Agenda item

Stephen Alexander, Head of City Planning and Alison Shannon, Chief Accountant, gave a joint presentation on how the Council collects S106 contributions received from developers and how the money allocated is spent on capital projects. The Head of City Planning gave a summary of S106 contributions and explained that the payments received can be used for public open space enhancement, the provision of affordable housing and transportation improvements. The funds are collected as part of major planning applications.

The Head of City Planning advised the panel that the Community Infrastructure Levy Regulations 2010 is the key regulation which details what funds can be collected from developers. The Council can only collect money if it is necessary to make the planning application acceptable and must be directly related to the development proposed. Furthermore, it must be fairly and reasonably related in scale to the planned development. The Council is also required under national planning policy to ensure that Section 106 agreements do not threaten the financial viability of a proposed development. This would be based on the findings of a financial viability assessment. This could mean in some situations that the Council would be unable to collect the full Section 106 financial obligations that would be normally be expected from a developer.

The Head of City Planning explained the process when a planning application is received and advised that the Open Space Strategy and Action Plan would also need to be considered.  The strategy sets out the Council's priorities for spending on public open space and is regularly reviewed. The strategy was last reviewed in 2018 and the next review is planned for the financial year 2021 to 2022. The final draft is sent out to Councillors for consultation and is subject to final approval by Cabinet.

S106 contributions from developers is based on a legal agreement, which requires them to pay when a specific trigger point in the agreement has been reached. For example, an agreement may specify that a contribution must be paid when more than 80 per cent of houses on a site are occupied. The money will then be passed to the relevant spending authorities. The money can only be spent for the purpose specified in the legal S106 agreement. The agreement will detail the timescale for delivery. Approval from Cabinet Resources will be required before the contribution can be spent and once approved, the contribution will be included in the capital programme.

Alison Shannon, Chief Accountant, presented a table which gave a summary of the total S106 contributions spent between 2010-2011 to 2019-2020. The Chief Accountant presented details of the S106 contributions expected. The funds are monitored on a quarterly basis and are only allocated to projects when they have been received. The Chief Accountant advised that wherever possible, the Council will aim to leverage external funding to enhance the planned project. The Chief Accountant presented details of scheme improvements in the Parks and Open Spaces Committed contributions since 2010-11 and planned projects for 2021-22.

The Chief Accountant presented a list of uncommitted contributions for parks and open spaces where no specific spend date has been agreed.

The Head of City Planning gave details of parks and open planned projects for 2021-2022 and also details of uncommitted S106 contributions. These are relatively small amounts which are available to be spent on particular areas in the future.

The Head of City Planning advised the panel that S106 Affordable Housing Contributions are relatively rare and such payments are made when a contribution cannot be spent on a site. In this situation the money is either spent on new build affordable housing, or to purchase from the open market, which is then allocated through Homes in The City, a choice-based lettings system.

The Head of City Planning advised the panel that S106 Transportation Contributions are used to make highway or junction improvements, lighting schemes, road safety improvements and contribution to larger corridor improvements to make a development safe. The Head of City Planned gave examples of how previous funds have been used to make improvements.

The Head of City Planned concluded by reassuring the panel that there is robust system in place for collecting and spending S106 contributions. The spend is monitored quarterly by the s106 monitoring group and no funds have been repaid back to a developer. The aim is to use the contributions to maximise the outcomes to benefit the residents of Wolverhampton.

The panel thanked the presenters for the report. The panel queried what would happen in a situation where during the consultation process there was a concern that the planning proposal would be unlikely to meet the required building standards.

The Head of City Planning responded that some S106 agreements have time limits, whereby if the funds are not spent within a certain time period then it will have to be repaid to the developer. The Head of City Planning added that he was not aware of a situation where a suggestion about use of funds from the public during the consultation process did not comply with the S106 agreement. The service would provide guidance to the public during the consultation process to explain what is within scope and what is outside. As long as the money was spent to enhance the provision of a public open space, it will be generally acceptable in planning terms.

The panel queried what would happen in a situation where a developer goes out of business and if there was an obligation on any new developer to make a S106 contribution previously agreed. The Head of City Planning confirmed that in this situation the new developer would not be liable to make a S106 payment.

The panel queried the time limit for the Council to retain S106 contributions and also details on contributions allocated to each ward. The Head of City Planning responded that the S106 agreement will details when and where the money should be spent.

In some situations, this could Council wide to support housing or more specific in, for example funds have to be spent on a particular junction, or public open space or park as part of the agreement.

In past the Council has had some flexibility about where the funds could be spent but Government regulations have since changed to restrict this and increasingly there is a need to be more specific in the agreement about where the money can be spent.

The panel queried the formula used to calculate the level of financial contribution from a developer. The Head of City Planning explained that the method of calculation is based on a complex formula which is set out in the supplementary planning document guidance on public open space. In addition, there will be a need to consider factors such as how much is required to make the demand acceptable to make the development proceed. There will be a negotiation between the Council and the developer to agree this. The Council will try to maximise the contribution from the developer, whilst recognising what is reasonable for the developer to pay and the impact of the level of the contribution on the overall financial viability of the scheme.

The panel expressed concern about the lack of awareness across the Council about the uncommitted funds set aside from S106 contributions and how this was being communicated to ensure the funds were used as intended.

The panel welcomed the information presented and were reassured that only small sums were uncommitted, and also that the funds were being regularly monitored.

The panel welcomed the information that the Council has not had to repay any S106 contributions to a developer.

The panel thanked the presenters again for the report.

Resolved:

The panel agreed to note the report.