Open Spaces Strategy First Stage Issues Consultation

Ended on the 13th April 2015
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Chapter 22 Determining Open Space Contributions including towards Quality of Open Space

22.1 Intended Outcomes

  • To demonstrate specific sites that require contributions towards quality improvement
  • To determine when open space is needed and how location of open space should be decided
  • To establish calculations for commuted sums and off site contributions

Approach

22.2 The current quality vision, which will be refreshed as part of this consultation, for open space is:

“a clean, litter and dog fouling free area that is well-lit and provides a lev-el of varied vegetation and biodiversity, including well-kept grass and other natural features where suitable. The site should be regularly maintained and have suitable parking in close proximity where appropriate.”

22.3 Through consultation we aim to determine whether sites that have specific quality requirements should be identified

(4) Question: Do you consider that the quality vision for open space is still relevant?

Question: How in your opinion should the quality vision be amended?

(1) 22.4 We will seek views whether developments within the accessibility threshold of the site should contribute towards improvement of quality of these open spaces.

(1) 22.5 We will develop a formula for calculating when open space is required using the updated minimum provision threshold and the updated method for calculating the population of a new development.

(1) 22.6 The location of open space associated with a new development is important as it needs to be located so that it is accessible to residents, but does not create noise or nuisance issues to either new dwellings or existing population.

(1) 22.7 Certain types of open space may be unsuitable for on site provision within new developments (eg burial provision, allotments), or the contributions is below a size that is viable (eg sports provision). In these cases it will need to be considered whether off site provision is appropriate.

22.8 We are seeking views about when off site provision is most appropriate and where these contributions should be spent.

(8) Question: Should the District Council always seek to provide open space on site, or are there occasions when off site contributions are acceptable?

(3) Question: In your opinion where, geographically, should off site contributions from a development be spent?

22.9 The Provision for Open Space, Sport and Recreation: Developer Guidance document will contain the calculations for commuted sums for maintenance and off site contributions.

22.10 Views are being sought concerning the level of contributions sought, the length of time that a commuted sum for maintenance is required and the level of a cumulative present value factor.

22.11 In order to calculate the developer’s contribution towards the future maintenance of public open space in the form of a commuted sum under the requirements of a section 106 agreement or other arrangement, the following factors are considered.

22.12 The commuted sum is currently to cover the cost of maintenance over a period of 15 years. As the sum is paid in total in advance, the sum is subjected to a formula using a cumulative present value factor. This formula in effect makes the 15 year maintenance cost equate to 10.4 times the current annual maintenance cost (10.77774 using January 2014 ONS figures). We are seeking views on whether this cumulative present value factor needs to be updated.

22.13 Using this multiplying factor, it is possible to calculate the level of commuted sum that a developer will be required to pay for each type open space.

(1) 22.14 The following formula has been used to calculate the maintenance obligation:-

Commuted sum = ? Mp / (1+D/100) T

where: Mp = Estimated periodic maintenance cost based on current rates.
D = Periodic Discounted Rate (effective annual interest rate)(%)
T = Time period before expenditure will be incurred or cyclical period (years)

Periodic Discounted Rate (D).
The discount rate (effective annual interest rate) is 2.2% which is calculated as follows: -

D = ((LTNBR / RPIX) -1) x 100

Where: LTNBR is the Long Term Neutral Base Rate (Taken as 4.5% ie 1.045)
RPIX is the Retail Price Index excluding mortgage payments, taken as 2.25% i.e. 1.0225 for this example.

therefore D = ((1.045 / 1.0225)-1) x 100 = 2.2%

The RPIX rate is published by the office of National Statistics on a monthly basis and suitable figures for the calculation will be adopted as necessary to reflect any significant long term changes in the rate. Similarly the current rates may be amended to reflect any changes in costs.

(1) 22.15 Views are sought whether this approach should be taken to calculating commuted sums for maintenance, and whether a period of 15 years is an appropriate period for commuted maintenance sums.

(1) Question: The current commuted sum maintenance period is 15 years. Do you consider that this should be extended or reduced?

22.16 For a sum deposited in respect to a future maintenance activity, interest will be accrued up until the activity must be carried out, although over the same period inflation will tend to reduce the value of the deposit. This effect is taken into account by the use of the Periodic Discounted Rate which represents the effective interest rate.

22.17 The calculation is based on the conversion of future expenditure, (the cost of which is known at today’s prices), being converted into a Net Present Value (NPV). This is the sum which if deposited today and invested at the periodic discounted rate would provide the sum required for the activity to be undertaken when it becomes due in ‘T’ years.

22.18 Considering the costs for annual mowing of a new open space. The commuted sum must include for the mowing, cost of mower and labour.

22.19 The cost of undertaking the work is calculated through the integrated contract rates and has been determined to be £850 per annum at current rates. The activity will be required each year as it is the total cost for annual maintenance. Three commuted maintenance sum periods have been given as examples.

22.20 Using the formula
NPV factor = ? 1 / (1 + D / 100) T where D is the Periodic Discounted Rate calculated at 2.2% as outlined above.
Effectively NPV for one item of maintenance:

every year for 15 years = 10.77774
every year for 20 years = 14.21514
every year for 30 years = 21.79260

22.21 Commuted sum for maintenance = Current Cost x NPV factor
For a 15 year maintenance period = £850.00 x 10.77774 = £9,161.00
For a 20 year maintenance period = £850.00 x 14.21514 = £12,083.00
For a 30 year maintenance period = £850.00 x 21.79260 = £15,745.00
therefore the commuted sum required would be

£9,161.00 for 15 years maintenance
£12,083.00 for 20 years maintenance
£15,745.00 for 30 years maintenance

22.22 The tables showing expenditure of these sums are shown in Appendix A

22.23 Off site contributions are currently calculated using rates for the integrated contract. We will consider using the Spons Guide to Landscaping Works, as this will provide a more comprehensive and up to date approach to calculating set up costs for open space. Views are to be sought on this approach.

(2) Question: Do you consider that District Council contract figures should be used to calculate maintenance costs or an industry recognised index such as Spons Guide?

Question: What is you opinion on the method of calculation of commuted sums for maintenance? Is there a more appropriate mechanism for calculation?

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