Proposals for a Mayoral Community Infrastructure Levy

1. Annex 2 Proposals for a Mayoral Community Infrastructure Levy Preliminary draft Charging Schedule consultation2011

2. This presentation will cover… • Why is the Mayor introducing a CIL? • Why is Crossrail important for London? • Who benefits? • Common CIL misconceptions

3. How the CIL works in London • Mayor/boroughs both “charging authorities” • Mayor restricted to using CIL for transport • Boroughs collect Mayoral CIL • Both can pay admin costs from CIL: • 4% boroughs • 1% Mayor • Boroughs have to have regard to Mayoral CIL in setting their own

4. What is the Mayor consulting on? • Preliminary draft Charging Schedule • Mayor has issued a consultation document: • Explaining the CIL • Explaining Crossrail and its funding • Setting out the preliminary draft schedule (section 3) • Summarising the evidence on viability • Explaining the judgements made by the Mayor in bringing the proposals forward

5. Why is the Mayor setting a CIL? • Mayor’s current proposals just for Crossrail • Will review position for post-2018 later • CIL to contribute £300 million • Plays a significant part in funding arrangements agreed by Mayor/Ministers • If sum is not raised from CIL: • Possible need to renegotiate funding agreement • Possible delay in project • Possible pressure on other parts of TfL budget

6. The Londonwide benefits of Crossrail • “The Mayor’s top strategic transport priority for London” (draft new London Plan) • Links, and support development of, key parts of London: Heathrow, West End, City, IoD, Thames Gateway • Alleviate pressure on network • Generates annual economic, transport and employment benefits of £1.24 bn by 2026 • Benefits every borough in London (£15-115 m pa) • Will benefit anyone travelling on it, or lines/stations where it will relieve congestion

7. Zone London boroughs Rates (£ per sq. m.) 1 Camden, City of London, City of Westminster, Hammersmith and Fulham, Islington, Kensington and Chelsea, Richmond-upon-Thames, Wandsworth £50 2 Barnet, Brent, Bromley, Ealing, Greenwich, Hackney, Haringey, Harrow, Hillingdon, Hounslow, Kingston upon Thames, Lambeth, Lewisham, Merton, Redbridge, Southwark, Tower Hamlets £35 3 Barking and Dagenham, Bexley, Croydon, Enfield, Havering, Newham, Sutton, Waltham Forest £20 The rates proposed

8. Proposed differential rates/reliefs • Zero rates for development for use for: • Education • Health For viability reasons • No proposals for discretionary reliefs Better to deal with viability by adjusting s106, makes administration by boroughs easier • Avoiding double charging between CIL and Crossrail s106 to be dealt with by the former being a credit towards the latter

9. Assessing Viability • Viability: • Fundamentally about values of land and existing uses • But recognise land availability also essential • House prices used as an indicator of viability • Residential largest form of development • Good correlation between house prices and shop/office rents – so a valid proxy • Use house prices to: • Assess viability • Allocate boroughs by band

10. Viability: Conclusions • Banding means CIL as a % of house prices similar for 1&2 and slightly lower in 3 – where fundamentals are weakest • Have to consider land availability when looking at levels of development against prices • Movement in construction costs/capital values likely to have far greater viability impact than CIL • “CIL at the levels proposed will not put at serious risk the overall development” of Greater London

11. Mayor’s conclusions (1) • Evidence presented meets legal standards • Approach to viability appropriate given: • Data availability (lacking at sub-borough level) • Nature of judgement • Use of CIL for Crossrail appropriate • Particularly as it benefits all parts of London • Amounts proposed should not have an undue impact on development

12. Mayor’s conclusions (2) • CIL should not have undue impacts on London’s development: • 40% of London Plan Opportunity Area housing and 21% employment capacity in band 3 • 61.5% of identified housing capacity in Band 2; 22% in Band 3 • CIL should not have adverse equalities impacts • 65% of London’s BAME population live in Band 2, 20% in Band 3

13. Mayor’s conclusions (3) • Effect on borough s106/CIL “take” • Average Mayoral CIL “take”: £42.8 m pa • 2007-8 total London s106: £1.6 bn • £1.3bn affordable housing • £300m “other” • With agreements from 7.1% of developments • Wider pool • Not a £1 for £1 zero sum game

14. Couldn’t we… • Borrow more? • No – both TfL and GLA are already borrowing as much as is prudent • Find the money elsewhere in the TfL budget? • No – this would mean renegotiating the Crossrail funding package and either cancelling or postponing other transport priorities • Renegotiate the funding package? • No – no Government appetite for this, would risk delaying the project and adding to its cost • Get districts outside London served by Crossrail to contribute? • Mayor is lobbying ministers to this end – but has no powers to compel them himself

15. Couldn’t we… • Split Band 2 in half? • We will look at this if a viability case can be shown, but would add to complexity • Move particular boroughs from one band to another? • Again, will consider if a viability case exists • Exempt particular places/uses? • This is very difficult to do within the regulations, and a strong viability case would be needed

16. Couldn’t we…. • Arrange bands according to how much benefit each borough gets from Crossrail? • No – the legislation is clear that this can only be done on the basis of development viability

17. Next steps • Preliminary consultation closes 1 March 2011 • Consult on draft schedule: May • Submit to examiner: June/July • Examination: September • Mayor approves schedule: April/May 2012 • Subject to change in light of Localism Bill

18. In the meantime.. • We will work with boroughs on implementation • We will work with boroughs setting their own CIL: • Officers from GLA/TfL meeting Redbridge – the only borough to propose a CIL so far • We will be playing a full part in the CLG “Frontrunners” Group • We will provide as much assistance as we can to boroughs in infrastructure planning • This is a new system, and we are keen to listen