Reforming the Community Infrastructure Levy
This article was included in the Winter 2011 issue of Informer- the real estate newsletter
The Government recently announced a consultation on proposals to reform the Community Infrastructure Levy (CIL). The CIL regulations came into force in April 2010, allowing local authorities to choose to charge a levy on new development within their area to meet the additional costs of local infrastructure associated with that new development. The local authorities who can currently charge and spend the CIL include District and Metropolitan Councils, London Borough Councils, the London Major and National Park Authorities (called “charging authorities”).
The Government proposes that there should be a duty on these charging authorities to pass on a “meaningful proportion” (amounting to a minimum percentage) of the CIL funds raised to a locally elected Council, which in England would be a parish or town council, and in Wales would be a community or town council. The Government hopes that local communities will find new development more acceptable where they are able through their locally elected councils to influence how best to use these funds to address the impacts of the new development. The charging authorities will not have to pass on funds where there is no locally elected council, but they will then be expected to engage with the local communities on how these funds should be used.
The Mayor of London will be exempt from obligations to allocate a meaningful proportion of key funds because he is only permitted to raise charges for strategic transport infrastructure.
It is proposed that the funds raised may be spent on ongoing costs of providing infrastructure, other than simply the upfront cost, for example, constructing a school or roundabout. The charging authority will, however, have to show that the funds are being used to support the infrastructure associated with the new development that gave rise to the CIL liability. Councils will therefore need to be careful to ensure that such CIL funds are not used simply for ongoing infrastructure maintenance unconnected with the new development.
The other key proposal that the Government is consulting on is whether the CIL should be extended to allow the funds raised to be used towards the cost of affordable housing. Currently, this is not permitted, and affordable housing as secured by way of section 106 planning obligation. The Government recognises that this is a well established method of ensuring on site provision of affordable housing, but suggests that off site provision might be more effectively secured by the CIL. Developers will no doubt wish to look very closely at these proposals to ensure that any move to include affordable housing within the scope of CIL will not impose additional (to any planning obligation), but merely alternative, requirements for affordable housing so as to avoid endangering the economies of particular developments.
The consultation can be found here, and closes on 30 December 2011.