Reformed Infrastructure Contributions MAV Presentation Kathy Mitchell, Chair Standard Development Contributions Advisory Committee 23 May 2014
Jan 15, 2016
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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