Travel plan bonds and monitoring sums in an agreement

A travel plan bond is a sum secured through the section 106 agreement, drawn down by the local planning authority to fund remedial measures if the development fails to meet agreed modal share targets. Authorities prefer it to a condition because a condition cannot easily compel positive action years after occupation, and because a bond gives them something to spend when the targets are missed. For a developer, the drafting that matters is how the targets are measured, what triggers a draw, and how the bond is released.

Get those three right and a bond is a manageable, time-limited obligation. Get them wrong and it becomes an open-ended liability sitting against the asset.

Why a bond is sought rather than a condition

A condition requiring a travel plan to be submitted and approved works well enough before occupation. It works poorly afterwards. Enforcing a condition that says modal share shall be achieved means proving a breach, serving a notice and specifying steps, which authorities rarely have the resources to do.

A bond sidesteps that. The obligation is to pay a sum into an account, or to provide security, and to forfeit part of it if monitoring shows the targets are not met, with the money then spent on measures set out in the agreement. It is an incentive mechanism rather than an enforcement one.

That is also the ground on which a bond can be challenged. An obligation must be necessary to make the development acceptable, directly related to it, and fairly and reasonably related in scale and kind under the statutory tests in the Community Infrastructure Levy Regulations. A bond that operates as a penalty, with no identified measures to spend it on, struggles against those tests.

Setting modal share targets that can be measured

Targets fail on measurement far more often than on ambition. A target of a stated single occupancy car driver percentage for trips to the site is measurable. A target of "a reduction in car use" is not.

Interim targets are worth asking for. They let a problem be addressed when the measures can still work, rather than producing a single pass or fail five years after occupation when the travel habits are set.

Set the baseline carefully. On a site with phased occupation, a survey taken when the first phase is half occupied bears no relationship to the completed scheme, so define the baseline as a stated occupancy threshold rather than a date.

Survey frequency and methodology

The survey method belongs in the agreement, not in correspondence afterwards. Specify the instrument, the sample, the timing and the analysis.

1. The survey type, whether a resident or staff travel survey, automatic traffic counts, car park occupancy counts, or a combination.
2. The minimum response rate for a questionnaire survey, with a defined procedure if it is not achieved rather than an automatic failure.
3. The survey window, in a neutral month avoiding August, December and school holidays, on defined weekdays.
4. Who carries out the survey and who pays, which is normally the developer or management company for the first surveys and the authority thereafter.
5. The reporting format and the deadline for submission after each survey.

The response rate point causes more disputes than any other. A questionnaire that achieves a low response rate is not evidence of failure, and an agreement that treats a poor response as a missed target is drafted against the developer. Provide for a repeat survey or an alternative method instead.

Remedial measures and when they trigger

The agreement should list the measures the bond can fund, with indicative costs. Typical items are additional cycle parking, a subsidised bus service contribution, car club membership, personalised travel planning, a shuttle service, improved pedestrian links or a further tranche of travel vouchers.

That list does real work. It ties the sum to identified measures, which helps it pass the statutory tests, and it stops the authority spending the money on something unrelated. Where the authority wants a general fund, resist it on exactly that basis.

The trigger should be a failure against a stated target at a stated survey, followed by a period in which the developer or management company may propose and implement measures itself before the authority draws on the bond. That self-help period is the single most valuable clause to negotiate, because implementing a measure costs less than forfeiting the sum intended to pay for it.

Where physical highway works sit among the measures, the cost treatment described in highway works costs in a development appraisal applies to the indicative figures, and a measure that cannot be delivered should not be on the list at all.

Release of the bond and the certificate

The release mechanism is the clause developers most often leave vague and most often regret. Ask for four things: a defined end date for the monitoring period, commonly five years from a stated occupancy level, a certificate of compliance issued by the authority on request, a deadline for issuing or refusing the certificate with a default position if it does not respond, and release of the balance with interest where held in an account.

Without a deadline, the bond sits unreleased because nobody at the authority has the file. That is a real cost on a balance sheet and it is avoidable with one sentence.

Also deal with partial release. On a phased scheme, each phase's bond should be releasable on that phase's compliance rather than waiting for the last phase to complete, and the drafting needs to say so explicitly.

Sums that fail the statutory tests

Three patterns are vulnerable. A sum calculated as a round figure per dwelling with no stated relationship to any measure. A sum that will be absorbed into a general transport fund. And a monitoring fee that exceeds any plausible cost of monitoring, which has been a recurring argument between developers and authorities.

Monitoring fees themselves are legitimate where they reflect the actual administrative cost of monitoring the obligations, and the scope for challenge is in the amount and the basis rather than the principle. Ask for the calculation: the officer time, the hourly rate, the number of interventions, the period. A fee presented without a calculation is worth questioning.

An illustrative example. A 180-unit scheme where the authority seeks a travel plan bond with a single test at year five against an absolute car driver share, a monitoring fee, and no list of measures. After negotiation the agreement provides interim targets at years one, three and five, a baseline taken at 75 per cent occupancy, a named survey methodology with a repeat provision for low response, a schedule of six measures with indicative costs, a 12-month self-help period before any draw, partial release by phase, and a certificate deadline of eight weeks. The sum stayed the same. The risk profile changed completely.

Negotiating a realistic obligation

Price the bond into the appraisal as a cash flow item with a release date rather than as a cost, and show it that way, because the difference matters to the residual value. The conventions in viability appraisal submission format apply, and an independent review of a viability appraisal will look at how the obligation has been treated.

Then make the travel plan itself deliverable. A Travel Plan with measures the management company can actually run, costed and with a named coordinator, is what keeps the targets within reach, and a plan written to satisfy a validation checklist is what loses the bond five years later.

This is general guidance, not legal advice. Section 106 drafting is a matter for a planning solicitor, and the statutory tests for obligations should be checked against the current regulations and guidance before relying on anything here.

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