Purpose

As part of the Council’s ongoing work to address issues identified by an internal audit relating to the monitoring, compliance, and spending of section 106 financial contributions, it has identified a number of contributions that have been received and have either not been spent (or not fully spent), are now beyond their spend-by date, or for which no appropriate use can be identified in line with the terms of the obligation.
It is unlawful to retain the funds without agreement and lawfully the funds have to be returned unless agreement is given that they can be repurposed.
The following actions with regard to these funds have been agreed at Director level and endorsed by the Cabinet member and Place Shaping Group.
A standardised approach is adopted and delegated authority provided to officers to carry out the steps set out below.

Decision

• The repurposing of funds that are time barred is the responsibility of the services to whom that fund is allocated.
• Each case must be considered on its own merits having considered each section 106 agreement in full.
• Decisions should be made based on the size of fund, the nature of the agreement and the degree of departure from the original intent and taking account of the level of risk identified within this report.
• In all cases where funds are repurposed there must be a clear and unequivocal written waiver signed by the developer or a formal Section 106 variation.
• Any repurposing must be authorised by the Director or Head of Service (based on general expenditure thresholds set out on page 169 of the constitution).
• Any repurposed agreements that are above 50K should be subject to a formal S106 deed amendment which can be executed by the planning and legal team under existing delegated authority (authority found in Planning Scheme of delegation at paragraph 20).
• In order to assist in the negotiation of 50K plus funds the Council will facilitate the cost of amending the S106 and the planning team will offer these services support with negotiations.
• A record of any agreed change negotiated by a service must be provided to the planning and legal services for transparent recording and retention alongside the original legal document.
• All decisions must be recorded on the standard template that has been produced by the planning service for that purpose.

Alternative options considered

1. Return the contribution which carries no legal risk but results in loss of contribution which the Council might otherwise be able to retain and repurpose (see further options below)
2. Deed of variation to S106 (formal agreement) which is very low risk, legally robust but has cost and time implications and some developers have already shown resistance.
3. Informal agreement with the developer agreeing to change the terms / waiver of repayment, clearly documented which is low–moderate risk, quick and proportionate for smaller sums but depends on clear and unequivocal written waiver from developer.
4. A combination of Options 2 and 3 linked to the size of the contribution. This would enable the risk to be minimised on the highest contributions.