Revolving Infrastructure Funds. Learning from the SW RDA and West of England experience. Antony...
Transcript of Revolving Infrastructure Funds. Learning from the SW RDA and West of England experience. Antony...
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Revolving Infrastructure Funds. Learning from the SW RDA and
West of England experience.
Antony Corfield(07807 452026
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What is the RIF?
• Forward funding of developer contributions required toward the provision of essential infrastructure, unlocking significant sustainable growth.
– Recouping investments through the planning obligations process.
– Reinvesting as funds are returned.
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RIF – what it’s not.
• Not an ‘Investment Fund’ - no return on investment.
• It is not gap funding.
• It is not Public Sector borrowing, but might be accounted for as prudential borrowing.
• Not an off-balance sheet special purpose vehicle.
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Why create the RIF?
• What does it do?– Unlocks development– Accelerates development– Co-ordinate funding– Creates a private sector sourced revolving
fund.
• One model of a revolving fund– Proven concept that works.
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A
Motorway junction improvements require £5m developer contribution.
Development A first into the planning system.
Can not pay, up front, the full £5m required.
Pure S106
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A
Other benefitting developments (B, C and D) at different stages in the planning process.
RIF allows you to forward fund the contributions of A, B, C and D (more than £5m).
Unlocks all the developments.
B
C
D
S106 Tariff/Pooling Approach
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A
Motorway junction improvements.
New sewers.
Combined Heat and Power infrastructure.
Additional bus lanes and routes.
Schools, health, community facilities.
B
C
D
Community Infrastructure Levy (CIL)
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Issues Menu:
• CIL and ‘borrowing’• Forms of support• State Aid• Governance• Programme
Management• Appraisal• Identifying schemes
• Contractual arrangements
• Risk• Private sector
leverage• Small funds v Large
funds.• Infrastructure
Planning
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Potential future forms of Support
Growing Places could be released as:– Forward Funding (RIF)– Loan (Debt)– Equity– Grant– Conditional Grant (Overage)
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State Aid
• Funding Infrastructure and being State Aid compliant:
• Four options:– Charge interest at market rates (not attractive).– Equity investment (equal share of risk and reward).– Fund public open access infrastructure through public
works or joint procurement (RIF).– Seek approval from Commission (best avoided).
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State Aid
• State Aid meets each of the following:– Granted by the State or through State
resources.– Favours certain undertakings or production of
certain goods.– Distorts or threatens to distort competition.– Affects trade between Member States.
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Infrastructure Costs V Funding
-£30,000,000
-£25,000,000
-£20,000,000
-£15,000,000
-£10,000,000
-£5,000,000
£-
£5,000,000
£10,000,000
£15,000,000
£20,000,000
Years 1 to 10
Infrastructure costsCIL collectedRIF InvestmentPublic investmentNHBNet Deficit/Surplus
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Infrastructure Costs V Funding (With RIF)
-£15,000,000
-£10,000,000
-£5,000,000
£-
£5,000,000
£10,000,000
£15,000,000
£20,000,000
£25,000,000
£30,000,000
Years 1 to 10
Infrastructure costsCIL collectedRIF Investment/repaymentPublic investmentNHBNet Deficit/Surplus
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Without RIF
-£100,000,000
-£50,000,000
£-
£50,000,000
£100,000,000
£150,000,000
Years 1 to 6
Gross Costs
Value of Planning Obligation (£15m)
Net surplus/cost
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With RIF
-£100,000,000
-£80,000,000
-£60,000,000
-£40,000,000
-£20,000,000
£-
£20,000,000
£40,000,000
£60,000,000
£80,000,000
£100,000,000
£120,000,000
Years 1 to 6
Gross costs
Value of Planning Obligation (£15m)
Net surplus/cost
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£24m Fund cash flow
£-
£2,000,000
£4,000,000
£6,000,000
£8,000,000
£10,000,000
£12,000,000
£14,000,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year
1st round investments
Contributions back
2nd round investments
Contributions back
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£6m Fund cash flow
£-
£500,000
£1,000,000
£1,500,000
£2,000,000
£2,500,000
£3,000,000
£3,500,000
£4,000,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year
1st round investments
Contributions back
2nd round investments
Contributions back
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Governance (WofE)
Scheme fundingcontracts
LEP Board
AccountableBody
Technical AdvisoryGroup / Programme
Manager
Investment AwardPanel (Chief execs
and LEP reps)
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Contractual arrangements (WofE)
B&NES
North SomersetCouncil
Bristol City Council
South GlosCouncil
B&NES(Sponsor Authority)
BISRegional Growth Fund
CLGGrowing Places
Section 106 agreements and CIL
Funders:
Accountable Body:
Sponsor Authorities (recipients of funding):
Payback mechanism:
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Governance (SW RDA)
RDA Board
ProgrammeManagement
RIF Investment Panel
DfT
Regional Bodies
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Contractual arrangements (SW RDA)
SW RDAAccountable Body
Developers Local Authorities
DfTRegional Funding Allocation
(Major scheme)
Section 106 agreements and/or direct contract
Funder:
Accountable body:
Recipients of funding:
Payback mechanism:
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Planning obligations Circular 5/2005
B23. In cases where an item of infrastructure necessitated by the cumulative impact of a series of developments is provided by a local authority or other body before all the developments have come forward, the later developers may still be required to contribute the relevant proportion of the costs. This practice can still meet the requirements of the Secretary of State’s policy tests if the need for the infrastructure and the proportionate contributions to be sought is set out in advance.
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CIL Regulations60.—(1) A charging authority may apply CIL to reimburse expenditure already incurred on infrastructure.(2) Where a charging authority, other than the Mayor, has borrowed money for the purposes of funding
infrastructure, it may apply CIL to repay that money, and any interest, if the conditions set out in paragraphs (4) and (5) are both met.
(3) Where the Greater London Authority or a functional body has borrowed money for the purposes of funding infrastructure consisting of roads or other transport facilities, the Mayor may apply CIL to repay that money, and any interest, if the conditions set out in paragraphs (4) and (5) are both met.
(4) Condition 1 is that the charging authority has collected CIL, or CIL has been collected on its behalf, for at least one full financial year before the date on which CIL is to be applied to repay the money.
(5) Condition 2 is that the total amount to be applied in any one financial year does not exceed the relevant percentage of CIL collected by or on behalf of the charging authority in the preceding financial year.
(6) For the purposes of paragraph (5), the relevant percentage is such percentage as the Secretary of State may direct or, in the absence of a direction, zero per cent.
(7) A direction under paragraph (6)—(a)must be made in respect of authorities generally; (b)must be in writing; (c)may be substituted or revoked at any time, any substitution or revocation being made by a further
direction in writing. (8) In this regulation “functional body” means—(a)Transport for London; or (b)the London Development Agency.