Community Infrastructure Levy: Merits of Exploiting the Development Process to Pay for Infrastructure - Essay Example

? With reference to CLI (Community Infrastructure Levy Merits of exploiting the development process to pay for infrastructure Course: Date: Infrastructure refers to the basic or fundamental systems of a nation or business. Communication, transportation, sewage, electric systems, and water form some of the examples of infrastructure. Infrastructure also includes equipment and services, and stock facilities found in a country. The most significant components of infrastructure include electrical power grid, telecommunication, and networks like airlines and railways. These particular systems are usually high-cost investments though they are very significant to the economic prosperity and development of a country. A country will basically find it difficult or unable to operate properly without infrastructure. On the contrary, expanding and upgrading infrastructure enables a country to meet the augmenting demands that usually emanate from the economic and populace growth (Eichengreen, 2000). Projects of infrastructure can be funded privately, publicly, or via public-private initiatives or partnerships. Formerly, several governments- to a large extent the largest source of financing for the projects of infrastructure- supported the project finance and infrastructure markets with cash and guarantees. However, this support seems to be no longer sustainable because of the significant sovereign debt and deficits levels in the developed countries. By nature the society needs to maintain the quantity and quality of its infrastructure based on the present and the future developments. A tightening of the budgets of several countries in the recent past had led to the exploration of various alternative resources for the financing of infrastructure. Tax revenues have been deemed insufficient to maintain the huge capital required for the development of infrastructure (Pokorna and Mockova, 2001, p 51). Therefore, most countries have resorted to planning for infrastructure, which involves the exploitation of the development process to pay for infrastructure. With reference to the CIL (community infrastructure levy method, this paper will discuss the merits of exploiting the development process to pay for infrastructure. Planning for Infrastructure A larger number of infrastructural developments constitute a huge capital investment where money is spent to institute the infrastructure. The process of planning for infrastructure ensures the presence of a common understanding between the providers of service, developers, and the other stakeholders (Hanak & Reed, 2009). This concept of planning for infrastructure has been a significant consideration for an extended period and its importance demonstrates the deliverability of infrastructure, which has gained eminence in the recent years (Great Britain, 2008). The planning process for infrastructure is connected to the development tenders and assists in ensuring that the population of worth gets good access to facilities and services required (Crown Copyright, 2012). The priority infrastructure plan prepared by the local governments found in Queensland outlines where the infrastructure of sewerage, water, transport, storm water, parks, and land for the community is to be rolled out to service the communities (The State of Queensland, 2010 and Wright and Cleary, n.d). Community Infrastructure Levy The CIL is regarded as a new system of planning charges that the local planning authorities can apply to raise funds from the developers undertaking new projects of building to pay for infrastructure (Levy, 2011). This planning charge system came into force on 6th April the year 2010 via the CIL Regulations 2010. It permits the local authorities in Wales and England to raise funds from the developers who are undertaking a new building project in the area. The amount collected can be used to fund a number of different infrastructure required because of development (Glaeser, 2012). The infrastructure needs includes flood defenses, transport schemes, hospitals, schools, social care facilities, green spaces, parks, and leisure centers. The charging authorities of CIL in England include the district and the metropolitan district councils, unitary authorities, London borough councils, the Mayor of London, the Broads authority, and the national part authorities. In Wales, the authorities with power to charge the CIL are the national park authorities and the county and county borough councils. These bodies with the mandate of collecting the CIL prepare the plans of development for their respective areas informed by the assessment or evaluation of the needs of infrastructure for which the levy is collected (Department for Communities and Local Government, 2010). A majority of the buildings that people use are subject to this levy, but the ones that people do not normally go or the ones that people onto use intermittently for maintaining or inspecting of machinery or fixed plant are not subject to the levy. When charging this levy, structures that are not buildings such as the wind turbines and the pylons are also not subject to this levy. For the new buildings that are being extended or constructed and are 100square meters or more of the gross internal floor space, or a creation of a single dwelling, the charge remains liable. A number of explanations have been offered to account for the answer as to why development pays for infrastructure. Almost all types of development have certain impact on the need for infrastructure, amenities and services- or benefits from it-so it only remains fair that the development pays or accounts for a share of the infrastructure cost. Equally, it is deemed right that the individuals who benefits financially when the permission of planning is granted share a part of their profits or gain with the society or community that granted it to assist fund the infrastructure needed to make development sustainable and acceptable. Conversely, developers need to be more certain regarding what they are expected to contributed and thus speed up the process of development and that the cash raised from the contributions of the developer are spent in a manner that the contributors feel worthwhile (Department for Communities and Local Government, 2010, p 5). Merits A number of merits have been attributed to the use of this system in funding the infrastructure given that it takes advantage of the development process to account for infrastructure. The CIL, which is a tariff based approach, gives the best framework used in funding new infrastructure to unlock land for development or growth. CIL is faster, fairer, and more certain and remains transparent compared to the planning commitments or obligations that causes delay because of the lengthy or extended negotiations (Sharma, 2010). The other advantage or merit of using this system or method in exploiting the development process to account or pay for infrastructure is that the levy rates of CIL are set in consultation with the developers and local communities and thus provides the developers with a more certain up front or assurance regarding the amount of money that they will be anticipated to contribute (Peterson, 2009). The other advantage that the inclusion of the local communities and developers in the determination of the levy charge implies is that the powers of the charging authority’s remains limited in fixing the levy rates. The limited powers thus shield the communities from oppression by the local authorities (Albelson, 2011). Comparing the levy system with the planning obligations system, only 6% of the entire planning permissions of planning obligations system bring any contribution to the supporting cost of infrastructure whereas even the small developments are able to create a necessity for novel services. This is in contrast to the levy systems, which creates a fairer system having all but the smallest projects of building making a donation towards increased or additional infrastructure required as a result of infrastructure (Public Policy Institute of California, 2006). The other merits that the levy system has over the planning obligations system or method are that it comprises of a far greater legal certainty. The system or method provides the foundation for a charge in a way that the planning obligations method alone cannot achieve easily (Myles, 2004). An examination of the CIL system indicates that prior to arriving at any decision of examining the draft-charging schedule, a formal publication for presentation reasons is done. The periods of the presentation permits any individuals to appeal for a hearing by the examiner in case the charging authority has imposed any other charges on the already published charging schedule (Denyr-Green, 2012). Besides, an examiner is also allowed to reject any form of charging schedule not confronted with the aspects of legislation. Therefore, the aspects of legislation cannot be tackled via modifications (PWC, 2011). The advantage of this provision is that the charging authority remains obliged to incorporate any modifications as recommended by the examiner in adopting the charging schedule thus providing a legal certainty (Jean-Paul, 2009). Examples of successful CIL system or method are the Moreton Bay (2013) and the Authority of South Downs National Part (2012). In conclusion, this paper discussed the merits of exploiting the development process to pay for infrastructure with reference to the CIL system as opposed to the planning obligations systems. The paper concludes that the CIL system has far more reaching benefits and merits as opposed to the other systems or methods. Bibliography Albelson, P.,2011.Financing Transport Infrastructure: Public Finance Issues. Macquarie University, Sydney, NSW 2109. Crown Copyright., 2012. National Infrastructure Plan: Update 2012. [Online] available at :< http://www.hm-treasury.gov.uk/d/national_infrastructure_plan_051212.pdf > Accessed 15 April. 2013]. 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