Housing Affordability Fund

Housing Affordability Fund 2008-09 Application Guidelines Introduction The Federal Government has established a Housing Affordability Fund of $512million which will be available over a five year period to lower the cost of building new homes. This assistance will focus on supply side barriers to the development of affordable housing, particularly:- Reducing lengthy planning and/or development assessment processes, which impact on the holding costs for housing development; and Reducing the costs of infrastructure developments, such as roads, water, sewerage, open space and community facilities, which are incurred by State and Local Governments and often passed on through developers to new home buyers. The funds will be distributed through a competitive process, largely to Local Government but applications will be accepted from State Governments as well as Local Government Associations and other housing suppliers such as developers. The Fund will target both greenfield and infill developments where high demand exists or is forecast over the next five years. Proposals will need to show how cost savings will be passed onto new homebuyers and how planning reform agendas will be progressed. Applications to this first funding round will also need to demonstrate how 30% of the Housing Affordability Fund funding would be expended on agreed milestones by 30 June 2009. The Housing Affordability Fund is considering three types of projects:- Infrastructure only a contribution towards larger scale housing linked infrastructure or entirely fund smaller scale infrastructure proposals eg connecting infrastructure (roads, water, sewerage etc) and community infrastructure (parks, cycleways and other facilities); Reform only - to achieve specific reforms including the adoption of a best practice or the development of leading practice modules; and Mixed Infrastructure and Reform for infrastructure but also includes an element of reform in order to increase the level of savings to be passed onto homebuyers. Assistance with Applications to the Fund These guidelines are provided by the to assist Councils with the completion of the Housing Affordability Fund (HAF) application. The objective is to ensure a consistent approach across all applications submitted by South Australian Councils and to ensure uniformity in calculations sitting behind the application. In addition to this guideline a series of working templates are provided in a separate Excel spreadsheet document (HAF working templates.xls). Working templates are not to be submitted with the application, but are essential to calculate the information required 30 September 2008 1

for many of the questions. Working templates should, however, be forwarded to the LGA along with your completed application to assist with state wide coordination. The HAF application form has been developed by the Australian government and cannot be modified. Complete each section as required preparing the attachments requested under relevant questions. These guidelines address only those questions in the HAF application that require some form of calculation or methodology. Guidance includes a structure for preparing the various attachments that are to accompany the formal application form to be submitted. Please note that it is important to ensure that attachments do not exceed the file size limitation of 1Mb. So attachments may need to be broken into multiple files for emailing with the HAF application. To assist with processing and to avoid confusion, it is recommended that attachments be numbered according to the numbering system used in the application form, e.g. Attachment 1a.10 will relate to Part 1a question 10, this is explained further below. Before commencing the application, and in addition to this guideline, you should have the following resources at your side: Housing SA document Assistance for SA based submissions Sept 2009 HAF data sets (in Excel file) to use in answering question 11 of part 3 Working Templates A to F (in Excel file) for calculations HAF Application Form PART 1 APPLICANTS DETAILS 7. Recipient Created Tax Invoices Further information on recipient created tax invoices can be found on the ATO website http://www.ato.gov.au/businesses/content.asp?doc=/content/00104657.htm&pc PART 1a CONSORTIUM DETAILS 10. Memorandum of understanding Where applicable attach the full memorandum of understanding signed by the proposed consortium members and label it Attachment 1a.10. Follow all instructions provided in the application form. PART 2 SUMMARY of PROPOSAL 3. Description of proposal 30 September 2008 2

All applications must attach a description of proposal no longer than two pages and following the instructions provided in the application form. Label it Attachment 2.3. To assist Councils to establish a context to their project description the following introductory comments for each of the project types is provided. Councils are encouraged to use and modify these words, where appropriate: Infrastructure only This proposal provides essential infrastructure for the development of affordable housing and will provide critical services to the community over a long economic life. (Where applicable - The infrastructure demonstrates an innovative approach to key sustainability issues in South Australia including stormwater management, water retention and re-use, renewal energy technologies and urban and building design. Where applicable - The development of this community infrastructure promotes the South Australian Government s strategic goals in the areas of community well being and better access to alternative transport modes such as cycling and walking.) The proposal links with the infrastructure planning priorities of the State Government. The (insert Council name) is regarded as being a better practice Council under the current South Australian planning and development requirements and has undertaken significant reform to achieve this level of practice. Reform only This proposal will result in (insert Council name) creating or adopting a best practice module for planning and development in South Australia. It leverages off the work undertaken by the Development Assessment Forum and their ten leading practices and the six tracks that apply these leading practices to development assessment. (Where applicable - The development of the leading practice module will be within the context of the Planning Reforms announced by the State Government in June 2008. The proposal will implement these reforms within the (insert Council name) and result in changes to development assessment processing including the time taken. Where applicable - The development of the module will compliment the Planning Reforms announced by the State Government in June 2008. The module will create best practice and combine a range of requirements, including planning and development, to achieve the overarching goals of the Planning Reforms. Where applicable - The proposal will allow the (insert Council name) to adopt best practice under the reforms to planning and development announced by the South Australian Government in June 2008. The implementation of these practices will result in changes to the Council s development assessment processing including the time taken. ) Mixed Infrastructure and Reform Combine sentences from those set out above. 4. Funding structure 30 September 2008 3

The information required by questions 4(a) and (d) can be obtained from Working Template A (infrastructure proposals) and D (policy reform proposals). At this point, complete Working Template A and / or D provided in the Excel spreadsheet. Instructions for completing Working Template A & D Identify initial costs of services to be provided for the new development and / or policy reforms. Template A is provided for infrastructure proposals and template D is for policy reform proposals. Complete the appropriate template(s) showing all initiation costs required to establish all necessary services to the new development and / or policy reforms. Detail how each item will be funded including where HAF funds are proposed to be applied. The council administration should be able to prepare most of these figures internally. Councils should be familiar with determining these costs as part of their annual budget cycle. For example in the case of infrastructure developments, the planning department will coordinate with the finance and engineering departments. The engineering department will prepare estimates for the value of the assets that will be capitalised, including contributed (donated) assets from developers. Some assets may not pass to the council such as electrical, water and communication assets. Where a consortium is involved, it may be necessary for another consortium member, such as a private developer, to complete the total cost column and any other relevant details on the working templates. The second part of the working templates sets out the funding by each party over the HAF five year horizon. The totals for the columns in the first table must equal the totals for the rows in the second table. PART 3 MANDATORY CRITERIA 1. Compliance with Commonwealth, State, Territory and Local Government Requirements All applications must attach a one page summary of compliance with existing Commonwealth, state or local government requirements. Label this summary Attachment 3.1 and address the areas discussed below using the headings provided as applicable. Below is a summary of Commonwealth, State and Local Government legislation, strategies and policies that may be relevant to HAF applications, both infrastructure and policy reform. You are not required to address all however it is advisable to identify and comment on how your proposal is consistent with or will support any relevant legislation, strategies and policies. 1.1. Commonwealth Government Requirements 1.1.1 National Rental Affordability Scheme 30 September 2008 4

Although the HAF is directed towards lowering the cost of housing for home owners, Councils may also consider joint developments that incorporate a component of rental accommodation to be provided by private investors. The Federal Government s National Rental Affordability Scheme (NRAS) encourages large-scale investment in housing by offering incentives to investors to increase the supply of affordable rental dwellings for low to moderate income families. The NRAS will fund tax incentives for investors to build up to 100,000 new affordable rental properties. Under the scheme, the Commonwealth will provide private investors with tax credits of $6000 a year for 10 years for new properties that are rented at 20% below the prevailing market level. States and territories have agreed to provide $2000 per home either through cash payments or in-kind, such as the provision of cut-price land or concessions on stamp duty. The Federal Government has appointed partnership facilitators to support implementation of the NRAS by coordinating potential partnerships between councils, investors, builders and developers, and tenancy managers. Private investors can register their interest by emailing: nationalrentalaffordabilityscheme@fahcsia.gov.au and they will be directed to the appropriate facilitator. 1.1.2 National Transport Infrastructure It is unlikely that housing proposals under the HAF will impact on national transport infrastructure. However, Councils should be mindful of any national transport infrastructure in the district or region and any proposed transport projects earmarked for development. Where relevant, comment on any relationship between the HAF proposal and national transport infrastructure or proposed infrastructure. National transport initiatives are mostly focused on national road and rail networks and their integration with air, sea and ports. Of relevance for local government will be projects delivered through the Auslink, Roads to Recovery and Black Spot Programs, regional airport upgrading, infrastructure relating to the resources boom, Northern Expressway and various urban congestion initiatives. 1.1.3 Climate Change The design of housing should have regard to national targets set for climate change, i.e.: The provision of rebates on solar powered systems and solar hot water and low interest loans for households to undertake energy and water efficiency improvements to their homes Assistance to coastal communities to prepare for the impact of climate change Clean renewable energy supply to be at least 20% of total consumption by 2020 1.1.4 Water Commonwealth initiatives, under the umbrella of the National Urban Water and Desalination Plan, which may impact on housing affordability, include measures to: promote the capture of storm water (e.g. aquifer recharge) and the use of recycled water, especially by industry 30 September 2008 5

promote new sources of water not dependent on rainfall, i.e. desalination protect existing water courses, waterways and the environment installation of water saving devices (e.g. shower heads) create Green Precincts to raise community awareness about water and energy savings. 1.2. State Government Requirements 1.2.1. The South Australian Strategic Plan Councils should describe how the proposal supports any of the SA Strategic Plan targets. Listed below are some of the more relevant targets in terms of the housing affordability grant criteria. It is not expected that applications will address all of these targets.. A full copy of the SA Strategic Plan can be viewed at www.stateplan.sa.gov.au. The State Housing SA department has highlighted the following six strategic targets ( Assistance for SA based submissions Sept 2008 ): Expanding Opportunity - Housing T6.6 Homelessness: halve the number of rough sleepers in South Australia by 2010 and maintain thereafter. T6.7 Affordable housing: increase affordable home purchase and rental opportunities by 5 percentage points by 2014. T6.8 Housing stress: halve the number of South Australians experiencing housing stress by 2014. T6.9 Aboriginal housing: reduce overcrowding in Aboriginal households by 10% by 2014. Attaining Sustainability - Climate Change T3.07 Ecological footprint: Reduce South Australia s ecological footprint by 30% by 2050. (This is a measure of our impact on the environment how much our way of life affects productive land. South Australia s ecological footprint is 7.0 global hectares per person) Growing Prosperity - Infrastructure T1.22 Total population: increase South Australia s population to 2 million by 2050, with an interim target of 1.64 million by 2014. Associated State targets that may be relevant include: Growing Prosperity - Economic Environment T1.08 Performance in the public sector government decision-making: become, by 2010, the best-performing jurisdiction in Australia in timeliness and transparency of decisions which impact the business community (and maintain that rating). Attaining Sustainability - Energy T3.14 Energy efficiency dwellings: increase the energy efficiency of dwellings by 10% by 2014. 30 September 2008 6

Building Communities - Regional Population Levels T5.09 Regional population levels: maintain regional South Australia s share of the state s population (18%). Expanding Opportunity - Disability T6.10 Housing for people with disabilities: double the number of people with disabilities appropriately housed and supported in community based accommodation by 2014. 1.2.2. State Policy Objectives 1.2.2.1. The relevant South Australia Planning Strategy for the region. Planning SA issue a series of regional based Planning Strategies. These provide important spatial and environmental strategy for the state, which may be relevant to particular proposals. As part of the Planning Reforms 2008 package, the Government will develop detailed new Regional Plans for all areas of the State. Proposed Regional Plans will have: Specific regional targets for population and land supply (for both housing and employment) Targets and strategies for water and energy efficiency and for housing affordability Protected conservation and agriculture/horticulture areas, growth precincts, and land subject to further investigation Integrated transport planning, and Major infrastructure requirements identified for feeding into Government planning Directions approved in mid 2008 arising from the Planning Reforms will introduce changes to the current Planning Strategies. Councils are encouraged to be mindful of these directions which will be adopted within these strategies, in particular: Planning Strategy - 30 year Regional Plan for Greater Adelaide which is to comprise 7 regions - extended out to Victor Harbor in the south, Barossa in the north and Murray Bridge in the east; 5 Regional Plans for country SA. developing regional plans with specific population and development targets in each region of the State (in conjunction with Local Government) implementation of Transit Oriented Developments (TODs) to support population growth and support affordable housing and climate change preparedness; overhauling land supply management by adopting a rolling 25 year plan for land release for residential and industrial development; clarifying 'Major Development' project status (now to be known as 'State significant development') and for TODs to be considered as State significant development; changes to native vegetation legislation and removal of impediments to the planning processes; incentives for Councils to work on a regional basis in development planning and assessment. 1.2.2.2. Strategic Infrastructure Plan for South Australia 30 September 2008 7

The Principal purpose of the Strategic Infrastructure Plan for SA is to guide new infrastructure investment by governments and the private sector and to improve the management and use of existing infrastructure. In terms of housing, the Strategic Infrastructure Plan for SA includes the following strategies: Develop the capacity for new joint ventures between the government, not-for-profit organisations, the private sector and local government to develop new, affordable and high-needs housing and support community aspirations for home ownership. Incorporate affordability objectives within the planning system so that the development approval process supports an appropriate supply of affordable and high need housing. Accelerate urban regeneration in areas of disadvantage to improve amenity for tenants and expand housing choice. Encourage higher-density residential development in appropriate urban areas through planning for land use and infrastructure augmentation. The Strategic Infrastructure Plan for SA contains metropolitan and regional development priorities throughout the state, including housing, transport, hospitals and waste management. A copy of the plan can be viewed online at www.infrastructure.sa.gov.au/strategic_infrastructure_plan 1.2.2.3. State Government housing affordability targets Housing Plan for South Australia, March 2005 The SA Housing Plan set a target for 15% affordable housing within all significant residential developments. In meeting this target, it is a requirement that properties meet Affordable Homes criteria, including restricting sale to eligible buyers for a limited period and are listed on the Property Locator. The South Australian Housing Trust Act 1995 and Regulations provides criteria for determination of affordable housing and a process for its delivery and ongoing management. It also provides for the Housing Trust to enter into Statutory Covenants to secure affordable housing commitments. The Covenants are registered on the Title and may bind subsequent owners of the land. Local Government Affordable Housing Resource Kit The South Australian Affordable Housing Trust (SAAHT) has developed a Local Government Affordable Housing Resource Kit in conjunction with Planning SA and the Local Government Association. The Kit will assist councils to identify critical housing issues in their community and develop effective local responses that are supported by regional and statewide planning and investment. The Kit captures some of the latest ideas and thinking in planning policy and affordable housing, and provides examples of these. The Kit includes: A description of affordable housing; A checklist of affordable housing strategies for councils to consider in their Strategic Management Plans; A Planning Policy Framework, providing ways for State and Local Government to work together; A sample Development Plan policy and discussion paper to assist with local adoption; Web based Housing needs data set, www.housing.sa.gov.au/lgdata An FAQ section discussing common concerns and issues. 30 September 2008 8

To find out how to participate in the Affordable Homes program, contact the Affordable Housing Innovations Unit in SAAHT on Ph 8124 4073 or email ahiu@dfc.sa.gov.au. 1.2.2.4. State Government requirements regarding accessibility The aim is to integrate the planning of housing, jobs and transport to create communities that are more compact, and offer public transport choices and ready access to services and local jobs. The Planning Reforms have proposed an organising principle of the new Planning Strategy for Adelaide that both broad-acre housing supply and infill developments be concentrated around the major transport corridors and that 70 per cent of growth in infill areas be concentrated in those transport corridors. Transit Oriented Developments (TOD) is defined as walkable neighbourhoods within 800 metres of transport hubs. These can include a hierarchy of activity centres from regional, neighbourhood or local activity centres and is not confined to the major regional TODs highlighted in the Planning Review. Where relevant, a Council should make reference to how the proposal will support these targets. Note 1: Councils that have established policies on accessibility for their area should indicate how their HAF application will address those policies. 1.2.2.5. Planned sequencing In terms of State Government sequencing, metropolitan based applications should make reference to the land sequencing program as detailed in the Metropolitan Development Program available at www.planning.sa.gov.au. Regional applications should reference the relevant regional volumes of the Planning Strategy, which provide direction from the State Government on land use and development in South Australia. Planning Reforms have adopted a policy for the majority of new housing to be within existing areas with a target of a 60:40 distribution split between infill and broadacre development. Provided housing affordability is maintained, the target would extend to 70:30 over the life of the Plan. Note 1: Councils that have established policies on sequencing of development for their area should indicate the relationship and linkages here. 1.2.2.6. Minimum density ranges 30 September 2008 9

Councils should have regard for State Government policy on minimum density ranges, particularly where proposals increase dwelling yield across the development. The following ranges are indicative only: Area Current density Proposed minimum density Outer Metropolitan 8 dwellings/hectare (gross) 8-11 dwellings/hectare (gross) Metropolitan Broadacre 10 dwellings/hectare (gross) 10-15 dwellings/hectare (gross) Infill a) Targeted infill: 20 dwellings/hectare (net) Minimum 20-35 dwellings/hectare (net) corridors, centres b) Transit Oriented Development Normal infill No current average 15-18 dwellings/hectare (net) Minimum 35-40 dwellings/hectare but more likely 60-70 and upwards (net) 20-25 dwellings/hectare (net) Reference: table 6.1 Planning Reforms report May 2008. 1.2.2.7. Tackling Climate Change SA Greenhouse Strategy South Australia s Greenhouse Strategy has produced a Government Action Plan to 2012 containing many references to sustainable building design and community led greenhouse projects. For example, objective 7.2 is to optimise the energy performance and subsequent cost effectiveness of buildings. Proposals that incorporate smart building design and sustainable initiatives are likely to support state (and national) climate change strategies. Further information on the SA Greenhouse Strategy is available at http://www.climatechange.sa.gov.au/strategy/strategy.htm 1.3. Local Government Requirements 1.3.1. The relevant Council Development Plan(s) and Building Rules Applicants will need to clarify whether the development complies with the relevant Council Development Plan(s) and relevant Building Rules. An overview of the applicable legislative requirements should be included, e.g. extracts from the development plan. Include information on the timelines of any approval processes to be followed and the status, i.e. whether approvals have been granted, in progress or pending. Due to the short time frame to submit HAF applications it is unlikely that relevant development and building approvals can be obtained prior to submission. In such cases it is advisable that Council s senior planning officers provide a preliminary view on the extent to which the application is consistent with the provisions of the Council s Development Plan. A clear risk assessment should be undertaken by Council based on the preliminary assessment of the application prior to submitting the proposal. This preliminary assessment and risk assessment should not be provided to external parties at any time. Note 1: The Housing Affordability Fund advises that it is not a requirement that development approval and building consent be required prior to submitting a funding application; however, approval must be obtained before the funding is paid. 30 September 2008 10

Note 2: Councils are reminded that the funding criteria for round one 2008/09 requires 30% of agreed milestones to be completed by 30 June 2009. Affordable Housing under the Development Act 1993 The State Government seeks to achieve a 15% affordable housing component for all new significant residential developments with a focus on: Government Land Major Developments Significant rezoning of land to residential development Amendments to the Development Act 1993 through the Statutes Amendment (Affordable Housing) Act 2007 inserted explicit references to affordable housing leading to the Act supporting initiatives to improve housing choice and access to affordable housing within the community (as an object of the Act) and as an issue for Development Plans to address. Planning Reforms Councils are advised to consider the impact of current planning reforms in terms of applications and to comment on these where relevant (see discussion under 1.2.2.1 above). Planning reforms follow four broad themes, namely: 1. Expanding exempt development (matters which require no development assessment or approval). 2. Creating a new Building Consent only list for minor home improvements (20 day building approvals). 3. Creating a new Residential Development Code to speed planning approvals for major alterations and additions to existing homes and for new dwellings which meet the Code (10 day planning consent and overall 30 day approvals). 4. Speeding assessment processes for merit approval. 1.3.2. Other matters for consideration The LGA State Executive will be requested to provide comment on all SA applications to the HAF. Although not intended to be an exhaustive list, the following additional criteria will be considered by the State Executive, where appropriate: possible intergovernmental cost transfers (three tiers) the impact on local government infrastructure and service usage whether the proposal meets particular community and economic demands the need for business process reengineering in councils through policy or process reform proposals differential impacts of sector-wide reforms and their financial sustainability for Councils potential risks that may be created for local government through the proposal being implemented. 2. Future Viability It is essential to demonstrate capacity of the applicant to fund future liabilities arising from the initial funding without assistance from the Commonwealth. Future viability should be considered in a holistic sense in terms of the viability of the entire new development and / or improved processes through policy reform. Please note that it is not necessary for the new development or policy initiative to be self funding. For 30 September 2008 11

example, it is possible for Council to cross subsidise a development that is not sustainable in its own right. The critical point is that Council is responsible in total for all future liabilities as a result of the HAF funding. As an example, to analyse the viability of a new sub-division, council will need to consider all new revenue streams attributed to the development and ongoing costs required for the new development over a long term horizon. Costs will include such things as community services, refuse collection, street sweeping, street lighting, and infrastructure maintenance and renewal. To analyse the viability of a new process, Council needs to consider new revenue streams or savings generated as a result of the new process, together with any new costs over a long term horizon. There are two Working Templates (B and E) provided for the calculation of future viability. Only use the template(s) relevant to your application. These are working templates only and are not to be included with the formal application submitted. Working Template B Future Viability Of Development X Working Template C Future Viability Of Policy Reform Y Instructions for completing Working Template B Development X Template B demonstrates the future viability of the services provided by local and state government to the residents in the new development. In order to properly assess the future viability of the provision of new infrastructure future revenue streams and costs must be considered over a substantial portion of the life cycle of the infrastructure assets. The templates propose that 50 years is an appropriate timescale for this exercise, although Council may model a shorter timeframe where justified. Complete Template B showing each service to be provided to the new development by council and provide estimates for ongoing revenue streams and cost obligations. For the new development prepare a summary asset management plan for each class of assets. Take for example the new roads that will be passed to council by the developer. The asset management plan for these roads should outline all operational, maintenance and replacement costs required over the 50 year time horizon. It is expected that the different asset classes will require different timing of maintenance and renewal expenditure. The ongoing cost obligations will be based on the asset management plans. Forecasting of revenue (e.g. rates and tariffs) must also take into account the need to fund these cost obligations. It will be a decision for Council on what expenses are to be covered by income generated from the new development and what expenses will be funded (cross-subsidised) from other revenue. When preparing this template take into consideration the principles of financial sustainability as covered in the information papers released by the LGA. Where applicable to the application, show each service to be provided to the new development by the state government and provide estimates for ongoing revenue streams and cost obligations. Future viability of private services has not been included at this stage. 30 September 2008 12

Instructions for completing Working Template E - Policy Reform Y Template E demonstrates the future viability of the new planning and assessment processes to be implemented by the Council and state government. Savings generated may outweigh ongoing costs associated with the new processes. Alternatively, savings may be found in other areas or the ongoing costs could be paid for through increasing rates, fees and charges. Summary of working templates B and E (to be attached to application) Council must attach a summary of working templates B and E, including suitable narrative describing future viability of the proposal. This summary is to be labelled Attachment 3.2 and cannot exceed one page in length, as per the HAF application requirements. Attachment 3.2 guidelines for preparation To be attached to the formal application (one page maximum) Future Viability of Development X (Working Template B) Provide a summary table for the information contained in working template B. Use the column headings in the template (including the projected years) 1. Show one row for: Ongoing revenue Ongoing costs o Operation o Maintenance / renewal o Corporate overheads o Other Net revenue / (cost) Future Viability of Policy Reform Y (Working Template E) Provide a summary table for the information contained in working template E. Use the column headings in the template (including the projected years) 2. Show one row for Ongoing revenue or savings Ongoing costs Net revenue / (cost) Narrative Following the summary table(s), provide narrative that summarises the information in the tables including: the future costs that are likely to arise as a result of the new development and or new policy reform and explain how they will be funded over the period shown in the tables. Non-financial benefits that may be provided such as improved service delivery Concluding remarks on the future viability of the new development and or policy reform. 3. Infrastructure Only Projects 30 September 2008 13

Where funding is sought for infrastructure only proposals it will be necessary to demonstrate that significant policy reforms have already been undertaken or that leading practice in planning and development assessment processes are in place. In attachment 3.3 provide summary evidence of the above making reference to the appropriate information in Attachment 3.2 and weighted criteria 4, 5 and 6 contained further on in the application form. Provide statistics and other information that demonstrates that leading practice is already in place. This may include benchmarking against other councils. When demonstrating current planning and assessment performance, Councils may wish to consider the relevance of the Systems Indicators system in providing evidence of performance, or similar comparative performance indicators. Councils which have adopted the Better Development Plan modules or which are compliant with the Development Assessment Forum s 10 leading practices may wish to note this in their application. Councils should also be mindful of the recently released State Government Planning Reforms which include a goal of streamlining development assessment. The policies and practices to achieve this streamlining of development assessment will be staged over the coming 1-2 years and beyond. The benefits of the reforms are set out in text in the overarching documents set out on the Planning SA website or in Appendix G of the Planning Review which should also be available on the Planning SA website or through the LGA s website links at http://www.lga.sa.gov.au/site/page.cfm?u=1573 Councils that have put in a submission to Planning SA or through the LGA in the recent consultation period on the Planning Reforms may also wish to note their active participation in formulating better practice/planning reforms in this State. 30 September 2008 14

WEIGHTED CRITERIA 1. Value for Money (for the Australian Government) This criteria is the most heavily weighted and will attract over 50% of the total application weighting. The Australian Government will weight applications according to which ones provide the best value for their grant investment. Value for money must consider the total contribution from all parties to the application (including the HAF grant) both cash and in kind. This is to be translated into the net reduction in housing cost to be passed onto the home purchaser. Working Templates C and F have been developed to assist Councils calculate savings for homebuyers. Instructions for completing Working Template C & F - Value for Money Working templates C and F will assist in identifying savings related to affordable housing, both infrastructure and policy reform initiatives. Working templates A and C will have already required identification of the items to be considered. These templates look similar to A and C but focus on savings only. Savings may also be in the form of improved operational efficiencies for the homebuyer and / or Council. Where energy savings can be demonstrated through the use of innovative design and appliances resulting in reduced operational costs then this should be factored into the application as value for money 2. Demonstrating savings for homebuyers 2.1. Mechanisms for Passing Savings on to Homebuyers It is expected that in the main cost savings will be in the form of an initial saving on the purchase price of the new home, although applications may use innovative mechanisms to ensure savings are passed onto the home purchaser. This could be immediate through a discounted purchase price or staggered over a number of years through reduced recurrent costs, or a combination of both. Savings may also be in the form of improved operational efficiencies for the homebuyer and / or Council. Where energy savings can be demonstrated through the use of innovative design and appliances resulting in reduced operational costs then this should be factored into the application as value for money Projects must outline the mechanism by which savings will be passed on to homebuyers and Councils must display caution where there is a relative likelihood of the mechanism resulting in windfall gains. Please refer to the Housing SA Assistance for SA based submissions Sept 2008 paper for information on Land Management Deeds for securing affordable housing provisions. This system is well developed in SA. 30 September 2008 15

The proposal should detail what performance measures will be used to enable the Australian Government to ascertain the level of savings to the homebuyer that result directly from the funding, and a measure of the savings that result from state, territory or local government reform. One way to demonstrate the savings to be passed on to the home buyer is to obtain a report from a licenced valuer certifying the current market value of each new dwelling, against which the discounted purchase price is shown. A reconciliation of the savings passed on to the homebuyer could look like the following table: Allotment Estimated market value (by licenced valuer)* Savings to be passed on to homebuyer Net sale price to be advertised Actual price paid by homebuyer (after development completed)** 123 $250,000 -$15,000 $235,000 $235,000 124 $255,000 -$15,000 $240,000 $240,000 125 $245,000 -$15,000 $230,000 $228,000 * Note 1: A copy of the licenced valuer s report determining the market value of each housing allotment must be attached. ** Note 2: This column would remain blank for the application and the actual price paid inserted as a performance measure once the development is completed. This is to verify the homebuyer obtained a reduced purchase price. Councils may also consider passing on direct benefits through reduced Council rates over a period of time. Rate Rebate: In South Australia it is possible to pass on savings generated through the HAF application by way of a rate rebate over a period of time, e.g. $1500 per annum over 10 years. This would have the effect of spreading the benefit over a medium term and would be rebated to the present day owner of the land, even if that were to change during the 10 year period in this example. Passing on the savings generated through HAF grant assistance and/or policy reforms directly to the homebuyer through reduced council rates provides a visible, long term benefit that is transparent and auditable. A rate rebate is provided through section 166 of the Local Government Act 1999 and may apply for up to 10 years. 2. High Demand for new dwellings (Benchmarks) The state government has compiled excel based spreadsheets of the core data required for weighted criterion 2 High demand for new dwellings. The region of relevance will generally be the applicant Council Local Government Area(s) although a grouping of adjoining councils or a region in which the Council sits may be used to suit the particular proposal. The purpose of this criterion is to demonstrate high demand at present or projected for the next 5 years and this may overlap into adjoining Council areas. 30 September 2008 16

3. Delivery Risk Risk Management Strategies (questions 34 & 37) As with any project undertaken by Council, consideration of the risks in the delivery of the project and the development of strategies to deal with risks need to be undertaken. The HAF application form identifies various delivery risks in relation to policy reform projects (questions 29 to 34) and infrastructure projects (questions 35 to 39). A risk may be defined as: any threat that can potentially prevent Council from meeting its proposal; or any opportunity that is not being maximised by Council in meeting its proposal. Council s aim is not to eliminate all risk but to ensure that risk is maintained at an acceptable level in a cost effective manner. Questions 34 and 37 require Council to describe any strategies that are/will be put into place to manage risks associated with the proposal. The identification of key risks in a project relies principally upon experience, judgment and, to a significant extent, creative and lateral thinking. For a complex project the identification of risks is best achieved in a workshop environment involving key players from Council and appropriate experts in areas such as planning, engineering and project management. Less complex projects may be assessed by the project coordinator with assistance from in-house experts where required. To assist the quantification of risk in the next stage, the Council should make an assessment of: the likelihood of the risk occurring; and the consequence or impact of the risk if it did occur. Once all risks have been identified and recorded, the likelihood and consequence of the risk occurring should be recorded and ranked in a simple matrix. The numbers below represent each risk that has been identified for the project. Risks that have been placed in the shaded boxes are considered medium/high impact and medium/high likelihood and should be further analysed with a suitable risk strategy developed. The remaining do not need to be quantified due to their relatively low likelihood of occurrence and impact. Preliminary risk matrix Likelihood Low Medium High High 1, 2, 5 6, 9 4, 3 Impact Medium 7, 8 12, 13, 16 19, 20 Low 10, 11, 15 14 17, 18 30 September 2008 17

The quantification of risks is an iterative process that relies upon reliable information and sound judgement. Some risks are readily quantifiable due to data available from prior experience in the management of these types of risk, while other risks are not easily quantifiable and an accurate quantification will depend upon the judgement and experience of the project team, as well as expert opinion. The strategies to be developed to deal with identified risks will vary considerably, keeping in mind that the HAF application requires Council to only address risks associated with the proposal. 30 September 2008 18