Planning Obligations

1. Planning Obligations The Planners View Bob Pritchard, Senior Associate, Eversheds LLP April 2008

2. Recent Criticism • “There is a wide variation in what councils secure under the Section 106 process – some are missing out on opportunities to secure benefits through the planning process” – Audit Commission 2006

3. Planning Obligations –Current System 106. - (1) Any person interested in land in the area of a local planning authority may, by agreement or otherwise, enter into an obligation (referred to in this section… as "a planning obligation")

4. Planning Obligations –Current System (a) restricting the development or use of the land in any specified way; (b) requiring specified operations or activities to be carried out in, on, under or over the land; (c) requiring the land to be used in any specified way; or (d) requiring a sum or sums to be paid to the authority on a specified date or dates or periodically.

5. Current System • Very broad power • No specific link to planning permissions • No suggestion that they should be used to mitigate problems with planning applications • No suggestion that obligation should be commensurate with any problem it is intended to address

6. Legal Test for Planning Obligations • Tesco Stores case 1995 - HL confirmed a minimal test for lawfulness of planning obligations • Planning obligation which has connection to development proposals which is more than de minimis can be taken into account • Case also confirmed that the SoS was entitled to produce policy guidance on the use of planning obligations

7. Planning Obligations – Policy Test • Following Tesco – Circular 1/97 • Tests akin to those for planning conditions • Obligations should only be sought where they are • Necessary • Relevant to planning • Directly related to the proposed development • Fairly and reasonably related in scale and kind to the proposed development and • Reasonable in all respects

8. Law v Policy • Tension between law and policy • LPA - offered obligation can be accepted it is lawful but not “circular compliant” - but they can’t require it

9. Current Guidance on Planning Obligations • Circular 05/05 - replacement for Circular 1/97 provides revised guidance for the operation of the existing system • Retention/simplification of policy tests – the necessity test remains; • New typology for the use of planning obligations; • Clarification of policy on contributions for affordable housing; • Clarification of guidance on use of maintenance payments; • Clarification of guidance on pooled contributions;

10. Current Guidance on Planning Obligations • Stronger emphasis on national, regional and local plan policies; • Encouragement of “joining up” across all public sector infrastructure providers; • Encouragement of use of formulae and standard charges; • New guidance on use of standard agreements/undertakings; • New guidance on use of independent third parties; • Encouragement of the use of unilateral undertakings; • New guidance on monitoring of implementation of planning obligations.

11. Current Guidance on Planning Obligations • Practice Guidance (August 2006) – includes case studies and checklists • Associated Model Planning Obligation

12. Public Involvement and Transparency • Para B41 Circular 05/05 – process of policy development and negotiations should be conducted openly and fairly and assistance should be given to access proposed and agreed obligations • Since 2002 – requirement to include on planning register proposed obligations

13. Future Developments? • Proposals for Planning Gain Supplement abandoned • Govt currently consulting on Community Infrastructure Levy (CIL)

14. CIL –Proposals • Charge - could be levied as an amount per dwelling or per square metre of development • paid by the landowner • when development is commenced in reliance on planning permission • payable whether or not the value of the land has increased as a result of the issue of planning permission • payable either in one sum or by instalments • applied to fund (wholly or partly) infrastructure in the area. • Would supplement planning obligation regime

15. Top Tips – Certainty and Transparency • Ensuring there are policies governing different types of obligations in the LDF • Ensuring any requirements are proportionate and will not inhibit much needed development • Ensuring consistency of approach • Positive assistance with access to proposed 106s • 2007 guidance – heads of agreement should accompany planning application • Aim to have well advanced draft to annex to the Committee Report

16. Top Tips - Speed • Standardising 106s as far as possible • Proper support from lawyers! • Early engagement in 106 preparation

17. Planning Obligations –Examples

18. Planning Obligations - Examples

19. Planning Obligations - Examples • Footpath provision/maintenance • Educational visits • Enabling development – improvements to listed buildings in the vicinity

20. Planning Obligations - Examples

21. Planning Obligations - Examples • Leeds City Council Public Transport Improvements and developer Contributions • Formula – developer contribution = the development unit x the impact multiplier x the cost multiplier • Secured by Section 106 obligation • Looks familiar!

22. Conclusions • Planning Obligation system has benefit of flexibility – powerful tool for LAs to deliver necessary development infrastructure • BUT needs to be open and accountable system both in terms of the policies behind the obligations and formulating the obligations themselves