Meeting documents

1 THE ISSUE

1.1 A Supplementary Planning Document (SPD) has been developed that will introduce a more rigorous, evidence-based and methodical approach to securing developer contributions. Up to now, the negotiation by the Council of s.106 agreements to secure developer contributions to mitigate the effects of development has taken place on a site-by-site ad hoc basis. Whilst this approach has resulted in many successful agreements over the years, officers have been concerned that we haven't always been able to ensure sufficient contributions to fully mitigate the effect of development.

1.2 The draft SPD has been through a public consultation and this report now seeks approval to adopt the Planning Obligations Supplementary Planning Document.

2 RECOMMENDATION

That the Cabinet agrees that:

2.1 The draft Planning Obligations Supplementary Planning Document (Appendix 2), as amended in line with the schedule of proposed changes outlined in Appendix 1, is adopted by the Council.

2.2 The accompanying Consultation Report (Appendix 3) and the Sustainability Appraisal (Appendix 4) is published alongside the SPD.

2.3 The Council adopts a case by case approach in responding to development viability issues arising from the current economic downturn, in line with the approach outlined in the SPD.

2.4 Delegate to the Divisional Director of Planning and Transport Development the authority to make minor changes to the SPD and accompanying documents prior to formal adoption.

3 FINANCIAL IMPLICATIONS

3.1 The adoption of the SPD together with implementation of administrative and other procedural changes will significantly assist in ensuring that developer contributions mitigate the effects of development rather than placing this burden on local council tax payers. As such, this approach is a key element underpinning the Council's Medium Term Financial Strategies (Revenue and Capital).

3.2 The priority given to the various sorts of contribution required needs to be considered in the context of the Council's long-term vision for the area, but also the other potential sources of funding that are available. Hence the SPD recognised that it is a primary funding vehicle in relation to enabling the provision of affordable housing, but in relation to transport Infrastructure, the requirements are more likely to be for `gap' funding. The range of contributions required is not yet comprehensive, for example it does not yet include public realm improvements. To this end, a review of the SPD has been planned following the adoption of the first version.

3.3 It needs to be recognised that the implementation of the SPD will also have an impact on the development value of land within the district and this issue is dealt with in more detail in section 5 of this report.

3.4 The implementation of the SPD will require new administrative and monitoring processes which will need to be resourced. The SPD addresses this in part through the introduction of administration fees.

3.5 Implementation of the SPD will need to take into account development viability so as not to discourage necessary development in the District, particularly in the current economic climate. This issue is considered further in paragraph 5.12 onwards of this report.

4 CORPORATE PRIORITIES

• Building communities where people feel safe and secure
• Improving life chances of disadvantaged teenagers and young people
• Improving school buildings
• Sustainable growth
• Improving the availability of Affordable Housing
• Improving transport and the public realm

5 THE REPORT

Background

5.1 Agreements under section106 of the Town and Country Planning Act are used to secure developer contributions to mitigate the negative effects of development. In Bath and North East Somerset, the Council has traditionally undertaken such negotiations on an ad hoc site-by-site basis. Whilst this approach has resulted in many successful agreements over the years, this approach is inefficient and opportunities for a better 'capture rate' are being missed. To this end a Supplementary Planning Document (SPD) has been developed to introduce a more rigorous, evidence-based and methodical approach to securing developer contributions. Once adopted the SPD will carry considerable weight in planning terms.

5.2 The Planning Obligations SPD will initially derive its legitimacy from the adopted Bath and North East Somerset Local Plan, in particular Policy IMP.1. The Local Plan provides a framework for development proposals up to 2011. Therefore, this first version of the SPD relates to new developments coming forward in the period leading up to that date, unless extended further under the provisions of PPS12 for saved policies.

5.3 Cabinet will be aware that the Adopted SPD for the Bath and Western Riverside (BWR) contains specific developer contribution requirements associated with the development of that site. The BWR SPD will not be amended by the Planning Obligations SPD and the two policy documents will therefore sit alongside each other.

5.4 An SPD must also be based on sound evidence. This is particularly important with a document that will be the subject of tough negotiation. Members will note that the scope of the draft SPD does not cover the full range of Council services. It covers transportation, affordable housing, children's services, libraries, sport & leisure and green space provision. The scope is narrow because these are the only areas where a sufficiently rigorous evidence-base is currently available to justify the requirement for contributions. However, the SPD is a `living' document and it is anticipated that it will be updated as new information becomes available.

5.5 The result will be that the development industry will know precisely what Bath & North East Somerset will require from them in contributions and where it wants the contributions spent. There may still be opportunities to seek contributions on issues not in the SPD provided they are robustly justified as a material consideration and backed by sound evidence.

Public Consultation on the draft SPD

5.6 The draft Planning Obligations SPD was agreed for consultation in September 2008 (Appendix 2). A six week public consultation was undertaken in October/November 2008.The public consultation undertaken on the draft SPD, together with a schedule of consultation responses and a response to these comments is included as Appendix 3 to this report.

5.7 Some of the key issues raised related to the clarity of the draft SPD, to address this amendments are proposed as outlined in Appendix 1. These amendments include the addition of information to the SPD to underpin the calculations, the annotation of the case studies, explicit references to the evidence base, standardisation of the occupancy assumptions and maintenance periods and more detailed reference to on site and in-kind contributions.

5.8 Two of the main issues raised in the consultation were the need to facilitate greater community engagement in the negotiation of planning obligations and the need to consider the impact of these contributions on development viability within the district, particularly in the current economic climate. These issues will be considered in turn.

Economic Viability Issues

5.9 The Council, in order to conform to national planning policies, must consider the impact of planning obligations on development viability. As outlined in National policy Circular 05/05 Planning Obligations, the Council must ensure that the planning obligations being sought are not unduly onerous or unreasonable.

5.10 National policy also suggests that where issues of development viability are being considered that it may be beneficial to bring in an independent third party who can have access to financial information being provided by a developer.

5.11 It is critical that the SPD addresses this issue of viability, particularly in the current economic climate where the process of demonstrating such issues will be undertaken much more frequently, rather than being limited to exceptional cases.

5.12 To this end, it is suggested that the SPD outlines an "open book" approach to considering development viability issues in much greater detail and ensures that the Council are not burdened with the additional costs of meeting any viability testing. Therefore, it is proposed that the SPD outlines the need for:

i) An independent chartered surveyor (or suitably qualified and independent financial professional) must be utilised to undertake a viability assessment on behalf of the developer;

ii) Specific information to be considered to assess the viability concerns (including site or building acquisition cost and existing use value; construction cost and programme; fees and other on costs; projected sale prices; gross and net margin etc);

iii) The costs of the Council interrogating any viability assessment as provided by a developer are to be met by the developer. Although, the Council will be able to commission an independent chartered surveyor (or suitably qualified and independent financial professional) to undertake this work on their behalf;

iv) The costs of any further adjudication should be funded by the developer.

5.13The significant resource implications and specific technical expertise to deal with this case by case viability testing approach is such that the Council will need to bring in external expertise. To this end, it is recommended that the cost of this additional work be funded by the developer in full as outlined above to avoid additional costs for the Council.

5.14 It should be noted that where viability issues are demonstrated in relation to a development proposal and the ability to fund the planning obligations as outlined in the SPD is in question, that this may trigger a need for an application to be considered by the Development Control Committee in line with the Council's delegation scheme, in that it would have "significant implications for adopted policy".

Future community engagement

5.15 The public consultation on the draft SPD was the first stage in improving community engagement in the negotiation of Planning Obligations in the district. The SPD also outlines the process by which Planning Obligations will be considered for planning applications, which should help to make this process more accessible and transparent.

5.16 Furthermore, changes to the local validation checklist which came into force on 1^st April 2009, in anticipation of the future adoption of the SPD, mean that draft "Heads of Terms" for section 106 agreements will now have to be submitted alongside the planning application to ensure that the application can be registered. Members of the public and the Development Control committee will therefore be able to comment on and discuss planning obligations alongside the planning application.

5.17 The content of the draft "Heads of Terms" will be informed by the SPD and any pre-application discussions that are undertaken through the Council's Development Team pre-application advice service.

Next Steps

5.18 Appropriate administrative and monitoring arrangements are being developed and will be put in place on adoption of the SPD to ensure that the SPD can be implemented and the impact of the SPD monitored.

5.19 A review of the Planning Obligations SPD is programmed in the Local Development Scheme. This review is planned to commence in July 2009, with a public consultation scheduled for January 2010. It is anticipated that through this review process additional service areas will be added to the SPD, existing areas already identified for potential inclusion in the next draft of the SPD such as Public Realm improvements; Health Services; Community Facilities; Community Safety; Waterways and Economic Development.

5.20 The Council has also embarked on an infrastructure delivery planning process which will aim to establish appropriate infrastructure to support future development planned through the Council's Core Strategy and through the Regeneration Delivery Plans.

6 RISK MANAGEMENT

6.1 The report author and Lead Cabinet member have fully reviewed the risk assessment related to the issue and recommendations, in compliance with the Council's decision making risk management guidance.

6.2 The main risk associated with failure to produce an SPD is that significant levels of contributions will not be captured. This will result in more pressure on Council revenue and capital budgets as resources will need to be diverted to mitigate the effects of development.

7 EQUALITIES

7.1 A proportionate equalities impact assessment was prepared alongside the draft SPD, no significant amendments to the SPD are proposed therefore it is considered that this existing assessment is still valid.

8 RATIONALE

8.1 It is recommended that the SPD is now amended to reflect the issues raised during the public consultation, the recommended changes are predominantly for the purposes of clarification and are improvements to the SPD.

8.2 The Council is required by the regulations to undertake and publish a Sustainability Appraisal alongside all SPDs which it produces. Similarly, to meet the requirements of the regulations and the Council's Statement of Community Involvement a Consultation report must be published alongside an SPD (Appendix 4).

9 OTHER OPTIONS CONSIDERED

9.1 The option of taking a policy-led approach to economic viability concerns was considered, as adopted by Plymouth City Council. However, it was considered that a case by case viability approach was more flexible and sensitive to the issues as presented by a particular scheme.

10 CONSULTATION

10.1 Ward Councillor; Cabinet members; Parish Council; Town Council; Overview & Scrutiny Panel; Other B&NES Services; Local Residents; Community Interest Groups; Stakeholders/Partners; Other Public Sector Bodies; Section 151 Finance Officer; Chief Executive; Monitoring Officer

10.2 The consultation report included as Appendix 3 to this report outlines the public consultation that was carried out on the draft SPD in line with the regulations and the Council's Statement of Community Involvement. This consultation included a well attended workshop aimed at the community and voluntary sector facilitated by the Council alongside Planning Aid South West.

10.3 Furthermore the SPD was also discussed in depth by the Overview and Scrutiny Panel following the outcome of the public consultation.

11 ISSUES TO CONSIDER IN REACHING THE DECISION

11.1 Social Inclusion; Customer Focus; Property; Young People; Corporate;

12 ADVICE SOUGHT

12.1 The Council's Monitoring Officer (Council Solicitor) and Section 151 Officer (Strategic Director - Support Services) have had the opportunity to input to this report and have cleared it for publication.