Date: 12 th October 2013

1. The Direct Financial Implications of Planning Date: 12th October 2013 www. pas.gov.uk

2. Introduction

3. 10%?

4. Long term Strategic Planning • Carefully calculated needs assessments • Business Cases • Options appraisal • Building political consensus • Delivery routes • Working with private providers & 2. Opportunism

8. The amount of Business Rates payable by shops, offices, warehouses, etc is currently calculated as follows: RateableValue of the property x NNDR Multiplier RV is set by the Valuation Office based on the individual characteristics of the property. The current rateable values were set in 2010, with the next valuation in 2017 and every 5 years thereafter, and; The NNDR multiplier for 2013/14 is 0.471 (0.462 for small businesses)

9. Business Rates – how they’re calculated Total Rateable value of property is £100k Payable Business Rates = £47.1k 0.471 NNDR MULTIPLIER

10. Business Rates – How much do local authorities keep?

11. Business Rates – Why promote growth? Before… NNDR Funding level Local share level + Business Rates collected Allocated to local authority

12. Business Rates – Why promote growth? Now… NNDR Funding level Local share level + Business Rates collected + Allocated to local authority

13. THE COMMUNITY INFRASTRUCTURE LEVY

15. Local Plan

16. How to Model the Financial Benefits of Planning & Growth

17. Community Infrastructure Levy (CIL) Net additional floor space in square metres CIL Rate Payable CIL Set by the Council; Charging Schedule will determine rates by use

18. Community Infrastructure Levy 3 key points to remember: • CIL is a one-off payment, payable by the developer at the beginning of a development (following planning permission). • Replacement floor space & affordable housing do not pay CIL. • Collected CIL must be spent on infrastructure in the Regulation 123 list.

19. Community Infrastructure Levy Example 3,000 sqm of new retail floorspace X £100 per sqm (your CIL rate for retail) = £300,000 CIL! Development & CIL

20. New Homes Bonus (NHB) 2013/14 National Average Band D Council Tax Rate Number of homes Private:£1,444 6 Affordable:£1,794 + £350 supplement

21. New Homes Bonus 3 key points to remember: • New Homes Bonus payable from Central Government to a Council is calculated based on net increases to the Council Tax base; • New Homes Bonus is an un-ringfenced funding stream; • NHB is paid for six consecutive years.

22. New Homes Bonus Example a) 100 units of market housing x £1444 x 6 (years) b) 100 units of affordable housing x £1794 x 6 (years) (a) + (b) = £1.73m Total NHB Development & NHB

23. Business Rates Retention (NNDR) Payable Business Rates (RV*0.471) Proportion to Upper Tier authority 50% 40% Proportion to Central Government

24. Business Rates Retention 3 key points to remember: • Different uses get different Rateable Values (RV). RVs are set by the Valuation Office Agency, and are reviewed every 5 years. • Business Rates are an un-ringfenced, on-going funding stream, and are payable annually; • Housing does not pay business rates.

25. Business Rates Retention Example 1) £100,000 x 0.471 = £47,100 Payable Business Rates 2) £47,100 – 50% = £23,550 “Local Share” 3a) £23,550 x 40% = £9,420 Paid to upper tier 3b) £23,550 x 60% = £14,130 Retained by Local Authority Development & NNDR

26. Financial benefits over time

27. When should a ‘local finance consideration’ be taken into account as a material planning consideration? Whether or not a ‘local finance consideration’ is material to a particular decision will depend on whether it could help to make the development acceptable in planning terms.

28. Example 1 City in South West UKL Master Plan Delivery Programming

29. Income from Growth – by type

30. Example 2 Local Authority in Outer London Growth Area 1: Strategic Infrastructure Investment

31. Income from Growth – by type

32. Income from Growth – by type

33. Income from Growth – by type

34. Example 3 Local Authority in Outer London Growth Area 2 Medium Term Financial Planning

35. CIL & New Homes Bonus Area3 Area4 9% Area2 Area5 Area6 Area1 Area7

36. Business Rates Retention & Council Tax Area2 Area3 Area4 Area5 Area6 Area1 Area7 Area8

37. Business Rates Retention & Council Tax • A significant proportion of collected Council Tax will be used for payment of increased cost of services. • When Council Tax and NNDR income streams are separated, a single large shopping centre shown to provide 97 per cent of all NNDR retained income.

38. Example 4 Local Authority in outer London Growth Area 3 Informing Public Sector Interventions

39. INTRODUCTION & OVERVIEW … What more can be done to develop the Town Centre • Well-articulated regeneration agenda, with high-profile projects ongoing in the Town Centre • Investment in the public realm to enhance safety and remodel the urban fabric • Still issues with the Town Centre – mainly due to office market

40. Working hypothesis on how to address the challenge • Acquire blocks that are past their sell-by-date and largely empty, securing outline planning consent and disposing directly to market • Marketing site opportunities outside the Council’s direct ownership, selecting a development partner to design a scheme, secure planning consent and undertake back-to-back CPO. • Offering incentives (such as business rate relief within state aid restrictions) to owners and developers to re-develop or refurbish outdated accommodation.

41. Scope of the brief • Where should the Council intervene in the office property market to accelerate the turnaround in offer? • What will be the most effective intervention? • When and how should the Council intervene?

42. The Approach • Site-specific assessments • Detailed assessment of ROI from any site-specific interventions, including the cashable impact on wider public financing and regeneration • Site residual valuations • public finance sources, such as NHB, CIL, Business Rate Retention, etc? • implementation planning • Where, when and how is Council intervention likely to have the biggest impact?

43. FINDINGS SITE FOR INTERVENTION Site Selection • Probability of development • History of planning applications • Cost of intervention • Delivery/site constraints and issues, such as land ownership, existing lease arrangements, etc. • Impacts - blight effect on town centre • Potential to have windfall benefits from adjacent development, i.e. gateway site • Potential regeneration impact • Financial return on investment from intervention

44. FINDINGS STRATEGIC SITE OPPORTUNITIES

45. Site Purchase Residual Valuation (Working Results) All Scenario #1

46. SCENARIO TESTING SITE 2 Site characteristics • Directly in front of regeneration site, adjacent to new development • Current use can easily be re-located • Development partner interest • Scenario 2: Mixed-use • 90% Residential, 10% Retail • 141 Homes; 1,097 sqm retail Opportunities • Scenario 1: Office • 98% Office, 2% Assembly • 9,205 sqm office

47. SCENARIO TESTING Finance Cumulative Totals SITE 2: Scenario 1: 98% Offices, 2% Assembly & Leisure SITE 2: Scenario 2: 90% Residential, 10% Retail

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