Cabinet Member Report

Decision Maker: Cabinet Member for the Built Environment

Date: 19 May 2015

Classification: For General Release

Title: Approval to publish and issue for consultation a Draft Charging Schedule (DCS) as part of the process for setting Westminster’s Community Infrastructure Levy (CIL)

Wards Affected: All Wards

Key Decision: This report requires an executive decision and is therefore included in the publication of the council’s statutory executive list of Cabinet Member-level decisions.

Financial Summary: If the council does not implement a CIL it could forego the substantial income that a CIL could secure to help enable the delivery of infrastructure needed to support development and growth in Westminster. It has been estimated that whilst £2.3m per annum has historically been generated towards the delivery of infrastructure from “pooled” contributions from S106 agreements the CIL could deliver a projected £17.5m. In addition upon adoption of a CIL the council will be able to retain up to 5% of its CIL receipts to be applied to administrative expenses, including any expenses incurred before the CIL is adopted (to enable authorities to cover CIL set-up costs the council can apply the 5% to the amount collected across the three years; after this it is applied to the amount collected each year) . So whilst preparing and implementing a CIL requires some up front funding by the council in the long term this can be recovered from future CIL receipts. It is likely that the council could incur some loses

during the transition period from the cessation of s106 pooling and the implementation of the new CIL, this is dependent upon the pipeline of planning applications and where possible officers are talking actions to limit and mitigate any potential losses.

Report of: Julia Corkey, Director of Policy, Performance and Communications.

1. Executive Summary

1.1 The City Council is working towards adoption of a Westminster Community Infrastructure Levy (CIL) in accordance with the Planning Act 2008 and Community Infrastructure Levy Regulations 2010 (as amended). A CIL can be charged on developments in a local authority’s area with the money raised being used to pay for the provision, improvement, replacement, operation or maintenance of infrastructure that is needed as a result of development. Infrastructure funded through a Westminster CIL will be directed towards projects that the council, local community and neighbourhoods consider are required to help accommodate development. CIL rates are formally set through a legal document called a “charging schedule”. The first formal stage in the CIL-setting process – consultation on a preliminary draft charging schedule (PDCS) – took place in September-November 2014.

1.2 The purpose of this report is to summarise the comments that have been received in response to the PDCS, set out the City Council’s proposed response to the PDCS and to seek approval for the next formal stage in the process of setting a Westminster CIL – publication and consultation on a draft CIL charging schedule (DCS), included at Appendix 1.

1.3 In addition to the publication of the DCS approval is sought to publish the supporting evidence based documents included as Appendices 2 to 5 respectively. The purpose of publishing these documents is to demonstrate how the council has met the requirements of the relevant legislation and accompanying government guidance in setting the proposed draft CIL rates.

1.4 Following consultation on a DCS, the council must appoint an independent person to conduct a public examination of its CIL proposals, and then formally submit its DCS to the examiner with its supporting evidence. It is likely that the examination will take the form of a public hearing. Anyone commenting on the DCS has the legal right to be heard at the examination. The examiner must recommend whether the DCS should be approved, approved with specified modifications or rejected.

2. Recommendations 2.1 The Cabinet Member for the Built Environment is asked to:

1. Approve the publication of the Westminster Community Infrastructure Levy

Draft Charging Schedule (DCS), as set out in Appendix 1, for a four week period of public consultation in accordance with regulation 16 (1) of the Community Infrastructure Levy regulations 2010 (as amended);

2. Approve the publication, alongside the DCS, of the supporting evidence

based documents included at Appendices 2, 3, 4 and 5;

3. Approve publication of the statement of representations procedure and of a local advertisement in accordance with regulation 16 (1) and (2) of the Community Infrastructure Levy Regulations 2010 (as amended). Both documents are appended to the DCS in Section 4.

4. Delegate the authority to the Director of Policy, Performance and Communications to make any minor editorial changes to the DCS and supporting evidence documents, where necessary, prior to publication of the documents for consultation.

3. Reasons for Decision

3.1 National government has been consistent in being clear that local authorities should move away from securing developer funding for infrastructure through tariff-based policies using planning obligations (commonly referred to as Section 106 agreements). To ensure this, the Community Infrastructure Levy (CIL) Regulations 2010 (as amended) restrict how authorities can use planning obligations in the delivery of infrastructure. The first of these restrictions – which prevent pooling contributions for particular infrastructure projects or types of infrastructure from more than five developments – came into force on 6th April 2015.

3.2 Officers estimate that the potential effect of this restriction on the use of planning obligations could be a loss of income currently used to deliver infrastructure of up to £2.3m per annum. This figure has been based on an average of what was received through financial planning obligations, for infrastructure, during the period 2008 to 2013. Introduction of a Westminster CIL is the only way of addressing this loss. It will also secure substantial additional resources to help enable delivery of the infrastructure needed to support development and growth in Westminster.

3.3 The reason for this report, and associated decisions, is therefore to initiate the second formal stage in the CIL-setting process which will help lead the council towards adoption and charging of a Westminster CIL.

4. Background

National Legislation 4.1 The Planning Act 2008 and Community Infrastructure Levy Regulations 2010 (as

amended) provide the powers for “charging authorities” (in London the London boroughs and the Mayor of London) to choose to develop and charge their own CIL. The Government considers that the infrastructure needed to support cumulative development should be funded from developments through the levying of a CIL, instead of the use of planning obligations, and they have made it clear that it is their ambition for local authorities to adopt a CIL as swiftly as possible.

4.2 A CIL is charged on developments in a local authority’s area involving the

creation of new floorspace with the money raised being used to pay for the provision, improvement, replacement, operation or maintenance of infrastructure that is needed as a result of development. Payments for infrastructure funded through a Westminster CIL would be directed towards projects that the council, local community and neighbourhoods consider are required to help accommodate development.

4.3 Central to the process for setting a CIL is the statutory requirement for a charging authority to strike an appropriate balance between the desirability of funding from CIL (in whole or in part) the actual and expected estimated total cost of infrastructure required to support the development of its area, taking into account other actual and expected sources of funding, and the potential effects (taken as a whole) of the imposition of CIL on the economic viability of development across its area. Under the CIL Regulations these are the only considerations that may be taken into account in setting rates. In short, this means the Council is required to consider its infrastructure needs, and the contribution CIL receipts may make to meeting these on the one hand; and the effect the proposed rates might have on the economic viability of development in its area on the other.

4.4 To charge a CIL a charging authority must produce a ‘charging schedule’ (the legal document setting out the CIL rates that will be charged per square metre for different types of land uses and in different parts of the authority’s area). This schedule must be supported by evidence to show that the balance referred to in paragraph 4.3 has been struck, and to show that the rates proposed will not have an undue impact on development in the authority’s area. The charging schedule must be the subject of thorough consultation and finally an examination in public by an independent examiner.

4.5 The first formal step in adopting a CIL is publication of a Preliminary Draft Charging Schedule (PDCS) for consultation, giving stakeholders an early opportunity to comment on the authority’s proposed approach and supporting evidence. A Westminster PDCS was published for consultation in September 2014, with a deadline for comments by the end of October 2014. The Council received 32 responses to the PDCS. The consultation response, the further work that has been done as a result and the changes proposed to the council’s proposals in answer are all dealt with in more detail later in this report.

4.6 The second stage in the formal process of adopting a CIL is publication of a draft charging schedule and issuing it for consultation. The purpose of this report is to seek approval to publish the draft charging schedule (DCS), included at Appendix 1, and issue it for consultation. This is a more formal process than consultation on the PDCS; it is at this stage that anyone wishing to be heard at the public examination of the council’s charging schedule has to register their wish to do so.

4.7 The proposed format and content of the DCS is in accordance with the

Community Infrastructure Levy Regulations 2010 (as amended) and the Government’s Planning Practice Guidance on the Community Infrastructure Levy (June 2014). It contains only the most essential information including the draft rates (set, as the CIL Regulations require, in pounds per square metre) at which CIL is proposed to be chargeable in Westminster. As differential rates, for different areas of the city and for different land use types, are proposed the DCS includes maps to identify the location and boundaries of the different charging zones. An explanation of how the chargeable amount will be calculated is also included. Further information on this evidence is included below.

4.8 At this stage the council also has to publish a “statement of representations procedure” setting out arrangements for consultation on the DCS. Under the CIL Regulations, this must include details of:

The period within which representations on the DCS must be made

The address to which such representations must be made

That representations may be made in writing or electronically

That those making representations may request the right to be heard by the independent examiner appointed by the council to examine its proposals

That representations may be accompanied by a request to be notified of later steps in the CIL-setting process – submission of the CIL proposals for examination, publication of the examiner’s report and final approval of the charging schedule.

The council must also publish a local press advertisement setting these details out and stating that the DCS and supporting evidence are available for inspection and the places at which they can be seen. Both of these documents are included in Section Four of the DCS.

4.9 Detailed information on the background to CIL and how the draft rates have been determined is included in the supporting evidence that will be published alongside the DCS. In accordance with the CIL Regulations and national guidance, the proposed CIL rates contained in the DCS have been informed by evidence consisting of:

(i) An updated version of Westminster’s Infrastructure Plan, produced by the

council’s appointed consultants CIL Knowledge, to demonstrate infrastructure

demands across service areas, funding, and any funding gaps (Appendix 2);

(ii) Viability evidence, produced by the council’s appointed consultants BNP

Paribas Real Estate (who are the leading consultants in the country taking

forward local authorities proposals for charging a CIL). This evidence is

based on different types of development across the city, taking account of

spatial differences in values and development costs (land purchase,

construction costs, planning policy requirements, affordable housing, Mayoral

CIL) (Appendix 3);

(iii) A “draft infrastructure list” (or Regulation 123 list) which comprises the list of

infrastructure which may be funded in part, or wholly, by a Westminster CIL

(Appendix 4);

(iv) Evidence that demonstrates how the levy would support the implementation

of the council’s ‘relevant’ plan, which for Westminster is primarily for this

purpose Westminster’s City Plan: Strategic Policies (2013) (Appendix 5), but

also comprises the saved policies of the City’s Unitary Development Plan

(2007) and the Mayor of London’s London Plan (2011 and altered in 2015).

(v) A statement on the relationship of CIL and planning obligations (commonly

referred to as ‘section 106 agreements’ or in some cases ‘unilateral

undertakings’) setting out where the council is likely to still continue to seek

planning obligations and what will be encompassed by CIL. Background

evidence information is also provided on the amount of funding collected in

recent years through planning obligations (Appendix 5). More detailed

information about use of section 106 and other planning mechanisms

following the adoption of Westminster’s CIL will be given in a draft

supplementary planning document intended to be published separately for

consultation alongside the DCS (further details of which are given below).

Background to the DCS: approach taken and PDCS response

4.10 The rates proposed in the DCS reflect the viability evidence set out in the Viability Assessment (attached as Appendix 3). The proposals are a set of rates differentiated by both use of land and by geographical charging area, reflecting variations in development viability by different uses and across different parts of the city. Having tested other options, officers are satisfied that these proposals strike the appropriate balance between desirability of using CIL to fund infrastructure and effects on the economic viability of development across the council’s area. In particular, it will be noted that different charging zones are being proposed for different uses. In general, the principle has been adopted of identifying “prime” areas where the viability fundamentals are particularly strong for each type of development, a “core” area, and then “fringe” areas where development essentials are comparatively less robust. It has not proved possible to produce common charging areas for all uses; although this option was examined the viability evidence available suggested variations by use and area, and that this would have unnecessarily constrained the Council’s ability to secure infrastructure funding from CIL – particularly in respect of residential development in parts of the north of the City (such as St John’s Wood). The rates proposed in the PDCS were as follows:

Prime Core Fringe

Offices £250 £200 £50

Hotels £200 £150 £50

Retail (all “A” use classes and sui generis retail, nightclubs and casinos)

£200 £150 £50

Residential £550 £400 £200

Other uses (e.g. theatres, health, education)

Nil Nil Nil

4.11 The comments on the PDCS fell into five categories which are summarised below, together with the suggested response (a more detailed report on the consultation and consideration of the issues raised are included in the Evidence and Information document attached as Appendix 5):

1. The quality and extent of the evidence base: it was argued that there was

a need to produce more evidence about development viability, in particular testing the likely impacts of the proposed rates on a wider range of developments across the City. It was asserted that there should there be more sensitivity testing to consider the effects of changes in the development market and of seeking higher levels of affordable housing. Further details should be given about the commercial development market in Westminster (particularly hotels and offices), and there was a particular need to consider whether the assumptions about build costs are robust (especially for offices, which in Westminster will tend to be built to a higher standard than the norm, with air conditioning and “in all likelihood be 6+ storeys”). A number of detailed technical arguments were made about the approach to valuation that our consultant has taken. In particular, an argument that more account should be taken of site-specific viability appraisals that have been submitted to the Council with planning applications, and to evidence recent property transactions. Proposed response: Viability impacts of the proposed rates have been tested on a further 62 proxy developments, using schemes submitted for planning permission in 2014. This will bring the total number of developments tested to 155 and will ensure that the rates for different uses are based on a larger number of actual developments rather than notional ones and provide a greater breadth of evidence for types of development highlighted in the response to the PDCS - particularly around commercial development. There has been further sensitivity testing showing the effect of build costs increasing by 20% and of seeking affordable housing at 35% (the highest level sought under the council’s interim guidance note on affordable housing policy). This confirmed that the proposed residential, retail and hotel rates are robust. For offices, cost information from the Royal Institution of Chartered Surveyors suggests that the upper quartile figure in the range of build costs

for this form of development is £2,527 per square metre. A rate of £1,817 per square metre was used in the original viability assessment; this is still 16% higher than the sensitivity tested figure. Likely developments in the office market, with occupiers demanding higher design standards, greater flexibility in use of space and better integration with surrounding public realm are likely to increase pressure on build costs. A reduction in the proposed CIL rates for offices is being proposed to address this issue.

2. Affordable housing and other policy requirements: A major theme of the

response was that the City Council has accepted viability arguments made in respect of individual planning applications and agreed to affordable housing provision at levels below those set in adopted policy. It was also argued that insufficient allowance has been made for the section 106 requirements that will not be subsumed in CIL and which development will still be expected to bear. A related argument was that there was insufficient clarity about what CIL will be used to fund, and what will continue to be sought through section 106; use of agreements under section 278 of the Highways Act 1980; and use of planning conditions and other mechanisms.

Proposed response: There is an important difference between the kind of area-based viability assessments that have to be used to inform the setting of CIL rates and those submitted in respect of individual developments, and the approach that has been taken in compiling the CIL viability evidence is appropriate for this purpose. Additional sensitivity testing has been done to ensure that the proposed rates are compatible with the Council’s adopted affordable housing policies, which confirms that the residential rates proposed are robust. Officers have checked to confirm that the assumptions about the section 106 requirements after adoption of the CIL used in the viability evidence are justified in the light of recent practice in Westminster. The draft supplementary planning document on use of planning obligations and other planning mechanisms proposed to be issued shortly for consultation alongside the DCS will provide the additional detail about these matters sought.

3. Charging Zones: It was suggested that insufficient evidence was provided to

justify whether the proposed charging zones adequately reflect development viability across Westminster, and an argument that these should be based on rent levels. For residential uses, it is suggested that Maida Vale (the W9 1 postcode) should be in the “fringe” charging zone rather than the core one, and that if St John’s Wood is included in the “prime” zone those around Regent’s Park (the NW1 4 postcode) should be as well. For commercial uses it has been suggested that Pimlico and the area to the west of Paddington should be classified as “fringe” rather than “core”. No viability evidence was put forward to support this argument.

Proposed response: Officers have reviewed the charging zones comprehensively in the light of these comments, taking account of information about office rents and transactions, hotel transactions and house prices. For the most part, this confirms that the proposed zones are robust; however it supported the view that the relatively small part of the NW1 4 postcode falling within Westminster should be included in the prime residential charging zone. It also suggested that it would be appropriate that the SW1A 2 postcode (the area around Whitehall) and that part of WC2 in Westminster should be moved into the prime zone, having regard to prices for new build residential properties in those areas.

4. Flexibilities (discretionary reliefs/ CIL payment in kind): Developers

encouraged the Council to adopt policies that allow the following discretionary provisions in the CIL Regulations to be made available:

in-kind CIL payments (developers providing infrastructure or transferring land of a value equivalent to their CIL liability)

discretionary relief from the need to pay CIL for development by charities for investment purposes and in cases that fail to qualify for mandatory charitable relief on the grounds that they would constitute state aid, but where the value of the relief is below the threshold for it to be notified to the European Commission

discretionary social housing relief for discount market sale housing.

They also argued that allowance should be made for the Council to allow relief from CIL in “exceptional circumstances” relating to development viability.

Proposed response: It is intended to allow these flexibilities to make the

Westminster CIL as responsive to the very diverse circumstances that characterise development in the City. Further details are given in paragraph 4.12c below.

5. Governance and spend: Several respondents (including the Royal Parks,

the Environment Agency, the Canals and Waterways Trust and Victoria Business Improvement District) expressed an interest in working with the Council in deciding priorities for spending CIL receipts. The West End BIDs (Heart of London Business Alliance, New West End Company, Baker Street Quarter Partnership, Northbank and Victoria) suggested that the majority of CIL raised from development in their areas should also be spent there. There was also interest from neighbourhood forums and the Westminster Amenity Society Forum about how the 15% of CIL generated in each area which the CIL Regulations require should be spent for local benefit will be dealt with.

Proposed response: These issues are not strictly relevant to the proposed

rates. Some further information about the intended use of CIL is given in the draft supplementary guidance that will be issued for consultation alongside

the DCS. Further work on governance of the CIL (including arrangements for keeping the Westminster CIL under review, ensuring the efficient collection of the Mayor of London’s CIL, ensuring CIL income is spent in accordance with the relevant legislation, overseeing collection and handling claims for relief, monitoring and reporting and stakeholder liaison) will be done alongside the DCS with further reports to Cabinet members made as necessary.

Proposed changes

4.12 In light of the comments made on the PDCS and further officer work carried out

in response, it is proposed that the following changes to the proposals are made at this stage:

a) A reduction in the office rates In light of the evidence regarding current build costs and changing occupier

demands which might be expected to increase these further; global financial uncertainty which might impact the demand for offices in an internationally-oriented market like the West End; and the implications that a wider choice of office locations in and around central London might have on delivering the council’s strategic planning policies relating to employment it is proposed to reduce the office rates in the prime and core charging zones by £50. The available evidence suggests that these factors do not apply to other forms of development in the same way or to the same extent, so no further rate changes are proposed. The effect of this change would be that the rates proposed at DCS stage will be as follows:

Prime Core Fringe

Offices £200 £150 £50

Hotels £200 £150 £50

Retail (all “A” use classes and sui generis retail, nightclubs and casinos)

£200 £150 £50

Residential £550 £400 £200

Other uses (e.g. theatres, health, education)

Nil Nil Nil

b) Changes to charging zones

In light of a review of property transactions across Westminster, three relatively minor changes to the charging zones for residential development are proposed, involving moving the following areas currently in the core zone into the prime one: NW1 4: The part of this postcode in Westminster is the area immediately to

the west and south of Regent’s Park. Its inclusion in the Prime zone

was suggested by the Westminster Property Association in their response to the PDCS, and a review of its housing market suggests it has more in common with St John’s Wood (already in the prime zone) than with the adjoining Lisson Grove area.

SW1A 2: This would have the effect of including the whole SW1 A postcode

into the Prime zone, including the Whitehall area to the east of St. James’s Park. The housing market here shows values more characteristic of those in the Prime zone.

WC2: This would bring into the prime zone the parts of the WC2 postcode

in Westminster – the Aldwych-Strand-Covent Garden-Leicester Square areas. Again, the housing market here shows values more characteristic of the prime zone.

c) Areas of discretion It is proposed to indicate that the City Council is likely to make available the following areas of discretion relating to relief from and payment of CIL. These are optional policies which are provided for in the CIL Regulations and are matters that the Council can decide to make available (or to withdraw) at any stage. They are not therefore matters that are directly pertinent to the proposed CIL rates, but they may be borne in mind at the public examination:

discretionary relief for forms of social housing commonly known as “discount market sale” – dwellings sold for not more than 80% of market value and in accordance with a policy published by the Council setting out how that housing is to be allocated in its area. This kind of innovation is something the council is keen to encourage, and it is recommended that this relief should be adopted.

discretionary relief for the investment activities of charities. This can be claimed by charitable institutions which have a material interest in land which is developed as an investment held by the institution (or jointly by the institution and other charities) as an investment from which the profits will be applied for charitable purposes. Relief cannot be granted in circumstances where it would constitute a notifiable state aid.

a further discretionary charitable relief which covers development by charities for charitable purposes. There is a provision in the regulations exempting development in cases where a charging authority considers this would not comprise a state aid; the discretionary provision allows the charging authority to allow relief in cases where it considers the exemption would be a state aid, but is satisfied that this would not be of a nature requiring notification and approval by the European Commission. This effectively

allows relief to be granted in respect of charities able to demonstrate that even after CIL relief is granted they met the de minimis threshold set in EU law (which allows up to £146,220 in state assistance to be given to any particular recipient over a three year rolling period – funding from any source including CIL relief would count towards this limit).

A relief for what the CIL Regulations term “exceptional circumstances”. This will allow a claim for relief from payment of CIL to be made in circumstances where a section 106 planning obligation has been entered into in respect of a development. Evidence will have to be brought forward to satisfy the council that to require payment of the CIL would have an unacceptable impact on the economic viability of the development. The council will also have to be satisfied that granting the relief would not constitute a notifiable state aid under EU law.

Allowing payment of CIL through “infrastructure payments”. This will allow the council to accept one or more items of infrastructure by a person liable to pay CIL where the value of this infrastructure is equal to the amount of CIL payable. The council will have to aim to ensure that any infrastructure provided will be used to support the development of its area. It would have to be infrastructure referred to in the regulation 123 list of projects or types of infrastructure that may be funded by CIL and it must not be necessary to make the development granted planning permission giving rise to CIL liability acceptable in planning terms (in other words it cannot be anything that could be dealt with through a section 106 agreement).

If these recommendations are approved officers will develop the policies required to make these flexibilities available. Next Steps

4.13 If there is agreement to the recommendations in this paper, the next step will be to publish the DCS and supporting evidence for the second consultation stage in the CIL-setting process. During this period, officers will make arrangements for the appointment of an examiner to conduct the public examination of the DCS. The examiner must be independent of the council and have appropriate qualifications and experience.

4.14 After the end of the DCS consultation period, and assuming that no further

modifications to the proposals are required, the DCS and supporting evidence will be formally submitted to the examiner. The examiner will then convene a public examination, which is likely to take the form of a public hearing in the autumn.

4.15 After the examination, the examiner will make recommendations to the Council

as to whether or not it should adopt its CIL proposals and about any changes that should be made to them. The final decision to adopt the charging schedule and

start charging CIL has to be taken by full council. It is currently anticipated that charging will start at the end of 2015.

4.16 National policy guidance on CIL encourages authorities to publish policies

regarding the way in which CIL, planning obligations and unilateral undertakings under section 106 of the Town and Country Planning Act 1990, highways agreements under section 278 of the Highways Act 1980 and other planning issues alongside their CIL proposals to provide clarity for developers about the basis on which the likely financial requirements that will be made of development will be assessed. At PDCS stage, this was done in summary form in the supporting documentation. It is proposed to provide much more detailed information at this stage - further detail has been provided in the ”Information and Evidence” document and this will be added to through a draft supplementary planning document (SPD) that will be published for consultation shortly.

4.17 This document is intended to replace a “Supplementary Planning Guidance on

Planning Obligations” which was adopted in January 2008. As well as the CIL it will take account of the changes to national, London and Westminster planning policy since then. It will cover CIL, planning obligations, highway agreements and conditions attached to planning permissions and explain how they interact. The underlying principle is that after adoption of the Westminster CIL, planning obligations will be used to address site-specific issues and non-infrastructure items. CIL will be used to fund delivery of infrastructure requiring an area-based approach and/or more resources than it would be reasonable to secure from a single developer. A report seeking approval for public consultation on the draft SPD will be put forward for approval shortly.

5. Financial Implications 5.1 From 6th April 2015 the council’s ability to leverage funding for infrastructure from

s106 planning obligations (as secured through Section 106 agreements) has been significantly restricted. Although mitigation steps have been put in place, the restrictions on the future use of s106 planning obligations could result in the council potentially foregoing up to £2.3 million per annum towards the delivery of infrastructure. This figure has been based on an average of what was received through financial s106 planning obligations (not ‘in kind’), for infrastructure, during the period 2008 to 2013.

5.2 Adoption of a CIL would both address this shortfall, and be likely to generate

significant additional resources to help fund the infrastructure required to support development and growth in the City. The yield from CIL is dependent upon planning applications and their start upon site. It has been estimated that had the proposed CIL been applied to the previous 8 years implemented developments that the impact would have been to generate an annual average of £17.5 million

in receipts. This is a significant increase above the financial receipts received through s106 planning obligations for infrastructure.

5.3 The retrospective income projection figures should only ever be considered as illustrative, and not as a guaranteed source of funding, as the receipt of CIL funding will always be dependent upon the implementation of developments. The 8 year period taken for analysis does however, represent a complete development cycle taking in both recession and recovery. Because of this there were some significant differences from the calculated annual average between the years.

5.4 On adoption of a CIL the council will be able to retain up to 5% of its CIL receipts (plus the additional 4% for collecting the Mayoral CIL) to be applied to administrative expenses, including any expenses in the three year period incurred before the CIL is adopted. The estimated WCC CIL is £875k and the mayoral CIL £125k, giving a total amount of around £1 million each year). Some of the basic machinery for CIL collection has already been put in place to implement the Mayoral CIL. So whilst preparing and implementing a CIL requires some up front funding by the council in the long term this could be clawed back from CIL receipts.

6. Legal Implications 6.1 The legislation governing the development, adoption and administration of a

Community Infrastructure Levy (CIL) is contained within the Planning Act (2008) and the Community Infrastructure Levy Regulations 2010 (as amended). The associated Government National Planning Policy Guidance is also important in guiding this process. There are other areas of law which should be considered when assessing certain developments for CIL liability and determining the appropriate sum due. These include matters relating to social housing, procurement, charitable institutions’ and state aid.

6.2 Further legislative reforms to the CIL regulations are expected in 2015/16 as part of a whole scale review of CIL by government.

8. Consultation 8.1 As explained in the body of this report, the recommendations have been informed

by the responses to consultation on the CIL preliminary draft charging schedule. These have been reinforced by meetings between officers and the Westminster Property Association and with representatives of the Mayor and Transport for London. A comprehensive review of the comments made on the PDCS and the City Council’s proposed response is set out in the document attached as Appendix 5.

8.2 Appendix 5 also provides details to inform consultation bodies, and any other interested parties, on how they can respond to the consultation on the PDCS. These include the details about the consultation process that the council is legally required to publish in the “statement of the consultation procedure” explained in paragraph 4.8.

8.3 There has been considerable engagement with the development industry and others throughout the process of CIL preparation. Infrastructure providers, both within the council and externally, were engaged with in order to inform the update of the council’s Infrastructure Development Plan, included as Appendix 2). Reports on the development of a Westminster Community Infrastructure Levy have been considered by the council’s Environment Policy and Scrutiny Committee in November 2014, April 2014, November 2012 and December 2011.

9. Staffing Implications 9.1 We are currently developing a CIL through the use of existing resources.

9.2 In terms of future staffing there will be a requirement on adoption of a

Westminster CIL to ensure that there are sufficient resources allocated to both the collection and spending of CIL funding. A monitoring post for the collection of the Mayoral CIL is currently being funded through the 4% admin fee retained from the Mayoral receipts collected. Further resources are however likely to be required as the number of liable applications increase and the council moves forward to adopt its own CIL. It is most likely that any additional resources could be funded through the 5% administration retained by the council from the collection of its own CIL. Appendices

Appendix 1 Westminster Community Infrastructure Levy: Draft Charging

Schedule (May 2015)

Appendix 2 Addendum to Westminster Infrastructure Plan Technical

Assessment 2006-2026 (August 2014)

Appendix 3 Community Infrastructure Levy: Viability Assessment prepared for

Westminster City Council (May 2015)

Appendix 4 A “draft infrastructure list” (or Regulation 123 list) (May2015)

Appendix 5 Information and evidence to support the development of the City of

Westminster’s Preliminary Draft Charging Schedule (May 2015)

If you have any queries about this Report or wish to inspect any of the Background Papers please contact: Rachael Ferry-Jones / Andrew Barry-Purssell, Policy, Performance and Communications Department rferry-jones@westminster.gov.uk / abarrypurssell@westminster.gov.uk 020 7641 2418 / 5662

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NAME:

State nature of interest if any …………………………………………………………..…… ………………………………………………………………………………………………….. (N.B: If you have an interest you should seek advice as to whether it is appropriate to make a decision in

relation to this matter) For the reasons set out above, I agree the recommendation(s) in the report entitled: Approval to publish for consultation a Draft Charging Schedule (DCS) in preparation of the implementation of a Westminster Community Infrastructure Levy (CIL). Signed ……………………………………………… Cabinet Member for the Built Environment Date ………………………………………………… If you have any additional comment which you would want actioned in connection with your decision you should discuss this with the report author and then set out your comment below before the report and this pro-forma is returned to the Secretariat for processing. Additional comment: …………………………………….…………………………………… ……………………………………………………………………..…………………………… …………………………………………………………………….……………………………. If you do not wish to approve the recommendations, or wish to make an alternative decision, it is important that you consult the report author, the Head of Legal and Democratic Services, Strategic Director Finance and Performance and, if there are resources implications, the Strategic Director of Resources (or their representatives) so that (1) you can be made aware of any further relevant considerations that you should take into account before making the decision and (2) your reasons for the decision can be properly identified and recorded, as required by law.

Note to Cabinet Member: Your decision will now be published and copied to the Members of the relevant Policy & Scrutiny Committee. If the decision falls within the criteria for call-in, it will not be implemented until five working days have elapsed from publication to allow the Policy and Scrutiny Committee to decide whether it wishes to call the matter in.