Yes, it is a combined presentation, which we have sent in already. The document is presented primarily as an aide to the committee. It presents a range of matters which we believe require consideration by the committee prior to finalisation of the legislation. The presentation is based on the experiences of officials in the three authorities as they relate to the practical application of the existing legislation as well as in consideration of any implementation matters that might arise in respect of the proposed vacant sites levy and the modification of planning permission legislation.
Our practical experience primarily relates to working with Part V legislation and development contributions. Rather than present a commentary on the proposed legislation we have taken the approach of setting out issues that we believe require to be addressed. We have listed some practical matters that might be of benefit to the committee's deliberations.
We will set out some observations on the proposals in the areas of Part V and development contributions. We will also highlight, particularly in respect of Cork County Council and Dublin City Council, how the Part V legislation has been of benefit.
The achievements of the existing Part V legislation have been manifold. The Cork county joint housing strategy initially set a 5% social housing figure and a 15% affordable housing figure. This was changed to a 10% social figure and 10% affordable figure in 2009. It responded to the demand at the time. This has been the case in all local authorities in that the Part V legislation has allowed us to respond flexibly to the demands and economic conditions in each authority.
The scheme was widely applied throughout Cork county on zoned land and through development boundaries and smaller settlements. In summary, some of the achievements in Cork county include the delivery of 460 social built units, 1,208 affordable built units, four land parcels and 13 individuals service sites. Significantly, we believe, the scheme delivered €16.2 million in financial contributions. This money was then used for the purposes of aiding the delivery of housing thereafter. In the case of Dublin City Council, a total of €7.8 million in financial contributions has been paid, while the council acquired 1,177 units. This breaks down into 812 affordable units and 356 social units on two sites. In the case of both these authorities and in Leitrim some outstanding agreements are in place but they are not yet completed due to the inability of the authorities to fund the acquisitions at the moment.
The existing legislation is of critical importance. The delivery from that legislation demonstrates that the outturns reflect the good working relationship between the local authorities, developers and the Construction Industry Federation in implementing the Part V legislation. I believe this view is accepted generally by the CIF. Although the federation may have a different view I believe it has worked well.
One question that requires consideration on foot of the proposed legislation is that while the immediate requirement for affordable housing may be diminished there may be a renewed requirement in future as the market develops. It is likely that as prices increase in the market, wages may not increase to the same extent. This creates issues for the model upon which the affordability of housing will be achieved.
Is it reasonable or prudent to apply a 10% Part V requirement across the board, that is, equally to all authorities? Cork County Council's current Part V requirement in our adopted development plan, having looked at the model of housing and the model of affordability, is 14% social and 0% affordable. In the case of Leitrim it is 12.5% social and 0% affordable. That is on foot of extensive analysis of the various criteria impacting on affordability in particular. Therefore, is it reasonable to apply a simple 10% across each authority and thus take away the local decision making which reflects local conditions?
The continuation of the role of financial contributions as an option requires careful consideration and must consider key factors. Where a development has fewer than nine units it will not deliver anything under the proposed legislation. Sites where 10% results in a fraction of a unit or units arising must be considered. Will there be a social housing need in all areas? In other words, there might be areas in local authorities where there is not a social need to the extent that could be met by the delivery of houses. In addition, in many cases 10% might only yield a small supply in rural areas, particularly as the proposal is to apply Part V only to ten or more unit developments.
Increasing the exclusion threshold from four to nine is not recommended for smaller counties such as Leitrim, where the majority of housing developments will have potentially fewer than nine units. It is understood that the proposed threshold provides consistency in the context of the proposed social housing obligation of 10%. However, as I said earlier, in the case of Leitrim its social obligation in its adopted plans is 12.5%.
Another significant factor will be the availability of funding to enable the purchase of Part V units into the future. That is linked with the fact that the proposed options in the legislation provide for compliance of Exchequer funding at the time of validation of planning applications. This might result in difficulties if the national finances at a time of completion of units cannot meet the commitments that were made at the time of validation of planning applications.
Some issues arise in respect of valuation and price calculation. This comes from the practical application of the existing legislation. These require clarification in the legislation and involve matters such as the format for payment and the calculation of price. The concept of a nominal sum should be removed completely. The definition of existing use value requires elaboration and clarification. How would lease to rent accommodation be valued? There may be a difficulty with excluding the value of existing buildings that are to be demolished. These are just some practical implications of the legislation in terms of its application if it were adopted.
Circular 11/12 of 2012, dated 29 February 2012, from the Department of the Environment, Community and Local Government advised that, in negotiating agreements under section 96, Part V obligations should be discharged through mechanisms that place no additional funding pressures on authorities. This led to arrangements being made to accept financial contributions in compliance with Part V requirements. Is it the intention of the new section that these commitments be retrospectively revisited and replaced by one of the proposed options?
We would be supportive of the concept of the vacant sites levy. However, some issues arise. The principle of a vacant or under-utilised sites levy is worthy of consideration, especially if applied within larger urban areas. The process that is set out appears to be unnecessarily long and protracted and, as a result, may prove to be administratively challenging and incapable of delivering the desired results expeditiously. The definition of areas to which this is to apply requires careful consideration. There is reference to a reliance being placed on the definition "census towns", and this could exclude a number of large urban areas in County Cork, for example, Ballincollig, Glanmire, Douglas, and other urbanised areas. There are significant urbanised areas that would have sites to which this proposed vacant sites levy would be applicable, but in the published Central Statistics Office, CSO, data they are not classified as "census towns".
Questions also arise as to whether it is intended to apply this to greenfield land identified for urban expansion on the periphery of towns and cities and whether the lower threshold of a population of 3,000 is too high. Another issue is the definition of under-utilised. For example, is farming land on the edge of a town location under-utilisation? Is application of the levy on private land ownership alone reasonable? The categories for exemption require clarification in that regard.
Is there a role for the vesting of sites that remain under-utilised after a prolonged period and where the levy remains unpaid? The combination of matters and circumstances being considered under the hardship clause could also, we believe, severely limit the potential application of the provision. Too large a proportion of developers and landowners may use this provision, which may render the provision ineffective in its application.
On the head covering the reduced development contributions on permissions not commenced, a table in the submission we forwarded to the committee in advance shows an example of the benefits that arose from the general, special and supplementary schemes that were adopted by Cork County Council. For example, in 2006, those combined development contribution schemes delivered €57.4 million to Cork County Council for the provision of infrastructure. In 2007, the amount delivered was €58.8 million. This amount has dropped at this time. In 2013, it was down to €3.2 million, reflecting construction activity. It should be noted in this regard that the entirety of this funding was expended on capital infrastructure projects of benefit to the county and to the development of a significant supply of housing, office and other development over that period. Without that level of contribution, the Exchequer would have been required to fund this level of investment in infrastructure provision in support of economic growth. Therefore, there is a significant issue in regard to how infrastructure which aids economic growth is to be funded into the future, in the event there is a significant or further reductions in development contributions.
As an example of adjustments made already to some of the schemes, most authorities across the country have made adjustments to reduce development contributions, reflecting the guidelines issued by the Minister approximately 12 months ago. In Cork county for example, indexation of 8% per annum was suspended from 1 January 2009, water and sewerage contributions were reduced by 50% for non-residential developments with planning decisions made on or after 1 January 2011 and also in respect of developments permitted prior to 1 January 2011 and to commence in 2011. Warehousing charges for other non-residential developments were reduced by a further 50% for water and sewerage services in respect of similar planning decisions. Horticulture enclosed development and intensive animal husbandry charges for other non-residential uses were reduced by a further 50%. Clearly, with Irish Water having been established from 1 January 2014, water and sewerage elements of the general scheme are no longer applied by the local government sector. In regard to the supplementary scheme, which supported the development of suburban rail from Cork to Midleton, the charges on office type development within 1 km of that rail line have been reduced from €92.82 to €52.00 per square metre, with effect from 1 January 2014. These are just examples of how Cork County Council is dealing with the situation and reflects the position across the country in regard to how local authorities have responded to the issue of the impact of development contributions on development.
Key issues that may require consideration on foot of consideration of the current proposed legislation include the issue that in order to release housing land, for example in the metropolitan area of County Cork, significant infrastructural development is required, particularly in the area of non-national roads. Therefore, the local authority and that sector across the country needs access to capital funding to initiate works to secure the supply and release of land for housing. This is a significant and pressing issue in metropolitan Cork and is an example of what will be replicated throughout the country in terms of the pressures on local authorities to provide infrastructure to support development.
In the same way, funding is also required to ensure that new residential neighbourhoods are provided with appropriate recreation and commercial facilities at an early stage in their development. The proposals, as set out in the legislation, will be difficult to implement in areas where verification of what is sold or unsold required. It is difficult and resource intensive to inspect all partially completed developments on ongoing basis. The status of units owned by a developer but let for rent also requires consideration.
In regard to the section on modification of planning permissions and permissions part of which have not commenced, we list a range of issues that may require consideration. The first issue concerns whether it would be constitutional to have a "use it or lose it" policy. We put this as a question. Would the proposed legislation be akin to the current section 35 provision, where planning permission can be refused due to past failures to develop? However, it is extremely difficult to implement or enforce this.
The provision as set out is predicated on each developer outlining a development schedule at planning application stage.
The question arises as to whether this is reasonable and binding. It is not so provided and may be difficult to implement. The provision for the extension of the duration of an appropriate period seems to conflict with this provision and requires consideration and clarification. This provision might work best in the case of sites in the centre of large urban areas in a buoyant market. There may be a potential adverse effect on the supply of housing by calling into question the duration of permissions granted, thus creating a level of uncertainty in the decision-making process surrounding the funding and activation of development.
It is hoped the aforementioned matters which are based on the practical experience of officials across the three local authorities in working to support development under the current legislative provisions will be of value to the committee in its deliberations.
