11. Implementation

11.1 Negotiation/Viabiltiy

(2)11.1.1 Planning obligations, like CIL, are a necessary cost of development and it will be expected that the likely cost of obligations, including the cost of affordable housing provision, will be factored into development from an early stage. The Council has tested the viability of development as part of the preparation of the Cambridge Local Plan 2014 Submission Version and the Cambridge Submission CIL charging schedule. The viability assessments6 tested the impact of the proposed CIL rates, alongside Local Plan policies and planning obligations on development. The results of these residual land value development appraisals produced land values that would still incentivise landowners to make their land available for redevelopment. These results were based on area-wide viability assessments, which included additional headroom (i.e. the CIL rates are not set at the margins of viability), something that would not be relied on for site-specific cases.

11.1.2 The costs incurred in delivering a workable, high quality development should be anticipated and reflected in the price paid for land and should not reduce the ability of a site to provide what is required under the planning obligations.

11.1.3 Anticipated costs must include affordable housing, site clearance and remediation, good quality, design measures, landscaping, noise and other environmental attenuation measures, and appropriate infrastructure provision. Price paid for land may not be a determining factor if too much has been paid or historic land values or developer profit margins are being protected at the expense of required planning contributions.

11.1.4 There may be exceptional circumstances where development proposals are unable to meet, in full, the policy requirements of the Development Plan. If the Applicant can demonstrate, to the satisfaction of the City Council, that the scheme cannot be fully compliant and remain financially viable, the Council may consider a reduced level of contributions in one or more areas.

11.1.5 In order to determine such applications the applicant is required to submit an ‘open book’ viability assessment to the Council. In all cases, the Council requires viability assessment to be undertaken using a residual land value approach. The applicant should use the Homes and Communities Agency Development Appraisal Tool (www.homesandcommunities.co.uk/ourwork/development-appraisal-tool) or an equivalent well recognised appraisal tool, to be agreed with the Council in advance of the assessment. The viability assessment will need to address the fundamental issue of whether an otherwise viable development is made unviable by the extent of the planning obligations and CIL requirements. The assessment will need to derive a residual land value for the proposed scheme, which can then be compared against a benchmark or threshold land value (Market Value, / Existing Use Value or Alternative Use Value).

11.1.6 Viability costs should only include costs that are essential to the development, or required through Local Plan policies, National and local legislation, regulation and guidance. The provision of additional benefits to development not required through the above e.g. additional parking spaces, underground parking, should not be included as a reason to demonstrate a non-viable development.

11.1.7 The schedule of information to be provided as part of a Financial Viability Assessment on any development scheme can be found at Appendix 3

11.1.8 Once submitted, the viability assessment will be considered and assessed by the City Council and an independent viability advisor appointed by the City Council, with full costs to be borne by the applicant. Commercially sensitive information will be treated in due confidence, however it may be necessary to report the key issues and broad conclusions to elected members at the time of their consideration of the planning application.

11.1.9 Where the applicant fails to demonstrate that a reduced level of contributions should be applied or that the level of planning obligations that the development can viably support cannot mitigate the impact of the proposed development, then the planning application will be refused.

11.1.10 If it is proved that meeting the full policy requirements for affordable housing would make a scheme unviable, then negotiations will take place to reduce the planning obligations to a point which maximises affordable housing, but results in a viable well designed scheme.

11.1.11 The Growth and Infrastructure Act 2013 provides a route for applicants who already have the benefit of extant permission on a site to apply under Section 106BA of the Town and Country Planning Act 1990 to reduce the quantum of affordable housing included in a development if the original provisions of the associated Section 106 agreement render the development unviable. Further guidance in relation to applications under Section 106BA is included in the Council’s Draft Affordable Housing Supplementary Planning Document.

11.2 Legal Agreements

11.2.1 Section 106 (S106) of the Town and Country Planning Act 1990 (as amended) allows the local planning authority to enter into a legally binding agreement with a landowner in association with the granting of planning permission in order to secure planning obligations.

11.2.2 The Council’s S106 agreement includes clauses to secure the provision of planning obligations. The agreement is made by Deed between the landowner (s), Cambridge City Council, Cambridgeshire County Council and any other person with an interest in the application site.

11.2.3 In all cases where a planning obligation is to be secured by S106 the Council’s Legal Services will usually produce the first draft and the applicant will be required to pay the Council’s legal and administrative costs incurred in negotiating and completing the deed and the costs of the transfer of any land to the Council, as well as to pay a contribution towards the cost of monitoring for compliance.

11.2.4 The proposed Heads of Terms of any Agreement will need to be established before instructions to draft a section 106 agreement are sent to Legal Services and the agreement must be completed before any planning permission can be issued. The applicant will be expected to provide Heads of Terms reflecting the obligations outlined in this SPD, and reflecting all parties with interests in the relevant land.

11.2.5 Where it considers it appropriate, and having first assessed whether there is any risk to the City Council and County Council in doing so, the City Council may decide to make it a condition of a planning permission that there shall be no commencement (including demolition) until such time as the terms of the section 106 agreement in accordance with the approved Heads of Terms and template have been agreed and entered into by all the parties with interests in the land.

11.2.6 Where the City Council decides that such a condition is not appropriate, for example (but not limited to the following example) because one or more of the site specific Heads of Terms are not drafted with sufficient certainty, the permission will not be issued until the section 106 agreement has been completed. Failure to complete the agreement in a timely manner may risk refusal.

(1)11.2.7 Any references to financial contributions will be index linked to the Building Cost Information Service (BCIS) and take account of any increases in the index during the time period that elapses between the date of the deed and when the contribution is due to be paid.

11.2.8 Further information can be obtained by contacting the Council’s Legal Services on: 01223 457414.

11.3 Practical points for preparing and completing planning applications

11.3.1 In order to enable the completion of planning obligations to take place quickly and effectively, the following points should be borne in mind:

  • Use of conditions including Grampian type conditions7 or Unilateral Undertakings8 rather than S.106;

  • Use of standard clauses where possible;

  • Proposed Heads of Terms should be submitted with planning applications/as soon as possible following registration of planning applications. The applicant should notify the planning case officer of the solicitor they intend to instruct to act on their behalf in relation to the S.106 Agreement. They should also ask their solicitor to contact Legal Services so that the appropriate undertaking for the City Council’s and (where a party) the County Council’s legal costs can be provided (or to cover the cost of external solicitors if the City Council decides that this is appropriate). Up to date evidence of title should also be provided at an early stage;

  • As all parties with an interest in the application may need to be party to any planning obligation relating to it, applicants should inform and involve landlords and anyone else with an interest in the land (for example, a bank with a charge) at an early stage. If such parties are not involved until the first draft of the planning obligation is produced, this can slow down the process considerably;

  • Where contributions to the City Council and County Council towards physical or social infrastructure are required through a planning obligation they will be index linked to reflect any increases in the index (as described in paragraph 11.2.7).

11.4 Monitoring of planning obligations

11.4.1 Once a planning obligation is signed, administrative costs are incurred on tasks such as checking legal agreements, processing financial contributions in accordance with the terms of the obligation, updating the Council’s S.106 database, monitoring of triggers associated with the provision of on-site/off-site infrastructure, and monitoring conditions that secure planning obligations. The list is not exhaustive.

11.4.2 This requires compliance checks, monitoring, project management and implementation by the City Council. Standard charges will apply to recoup these costs. These standard charges will be imposed on a per clause basis as outlined in Table 6 below in line with Policy 85 of the Draft Cambridge Local Plan 2014.

11.4.3 Large-scale developments may be agreed by negotiation, although this will incur an additional administrative charge. Such agreements will need to be agreed as part of the S.106 negotiation process on a development specific basis.

Table 6 – Monitoring Charges

Type of planning obligation Monitoring Charge
Monitoring charges on financial and non- financial planning obligations The management and administration charge will be
5% of the total contribution(s)
(subject to a maximum charge of £50,000).
Large Scale Development To be considered on a case by case basis.
May be agreed by negotiation, subject to an additional management and administration charge.
The default position for administration charge will be 5% of total contribution(s).

11.5 Review of planning obligations and expenditure of contributions

11.5.1 In order to ensure that information on planning obligations receipts and expenditure is available and the system is fully accountable, the following measures are an integral part of the City Council’s processes:

  • Reports on planning applications presented to Planning Committees/Area Committees will identify any key aspects of planning obligations recommended by the planning officer;

  • A copy of each planning obligation will be placed on the public planning register in association with the planning decision notice to which it relates;

  • An overview of contributions received and projects funded will be reported to Environment Scrutiny Committee;

  • The Council has a system of devolved decision making in place whereby Area Committees prioritise how devolved funding from or within contribution categories is used on local projects to provide or improve local facilities. At the same time some developer contributions from major developments are assigned to a citywide fund for strategic projects benefiting more than one area in the city.

6 Local Plan/CIL Viability Assessment, Small Sites Affordable Housing Viability Assessment, Student Accommodation Affordable Housing Viability Assessment, SHLAA Viability Assessment 7 A Grampian Condition is a planning condition attached to a decision notice that prevents the start of the a development until off-site works have been completed. 8 A unilateral undertaking is a simplified version of a S.106 Agreement. It is a legal deed that is only entered into by the landowner and not the Council. It will only be appropriate circumstances.
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