Infrastructure contributions (or planning/developer obligations) are designed to offset or mitigate the impact of a proposed development on the community.
Infrastructure planning contributions provide funding for public services like education, open spaces, sports facilities, libraries, and biodiversity conservation/net gain. In areas which have adopted the Community Infrastructure Levy (CIL) this is a straightforward and legally defined calculation. However, in other areas this is a more complex process.
For example, if you’re building a new housing development that significantly expands a town or village, said town or village is likely to need additional public spaces, schools, libraries, and so on, to compensate for the population increase. And in biodiverse areas contributions can help offset the environmental impact of development – an increasingly important area for issues such as phosphates in the Somerset Levels and the Environment Bill.
These payments were originally theoretically paid for by the uplift in land value generated by the grant of planning consent. You can find out more about establishing land use value in this article which considers the definitions and interactions between Existing and Alternative use values.
The validity of requests for infrastructure contributions isto be judged by reference to CIL Reg 122(2) which provides:
A planning obligation may only constitute a reason for granting planning permission for the development if the obligation is—
(a) necessary to make the development acceptable in planning terms;
(b) directly related to the development; and
(c) fairly and reasonably related in scale and kind to the development.
This three-part test was originally defined in case law in response to criticism that councils were furnishing developers with shopping lists of funding requirements which bore little relation to the proposed development, such as facilities in neighbouring towns or funding of otherprojects.
Local development plans should specify the circumstances, calculations and evidence base for such requests, which must be fully justified as above.
Further, following PPG Viability paragraph 029, ‘The total cumulative cost of all relevant policies should not be of a scale that will make development unviable.’
Viability reports can also examine whether requests for infrastructure contributions are fairly and reasonably related in scale to the development. Analysing such contributions can be done by utilising the same viability principles used when considering affordable housing requests.
Reporting to establish whether contributions are necessary and directly related (as per CIL rule 122) should also interrogate the policies, calculations and evidence base used by the relevant council. The most common outcome is that a development will be sufficiently viable to provide some level of contributions – whether infrastructure, affordable housing, or both – however not always the full amount sought by policy.
There are also a considerable number of cases where, either through errors in planning judgment or otherwise, more contributions are sought from a development than are justified under CIL Reg 122. This can endanger the deliverability of the development, and often only comes to light very late inthe planning process when time is of the essence.
For example, a recent case S106 Management acted on involved a development which had received resolution to grant consent subject to completion of s106 agreement including the agreed policy-compliant provision of 11 affordable homes and £150,000 in education planning contributions. These policy-compliant contributions were not being challenged.
6 months later the planning officer contacted the applicant requesting a further £490,000 in various planning contributions. No mention of these contributions was made in the resolution to grant consent, and they had not been mentioned by any party earlier in the planning process.
Neither the policy environment nor the planning balance had changed during the time from resolution to grant consent, and there was no adequate justification under CIL Reg 122 for the proposed additional amount sought.
The provision of such an extraordinary additional sum ofmoney would have rendered the proposed development unviable, and threatened thedelivery of both the development and the already agreed policy-compliantcontributions.
S106 Management, acting for the applicant in this matter, submitted both legal report under CIL Reg 122 to the Head of Planning and aviability report to the planning officer dealing with these matters.
This action led to the additional funding requests being revoked and consent being issued with the previously agreed terms.
In considering infrastructure contributions, seeking to negotiate a fair outcome for both sides is paramount. Infrastructure contributions are vital where a development has impact upon a community, but so too is following due process and ensuring requests are legally evidenced and justified, and requests they do not threaten delivery of other benefits.
The ideal is to preserve the overall viability and deliverability of a development while contributing proportionately to those direct impacts of the proposed development which can be mitigated.
As noted these contributions are often complex, hard to calculate and only come to light late in the planning process. Prior to submitting an application, if you have questions about your development’s exposure to planning obligations, contact our Feasibility Team, who can provide detailed advice on what contributions are expected.
If you are partway through an application and surprised by seemingly disproportionate requests from a local authority, contact our Viability team who will be able to assess the requests against CIL Reg 122 and the viability of your development.