Community Infrastructure Levy No 5 - Exemptions and Reliefs from CIL

At present there are few exemptions and reliefs from CIL in the Planning Act 2008 (as amended). They include the following:

• social housing;
• charity exemption;
• charity relief;
• the 10 percent relief
• relief through CIL rates.

Social housing;
There is no charge of CIL on any development intended for social housing. Thus, a housing association will be exempt and also a private sector developer who builds some social housing as part of the project.

However, if the private developer, for instance, should later switch some or all of the social portion for private housing the charging authority may clawback the amount of relief from CIL which should have been paid.

Charity exemption;
Explicit exemption from CIL is given to a charity which builds a projevct which will be used for charitable purposes.

Charity relief
The charging authority has power to forego CIL on a charity's non-caharitable project where the proceeds of the project are later used for charitable purposes. (The charging authority must have a written policy on the application of this relief.)

Rebuilding upto 110 percent relief.
If a person rebuilds a building there will be no charge to CIL provided the extent of the rebuild is not more than 110 percent of the original building.


Discretionary Relief through CIL Rates
To the extent that the charging authority has adopted variable rates of CIL in its charging schedule according to the type of building, a relief could be said to be applied  to buildings charged at the lower rates.


Discretionary reliefs for Type of Development
A charging authority may apply an exeption to certain types of building, eg Shropshire County Council does not charge CIL on employment-related buildings.

Viability relief
Where the imposition of CIL would cause the project to be unviable so that the developer would not wish to proceed with the project, the charging authority may consider a request that CIL relief be given. Each case must be exceptional and an independent evaluation of the project must be conducted.

Community Infrastructure Levy No 4 - CIL Charging Authority - Contracting Out

A draft order has been published, namely the Local Authorities (Contracting Out of Community Infrastructure Levy Functions) Order 2011.

Arising from the Planning Act  2008, it will allow a CIL authority to appoint a contractor to carry out some of its CIL functions, namely functions given in Part 11 of the 2008 Act except for four functions which are withheld from the contracting out provisions (see articles 3 (a), (b), (c), and (d)).

Community Infrastructure Levy No 3 - CIL Charging Policy

This post looks at charging policies and begins with a look at various rates, exemptions, and exceptions. Some policy has a foundation in the Planning Act 2008 (as amended) and in the regulations. Examples of implemented policy will be used to illustrate the subject. [Updates will explore the implementation further.]  

In Shopshire, there are two charging zones, namely: 

• that for Shrewsbury, market towns and key centres; and,
• that for the rest of the county.

Subject to some housing exceptions, housing, ie private sector housing in the county, takes the brunt of the charging policy. 

Insurance Rebuilds
It may be noted that modest extensions escape the charge unless they exceed 100 square metres. It seems that rebuilds after a destructive fire would be included: but an insurance-covered replacing of a destroyed home with two or more dwellings may cause problems!

Rates
CIL is charged at £40 per metre squared on newly build housing in the following settlements:

• Shrewbury;
• the market towns; and,
• key centres.  

Elsewhere the charging rate is £80 per square metre. Thus, it seems, other settlements, eg the villages which are not "key centres" will bear the brunt. [The Shopshire website on CIL has not explored in detail and there is a lot of it!] 

Effective Date:
The CIL scheme for Shopshire begins on 1 January 2012. Developers of housing who get planning permissions next year and thereafter will face the charge. 
"Nil" rate
For the time being there are some nil rate of CIL categories as follows:

• affordable housing has a nil rate;
• employment-related developments have a nil rate;
• other non-housing developments have a nil rate 

One supposes that nil rate means that at some time one or more of these categories could come within the charge but I would not expect affordable housing to ever be charged...?



 http://www.shropshire.gov.uk/planningpolicy.nsf/open/63C27CBEAE1E06AF80257922004CC8E3
The kinds of concerns which developers need to check include:

• Does CIL apply to my development?
• What rate applies?
• Can I pay by instalments?

Community Infrastructure Levy No 2 - Town and Parish Councils - Role and Activities Update No 1 24 November 2011

In areas where the community infrastructure levy (CIL) is being adopted, part of the cost of local and sub-regional infrastructure is met by the tax. In effect such infrastructure is that needed to support local areas which are to get increases of development, eg offices , dwellings, etc.

However, for the time being the cost of infrastructure which is specific to a particular development site is likely to be met by a section 106 Agreement. Similarly, where CIL is not adopted the aggregate of monies arising under section 106 Agreements may be thought of as contributing to local and possibly sub-regional infrastructure. 

The arrangements for CIL are being developed largely by second tier local authorities, ie local planning authorities - such as district councils. It might be expected that parish and town councils will no doubt have or may intend to have a wish list of local infrastructure - which will be in accord with their duties and discetionary powers. 

 If such a council, say parish council has not prepared a list the members may find that their undeclared needs are not realised under CIL. Under the CIL arrangement "neighbourhoods" are destined to receive some of the CIL for local infrastructure improvements. Furthermore, under the Localism Act 2011 (Royal Assent 15 November 2011) such neighbourhoods are parish councils (and hence town councils) and neighbourhood forums.

It seems imperative, therefore, that where CIL is adopted by say, a district council the "neighbouhood", level local authorities should have in place their wish list for infrastructures which need attention. The "attention" is more than just provision but includes repair and maintenance, operating etc. The list of infrastructures might include:

• green infrastructure - allotments, footpaths, and cycleways;
• community buildings and amenities - village halls, and play areas; and,
• health facilities, eg doctor's surgery. 

Elsewhere in the Localism Act 2011 there are provisions for a list of assets of community value to be prepared by say. the district council. No doubt CIL monies might be used for acquisition this context.

Community Infrastructure Levy No1 - Effects of the Localism Act 2011 (Update No 1 19 November 2011)

Although community infrastructure levy (CIL) was introduced by the previous Labour government in the Planning Act 2008 and regulatory secondary legislation, it is now just finding its feet. There was a spell when I thought the Coalition government would drop CIL but they finally picked it up and are now running fast.

Changes were made by the Coalition but it was originally significantly the same as intended. In effect CIL is a new kind of tax which will probably entirely replace various "tariffs" and almost completely section 106 Agreements and, possibly, like agreements under housing and transport legislation. The Localism Act 2011 may have introduced changes which may cause local problems.

Firstly though it has been pleasing to see some order come about in this (mine)field of taxation - the so-called tariffs have been bludgeoning in in a manner reminiscent of the days of of the Sheriff of Nottingham.   What now seems a hundred years' ago, I came to the view that Section 106 Agreements were a system of unbridled "taxation" without recourse to the basic principles of taxation: tariffs seemed more appropriate but were similarly unbridled in the green and pleasant land!

Although determined locally, CIL is formulated within a national tax structure provided by the 2008 Act (as amended) and subsequent regulations. It might be thought of as a "bricks-and-mortar" tax. In this respect it is not a "development value tax" also variously known or guised as "development charge", "betterment levy", "development land tax" or "development gains tax", etc. All of these national taxes required insights into the development value of the land at some time. Each was an impost  and differently imposed on the difference between a parcel of land's open market value and the existing/current use value to give development value.

Destination of CIL Proceeds
It remains to be seen how local aggregations of CIL will be allocated to the needs for local infrastructure. It may be noted that very little of each of the proceeds (tax-take) of the development value taxes had a transparent local destination: they ended up in the national piggy bank! Similarly, I understand that very little of the aggregation of proceeds ("tax-take") of Section 106 Agreements was or is actually spent on infrastructure: they ended/end up in local authority piggy banks!

What will happen to CIL? We do know that under the 2011 Act a portion will end up in the neighbourhoods' pockets (say, parish council (?), town council (?), etc) but will it be spent on infrastructure? What happens to the rest? Will it be spent on infrastructure?  Also, in this context, the Localism Act 2011 begs the question:  "What is neighbourhood?"

Finally, the Localism Act 2011 (15 November 2011) may "spoil" CIL. For about two years local planners have been beavering away at collecting information on prospective new infrastructure - types, programmes, costs, etc - and basing their charging schedules on these pointers.

However, the 2011 Act provides that the proceeds will go:

1. to the kinds of infrastructure itemised in the Planning Act 2008; 
2. to the neighbourhoods for the kinds of things the locals want - about which the planners may not have collected much if any information; and,
3. a range of costs associated with old infrastructure costs, eg maintenance, operations, etc - again this may not have been foreseen in each planner's crystal ball when devising the charging authority's rates of CIL.

These extra "burdens" (2 and 3) may throw the CIL-take to the point where the extra costs on top of the  original list of infrastructures upon the CIL rates are based is such as to so severe that not all expectations will be achieved in some areas where say, the neighbourhoods are demanding.