Section 106 Planning Obligations – speeding up negotiations

BIRMINGHAM CITY COUNCIL
Appendix
REPORT OF DIRECTOR OF PLANNING AND REGENERATION
19th March, 2015
PLANNING COMMITTEE
Section 106 Planning Obligations – speeding up negotiations
1.
Subject and Brief Summary of Proposals
1.1
To inform members of a technical consultation by the Department of
Communities and Local Government (DCLG), on proposals to speed up
section 106 negotiations.
2.
Recommendations
2.1
That members agree the proposed response to the consultation set out in the
appendix.
3.
Contact Officer
Rod Chapman
Principal Planning Officer
Planning and Regeneration
Tel: 0121 675 9273
Email: [email protected]
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4.0
Background
4.1
Following feedback from the commercial and housing development sector
identifying delays in dealing with section 106 (s106) the DCLG, have
produced a paper proposing measures, notably the use of a mediation service
to resolve s106 disputes and speed up negotiations. This consultation paper
is welcomed as it draws attention to the issue of potential for delays in the
planning system and provides an opportunity to highlight some of the
measures that Birmingham effectively use to minimise or remove potential
delays. In Birmingham’s case however a variety of measures are used which
have resulted in 80 to 90% discharge of major planning applications within the
13 weeks target. Most notable of these is the use of independent RICS
financial viability assessments, which provides an efficient, fair and timely
input into the process.
4.2
Other existing key measures include: front loading of the process with
detailed pre-applications; using S106 Heads of Terms’s; early involvement of
experienced legal services colleagues to deliver the legal requirements of the
process; use of standardised templates; local time limits and sanctions of
refusal for non-agreement (where justified); attention to early Committee
dates; micromanagement of major caseloads for performance purposes;
skilled staff and sound policy evidence bases.
5.0
Summary of Proposals
5.1
The Paper begins by setting out the concerns over delay in dealing with
planning applications that have come from feedback the housing and
commercial development sectors. These include the contentious nature of
agreeing fair, reasonable and necessary mitigation, difficulties in drafting
robust agreements, limited legal capacity, particularly in smaller authorities
and lack of incentives to resolve negotiations quickly.
5.2
In response the paper sets out some changes to guidance to be introduced in
the short term. These include: confirming that s106 negotiations should be
concluded within timescales; set expectations of earlier engagement at the
pre application stage by all parties to front load discussions about the scope
of the s106 ‘ask’; encourage greater use of standardised clauses to minimise
the need to draft agreements from scratch and set expectations of greater
transparency about what has been raised through s106 and what it has been
spent on.
5.3
The paper discusses using an automatic or ‘deemed’ solution whereby an
applicant would submit a draft s106 or unilateral undertaking which would be
deemed planning obligation after statutory or agreed timeframes were
breached. However it rules this out, rightly because local planning authorities
could refuse applications where they did not consider the draft agreement/
unilateral undertaking made the proposal acceptable in planning terms.
Further there would be limited incentive for the applicant to negotiate and an
unilateral undertaking is not obligatory for a local authority to deliver.
5.4
The main proposal is for a dispute resolution service through a mediator. This
could take the form of a body or persons. The mediator would determine any
s106 agreement dispute. The consultation asks if this proposed dispute
resolution service should be binding, whether it should be brought in for major
applications only (to lessen the burden on the mediator) and finally whether
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the related application itself should be considered by the mediator. This last
point recognising the close linkage between the application and the s106
agreements needed to mitigate unacceptable development. However views
are sought on whether the dispute resolution could just focus on the s106
issues.
5.5
The final part of the consultation considers affordable housing and student
accommodation and asks for views on whether the requirement acts as a
barrier to development providing dedicated student accommodation. This last
point is not applicable to Birmingham as affordable housing contributions are
not sort as part of student accomodation schemes.
6.0
Key Matters for Consideration
6.1
The consultation paper’s main premise is that s106 negotiations are a cause
of delay in the planning process. Birmingham achieves between 80 and
90% decision rate within the 13 week period for major planning
applications and therefore does not consider that there is a need for
amendments to the planning application process in the way proposed.
However it is recognised, that the process can create delays and that these
can be averted by various measures already available to local planning
authorities.
6.2
However the main one is the carrying out any viability assessments up front
with application submission, with early undertaking of independent
assessment (via a tender process in our case) of these viability assessments.
This is done through an independent RICS financial appraisal. A number of
other factors can positively affect the speed of discharge these include: front
loading of the process with detailed pre-applications; using S106 Heads of
Term’s early involvement of experienced legal services colleagues to deliver
the legal requirements of the process; use of standardised templates; local
time limits and sanctions of refusal for non-agreement (where justified);
attention to early committee dates; micromanagement of major caseloads for
performance purposes; skilled staff and sound policy evidence bases. Without
some or all of these measures delays would result. The paper identifies some
amendments to guidance in the short term including some of the above
measures, this is welcomed.
6.3
Over the last twelve months there have only been a few instances where
Section 106 issues have been a reason for seeking extra time. It is usually
more complex cases that require more time. Planning permission for
proposals at Icknield Port Loop took over 12 months due to a number of
factors including canals, conservation issues, development mix, land
ownerships and also a desire for a longer permission period. In this case,
Birmingham applied flexibility by agreeing to a longer permission period by
tying in section 106 considerations to be assessed at reserved matters
stages. This latter point allows section 106 to be assessed at a later time
where it can be set to reflect the then current situation.
6.4
In our experience the existing legal framework provides effective mechanisms
for resolving s106 delays and disputes in a timely manner. The use of
independent RICS checked viability assessments operating within the existing
legal framework provides an effective mechanism for resolving Section 106
delays and disputes in a timely manner. A sensible, evidence based approach
to S106 agreements, as well as an open-ness to negotiate means recourse to
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mediation is not required. Similarly, there are legislative mechanisms
which allow agreements to be altered after signing if circumstances change.
Similarly, these have been rarely used in Birmingham due to our open
approach to discussing potential changes to S106 agreements. Further a
dispute resolution mechanism involving a separate body or persons will add
another layer of bureaucracy to the process and critically would take a key
element of planning application decision making away from elected members
through planning committee.
6.5
Support the paper’s view that automatic or deemed agreements are not
workable in practice and agree with some of the reasons set out in the paper,
particularly that, unacceptable schemes would be refused in any case. Do
not wholly agree with the paper’s assertion that developers will negotiate
less though as surely this would be counter productive. In Birmingham’s case
using Heads of Terms speeds up the process.
6.6
If a dispute resolution service is to be implemented then it’s decision should
be binding. It would have to be independent and jointly agreed by the local
authority and the applicant. This should be completed within the 13 weeks.
The mediation process should take no longer than the existing independent
RICS viability appraisal process. Section 106 disputes occur where an
applicant has failed to meet a policy compliant s.106 requirement. For this
reason applicants should pay any fees required by the dispute resolution
service.
6.7
There are concerns over how this separate disputes resolution service would
sit in the whole planning application process particularly with regard to
planning committee’s decision making role. Potentially just taking section 106
dispute outside undermines local accountability if all types of planning
application are considered this adverse effect will be exacerbated. It is
considered that there is no need for this service and if brought in it goes
against localism by taking a key element of decision making away from
elected members through planning committee. It also adds another layer of
bureaucracy to the process.
6.8
The paper asks whether any dispute mechanism would need to also involve
the determination of the related planning application as s106 agreements are
to mitigate the impact of unacceptable development. It is essential that as
s106 requirements are tied in with policies, so considering determination of
the related planning application as well, is essential, by the same body.
However as stated above, taking the proposed approach of creating a
disputes resolution process with a body or persons would create another
layer of bureaucracy and undermines the role of elected members through
Planning Committee.
6.9
Birmingham City Council do not seek affordable housing contributions as part
of student accommodation planning applications so cannot comment on
whether the seeking of such contributions, adversely affects delivery of
student accommodation.
7.0
Conclusions
7.1
This consultation paper sets out proposals to speed up the s106 negotiations
process. This aim is welcomed. In the short term several measures are
identified to help, notably encouraging the use of front loading. These are
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supported. However, the key proposal is to set up a disputes resolution
service which would make decisions regarding s106 agreements. This
proposal is not necessary, as Birmingham, through a variety of measures is
able to deliver the vast majority of major planning application decisions within
statutory timescales, using the existing planning legislation and retaining the
key role of elected members through planning committee. A separate body or
persons dealing with s106 agreements and possibly the related planning
applications due to their linkages would undermine local accountability
8.0
Financial Implications
8.1
Section 106 disputes occur where an applicant has failed to meet a policy
compliant s.106 requirement. For this reason applicants should pay any fees
required by the dispute resolution service.
9.0
Implications for Policy Priorities
9.1
These changes are likely to have a negative impact on achieving Council
Plan objectives in terms of the accountability of decision making if s106 and
related planning applications are dealt with by an independent body or
persons.
10.0
Implications for Equalities
10.1
No significant direct impacts have been identified.
11.0
Background Papers
DCLG Section 106 planning obligations – speeding up negotiations
____________________________
Waheed Nazir
Director of Planning and Regeneration
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Appendix
Section 106 Planning Obligations – speeding up negotiations
Question 1: Do you agree that Section 106 negotiations represent a significant source of delay
within the planning application process?
No. Birmingham achieves between 80 and 90% decision rate within the 13 week period for major
planning applications. This is due to a number of factors. However the main one is the carrying out
any viability assessments up front with application submission, with early undertaking of
independent assessment (via a tender process in our case) of viability assessments. This is done
through an independent RCIS …
Other factors affecting speed of discharge are: front loading of the process with detailed preapplications; using S106 Heads of Terms’s early involvement of experienced legal services
colleagues to deliver the legal requirements of the process; use of standardised templates; local
time limits and sanctions of refusal for non-agreement (where justified); attention to early
Committee dates; micromanagement of major caseloads for performance purposes; skilled staff and
sound sound policy evidence bases .
Without some or all of these measures delays would result. Smaller authorities may not have
resources. Further district councils would have to consult county councils on certain matters eg
transport ,housing and education.
Question 2: Do you agree that failure to agree or complete Section 106 agreements are common
reasons for seeking extra time to determine a planning application?
No. Over the last twelve months there have only been a few instances where Section 106 issues
have been a reason for seeking extra time. It is usually more complex cases that require more time.
Planning permission for proposals at Icknield Port Loop took over 12 months due to a number of
factors including canals, conservation issues, development mix, land ownerships and also a desire for
a longer permission period. In this case, Birmingham applied flexibility by agreeing to a longer
permission period by tying in section 106 considerations to be assessed at reserved matters stages.
This latter point allows section 106 to be assessed at a later time where it can be set to reflect the
then current situation.
Question 3: Do you agree that the current legal framework does not provide effective mechanisms
for resolving Section 106 delays and disputes in a timely manner?
Not in our experience. The use of independent RCIS checked viability assessments operating within
the existing legal framework provides effective mechanisms for resolving Section 106 delays and
disputes in a timely manner A sensible, evidence based approach to S106 agreements, as well as an
open-ness to negotiate means we don’t require recourse to mediation. Similarly, there are legislative
mechanisms which allow agreements to be altered after signing if circumstances change. Similarly,
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these have been rarely used in Birmingham due to our open approach to discussing potential
changes to S106 agreements.
Question 4: Do you agree that legislative change is required to bring about a significant reduction
in the delays associated with negotiating Section 106 agreements?
No see previous answers.
Question 5: Do you agree that any future dispute resolution mechanism should be available where
Section 106 negotiations breach statutory or agreed timescales?
No the independent RCIS process referred to in previous answers is an effective, established tool
that addresses this issue very effectively. Further a dispute resolution mechanism involving a
separate body or persons will add another layer of bureaucracy to the process and critically would
take a key element of planning application decision making away from elected members through
planning committee.
Question 6: Do you agree that a solution involving an automatic or deemed agreement after set
timescales would be unworkable in practice?
Yes. Would agree with some of the reasons set out in the paper, particularly that unacceptable
schemes would be refused in any case. Do not wholly agree with the paper’s assertion that
developers will negotiate less though as surely this would be counter productive.
Question 7: Could submission of a draft Section 106 agreement or unilateral agreement during the
negotiation process be a requirement of being able to seek dispute resolution where statutory or
agreed timescales are breached?
Effectively, this is done in Birmingham’s case through Heads of Terms so making this a formal
requirement seems unnecessary.
Question 8: Do you agree any dispute resolution mechanism would need to be binding on the
parties involved?
Yes otherwise the process would be pointless.
Question 9: Which bodies or appointed persons would be suitable to provide the dispute
resolution service?
Any dispute resolution service would have to be independent and jointly agreed by the local
authority and the applicant.
Question 10: How long should the process take?
This should be completed within the 13 weeks. The mediation process should take no longer than
the existing independent RCIS viability appraisal process.
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Question 11: Do you agree that the body offering Section 106 dispute resolution should be able to
charge a fee to cover the cost of providing the service?
Section 106 disputes occur where an applicant has failed to meet a policy compliant s.106
requirement. For this reason applicants should pay any fees required by the dispute resolution
service.
Question 12: Should all types of planning application have recourse to Section 106 dispute
resolution?
No and we have concerns over how this separate disputes resolution service would sit in the whole
planning application process particularly with regard to planning committee’s decision making role.
Potentially just taking section 106 dispute outside undermines local accountability if all types of
planning application are considered this adverse effect will be exacerbated. We do not consider
there to be a need for this service and if brought in it goes against localism by taking a key element
of decision making away from elected members through planning committee. It also adds another
layer of bureaucracy to the process.
Question 13: Do you consider that any dispute mechanism would need to also involve the
determination of the related planning application?
As stated above s106 requirements are tied in with policies so considering determination of the
related planning application as well is essential. However as stated above, taking this approach
creates another layer of bureaucracy and undermines the role of elected members through Planning
Committee.
Question 14: Are there any ways in which this could be done where only the Section 106
agreement is the subject of the resolution mechanism?
No for the reasons stated above.
Question 15: To what extent do you consider that the requirement to provide affordable housing
contributions acts as a barrier to development providing dedicated student accommodation?
Birmingham City Council do not seek affordable housing contributions as part of student
accommodation planning applications so this question is not applicable.
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