

BDC’s website states that they will consider working on their Community Infrastructure Levy later in 2017. The CIL has to be approved by the planning inspectorate, so is unlikely to be adopted before the Local Plan.