Community Infrastructure Levy - New Guidance.

Yesterday the Department for Communities and Local Government issued new guidance looking in more detail at the proposed Community Infrastructure Levy ("CIL") and how it is envisaged this will operate in practice. The guidance looks at issues such as how the levy will be set, how will authorities spend it, payment arrangements and the relationship between the levy and section 106 agreements.

In terms of some of the headline points:- In setting the levy authorities will need to follow two steps. The first is identifying what infrastructure is needed and how much it will cost. The second is working out what contribution each development should make to that cost. Arrangements will be put in place for independent testing of the proposed levy.

It is accepted that an authority may want to impose different levels of charges because of specific local conditions so there may be different levies charged by an authority in respect of different parts of a town or district.

Initially the intention is "affordable housing" should also be included in the definition of "Infrastructure" although it is not the intention that the levy will be used to fund affordable housing at this stage. This is just a fall back which can be used in the future in case there is a reduction in affordable housing contributions as a result of the introduction of the levy.

The levy might be used to off set expenditure which has already been incurred (for example where an authority has funded in advance infrastructure costs in anticipation of the levy being paid). Also possibly the levy may be reserved for future expenditure.

The guidance recognises that some infrastructure (for example hospitals and large transport projects) are actually undertaken on a sub-regional basis and involve a number of different charging authorities. There are no specific proposals in how to ensure that CIL can effectively contribute towards this sub-regional infrastructure and views from the industry are invited.

The levy is expected to compliment the existing section 106 arrangements. Also for those authorities who choose not to implement the levy, section 106 obligations will continue to be used as a way of securing contributions. The intention is that otherwise the section 106 agreements should (once the levy is implemented) focus on only three areas. The first is affordable housing. The second are non financial and technical operation matters which can only really be covered by way of planning obligations. The third is dealing with site specific impact arising from the development (for example on site archaeology or an access road to the development).

The levy will be payable on commencement of the development. The levy will be determined when planning permission first becomes fully effective. This is likely to mean that the levy will not be fully ascertainable at outline planning stage only.

Because of potential difficulties associated with enforcing against the "land owner" at the time of implementation, it is proposed that developers should also be liable to pay the levy.

The levy may be paid by instalments and failure to pay could result in works having to stop on site. The intention is that failure to pay will also be a criminal offence.

The intention is to formally consult on draft regulations in Autumn this year with a view to regulations being finalised in Spring 2009.

For a copy of the Guidance please click here.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 25/01/2008.

Mr Mark Heighton

CMS Cameron McKenna LLP

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