PEER REVIEW DRAFT BANYULE DEVELOPMENT CONTRIBUTIONS PLAN MARCH 2017 BANYULE CITY COUNCIL

Transcription

1 PEER REVIEW DRAFT BANYULE DEVELOPMENT CONTRIBUTIONS PLAN MARCH 2017 BANYULE CITY COUNCIL Urban Enterprise Urban Planning / Land Economics / Tourism Planning / Industry Software 1

2 AUTHOR Paul Shipp Reviewed by: Matt Ainsaar Urban Enterprise Urban Planning, Land Economics, Tourism Planning & Industry Software 389 St Georges Rd, Fitzroy North, VIC 3068 (03) Copyright, Urban Enterprise Pty Ltd, 2017 This work is copyright. Apart from any uses permitted under Copyright Act 1963, no part may be reproduced without written permission of Urban Enterprise Pty Ltd. FILENAME: Peer Review of Draft Banyule DCP - Draft v docx VERSION: 1.0 DISCLAIMER Neither Urban Enterprise Pty. Ltd. nor any member or employee of Urban Enterprise Pty. Ltd. takes responsibility in any way whatsoever to any person or organisation (other than that for which this report has been prepared) in respect of the information set out in this report, including any errors or omissions therein. In the course of our preparation of this report, projections have been prepared on the basis of assumptions and methodology which have been described in the report. It is possible that some of the assumptions underlying the projections may change. Nevertheless, the professional judgement of the members and employees of Urban Enterprise Pty. Ltd. have been applied in making these assumptions, such that they constitute an understandable basis for estimates and projections. Beyond this, to the extent that the assumptions do not materialise, the estimates and projections of achievable results may vary.

3 CONTENTS 1. INTRODUCTION ENGAGEMENT SCOPE OF WORK MATERIAL REVIEWED 1 2. SUMMARY OF THE DRAFT DCP OVERVIEW INFRASTRUCTURE TO BE FUNDED DCP PARAMETERS COST APPORTIONMENT APPROACH LEVIES 3 3. PEER REVIEW INTRODUCTION STATUTORY FRAMEWORK AND DCP PRINCIPLES GENERAL FINDINGS SPECIFIC ISSUES 6 TABLES TABLE 1 RESIDENTIAL LEVIES PER DWELLING 3

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5 1. INTRODUCTION 1.1. ENGAGEMENT Urban Enterprise was engaged by Banyule City Council (Council) to prepare a Peer Review of the Draft Banyule Development Contributions Plan prepared by Hill PDA for Council and dated January 2017 (the Draft DCP). The Peer Review was prepared in February and March SCOPE OF WORK The scope of the Peer Review was to review the broad method and outcomes of the draft DCP and provide comment on: The extent to which these align with the statutory framework for the preparation of DCPs; and The extent to which the draft DCP results in an equitable apportionment of infrastructure costs. The scope of the review excludes detailed review of calculations, a line-by-line review of infrastructure items and review of the accuracy of development projections MATERIAL REVIEWED The Draft DCP has been reviewed along with: The Draft DCP Overlay Schedule; The DCP Guidelines; Part 3B of the Planning and Environment Act 1987; and Recent Planning Panel reports regarding the introduction of new DCPs. No further material has been reviewed. URBAN ENTERPRISE MARCH

6 2. SUMMARY OF THE DRAFT DCP 2.1. OVERVIEW The Draft DCP applies to all land in the City of Banyule and would require development proponents to make a contribution towards the cost of delivering a range of infrastructure items. The DCP is a full cost apportionment DCP prepared under Part 3B of the Planning and Environment Act INFRASTRUCTURE TO BE FUNDED The Draft DCP proposes to fund 428 projects with a total value of $53.6m. Projects are within the categories of road works, drainage works, shared paths and community facilities. Infrastructure projects include land acquisition, new Council assets, upgrades to existing assets and renewal or replacement of existing assets. Approximately 75% of the total infrastructure cost in the DCP relates to community facilities DCP PARAMETERS The Draft DCP has the following main parameters: DCP Area: municipal area of Banyule; Time period: Council commits to delivering the DCP projects between 2016 and 2036; Demand units: one equivalent dwelling equates to one demand unit (equivalence ratios are used to convert non-residential floorspace into equivalent dwellings) COST APPORTIONMENT APPROACH The Draft DCP apportions the cost of each infrastructure item to existing and new development within an estimated catchment area of the item. The catchment areas are aligned with 24 Charge Areas, broadly reflecting suburb and activity centre boundaries. The number of existing and future demand units within each Charge Area is based on development projections which were prepared by Hill PDA using Council s rates database (for commercial and industrial development) and Forecast ID projections (for residential development). Levies have been calculated for each charge area by adding the levy for each item applicable to the charge area. This approach to cost apportionment results in the Draft DCP projecting that Council will collect approximately 16% of the cost of providing the infrastructure through development contributions. 2 DCP PEER REVIEW BANYULE CITY COUNCIL

7 2.5. LEVIES The outcome of the Draft DCP approach is a set of levies which apply to residential, retail, industrial and commercial floorspace. The residential levies are shown in Table 1. TABLE 1 RESIDENTIAL LEVIES PER DWELLING Charge Area Development Community Infrastructure Infrastructure All Infrastructure Area 01 Bundoora $ $ $ Area 02 Watsonia North $ $ $ Area 03 Watsonia $ $ $ Area 04 Greensborough Structure Plan Area $ $99.17 $ Area 05 Greensborough (Part) $ $ $ Area 06 St Helena - Eltham North (Part) $ $97.29 $ Area 07 St Helena - Eltham North (Part) $ $94.62 $ Area 08 Briar Hill $ $ $ Area 09 Montmorency $ $ $ Area 10 Macleod $ $ $ Area 11 Yallambie $ $96.61 $ Area 12 Viewbank $ $ $ Area 13 Lower Plenty $ $ $ Area 14 Heidelberg West - Bellfield (Part) $ $ $1, Area 15 Heidelberg Heights (Part) $ $ $1, Area 16 Rosanna $ $ $1, Area 17 Heidelberg West - Bellfield (Part) $ $1, $1, Area 18 Heidelberg Structure Plan Area $ $ $1, Area 19 Heidelberg (Part) $ $ $ Area 20 Ivanhoe (Part) $ $ $1, Area 21 Eaglemont (Part) $97.09 $ $ Area 22 Ivanhoe Structure Plan Area $ $ $ Area 23 Ivanhoe (Part) $ $ $1, Area 24 Ivanhoe East $ $ $1, Source: Hill PDA, Draft DCP, p.23 URBAN ENTERPRISE MARCH

8 3. PEER REVIEW 3.1. INTRODUCTION The key elements of the DCP have been reviewed, along with a brief review of the types of infrastructure to be funded to ensure alignment with the statutory framework for development contributions, in particular the Planning and Environment Act 1987, the DCP Guidelines and the Ministerial Direction on the Preparation and Content of Development Contributions Plans (2016) STATUTORY FRAMEWORK AND DCP PRINCIPLES The Peer Review has been undertaken by reference to the statutory framework for the preparation of development Contributions Plans in Victoria as summarised below. PRINCIPLES UNDERPINNING DEVELOPMENT CONTRIBUTIONS An Administrative Appeals Tribunal decision known as the Eddie Barron decision 1 is considered to be the landmark decision relating to the principles which underpin development contributions in Victoria. The Tribunal identified the following four principles that were to be met in order for a levy to be applied as a permit condition: Need - The need created by the development and the measures to satisfy the need must be adequately identified; Equity - The payment or levy must be a fair and reasonable apportionment of the cost of implementing the need satisfaction measures; Accountability - The responsible authority should implement procedures to ensure that the money collected cannot be used for any purpose other than that for which it was levied and which clearly show how, when and where the money collected is spent; Nexus - There must be a reasonable nexus between the development and the need satisfaction measures. The Standard Development Contributions Advisory Committee (SDCAC), which was appointed by the Minister for Planning to prepare a review of the current development contributions framework in Victoria, notes that the Eddie Barron decision was a landmark case for the understanding of the legal principles which underpin development contributions within the framework of the Victorian Planning System and as a first principles authority on the implementation of development contributions in Victoria, this decision is an important guide for the Committee. 2 PLANNING AND ENVIRONMENT ACT Part 3B of the Planning and Environment Act 1987 outlines the statutory provisions relating to development contributions. In summary, Part 3B provides for, amongst other things: The inclusion of a DCP in the planning scheme, for the purpose of levying contributions for the provision of works, services and facilities and for costs associated with preparation of strategic planning and development contributions plans (section 46I); The provision to impose either a development infrastructure levy or a community infrastructure levy (section 46J); The contents required of a DCP (Section 46K); The setting of limits in respect of a community infrastructure levy(section 46L); 1 Eddie Barron Constructions Pty Ltd v Shire of Pakenham & Anor (1990) 2 Report 1: Setting the Framework, Standard Development Contributions Advisory Committee (2012) Page 15, 4 DCP PEER REVIEW BANYULE CITY COUNCIL

9 The provision for the Minister to issue written directions relating to the preparation and content of a DCP (section 46M); The collection of a development infrastructure levy, by way of a condition on a planning permit either requiring the payment of a levy within a specified time, or entering into an agreement to pay the levy within a specified time (section 46N). MINISTERIAL DIRECTION The Ministerial Direction on the Preparation and Content of Development Contributions Plans (11 October 2016) outlines what may be funded from a development contribution levy, namely: Acquisition of land for roads, public transport corridors, drainage, public open space, community facilities; Construction of roads, including the construction of bicycle and foot paths, and traffic management and control devices; Construction of public transport infrastructure, including fixed rail infrastructure, railway stations, bus stops and tram stops; Basic improvements to public open space, including earthworks, landscaping, fencing, seating and playground equipment; Drainage works; Buildings and works for or associated with the construction of a maternal and child health centre, a child care centre, a kindergarten or any centre which provides these facilities in combination. The Ministerial Direction also specifies that a development contributions plan must not impose a development infrastructure levy or a community infrastructure levy in respect of the development of land for a non-government school or housing provided by or on behalf of the Department of Health and Human Services. DEVELOPMENT CONTRIBUTIONS GUIDELINES The Victorian State Government has published a set of documents which make up the Development Contributions Guidelines (2007). These documents provide guidance as to how DCPs are to be prepared and administered including the matters that DCPs are to consider. The relevant sections of the Guidelines are referred to in relation to specific issues identified during the Peer Review in this report GENERAL FINDINGS The Draft DCP applies principles and approaches that generally align with the requirements and intent of the statutory framework. The way in which costs have been apportioned aligns with a number of previous DCPs which have been approved, such as the Darebin DCP and the Moreland DCP. Although no fundamental flaws were identified in the Draft DCP, a number of areas requiring clarification or further information were identified, along with some specific recommendations to ensure that the Draft DCP aligns with the statutory framework. It should be noted that in some cases, it is not possible to make a definitive conclusion regarding the appropriateness of the Draft DCP in the absence of some of the information identified as necessary to support a DCP URBAN ENTERPRISE MARCH

10 3.4. SPECIFIC ISSUES The Peer Review process identified a number of issues that require clarification, further information, or, in our opinion, changes to the Draft DCP or DCP Overlay. These issues are discussed as follows INFRASTRUCTURE NEED AND STRATEGIC JUSTIFICATION Section 46K(1)(c) of the Planning and Environment Act requires a DCP to: Relate the need for the plan preparation costs, works, services and facilities to the proposed development of land in the area. The DCP Guidelines provide information on the level of strategic justification required for DCP infrastructure projects as follows: The selected infrastructure and the standard of provision must be justified in the DCP. The inclusion of infrastructure and the standard may be challenged through the planning scheme amendment process. To qualify for inclusion in a DCP, all infrastructure must be used by a broad cross-section of the community, and must serve a neighbourhood-sized catchment or larger area. This means that the infrastructure provided is likely to be used by a broad range of people, given the likely profile of the expected community (age, ethnicity, sex) which justifies the selection of the infrastructure. To justify the infrastructure projects to be included in a DCP, the type and standard of infrastructure must be either basic to the health, safety or well-being of the community, or consistent with current community expectations of what is required to meet its health, safety or well-being. (p.16-17) There is no strategic justification within the DCP which demonstrates that the infrastructure items are needed or justified. This is usually achieved by reference to supporting documents, structure plans, strategies, or business cases relevant to each item and is especially important for larger projects. It is recommended that further information is provided within the DCP for each item or group of items to identify the supporting documentation that identified the need for the item(s). For larger items, a project sheet or similar could be included in the DCP describing the need for the item, the catchment and the scope of the project CATCHMENT AREAS The Draft DCP states that a unique project catchment was identified for each project and that the catchment identification process was undertaken in collaboration with Council officers. (p.22) It is noted that many items have a catchment that relates to a single charge area, whereas others encompass multiple charge areas. It is recommended that the process through which catchment areas were determined should be explained to ensure that it was sufficiently robust and undertaken by reference to supporting documents and/or by infrastructure experts. This should include any documentation referred to and the Business Units of Council involved in the process EXTERNAL APPORTIONMENT For every item to be funded by the DCP, 5% of the cost is apportioned to external demand to account for usage by residents outside the municipality and/or use of the item beyond the life of the DCP. Although it is reasonable to assume that external usage will occur to some degree, the application of a flat rate of 5% is not supported by any assessment of demand. It is recommended that in the absence of such supporting analysis external demand should be excluded altogether. Alternatively, external demand could be considered on a case by case basis, especially for large community / recreation items located near the municipal boundary such as Banksia Stadium. 6 DCP PEER REVIEW BANYULE CITY COUNCIL

11 APPROPRIATENESS OF INFRASTRUCTURE TYPES TO BE FUNDED MAINTENNANCE AND MINOR REPLACEMENT ITEMS The appropriateness of many items to be funded by the DCP could be challenged, on the basis that they do not meet the DCP Guidelines. The DCP Guidelines note that: The capital cost is expenditure which creates a new asset, or extends the life of an existing asset where the cost required would be equal to or greater than the cost of providing the asset in the first place. Recurrent costs such as maintenance and operating costs cannot be included. (p.17-18) Examples of items that appear to be related to maintenance or not relating to an upgrade or renewal of an entire facility include: Air-conditioning replacement; Internal and external fit out items; Freezer replacement, and Maintenance of windows and doors. It is recommended that any items that relate to maintenance or that do not form part of an overall project which replaces or upgrades a facility such that its economic life is extended should be deleted from the DCP. ASSET RENEWAL The DCP Guidelines state that to qualify for inclusion in a DCP, all infrastructure must be used by a broad crosssection of the community and must serve a neighbourhood-sized catchment or larger area. (p.16). The Guidelines go on (p.56) to note that: The types of projects in a DCP can include the following: a new item of infrastructure an upgrade in the standard of provision of an existing infrastructure item an extension to an existing facility, or the total replacement of an infrastructure item after it has reached the end of its economic life. The Draft DCP proposes to fund a significant number of asset renewal projects, the majority of which relate to resheeting of local roads. It has previously been argued that projects of this type do not serve a neighbourhood catchment, and could more appropriately be characterised local works or road maintenance, rather than capital works that meet the requirements for inclusion in a DCP. Planning Panels have, however, supported the inclusion of asset renewal projects in established area DCPs, including the Moreland DCP and Darebin DCP. In order to justify the inclusion of asset renewal items in the DCP, it is recommended that: The rationale for including these items is clearly explained in the DCP by reference to the Capital Works Program; A description is included as to how the items in the DCP were selected from the CWP; and A discussion is included describing how these asset renewal items are distributed across the municipality and therefore, as a group of items, serve a broad catchment. PROJECT SCOPE The scope of some projects included in the Draft DCP is not clear, including some of the projects with the highest capital cost. It is therefore not possible to assess whether there is a need for the item or whether the project is appropriate for inclusion in a DCP. Examples include (but may not be limited to): Project 52 Watermarc Greensborough is a project with a $6m capital cost, however there is minimal detail as to what the project will entail; and URBAN ENTERPRISE MARCH

12 Project Purchase of land the need for or purpose of the acquisition is not defined. It is recommended that further detail is required for all items to ensure that the project scope and basis for costing is clear. A further review of the appropriateness of some items may be required once this information is available. It should be noted that a line by line review of all items has not been undertaken as part of this Peer Review EQUIVALENCE RATIOS The Draft DCP uses equivalence ratios to convert non-residential floorspace into equivalent dwellings. Standard equivalence ratios as outlined in the DCP Guidelines are used for Road items (p.16), however the method and calculations used to derive equivalence ratios for paths and drainage items are not defined, and the ratios do not align with Standard Equivalence Ratios. Further information should be included in the DCP as to why the standard ratios were not applied and how the alternatives were calculated DCP TIMEFRAME The Guidelines state that DCPs must include a time horizon. (p.13) The Draft DCP is silent on the commencement date and term of the DCP. Projections extend to 2036, however the start date for the DCP (i.e. the date the DCP is ultimately Gazetted) is not known. Therefore, it is recommended that a time period (eg. 20 years) is specified in the DCP for certainty INDEXATION The Draft DCP proposes the Consumer Price Index as the method by which the levies are to be indexed over time. However, the CPI does not always reflect changes in construction industry costs. Other indices such as Building Price Index (Rawlinsons) and Producer Price Index - Building Construction (ABS) are usually a more accurate reflection of cost escalation in the construction industry and are recommended to be used for this DCP in order to minimise the risk of under collection of levies by Council over time DCP OVERLAY The DCP Overlay includes a wide range of detail as to how the DCP is to be administered. Some of this detail is considered more relevant to be included in a separate DCP Policy that is held by Council and updated from time to time, given that a Planning Scheme Amendment is required to make any changes to the DCPO, and some degree of flexibility is usually required. Any information that repeats administration detail from the DCP could be removed and replaced by reference to the DCP. Examples of statements that are not considered necessary to be included in a DCPO include: Payment of development contributions is to be made in cash. Council, at its discretion, may consider accepting works in lieu of cash contributions, provided the value of the works / land in question does not exceed the cash liability of the proponent under this DCP (unless the proponent agrees). Payment of the Development Infrastructure Levy at Subdivision Stage - Payment of the Development Infrastructure Levy is to be made prior to the issue of a statement of compliance for the approved subdivision. At Council s discretion, payment of the levy may be deferred to a later date, subject to the developer/land owner entering into an agreement under section 173 of the Planning and Environment Act 1987 to pay the levy at an alternative date agreed upon. Payment of the Development Infrastructure Levy at Planning Permit Stage where there is no Subdivision - Payment of the Development Infrastructure Levy is to be made prior to the commencement of any development or works. Payment of the Community Infrastructure Levy is to be made at the building permit stage, no later than the date of issue of a building permit under the Building Act Where no permit is required for a development, the contribution must be made no later than the date of issue of a building permit under the Building Act DCP PEER REVIEW BANYULE CITY COUNCIL

13 RECOMMENDED LEVIES PER DWELLING The levies recommended in the Draft DCP range from $365 per dwelling to $1,424 per dwelling (June 2016 values). The levies are significantly lower than those recommended by the Standard Development Contributions Advisory Committee (SDCAC) of $3,000 per dwelling for established metropolitan areas. Relevant extracts from the SDCAC Stage 2 Report are shown below: Based on the previous work done on existing DCPs, the Committee s own enquiries, comparisons with the Growth Area Standard Levies and the limited benchmarking, the Committee considers that the Urban Area levy in metropolitan areas should be somewhere in the range of $2,700 to $3,600 per new dwelling The Committee proposes a metropolitan Urban Areas Standard Levy of $3,000 per dwelling... The Committee is of the view that infrastructure planned for and included in the capital works programs of the vast majority of metropolitan Councils, and the clear nexus with population growth, justify a levy at this level. (SDCAC Report 2: Setting the Levies, 31 May 2013, p.67) The SDCAC recommended levies were expressed in 2012 values. When escalation is applied to June 2016 to align with the Draft DCP values, the levies would be in the order of $3,200 per dwelling, significantly higher than the levies in the Draft DCP. TRANSITION TO INFRASTRUCTURE CONTRIBUTIONS DELWP intends to introduce the opportunity for Councils to apply Standard Levies to areas defined as Strategic Development Areas through the application of an Infrastructure Contributions Plan (ICP). Although an official definition of this development setting has not been finalised, the following description is included in explanatory material provided by DELWP: Strategic development areas refers to locations within existing urban areas that are planned or become available for significant growth and change. Generally, these areas will be identified in a strategic plan such as Plan Melbourne (for example National Employment Clusters and Urban Renewal Areas), a Municipal Strategic Statement or a regional growth plan. (DELWP, Overview of the Infrastructure Contributions Plan System, 2016, p.2) The Draft DCP is silent on how areas within Banyule that may be identified as Strategic Development Areas would transition to an Infrastructure Contributions Plan under the ICP System. It will be important for Council to review opportunities and requirements for the application of an ICP, and to plan for how these areas would transition from the municipal-wide DCP to an ICP. Potential areas include the Latrobe National Employment Cluster, urban renewal areas and activity centres. This is particularly important given the likelihood that the levies under an ICP could be somewhat higher than the levies in the DCP. URBAN ENTERPRISE MARCH

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