Standard Development Contributions AdvisoryCommittee

Transcription

1 to the Standard Development Contributions AdvisoryCommittee On Report 1 Setting the Framework March 2013

2 Introduction 1 HIA Policy on Development Contributions...2 Issues with the Current System of Development Contributions...3 HIA Comments on the Advisory Committee s Report 5 Concluding Comments..15 HIA: Housing Industry Association Level 3 70 Jolimont Street Jolimont, VIC 3002 hia.com.au f.nield@hia.com.au s.grigg@hia.com.au

3 1. Introduction HIA has welcomed the current review of Victoria s existing development contributions system and participated fully in the process to date. As part of the Stakeholder Reference Group advising Government and in follow up meetings with the Standard Development Contributions Advisory Committee (the Committee), HIA has called for a simpler and more certain process around development contributions. The Government s response in its Preferred Way Forward document has moved some way towards this and the Committee has taken the next step by further exploring the concepts behind a standardised development contributions system for Victoria. As part of the process, HIA made a submission to the Committee in October HIA has also participated in one individual follow up meeting with the Committee as well as two meetings attended by all industry body representatives. In its initial submission to the Committee, HIA outlined its policy position around development contributions. Essentially, HIA opposes local authorities applying local development levies to cover over and above basic and essential infrastructure items. Through the use of a Development Contributions Plan Overlay, Councils end up requiring contributions from developers not only for basic items of infrastructure but for items that often constitute broader municipal community infrastructure. This infrastructure is not directly related to a subdivision and benefits the broader population - not just those in the new subdivision. HIA argues that for broader community infrastructure - other funding measures should be used such as state government funds or rate revenue. This is because development levies are one of many costs that impact the end price of a house and in effect act as a tax on homebuyers. However, the reality is that in Victoria, these levies are already in place and the requirement for developers and home buyers to contribute to the broader infrastructure requirements of a municipality are likely to remain in some form. It is on this basis that the comments on the Committee s report are made. Given the levies are in place and developers and homebuyers are already paying large amounts, it is important that the levies are based on a fair and justified set of principles. It is after all the recent increases in the amounts being levied that has in part prompted this review and it is hoped that a fairer and more realistic system can be applied the longer term. Any new system should, result in both greater certainty over the cost of development and a reduction in costs for developers and homebuyers associated with funding local infrastructure. 1

4 2. HIA Policy on Development Contributions Development specific infrastructure, or infrastructure which provides essential access and service provision without which the development could not proceed, are considered by HIA to be core requirements for housing development and should be provided by developers in a timely manner to facilitate affordable development. Examples of this kind of infrastructure are local roads, local storm water drainage, land for local open space and direct costs of connecting to water, sewerage and power supplies. HIA defines community and regional infrastructure as items of broader physical, community and social infrastructure provided for new development that is accessible to the wider community. HIA considers these items to be ancillary to the direct provision of housing and an increased population. Examples include headworks for water, sewerage and power supplies, community facilities such as schools, libraries & child care centres, district and regional improvements such as parks, open space and capital repairs, public transport capital improvements and district and regional road improvements. Development specific infrastructure establishes a nexus with the services necessary for the provision of the allotment or building and could realistically be expected to be funded by the developer. In contrast, community social and regional infrastructure establishes a nexus with the needs of the broader population who will occupy the broader area over a longer timescale and should be funded through other state and local funding sources. Due to local contributions in Victoria already being in place that include community and regional infrastructure in their scope, the comments in this submission are intended to assist the process of creating a more standardised approach which would provide a higher degree of certainty for industry and ensure housing affordability is not detrimentally affected for new home buyers. 2

5 3. Issues with the Current System of Development Contributions The Government s initial report (The Preferred Way Forward) outlined the issues with the current system of development contributions. Development Contribution Plans (DCPs) are too complex and require significant resources to be allocated to their preparation and can take up to two years to prepare. The justification for their replacement is outlined by Government in its report as follows: Section 173 agreements are frequently used in favour of DCPs as they are easier to implement. Developers are often forced to agree to draft DCP requirements in order to bring land to market. Higher costs are often subsequently imposed by Government beyond those required under an approved DCP. Determining the appropriate apportioning of costs for large infrastructure items not directly associated with developments, such as arterial roads, is often difficult. There is difficulty accurately projecting infrastructure costs and needs over the timeframe of a DCP s operation, which leads to further unjustified requests for infrastructure contributions. DCPs are inflexible and difficult to amend. DCPs lack accountability in the spending of contributions collected. Lack of certainty around the cost of items required under DCPs. The uncertainty caused by using DCPs presents financial risks to parties involved in funding infrastructure. Adding to this list are industry s concerns with DCPs including: Lengthy planning permit negotiation processes, where it is common for developers to agree to provide more than is required in order to achieve a more timely planning approval. DCP mandated levies have grown to unprecedented levels in Victoria. Levies are charged for an increasingly broader range of community infrastructure items. Lack of standardised defined infrastructure requirements applying across all councils (which can lead to higher and higher standards of facilities or gold plating ). Unclear delineation between items funded from local/state levies which do not directly support or relate to the developments from which it has been levied. The question to be answered is whether the simpler system proposed by the Committee will resolve these issues. HIA has generally agreed that given the system is likely to continue in some form, there would be some benefit in a more standardised approach where agreement can be reached between industry and authorities about the reasonableness of a charge. 3

6 Any new system must not further burden industry or homebuyers. As mentioned in HIA s previous submission: any new system should deliver a standardised approach to local infrastructure levies that more accurately reflects the relationship or nexus between development and the need for provision of further local infrastructure to accommodate resulting population growth. Any discussions between developers and authorities should be over negotiated knowns with defined standards, not arbitrary claims or unjustified Council wish lists. HIA has long argued that it is impossible to provide meaningful comment on the development contributions process without an analysis of costs. Repeated requests to Government to assess the likely costs of all proposed alternative models against the costs incurred through current DCPs have been ignored. HIA has strong concerns for the type of facilities that the Committee has defined as basic and essential infrastructure as they seem to move well beyond HIA s own definition. Again, whilst HIA holds this view - comments on the Committee s report are made in the interests of providing some meaningful feedback to the concepts raised. But our overarching view still remains that evaluating any new system without costs attached is neither practical nor prudent. 4

7 4. HIA Comments on the Advisory Committee s Report Section 4.3 Key Principles In the context where some form of local development contributions is likely to be applied in Victoria, HIA is supportive of the key principles nominated in the Committee s report. The framework principles of need, nexus and apportionment are emphasised in all of HIA s following comments on the proposed framework. It is of paramount concern to HIA that in the interests of our members, these principles are constantly referred to in the determining of the levy rates, the allowable items lists and the proposed criteria associated with the application of the system. HIA is also highly supportive of the nominated operational principles, particularly that the new system should not unreasonably affect housing affordability, that levies should not be used as a means of full cost recovery and that the levy system as a whole is a mechanism to deliver planning outcomes not a driver of planning outcomes or infrastructure ambitions. Section 5 Proposed Development Settings and Development Levies Development Settings Where the Government had outlined the need for 5 development settings - the Committee has proposed that development settings for simplicity sake be reduced to three being: Growth Areas (only land in or proposed for the Urban Growth Zone (UGZ)) Strategic Development Areas either small scale or large scale (key sites not in UGZ where significant development or redevelopment is to occur - sites must be identified within a Council s MSS and the development of which must be supported by a structure plan or other strategic document.) Urban Areas (in city / town / settlement a planning scheme s MSS must specify areas of application may be applied to whole of municipality or to part) If the State is to operate with a development contributions system in place, the proposed application of the standard development levy model and a variable model (DLS option) within the Growth Areas and Strategic Development Areas settings appear to be generally appropriate. However, the differentiations between metropolitan and non-metropolitan areas are acknowledged but not dealt with in this report. HIA requests that further discussion of the application to non-metropolitan areas is included in the Committee s Stage 2 report. Clarification of terminology across all council planning schemes also needs to be pursued. Additionally, with the announcement in the State Parliament on the 6 th March that the Victorian Government is introducing new legislation that will allow any area to be declared as a Growth Area, careful consideration will need to be given as to how Growth Areas are defined within the proposed framework, particularly if future application of the UGZ is allowed beyond the existing growth area councils. 5

8 Proposed Model of Development Levies The Committee is proposing that there be two types of levy models available - 1. A Standard Model (standard model) - generally comprising either a single rate or in some instances a variable rate for allowable items within a defined range of costs which needs a minimum level of strategic justification to be met; 2. A Development Levy Scheme (variable model). The DLS will differ from the current DCP model in that it is still limited to allowable items, standard rates for which are applied where possible and a higher degree of strategic justification is required. HIA s initial reaction was that the inclusion of the variable model would detract from the opportunity to standardise levies and provide certainty. However Members have indicated that some merit in allowing a negotiable style of agreement as is proposed through the variable model. It may also provide a deterrent to unnecessary use of Section 173 agreements. Standard Model It is HIA s preference that any scope for variation of the standard model should be oriented towards differing specifications and ranges of allowable items, not necessarily an overall variability in contribution amounts required. Also the Committee s report indicates that the Urban Areas setting will be able to be applied to any existing urban area across the state including the whole of a municipality. By allowing council s to apply contribution requirements on as broad a base as they see fit, it will unfairly impact small scale development and home builders, further exacerbate housing affordability within existing urban areas and discourage the supply of a variety of housing types for which inner urban communities are in desperate need of. It is not equitable or appropriate, to charge small scale urban infill developments (potentially even single dwellings or dual occupancies) a contribution towards the provision of infrastructure upgrades that benefit a much broader area. A suburb or municipal wide catchment would only experience a very minor increase in further demand on its existing infrastructure as a result of a small scale development proposal. It is unfair for new residents to shoulder the burden when existing local infrastructure has previously been funded from a council s broader rate base or general government revenue sources. Whilst it is understood that councils would also need to opt in for this measure the application of development contributions to smaller scale infill developments, particularly within the inner and middle metropolitan areas is not considered desirable. Variable Model The variable model (DLS) will only be available in the Growth Areas or large scale strategic redevelopment areas and is intended to target exceptional circumstances where local requirements justify a variation. The levies under this model may also include a capped contribution amount. The variable model could allow significant variation to the range of allowable items requiring contributions and to the amount of contributions required under the standard model. It is 6

9 considered appropriate that Councils will be required to provide a higher degree of strategic justification to seek variation from the standard model based on local needs and constraints. The need for adapting the contributions system to cater for local variability is understandable as a number of factors such as land value, topography or the existing built from context will influence the requirements for community infrastructure in different areas. However, the degree of variability allowed and the corresponding required justifications for this variability need to be carefully prescribed. The variable model should not be used as an opportunity for councils to simply demand contribution amounts above and beyond the norm or to catch up on previous underinvestment in municipal infrastructure. As such, the application of the variable model needs to be carefully monitored to ensure that variations are based on genuine, circumstantial cases of local variability and that the required strategic planning work thoroughly addresses the need for these variations. Finally the following general principles should continue to apply to both models of contributions: 1. Levies should not be relied upon as the sole source of funding for local or state government infrastructure. 2. Councils should not be able to request additional infrastructure items via permit conditions or other means. Section 6 Application to Types of Development The proposed standardised model and variable model (DLS) options would see a range of standardised levies being charged for planning permit applications. Each category will contain a list of corresponding allowable items from which Councils will nominate infrastructure items requiring developer funded contributions in the form of either land contributions and or monetary values up to a fixed capped amount. The capped amount applicable under each category will be determined by the applicable development setting. These categories, which the Committee proposes to retain from the Government s original report, are: a fixed community and recreation levy, a variable transport levy, a variable drainage levy (to be applied in nonmetropolitan areas only) and a variable public land levy. Under the Committee s proposed model, the categories of infrastructure have been reduced down to four by the incorporation of the previously separate community and recreation levies. As the items contained under these two lists generally exist in similar contexts and are often interlinked, their amalgamation into a single combined category is considered appropriate. The report indicates that most stakeholders are in broad agreement on the concept of having a list of allowable items comprised of basic and essential infrastructure, with these lists differing relative to the development settings. HIA is naturally supportive of this concept as it will aid in better defining the range of potential costs that could be applied to development within a given 7

10 development setting. It is also anticipated that the use of an allowable items list will provide greater consistency of contribution costs applied to land in similar development settings across different areas of the metropolitan region or the state as a whole. However, as already stated, HIA defines community and regional infrastructure as items of broader physical, community and social infrastructure provided for new development that is accessible to the wider community. HIA also reiterates its position that it is not industry s responsibility to minimise unfunded liabilities for councils that have not adequately budgeted to provide for broader community infrastructure throughout their municipalities. As such, clear and transferrable limitations on what constitutes basic and essential infrastructure must be provided by the Committee. This established definition, whether in the form of a list of allowable items or otherwise, must be adhered to under both the standard levy model and a variable option, such as the DLS proposal. However, the adoption of an approach that uses the principles of the Eddie Baron decision, regarding infrastructure being essential for basic livability, are supported. As previously stated to the Committee, in HIA s view development specific infrastructure establishes a nexus with the services necessary for the provision of the allotment or building and could realistically be expected to be funded by the developer. Whereas community social and regional infrastructure establishes a nexus with the needs of the broader population who will occupy the area over a longer period. These types of infrastructure should be funded through more broad-based state and local charges. HIA rejects the idea that basic and essential community and regional infrastructure items should be fully funded under a development contributions system. Section 7 Defining the Levies Growth Areas The inclusion of a standard levy model for Growth Areas would ultimately see a more standardised approach to development contributions. HIA is also supportive of the proposal to cap the maximum charge level for the combined community and recreational infrastructure component in both the standard and variable models. This will add greater certainty for developers and benefit the efficiency of the levying process as this component is perhaps the most difficult to negotiate with the most variability in the type and kind of items that could potentially be included. Variability will exist between one area and another, particularly with regard to land value. As such, providing a range of costs for the land value components is considered appropriate, provided that a robust and equitable valuation methodology is being used. However, HIA does not support the view raised by some Growth Area Councils that there should be some allowance to vary the provision rates for community and recreation infrastructure items in response to demographic factors. 7.5 Community Infrastructure and Recreation Facilities in a Growth Area DLS With regard to the GAA s proposed methodology for setting the community and recreational infrastructure component, HIA considers reliance on existing precedents and status quo established under recent PSPs to determine which items are essential for basic livability will not necessarily address scope creep and the increasing range of items being included for contribution by developers under the present system. In all instances the range of items available for contribution must be reassessed from first principles, particularly those as outlined 8

11 in the Eddie Baron decision - need, equity, accountability and nexus. Establishing an enduring benchmark of what range and standards of items meet these tests within each development setting is a key outcome that HIA and industry are seeking from the Committee. It is critical to HIA and industry that in the interests of maintaining fairness in the development contributions process, all community and recreation infrastructure items that developers are required to contribute towards be justified on the basis of a direct nexus between a subject development and an infrastructure requirement. As such, the inclusion of infrastructure items that serve regional or municipal wide functions are not supported and as a matter of principle, neither is the inclusion of facilities that are to be privately operated for profit. It is HIA s view that this principle can and should be applied to all items being proposed under the community and recreation levy category but without costings being provided, a discussion of what items should or should not be included in various development settings is considered to be somewhat academic at this stage. However, in the interests of providing some feedback to the Committee s, HIA does not support the inclusion of higher order facilities such as multipurpose community centre to be operated by a council, as proposed under the level 2 and 3 distinctions in table 3. These further augmentations are considered to be neither basic nor essential for the operation of a multipurpose community centre, which is intended to serve local needs relative to the population increase being provided by a given development. Additionally, although the provision rates that differentiate between level 1 and level 2 requirements are not yet clear, if there is to be differentiation with regard to a multipurpose community centre then it stands to reason that there should be further demarcation between a local and a district sports facility within table 4. Also as mentioned HIA does not support charging development contributions for infrastructure items which will ultimately support a business proposal such as fee for service child care centres or medical facilities. HIA is generally in agreement with the Committee s preference for levies to be determined in this setting on net developable hectares as opposed to a per dwelling basis. Exemption of nonresidential development or residential components of business development is also supported in the interests of maintaining viability for these developments in the Growth Areas, which serve an important role in supporting the livability of a developing residential area. 7.6 Transport Infrastructure in a Growth Area DLS Aiming for standardisation of contribution costs should be the primary goal of this Committee. As such, it is HIA s view that setting a standard road cost based on current costs in Growth Areas or a standard reference index such as Cordell s is an achievable and desirable outcome for the Committee. This standard rate should be based on ideal topographic and geographic considerations and should be applicable as a base scenario across all Growth Areas, with any required variability based on local constraints or conditions to be then further explored and accommodated under a given DLS process. HIA does not support option 2 proposed under this section and questions the overall benefit in attempting to prescribe individual rates for varying LGAs or Growth Areas, when subsequent variation will inevitably be sought as further local constraints and circumstances come to light. As various submitters have asserted, each case will be calculated on its individual circumstances based on preliminary design and cost estimates. It should be a goal of this 9

12 Committee to determine what those initial estimates should be. As such, HIA supports the idea that typical intersection and road models should be developed to inform the range of costs allowed under the variable model. With regard to the provision of land contributions towards ultimate works (the building and upgrading costs of which must be met by the Road Management Authority), this contribution must always be based on the principles of need, equity and nexus as described above. Additionally, peripheral issues such as the timing of VicRoads declarations and resulting uncertainty for councils should not be used as justification for further contributions being sought under a DLS arrangement to provide preemptive ultimate arterial road solutions to the benefit of councils. HIA does not support the formalisation of any protocol or standards that run contrary to these principles including the apportionment of costs for higher order or regional transport infrastructure items (such as regional pedestrian and bike infrastructure) mentioned in Table 5 of the Committee s report. As a rule, contribution towards these items should exclusively be dealt with under the Growth Areas Infrastructure Contribution (GAIC) process. 7.7 Drainage Infrastructure in a Growth Area DLS HIA s previous submission stated that where an existing relationship with a drainage authority was in place, infrastructure contributions for drainage works under the proposed model are not required. However, as with the transport items, it is HIA s view that the development contributions system would benefit from a standardised model of drainage infrastructure contributions even if as only a guide which would inform variation from the standard model under a variable model (DLS). As such, Option 1 is preferred. HIA questions the overall efficiency benefits of determining a rate per municipality or growth area, which is better left to be negotiated in the process of developing justification for an individual DLS. Owing to Melbourne Water s role as the relevant authority, and the existing requirements placed on developers under the drainage scheme, the exclusion of contributions to drainage infrastructure from metropolitan Growth Areas is considered appropriate. The Committee s approach to metropolitan growth areas outside of Melbourne Water s domain and in regional areas is generally supported. The use of Melbourne Water standard rates to guide non metropolitan regional growth area costings are supported in principle. However the level of contribution to works covered under the drainage levies for these areas need to be thoroughly justified as a matter of principle with relation to the requirements of a council s drainage scheme and any local topographical issues and the nexus between increased discharge volumes from a development and the capacity of any existing drainage infrastructure. This is especially important with regard to regional flood mitigation measures as the apportioning of costs for these works under the development levy system need to be considered in light of their catchment wide application. The capturing of costs for open space and recreation works on land reserved for drainage infrastructure under the capped community and recreation levy categories is considered appropriate, provided that these costs are limited to the existing fixed amounts specified under that category. 10

13 7.8 Public Land in a Growth Area DLS Whilst the contribution rate specified in a planning scheme or under the Subdivision Act 1988 provides certainty - it is understood that this in not common practice in Growth Areas. Any approach to public land contributions needs to ensure that there is certainty over the methodology used to calculate the amount required. This should be detailed as part of stage 2 for further scrutiny by industry. 7.9 Administrative Costs As a matter of principle, HIA opposes the inclusion of costs related to the completion of strategic work required for justifying the application of development contributions via either the standard model or the variable DLS option. This work is required to be completed by councils or the relevant authority and is not the responsibility of new home owners to fund. However, if the Committee intends to support the inclusion of these costs they must be capped at a standardised rate that remains constant across all development settings. In relation to Works in Kind, as a matter of principle and in the interests of transparency and equity, any unused or unneeded amounts of contribution funds levied for this purpose remaining at the completion of the required strategic planning stage should be made public and funds reimbursed to the developments who made contributions via a deduction from the overall contribution amount. Section 8 Defining the Levies Urban Areas HIA does not support the application of the proposed standard development contributions model to existing urban areas. There are no assurances provided under the Committee s report that adequate justification for the application of contributions to small scale developments will be required prior to or that a contribution amount commensurate with the minor impacts such development would have on existing infrastructure capacity. In HIA s experience, councils do not adequately define the nature of specific infrastructure capacity shortfalls or how much impact a specific development will have in regards to the capacity of existing local infrastructure before seeking to apply contribution requirements. The cost imposed on an individual home buyer under this model would be disproportionate to their level of impact on existing infrastructure capacity and a disincentive on the provision of further housing capacity in existing urban areas. While the broad strategic growth patterns of a municipality should certainly be indicated within a planning scheme s Municipal Strategic Statement (MSS), this document is pitched at a high level and is not likely to provide adequate justification for assessing specific impacts on existing local infrastructure capacity. Additionally, if DPCD s model Ruby Town structure plan is used as a guide, the average activity center structure plan will also not cover specific details such as vehicle movements on local roads per day, flow rates of council owned drains or the number of residents who use their local sporting fields. As stated in the Committee s own operational principles, charges should be able to be used to fund new infrastructure or replace obsolete infrastructure, but only in proportion to its likely use by new population. In the absence of actual levy costings and further details of what specific infrastructure capacity assessment criteria are required to apply the proposed Standard Levy to all existing urban areas, HIA cannot in good conscience support this measure being applied to small scale housing developments at this time. 11

14 Section 9 Defining the Levies Strategic Redevelopment Areas It is important that any proposed allowable items list in this category have the same principles of nexus and need applied before any charging mechanism is implemented. It must still be clearly demonstrated within a council s strategic work in application to sites in this development setting what infrastructure is required and why. The level of impact that the development will create should also be clearly defined with the structure plan or development plans that are required in justifying the application of the standard model or the variable model to these sites, so that apportionment of the costs of required additional infrastructure upgrades can be fairly determined with regard to the capacity of the existing infrastructure. The proposal to limit the variable model to large scale sites is supported in principle, as is replicating many of the DLS provisions proposed to be applied under the Growth Areas setting. The application of a per dwelling rate, as opposed to the per hectare rate nominated for the Growth Areas setting, will potentially have some impact on dwelling yields, particularly on smaller sites. However, this is still considered the most appropriate measure for the given context and this potential impact on providing the maximum amount of dwellings on a site could be addressed via the application of strong strategic planning guidance. The value in differentiating between these two categories of sites hinges on the justification for the threshold between the small scale and large scale site designation. The capacity of a site to accommodate a given number of dwellings is perhaps the most natural first point of reference, as ultimately the amount of dwellings being provided on a site will determine the level of impact and therefore the level of contribution to be sought. Perhaps a distinction based on DPCD s planning permit activity statement data categories would be an adequate arbitrary measure. However, this aspect is also quite variable and would depend on the design of the development and its target market. Additionally, any subsequent redesign could technically alter the classification of the site after contributions have been levied. The same criticism could be applied to using a measure of site area as the threshold criteria, although this is perhaps the most equitable approach. It is possible that the zoning of the site or the nature of any other strategic controls that apply could be used to differentiate between the two categories. However this would require a relatively standardised approach to identifying these sites across all municipalities, as variations in approach would result in further complications. However, as the ability to apply the variable DLS option is the main difference between the small scale and large scale contexts, perhaps the criteria for differentiating between them should be based on the committee s original justifications for providing the variable model. Section 10 Apportionment HIA acknowledges the challenges involved in determining apportionment, particularly in relation to sites that abut existing areas. It is also HIA s view that external apportionment of costs should be minimised. It is reasonable that there must be some degree of flexibility in the consideration of apportionment, as there will be local variation based on location and other external factors leading to greater or lesser impacts on surrounding infrastructure. The guidelines provided in Table 12 appear to be appropriate guidance for the application of apportionment principles to each development setting. 12

15 It is acknowledged that the apportionment requirements apply only to higher order facilities. Where the population doesn t grow as anticipated and the developer has paid the levy based on anticipated population growth rate - appropriate reimbursement to the developer for anticipated external use should occur. HIA s initial comments on apportionment still have relevance here in as far as connector roads should not be funded through development contributions as these can provide benefits to beyond the locality of a subject development area. External road cost contributions should only apply to the first carriageway of any adjoining road and should be included within the capped transport category and treated in the same manner as other infrastructure items in respect to adjustment. Any further roadwork required beyond this should be funded by the roads authority in recognition of these items broader regional role. However, HIA believes that adequate VicRoads funding is often not available to fully fund broader regional road infrastructure. Section 11 Valuing Public Land HIA is supportive of the Committee s commitment to review of land valuation processes particularly in light of increasing land costs as a component of existing DCPs. An equitable and efficient approach must be determined that gives certainty to land owners over council s land requirements as early as possible and provides a fair and equitable valuation framework. Section 12 Works in Kind It is agreed that the proposed system must be able to consider works in kind which should be negotiated between the collecting agency and proponent. There needs to be an agreed standard for the works to be undertaken so that the costing of provided items by proponents is consistent across all council areas. In the event that works required under a works in kind agreement are completed to the agreed standard but under the budgeted cost, credit of the remaining difference should be provided to the developer s benefit via a commensurate reduction in a developer s overall required contribution amount under the standard model or DLS. Section 13 GAIC A review of existing definitions for State level infrastructure, with reference to the allowable items, particularly transport items, proposed for inclusion under the Standard Levy model or variable DLS option is required to eliminate any future confusion or potential doubling up of infrastructure payments within the two separate contributions systems. HIA is broadly supportive of the Committee s proposal to review the existing GAIC arrangements in light of the proposed contribution amounts as indicated in this section of the report. 13

16 Section 14 Use of Permit Conditions It is HIA s understanding that Section 62(5)(c) of the Planning and Environment Act 1987 allows for a responsible authority to require the provision of or payment for works on land subject to a planning permit via conditions of a permit, without the need of a DCP or Section 173 Agreement. However, the Committee s report also indicates that these provisions relate only mitigating off site impacts or out of sequence developments and prevent the levying of funds from multiple parties via permit conditions without an approved DCP. These conflicts need to be addressed and the preferred regulatory operation of the proposed standardised model or DLS option should be explained in detail within the Committee s Stage 2 report and should be checked with regard to these provisions and any other relevant or contradictory provisions of the Act. Regardless of the regulatory method used, the following principles are suggested as guidance around how permit conditions should be used to apply either the standard or variable models of development contributions: Conditions for development contributions must be reasonable, certain and relevant - as per all other permit conditions. The provision of contributions must be required as a direct causal result of the granting of a permit for development. Given the nexus established between the permitted development and the need for the infrastructure - the works must be paid for in whole by the developer or in part if agreed by council or other authority. It is reasonable that other land owners may benefit from the works and this may be reflected in the apportioning of costs and the amount borne by the developer. DCPs are the only means for levying contributions from multiple developers. No double dipping - permit conditions cannot conflict with or duplicate DCP requirements. These principles should be reinforced via DPCD issued guidelines for the proposed system, which should provide clear examples of how and when permit conditions should be worded and used. Additional Comments - State Infrastructure Committee and Review Mechanism As raised in HIA s initial submission, at some point the Committee will need to consider the way forward with regard to disputes which will inevitably arise from any new process that is put in place by Government. An appeal mechanism is also vital to the success of any new process the details of which would need to be carefully considered and could be a process run through either a single Ministerially appointed advisory committee or a similar process run through Planning Panels Victoria. Industry is open to suggestion as to the mechanism used but an appeal process does not seem to be discussed either within the Government s preferred model or the Committee s report. The disputes mechanism should ideally avoid the use of VCAT - not because the process would not work, but because the waiting times for appeals at the Tribunal are already well beyond the kind of timeframes that would be considered appropriate. Currently there is a 10 month waiting time from lodgment to hearing date and the use of VCAT for further disputes arising from contested development contributions issues will only serve to further clog the system. 14

17 Consideration should be given to the use of sessional Planning Panels Victoria members who would be well placed to hear and decide on disputes. Failing this option an internal government committee within the planning department might be considered appropriate but issues over ongoing membership of the committee and level of expertise would need to be carefully considered. It is realised that a standard contribution system should in theory minimise disputes, but in reality there will always be differences of opinion in the makeup and use of the levies and if a capped system is in place, funds should not necessarily have to be all charged and spent. Any system which is based around the principles of nexus and need will always in theory have the ability to generate a dispute and an appropriate mechanism should be in place to manage this. 5. Concluding Comments As previously stated, HIA welcomes the continuing progress of the Committee in reviewing the development contributions system within Victoria and is pleased to provide further input into this process together with a number of general policy principles that should be included in any new model under consideration. As with our initial submission to the Government s Preferred Way Forward paper of last year, HIA welcomes the opportunity to help simplify and improve on inconsistencies within the existing system but cautions against the potential for designing a system of levies that attempts to satisfy all parties and becomes more cost effective than the existing system. However as stated above and previously, HIA believes that detailed costings of any alternative model are critical in determining if this is the best model for Victoria. For this reason HIA has been unable to provide comments beyond the overarching principles on the types of infrastructure the Committee has put forward as appropriate in a standardised development contribution system. Placing the costing of the model as secondary to the determining its operational framework is of concern and has the potential to undermine the work of the Committee in consulting with industry. We look forward to more thoroughly assessing the effectiveness of the proposed model with reference to costings for revised allowable items lists for each development setting and more explicit details of other operational solutions and supporting measures within the Committee s Stage 2 report. 15