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Reformed Infrastructure Contributions . MAV Presentation Kathy Mitchell, Chair Standard Development Contributions Advisory Committee 23 May 2014. Development Contributions. Complex, time consuming, difficult to implement, unpopular, inconsistent, contested

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Reformed Infrastructure Contributions

MAVPresentation

Kathy Mitchell, Chair

Standard Development Contributions Advisory Committee

23 May 2014

development contributions
Development Contributions
  • 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 contributions1
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
advisory committee
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
key challenges and issues
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
urban infill and renewal areas
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
how was the growth area levy determined
How was the Growth Area Levy Determined?
  • 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 determined1
How was the Growth Area Levy Determined?
      • 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 determined2
How was the Growth Area Levy Determined?
  • 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 determined3
How was the Growth Area Levy Determined?
  • 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
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
commercial and industrial levy
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