Agenda item

J Doe ran through the main points in the report regarding an update on managing CIL and s106 receipts.

• On page 7, section 2 – there is an ongoing government review of CIL as nationally, it is raising less than anticipated and it is a complex system to run. Page 8, paragraph 2.4 onwards – a review group has suggested a hybrid system to set a local tariff for smaller sites like the system in London where developers pay two tariffs – one the local authority and another to the Mayor of London.
• The Council started collecting CIL in July 2015 but there has been no expenditure yet as revenue is still coming in. An advisory group meets every three months and includes the borough council, the county council and other stakeholders and it is there job to prepare an annual business plan.
• The Infrastructure Delivery Plan sets a long list of necessary infrastructure provision. It is updated regularly with changing priorities. A report went to Cabinet in June to delay inviting bids from service providers as currently, there is £450,000 available but it was felt it was not a meaningful amount to distribute.
• The Council has permitted a lot of new developments but CIL is only paid when the development begins. Page 11 shows there is almost £7 million in assets - £3 million coming from The Beacon development.
• There are costs associated with collecting CIL – 5% of the money collected is allowed to be spent on administration costs.
• In the New Local Plan, there will be a review of the CIL charging schedule as it is inflationary. Also, changes to the property market should be monitored and an increase in house prices should be reflected in the CIL charges.

Councillor Birnie asked about the structure of the Infrastructure Advisory Group (IAG) and the distribution of funds. He said he found it odd that it includes LEPs and outside bodies yet only two members of the council are involved – it does not seem very democratic.

J Doe said it was a working group and the democratic element comes from Cabinet sign off. Member representation on the group is for political input and more technical input is required.

Councillor Birnie asked if the IAG only makes recommendations to Cabinet and the expenditure decisions are made by Council.

R Freeman said yes that was correct.

Councillor Hicks asked how the IAG got the ideas for spending.

J Doe said the process starts through expression of interests which will be opened later this year. Officers will assess their relevance and effectiveness.

R Freeman explained that submissions had to be scrutinised to find out if it is deliverable. A scoring mechanism is being developed and those with the highest score will be promoted as options to recommend for approval.

Councillor Birnie asked if the IAG covered neighbourhood submissions.

R Freeman said no. Core allocation of CIL funds go to the IAG. Town and Parish Councils have set up their own processes. Neighbourhood funds are allocated proportionally. In unparished wards, projects are to be decided in consultation with the community.

Councillor Birnie referred to the tables in the report and asked what they showed.

R Freeman said the table in the appendix show the funds transferred to each area in the last financial year.

Councillor Anderson asked the members on the committee who represent unparished wards if they were aware of the neighbourhood mechanism.

Councillor Howard said she wasn’t and she was unsure what the money was reserved for.

J Doe said they are allocated to the wards for use on one off infrastructure projects that do not commit the council to further spending.

Councillor Birnie asked on what basis these allocations were made.

J Doe said it was 15% of the CIL receipts in each ward. The Council collects 100%, 5% is used for administration and 15% has to go to Town and Parish Councils or the ward by law.

Councillor G Sutton thanked the officers for the report. He said there seemed to be some doubts with the technicalities of how funds are administered. It might be helpful to produce a document explaining the process for all members.

Councillor Anderson said there was a sharp difference parish and non-parished areas and it would be useful to produce two documents.

Councillor G Sutton said that Dacorum were pathfinders for this scheme in the County. Many boroughs are not getting involved.

J Doe said Dacorum were third to introduce it in Hertfordshire and some borough do not have it at all.

Councillor Anderson felt a copy of a document should be emailed to members. He mentioned there was a member development session on this topic and was shocked that there was such a low turnout.

J Doe said when Cabinet first approved the scheme, there was some documents which accompanied the main report and this might be good to start with. He said he will liaise with Member Support to recirculate that information.

Councillor Barrett asked if those that receive the 15% of CIL wouldn’t be able to apply to the IAG.

J Doe said 80% is allocated for core funds. After inviting bids, the receipts collected were lower than expected. There are no restrictions on who can apply but competition for the funds will increase. The 15% for Town and Parish councils are for more localised projects but there is no reason why they couldn’t pool their resources.

Councillor Hicks asked the IAG published its criteria so applicants knew what they were looking for.

J Doe said yes, the process had to be transparent. Cabinet had set the priorities.

Councillor Birnie asked if the obligation on developers to provide affordable housing could be bypassed by a larger CIL payment.

R Freeman said no, it couldn’t be bypassed. Affordable housing provision is guided by planning policy and is controlled by S106 agreements. There is a CIL payment deduction for affordable housing but it does not override the developer’s obligation.

Councillor Birnie said many developments are failing to meet the much needed affordable housing.

J Doe said any developer can make the case the build less than the set 35% affordable housing if it is not viable for the development. Officers will assess this claim through a viability assessment. Affordable housing is not subject to CIL payments and if it is not viable to reach the prescribed 35%, then a community payment will be made to the Council which is what has happened in The Beacon case.

Councillor Barrett asked if the £3 million from The Beacon was CIL or s106 payments.

R Freeman said the £3 million was purely CIL. There was an extra £2 million of s106 contributions.

Councillor Barrett asked what the cost per square metre was.

R Freeman said it as £100 per square metre in Hemel Hempstead.

Councillor Birnie said it was interesting to hear that a liability notice is served but no commencement notice.

R Freeman said it was a two stage process. The liability notice is served when planning permission is issued. Once the development has commenced, a demand notice for payment is served.

Councillor Fisher asked if the provision of affordable housing was set in stone and who checks the developer are providing what was agreed.

J Doe said it is known from the outset. If they want to provide less than 35% then they must let the council know from the start in order to provide a viability assessment which is then checked by officers. Any large schemes will go to the Development Management Committee.

Councillor Barrett asked if demolition classed as commencement.

J Doe said yes it did. Demolition did begin at The Beacon but after advice from the council, they stopped. At the moment it can’t begin as they haven’t fulfilled all the planning conditions.

Councillor Hicks asked there was any problem with the legal obligations to tell the department when work has commenced.

R Freeman said a failure to submit commencement notices came with severe penalties. However, it is an on going issue and is being dealt with through regular site visits and working alongside the Town and Parish Councils. There is a lot to monitor and not enough resources.

Councillor Anderson said he was concerned about the level of money not being collected. Relying on Town and Parish Councils doesn’t look good from a procedural angle. He asked if anything new had been considered to improve the process.

J Doe said they were doing all they can to monitor the process. Planning permission is live for three years so there can be a delay in collecting CIL payments. He said he would take away the committees views for discussion within the department. R Freeman spends time dealing with claims of exemption. It is a bureaucratic process and takes longer to get money because of these claims.

Councillor Birnie asked if there was an issue with under resourcing of staff.

J Doe said there was two members of staff – R Freeman dealt with the legal and technical aspects and there was an administration colleague too.

Councillor S Hearn suggested getting the Town and Parish councils involved and maybe the Clerk’s could notify the Council when development has commenced.

Councillor Anderson said this has been happening informally but to make it a formal duty it might be too much responsibility. He asked if it was possible to drill down further into the data to find developments in each parish and send out a list of developments every six months to the parishes to find if development has started or not.

R Freeman said his colleague currently undertakes regular weekly inspections from a prepared list but said he would be more than happy to circulate this on a quarterly basis.

Councillor Timmis asked if permitted developments were subject to CIL payments.

J Doe said they only charge CIL on residential developments and there is provision to charge it on extensions of a certain size.

R Freeman said that large house extensions often submit relief claims.

J Doe said there might be an opportunity in the future to revisit the classes that are charged CIL. For example, storage and distribution developments are increasing in the borough.

Councillor Barrett asked if the size of a property that is demolished is taken away from the total floorspace of the new dwelling when calculating CIL payments.

J Doe said it was calculated on the net increase in floorspace.

Councillor Barrett referred to the reclassification and asked if retirement homes would be included.

R Freeman said they would be looking at all usages and that class was on the agenda.

Councillor Anderson said he sat on the task and finish group when this was originally discussed. Retirement homes mean different things – sheltered accommodation, care homes or residential.

J Doe said it wasn’t programmed but the council needs to make sure they are charging the optimum rate in the economic climate.

Outcome

That the Strategic Planning and Environment Overview and Scrutiny Committee endorse the amount of work undertaken by officers and thank them for their work and hope to see some improvement in collection and spending of CIL revenue when it returns to the committee next year.