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SALFORD COUNCIL SET TO ENSHRINE HUGE DEVELOPER PROFITS INTO PLANNING PROCESS
 

Star date: 4th June 2015

DEVELOPER VIABILITY AND MASSIVE PROFITS TO BE OFFICIAL SALFORD COUNCIL POLICY

"We note the Council has supported residential developments based upon viability to support a reduced contribution, and this can be met with local political and community unease" Barratt Homes

Salford Council is set to enshrine huge profits for developers and to waive planning fees officially in line with `viability' reports, despite the controversy these issues have aroused. After a consultation, only with those on its planning data base, the new `approach to planning obligations' is set to be endorsed next week by Derek Antrobus, Assistant Mayor for Planning, and Gena Merrett, Assistant Housing Mayor.

Full details here...


Both online and in the new print issue, the Salford Star has been documenting the loss of 830 affordable houses and £19,275,553 in planning fees and obligations over the last twelve months alone. The Star showed how a developer can make over £20million profit while its scheme can be deemed `not economically viable' in a hopelessly skewed planning process that even both Tory and Labour councillors have fiercely criticised...

"What's been going on behind the door I don't know" said Councillor Karen Garrido at a recent planning panel meeting, while Assistant Mayor for Planning, Derek Antrobus was equally scathing...

"It's totally unacceptable that developer after developer comes here claiming that they can't comply with our policy when our local communities are being robbed left, right and centre" he frothed "If you're in business and invest there's always a risk that you might not make profits but we're told when we're assessing viability that we're supposed to guarantee a certain margin of profit...and it's the public sector that's underpinning their profits. We're told that the economy's booming and then the next day we get developers pleading poverty and saying they can't comply. I don't know who to believe any more..."

While his words sound like fighting talk, next week Councillor Antrobus, along with Assistant Housing Mayor, Gena Merrett, is set to endorse a new `approach to planning' which will enshrine massive developer profits and `developers pleading poverty' into the planning system.

The Salford Star print issue deconstructed the huge document on which this new policy is based, showing how developers' profits of up to 20% were to be taken into account along with other costs when `viability' is assessed, via an equation A-(B+C+D+E)...

`A' is the `Gross Development Value', or income from sales, ground rents etc. From this total is then deducted land costs (B), building costs, including sales and marketing (C), interest costs (D) and developer's profit (E). To this equation was added extra building costs, and, by the time standard Section 106 planning fees (public realm, infrastructure, education, heritage, climate change) and provision of affordable housing were added schemes were becoming economically `unviable' all over the place – which allowed developers to `plead poverty' and avoid paying the city millions of pounds.

The snappily titled Supplementary Planning Document Planning Obligations (or SPD) document went out for consultation earlier this year – but for the eyes only of developers, organisations and individuals already on the Council's planning data base. And, of course, the vast majority of those who responded were developers intent on screwing the city for even more money...

Peel Holdings, as usual, complained about everything but, along with two other developers, even objected to Salford Council's weedy attempt to re-claim some money after it has waived fees for certain schemes. Having waived fees, the Council insists on inserting a `clawback' arrangement, whereby, if developers do make a profit (relying on their honesty) they will pay some Section 106 fees.

Peel, and the others, objected to this, while wanting a clause inserted that worked the other way too – that if, once schemes were completed, the profit was less than anticipated, any fees they had paid would be refunded by the Council. In response, Council planning officers told them to do one... "the developer would in essence be shifting its loss on to the city council. It is not appropriate for the city council to underwrite developer risk in this way..."

While developers tried pushing their luck, the Council report on the consultation unsurprisingly notes that "a number of developers expressed support for the proposed approach regarding the negotiation of reduced contributions where a developer considers that the cumulative effect of policy and planning obligation requirements would compromise development viability in relation to a particular scheme..."

Barratt Homes acknowledged the controversy that surrounds the avoidance of fees by developers... "We note the Council has supported residential developments based upon viability to support a reduced (ie below policy) contribution, and this can be met with local political and community unease" it stated "...the SPD should set out positively why this occurs, in order to reduce or manage such opposition by informing them of the realities of development."

Hmmm. Meanwhile, following the Royal Borough of Greenwich proposing to make developers' `viability assessments' (or `poverty pleading') public (see previous Salford Star article – click here), Salford Council does not include such a clause in the report to be endorsed next week.

Indeed, the English Cities fund, in its consultation response, insists the policy should "recognise developers' sensitivities regarding disclosure of confidential and commercially sensitive information, and should state that the City Council will accommodate developers' desire to maintain the confidentiality of information provided..." 

Since the consultation, the Council has amended the huge profits that developers are allowed to make in viability assessments, reducing this from 20% to 17.5%. But there is the added loophole... "a higher percentage developer profit may be necessary for higher risk schemes"...

A Community Impact Asessment on the policy doesn't refer at all to the loss to the city as a result of developers avoiding millions of pounds worth of fees and the provision of affordable housing. It only stresses the positive aspects from the money it might receive in planning fees. But the introduction to that Assessment explains what the policy is all about...

"A key principle guiding the review is the need to ensure that the city council's approach to planning obligations has clear regard to development viability" it states "The cumulative impact of all financial requirements when taken together with other policy requirements should not compromise development viability across the city. The purpose of the review is not therefore to place additional financial requirements on new development, but to rationalise the existing approach to securing planning obligations to ensure that it is clear."

...Clear to all that `developers pleading poverty' and avoiding fees is set to be enshrined into official Salford Council practice.


To read the Salford Star report into the £19million Planning Scandal and The Secrecy behind the English Cities fund see the print issue – click here




Labor Voter wrote
at 09:34:50 on 07 June 2015
Joe. It is because gays do not understand UKIP. Many think UKIP is racist and hate gays. People need ways to here what they stand for at the top for example.
 
joe oneilll wrote
at 20:51:07 on 05 June 2015
Looks Like London's gay community want to ban us...
 
Michael F in SalFord wrote
at 19:13:54 on 04 June 2015
With UKiP taking part in London's Gay Pride parade as quoted in Pink News this week it seems some political parties are realising they need to connect with all voters to win. I urge the Salford Conservative Party to be highly determined to follow UKiP's example by making policy challenges that will see diversity at the top of the Salford Council agenda, including on getting builders to invest more in social housing. If builders cannot afford the levy let them invest in 25% of their development being socially affordable.
 
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