Contact: Richard Lemon, ext 6760

1. Summary

1.1 All new development resulting directly or indirectly from the County Structure Plan and Local Transport Plan will place additional demands on services and infrastructure provided by various departments of the County Council. Contributions from developers, negotiated through planning obligations, are a critical source of funding for these services and infrastructure.

1.2 This report proposes draft Supplementary Planning Guidance (SPG) in the form of a corporate Statement on Developer Contributions, Infrastructure Provision, Service Requirements and Negotiating Protocol for public consultation (see attached appendix). The Statement is based on wide-ranging analysis of systems already in place elsewhere and following lengthy discussions between County Council departments. The Statement provides a comprehensive basis for the establishment of the infrastructure and services required to be provided by the County Council, for the calculation of developer contributions and negotiations with the local planning authorities to ensure that all necessary contributions are included in obligations as part of planning consents.

1.3 To achieve the status of Supplementary Planning Guidance - which will give weight to the Statement as a material consideration in the planning process - public consultation is required.

1.4 The report recommends that the Executive Member for Policy and Resources be advised to approve the draft Statement for public consultation and support the appointment of a dedicated coordinator to implement the Statement.

2. Introduction

2.1 It is established Government policy and an accepted element of the planning process that the community should not have to bear the burden of the costs of additional services and infrastructure made necessary by new development. It is also accepted that developers should contribute towards these costs - the principle known as `planning gain'. The contributions from developers are usually negotiated as a planning obligation which forms an element of the planning consent. It is common practice for contributions to be secured for the costs of some transport infrastructure and the provision of, for example, public open spaces and community centres. More recently, a contribution towards the cost of additional schools has become an accepted part of the planning obligation package.

2.2 The County Council has not maximised the contributions it could secure from this process because departments which need to provide a service or infrastructure and secure a contribution are either not party to the process or not involved early enough to maximise potential. Income has been lost as a result. It also means that development may go ahead without some essential service or infrastructure, resulting in existing facilities becoming overstretched. The latter is one of the main reasons for public opposition to new development and reflects poorly on the County Council.

2.3 In the absence of Government support for the provision of new infrastructure made necessary by development, and given the Government's emphasis on external funding and a partnership approach, developer contributions are a potential source of income which must be capitalised to the full. However, to provide justification for requests for contributions, the infrastructure requirements and impact on all services of new development need to be costed and built into long term capital programmes and investment strategies.

2.4 This report therefore proposes a corporate 'Statement on Developer Contributions, Infrastructure Provision, Service Requirements and Negotiating Protocol' designed to address the issues raised above. The aim of the Statement is to help achieve the Vision and the Corporate Strategy and maximise the level and effectiveness of developer contributions towards the provision of services and infrastructure required to be provided by the County Council in association with new development.

3. The Statutory Basis

3.1 The starting point for the establishment of developer contributions is the statutory framework established by Section 106 of the Town and Country Planning Act 1990. The only formal guidance available at present on the interpretation of Section 106 is Circular 1/97, which requires tests of fairness, reasonableness and relevance with which proposed contributions should comply.

3.2 The route recommended by Circular 1/97 to ensure that developer contributions form part of the planning process is through the inclusion of policies in structure and local plans. Hampshire Structure Plan policies have already been adopted, but need to be supported by more specific guidance which gives a clear indication of the facilities and services required for which contributions will be sought and the basis for the calculation of the level of contribution required.

3.3 The draft Statement fulfils this requirement for the County Council but it is recommended that it is extended, once the initial exercise is complete, to include similar position statements prepared by individual local authorities and other agencies, such as the police and fire and rescue authorities, health authorities and relevant non-governmental organisations, such as the Environment Agency. The advantage of a comprehensive statement would be a single document, available for developers, landowners and the public, setting out consistent guidance for the whole of Hampshire.

3.4 On 18 July 2002 the Deputy Prime Minister announced that the current system of planning obligations is to be improved to make it more transparent and simple. New national guidance will be issued on how planning obligations should work. The draft Statement should provide a robust basis for County Council involvement in whatever refined planning obligation mechanisms are introduced by the Government.

4. Contents of the Draft Statement

4.1 The draft Statement is intended to provide the basis for and guidance on contributions from developers towards the provision of new County Council infrastructure and services. Most planning applications are dealt with by district councils however, so the County Council's requirements will need to be included with the district councils' equivalent requirements in their Local Plan policies or planning guidance. The attached draft Statement will therefore inform and help justify those documents.

4.2 Although individual departments have contributed to the preparation of the draft Statement and the Corporate Management Team has given its backing to it, work is still continuing on the calculation of each department's new service/infrastructure costs and thus the contribution which each would seek from developers. The current position on this work is summarised in section 4 of the draft Statement.

5. The Next Steps

5.1 Publication of the Statement as Supplementary Planning Guidance (to the Hampshire County Structure Plan) will attach the necessary status and weight for it to influence the preparation of Local Plans and decisions on individual planning applications. To have this status, there must be public consultation on the draft version. It is intended to conduct this public consultation later in 2002, once the detailed financial information referred to in paragraph 4.2 has been added. After that consultation, this Committee and the Executive Member for Policy and Resources will be asked to consider the comments received and decide what changes need to be made to the document in response to those comments.

5.2 Implementation of the definitive Statement/Supplementary Planning Guidance will generate a substantial workload, including negotiations on individual planning applications. The latter will need to be done expeditiously to avoid delays to decisions on planning applications and to ensure that opportunities to secure contributions are not lost. This makes the case for a dedicated post - a Developer Contribution Coordinator - within the County Council who would coordinate and lead negotiations on behalf of the whole authority. If that person could be appointed quickly, he/she could assist with the work of calculating County Council service/infrastructure costs and thus the level of contribution.

Recommendation

That the Executive Member for Policy and Resources be advised to:

(i) approve the principle and format of the draft Statement as a basis for public consultation after the inclusion of detailed financial information from all departments; and

(ii) agree the principle of appointing a Developer Contribution Coordinator to implement and manage the Statement.

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APPENDIX

CONSULTATION DRAFT

STATEMENT ON DEVELOPER CONTRIBUTIONS, INFRASTRUCTURE PROVISION, SERVICE REQUIREMENTS AND NEGOTIATING PROTOCOL

Supplementary Planning Guidance on the Implementation of the Hampshire County Structure Plan 1996-2011 (Review)

Hampshire County Council

September 2002

1. Introduction

1.1 Securing the provision of new infrastructure, services and community facilities alongside new development, and using the opportunity provided by new development to make good deficiencies in services is a fundamental objective of the Hampshire County Structure Plan 1996-2011 (Review). In addition to it being an aim of all good planning, this objective is also a response to the public perception that much new development over the past 20-30 years was built with insufficient parallel provision of services. The principles of sustainable development identify the advantages of, for example, living, working, shopping and enjoying recreation locally, adding further justification for this objective. The Major Development Areas embody these principles explicitly, but all development resulting from the Structure Plan should contribute towards this objective, which is also now a key outcome of Aim 1 of the County Council's Corporate Strategy.

1.2 The funding of infrastructure and services provided by the public sector is a major hurdle to achieving this objective, and Central Government has made it clear that the future lies in working in partnership with other organisations to secure investment and funds. Partnership working with local communities and responding to their needs is also part of the culture of Best Value and the Community Strategy process.

1.3 Closer County Council involvement in the local planning and implementation process is also encouraged by the Government's `plan, monitor and manage' approach, enabling the involvement of community partners and other stakeholders in the planning process from the outset rather than at the formal consultation or public inquiry stage.

1.4 As a provider of key services and infrastructure the County Council, and others such as the health authorities, utilities and emergency services, should be a beneficiary of this new approach through early contact with the local planning authorities to integrate capital development programmes and other requirements with the local plan process. This has two advantages. Firstly, by tying-in the providers to the planning process it ensures, as far as possible, that social and physical infrastructure is provided alongside new development (principally housing and employment). Secondly, by providing an early opportunity to establish the level and nature of services and infrastructure required by new development, their estimated costs to the service providers can be assessed and allowed for in long term financial planning.

1.5 In the absence of Government support for the provision of new infrastructure made necessary by development, and given the Government's emphasis on external funding and partnerships, developer contributions negotiated through planning obligations are a potential source of income which must be capitalised to the full, and the impact of all new development on all services costed, where possible, in detail.

1.6 In the case of the Major Development Areas, and other large scale development proposals, there may also be an opportunity for the provision of additional facilities and services, or a reassessment of the distribution and location of existing services, to meet long term strategic service provision objectives which may not otherwise be achieved. In these cases, the developer contribution towards direct costs arising from new development would be enhanced by the rare opportunity to take advantage of early negotiations on major land releases and the scope provided to redesign the provision of facilities at a strategic level.

1.7 This 'Statement on Infrastructure Provision, Service Requirements, Developer Contributions and Negotiating Protocol' has been prepared by the County Council to address all these issues. The Statement is designed to:

(i) establish the statutory basis for developer contributions;

(ii) provide a vehicle for all County Council infrastructure and service providers to assess the cost of implementing the Structure Plan, identify the opportunities it provides and build provision into their budgets and long term investment programmes;

(iii) provide a clear, consistent and comprehensive basis for the establishment of the nature and level of developer contributions, for the benefit of local authorities, developers, other investment agencies and the community;

(iv) give guidance on appropriate local plan policies to establish the development plan basis for developer contributions within the bounds of legislation, and ensure that all County Council departments are part of the process;

(v) establish the internal management arrangements necessary to handle the proposals in the statement; and

(vi) agree a protocol for developer contribution negotiations between the local planning authorities, the developers and the County Council.

1.8 Residential development has traditionally been the focus of developer contributions for social and community infrastructure, but all forms of development generally contribute towards transport infrastructure and other non-residential services. To be effective a simple approach is needed and therefore it is proposed that the Statement applies to all development unless specifically excluded. On the basis that all developments cumulatively and incrementally have an impact on services it is proposed that the Statement is applied to all sizes of development.

1.9 A differential application of contribution protocols to, for example, brownfield and greenfield sites is a complex issue. The simple argument is that because urban and brownfield development is to be favoured by the planning system because of the regeneration imperative, the requirement to make contributions should be waived or lowered to encourage it. The corollary is that on greenfield sites, the last resort in terms of the sequential approach, contributions should be maximised. Using this approach to encourage desired locations and forms of development would sit comfortably with the Government's intention of using contributions to achieve broad planning objectives.

1.10 The argument against a differential approach is that development has an impact and requires services and infrastructure wherever it is. Moreover, it is the allocation of land through the planning system which should achieve development of the right type in the right places, not the differential application of developer contribution protocols which are not designed as locational tools.

1.11 The approach proposed in this draft Statement is that the initial basis for developer contributions applies equally to all sites, but that flexibility is built in to allow developers, through negotiation to make a special case where appropriate, for an adjustment to be made.

1.12 Some authorities elsewhere in the UK do not take contributions from affordable or key worker housing because of the risk of discouraging such development, which is strongly supported by policy. However, affordable housing has potentially the same impact on services and infrastructure requirements as market housing, and planning policies are normally designed to secure affordable housing as an element of housing schemes, on-site or off-site, regardless of the development economics. This statement therefore proposes to treat affordable housing in the same way as market housing in respect of developer contributions.

1.13 The intention is that the County Council adopts this Statement as Supplementary Planning Guidance (SPG) after public consultation and scrutiny consistent with Government planning guidance.

2. The Case for Developer Contributions and the National Policy

2.1 It is Government policy that the community at large should not be disadvantaged as a result of development proposals and that it is reasonable to expect developers to contribute towards the cost of community services and infrastructure needs arising directly from their development. This approach was endorsed by the Nolan Committee:

"In our view the community is quite entitled to seek a contribution from the developer to offset such costs, and we readily envisage circumstances in which a development would only be made acceptable if this was forthcoming" (paragraph 3.06).

2.2 The statutory framework for developer contributions is established by the Planning Act in the form of Section 106 planning obligations. Circular 1/97 is the only formal guidance on the application of these regulations and of fundamental relevance to their implementation. In summary the Circular states that:

(i) Planning obligations should be 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 other respects. (These are the `necessity tests.')

(ii) Planning obligations can play a positive role in remedying genuine planning problems and enhancing the quality of development.

(iii) Developers may reasonably be expected to pay for or contribute towards costs of infrastructure that would not have been necessary but for their development and to pay for facilities to remedy existing deficiencies which are materially exacerbated by the proposal.

(iv) Local authorities should not try to secure more benefit than is justified.

(v) Development plans should set out where and in what circumstances local planning authorities are likely to seek planning obligations, and local plans especially should include appropriate policies so that all interested parties know, as far as can be foreseen at the plan preparation stage, what is expected of a particular development.

These principles are also referred to in several Planning Policy Guidance notes where the importance of coordinating infrastructure with new development is emphasised.

2.3 This Statement proposes an approach which is consistent with this advice. The County Council will not seek developer contributions which do not meet the tests of Circular 1/97.

2.4 This Statement will be reviewed to ensure consistency with the Government's proposals for reform of the planning obligations system when they are published.

3. The Development Plan Context

3.1 The importance of infrastructure provision was recognised by the County Council in 1995, when research was commissioned in advance of the Structure Plan Examination in Public with the objective of "identifying means whereby the implementation process could be made to deliver timely land use and infrastructure items of the right mix". The study identified that the objective could only be achieved by:

(i) securing adequate contributions to cover the cost of required items;

(ii) ensuring a comprehensive approach to large scale development areas;

(iii) ensuring that all parties to a development are brought within a net which obliges fair contributions;

(iv) framing structure plan policies, and recommending local plan policies to district councils, which together allow the mechanisms proposed to be put in place and operated;

(v) putting in place adequate management arrangements (staffing and resources); and

(vi) ensuring that the County and district councils work closely together with a common understanding of objectives for large scale development.

(Source: Hampshire County Structure Plan (Review) Background Paper 49: Implementation paragraph 1.9).

3.2 Adoption of the following policy in the Hampshire County Structure Plan 1996-2011 (Review) established the strategic basis for implementation:

"IMP1 To ensure that provision will be made for the infrastructure, services and amenities needed to support development, planning permission in accordance with the policies of this Plan will only be granted once:

(i) the on- and off-site infrastructure needed to support the development exists or has been programmed; and

(ii) a formula for funding this necessary infrastructure has been agreed.

Infrastructure requirements and funding formulae will normally be established in local plans.

IMP2 Planning permission in respect of MDAs will only be granted if off-site infrastructure for the development exists or is programmed, and funding formulae have been agreed with potential developers.

Infrastructure requirements and funding formulae will normally be established in local plans provided that the timing of provision is not affected by any significant delays in the local plan process."

3.3 It is essential that Policies IMP1 and IMP2 are translated into appropriate local plan policies. Otherwise there is no development plan policy basis for the local planning authorities to undertake negotiations with developers or for securing planning obligations as part of a planning consent.

3.4 Local plan policies must also refer to this Supplementary Planning Guidance as the basis on which developer contributions for County Council infrastructure and services will be negotiated, in addition to references to any local planning authority, utility, or other planning obligations guidance available. Local plan policies should also make reference to any specific developments where further advice on implementation is available, or where special arrangements will be made which influence the nature of planning obligations to be negotiated.

3.5 Care, however, must be taken in wording local plan policies, because C1/97 makes it clear that policies which are, for example, based on a blanket formulation or allocate precise costs in advance will not be acceptable, because they would prevent consideration of appropriate costs in relation to individual proposals on their merits. Similarly, policies which seek the costs of overcoming existing problems, unless a proposal materially exacerbates them, or which seek contributions to general funds for a number of facilities, unless the facilities relate to individual proposals, are not acceptable.

3.6 Flexibility is an essential requirement of local plan contribution policies, allowing the planning obligation package to be tailored to individual proposals and allowing changes to be made over time between plan preparation and implementation. The purpose of this SPG is to provide a clear, comprehensive and consistent basis in support of local plan policies, as the starting point for negotiations on planning obligations involving County Council infrastructure and services.

4. Guidelines for Individual Services

(This section will comprise a submission from each Department of the County Council setting out the infrastructure and services for which they are responsible and their individual bases for establishing developer contributions. The pro forma on the following page has been suggested to ensure a consistent approach. The following notes summarise the current position in each Department and indicate the range of services for which contributions may be required. They are based on submissions made for the Structure Plan financial implications project in 2001 and earlier work on the developer contributions protocol.)

Proposed Pro Forma for Schedule to be inserted for each HCC Department

4.1 Highways and Transportation

· Guidance on criteria to be used for developer contributions currently in preparation by consultants. Most recent version discusses two options - trip based and parking based.

· Several district councils have adopted developer contribution guidance on transportation and highways.

4.2 Education

· Consultation paper on developer contributions distributed in February 2002 proposes a method of assessing capacity, sets out requirements for the allocation of sites for new schools and suggests a level of contribution per dwelling for primary and secondary schools.

· Exceptions recommended, e.g. housing for the elderly.

· Approach generally welcomed by district councils but differing views on thresholds and application to affordable housing. Further consideration of pre school provision, post 16 and adult education encouraged.

4.3 Social Services

Potential categories for contributions include:

· Residential care and nursing homes (Project Connaught submission provides a useful case study)

· partnership schemes with health authorities

· Housing for Life

· Child care linked with pre school education

· Shared use community facilities

· Family support services

· Care management facilities linked with primary health

· Social care staff housing

· Services and facilities to encourage establishment of social infrastructure, e.g. good access to healthcare, education, employment, affordable housing, local shops, recreation.

Material submitted to the Structure Plan Examination in Public in 1996 estimated a need for additional resources of £4.5 million per year (1996 prices) to meet the social care demands of the additional population associated with the development proposed in the Structure Plan.

4.4 Recreation and Heritage

Potential categories for contributions include:

· Implementation of Integrated Access project and other rights of way and access management issues raised by new development

· Provision of Community Development workers (recent estimates suggested £35,000 per year for 3 or 4 years on major new housing areas)

· Expansion of existing library and other Recreation and Heritage facilities and establishment of a network of Discovery Centres (several other County Council developer contribution statements include additional population thresholds for new libraries or expansion of book stocks)

· Extension of Country Park network and countryside recreation facilities generally

· 'Percentage for Art' schemes

· Community centres

· Sub regional centres of sports excellence

· Outdoor recreation provision

· Management of impact of new development on sensitive sites.

4.5 Waste Management

Potential categories for contributions include:

· Transfer stations

· Anaerobic digestion facilities

· Materials recovery facilities

· Energy from waste incinerators

· Landfill sites

· Household Waste Recycling Centres

Recent material provided for the Project Connaught suggested £595 per dwelling if in excess of 400 dwellings.

4.6 Minerals and Waste Development

· As the minerals and waste authority the County Council negotiates S106 agreements on contributions linked to operational development for highway improvements, lorry routeing, footpath provision, nature conservation management and other amenity works.

· It is not clear if these contributions will be included in the proposed tariff approach but the basis for the contributions should form part of the corporate document if it is to be comprehensive.

· Some authorities apply a levy per tonne of minerals extracted as a contribution to the cost of managing impacts. This could potentially be extended to landfill.

5. The Nature of Developer Contributions

5.1 The requirements for developer contributions established in this Statement will, in the first instance, be applied to:

· all types of development

· all sizes of development

· all types and sizes of site

5.2 The nature of the developer contributions required will be a product of the application of the different service approaches set out in Section 4. Two approaches will be used:

A For large developments (guidance on threshold to be established), the contribution will be based on a list of specific infrastructure services or facilities which the scale of the development justifies.

B For all other developments the contribution will be based on a `roof-tax' approach calculated on the basis of the details contained in the service department approaches in Section 4. This will be applied to, for example, the number of new households, floorspace or trip generation.

5.3 Contributions will be categorised into:

· specific on-site facilities necessitated by the development

· specific off-site facilities necessitated by the development

· facilities which are required as a result of incremental cumulative impact

5.4 These approaches will also be refined, for example, in the case of urban regeneration sites, where the development economics are markedly different from greenfield sites, and the relationship between additional demand and the provision of infrastructure and services is more complex. Urban sites may also generate different types of demands.

6. Management Arrangements

6.1 Coordinated implementation of the proposals in this Statement is essential for its success, and this requires cooperation between the County Council and the local planning authority. The County Council will therefore provide officers dedicated to representing the highway authority and, corporately, other County Council departments. These officers will form a team with other officers from the service departments of the local planning authority, and any other agencies as required, to draw up a contributions package and negotiate with developers. The input of the County Council corporate representatives will, where relevant, reflect corporate initiatives where outside agencies with a responsibility for infrastructure or services are in partnership with the County Council.

6.2 To ensure comprehensive and integrated provision of County Council services and facilities consistent with the objectives of the Structure Plan, any discussions between the local planning authorities and the service departments of the County Council, other than highways and transportation, will be coordinated by the corporate representative. This need not mean involvement of the corporate representative in every meeting or discussion, nor prevent direct contact between the local planning authority and service department, but is proposed to ensure that any discussions which do take place are in the context and full awareness of the objectives of the Structure Plan and the corporate objectives of the County Council. This arrangement will apply equally to the preparation of development briefs, master plans and concept studies, and to specific developer contribution negotiations.

6.3 The local planning authority will usually lead the joint team and the negotiations with the developer(s). Where the County Council is seeking to develop its own land however, it may take the lead role working within the principles in this Statement. Similarly, the County Council may prepare development briefs, master plans and studies relating to its own land adhering to the consultation arrangements set out above.

6.4 The County Council acknowledges that the local planning authority has the ultimate responsibility for granting planning permission and agreeing planning obligations, and this Statement is intended to complement this role and assist the process. The infrastructure for which the County Council is responsible, particularly the education and highway responsibilities, is essential for successful implementation, and the recommendations on joint negotiating teams are made to ensure that negotiations involving these services are coordinated and consistent, thus maximising the benefit to the community.

6.5 Several local planning authorities have adopted their own developer contributions guidance, relating to the services for which they are responsible. This Statement complements rather than duplicates this local guidance. The intention is that the local authority guidance and the County Council guidance are presented jointly to developers, so that a complete picture of the likely level and nature of contributions is available.

6.6 It is the intention of the County Council to extend this Statement to include guidance on developer contributions produced by local authorities, fire and police authorities, health authorities, utilities and other service and infrastructure agencies. This composite document will present a comprehensive cross-cutting approach for the benefit of the development industry.

7. Negotiating Protocol

7.1 To ensure that the necessary consultation and involvement with the County Council takes place and provides the opportunity to negotiate contributions the following protocol is proposed for agreement with the local planning authorities.

Draft Proposed Negotiating Protocol

NEGOTIATING PROCESS FOR COUNTY COUNCIL INFRASTRUCTURE, SERVICES AND FACILITIES DEVELOPER CONTRIBUTIONS

1. The county highway authority and corporate representative of other County Council departments will cooperate with the local planning authority to form a team to identify all proposals to which the Statement should be applied and identify all organisations with a potential interest in the infrastructure, services and facilities that may be required. This will involve all the services specified in the schedules contained in this Statement . Neighbouring local authorities will also be invited to identify a potential interest.

2. The team will establish contact with nominated officers for each interested organisation or agency specified in the schedules.

3. The team will invite all contact officers to identify, so far as is possible, the infrastructure and funding needs of their organisation associated with the proposal. Wherever possible potential developers will be expected to undertake this exercise. These needs should be justified, phased and costed in accordance with the other requirements of this Statement . Each organisation must think as widely as possible about its likely needs over the full period of the development and beyond its physical completion.

4. The team will seek agreement with the contact officers on a prioritised package of infrastructure and facility requirements associated with the proposal combining the needs of all organisations.

5. The team will make an assessment of the scale of contributions towards the provision of infrastructure, services and facilities that might be available from the proposal.

6. Contact officers will seek the preliminary or outline approval of their organisation to the package of benefits being sought.

7. The authorities represented on the team will approve or endorse the package of benefits being sought.

8. The team will meet the developers to discuss and agree the terms of the overall package of benefits, led by the local planning authority.

9. Individual organisations or departments will keep the negotiating team informed of any individual discussions with the developers on detailed aspects of their bid. Any such discussions will take place in the context of this Statement.

10 All contact officers will, if necessary, be brought together at appropriate intervals to review progress on the overall package.

11. The team will suggest and recommend the heads of terms for the overall package of all agreements and obligations to the local planning authority and the county highway authority.

12. All interested organisations will be kept informed of progress of negotiations and their approval sought to any necessary changes to the package.

13. The team will need to establish a system for monitoring agreements with appropriate mechanisms for relating the timing and phasing of the provision of individual facilities to the progress of the development and the councils' capital programmes and for addressing the revenue consequences.