Revolving Infrastructure Funds. Learning from the SW RDA and West of England experience.

1. Revolving Infrastructure Funds. Learning from the SW RDA and West of England experience. Antony Corfield (07807 452026 ajcorfield@btinternet.com)

2. What is the RIF? • Forward funding of developer contributions required toward the provision of essential infrastructure, unlocking significant sustainable growth. • Recouping investments through the planning obligations process. • Reinvesting as funds are returned.

3. RIF – what it’s not. • Not an ‘Investment Fund’ - no return on investment. • It is not gap funding. • It is not Public Sector borrowing, but might be accounted for as prudential borrowing. • Not an off-balance sheet special purpose vehicle.

4. Why create the RIF? • What does it do? • Unlocks development • Accelerates development • Co-ordinate funding • Creates a private sector sourced revolving fund. • One model of a revolving fund • Proven concept that works.

5. Pure S106 A Motorway junction improvements require £5m developer contribution. Development A first into the planning system. Can not pay, up front, the full £5m required.

6. S106 Tariff/Pooling Approach D A Other benefitting developments (B, C and D) at different stages in the planning process. RIF allows you to forward fund the contributions of A, B, C and D (more than £5m). Unlocks all the developments. C B

7. Community Infrastructure Levy (CIL) D A Motorway junction improvements. New sewers. Combined Heat and Power infrastructure. Additional bus lanes and routes. Schools, health, community facilities. C B

8. CIL and ‘borrowing’ Forms of support State Aid Governance Programme Management Appraisal Identifying schemes Contractual arrangements Risk Private sector leverage Small funds v Large funds. Infrastructure Planning Issues Menu:

9. Potential future forms of Support Growing Places could be released as: • Forward Funding (RIF) • Loan (Debt) • Equity • Grant • Conditional Grant (Overage)

10. State Aid • Funding Infrastructure and being State Aid compliant: • Four options: • Charge interest at market rates (not attractive). • Equity investment (equal share of risk and reward). • Fund public open access infrastructure through public works or joint procurement (RIF). • Seek approval from Commission (best avoided).

11. State Aid • State Aid meets each of the following: • Granted by the State or through State resources. • Favours certain undertakings or production of certain goods. • Distorts or threatens to distort competition. • Affects trade between Member States.

18. Governance (WofE) LEP Board Investment Award Panel (Chief execs and LEP reps) Accountable Body Scheme funding contracts Technical Advisory Group / Programme Manager

19. Contractual arrangements (WofE) BIS Regional Growth Fund CLG Growing Places Funders: Accountable Body: B&NES Bristol City Council B&NES (Sponsor Authority) Sponsor Authorities (recipients of funding): North Somerset Council South Glos Council Payback mechanism: Section 106 agreements and CIL

20. Governance (SW RDA) DfT RDA Board Regional Bodies RIF Investment Panel Programme Management

21. Contractual arrangements (SW RDA) DfT Regional Funding Allocation (Major scheme) Funder: SW RDA Accountable Body Accountable body: Developers Local Authorities Recipients of funding: Payback mechanism: Section 106 agreements and/or direct contract

22. Planning obligations Circular 5/2005 B23. In cases where an item of infrastructure necessitated by the cumulative impact of a series of developments is provided by a local authority or other body before all the developments have come forward, the later developers may still be required to contribute the relevant proportion of the costs. This practice can still meet the requirements of the Secretary of State’s policy tests if the need for the infrastructure and the proportionate contributions to be sought is set out in advance.

23. CIL Regulations 60.—(1) A charging authority may apply CIL to reimburse expenditure already incurred on infrastructure. (2) Where a charging authority, other than the Mayor, has borrowed money for the purposes of funding infrastructure, it may apply CIL to repay that money, and any interest, if the conditions set out in paragraphs (4) and (5) are both met. (3) Where the Greater London Authority or a functional body has borrowed money for the purposes of funding infrastructure consisting of roads or other transport facilities, the Mayor may apply CIL to repay that money, and any interest, if the conditions set out in paragraphs (4) and (5) are both met. (4) Condition 1 is that the charging authority has collected CIL, or CIL has been collected on its behalf, for at least one full financial year before the date on which CIL is to be applied to repay the money. (5) Condition 2 is that the total amount to be applied in any one financial year does not exceed the relevant percentage of CIL collected by or on behalf of the charging authority in the preceding financial year. (6) For the purposes of paragraph (5), the relevant percentage is such percentage as the Secretary of State may direct or, in the absence of a direction, zero per cent. (7) A direction under paragraph (6)— (a)must be made in respect of authorities generally; (b)must be in writing; (c)may be substituted or revoked at any time, any substitution or revocation being made by a further direction in writing. (8) In this regulation “functional body” means— (a)Transport for London; or (b)the London Development Agency.