Report of the Strategic Director (Development)

This report provides information on the 2017/18 financial year’s activity in relation to S106 Agreements and specifically on associated financial obligations.  It also sets out the legislative framework for negotiating S106 agreements, an update on CIL and viability, the latter a key factor in the planning process.

The Committee considered a report of the Head of Planning, Building Control and Licensing, which provided information on the 2017/18 financial year’s activity in relation to S106 Agreements and specifically on associated financial obligations. The report also set out the legislative framework for negotiating S106 agreements, and updates on the Community Infrastructure Levy (CIL) and viability assessments.

The Head of Planning, Building Control and Licensing referred to the main points and themes within the report, which included:-

·                During 2017/18 year, 19 S106 agreements were signed. Of these 5 related to deeds of variation of previously signed agreements as the associated schemes had been subject to amendment;

·                During the same period £999,895 was received following triggers being met from existing agreements;

·                No refunds had been made during this period in relation to any financial obligation, however, there were two cases where the financial obligation was now required and these were being pursued.

·                There was currently £6million held through received S106 contributions. Of this around £550,000 was awaiting to be reserved to projects;

·                Details of income received against principle areas of spend since 2015/16;

·                Since the concept of ‘viability’ was introduced into the NPPF, developers had sought to use viability assessments to help demonstrate why certain S106 requirements would make a scheme economically unviable;

·                Viability assessments now played an important part in the planning process, however, as developers had submitted information on a confidential basis due to commercially sensitive information, assessments had until very recently not been in the public domain;

·                Where a viability assessment supported a contribution through the S106 process, agreements would now include a reconciliation clause requiring a further viability test. This would allow the Council to share in any uplift and for this to increase the contributions from the original obligation; and

·                The Council continued to not implement CIL in Manchester at the current time due to the concerns the approach could have on development in the wake of the down turn in the economy. It was also considered that a review of CIL and its impact should take place alongside that of the local plan (the Core Strategy).

The report also contained a breakdown of S106 agreements on a ward by ward basis.

Some of the key points that arose during the Committees discussions were:-

·                There appeared to be little progress made with the delivery of S106 agreements form last year’s report and what could be done to ensure developers were delivering their agreed requirements;

·                Why had neighbouring Local Authorities outperformed Manchester in S106 income received given the volume of development in Manchester;

·                Was a 17% level of affordable housing in the Piccadilly Ward deemed an appropriate level;

·                Was it possible for further S106 income to be spent on alleygating schemes;

·                What progress had been made following the Council motion in March 2018 to require developers to provide greater transparency of viability assessments in relation to affordable housing;

·                Could there be an update on the proposed new supplementary planning document (SPD) in relation to viability assessments;

·                Had the increase in land values had an impact on S16 arrangements

·                Concern was expressed about the level of communication with Ward Members in relation to S106 proposals within their respective wards;

·                How did the Council pursue S106 monies owed;

·                As Manchester City Council and Salford Council shared legal services, was the legal advice provide to both Authorities consistent; and

·                With the increasing levels of residential dwellings in the city centre, it was suggested that there was a need to reconsider the introduction of CIL especially for developments within the City Centre.

The Head of Planning, Building Control and Licensing advised that the Council only received S106 monies when certain triggers had been met.  She acknowledged the views that there appeared to have been little progress made and provided reassurance that a number of schemes were fully committed to and were currently being progressed by the Council.

The Strategic Director (Development) commented that there was a need to strengthen the internal governance of monies received form S106 agreements which would be undertaken by the Capital Strategy Board and that once this was in place it would be appropriate for scrutiny to review the delivery and spend of S106 funding.

The Head of Planning, Building Control and Licensing advised that it was not possible to give a precise reason as to why neighbouring authorities may have outperformed Manchester in terms of S106 income as there would be a number of factors, such as the size of application that would need to be taken into consideration.  When comparing performance to other core cities, the Council was performing at a similar level.  In terms of the level of affordable housing in the Piccadilly Ward, she explained that it would not be appropriate to comment on this so not to pre-judge any planning applications or viability assessments.  In relation to National Planning Policy Framework (NPPF), the guidance set a level of 20% affordable housing from major developments.

In terms of further alleygating schemes from S106 funding, it was reported that this would be dependent on whether any proposed scheme intended to mitigate the risk of harm.

The Head of Planning, Building Control and Licensing reported that viability assessments that had been previously received were now in the public domain and were a requirement of all future major planning applications which would be submitted on the basis that they would be publically available.  Any applicant could still request that the Council did not disclose information on the basis that disclosure would adversely affect the confidentiality of commercial information which protected a legitimate economic interest, however, this should be the exception and not the norm.  It was also confirmed that the Council intended to move forward with the production of a new SPD to enable the Council to set out a new approach to the assessment of viability and the procedures to follow.

It was reported that the Council had reconciled its land values prior to the requirements within the NPPF and a such this did not pose a challenge or risk to the Council.  It was hoped that discussion with Ward Members around S106 monies had improved and this was now discussed at each Ward Co-ordination meeting.  If Members still had issues around communication Officers requested that they be notified in order to address. 

The Committee was advised that the Council wrote to developers that owed S106 funding and if this resulted in no response, then the Council’s Legal Team became involved alongside the Council’s Debt Recovery team.  It was also reported that the legal advice provided to both Manchester City Council and Salford Council was consistent.

Decision

The Committee:-

(1)   Notes the report; and

(2)   Requests a future report on S106 that covers the following:-

·           The governance arrangements in the delivery of S106 agreements;

·           Progress made following the Council motion passed in March 2018 on Transparent Viability Assessments;

·           Practical examples of the delivery and spend of S106 funding

·           The structure of consultation with Ward Councillors; and

·           Consideration of the use of CIL within the City Centre