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The increased burden on infrastructure from new developments is real and should be built into development costs. But is the CIL the way to do it?


The Community Infrastructure Levy (CIL) is a product of the UK Planning Act 2008 Ryan McDonagh USA Jersey , enforced since 2010, as a means of making developers pay for the increased burden on infrastructure that comes with new homes and businesses. It is an outgrowth of earlier recommendations in 2003 from economist Kate Barker, who felt that planning gains that went to developers should be partially channelled to overburdened infrastructure features (roads, schools Paul Martin USA Jersey , utilities, etc.) and to increase the stock of social housing.


Private investors involved in land site assembly of course need to take this into consideration. Infrastructure will make the properties they develop more valuable 鈥?but only if funds from the CIL are put to use in ways that materially affect the new developments. Evidence suggests this does not always happen that way.


In its most basic form, the CIL is charged on any building that has some degree of human occupancy (i.e., not parking or warehousing) including residential Cam Fowler USA Jersey , commercial and retail space. Only buildings adding or constructing anew 100 square metres or more of floor space (gross internal area) on or after 6 April 2013 are subject to the levy. Changes of (existing) building uses are not liable, nor are structures that are not actually buildings (such as warehouses or wind turbines). Social housing development and buildings owned by charities are exempt as well.


Implementation of CIL has of course met some criticisms, many of which make a legitimate point. Because local planning authorities collect the levy and apply it as they choose 鈥?within prescribed parameters, of course 鈥?they are instructed to establish charging schedules. This was to be completed as of April 2014 but now is likely extended to April 2015. Those authorities can also set different rates for different sized developments John Carlson USA Jersey , however they must establish evidence to justify those different rates.


Importantly, a 鈥淐IL in kind鈥?provision allows that developers themselves may be best suited to build certain infrastructure components using cost-effective methods. For example, when building a community of 50 homes, the developer or homebuilder might be able to establish water and other utility services with the equipment they already have in place Justin Faulk USA Jersey , where they are most familiar with the land and adjoining infrastructure. It could be much more cost efficient than to channel funds through a bureaucracy that then hires a third party to do the work.


A columnist for The Guardian who writes on local government issues took a swipe at the CIL for having a significant unintended consequence. Ian Blacker wrote in October 2012 that the CIL may actually be reducing the number of affordable homes. He cites how in London, the mayor wants to channel CIL funds to the gargantuan Crossrail project, not social housing. Also, that the CIL funds in any planning authority can be geographically used anywhere in that authority Jimmy Howard USA Jersey , well removed from where the infrastructure needs are increased by new development.


Blacker concludes the CIL is uncharted territory, stating 鈥渨e are entering the realm of unintended consequences.鈥?To the developer, joint venture land investment managers as well as the local planning authorities, this may be unsettling news.