Developer Contributions Supplementary Guidance

Closes 17 Sep 2024

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Legal Agreements and use of monies

Related information

Legal Agreements 

  1. Once Developer Contributions are agreed in line with this SG, a Section 75 agreement will normally be required, although other arrangements such as Section 69 agreements may be made where smaller contributions are to be delivered by the developer or paid up front.  

  1. The Council needs to ensure that contributions are received in good time to allow the necessary infrastructure to be delivered in step with new development. It is anticipated that planning applications will be submitted and construction started at varying timescales. The timescales for delivery will be agreed between the Council and the applicant. Developers will be required to demonstrate that a site can proceed in the short term prior to the delivery of other infrastructure projects that the site would be expected to contribute to. However, the Council appreciates that the timings of payments may have implications in terms of project cash flow and will take this into account in agreeing terms. Nevertheless, in order to protect from funding shortfalls, it will be expected that all contributions are paid in full at a determined point in the phasing of unit completions and/or occupation (may relate to a number of units, a percentage of units, or relate to the completion of a flatted block, or prior to the occupancy of the building for the intended purpose). In any case, it will be significantly before the last consented planning unit.  

Land for schools 

  1. Where a development site includes the land safeguarded for a new school, the site will be secured as part of a legal agreement. The value of the land, as well as the cost of servicing and remediating the site (if appropriate), will be credited against that site’s overall contribution requirement once the Council has confirmed that the new school will be delivered. It is likely that this will be following a statutory consultation process to establish the school location and catchment boundaries. All contributions from other development sites which are attributable to the cost of securing land for a new school will then be used towards the general cost of delivering the new education infrastructure that is required within the relevant zone. If the Council confirms that it requires a school site then following transfer, the land value of this can be credited against the overall value of the required contribution. Future financial contributions can then be adjusted accordingly. If the developer has serviced and remediated the site then the costs of this can also be credited against the overall contribution requirement on an open book basis. If the developer wants these costs fixed within the legal agreement then they must confirm what work will be carried out and provide evidence to be agreed with the Council that demonstrates what these costs are likely to be.  

Index and Repayment 

  1. The Council will continue to collect contributions towards the delivery of infrastructure in Part 4 of City Plan and in contributions zones in the guidance even after infrastructure has been delivered. This may be when the Council or its partners have delivered the infrastructure in advance of the construction all the contributing sites. This also includes large cumulative infrastructure such as the Edinburgh Tram Project.  

  1. Any monies collected towards healthcare projects or actions on the trunk road network will be forwarded to NHS Lothian or Transport Scotland once the relevant project is confirmed.  

  1. Contributions collected within a specific zone can only be used for the actions within that zone. If there are more than one action within a zone, legal agreements should specify what action or actions the contribution can be used for.  

  1. Model agreement was updated to make the process of drafting and agreeing terms more efficient. 

  1. Indexation will always be applied to all payments for infrastructure contributions. This is based on the increase in the BCIS Forecast All-in Tender Price Index from the current cost date shown in the relevant infrastructure Appendix to the date of payment. The most recently calculated cost will apply – this may be in the most recently published Action (Delivery) Programme.  

  1. No indexing will be applied to payments towards land.  

  1. The Council will hold contributions towards healthcare and education infrastructure for 30 years from the date of construction of new school / healthcare infrastructure. This is in order for payments to be used for unitary charges associated with infrastructure projects which have been delivered through revenue based funding mechanisms. In other words, infrastructure that has been delivered in advance of the completion of all housing units, front-funded by other budgets in advance of recouping costs from developer contributions. Contributions can include the cost of borrowing and servicing debt that the Council has had to secure in order to deliver infrastructure in advance of the majority of developer contributions being paid.  

  1. For all other contributions, payments will be held for 10 years. If the actual costs of delivering the new infrastructure are lower, S75 legal agreements can make provision for the repayment of unused contributions. In addition, applicants have the opportunity to ask the Council to consider modifying existing S75s to reflect contribution rates that have been updated to take account of up-to-date costs.  

Repayment 

  1. Legal agreements currently include a clause that any monies not spent within the stipulated period or any underspend (more money collected than was needed to fund the delivery, or more development came forward) can be requested by the named party in the legal agreement for repayment / return.  

  2. Contribution zones calculate proportionate cost estimates based on estimated housing outputs of relevant development proposals within the zone. If more housing comes forward, either because of a higher housing output or additional ‘windfall development’, there is potentially more contributions than expected. Provisions in legal agreements that allow for repayment of unused contributions could be used to make adjustments in contributions.    

16. Do you agree with the Council’s approach to the use of legal agreements to secure contributions?
17. Do you agree with the proposed timescales/timings for the payment of contributions?
18. Do you agree with the approach to secure land for schools?
19. Do you agree with the Council’s proposal to continue to collect contributions?
20. Do you agree with the Council’s proposal that contributions are forwarded onto relevant service providers?
21. Do you agree with the Council’s proposed approach to indexation?
22. Do you agree that contributions can include the cost of borrowing and servicing of debt that the Council has had to secure in order to deliver the infrastructure in advance of the majority of developer contributions being paid?
23. Do you agree with the proposed approach to repayment?
24. Do you have any other comments on Part 1 : Introduction and General Principles of the draft Supplementary Guidance?