Future of London DEVELOPMENT & RENEWAL 9 June 2011
Engaging the private sector to deliver development and renewal in London
Agenda 8:30
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, GVA The 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
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Our Development and Renewal Programme Public sector asset rationalisation and investment – making Total Capital work Financing mechanisms to pump-prime infrastructure delivery Housing delivery in the new policy environment
Town centre and neighbourhood centre regeneration Delivering localism through the planning system Engaging the private sector to deliver development and renewal in London Short presentation title here / November 2010
November January February March May June
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Future of London 9th June 2011
The London LEP
Mark Kleinman, GLA, Assistant Director Economic and Business Policy
Short presentation title here / November 2010
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Future of London 9th June 2011
Community Infrastructure Levy Securing infrastructure delivery and encouraging growth
Andy Pack, Director Mike Taylor, Director
gva.co.uk
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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
gva.co.uk
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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 crosssubsidisation has failed
The Result – A Need for Innovation… gva.co.uk
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What tools do we have to address this? s106 TIF Charge over land Infrastructu re Bank
CIL
Prudential Borrowing JESSICA Loan Guarantee
Self Enterprise Developme Zones nt Capital Local Retention of Disposals Business Rates gva.co.uk
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What needs to be funded? Schools Roads Broadband Utilities
Energy
DEVELOP STRATEGY
How can we fund it up front? Borrow Internal resources Income Partnerships?
Repayment? CIL s106 TIF CoL NNDR
STRATEGY
CIL Cornerstone - Securitise
Costed Infrastructure Plan Viability Analysis
IMPLEMENT
Powerful part of broader strategies‌ revolving fund?
Charging Schedule Consultation
Areas
Evidence
Review
gva.co.uk
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Is a fund the answer? Kick off resources • Unsupported Prudential Borrowing (CTax/CIL) • Existing capital resources / Land holdings
Revolving Infrastructure Fund Scheme 1
Scheme 2
Scheme 3
Scheme 4
Repayment methods • CIL / section 106 • Charge over land / TIF
gva.co.uk
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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?
gva.co.uk
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CIL – Practical considerations for successful implementation
gva.co.uk gva.co.uk
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
Short presentation title here / November 2010
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Basic Ingredients • Development Plan must be up-to-date
• Evidence of infrastructure gap
• Evidence of viability effect
Short presentation title here / November 2010
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Setting CIL: Key Ingredients Viability
Other Funding
Strategic Land & Sale Values All uses
Public Private
CIL
Development Scale Type Scale Location
Short presentation title here / November 2010
Infrastructure Needs Identified Need Delivery Programme Costs
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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 Short presentation title here / November 2010
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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
Short presentation title here / November 2010
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Testing Viability of CIL Rates • Strategic view • Model viability effects on whole area • Some development may be at risk of nondelivery • Test opportunities for differential CIL rates: – Geography – Type of use – Both Short presentation title here / November 2010
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GVA CIL Model 1. Establishing the Base Trend land & sale values Policy basis Cost assumptions
2. Test & Validate Development typologies Market scenarios Sensitivities
3. Forecast CIL viability by use, area Confirm variations Exemptions, exceptions and relief
Short presentation title here / November 2010
4. Charge Schedule Confirm charge/zonal boundaries Prepare Schedule
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Balancing the CIL evidence • Desirability of funding infrastructure gap
• Likely effects on development viability over time
Short presentation title here / November 2010
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Issues • Interplay between London Mayoral CIL & Boroughlevel CIL • Mayoral Development Corporation as Charging Authority • Strategic infrastructure and cross-borough boundary working • CIL and Neighbourhood Planning – “meaningful contribution”? Short presentation title here / November 2010
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Richard Upton CEO
For information about the Future of London Programme please visit our website: www.futureoflondon.org.uk