The original Crossrail scheme was partly funded through a levy – the Mayor of London Community Infrastructure Levy (MCIL) – on developers and Mr Khan is planning to introduce a successor levy to help meet Government demands that London funds at least half of Crossrail 2’s costs as a condition of it being approved.
‘MCIL2’ – which was consulted on over the summer – is planned to come into effect from April 2019 and would see developments across London pay one of three rates based on residential house values in the borough.
City Hall documents published to support the consultation claim the April 2019 start date is essential “to avoid a charging gap at the end of Crossrail 1 construction and to allow for early funding of the Crossrail 2 scheme.”
However Mr Khan’s rush to introduce the new levy has been branded “premature” by Lambeth Council which notes that “the earliest time by which a bill on Crossrail 2 can be submitted before Parliament is in the autumn of 2019” and says the current political landscape means “it is likely that this will be further delayed.”
The City Hall papers also make clear that Mr Khan would retain all monies raised should the Government decide not to proceed with Crossrail 2, and use them “to fund other strategic transport projects for which there is a significant funding gap.”
In its official response to the Mayor’s consultation, Lambeth says this amounts to him asking councils and developers for “a blank cheque” and “is not acceptable”.
While stressing its support for Crossrail 2, the council says “it appears that the Mayor of London is seeking to ram through MCIL2 even when the justification for this does not yet exist.”
Instead of introducing the new levy ahead of Crossrail 2’s go-ahead, the council says Mr Khan has the option of allowing the current MCIL to continue beyond its planned expiry date to fund any initial work needed.
Lambeth has also taken issue with the basis of drawing up the rates payable under MCIL2 arguing that, instead of using house values, City Hall should be looking to charge more in those boroughs which will directly benefit from Crossrail 2.
It says: “Whilst it is accepted that Crossrail 2 will benefit the whole of London, some boroughs will be benefitting much more than others. There is not one single station in the proposed Crossrail 2 route that is located in Lambeth.
“Lambeth will not benefit directly from either Crossrail 1 or Crossrail 2. Nor are there any alternative rail schemes tabled for implementation in Lambeth that will have the same transformative effect as the Crossrail schemes.
“Crossrail2 will help to relieve increased pressure on the South West trains that run through Lambeth via Vauxhall and Waterloo.
“However, the 200,000 additional homes that will be unlocked along the line of the route will not be in Lambeth.
“There is therefore a strong case that those boroughs benefitting more directly from Crossrail2 should be in a higher charging band than those that will not be benefitting directly.”
The council has also warned that plans to stop exempting office, retail and hotel developments in parts of its borough from higher developer levies, as is the case under the Crossrail 1 funding package, threatens regeneration efforts.
It also warns that Mr Khan’s levy is so high it would undermine the council’s ability to apply its own charge to developers which, like all councils, it uses to fund local infrastructure improvements.
Lambeth’s report highlights how the Mayor’s proposal puts the planned Elizabeth House scheme “under threat”.
“The current Elizabeth House scheme will be liable for £3.5m of MCIL1 and £15m for Lambeth CIL.
“The developers have indicated that they are unlikely to proceed with this scheme and are considering submitting a new planning application for a new scheme possibly in 2019.
“If the new scheme will be anything similar to the current Elizabeth House scheme, its MCIL2 liability will be at least around £13.3m – enough for the developer to have second thoughts on going through with the redevelopment.
“Attached to the Elizabeth House scheme is a S106 agreement that provides for at least £6m (to be indexed from 2014) in S106 contributions that will deliver much improved access to Waterloo station and wider public realm improvements in the station environs. These improvements will not happen if the Elizabeth House scheme falls through.”
Similar concerns have been expressed by neighbouring Wandsworth council.
In a paper to be discussed by its executive this Friday, officers warn “it is anticipated that by charging higher MCIL2…for Crossrail 2, there will be both a reduction in the level of affordable housing in mixed use developments and an associated reduction in infrastructure contributions available for local infrastructure.”
The paper says this is because “councils at a local level have few levers to mitigate the effect of higher levels of Mayoral CIL (beyond fundamentally reviewing and lowering the levels of Borough CIL rates) with the main “balancing element” in financial viability calculations usually being the levels of Affordable Housing arising from developments, or related offsetting “off-site‟ contributions.”
Wandsworth Council leader Ravi Govindia told MayorWatch that “the Northern Line extension, two new Tube stations, and 4,000 new housing association homes, parks, health centres and schools, in fact all the community benefits carefully negotiated for Nine Elms would have never made it off the drawing board had such a burden been in place at the time, and this is what is now being put at risk by the Mayor’s plans.”
Councillor Govindia has also backed Lambeth’s concerns that councils “have no idea how [the Mayor] may spend this tax hike in the meantime while Crossrail 2 remains an uncertainty for at least the next few years.”
