Planning and Environment Act1987
Advisory Committee Report pursuant to section151 of the Act
Standard Development Contributions Advisory Committee
Kathy Mitchell, Chair
Trevor McCullough, MemberRodger Eade, Member
Chris De Silva, MemberBryce Moore, Member
Contents
Page
Executive Summary
Part AIntroduction and Background......
1Introduction......
1.1Setting the Scene......
1.2The Advisory Committee and Terms of Reference......
1.3Other Inputs......
1.4Approach to this Report......
2Historical Context......
2.1Development Contributions in Victoria......
2.2Implementation Framework - Victorian Planning System......
2.3Funding Context......
2.4Development Levies in Other States
3A Preferred Way Forward......
3.1The Current System......
3.2Issues with the Current System......
3.3The New Model – A Preferred Way Forward......
3.4Operational Features......
4Submissions and Consultation......
4.1Process Adopted by Committee......
4.2Summary of Submissions......
4.3Key Principles......
Part BThe Proposed Framework......
5Proposed Development Settings and Development Levies......
5.1Context......
5.2Defining Development Settings......
5.3Proposed Model of Development Levies......
5.4Operational Issues......
6Application to Types of Development......
6.1Context......
6.2The Proposed Infrastructure Categories
6.3Basic and Essential Infrastructure......
7Defining the Levies – Growth Areas......
7.1Context......
7.2Growth Area Levy Structure......
7.3Standard Levy for Growth Areas......
7.4Development Levy Scheme for Growth Areas......
7.5Community Infrastructure and Recreation Facilities in a Growth Area DLS......
7.6Transport Infrastructure in a Growth Area DLS......
7.7Drainage Infrastructure in a Growth Area DLS......
7.8Public Land in a Growth Area DLS......
7.9Administrative Costs......
7.10Level of Justification Required in Implementing the Levies......
8Defining the Levies – Urban Areas......
8.1Context......
8.2Submissions and Commentary......
8.3Standard Levy in Urban Areas......
8.4Allowable Items......
8.5Level of Justification Required in Implementing the Levy......
8.6Findings......
9Defining the Levies – Strategic Development Areas......
9.1Context......
9.2Standard Levies in Strategic Development Areas......
9.3Submissions and Commentary......
9.4Development Levy Scheme in Strategic Development Areas......
9.5Allowable Items......
9.6Level of Justification Required in Implementing the Levies......
9.7Findings......
10Apportionment - When is it Required?......
10.1Context......
10.2What are the Key Issues?......
10.3Submissions and Commentary......
10.4Proposed Approach to Apportionment......
10.5Findings......
11Valuing Public Land......
11.1Context......
11.2What are the Key Issues?......
11.3Submissions and Commentary......
11.4Discussion......
11.5Findings......
12Works in Kind......
12.1Context......
12.2Works in Kind......
13Developer Delivered Infrastructure and GAIC......
13.1Context......
13.2Developer infrastructure delivered on site......
13.3State Infrastructure and GAIC......
14Using Permit Conditions for Infrastructure......
14.1Context......
14.2What are the Key Issues?......
14.3Submissions and Commentary......
14.4Discussion......
14.5Findings......
15Administration of Development Contributions......
15.1Context......
15.2Accountability and Reporting......
15.3Indexation......
15.4Efficient Decision Making......
16Response to the Terms of Reference......
17Summary of Key Findings......
Appendix ATerms of Reference
Appendix BStakeholder Consultation
Appendix CWritten Submissions
Appendix DSmall Group Meeting Participants
Standard Development Contributions Advisory Committee Report 1 17 December 2012
List of Tables
Page
Table 1Defining Development Settings
Table 2Summary of Proposed Alternative Development Levies.
Table 3Growth Areas Community and Recreation levy – Allowable Items
Table 4Growth Areas Community and Recreation Levy – indicative list of items to be used to calculate fixed levy
Table 5Growth Areas Transport Levy - Allowable Items
Table 6Growth Areas Drainage Levy - Allowable basic and essential infrastructure items
Table 7Justification required to apply or vary Development Levies in a Growth Area
Table 8Urban Areas Standard Levy – Allowable Items
Table 9Justification required to apply or vary Development Levies in an Urban Area
Table 10Strategic Development Areas Standard Levy and DLS – Allowable items
Table 11Justification required to apply or vary Development Levies in an Strategic Development Area
Table 12Apportionment for Development Settings
Table 13Response to the Terms of Reference
Standard Development Contributions Advisory Committee Report 1 17 December 2012
List of Abbreviations
the Act / Planning and Environment Act 1987DC / Development Contributions
DCP / Development Contributions Plan
DCPO / Development Contributions Plan Overlay
DLS / Development Levy Scheme
DPCD / Department of Planning and Community Development
DSE / Department of Sustainability and Environment
GAA / Growth Areas Authority
GAIC / Growth Area Infrastructure Contribution
LPPF / Local Planning Policy Framework
MSS / Municipal Strategic Statement
NDH / Net Developable Hectare
PAO / Public Acquisition Overlay
PSP / Precinct Structure Plan
PTV / Public Transport Victoria
SPPF / State Planning Policy Framework
UGB / Urban Growth Boundary
UGZ / Urban Growth Zone
Standard Development Contributions Advisory CommitteeReport No. 1 17 December 2012Page 1
Executive Summary
In May 2012, the Minister for Planning announced a preferred framework for the development contributions system in Victoria which is set out in A New Victorian Local Development Contributions System – A Preferred Way Forward, prepared by the Department of Planning and Community Development. It proposes a combination of standard contributions and other variable contributions for five infrastructure categories, in different development settings.
In September 2012, the Minister for Planning appointed the Standard Development Contributions Advisory Committee (the Committee) to review and report on the new system. The purpose of the Committee is to provide advice to inform the Minister’s decision on the final framework for a new Victorian development contributions system and for the establishment of standard levies.
More specifically, the Committee is to provide advice on the implementation and operation of the new system, including setting and implementing standard levies for different development settings, and for different categories of infrastructure.
This report (Report 1 Setting the Framework) is the first of two reports required by the Terms of Reference and provides findings on matters required to finalise the features and operation of the new development contributions system. The Committee has approached preparation of this report by identifying the issues raised inAPreferred Way Forward and its Terms of Reference as the key parameters for its review, consideration and findings.
The Committee undertook targeted consultation, where it invited various stakeholders to meet with it. Over 100 people from 33 organisations attended these meetings. The Committee received 58 written submissions in response to the framework set out in A Preferred Way Forward.
Additionally, the Committee ‘road tested’ three key themes (development settings, overview of development levies and applying the levies) in confidential discussion forums with representatives of councils, State agencies and planning and development interest groups prior to finalising this report.
This report should be read as an interim report that provides the thoughts and views of the Committee based on its work to date. It does not represent its final views, nor does it provide final recommendations. In some instances, it proposes a range of options for further consideration prior to its work being finalised. The Committee’s response to the Terms of Reference and a Summary of Findings are shown in Chapters 16 and 17 respectively.
Following the release of this report by the Minister for Planning, the Committee will invite submissions from stakeholders on the issues raised prior to preparation of Report 2 Setting the Levies, in May 2013.
In summary, the Committee is proposing a new development contributions system that provides for three development settings:
- Growth Areas;
- Urban Areas; and
- Strategic Development Areas (Large Scale and Small Scale).
A Standard Levy is proposed as the default in each development setting, but with the opportunity to apply a tailored Development Levy Scheme (in Growth Areas and Large Scale Strategic Development Areas) if strategically justified. A Standard Levy will be applied per net developable hectare for Growth Areas, or per dwelling for Urban Areas and Strategic Development Areas in both a metropolitan and non-metropolitan context.
Lists of Allowable Items are proposed for each infrastructure category and each development setting in order to set clearly defined limits on what can be included in a development levy.
The new system will operate as a contribution towards infrastructure, and not full cost recovery.
Table A provides a summary of the key elements of the proposed framework with reference to the relevant Chapter(s) where the various elements of the proposed framework are discussed in more detail.
Recommendation
The Committee recommends that:
- The Minister for Planning receive Report 1 Setting the Framework, and endorse the Report for public release; and
- Report 1 Setting the Framework be used as a basis for further consultation to inform the Committee’s Report 2, Setting the levies.
Table ASummary of the Proposed Framework
Committee Proposal / Chapter(s)DEVELOPMENT SETTINGS
Three Development Settings are proposed: Growth Areas, Urban Areas; and Strategic Development Areas. / 5
A NEW DEVELOPMENT LEVY SYSTEM
Different development levies may be applied in metropolitan and non-metropolitan Development Settings. / 5
The new system is based around two alternative levies; a Standard Levy or a Levy determined through the preparation of a Development Levy Scheme (DLS). / 5
New terminology is proposed to distinguish the new DLS from current DCPs. / 5
Standard Levies will apply for each of the Development Settings. / 5
The Standard Levy will apply unless the preparation of a DLS can be shown to be strategically justified (for Growth Areas and Large Scale Strategic Development Areas only). / 5
A DLS will not be permitted in Urban Areas or Small Scale Strategic Development Areas. / 5
INFRASTRUCTURE CATEGORIES
The following infrastructure categories are proposed:
- Community and Recreation infrastructure;
- Transport infrastructure;
- Drainage infrastructure; and
- Public land.
BASIC AND ESSENTIAL INFRASTRUCTURE
Basic and essential infrastructure is not defined as such. The term ‘Allowable Items’ is used to define infrastructure that is able to be included in each levy for each Development Setting. / 6
Whilst some items in the lists of Allowable Items may be fully funded, Development Levies are considered a contribution to infrastructure. / 6
Land acquisition is to be considered a priority in development levies to ensure appropriate provision can be made for the long term development of infrastructure. / 6
Development Levies are more appropriately based on bottom up costing than on historical bases, where possible. / 6
GROWTH AREAS
A Standard Levy will be developed for Growth Areas. The option of preparing a DLS will also be available. / 7
A fixed Community and Recreation Levy will apply (as part of a Standard Levy or a DLS). / 7
For a set per net developable hectare Standard Levy for Growth Areas, the following is assumed:
- Expenditure on Community and Recreation Allowable Items will be permitted up to a fixed maximum charge level;
- Expenditure will be permitted on Transport and Drainage (where applicable) from the list of Allowable items;
- Expenditure will be permitted on land acquisition as defined in the PSP;
- Expenditure on the above will be allowed up to the standard per hectare levy; and
- Land values in different Growth Areas will mean that the Standard Levy will most likely vary between municipalities.
A fixed Community and Recreation Levy is proposed to be calculated on a list of infrastructure that will be scoped and costed in the Committee’s Stage 2 work
A standard per metre rate may not be possible for Transport because of widely varying circumstances. / 7
Scoping and costing of a series of standard intersection designs and road cross sections will be a useful benchmark in developing and assessing a variable Transport Levy. / 7
The draft Arterial Roads Protocol should be reviewed prior to being formalised. / 7
A standard levy for drainage may not be possible because of widely varying circumstances. / 7
The Committee supports the variable land levy as proposed in A Preferred Way Forward. / 7
JUSTIFICATION OF STANDARD LEVY AND DLS
Applying a Standard Levy (or varying it) will require strategic justification. A higher level of justification will be required when a DLS is prepared. / 7, 9
URBAN AREAS
A Standard Levy will be set for Urban Areas, possibly with a range. No DLS for Urban Areas. / 8
A Standard Levy for Urban Areas will fund infrastructure attributable to population growth only. Allowable Items will relate to population growth. / 8
STRATEGIC DEVELOPMENT AREAS
Two Standard Levies will be set for Strategic Development Areas reflecting Small Scale and Large Scale developments. / 9
A list of Allowable Items applicable to the setting is proposed. / 9
The preparation of a DLS will be an option in Large Scale Strategic Development Areas. / 9
EXTERNAL APPORTIONMENT
External apportionment of the costs of some infrastructure should continue to be permitted but the principles under which this can occur will be more carefully defined. / 10
PUBLIC LAND
The Committee supports the approach to determining the variable public land levy as proposed in A Preferred Way Forward. / 11
WORKS IN KIND
Works in Kind should continue to be encouraged at the discretion of a council and undertaken under the terms of a section 173 or other agreement. / 12
OFF- SITE IMPACTS
The existing legislative framework should be retained to enable responsible authorities to mitigate the off-site impacts of individual developments through permit conditions and this should be reinforced through the development of appropriate guidelines. / 14
Part AIntroduction and Background
1Introduction
1.1Setting the Scene
In May 2012, the Minister for Planning announced that the Victorian Coalition Government had identified a preferred framework for the Development Contributions System currently operating in Victoria.
In July 2012, the Department of Planning and Community Development (DPCD) prepared A New Victorian Local Development Contributions System – a Preferred Way Forward(A Preferred Way Forward).
The objective of the new system is to provide fairness, certainty and a simplified approach for councils, developers and the community through the use of pre‐determined standard levies. In order to deliver the objectives of the new system, the Government has identified A Preferred Way Forward.
APreferred Way Forward outlines a preferred framework for a new system that proposes a combination of standard contributions (that cannot be varied) and other variable contributions for different development settings, in five infrastructure categories:
- Community Facilities;
- Open Space Facilities;
- Transport Infrastructure;
- Drainage Infrastructure; and
- Public Land.
The calculation of standard levies is proposed to be based on the identification of basic and essential infrastructure and will apply to a range of development settings including:
- Growth Areas;
- Regional Settlements;
- Rural Settlements;
- Established Areas; and
- Strategic Redevelopment Sites.
Development contributions have been an important part of the planning and development process in Victoria since the 1990s. There have been a number of refinements since legislation was first introduced in 1995 to formalise the development contributions system, and this current review has the potential to change the way development contributions are applied into the future.
Under the model proposed, it will be possible to set different contribution rates for residential and non-residential land. The new system proposes to draw a distinction between local and higher order infrastructure and establish a number of operational requirements. Significantly, the new model seeks to base a new system around a clear and defined understanding of what constitutes basic and essential infrastructure in urban areas. Upon a consistent approach to the standard of provision, it is intended to establish a system of standardised levies, which will reduce uncertainty and the administrative complexity for all parties in the preparation and implementation of development contributions plans. If successfully implemented, these key features will represent a significant change from the current system, which is characterised by a high levels of complexity, uncertainty and cost in preparation.
1.2The Advisory Committee and Terms of Reference
In September 2012, the Minister for Planning appointed an Advisory Committee (the Committee) to review and report on the new system. The Committee comprises:
- Ms Kathryn Mitchell, Chair;
- Mr Chris De Silva;
- Professor Rodger Eade;
- Mr Trevor McCullough; and
- Mr Bryce Moore.
The Committee is assisted by:
- Ms Jessica Cutting, Senior Project Manager with Planning Panels Victoria, who was responsible for stakeholder engagement and management.
- Mr Andrew Natoli, Lawyer who was engaged by DPCD to assist the Committee with aspects of its work, particularly in relation to legal issues.
- Ms Mandy Elliot, Consultant, to assist with reviewing and summarising the submissions received.
Additionally, Ms Anne Larkins of Dench McLean Carlson was engaged by DPCD to provide probity oversight of the Committee processes.
The Minister for Planning issued Terms of Reference (dated 25 September 2012) to provide the framework for the Committee’s work (see Appendix 1). The purpose of the Committee is to provide advice to inform the Minister for Planning’s decision on the final framework for a new Victorian local development contributions system and for the establishment of standard levies. Specifically, the Committee is to provide advice on the implementation of the new system, including:
- Recommended operational arrangements for the new system.
- Recommended scope of works that should be included in each infrastructure category.
- Recommended standard development contributions levies for each infrastructure category and development setting.
The Terms of Reference note that the new system should:
- Ensure guaranteed delivery of land required for infrastructure in the long term.
- Ensure delivery of works in kind by developers can be provided as an alternative to a cash payment to achieve efficiencies and deliver infrastructure earlier.
- Ensure the development contribution requirement clearly articulates the infrastructure contribution obligation.
Further, the Terms of Reference state that in setting standard development levies, the Committee should seek to ensure that levies:
- Are simple to implement and administer.
- Are based on the basic and essential local infrastructure required to support the development of land and support the foundation of new communities.
- Do not unreasonably affect housing affordability for new home owners.
- Retain a nexus to the development which triggers the levy.
The Committee is required to prepare two reports as part of a two stage process for the Minister for Planning as follows.
(i)Stage 1: Setting the framework for the new standardised levy system
This report is to provide recommendations on matters required to finalise the features and operation of the new system including:
- Any required changes or improvements to the proposed framework as outlined in the attached Position Paper,A new Victorian Local Development Contribution System (July 2012).
- Advice on the definition of the development settings for which levies will be established. These may include, but are not limited to, growth areas (both Melbourne’s Growth Areas and similar with areas in some regional cities), regional settlements, rural settlements, established areas and strategic redevelopment sites.
- Advice on how development contributions should be applied to residential and non‐residential development, including retail, commercial and industrial development, in each of these development settings.
- Advice on how the new system should operate in the different development settings.
- The scope of the basic and essential infrastructure to be included in the standard levy for each of the following infrastructure categories:
-Community facilities