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					                              Planning Sub-Committee (Planning
                              Briefs and Local Development
                              Framework)

                     Date:    1 September 2009

                 Subject:     Section 106 Planning Obligations – Update on
                              issues that will require consideration in the
                              forthcoming review of the council’s Supplementary
                              Planning Guidance on Planning Obligations.


Summary
The council’s supplementary planning guidance (SPG) on planning obligations was
adopted in January 2008. The SPG is formed of two parts, the first setting out the
strategic policies and approach to securing planning obligations in the city through
section 106 legal agreements under the Town and Country Planning Act 1990, and the
second setting out formula details and maps for making financial contributions / carrying
out works towards specific funds / projects and schemes in the city.

On 17 April 2009 the Cabinet Member for the Built Environment agreed that the use of
the SPG on planning obligations should be extended until March 2010. He further
agreed that a report setting out a full review of the formulae used in the SPG be
submitted to the Cabinet Member by January 2010.

A number of detailed matters have arisen regarding planning obligations in the interim.
In preparation of the forthcoming review of the SPG officers have started to consider
these matters with regard to the balance and mix of obligations that may be included in
a new Supplementary Planning Document (SPD) produced as part of the Local
Development Framework (LDF).

In addition to the council’s own review, representations have been made from the
Westminster’s Property Association requesting that the city develops a public realm
credit system. Grosvenor Estates have also approached the council for agreement to
operate an offset system based on the Westminster Grosvenor Public Realm
Agreement that has already been entered in to with the council.

The purpose of this report is therefore to update and seek the initial views of the
Planning Sub-Committee on the requests being put forward by the property sector and
to advise on some of the issues that are likely to form part of the formal review of the



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SPG with a view to adopting a new SPD. In summary the main issues that are
considered in the report include:

 Public Realm credit system (Westminster Property Association’s proposals);
 Grosvenor Estate strategy on public realm contributions;
 Local procurement;
 Draft London Plan alterations – Funding of Crossrail through planning obligations;
 Planning obligations monitoring system;
 Other issues for consideration for inclusion in SPG review including biodiversity and
  childcare;
 Community Infrastructure Levy

The Planning Sub-Committee are asked to note the issues raised, any comments on
which would be welcomed and would assist in the forthcoming review of the current
SPG.

Recommendations

1. That the Sub-Committee notes the issues raised on the matters that are likely to
   influence the forthcoming review of the council’s Supplementary Planning Guidance
   on Planning Obligations (January 2008).

2. The Sub-Committee’s views are sought on the issues raised, especially on the
   principle of adopting a public realm credit system. These views will inform the
   development of the Supplementary Planning Document on Planning Obligations as
   well as the policy evolution of the City Management Plan as part of the Local
   Development Framework.

3. That the Sub-Committee recommends to the Cabinet Member for the Built
   Environment that he should agree that any works / financial contributions to public
   realm schemes delivered now, or in the future, and which are identified by the
   council as priority schemes, will be acknowledged by the council as a credit in the
   event that a public realm credit system policy is subsequently adopted and set out
   in a Supplementary Planning Document on Planning Obligations.




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                            Planning Sub-Committee (Planning
                            Briefs and Local Development
City of Westminster         Framework) Report

               Item No:     5

                   Date:    1 September 2009

         Classification:    For General Release

         Title of Report:

              Report of:    Strategic Director Built Environment

        Wards involved:     All`

         Policy context:     City of Westminster Unitary Development Plan
                              (UDP), (Adopted 2007)
                             The Greater London Authority (Consolidated with
                              alterations since 2004) (2008)
                             City Plan, and One City programme

    Financial summary:      1. All work on the planning brief can be
                               accommodated within existing resources.

         Report Author:     Rachael Ferry-Jones, City Planning Group

         Contact details    Rachael Ferry-Jones
                            Telephone 0207 641 2418
                            rferry-jones@westminster.gov.uk




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1.    Background Information
1.1   There is a balance to be struck between the need for development schemes
      to mitigate the impacts which they give rise to, contribute to the City and
      promote economic prosperity. Planning obligations can serve to mitigate the
      impacts arising from a development either on the development site, in the
      wider locality, or where the development will increase local demands for
      facilities and services or where it is important to integrate the new
      development in to the local community and environment.

1.2   Planning obligations are usually secured through a voluntary legal agreement
      or undertaking under Section 106 (s106) of the Town and Country Planning
      Act 1990. The council’s approach on planning obligations is set out in detail in
      Supplementary Planning Guidance (SPG), adopted in January 2008. The
      SPG identifies in detail the type of planning obligations that the council will be
      seeking to secure, albeit it recognises that priorities will depend on the nature
      of specific development proposals and their location. The SPG is formed in
      two parts, the first setting out the strategic policies and approach to securing
      planning obligations in the city through section 106 legal agreements under
      the Town and Country Planning Act 1990, and the second setting out formula
      details and maps for making financial contributions / carrying out works
      towards specific funds / projects and schemes in the city.

1.3   On 17 April 2009 the Cabinet Member for the Built Environment agreed that
      the use of the SPG on planning obligations should be extended until March
      2010. He further agreed that a report setting out a full review of the formulae
      used in the SPG be submitted to the Cabinet Member by January 2010.

1.4   The purpose of this report is to update the Planning Sub-Committee on issues
      that are being considered as part of the review of the existing SPG. This
      includes recent proposals being put forward by the property sector under the
      operation of the current SPG. Whilst this report is being presented to the Sub-
      Committee primarily for information and initial views on proposals put forward
      by the property sector any comments made will assist in the application of the
      current SPG as well as inform the forthcoming review to adopt a new SPD on
      Planning Obligations as part of the LDF.

1.5   Section 2 of this report sets out in more detail the main issues that require
      consideration. In summary these include:

       A Public Realm credit system (Westminster Property Association’s
        proposals);
       The Grosvenor Estate’s strategy on public realm contributions;
       Local procurement;
       Draft London Plan alterations – Funding of Crossrail through planning
        obligations;
       Planning obligations monitoring system;
       Other issues for consideration including biodiversity and childcare;
       Community Infrastructure Levy


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2.    Detailed Considerations
2.1   Westminster Property Association’s Proposed Public Realm Credit
      System

2.1.1 Westminster Property Association (WPA) have asked that the council adopts
      a public realm credit system. WPA’s latest proposal is set out at Appendix A.
      A public realm credit would be generated by one or more developers investing
      upfront in a public realm scheme in agreement with the council. This would
      take the form of either financial contribution towards public realm works or the
      carrying out of public realm works in advance of any planning application for a
      development scheme in the city.

2.1.2 WPA suggest that the early investment is made on the proviso that the ‘credit’
      can be used to offset subsequent requirements for public realm contributions
      associated with one or more development schemes in the same area of the
      city. It is considered that the councils SPG on Planning Obligations allows for
      the possibility of such an approach being accepted on an ad hoc basis as set
      out in the following paragraph which relates to public realm contributions:

        ’ The council will normally give priority to costed projects in the vicinity of the
       site and to wider public realm schemes it has identified as desirable.
       However, if landowners have public realm proposals of their own which relate
       in time and are in the vicinity, these may be taken into account as appropriate
       schemes for funding to offset the overall public realm contribution.’

       (Source: Sheet 3 ‘Public Realm’ of the council’s document ‘details of Formulae and Maps for
       Supplementary Planning Guidance on Planning Obligations’, January 2008)

2.1.3 WPA is now advocating the development of a formal policy framework for
      public realm credits as part of the Local Development Framework (LDF) Core
      Strategy and City Management Plan. They are also recommending the
      development of an interim policy position on public realm credits to provide
      formal approval of the principles which can be used for planning proposals
      submitted before the LDF documents, including the revised SPD on planning
      obligations, are adopted.

2.1.4 It is accepted that the benefits of a public realm credit system would be to
      provide added flexibility for developers and the delivery of upfront
      improvements to the wider public realm. This is of potential benefit to the
      council and London as a whole as it may assist in the delivery of a number of
      public realm improvements including works in advance of the 2012 Olympic
      Games. The WPA proposals to establish a public realm credit system are
      however complex and there are a number of issues which require further
      clarification before a detailed analysis of the proposals can be undertaken and
      a system developed and adopted.

2.1.5 One of the key issues in considering proposals under the existing policy
      context is to determine how they relate ‘in time’ to any future planning
      applications. In order to satisfy this requirement a detailed mechanism and
      safeguards on how a public realm system would operate needs to be

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       considered and agreed. This includes taking in to consideration the principles
       put forward in WPA’s proposals and as stated above these currently require
       further analysis. Legal and procedural implications and appropriate
       safeguards will need to be discussed in detail.

2.1.6 The review of the current planning obligations SPG is underway and it is
      therefore considered appropriate to consider the detailed mechanisms of
      implementing a public realm credit system as part of this process. This would
      ensure that if a system were to be put in place it would have been formally
      ratified and subject to public consultation prior to adoption by the council.

2.1.7 If the council adopted this approach the public realm credits would be required
      to be derived from public realm schemes that the council has agreed are a
      priority. The range of current schemes are listed in the council’s planning
      obligations SPG and will be reconsidered as part of the SPG review process.
      Only in exceptional circumstances will the council agree to credits being
      derived from public realm schemes that are not identified in the SPG / SPD.

2.1.8 Another fundamental consideration would be to ensure that a public realm
      credit system does not distort the hierarchy of priorities enshrined in the
      Planning Obligations SPG and reflected in the emerging Core Strategy. These
      are that planning obligations must:

       1. mitigate the direct impacts of the development, for example, highways
          improvements works necessary to make the development acceptable
       2. comply with policy requirements set out in the Unitary Development
          Plan, 2007, for example, the provision of public art or public open space
       3. make contributions where relevant to wider public realm schemes.

2.1.9 If the council adopted a public realm credit system the relevant planning
      committee would retain its discretion to determine each planning application
      and decide whether the public realm contribution should be offset against a
      public realm credit or spent in the normal way on alternative public realm
      works within the vicinity of the application site. In this respect whilst the public
      realm credit would be a material consideration the committee’s decision
      cannot be fettered.

2.1.10 Adoption of a system of public realm credits will only be acceptable to the
       council if it is simple, transparent and easy to manage and monitor, and
       delivers a substantially better planning outcome in line with the council’s
       adopted policy and guidance.

2.1.11 WPA have asked the council to adopt an interim policy approach in advance
       of the formal revisions to the SPG on Planning Obligations. As set out above
       the benefits of implementing a public realm system are acknowledged by the
       council. It is therefore considered that in advance of the review of the SPG if a
       developer were to come forward with proposed works / financial contributions
       towards public realm schemes that are agreed by the council as priority
       schemes they could be acknowledged as credits in the event that a public
       realm credit system policy is subsequently adopted by the council.

2.1.12 The purpose of this report is therefore to seek the Sub-Committee’s views on

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      the principles of a public realm system and to ask that they recommend to the
      Cabinet Member for Built Environment that, in the circumstances identified as
      above, that the works / contribution are acknowledged as a credit. Further
      analysis of the proposals by WPA and consideration of the mechanism for
      granting public realm credits could be agreed by the council in advance of a
      formally adopted approach on applying them to development proposals.
      These could be set out in detail in the Cabinet Member report following further
      clarification and legal advice.

2.2   Grosvenor Estate’s Strategy for Public Realm Contributions

2.2.1 In advance of receiving the report from WPA Grosvenor Estates put forward a
      request to the council for public realm contributions generated by planning
      applications in Mayfair and Belgravia to be offset against the costs of works
      carried out under the City of Westminster and Grosvenor Public Realm
      Agreement. This agreement provides for joint working between Westminster
      and Grosvenor to implement public realm works. Grosvenor has a number of
      programmed development proposals which will generate a requirement for
      public realm contributions and have asked the council to consider whether the
      contributions can be offset against the cost of the works carried out under the
      Public Realm Agreement.

2.2.2 Officers are currently preparing a Cabinet Member report which will set out in
      detail how such a system could be implemented in relation to this particular
      case. The report will propose a series of mechanisms and safeguards that will
      be required to be put in place to control the process including full
      accountability through the committee process and effective monitoring.

2.2.3 Officer’s initial view is that the Grosvenor Estate’s request is reasonable. The
      Grosvenor Estate agreement is however unique and therefore the approach
      being taken cannot be directly applied to other public realm schemes in the
      city. Officers have had the opportunity to consider the Grosvenor proposals in
      detail and to devise appropriate mechanisms and safeguards to ensure that
      their proposal complies with existing policy. Given the merits of the Grosvenor
      case officers consider it justified to proceed with a report to the Cabinet
      Member for the Built Environment for his approval to implement a Grosvenor
      specific public realm credit based system.

2.3   Local Procurement

2.3.1 Arising from work on the city’s Economic Development Strategy and City
      Recovery Programme and in conjunction with Cross River Partnership and
      Westminster Small and Minority Business Council, officers are currently
      considering setting up a local procurement initiative which seeks to maximise
      procurement opportunities for local enterprises from major property
      developments. Local procurement along these lines has been secured as
      planning obligations on major developments in both Camden and Islington.
      Both councils have identified this as a requirement in their SPD on planning
      obligations to ensure that the procurement of goods and services allows for
      local opportunities for local businesses to tender.



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2.3.2 iCAM Supply is a bi-borough local procurement initiative and included at
      appendix B is a paper prepared by them to highlight the benefits that this
      initiative can bring to an area quoting specific case study examples.

2.3.3 Officers consider this to be an effective mechanism for maximising
      procurement opportunities for local enterprises and recognise the benefits that
      the initiative has brought to both Camden and Islington. The review of the
      council’s SPG on planning obligations will take full account of the work being
      undertaken on setting up a similar initiative in Westminster and seek to secure
      local procurement for all major developments. The provision of such a
      planning obligation would fully accord with UDP policies STRA 5
      (Regeneration and Economic Development), STRA 7 (Planning Obligations
      and Benefits), paragraph 3.10 (Education, training and employment) of the
      council’s SPG on planning obligations and the emerging LDF. In light of the
      advice given under section 4 of this report the legal implications of a local
      procurement obligation requires further consideration. It is not however
      thought at this stage that relevant legislation on procurement will prevent this
      initiative being used in s106 legal agreements.

2.3.4 Whilst local procurement will be sought through the use of planning
      obligations it should be noted that funding from the London Development
      Agency has been secured to set up the initiative and as such no financial
      contribution would be sought from developers for this aspect of the proposal.

2.4    Proposed London Plan Alterations in Respect of Crossrail

2.4.1 In order to address the funding of Crossrail in advance of a full review of the
      London Plan on 18 May 2009, The Mayor of London published drafts of (a)
      Proposed London Plan Alterations and (b) associated SPG on 'the use of
      planning obligations in the funding of Crossrail' for consultation purposes. The
      drafts propose raising funds towards the costs of Crossrail from schemes
      which (i) are within the London Plan Central Activities Zone boundary and (ii)
      involve an increase of 500 sqm. or more in gross office space. No land uses
      other than offices are affected by the draft policy and SPG.

2.4.2 The council is concerned about the implications of the proposed policy
      approach with regard to: its justification in terms of the London Plan and
      government advice; the lack of adequate justification for the area and land use
      to which the charge will apply; and inadequate testing of implications for
      economic viability. Accordingly, a formal objection to the draft alterations has
      been submitted and a copy of this is attached to this report as appendix C.
      This was the subject of a Cabinet Member decision. The council’s response
      will be considered at the examination in public (EIP) of the proposed London
      Plan alterations. It is likely that this will afford the council the opportunity to
      appear at the EIP to put forward its case verbally to the Planning Inspector.

2.4.3 The publication of these documents is a material consideration in planning
      terms. However, leading counsel advises that they have only low weight in the
      determination of planning applications, due to the early stage they have
      reached in the statutory process. It is considered that the council at present
      can continue, subject to the Mayor’s power of calling in applications in certain


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        circumstances, to apply the policies of the statutory development plan in
        deciding what planning obligations should be secured– namely the London
        Plan published in February 2008 (consolidated with alterations since 2004)
        and the Unitary Development Plan adopted in January 2007, supported by the
        Section 106 Supplementary Planning Guidance – until the proposed
        alterations to the London Plan are adopted.

2.5     Section 106 (s106) Monitoring System

2.5.1 The present s106 monitoring system used by WCC has been in use since
      2000 and whilst it provides an adequate monitoring system it is outdated,
      mainly paper based and no longer fit for purpose.

2.5.2 Officers have undertaken research on locating a suitable replacement system.
      The result is that a system, purpose built by Colchester Borough Council for
      themselves, has been identified as meeting all the requirements needed by
      the council. This system is judged as a leader in s106 monitoring by local
      authorities.

2.5.3 Colchester has advised that they would be prepared to amend the system to
      fit the council’s requirements if further information needs to be recorded. This
      will be extremely useful particularly in monitoring public realm credits if this
      approach is taken forward.

2.5.4 The system is purely electronic based. No paper is required. This reduces
      officer time required to manage the system.

2.6     Update on Other issues for Review

2.6.1 Work is underway on three areas where the impacts of development are being
      felt and where it is considered that there is a demand for mitigation /
      improvements / integration as a consequence of development. These have
      been identified as:

         Joblessness and training
         Childcare, education and impacts on other social services
         Biodiversity/ sustainability

2.6.2 Work is underway on considering whether a formula approach on obtaining
      funding towards these areas is an appropriate response to address the needs
      and demand. As part of the forthcoming review of the SPG on planning
      obligations formulae in relation to these three identified areas will be
      introduced where appropriate. Where in kind works are preferred the revised
      SPD will attempt to identify this.

2.6.3    The s106 inter-departmental officers’ working party will continue to explore
        other options as part of the SPG review.

2.7     Community Infrastructure Levy (CIL)

2.7.1 Provision for the introduction of a Community Infrastructure Levy (CIL) is


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       made in the Part 11 of the Planning Act, 2008. Local authorities, including the
       Mayor of London, will be empowered (but not required) to set a charge for
       most developments, through a formula related to the scale and type of the
       proposal. The proceeds of CIL will be spent on local and sub-regional
       infrastructure contemplated by the development plan for the area, not to
       remedy existing deficiencies. The introduction of CIL is driven by the
       government’s desire for development to contribute to the provision of
       infrastructure either directly or indirectly related to the development. CIL is
       expected to make a contribution to, but will not replace, existing mainstream
       funding for infrastructure.

2.7.2 In anticipation of the introduction of CIL the council, with its partner authorities
      in Central London Forward, commissioned a study on infrastructure
      requirements. A Westminster specific study was commenced in parallel with
      this and is still in progress. The consultant team have also been asked to look
      specifically at CIL, to enable the council to better assess the potential for its
      introduction and the specific opportunities and limitations in a Westminster
      context.

2.7.3 The government subsequently published the consultation document:
      Community Infrastructure Levy Detailed proposals and draft regulations for the
      introduction of the Community Infrastructure Levy at the end of July 2009. This
      sets out for comment proposals for the preparation of a CIL and its operation.
      It also seeks views on how the current system of planning obligations might
      change or be scaled down in the context of CIL. Officers are reviewing the
      consultation document and the implications for Westminster. No decision has
      been taken by Westminster City Council on the introduction of CIL at this
      stage; at present planning obligations (S106) continue to be the mechanism
      for seeking developer contributions for infrastructure. However, the
      implications of CIL are being considered as part of the ongoing review of the
      Planning Obligations SPG. If the council subsequently takes the decision to
      implement CIL, this will be the subject of its own process of consultation and
      rigorous examination before adoption.

3.     Financial Implications
3.1    The work on the forthcoming review of the Supplementary Planning Guidance
       on Planning Obligations can be accommodated within existing resources.

4.     Legal Implications
4.1    The legal implications of implementation of a public realm credit system will
       need to be carefully considered, both in relation to individual cases and any
       overall policy approach. This will necessarily include giving consideration to
       EU procurement legislation and the UK Public Contract Regulations 2006,
       which govern procurement activity by local authorities. This legislation
       requires that when the council procures works or services (such as public
       realm works) over certain thresholds the proposals must be advertised to
       allow interested parties to bid for contracts and awarded in accordance with
       specific procedures.



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4.2   Until recently it was generally considered that partnerships or development
      regulated by town planning legislation was exempt from these requirements
      on the basis that a public contract will involve public (and not private) money.
      Therefore a section 106 or section 278 agreement in connection with a
      planning application will in general terms lack the ‘pecuniary consideration’
      (93/37 EEC and Public Contract Regulations 2006) required to make it a
      Public Works Contract. However, a recent European Court of Justice Case
      (Jean Auroux and Others v Commune de Roanne - Case C-220/05) has
      raised the question of whether development agreements entered into by the
      public sector without following the EU procurement processes are lawful. This
      emerging case law has implications for public realm credits system,
      particularly where it is envisaged the council’s money will be used to match
      fund or contribute to any given scheme. This may also assume greater
      significance if the early public realm investment - the generation of the credit -
      was independent of a planning scheme (as opposed to under planning
      legislation as part of a Section 106 agreement).

5.    Staffing Implications
5.1   There are no staffing implications as a consequence of this report.

6.    Business Plan Implications
6.1   These issues would not affect the council’s business plan.

7.    Consultation
7.1   Cabinet Member for the Built Environment, Cabinet Member for City
      Management, Director of Finance, City Solicitor, Children’s Services,
      Westminster Property Association, Grosvenor, and iCAM have been
      consulted on issues associated with this report.

8.    Health and Safety Issues
8.1   None

9.    Human Rights Act 1998
9.1   None

10.   Conclusions
10.1 The purpose of this report has been to update the Planning Sub-Committee on
     issues that are being considered as part of the review of the existing SPG. This
     includes recent proposals being put forward by the property sector under the
     operation of the current SPG. Whilst this report is being presented to the Sub-
     Committee primarily for information and initial views on proposals put forward
     by the property sector any comments made will assist in the application of the
     current SPG as well as inform the forthcoming review to adopt a new SPD on


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     Planning Obligations as part of the LDF.

10.2 A further report will be put before the Planning Sub-Committee on draft
     alterations to the current SPG on planning obligations as it is reviewed. The
     Sub-Committee will therefore have further opportunities to influence the
     development of the new SPD prior to its publication for formal public
     consultation.

      APPENDICES

A.    Westminster Property Association – Public Realm Attracting Private Capital
      Investment, 5 August 2009
B.    Report by iCAM – Local Procurement Initiative, August 2009
C.    City of Westminster’s Submission to London Plan Alterations on Use of
      Planning Obligations in the Funding of Crossrail and Comments on the
      Related Draft Supplementary Planning Guidance, August 2009

If you have any queries about this report or wish to inspect one of the
background papers please contact Rachael Ferry-Jones on 020 7641 2418, fax
020 7641 8538.

Background Papers

1.    Cabinet Member Report dated 2 April 2009 entitled Section 106 (S106)
      Supplementary Planning Guidance Review and subsequent Cabinet Member
      Decision dated 17 April 2009




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