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The decisions on the most appropriate approach for a local authority to deliver and finance new communities inspired by the Garden City principles will be specific to the project itself. The opportunity to use development corporations to drive delivery has seen renewed impetus as a result of the New Towns Taskforce and Programme. Most important however is that the sequencing of public sector intervention enables the maximum amount of value to be captured from a project to deliver high quality development with public services and facilities. Often the biggest challenge for new towns and communities is cashflow. Funding and finance tools and delivery vehicles need to work in concert to reduce peak debt and smooth cashflow. This section sets out some of the key lessons from case studies and the experience of the TCPA’s New Communities Group, which is collectively delivering over 300,000 homes on strategic sites.
Examples of the most successful major development projects such as Kings Cross in London demonstrate the importance of public infrastructure funding and wider strategic planning decisions. It is impossible to ignore that private investment in such schemes was dependant a large-scale commitment of public funding to support specific pieces of infrastructure. There is an important question whether it is not simpler and more efficient, as well as fairer to the taxpayer, to have such investment controlled on the ground by a publicly owned development corporation.
However, this will not be most suitable option in every case. While the issues are complex, the relationship between delivery model and investment is clear. There are huge opportunities to coordinate significant expenditure to deliver great places. Viability is at the heart of deciding whether a full Garden City approach is right for you. Taking a long-term view and linking finance and delivery approaches makes it possible. Approaches will be diverse, and professional advice necessary to identify the right model in each case, but there remain five headline factors which should drive your approach. Early consideration of these factors is essential to secure better delivery:
A. There is always an opportunity for land value capture
Funding sources for new Garden Cities will be diverse but places can be self-financing over time through the capturing, sharing and reinvestment of land value uplift. While the Garden City model, applied early and comprehensively provides the greatest opportunity for this, there remain opportunities, albeit more limited, to capture land values on smaller sites and those that are some way through the development process.
B. The right delivery body will de-risk the process for investors and stakeholders by building consensus
A dedicated organisation, with the right staff and skills is essential to oversee the complex task of delivering a new Garden City particularly in its ability to draw together diverse viewpoints and funding sources to create a deliverable programme. Delivery vehicles that commit to high standards and long-term delivery make private and public sector investment an attractive prospect on the right terms. Such a body can also provide reassurance for local people as there is a demonstration of commitment to deliver what is promised.
C. Successful places require a long-term stewardship model
It is vital that a proportion of the development values captured through the delivery process are invested in one or more organisations that will look after the development in the long-term, and in the community interest. The right financial model can ensure that funds are available in perpetuity to maintain community assets and provide additionality to the services provided by the council.
D. Strong and evidenced Local Plan policy is important
While established mechanisms such as Section 106 agreements and the Community Infrastructure Levy can help to capture land value uplift, the strongest mechanism available to councils at the moment is the setting of strong, clear and evidenced Local Plan policy. Revisions to national policy have made clear that the price paid for land is not a reason for non-compliance with Local Plan policy. While the position is not perfect, it does mean than local authorities can push back on viability assessments; and where costs for developers may be increased by, for example, building accessible homes, they should be translated into reduced land prices. For this mechanism to work, policy must be expressed early and clearly so that land markets can adjust, as well as being tested for viability at local plan examination.
E. Land values have a limit
It is also important to remember that land values are not a money tree, and there are limits to how much landowners will flex. Likewise, developers that have paid too much for land may simply refuse to develop it. In these cases, the power of local authorities to compulsorily purchase land are key, as is the potential use of locally led delivery vehicles such as Development Corporations. It is not realistic for land value capture to pay for every aspect of all new sites. Some will have major infrastructure costs for transport or flood resilience and public grant funding will be required to unlock the land.
Kingsbrook in Aylesbury, was one of a number of schemes as part of Aylesbury Garden Town, which received £172m in housing infrastructure funding from government. However, there has still been a funding gap of £72m which is being met through S106 contributions. – Image credit: Robert Eva, CC
