Sunday, 18 November 2012

Lambeth's proposed Levy to pay for infrastructure

Large developments such as new tower blocks housing many new residents are likely to increase the demand for transport, health care, school places, parks etc. in the local area. As a consequence developers are required to pay to the council a negotiated sum towards these costs, referred to as 'planning gain, or more normally as an S106 agreement.

With the wholescale redevelopment of Vauxhall and Waterloo in particular, Lambeth is now considering adopting a Community Infrastructure Levy (CIL) and has just held its first consultation with another due in early 2013. The CIL differs from the S106 in that developers will pay set charges depending on the floorspace, location and use of their building. Smaller buildings will be exempt and some uses will pay no charge in certain parts of the borough.

Getting the set rates and locations wrong could allow certain developments to pay way less than they should, meaning no funds for gyratory removal or a new school,  or could unintentionally make some desired developments unfeasible.

The more involved that Lambeth residents get, with as much expertise as possible, in consultations means the better the outcome is likely to be. I thought I'd publish in full the following response (which I played no part in) by the Kennington Association's Planning Forum to the draft CIL. It's not really easy reading to those without some knowledge of the subject, but I think that a skim through it gives a feel for the time, effort and skill that some residents volunteer to the benefit of strong local decision making, and for which I'd like to thank them.

Consultation on Lambeth’s Preliminary Draft Charging Schedule for CIL
1 This is a representation in response to Lambeth Council’s Consultation on a Preliminary Draft Charging Schedule for the Community Infrastructure Levy (CIL), on behalf of the Kennington Association.
Who we are
2 The Kennington Association is a voluntary membership association of about 400 members drawn from the wider Kennington area in the north of the Borough of Lambeth, an area that abuts the east side of the Vauxhall area. Our aim is to promote and maintain the Kennington area as a good place to live and work, and the Kennington Association Planning Forum is a group of Association members with interest in and experience of planning and development issues, that develops planning policies and makes planning representations on behalf of the wider Association.
CIL – The Infrastructure Schedule
3 We think the list of "needed infrastructure" and available funding is needlessly padded by inclusion  on both sides of the account of items like the Tideway Tunnel, (£3,600m !) which is going to be fully funded by London wide charging or charges to individual developers. In this context we note the reference in the DIFS Study to it being fully funded out of the Thames Water's Asset Management Programme (AMP), and its consequent exclusion from the DIFS tally of VNEB Infrastructure. A similar point could be made of the Vauxhall Underground access improvements (£41m ), which are declared by the March 2012 VNEB OAPF (page 52) to be fully funded from TfL’s Business Plan.  Fully funded items, to which CIL cannot now be expected to contribute, should be relegated to memorandum item level, so that discussion and prioritising can focus on the gaps that CIL could reasonably be contributing to.

4 At the same time, there are a number of exclusions from the list, which should be rectified. The cost of converting the Vauxhall Gyratory to two way working is estimated as £21.5m in the Vauxhall Nine Elms Public Realm Study, and this should be shown, instead of the current blank. There is no express mention of funding for Vauxhall Park, which will suffer extra pressure of use from the Vauxhall cluster development, though we understand there may be mistaken labelling of an item in the list. Express provision should be included, consistent with that park’s development plan. And despite Lambeth’s recognition that Vauxhall City Farm’s development plans for educational and open space use are S106 worthy, they are not included in the list. An express provision for £350,000 should be made, to include legal title changes to facilitate outside fund raising.

CIL – The Comparators for Viability
5 We welcome the detailed analytic work done to analyse viability, but think this needs to be extended, particular in relation to the dense luxury residential development coming forward at Vauxhall and along the Albert Embankment. The exemplar developments used to develop the model to show what level of CIL was feasible to extract from residential developments do not go above a density of 500 units per hectare. But we know that the Vauxhall cluster goes way above that, with build costs in excess of the £2,200 per sqm shown. Eg the Kylun Vauxhall Triangle twin towers have a density of 800 units per hectare and an aggregate build cost of nearly £5,000 per sqm; 81 Black Prince Road would build 101 units on 0.08 ha, a density of about 1260 per ha; and Vauxhall Sky Gardens puts 239 units on 0.155 ha, a density of no less than 1542 per hectare. Many developments are mixed use, with plot ratios of 15 or 20, and these ultra dense developments should also be assessed. We suspect that the luxury developments of the riverside edge will sustain higher rates of CIL.

6 In addition, while we note the Lambeth “headline” policy of 40% affordable housing, this is subject to a viability caveat which generally eats up the policy, and Lambeth rarely sees anything like 40%, unless the land is or was council owned. A more realistic stance on likely affordable housing rates might well boost viable tariff rates somewhat. On a more general point, we wonder if sufficient consultation has taken place between nearby authorities to consider respective approaches and share relevant transaction evidence. Looking at the BNP Paribas' report the number of transactions considered is low in a number of areas, and not revealed in some sectors. In this regard, a number of potentially levy worthy developments, such as restaurants and some leisure uses have not been adequately appraised.
CIL – The Zoning
7 Consistently with our view about the riverside edge, we do not support an undifferentiated Zone B for residential charging. As regards nomenclature, Kennington is no longer (if it ever was) principally south of the Oval.  For example, 68% of the members of the Kennington Association live in the SE11 area, and only 27% in adjacent postcodes, with 6%, often those with a previous connection with Kennington, in more distant postcodes. This is consistent with the detailed post code analysis of property sales in the background material, which notes the SE11 postcode as Kennington.  Zone B is actually Vauxhall and Kennington, and the Kennington label should be removed from Zone C.

8 As regards subdivision, we think property values and current development point to a split of Zone B into a riverside element and a hinterland element. The boundary is a matter of debate, and might be informed by the more detailed analysis we suggest at paragraph 5 above, but either the CAZ boundary, the OAPF boundary or the SPD study area boundary (if not sensibly aligned) are possibles. For simplicity, it might be best to carve out from Zone B and the top part of Zone C the area covered by the non Zone A area of the Waterloo and Vauxhall Office charging area. We think this area should be charged for residential CIL at nearer the Waterloo rate, leaving only the hinterland to be charged at the suggested Zone B rate. This would be consistent with the view and zoning of the DIFS study, which reckoned the riverside area to be capable of sustaining a higher DIFS levy than the rest of the OAPF DIFS area.

CIL – Other Development
9 As regards the proposed charge of £125 per sqm for office development in the Waterloo and Vauxhall area, and nil elsewhere, we recall the views of Messrs Tuckerman to the Bondway Inquiry:
“Vauxhall as a location is well provided for by transport facilities, benefiting from the train and tube lines as well as the new bus station. It is also a short walk to Westminster and Victoria. However, retail amenity is poor and the local environment has no ‘heart’ from either a community or business perspective. It is also viewed as a harsh environment due to the one way system, the clubs and the vagrant population. It is therefore generally seen as a secondary office location by the property industry and business community.”

10 The draft Vauxhall SPD and Lambeth Core Strategy contemplate a further 8000 new jobs at Vauxhall, which at 25 sqm per job for office jobs amounts to a need for a further 200,000 sqm of office development, which seems slow in coming forward, compared to residential development. At a time when office accommodation along the Albert Embankment is standing empty, indeed being converted to residential use (eg Eastbury House), and the current development emphasis at Vauxhall is on residential, student and hotel use, it seems risky to equate Waterloo and Vauxhall rates in this way. £125 per sqm seems high compared with neighbouring borough areas, and we think a lower, encouraging rate should be set for the Vauxhall part of the area, at say £50 to £75 per sqm.

11 As regards retail development, we agree that the charge is best targeted at stores over 2,500 sqm “superstores”. But some supermarkets will develop incrementally from below the 2,500 sqm level to above it, and we think the retail charge should catch both new developments of  2,500 sqm and above, and new developments of smaller size that take an existing retail development over the 2,500 sqm threshold.                      

CIL – The Meaningful Proportion
12 Now that the CIL can be raised in one part of Lambeth and spent in another, (breaking the S106 principle of direct relation between the development and its mitigation that the S106 money was meant to be spent on), we note that the Government has suggested that "a meaningful proportion" should still be spent locally to the development paying the CIL, and has consulted (without conclusion) on what that proportion should be. Suggestions have been as low as 5%, reaching to 40%. We think that  anything as low as 5% would be an insult to those who actually suffer the disruption to amenity, education and transport of a large development embodied in a tall tower, and we would pitch the proportion higher.
13 How much higher should be susceptible to analysis, eg by comparing, for any given development, how much S106 it would generate under the Lambeth S106 SPD Tariff with the CIL it would expect to pay. As the S106 payment is taken to meet local needs, what proportion it was of the CIL would give a lead as to a sensible “meaningful proportion”. We think officers should do this comparison on at least the comparator developments (and the additional examples we propose at paragraph 5). Informal checks on S106 paying developments approved in 2011 suggest that the CIL might be two or three times the S106 payments, for normal residential developments, but a distinctly higher multiple for student accommodation. At first blush, we would argue for a meaningful proportion of about one third, but this area needs to be informed by more analysis by officers.
CIL – Procedure and Administration
14 The short description of any proposed development in a planning application should give up front the metrics (in terms of   Gross Internal Area (GIA) less the GIA of the existing building, which is allowed as credit against the new build area) so the amount of CIL can be checked without resort to toiling through Design and Access Statements and plans. This should be covered in the proposed Development Management Document when the Core Strategy and Site Allocation Document are settled in 2013.
15 Paragraph 6.2 of the Preliminary Draft Charging Schedule notes that the Council will have a discretion to provide CIL relief if the developer demonstrates that there is an unacceptable impact on the economic viability of a development, but (paragraph 6.3) that the Council does not expect to implement any discretionary exemptions. Nonetheless, the discretion will be statutory, and the Council will have to consider fairly any application for its exercise. If any such “confidential” viability study get outs are ever allowed, such studies should be made public, else we will get the same "black box" explanation for unusually low CIL charges without any way of challenging or understanding them, just like low affordable housing offers, which without transparency now discredit the 40% policy.
16 As we understand matters, to spend money on infrastructure in another borough, or pool CIL revenues with another borough, you need to have a joint charging schedule, and a joint Examination in public. We should be grateful for an assurance that in the absence of such a joint charging schedule, CIL revenues raised in Lambeth will be spent in Lambeth.