Developer contributions refer to planning obligations delivered through Section 106 Agreements, Section 38 Agreements and Section 278 Agreements, as well as money collected through the Community Infrastructure Levy (CIL). These are planning tools that can be used to secure financial and non-financial contributions (including affordable housing), or other works, to provide infrastructure to support and mitigate the impact of development. Further details of each type of planning obligation is set out below.
Community Infrastructure Levy
The Community Infrastructure Levy (CIL) is a tariff-based charge that applies to some, but not all, new development in the City. The money generated through the levy will contribute to the funding of infrastructure to support development growth in south Worcestershire. The CIL has been jointly prepared by the three south Worcestershire councils of Malvern Hills District Council, Wychavon District Council and Worcester City Council, although each local authority has its own charging schedule. Full details regarding CIL including the charging schedule, how to calculate CIL, and CIL monitoring reports can be found on our dedicated CIL webpage.
Section 106 Agreements
A Section 106 Agreement (S106) is a legally binding agreement that is negotiated between the Council and the developer/landowner to mitigate the impacts of development on a site-specific basis. They can be used to secure a financial contribution toward the funding of infrastructure, for example, the provision of open space, recreation facilities, education and highways, and can also include non-financial contributions, for example, the provision of affordable housing.
Section 106 agreements often require the financial contributions to be made prior to the project starting or in accordance with ‘trigger points’ as the development progresses. Unlike the Community Infrastructure Levy, which is a tariff on particular types of development, S106 is charged based on the specific needs of the local community.
Usually, planning obligations are formally registered as land charges, which means that if the development site is sold the planning obligation remains a legal agreement between the new landowner and the Council.
When S106 agreements are used
When a planning application is submitted to the Council we will assess the application to consider whether the development would cause a significant impact to the area and community. The S106 will vary depending on the nature of the development and based on the needs of the City. The most common obligations include:
- public open space
- affordable housing
- city centre improvements
In accordance with the legal tests set out in Regulation 122 of the Community Infrastructure Levy Regulations 2010 (as amended) Section 106 agreements can only be used where they are:
- necessary to make a development acceptable in planning terms
- directly related to the development, and
- related in scale and kind to the development
Further information and guidance about developer contributions can be found in the following supplementary planning documents.
Developer Contributions Supplementary Planning Document (SPD)
The Developer Contributions SPD (2018) sets out the South Worcestershire Councils’ approach to seeking developer contributions for infrastructure or environmental improvements required as a result of development. The SPD provides guidance about when planning obligations will be expected, the scale of developer contributions, and how developer contributions will be used.
Affordable Housing Supplementary Planning Document (SPD)
The Affordable Housing SPD (2016) covers the administrative areas of Worcester City Council, Malvern Hills District Council and Wychavon District Council. It explains the details of the South Worcestershire Development Plan (SWDP) policies that relate to the provision of affordable housing. It is a guide intended to help developers, landowners, applicants applying for planning permission, registered providers and others who are seeking to provide or benefit from affordable housing.
Section 106 Monitoring, Drafting and Legal Charges
The administration and monitoring of S106 planning obligations is a time-consuming and complex process, taking up a significant amount of officer time. It is essential that the system operates effectively and efficiently.
The Council has therefore decided to introduce charges from the 31 January 2019 to cover the cost of monitoring and drafting planning obligations. The charges were drawn up having regard to relevant national guidance and legislation. They were devised to be proportionate to the amount of work undertaken in relation to planning obligations by the Council and to the scale of development. The monies raised will be spent on costs relating to the administration and monitoring of planning obligations.
The charges are set out below and are payable on completion of each Section 106 agreement:
- The base fee is £650
- In addition to the base fee, a further administration fee will be applied at a rate of £100 per trigger point specified in an agreement
Any Legal Services fees associated with the drafting of the legal agreement will be in addition to the Administration and Monitoring Fee for Section 106 Agreements.
How S106 monies are allocated and spent
Recent changes to the CIL regulations have introduced greater flexibility in how Section 106 monies can be spent. For instance, Section 106 monies can now be pooled together from a greater range of planning applications to fund the same project alongside Community Infrastructure Levy and other sources of funding.
The Council has a dedicated S106 Programme Board who act as the decision-making body for the collection and spending of developer contributions made up of Officers within the Council. The Board meets quarterly to review expenditure and to prioritise and identify potential projects and income from developer contributions.
The Council is required to publish details of income and expenditure from both S106 and CIL over the last financial period in an Infrastructure Funding Statement (IFS). This statement will be updated annually and replaces the Developer Contributions Monitoring Reports that the Council has previously published on the monitoring page of the website. The statement will also identify the type of infrastructure and projects we intend to fund through CIL and Section 106 income over the next reporting period.
Section 38 and Section 278 Agreements
Section 38 and Section 278 Agreements are legal agreements that are entered into by a developer and the relevant Local Highway Authority, which in the case of Worcester City is Worcestershire County Council. Although highway matters will be negotiated as part of the planning process, the legal process between the developer and the County Council takes place after the planning application has been approved and the developer has submitted technical information to the County Council.
- A Section 278 Agreement is a section of the Highways Act 1980 that allows developers to enter into a legal agreement with the Local Highway Authority to make alterations or improvements to a public highway.
- A Section 38 Agreement is a section of the Highways Act 1980 that allows developers to enter into a legal agreement with the Local Highway Authority to have new highway infrastructure adopted and maintained at public expense.