Proposed Land Development Charge to Fund Community Investment 

Friday 23 June 10:56

A consultation has been launched on the possible introduction of a Jersey Infrastructure Levy (JIL).

The Minister for the Environment is proposing the introduction of a broad, low and fair charge called a Jersey Infrastructure Levy to ensure that when land is given permission for development, the owner or developer contributes a small amount of the profit to essential community infrastructure. 

When planning permission is given for development of land, the permission itself generates an increase in the value of the land. A levy would allocate a small percentage of the profit from land development to improve the quality of neighbourhoods affected by new development.

Examples of what it could fund include:

•    new and improved streets, safe play spaces and recreational facilities, parks, tree planting and community gardens, such as the Millennium Town Park and the Weighbridge 
•    improvements to public transport services and facilities, like more bus shelters and improved services 
•    pedestrian improvement schemes and new footpaths, such as improvements to town streets in Conway Street and Broad Street
•    new cycle routes, such as the Eastern Cycle Network or the St Peter’s Valley Cycle Path
•    improvements to make areas more resilient to climate change, by introducing sustainable urban drainage schemes to help manage surface water, more tree planting to provide shade and cooling, and better flood defences.

A set percentage of the levy would be given to the parish in which the development is built to fund parish improvements. 

The Minister for the Environment commissioned a study on whether a JIL would work in Jersey. The viability report, which includes local professional and industry input, is published today, and shows that a levy is workable and would allow construction companies to continue to make a profit on developments.

The proposed rate has been set at £85 per square metre on new developments which create over 75 square metres of new floor space (roughly the size of a two-bedroom apartment), and all new residential units with an increased floor area. It is proposed that affordable homes and development undertaken by charitable trusts would be exempt from the charge. 

These rates would be expected to generate between £1.5m and £2.5m a year and the fund would be managed by the Minister for the Environment to ensure that it was used for the delivery of essential community infrastructure to improve the quality of urban neighbourhoods and parish centres.

Deputy Steve Luce said “Land in Jersey is at a premium and permission to develop immediately makes it more valuable. But development brings with it more pressure on the surrounding community. We think it’s fair that the land owner or developer who makes a significant profit out of permission, should also make a small contribution to improve the quality of life for people in that community by improving or providing new facilities or services.

“We know JIL is viable in Jersey, we know it won’t push up land prices or make homes more expensive, but we think it will ensure that through a straightforward, transparent and up-front process, there’s some investment in a community affected by development.” 

The Minister added “I’ve discussed it with the development industry, and now I want to know what the broader public think on the principle of a levy, before we put it to the States later this year.”

The report allays concerns that house prices would rise to pay for higher land costs. Affordable homes will be exempt from the levy. For other types of development, the authors say Jersey’s housing, commercial and office space markets are all competitive and any levy would be a small part of the overall cost of a new development. It is expected that developers will either negotiate to pay less for land they buy in time, or absorb some of the cost in order to keep prices competitive with existing developments. 

The consultation runs for ten weeks until Friday 1 September 2017. 
 

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