I thought an operator had been sought for Bayscape - Wyndham hotels IIRC

It was Wyndham, sounds like they've pulled out for one reason or another then ? If that's the case then it's a bloody shame but hardly surprising.

If this scheme is to survive at all I guess changing the development to just delivering the housing and reserving the tower/hotel element until a later date when more cash and an operator are available makes sense.

It's such a shame it really is, I was so excited about this development. The skyscraper geek in me was really hoping for that tower to come off, it seemed to be such a quality development overall and that tower was just stunning. I can't believe how many planned towers we've ended up discussing over the years on this forum had that have gone nowhere

Totally agree with you Kyle - this was going to be pure quality, still we'll continue to watch that space and when the ISV is thriving - who knows!

Regarding other towers discussed here... I can't think of any!

I see the Glass Needle therapy sessions are going well Paul ?

Glass Needle - that sounds exciting - where? when?? it's a shame they're putting a building in wood st that would've been a great location for this glass needle!!

Hrm, I must say I'm a little bit worried that the developers are trying to pull the wool over the council's eyes here.

£400,000 S106 contributions for a development of over 100 flats with a market value of around £20-25 million, say, seems pretty low.

Bayscape was proposed after the financial crisis, and not before. And if anything, in the last year or so the market has improved substantially (given the government's attempts to pump up demand via the various subsidy schemes for mortgages), and this looks set to continue. Other developments seem to be coming back on stream, with it looking like progress will be seen on a range of developments in Cardiff.

So if anything the scheme looks like it would be more viable than a few years ago. And funding availability for property schemes is also improving (witness the re-start of spec dev and increase in commercial property transactions).

I'm a fan of the project still, and of Chris's (earlier) openness to engaging with people like us. However, his interests are the profitability of his investments, and reducing S106 obligations can help boost profits. I think the council needs to be careful not to give a windfall profit to the scheme, and to ensure these reductions really are needed to make it viable (Cardiff pointe is providing, proportionally, larger S106s, for instance).

I agree it does seem very low.

However, it should be noted by those advocating that Cardiff's growth should continue to be developed solely on brownfield sites. Brownfield sites are far more likely to provide fewer S106 contributions than greenfield sites, due to the costs involved.

Also, it serves to demonstrate continuing uncertainty in the absence of an LDP - I think the developer would have less ability to vary S106 contributions if there was an up-to-date development plan.

in fairness, the document states the new s106 requirement should only be for the additional dwellings rather than the 105 (or was it 109) dwellings that had previously been granted planning. this actually seems fair to me:-

the first 105/109 dwellings have been granted planning subject to s106 condition type A

the next 50 or so dwellings which are the subject of the amendment and consequently only those new dwellings should be subject to s106 type B

Looks like the head of planning has given a provisional go ahead for the reduced costs. (Looking at the LATE REP SCHEDULE document attached to 13/00310/DCI)

About time! The site looks all good to go.

All sounds pretty positive, but does this mean construction is imminent?

Haha imminent is a strong word to use in relation to bayscape.

I'm guessing there will be a few weeks to get legal work completed (hopefully) then it will be upto Wilmott Dixon when they can make a start.

I hope we can see real work taking place by June. (I won't say which year )

http://cardiffian.jomec.co.uk/2014/03/14/planning-scheme-in-the-bay-could-set-a-dangerous-precendent/

am I missing something, isn't £400k better than nothing. This is where the public sector worker/politician/bureaucrat doesn't live in the real world. The state is being given £400k by a business for no other reason that it has been told to do so from legislation created by - you've guessed it - the state.

perhaps the councillors would like to dip into their own pockets and make up the shortfall if they feel that strongly about it. there is nothing stopping them.

I think this does set a dangerous precedent.

Jantra, I think this is one of the times where your 'state is bad views' blind you. The reason we have S106 obligations is two fold

1) is that the granting of planning permission substantially raises the value of land. S106 is a way of capturing some of that increase in value for the state rather than give it all as a windfall to the landowner. It is a form of redistribution from those who have had a windfall gain to the rest of society (e.g. lower council tax, higher spending)

2) developments impose external costs on others. That is the whole reason for operating a planning system in the first place: developers acting in their self interest would be seeking to maximise their own return and that could often result in costs being inflicted on neighbours (e.g. through over-shadowing, pollution, overcrowding etc). Effectively markets are missing (the market in trade of rights-to-light, or rights-to-road-space etc), and the planning system is a way of trying to replace markets with consultation, administration etc. Not perfect, but its why we have it. The S106 arrangement is a way of trying to put a 'price' on some of the external costs of the development (e.g. contributions to transport, schools, open space etc).

So in this case, if we thought the initial assessment was correct as (a) a tax on planning gain, and (b) compensation for externalities, reducing it wouldn't be a good idea. If the development can't pay for itself after these costs, fundamentally it isn't financially viable as these are 'proper costs' in the same way construction costs are.

And it also sets a dangerous precedent, showing the council will bend to developers who hold their ground.

Now it could be the case that the initial amount was excessive. I'm not sure. But £400,000 does seem low for a development of this size £60 million. The council's documents aren't clear but my reading is that because this modified the initial consent, the £400,000 refers to the S106 payment for the entire development and not only the amendments (as someone else suggested). That is an S106 of 0.66% of the value of the development.

The reasoning behind it doesn't make sense to me. The apartment market is now stronger than it was back in 2010 when they initially signed the S106 agreement, especially with Help to Buy in place. Prices are higher, transactions are higher. Witness the return of developers to Cardiff.

So either they were overly-optimistic back in 2010 and signed something they could not deliver (and given how much 'homework' they said they were doing, that is a bit worrying); or that they have been able to fool the council into letting them keep more of the 'profits' from the development.

To me this is very worrying, and I'd go as far as to say I'd have preferred the council to refuse permission for this amendment: if this scheme isn't viable, let another one be proposed that is, or call Bayscape's bluff.

Cambo

The only reason that the land increases in value is because someone has the capability to develop it. s106 is therefore a tax before you have even generated any wealth. How equitable is that? I also don't buy the argument that s106 allows the council to share in the increase in land value - the council aren't doing anything to increase that value so why should they profit from it? Notwithstanding that little point, it is the developer that is taking the financial risk, it is the developer that is creating jobs and wealth for the economy and it is the developer that will be ensuring council taxes can be generated from completion of the development. Without the development no extra council taxes can be collected. with the development (at no cost to the council) more taxes are collected. So it is unreasonable to levy taxes upfront when the developer is going to ensure the council collects many millions in taxes each year.

I agree regarding the externalities argument and also understand the need for planning, albeit at a much reduced level. I've stated previously planning should be about strategic aims and allow the developers to develop what the markets require to be built as long as they meet the requirements of the overarching framework. If there is no market then it won't be built. This is not just about new development but existing planning laws - businesses wanting change of use and so on. If the people did not want it then it would not survive. The whole concept of planning has moved away from its original purpose of achieving strategic goals and now we have the state micro-managing where and how what gets built and when it is built.

An S106 or a 'planning gain supplement' picks up the fact that the wealth is created by the act of giving the planning permission. Land with planning permission for housing sells for millions an acre, compared to thousands an acre for land without such permission. Because we have a planning system, there are distinct differences in value between land with and without planning permission that has nothing to do with the actual value created by the development itself - its purely the right to develop (the permission) which causes the value to rise. You can realise that wealth by selling the land. And, normally payments are phased so you don't have to pay it upfront (councils understand liquidity).

"If the people did not want it then it would not survive."

This is an argument I have made in relation to the likes of Tesco expresses opening up. It only holds because I believe the externalities associated with Tesco succeeeding and small shops closing are small enough to ignore from a planning perspective. More generally though, this is an argument about private benefits exceeding costs of development. If people don't want houses of a certain type, they won't buy them. But it could be the case people do want houses with big walls that overshadow other people's gardens, or to live in an area that is already congested (because most of the costs of the extra congestion fall on others) - but the social costs imposed mean one should intervene.

The argument you state is an argument to allow development where the social costs look low enough to ignore (the social costs are nearly always a subject of debate, of course). Its not an argument against planning in general.

The only reason this land is worth anything is that the state funded the construction of the Cardiff Bay Barrage. How could you ignore that minor point! You are as usual spouting utter gibberish and looking at everything from a narrow greed based frame of mind.

Public spending increases the value of property by many means, roads and other transport infrastructure, parks eg Roath Park, the better schools, flood defences (the barrage is a prime example of that type the Thames Barrier another). Such spending adds value to privately owned land.

Cardiff Bay represents a joint risk, and land is not a commodity that is being created by the developer, it is definetly finite in extent and so while a developer has some risk the land is unlikely to suddenly lose all value (until we melt the ice caps). Many so called developers either do not have the capability to develop land in Cardiff, eg Glass Needle or sit on the land, doing nothing, and scoop a capital gain from the rising market in land values.

Any final council taxes are paid by the eventual tenants, not the developer, and in a country with a shortage of housing finding tenants should not be too onerous.

Land in the UK has been a guaranteed way to make money since WWII the risk has generally been very low. The Westminter and Cadogan families are testament to the value of property ownership as opposed to actually making things.

read what I have written and then read what you have written. I am talking about planning in general. perhaps you can explain how a development in Grimsby is anyway related to the Cardiff Bay Barrage?

correct, this is why developers have to develop the infrastructure first. not only that, the councils are then the recipients of additional council taxes.


no one owns the land Jeremy. that is man's fragile little ego at play. the land is for everyone and it is not for the state to suggest it owns any parcel of land.


did you really just type the first sentence. I expected much better of you. perhaps you can explain why the tenants would need to pay council tax if the development doesn't go ahead? Of course no tax would be payable, therefore it follows in a very straightforward and obvious manner that without the developer there would be no extra council taxes collected.



perhaps then we need to free up the planning system so that there is no great disparity between land and land with planning. only then will we see land values fall to a more realistic level.

it is madness to think that the state can lay claim to how, where and when land can be developed. if you think man is special and needs these privileges, google 'pale blue dot'

Jantra - sometimes you talk sense, and sometimes you don't. On this issue you aren't talking (economic) sense. You also have a habit of creating straw men.

Re: Barrage, Jeremy was using a specific example relevant to this particular case, before going on to more general examples. Your response to that point doesn't really make sense. When you say "this is why developers have to develop the infrastructure first" - what do you mean here? The roads and sewers within a development? They aren't really 'infrastructure' but an integral part of the development. Jeremy is talking of the ancillary infrastructure needed to service a development, which generally, needs to be secured by S106's (on occasion for very large developments, the private interest of the developer is to provide these services). So it seems your point requires the existence of the obligations you think shouldn't exist. And council tax isn't a "profit" for the council. Council tax payers pay it in return for services - extra bins need collecting, extra roads need maintenance, extra kids need teaching, extra OAPs need meals on wheels etc.

The council tax point is now moot. But the issue is that if a particular development doesn't go ahead, some other will, so the council tax will still be paid. Effectively it is the demand for housing that creates the supply - and thus the demand that creates the council tax. In the long run, any particular developer is irrelevant to the total housing stock and council tax base.

And "it is madness to think that the state can lay claim to how, where and when land can be developed." As I said, Jantra (or URBANO?), with externalities you need either some administrative-regulatory restrictions, or some way to create a market in the things we care about (views, pollution, congestion etc) so that developers pay the true social cost for development. Otherwise you end up with inappropriate development - take a look at Houston for what you get even if you abandon 'zoning' (let alone full planning controls) - strip clubs next to Toys R Us.

Now the S106 set up is a blunt instrument. But taxing planning gain is a legitimate tax given the planning system, which is a system which, although probably in need of relaxation and reform, has a real reason to exist. It is fairer than taxing earned income (which is derived from effort), for instance, as the gain is purely the result of the permission, rather than the actual construction and investment you put in.

Now you're giving me ideas for the fallow plots of land at our International Sports Village....

not everything can be viewed through economic theory. Having a different viewpoint and seeing things in a different way does not necessarily infer a straw man either.


of course it makes sense. I made a statement which was specifically about the general s106 and Jeremy then went on to state that s106 was a direct consequence of the barrage. That is absurd hence why I asked by developments in Grimsby would relate to the barrage. not every development would be underpinned by previous state developments.


perhaps you can elaborate? I see the developer putting in roads, paths, sewers and so on as fulfilling an obligation towards infrastructure. What other infrastructure are you referring to?


I am saying that the extent of the developers obligation should be the development and its direct infrastructure and not the wider community that you want s106 contributions to go towards.


that is a fair point but the council tax can only ever be paid if the development goes ahead. therefore whoever develops the site is directly responsible for the additional council tax revenues. without the development it would not be possible to collect any additional revenues.


not at all, we have huge demand for housing in the UK and many developers, but we still have under supply. Without the developers spending the time effort and money on such developments the council can wish for these new houses all they like, they are not going to happen and thus no new taxes will be collected.


Where have I said abandon planning? I haven't, what I have said is lets revert planning back to exactly that - strategic planning rather than micro managing each development. The Council has stated in its LDP that it wishes to see mixed use on the Ferry Road site. lets say the document says 2,000 houses, 1m sqft of office space and a good mix of retail/hotels. That should really be the extent of the council's remit, it has stated what is required and should let the developers get on with it. Now I do agree where there are other considerations such as neighbours etc then there does need to be a degree of further scrutiny, but not to the level that local authorities undertake their planning activities.


how can you say there has been a planning gain? the developer hasn't made any money as of yet. One of the principles of UK taxation is that gains or income must be real and quantifiable. Until the development is completed it isn't possible to state what the overall gain would be.

I also go back to my point that the value is perceived only because the state has granted permission. The state is also a recipient of any increase in value via this tax which really is an unethical approach and would, if it was either a natural person or body corporate, be subject to the 2010 Bribery Act. It is obscene that the state can benefit from granting permission in this way and in any other jurisdiction we would call this corruption.

Practically the whole of Grimsby is at serious risk of tidal flooding and is dependent upon its manmade coastal defences (see the enviroment agency website flood maps) and Owen Patterson has spent another £14M on a flood project in Grimsby docks. This spending proved it worth this winter and not just in Grimsby, Hull is largely below sea level, the whole of Central London could well have flooded but for the Thames Barrier, The Jubilee River spillway, cost £110M, prevented flooding in much of the urbanised Thames valley (although directed the water right at Wraysbury). Practically every major settlement in Britain is dependent to some degree on flood defences provided by the state (not all I know).

In June 2007 in the Yorkshire and Humber region alone, a staggering 23,479 homes were flooded, along with 3,718 businesses. In 2013/14 some 800-900 properties have been flooded. Thats the value of State provision.

Anyway this post is about Bayscape and that land again only has value and development value because of public spending, and the presence of such defences such as the barrage increases the value of the land so protected. So the level of any S106 payment is related directly to the additional value accrued because of public monies.

The granting of planning permission in itself gives a windfall to the landowner who can often sell with a gain, having done little to accrue the gain.

Yes the S106 payment is paid before any gain or income is made, but it is not the only example of such taxation before a penny is made or received - stamp duties, fees for use of radio frequencies or oil/gas drilling, council tax, Capital gains tax on gifts, or the TV licence fee payable even if you do not watch the BBC. It is not unique and a Land Value Tax would be fairer and more progressive, but you would not like that either.



While the state is not perfect in deciding to how, where or when land can be developed I would be no fan of letting corporations or rich individuals free reign either. Farmers have had centuries to get it right in the UK but are in large part responsible for the UK being a wildlife desert. Humans are not very good at protecting the natural world or urban living.

The infrastructure I refer to is the infrastructure outside of the development boundaries that the residents of the new development will rely on - roads, public transport, parks, schools etc - and put extra pressure on. That is the 'social cost' of the development. The additional council tax and grant received when population rises may pay for some of the day-to-day costs, but not the up-front investment costs (e.g. building an extra classroom, or widening the public highway or building a new park) for dealing with such externalities.

The principle is much the same as pollution. We put taxes on carbon emissions because the private costs of burning fossil fuels (e.g. buying the coal) aren't the full costs: there are social costs from the pollution and we want the polluters to take those costs into account too when deciding whether that pollution is profitable/worthwhile. Its the same with a development: we want the developer to take into account the wider costs on the rest of the community, not only the private gains from the development. One rationale for S106 obligations is that they are a blunt way of trying to do that (rather than trying to on a case-by-case basis work out the negative externalities - or perhaps, positive externalities - of a development and requiring side payments to others in the community).

The other justification is that the planning system creates what is known as economic rents: the granting of permission to a piece of land raises its value dramatically creating a wind-fall profit for the land-owner. Taxing such economic rents is economically efficient as it does not distort decisions in the same way as taxing income or investment or consumption. So, in principle, you can raise the same revenue for lower economic cost by taxing rents. Its similar reason to why countries have higher taxes on natural resources (so called location-specific rents) - although there the rents are a result of nature, instead of a result of government policy. As well as being economically efficient it might also be seen as fair to tax rents. Why should one farmer get millions an acre as he has just won outline planning permission, but another up the road get thousands an acre because he is outside the development boundary?

Planning gain taxes does give the chance for both:
a) Outright corruption - although planning more generally gives opportunities for corruption, and by swallowing up a large part of the potential economic rent, planning gain taxes give less for the developer and corrupt politician/bureaucrat to bargain over, perhaps reducing corruption.
b) Agency problems - the state not acting in the interests of 'society' as is assumed in the basic economics models here, but as an actor in its own right, with interests that might diverge from society. That is bureaucrats grant permission in exchange for planning gain tax, even though the development is 'bad for society' because the costs aren't borne by the state apparatus but by some politically weak groups (e.g. sometimes its argued they put crap things next to poor areas)

That calls for robust monitoring and the democratic process though, not for abandoning something which helps share the rents created by the planning system; and helps ensure developments only take place if their social gain exceeds their social cost (not only private gain exceeding private cost).

Cambo

we'll have to agree to disagree on this one. the fundamental principle of taxation which is enshrined in law (TMA1970) is that taxes are only due when either a gain or income is realised, duties and excise is charged when a product is sold, when documents are stamped and so on. you are describing a tax on a potential increase in value. this contradicts the fact that planning time-frames are finite and repeat applications are necessary if the time frame expires. it must follow that if planning increases value then removal of planning decreases value in which case the increase in value is perception rather than fact.

the s106 is additional funds through the back door. it should not be for the developer to have to fund the cost of society beyond the development boundary - that is for society as a whole. the developer creates the new infrastructure up to the development boundary. if the developer has to fund the marginal impact of schools, hospitals etc then what are our other taxes for? Likewise council's receive funding from Westminster or WG based on population so any development that increases the population of the local authority provides greater resources on top of the economies of scale that we should see from providing services to a larger population.

too much emphasis is placed on the state legislating and taking what they deem is acceptable yet one of the underlying principles of the UK taxation system is that it is not designed to be fair but to place the greatest burden on those with the most resource. Just because a development costs £50m does not mean that the business is awash with cash. We have seen how such a development as Bayscape has struggled to get off the ground even in a recovering economy and it isn't helped by the state demanding its piece of the cake before the project has even started. We need homes, jobs and development and this type of tax before wealth has been created, certainly in Wales where margins are smaller, are contributing towards developments being still born.

The developer is funding the infrastructure (capital) and the resident and businesses are funding the ongoing maintenance and service costs (operational). There really is no cost to the state. If the requirement is to build schools, doctors surgeries, parks, open spaces and so on, then make it part of the overall strategic planning consent, without which the development as a whole cannot go ahead

Cardiff council have finally given formal permission for development of the 2 phase approach.

The document was attached on 4th July 2014, so assume that was the date it was granted.

For those interested it can be accessed:
1) Go to planning register: http://planning.cardiff.gov.uk/online-applications/
2) Search for: 13/00310/DCI
3) Click "Document" tab, and view the decision notice.

Hopefully this means things can start to move on. Maybe all the action from the other end of the sports village will kick this one up a gear.

Can Cardiff sustain to huge luxury hotel towers though? They would be an impressive sight to behold.

whilst it might kick things off, the bit we all want to see built is in phase 2....anyone have any idea of timelines...

It says in the report not long after phase 1. Hopefully, they won't waste much time because the other tower is surely imminent too.

While there is clear movement on both sides of the ISV, I dont think either of the towers are imminent. My guess is they will be just about the last thing to be built on both sites. If either of them get built, with scaled down versions also a possibility.

As far as Bayscape is concerned I'd now just be happy to see construction begin on the apartments. I'm sure Christopher and his team genuinely intend to build the hotel tower at some point but that time has to be right for them and I guess their investors will want to see some money come in from the apartment sales first.

The one thing I'm curious about is the hotel operator. Are they still interested in the city ? If so are they prepared to hang around for this development or are they lookin at alternatives ?

That's an intesting question, Kyle. I think it rather depends on whether they were keen on entering the general Cardiff hotel market or whether they saw the ISV as a resort / destination in its own right. I suspect the latter - in which case they might hang about.

Just to let you all know that there is nothing to report.

Glad you are still on top of things Christopher.