development & renewal - 9th june
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Development & Renewal - 9th JuneTRANSCRIPT
Future of LondonDEVELOPMENT & RENEWAL
9 June 2011
Engaging the private sector to deliver development and renewal in London
Short presentation title here / November 2010 gva.co.uk
Agenda8:30 Welcome – Gerry Hughes, GVA (Chair)
8:40 The London LEP – Mark Kleinman, Assistant Director Economic and Business Policy at the GLA
Community Infrastructure Levy – the charge setting process and the challenge of balancing the need to deliver investment in infrastructure and encourage growth in an area - Andy Pack and Mike Taylor, GVAThe developer view of the emerging public policy landscape for development in London – Richard Upton, Managing Director, Cathedral Group
10:00 Q&A/Panel discussion
10:30 Close
Short presentation title here / November 2010 gva.co.uk
Our Development and Renewal Programme
Public sector asset rationalisation and investment – making Total Capital work November
Financing mechanisms to pump-prime infrastructure delivery January
Housing delivery in the new policy environment February
Town centre and neighbourhood centre regeneration March
Delivering localism through the planning system May
Engaging the private sector to deliver development and renewal in London
June
Short presentation title here / November 2010 gva.co.uk
The London LEP
Mark Kleinman, GLA, Assistant Director Economic and Business Policy
9th June 2011
Future of London
Date MonthDate Month
gva.co.uk
Community Infrastructure LevySecuring infrastructure delivery and encouraging growth
Andy Pack, DirectorMike Taylor, Director
9th June 2011
Future of London
Date MonthDate Month
gva.co.uk
What is the problem?
“Funding our fundamental infrastructure needs is the most significant barrier to regeneration in the current economic climate”
Regeneration to enable growth, CLG
“Infrastructure is often cited as the most significant barrier to progress in delivering development and regeneration… it is essential that
new innovative financing methods are found to address this issue”
All Party Urban Development Group – Providing a holistic approach to sustainable communities
Date MonthDate Month
gva.co.uk
Why?…• Government austerity
measures
– Lack of central government support for infrastructure
– Lack of grant through traditional sources
– Agencies internally focussed rather than delivery
• Failure in the development market
– Reduced market capacity - number / size of developers
– Banking debt finance hard to source
– No one willing to take risk on up front costs and infrastructure
– Traditional model of cross-subsidisation has failed
The Result – A Need for Innovation…
Date MonthDate Month
gva.co.uk
What tools do we have to address this?
CILs106TIF
Prudential
BorrowingCharge over
landJESSICA
Loan Guarante
eEnterprise
Zones
Infrastructure Bank
Local Retention of Business Rates
Capital Disposals
Self Developm
ent
Date MonthDate Month
gva.co.uk
STRATEGY
What needs to be funded?Schools Roads Broadband Utilities Energy
How can we fund it up front?Borrow Internal resources Income
Partnerships?
Repayment?CIL s106 TIF
CoL NNDR
DEVELOP STRATEGY
IMPLEM
ENT
CILCornerstone -
SecuritiseCosted Infrastructure Plan
Viability Analysis
Charging ScheduleConsultation Areas Evidence Review
Powerful part of broader
strategies… revolving
fund?
Date MonthDate Month
gva.co.uk
Is a fund the answer?
Revolving Infrastructure
Fund
Kick off resources
• Unsupported Prudential Borrowing (CTax/CIL)
• Existing capital resources / Land holdings
Repayment methods
• CIL / section 106
• Charge over land / TIF
Scheme 1 Scheme 2 Scheme 3 Scheme 4
Date MonthDate Month
gva.co.uk
CIL – Some challenges?• Strategic approach – up front/timely funding and delivery of
infrastructure vs. profile of CIL receipts and other income
• Early engagement with business to prepare and secure support
• S106 is not dead – how can you make the most of site specific s106 contributions and CIL without duplication or omission
• How effective are we at collecting it?– Can only borrow with a degree of certainty
• Cross boundary strategy for major infrastructure?
Date MonthDate Month
gva.co.uk
CIL – Practical considerations for successful implementation
gva.co.uk
gva.co.ukShort presentation title here / November 2010
What is CIL and Why Have One?
• A Levy that Local Authorities can choose to charge new development to provide needed infrastructure
• Basis in 2008 Act and CIL Regulations
• Access to other funding restricted
• Changes to existing regime – 2014 deadline to stop pooled S106 contributions
gva.co.ukShort presentation title here / November 2010
Basic Ingredients
• Development Plan must be up-to-date
• Evidence of infrastructure gap
• Evidence of viability effect
gva.co.ukShort presentation title here / November 2010
Setting CIL: Key Ingredients
CIL
ViabilityStrategicLand & Sale ValuesAll uses
Other FundingPublicPrivate
Development ScaleType
ScaleLocation
Infrastructure NeedsIdentified Need
Delivery ProgrammeCosts
gva.co.ukShort presentation title here / November 2010
Applying and Charging the Levy
• Charged per sqm additional floorspace• Index linked• Due from date development commences• Levy is a charge over the land/property• Applies to all development >100sqm GIA• Single dwellings included• Any development with permission
gva.co.ukShort presentation title here / November 2010
Infrastructure & Regulation 123 List• Broadly identify and cost infrastructure needed –
Indicative List
• Identify aggregate funding gap
• Prepare list of projects to be CIL funded (R123 list)
• Cannot charge S106 on CIL infrastructure
gva.co.ukShort presentation title here / November 2010
Testing Viability of CIL Rates• Strategic view
• Model viability effects on whole area
• Some development may be at risk of non-delivery
• Test opportunities for differential CIL rates:– Geography– Type of use– Both
gva.co.ukShort presentation title here / November 2010
GVA CIL Model1. Establishing the
BaseTrend land & sale valuesPolicy basisCost assumptions 2. Test & Validate
Development typologiesMarket scenariosSensitivities
3. ForecastCIL viability by use, areaConfirm variationsExemptions, exceptions and relief
4. Charge ScheduleConfirm charge/zonal boundariesPrepare Schedule
gva.co.ukShort presentation title here / November 2010
Balancing the CIL evidence
• Desirability of funding infrastructure gap
• Likely effects on development viability over time
gva.co.ukShort presentation title here / November 2010
Issues• Interplay between London Mayoral CIL &
Borough-level CIL
• Mayoral Development Corporation as Charging Authority
• Strategic infrastructure and cross-borough boundary working
• CIL and Neighbourhood Planning – “meaningful contribution”?
Richard UptonCEO
For information about the Future of London Programme please visit our website:
www.futureoflondon.org.uk