Crunch pain hits Birmingham City Council planning deals
Planning deals meant to benefit Birmingham City Council are proving hard to nail down. Paul Dale reports
Only a small fraction of the cash promised to Birmingham City Council by developers in return for obtaining planning permission has been handed over and spent during the past decade, new figures show.
Since 2000, the council has signed 661 Section 106 notices worth a total of £105 million.
The aim of the legally binding agreements with builders and development companies is to secure cash to improve community facilities close to the site of planning applications.
But little more than £6 million of the total cash pledged has been received by the council and spent in full.
A further £40 million sits in a council bank account and is waiting to be used on projects, ranging from traffic calming measures to children’s playgrounds.
And more than £50 million appears to have fallen victim to the recession.
The money does not have to be handed over by developers until work begins on the projects for which planning permission has been given.
Major city centre schemes such as Arena Central and the V Building, the British Land Tower in Colmore Row and redevelopment of the former Bank of England premises in Temple Row have been put on ice for the time being along with the second phase of the Snow Hill scheme.
The council stands to gain well over £10 million in Section 106 money for these projects, but only when construction gets under way.
Planning gain money from city centre schemes is regarded as a vital source of income towards the cost of the proposed Midland Metro tram extension from Snow Hill Station to New Street Station and for a number of road improvements.
During this year several major development firms have approached the council asking either to renegotiate their Section 106 obligations or delay making payments in the light of deteriorating economic conditions.
St Modwen, the company behind the huge Longbridge redevelopment scheme at the former MG Rover works, secured permission to reduce its up-front Section 106 contributions from £35 million to £17 million with a promise to pay more as market conditions pick up.
Arena Central developers won approval to start site clearance work on the former Central TV studios site in Broad Street without paying £5 million up-front in Section 106 money. Normally, moving demolition crews onto the site would have triggered payments to the council, but the planning committee agreed the cash could be paid in three instalments.
Major regeneration projects mothballed by the recession mean that the council is missing out on millions of pounds.
The £550 million Martineau Galleries mixed-use scheme by the Birmingham Alliance, for example, is backed by Section 106 agreements totalling £10 million – but the money will not be handed over until work on-site begins, and no-one is saying when that might be.
Council lawyers are increasingly resorting to action against firms defaulting on planning gain payments, although it is recognised that negotiation is more likely to achieve a favourable result than taking cash-strapped firms to court.
The vast majority of Section 106 payments, however, are connected to planning permission for small-scale development, typically building a few houses on small parcels of land in the Birmingham suburbs.
A virtual halt in house building during the recession has hit the council hard.
Regeneration scrutiny committee chairman Tim Huxtable explained that two planned developments in his own Bournville ward, worth a total of £263,000 in Section 106 payments have not yet taken place because of a collapse in the housing market.
One, on a parcel of derelict land off the Pershore Road, is for 46 houses.
Coun Huxtable said: “The builder has planning permission but he has put the project on hold until the housing market picks up.
“We can’t get our money until work begins and there is no way of telling when that might be. It’s very frustrating.”
He is urging the city’s 10 constituency committees to spend the planning gain money that they do have as quickly as possible. He added: “The money is there to benefit local communities by improving facilities.”
The impact of the economic downturn can be seen by a sharp fall in the number of Section 106 agreements coming on stream. In 2006, 102 agreements were signed, a record number. By 2009, only 43 agreements had been approved.
Regeneration scrutiny committee members have expressed concern about a failure by constituency committees to spend Section 106 money quickly enough.
