KHOODEELAAR! TOLD YOU SO! So crass, so insane has been the CRASS-rail-peddling that for the first time, a serious crack appears!

1910 Hrs GMT London Friday 20 February 2009:


AADHIKARonline has taken the Steve Norris piece, below, from the web site cited:


http://www.propertyweek.com/story.asp?sectioncode=38&storycode=3134281&c=3

I disagree with Boris over the Crossrail levy
20.02.09

The politics of property

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By Steven Norris

Last week this magazine covered the two proposals to raise money for Crossrail that have got the development community up in arms: the 2p levy on existing non-residential properties with a rateable value of more than £50,000 in all 33 London boroughs and mayor Johnson’s proposal for what amounts to a compulsory section 106 levy at £19.80/sq ft on new development in central London.

There have been predictable objections to both from outraged retailers, who say the 2p levy will leave them uncompetitive, and from developers such as Land Securities, which faces a potential £20m bill for its Victoria Interchange scheme if Boris goes ahead with his plan.

Contributing factors

But is a contribution to Crossrail by the property industry so unreasonable?

When I was a minister desperately trying to get the Jubilee Line extension through the Treasury, the most difficult part of the negotiations was getting £400m over 20 years out of Olympia & York, the owner of Canary Wharf, as a contribution to the line. It wasn’t made any easier by the fact that the developer was in administration at the time and effectively owned by a consortium of banks.

But those hard-nosed bankers could see that the Jubilee Line was a lifeline for London Docklands. They agreed to a net present value lump sum and the scheme went ahead.

Two lessons struck me. First, that there is no doubt whatever that transport infrastructure can transform the value of surrounding property where the job pool is massively magnified and business access is transformed. Docklands without the Jubilee Line would be nothing like the powerhouse it is now.

But what also impressed me was that while Canary Wharf’s owners paid up, and one or two small contributions trickled in, most of the property owners along the line got a massive benefit for free. And that simply can’t be right.

There is certainly an argument over whether properties in those boroughs that are not directly affected should pay. I personally proposed a scheme of 1 km circles around stations, within which a graduated charge would apply, but I admit that it is easier to say than deliver in law.

In any event, the estimates I have seen are that the 2p levy will add 1% to total occupancy costs so, while no charge is welcome, this one is not likely to be fatal and small businesses are by definition excluded.

On the mayor’s levy, one thing is clear: any extra costs imposed on development – particularly at this time – will be as much of a disincentive as Development Land Tax in all its forms always has been.

I have argued in this column before that, while it always looks attractive to charge new development for a variety of reasons, the reality is that any charge makes that development less likely. The mayor is taking a risk with his proposal because, if he sticks to his guns, I fear many developments that are already in rocky territory financially simply won’t happen.

Boris will be aware of Edmund Burke’s theory that ‘to tax and to please … is not given to men’. He may have to lower his ambitions, as shown by the Howick Place example – where, after a standoff with Terrace Hill over its development in London’s Victoria, he had to accept a fraction of the Crossrail contribution he had asked for.

Neither is the levy likely to win popular approval – but that those who benefit most from a scheme such as Crossrail should cough up some of the cost ultimately sounds fair.

Postscript :
Steven Norris is an adviser on transport and development to London mayor Boris Johnson

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