Reformed Infrastructure Contributions

MAV Presentation

Kathy Mitchell, Chair

Standard Development Contributions Advisory Committee

23 May 2014

Development Contributions

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Complex, time consuming, difficult to implement, unpopular, inconsistent, contested

Vary markedly in Growth Areas, lack of consistency in application, lengthy debates and hearings to implement

Councils – want developers to pay more; Developers - want to pay less

In non Growth Areas, no simple and effective way to capture contributions for infrastructure required to service new development catering for growth

Development Contributions

Part 3B of the Planning and Environment Act 1987 provides for the preparation of DCPs

Key principle – now and post review:

Contribution not full cost recovery

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Advisory Committee

Members: Kathy Mitchell (Chair), Trevor McCullough, Rodger Eade, Chris De Silva and Bryce Moore

Terms of Reference:

• Advise the Minister on a system of standard levies to apply to all development scenarios

• Implementation and operation of a new system

• Setting and implementing standard levies for development settings and for different categories of Infrastructure

• Fix the system

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Key Challenges and Issues

•Simplicity and certainty

•Ease of introduction and adaptation

•Flexibility for users

•Transparency

•Demonstrating Need, Equity, Nexus and Accountability

•Standards and adequate funding for ‘starter’ infrastructure

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Consultation and Reporting Process

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Stage 1

• Stakeholder meetings late 2012 with over 35 meetings with 100 participants

• 58 written submissions • Report 1 Setting the Framework (submitted to the Minister 17 December

2012)• Released by the Minister on 26 January 2013

Stage 2

• 69 written submissions• The Committee met with over 800 people from over 100 organisations• Report 2 Setting the Levies submitted to the Minister 31 May 2013• Stage 2 released by the Minister on 1 May 2013 and the new reform

agenda announced

Urban Infill and Renewal Areas

Typically the contribution to public infrastructure for a development in an urban infill or renewal area is $0

Negotiated s173 agreements for some developments

A small number of DCPs outside growth areas, e.g.

• Darebin $130 to $3,600 per dwelling

• Manningham (Doncaster Hill) $2,139 per dwelling

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Interstate Comparisons

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State Infill Areas Growth Areas/Greenfield including State Infrastructure

Non-Residential

VIC $0 (generally) Approx $15,000/ lot plus GAIC $5,000/ lot

Section 173 only (site specific)

QLD $20,000/ lot up to 2 bedrooms

$28,000 for 3 bedrooms

$30-40,000/ lot and up High per m2 rates for different uses. Triggered by change of use.

NSW 1% of development cost

OR

Capped at $20,000/ lot (plus State charges)

“Capped” at $30,000/lot but typically between $50-60,000/ lot including on average $10,000 State levy

Generally 1% of project cost.

How was the Growth Area Levy Determined?

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Average DCP cost (including open space and $900 per dwelling Community Infrastructure Levy) for Growth Areas:• 2008 $194,000 per net developable Ha• 2009 $215,000 per net developable Ha• 2010 $218,000 per net developable Ha• 2012 $245,000 per net developable Ha

Scope creep in boom market saw ‘blow out’ in DCP costs

Typically spent on:• Community services and open space 30%• Roads and traffic management 30%• Public land purchase

40%

How was the Growth Area Levy Determined?

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• Showed consistency across regions

• Showed ‘normalising’ of total costs over the period

Analysed variations across infrastructure categories:

• Land costs higher in the south-east, although average land values had normalised in 2012 (post GFC)

• Transport infrastructure costs higher in the west

• ‘scope creep’ in community and recreation costs over the years

• Open space levies have been inconsistently applied

How was the Growth Area Levy Determined?

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Identified the need to:

• Achieve consistency in the application of open space costs

• Limit the scope of community and recreation facilities

• Provide some flexibility in the allocation of levies between land and transport infrastructure

• Not leave Councils short

• Not unreasonably impact on development viability

How was the Growth Area Levy Determined?

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•Looked at:

• A variable land levy

• A number of options for applying Supplementary Levies

Used averages over time period

Verified costs through economic peer review

Strategic Development Areas calculated as % of Growth Area levy

Allowable Items

Provides for a specified lists for each infrastructure category rather than a broad description of ‘basic and essential’ items

No State infrastructure where GAIC applies

No public open space included in Urban Areas or Strategic Development Areas (Clause 52.01 or Subdivision Act to continue to apply)

Budget for spending on the basket of goods

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Commercial and Industrial Levy

Two categories selected from complex equivalence tables

Based on demand these uses generate for transport infrastructure, with minor allowance for community and recreation

Quantum informed by recent DCPs

Levies set to minimise possible distortion with non levied areas

Set at low level to encourage job creating uses

Used per square metre as base, not cost of development

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Thank You

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