CIL Rate setting Simplicity vs Complexity Simplicity Single

CIL Rate setting

Simplicity vs Complexity Simplicity • Single rate (? ) • Requires minimal evidence • Need to set near the lowest value use / area (an opportunity cost? ) – – Complexity Differential rate (probably) optimises income for infrastructure “Progressive”: the most profitable developments pay more Too complex may be offputting and awkward to operate Too complex likely to require greater justification through evidence

Iterative Charge Setting Estimating your infrastructure funding gap Estimating CIL income Testing viability Who is involved? Working hypothesis Officers Draft rates Officers, Members (& Partners) Adopt rates Officers, Members (& Partners)

Differential Rate Setting Differential Rate 2 income (£/time) Differential Rate 1 income (£/time) CIL Viability levels Single Rate income (£/time) Use / Area A Use / Area B Use / Area C

CLG’s key messages • CIL is pro-growth – it should have a positive economic effect on development across your area • Whilst your CIL rate needs to be informed by viability evidence, the evidence does not have to dictate your rate • No policy-driven zero/low rates. Base your rates on economic viability evidence. • A charging schedule must stand on its own. A charging authority cannot rely on exceptional circumstances relief or any policy. The Guidance accepts that some individual developments may be unviable because of CIL. • Ensure no double charging – be clear with developers what is

What the Examiner must check The independent examiner must check that: 1. Is the charging schedule supported by background documents containing appropriate available infrastructure planning and economic viability evidence? 2. Are the charging rates informed by and consistent with the evidence? 3. Does the evidence demonstrate that the proposed charge rates would not put the overall development of the area at risk?

The proportional impact of CIL on development viability 36 31 26 21 16 11 6 1 £ 10/ sq m variance in CIL rate 10% variance in build costs 10% variance in sales values