delwp-internet-m5.clients.squiz.net · Web viewDraft Practice Note, Development Levy System. Gumnut Shire Council Development Levy Plan . Urban and Strategic Development Areas

Planning and Environment Act 1987

Standard Development Contributions Advisory Committee

Report 2 ‘Setting the Levies’

31 May 2013

Planning and Environment Act 1987

Advisory Committee Report pursuant to section 151 of the Act

Standard Development Contributions Advisory Committee

Kathy Mitchell, Chair

Trevor McCullough, Member Rodger Eade, Member

Chris De Silva, Member Bryce Moore, Member

ContentsPage

Executive Summary..............................................................................................................i

1 Introduction...............................................................................................................1

1.1 Background.............................................................................................................11.2 The Advisory Committee........................................................................................11.3 Terms of Reference................................................................................................21.4 Submissions and Consultation................................................................................41.5 Recommendations..................................................................................................9

2 Development Settings..............................................................................................11

2.1 Overview...............................................................................................................112.2 Submissions and Consultation..............................................................................112.3 Growth Areas........................................................................................................122.4 Urban Areas..........................................................................................................132.5 Strategic Development Areas...............................................................................142.6 Applying the Development Settings.....................................................................162.7 Recommendations................................................................................................18

3 Defining the Levies...................................................................................................19

3.1 Overview...............................................................................................................193.2 Submissions and Consultations............................................................................193.3 Development Levy System....................................................................................203.4 Standard and Supplementary Levies....................................................................213.5 Standard and Supplementary Allowable Items....................................................223.6 Relationship to other Funding Sources.................................................................243.7 Implementation Principles....................................................................................253.8 Recommendations................................................................................................28

4 Allowable Items.......................................................................................................30

4.1 Overview...............................................................................................................304.2 Submissions and Consultation..............................................................................304.3 Growth Areas........................................................................................................314.4 Urban Areas and Strategic Development Areas...................................................394.5 Recommendations................................................................................................43

5 Levies for Growth Areas...........................................................................................44

5.1 Overview...............................................................................................................445.2 Submissions and Consultation..............................................................................445.3 Basis for Standard Levy.........................................................................................455.4 Recommended Standard Levies for Metropolitan Melbourne Growth

Areas.....................................................................................................................525.5 Recommended Standard Levies for Non-Metropolitan Growth Areas.................54

Standard Development Contributions Advisory Committee| Report 2 | 31 May 2013

5.6 Implementing the Standard Levy in Growth Areas...............................................585.7 Additional Levies in Growth Areas........................................................................605.8 Overall Conclusions..............................................................................................635.9 Recommendations................................................................................................63

6 Levies for Urban and Strategic Development Areas..................................................64

6.1 Overview...............................................................................................................646.2 Submissions and Consultation..............................................................................646.3 Review of Previous DCPs......................................................................................656.4 Proposed Levies....................................................................................................676.5 Contributions to Councils Capital Works Programs..............................................696.6 Exemptions to the Standard Levy.........................................................................716.7 Supplementary Levies in Strategic Development Areas.......................................726.8 Recommendations................................................................................................74

7 Levies for Non-Residential Land Uses.......................................................................75

7.1 Overview...............................................................................................................757.2 Submissions and Consultation..............................................................................797.3 Developing an Approach to Non-Residential Levies.............................................807.4 Preferred Approach..............................................................................................827.5 Proposed Levies....................................................................................................847.6 Recommendations................................................................................................88

8 Valuing and Securing Public Land, and Open Space..................................................89

8.1 Overview...............................................................................................................898.2 Submissions and Consultation..............................................................................898.3 Discussion.............................................................................................................908.4 A New Approach to Securing Public Land in Growth Areas..................................918.5 Valuing Public Land...............................................................................................928.6 Securing and Transferring Public Land..................................................................928.7 Open Space in Growth Areas................................................................................938.8 Recommendations................................................................................................97

9 Apportionment........................................................................................................98

9.1 Overview...............................................................................................................989.2 Submissions and Consultation..............................................................................989.3 Approach to Apportionment..............................................................................1009.4 Recommendations..............................................................................................102

10 Works in Kind.........................................................................................................103

10.1 Overview.............................................................................................................10310.2 Submissions and Consultation............................................................................10310.3 Discussion...........................................................................................................10410.4 Recommendations..............................................................................................106

11 Developer Delivered Infrastructure and GAIC.........................................................107

11.1 Overview.............................................................................................................107


11.2 Submissions and Consultation............................................................................10711.3 Discussion...........................................................................................................10811.4 Recommendations..............................................................................................109

12 Using Permit Conditions for Infrastructure.............................................................110

12.1 Overview.............................................................................................................11012.2 Submissions and Consultation............................................................................11012.3 Discussion...........................................................................................................11012.4 Recommendations..............................................................................................112

13 Administration and Implementation.......................................................................113

13.1 Overview.............................................................................................................11313.2 Submissions and Consultation............................................................................11513.3 Collection of Levies.............................................................................................11713.4 Regulatory Implementation................................................................................11713.5 Decision Making and Dispute Resolution...........................................................12513.6 Development Levy Plan......................................................................................12613.7 Indexation...........................................................................................................12713.8 Contingencies.....................................................................................................12813.9 Recommendations..............................................................................................129

14 Conclusions and Recommendations.......................................................................130

14.1 Response to the Terms of Reference..................................................................13014.2 Consolidated Recommendations........................................................................133

Appendix A Terms of Reference

Appendix B Stakeholder Consultation

Appendix C Written Submissions – Stage 2

Appendix D Dwelling Approvals and Projections

Appendix E Implementation Mechanisms

Appendix F Sample Development Levy Plan

Appendix G Overview of Implementation Processes


List of Tables....Page

Table 1 Comparative Analysis of Typical Development Contributions................................7

Table 2 Proposed Development Settings..........................................................................18

Table 3 Framework for the Development Levies..............................................................28

Table 4 Growth Areas Community and Recreation Levy – Allowable Items......................32

Table 5 Growth Areas Transport component - Allowable and Supplementary Items...........................................................................................37

Table 6 Growth Areas Drainage Levy - Allowable Items....................................................38

Table 7 Urban Areas Standard Levy – Allowable Items.....................................................41

Table 8 Strategic Development Areas Supplementary Levy – Allowable Items.....................................................................................................................42

Table 9 Breakdown of DCP rates by infrastructure category for all DCPs approved (or pending approval) 2008 - 2012 by Region in 2012$........................47

Table 10 Breakdown of DCP rates by infrastructure category for all DCPs approved (or pending approval) in 2012 by Region in 2012$...............................47

Table 11 Overview of amount of land being secured by Region, 2008 - 2012....................48

Table 12 Average land value per NDHa for all DCPs approved (or pending approval) in 2012$................................................................................................48

Table 13 Total DCP rates being collected for all DCPs approved (or pending approval) 2012 in 2012$ (including Clause 52.01 contributions)..........................49

Table 14 Holding Costs for land in Growth Areas................................................................51

Table 15 Components of the Growth Areas Standard Levy.................................................53

Table 16 Standard Levy for Metropolitan Growth Areas....................................................53

Table 17 Ballarat West and Armstrong Creek DCP costs per hectare.................................55

Table 18 Possible basis for Larger Non-Metropolitan Growth Areas..................................56

Table 19 Summary of DCPs from Regional Cities, per NDHa...............................................57

Table 20 Recommended Levies for Residential Development in Growth Areas.....................................................................................................................63

Table 21 Current Metropolitan DCPs..................................................................................65

Table 22 Indicative Levy Revenue for Victorian LGAs..........................................................70

Table 23 Indicative Levy Revenue as percentage of Capital Expenditure............................71


Table 24 Recommended Levies for Urban Areas and Strategic Development Areas.....................................................................................................................74

Table 25 Equivalence Table from the DCP Guidelines, 2007...............................................76

Table 26 Non-Residential Levy Amounts by DCP Area and Development Type......................................................................................................................77

Table 27 Proposed Standard Levies for Non-residential Uses in Metropolitan Melbourne............................................................................................................86

Table 28 Proposed Standard Levies for Non-Residential Uses in Non-Metropolitan areas...............................................................................................87

Table 29 Recommended Levies for Non-Residential Development....................................88

Table 30 External Apportionment for the Development Settings.....................................102

Table 31 Legislative Reforms.............................................................................................119

Table 32 Issues for the new Overlays................................................................................122

Table 33 Issues for a new Ministerial Direction................................................................123

Table 34 Issues for Guidelines and Practice Note.............................................................124

Table 35 Response to the Terms of Reference..................................................................130

List of Figures Page

Figure 1 Metropolitan Growth Area residential rates average total cost included in DCP and Clause 52.01 by Growth Area, 2008 - 2012 in 2012$....................................................................................................................49

Figure 2 GAA Preferred Approach to Open Space Planning...............................................95


List of AbbreviationsCIL Community Infrastructure Levy

DCP Development Contributions Plan

DCPO Development Contributions Plan Overlay

DLP Development Levy Plan

DLS Development Levy Scheme (Note – this term refers to a concept developed in Report 1, which the Committee is no longer supporting)

DPCD Department of Planning and Community Development (Note - on 3 June 2013 the planning functions of DPCD were transferred to the new Department of Transport, Planning and Local Infrastructure)

DSE Department of Sustainability and Environment

GAA Growth Areas Authority

GAIC Growth Area Infrastructure Contribution

GFA Gross Floor Area

GLA Gross Leasable Area

GLAR Gross Leasable Area for Retail

GLFA Gross Leasable Floor Area

ISAC Infrastructure Standing Advisory Committee

LGA Local Government Area

LPPF Local Planning Policy Framework

MSS Municipal Strategic Statement

NDA Net Developable Area

NDHa Net Developable Hectare

PAO Public Acquisition Overlay

PPV Planning Panels Victoria

PSP Precinct Structure Plan

PTV Public Transport Victoria

SAC Standing Advisory Committee

SPPF State Planning Policy Framework

The Act Planning and Environment Act 1987

UGB Urban Growth Boundary

UGZ Urban Growth Zone

VIF Victoria in Future

VPP Victoria Planning Provisions


Executive Summary Complex, time consuming, costly and inequitable, these are some words that describe the existing development contributions system that operates in Victoria. Contributions vary markedly in different Growth Areas, there is a lack of consistency in application and there are lengthy debates and hearings to implement the system. In urban areas outside the Growth Areas there is currently no simple and effective way to capture contributions for infrastructure required to service new development and increasing development to facilitate growth.

In the Growth Areas of Melbourne developers are required to pay upwards of $20,000 per lot in local and State development charges to assist in the provision of infrastructure. Yet the vast majority of development in urban areas incurs no development charges.

The Minister for Planning has provided the opportunity to review the current development contributions framework and to introduce a new system – one that reduces the complexity, one that is clear and transparent, one that provides for standard levies across a range of development settings. A new system is sought that can be applied fairly, consistently and efficiently throughout Victoria – in Growth Areas and urban areas, in both a metropolitan and non-metropolitan context.

In May 2012, the Minister announced a preferred framework for a new development contributions system in Victoria. This was set out in A New Victorian Local Development Contributions System – A Preferred Way Forward, prepared by the Department of Planning and Community Development (DPCD).

In September 2012, the Minister appointed the Standard Development Contributions Advisory Committee (the Committee) to review and report on the new system. The purpose of the Committee is to provide advice, in accordance with the Terms of Reference, to inform the Minister’s decision on the final framework for a new Victorian development contributions system and for the establishment of standard levies.

On 17 December 2012, the Committee submitted Report 1, Setting the Framework to the Minister, and it was released on 26 January 2013 for stakeholder review. Report 1 set out a proposed approach to assigning standard levies in different Development Settings and invited comments on the detail of the framework.

Report 2, Setting the Levies reviews the feedback provided in consultations and submissions, and it proposes refinements to the levy framework and sets standard levies for each development setting.

The Committee undertook significant consultation, inviting public submissions and meetings with key stakeholders in both stages of its work. The Committee received 69 written submissions in response to the framework set out in Report 1 and engaged with over 800 people from over 100 organisations in the preparation of Report 2.

In summary, the Committee is proposing a new Development Levy System, using Standard Levies that can be applied in all Victorian municipalities, in three Development Settings: Growth Areas; Urban Areas; and Strategic Development Areas, as set out in Table A.

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Table A Summary of Recommended Levies in each Development Setting

Setting Standard LevyResidential

Standard LevyNon-residential

Additional Levies

Growth Areas

Metropolitan Residential$268,000 per net developable hectare

Retail$161,000 per net developable hectare Commercial and Industrial$80,000 per net developable hectare

Supplementary Levy available only in specific circumstances for transport or public land

Non-Metropolitan

Residential$210,000 per net developable hectare OR$120,000 per net developable hectare


Supplementary Levy available only in specific circumstances for transport or public landDrainage Levy available

Urban Areas

Metropolitan Residential$3,000 per dwelling

Retail$46 per square metre, Gross Floor AreaCommercial and Industrial$16 per square metre, Gross Floor Area

Not available

Non-Metropolitan

Residential$1,500 per dwellingOR$3,000 per dwelling


Not available

Strategic Development Growth Areas

Metropolitan Residential$4,500 per dwelling OR$6,000 per dwelling


Supplementary Levy available only in specific circumstances for drainage, transport or public land

Non-Metropolitan

Residential$4,500 per dwelling OR$6,000 per dwelling



Notes to Table A: Growth Area Standard Levy include all public land contributions, including Clause 52.01 contributions In Urban Areas, the Residential Standard Levy applies to the net increase in dwellings or lots.

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The Non-Residential levies apply to all new floor space, based on Gross Floor Area, above 100m2

The proposed Development Levy System responds to the identified deficiencies of the current system in a number of ways. Recent Growth Area Development Contributions Plans have increased significantly in cost over recent years, with some now over $300,000 per net developable hectare. The proposed system pulls back on the expectation that all infrastructure will be fully funded and it places clear limits on the scope and standards of infrastructure that can be included in levies by defining Allowable Items.

The recommended Growth Areas Standard Levy of $268,000 per net developable hectare for residential development in metropolitan Melbourne represents a more constrained budget that can be reduced further where land costs are lower, or infrastructure demands are less than normal benchmarks.

In making any comparisons between existing per hectare rates for Development Contribution Plans (DCP) and the proposed new Standard Levy for Growth Areas, it must be borne in mind that the proposed Standard Levy incorporates all public land, including all contributions for open space previously required via Clause 52.01 of the VPP. This sometimes adds up to $30,000 per hectare in current DCPs.

The other important factor that should be considered in any comparison is that the new Development Levy System can be expected to deliver substantial savings in approval time and consequent holding cost savings, conservatively estimated by the Committee at $15,000 to $30,000 per hectare in Growth Areas.

The recommended Standard Levies in Urban Areas and Strategic Development Areas redress some of the existing inequities between Growth Areas and infill development by making it easier for Councils to introduce levies on development in all urban and township areas.

A Standard Levy is proposed as the default in each development setting as set out in Table A. Standard Levies will be applied per net developable hectare for Growth Areas, or per new net dwelling increases for Urban Areas and Strategic Development Areas - in the metropolitan and non-metropolitan context.

A Standard Levy will apply for non-residential uses, applied on a per net developable hectare basis in Growth Areas and on a per square metre basis for new gross floor areas (above 100 square metres) in Urban Areas and Strategic Development Areas.

For genuine ‘exceptional’ circumstances, the flexibility to use Supplementary Levies is available in Growth Areas and Strategic Development Areas, but only where specific criteria can be met. This is a different approach to that proposed in the Committee’s Report 1 where what was then termed as a Development Levy Scheme or the DLS was proposed to be much more broadly available as an alternative to a Standard Levy.

Lists of Allowable Items are recommended for each infrastructure category and Development Setting in order to set clearly defined limits on what funds can be expended on each Standard Levy. The list of Allowable Items has been expanded, at least in part in response to submissions, and the approach is more flexible than proposed in Report 1.

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The new system will continue to operate as a contribution towards infrastructure, and not full cost recovery, and will continue to ensure the principles of need, nexus, equity and accountability are front and centre in the new Development Levy System.

The Committee has recommended a new approach to securing and valuing public land in Growth Areas, and has proposed a revised approach to works in kind. The Committee makes comment on the relationship of the proposed levies to the State Growth Areas Infrastructure Charge.

Each of the Committee’s recommendations, as set out throughout the Report and summarised in Chapter 14, is aimed at simplifying the Development Levy System and providing improved certainty for all parties involved. The Committee has provided detailed advice on the implementation of the levies including advice on legislative changes, planning controls and practice notes.

The Committee thanks all stakeholders for their input and assistance in developing the new Development Levy System, and it commends this report to the Minister for Planning.

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1 Introduction1.1 Background

The Minister for Planning announced in May 2012 that the Victorian Government had identified a preferred framework for the Development Contributions System in Victoria. The new framework was set out in A New Victorian Local Development Contributions System – a Preferred Way Forward (A Preferred Way Forward), prepared by DPCD in July 2012.

The objective of the new system is to provide fairness, certainty and a simplified approach for Councils, developers and the community through the use of pre determined standard‐ development levies.

In September 2012, the Minister for Planning appointed an Advisory Committee (the Committee) to review and report on the new system in accordance with prescribed Terms of Reference. The Committee undertook targeted consultation in October and November 2012.

On 17 December 2012, the Committee submitted its Report 1 Setting the Framework to the Minister for Planning, the Hon Matthew Guy, who released it on 26 January 2013.

The Committee’s Report 1 set out a proposed approach to assigning standard levies in different Development Settings and invited comments on the detail of the framework.

The Committee’s Report 2, Setting the Levies (this report) reviews the feedback provided in submissions, it proposes refinements to the levy framework and it sets a series of standard levies tailored for each development setting.

1.2 The Advisory Committee

The Advisory Committee comprises: Ms Kathryn Mitchell, Chief Panel Member, Planning Panels Victoria - Chair; Mr Chris De Silva, Director, Mesh Liveable Urban Communities; Professor Rodger Eade, Senior Sessional Panel Member, Planning Panels Victoria; Mr Trevor McCullough, Senior Panel Member, Planning Panels Victoria; and Mr Bryce Moore, Director, Moremac.

The Committee encompassed the qualifications required in the Terms of Reference and the biographies of the Committee members were publicly available on the Planning Panels Victoria website. All members completed conflict of interest declarations, and any potential conflict matters were properly considered and dealt with.

The Committee is assisted by: Ms Jessica Cutting, Senior Project Manager, Planning Panels Victoria, who was

responsible for stakeholder engagement and management, as well as assisting the Committee in all aspects of its work;

Mr Andrew Natoli, Lawyer who was engaged by DPCD to assist the Committee, particularly in relation to legal issues;

Standard Development Contributions Advisory Committee | Report 2 | 31 May 2013 Page 1 of 20

Ms Mandy Elliot, Consultant, and Sessional Member of Planning Panels Victoria, who was engaged by the Committee to assist with reviewing and summarising the submissions received for Stage 1;

Mr Wolfgang Haala, Sessional Panel Member, Planning Panels Victoria, engaged by the Committee to assist with reviewing and summarising the submissions received for Stage 2; and

Mr Stuart Morris QC of the Victorian Bar who provided legal advice on aspects of the operation of the proposed new system.

Additionally, Ms Anne Larkins of Dench McLean Carlson was engaged by DPCD to provide probity oversight of the Committee processes.

Further, the Committee engaged Urban Enterprise in March 2013 to undertake research on: Analysis of recent DCPs (from 2008 – 2012) in metropolitan and non-metropolitan

settings; Benchmarks for converting standard levies to non-residential uses; and Holding costs of broad acre land per net developable hectare.

Urban Enterprise provided this information to the Committee in the report: DCP Benchmarking, Development Contributions in Metropolitan Melbourne and Key Regional Growth Areas, in April 2013

1.3 Terms of Reference

The Minister for Planning issued Terms of Reference (dated 25 September 2012) to provide the framework for the Committee’s work (Appendix 1). The purpose of the Committee is to provide advice to inform the Minister for Planning’s decision on the final framework for a new Victorian local development contributions system and for the establishment of standard levies. Specifically, the Committee is to provide advice on the implementation of the new system, including:

Recommended operational arrangements for the new system. Recommended scope of works that should be included in each infrastructure

category. Recommended standard development contributions levies for each

infrastructure category and development setting.

The Terms of Reference note that the new system should: Ensure guaranteed delivery of land required for infrastructure in the long

term. Ensure delivery of works in kind by developers can be provided as an

alternative to a cash payment to achieve efficiencies and deliver infrastructure earlier.

Ensure the development contribution requirement clearly articulates the infrastructure contribution obligation.

Further, the Terms of Reference state that in setting standard development levies, the Committee should seek to ensure that levies:

Are simple to implement and administer.


Are based on the basic and essential local infrastructure required to support the development of land and support the foundation of new communities.

Do not unreasonably affect housing affordability for new home owners. Retain a nexus to the development which triggers the levy.

The Committee was required to prepare two reports as part of a two stage process for the Minister for Planning. Stage 1 was completed in December 2102 and details of Stage 2 - Setting the Standard Levies for the New System - are provided below. The Terms of Reference note this report is to include:

A schedule of standard levies for each category of infrastructure for each development setting including levies for residential and non residential‐ development.

A review of the appropriateness of standard levies for a range of infrastructure categories.

A schedule of standard transport infrastructure rates (fixed rate for each item) for transport infrastructure for each of the defined Development Settings. If appropriate, different rates for transport items may be required for each Metropolitan Growth area corridor and for different regions of Victoria, including:

- Roads – per linear metre, by type.- Signalised intersections – per item, by type.- Roundabouts – per item, by type.- Pedestrian operated signals – per item.- Culverts – per linear metre, by type.- Pedestrian paths – per linear metre.- Cycle paths – per linear metre.- Shared paths – per linear metre.- Standard bridges – per square metre by type (e.g. vehicular or

pedestrian/cycle over creek, road or railway). A definition of non standard transport infrastructure for which a standard‐

construction cost cannot be determined and which will need to be individually costed (e.g. larger, more complex structures).

The level of justification required to access the levies for each development setting.

Report 2 Setting the Levies is to be completed and provided to the Minister for Planning on 31 May 2013. This report is to be read in conjunction with Report 1 Setting the Framework.

Chapter 1 and 2 of the Committee’s Report 1 provide background and a historical context of the development contributions system in Victoria, and is not repeated here.

In preparing this report, the Committee has refined its thinking on the proposed Development Settings (Chapter 2), Defining the Levies (Chapter 3), and the Allowable Items (Chapter 4). Chapters 5, 6 and 7 then set out in detail the recommended levies for Growth Areas (Chapter 5), Urban and Strategic Development Areas (Chapter 6) and Non-Residential Areas (Chapter 7). Chapters 8, 9, 10, 11 and 12 provide the Committee’s final position on valuing public land, apportionment, works in kind, developer delivered infrastructure and Growth Area Infrastructure Contribution (GAIC), and the use of permit conditions for


infrastructure. The operation of the proposed Development Levy System is brought together in Chapter 13 – Administration and Implementation. The overall conclusions in the form of a summary to the response to the Terms of Reference, and the consolidated recommendations are provided in Chapter 14.

The Committee has included a series of Appendices (E, F and G) that provide indicative examples of how implementation of the recommendations might be realised through a proposed Development Levy Overlay, Practice Note, Development Levy Plan, and an overview of implementation processes. These have been prepared to provide guidance only, and are by no means definitive. More work will need to be undertaken to finalise these in due course.

1.4 Submissions and Consultation

As with Report 1, the Committee sought to engage with as many sectors as possible in finalising its work, including Councils, State agencies and authorities, developers, and industry stakeholders. The methods used to promote engagement included a call for submissions on Report 1 (through direct mail to those engaged in the Stage 1 consultation, a direct request through the findings made in Report 1 {paragraphs 59 and 60 of Chapter17} plus information through the website). Any individual, Council or stakeholder organisation that requested a meeting with the Committee was provided with the opportunity to do so.

In addition to reviewing the 69 submissions received in response to Report 1, the Committee convened a number of briefings, industry forums and presentations, and reviewed interstate experience with development contributions. The industry forums were exceptionally well attended and the format provided very positive engagement between the Committee and stakeholders. The full list of stakeholders involved in the Stage 2 process is provided in Appendix B. The emphasis on key issues varied depending upon the stakeholder(s), a summary of which is outlined further.

(i) Government and Council briefingsThe Committee held briefings with State Government authorities and agencies (GAA, DPCD, VicRoads, Local Government Victoria, VCAT, Places Victoria, Metropolitan Planning Strategy Advisory Committee and Planning Panels Victoria) to discuss its findings on Stage 1, and key issues and the way forward for Stage 2.

The Committee held two workshops with the Growth Areas Authority (GAA) to discuss the detailed application of Standard Levies to Growth Areas and review current approaches to Precinct Structure Plans (PSP) and DCPs.

The Committee met twice with VicRoads to discuss implementation issues, particularly in relation to the Draft Arterial Road Protocol in Growth Areas and the development of appropriate standards for roads.

The Committee had four meetings with Places Victoria and DPCD to discuss possible approaches to development levies in the Fishermans Bend redevelopment area.

The Committee convened roundtables with Growth Area and other metropolitan Councils as two separate forums. These included the Growth Area Councils (Cardinia, Casey, Greater


Geelong, Hume, Melton, Mitchell, Whittlesea and Wyndham) and the metropolitan Councils (Darebin, Frankston, Glen Eira, Manningham and Yarra).It also met with Casey City Council Officers, and City of Melton Developers Group in separate forums.

The key issues raised at these various forums included: Growth Area Council concern about unfunded liabilities and gaps in funding if a

Standard Levy is introduced that is ‘too low’; Public land acquisition and the conflicts between the Planning and Environment Act

1987 and the Land Acquisition and Compensation Act 1986; Whether the DLS proposed in Report 1 will be used as the default by the Growth

Area Councils, especially for non-standard items; How roads will be dealt with and whether VicRoads will assist in the development of

protocols and standards; Need to keep the non-residential levy as simple and as easy to manage as possible; Libraries need to be added to list of Allowable Items; The need for open space contributions from Clause 52.01 of the VPP and Section 18

of the Subdivision Act 1988 to be better defined and clarified; Urban levies supported, whether it be a $value range or a single figure, so long as

nexus is demonstrated; Need for clear guidelines to provide assistance for Councils in delivering on the

proposals and how to determine the charge area(s); and Criteria needed to identify Strategic Development Areas – large and small.

(ii) Regional and metropolitan briefingsThe Committee actively sought to engage regional Victorian Councils in considering the review and submission process, and in this regard it used the resources of DPCD to convene regional forums. Additionally, it held a briefing with DPCD staff at Spring Street. There were approximately 240 attendees at six forums, which included the following regions:

Barwon South West (Geelong); Grampians (Ballarat); Metropolitan Melbourne; Gippsland (Traralgon); Loddon Mallee (Bendigo); and Hume (Shepparton).

The Committee notes that almost without exception, all municipal Councils and some State agencies were represented at the regional forums, where the key issues raised included:

Overwhelming support for an Urban Levy; Better clarification on how the Strategic Development Areas can be defined; Land should be included as an Allowable Item; Funding for State infrastructure in areas of growth which do not have access to GAIC; How to deal with open space with regard to the requirements of Clause 52.01 of the

VPP and the Subdivision Act 1988 provisions; Whether the Urban Levy should be fixed or have a range from which Councils could

choose a dollar value; Whether the introduction of an Urban Levy might act as a disincentive for investment

in some areas;


How to best deal with drainage in the regional context; The desirability for the Committee to propose a simple way to introduce the Urban

Levy into Planning Schemes that does not include a full Planning Scheme Amendment process;

Release of the Committee’s Report 2 for public comment before it is finalised; Acceptance of the nexus principle for setting and collecting levies, and the need for

Councils to be accountable for any levy collected; and Transitional arrangements from the current system to the new.

The Committee asked representatives at these meetings their opinion of what the dollar figure the Urban Area Standard Levy might be, and the responses varied from $2,000 to $15,000. Most responses suggested a figure in the order of approximately $5,000. It was suggested that anything higher than $8,000 might be problematic.

(iii) Industry forumsMembers of the Committee met with representatives of the following organisations as part of an industry roundtable, and/or attended as guest speakers at specially convened industry forums at:

Housing Industry Association of Victoria; Municipal Association of Victoria; Planning Institute of Australia; Property Council of Australia; Urban Development Institute of Australia; and Victorian Planning and Environmental Law Association.

In total, there were approximately 420 attendees at these combined sessions. The key issues to emerge from these meetings and forums included:

Support for the review of the development contributions system; Support for the introduction of urban and non-residential levies, so long as the levies

were ‘manageable’; Concern that the introduction of the Development Levy System (‘DLS’ as proposed in

Report 1) might be a DCP in another form; Defining what is an ‘exceptional circumstance’ where a DLS would be required, and

who can make that call; Incentives for the use of the proposed Standard Levy over a DLS; Support for a fast tracked introduction of the new system that reduces cost, timing

issues and scope creep; The need to have clarification around the changing requirements of VicRoads; Clarification around the GAIC and when funds should be made available; better

definition of State infrastructure; and more opportunities to get additional funding; How works in kind might be included in the new system; Setting parameters for accountability and review on a regular basis (it was suggested

every 2 to 3 years); The land component is a key issue for keeping costs manageable, work needs to be

undertaken to better manage this; Impact of increasing land and development contributions costs on housing

affordability;


Streamlining the open space levy and use of Clause 52.01 with the proposed new system;

Whether there should be a difference in the metropolitan and non-metropolitan levies for all settings;

Minimise any opportunity for double dipping, especially in the context of open space; Need for better mediation and dispute mechanisms; going to VCAT is not the answer

(due to the time it takes); Whether passive and active open space requirements should be merged; The extent of legislative changes required could be onerous to implement the new

system; and Clear guidelines will be necessary for the introduction of the new system, with a fast

track process for Councils to implement.

(iv) Interstate briefingsMembers of the Committee met with a number of key stakeholders in Queensland and New South Wales in March 2013 to discuss the development contributions systems currently operating in those States (see Appendix B5 for list of stakeholders). These meetings enabled the Committee to gain an appreciation of what works well, what is under review, and what lessons could be learned from each State. This proved to be a very valuable and important level of consultation. In this regard, the Committee provides the following comparative summary of the key development contributions operating in those States and its comparison with Victoria:

Table 1 Comparative Analysis of Typical Development Contributions

State Infill Areas (Urban Areas) Greenfields/Growth Areas (incl. state infrastructure levies)

Non-Residential

Victoria $0 (in most areas)$200 to $3,600 in a small number of Councils plus open space contributions

Typically $10,000 to $20,000 per lot (including GAIC)

Lower rates in some Growth Areas and site specific agreements (section 173)

Queensland $20,000 per lot up to 2 bedrooms$28,000 per lot 3 bedrooms plus

$30,000 to $40,000 and up, per lot

High per square metre rates for different usesTriggered by change of use

New South Wales 0.5% of development cost above $100,000 and 1% of development cost above $200,000 ORDCPs capped at $20,000 per lot(with state charges sometimes on top of this)

DCs ‘capped’ at $30,000 per lot But more typically between $50,000 and $60,000 per lot including average $10,000 state infrastructure levy

0.5% of development cost above $100,000 and 1% of development cost above $200,000Where specified in a DCP – typically $50 per sq m


(v) Non-residential briefingsThe Committee is required to make recommendations on the introduction of a levy for non-residential land uses. It convened two briefings about this aspect of its Terms of Reference, with representatives of MacroPlan Dimasi, BMDA, Charter Keck Cramer, Urbis, MAB, GPT and Colonial First State Global Asset Management at these briefings. Particular issues raised included:

Principles of equity and a level playing field for all uses if a levy is introduced (i.e. it should not just be applied to the higher order centres);

Nexus, transparency and accountability; How the levy might be able to promote white collar employment on greenfield

location and its effect on land prices; The basis upon which a levy might be struck – flat rate across the spectrum – net

addition in leasable floor area or the capital cost of development; Definition of catchment or charge areas – whole of municipality? Need to define site works as a consequence of a proposal, and ensure there is no

opportunity for ‘double dipping/counting’ in application of the levy; Trigger for introduction – planning permit, building permit, change of use (but not

refurbishment or fit out); Road testing and rigour in application of the mechanism; and Need to ensure the levy does not act as a disincentive for development and growth.

(vi) Written submissionsThe Committee received a total of 69 written submissions in response to Report 1, and the list of parties who made written submissions is provided in Appendix C. The key issues raised in these submissions are generally referred to in the remaining Chapters of this report as appropriate.

Overall, the submitters were very supportive of the review of the development contributions system and the general thrust of the Committee’s findings in Report 1. The Moreland Council submission said:

Moreland Council officers would like to congratulate the members of the Advisory Committee on their efforts in progressing a simplified development contributions framework that will allow all Councils and the wider community to benefit from contributions towards required infrastructure.

Moorabool Council noted that:

Moorabool, together with the other Peri Urban Group of Councils, have long advocated for the introduction of an off-the-shelf development contributions scheme. The Committee is to be congratulated on the headway it has been able to make in articulating a practical and implementable approach for such a scheme.

Yarra Ranges Shire Council had a similar view and said:

Yarra Ranges commends the approach and accessibility of the Committee to Local Government in developing its report which is comprehensive and


demonstrates that the Committee has considered the range of views expressed during the first round of consultation.

There were no submissions that did not provide a level of support for the review. Many non Growth Area Councils noted that implementation of the proposed new system would provide an opportunity to fund infrastructure that is needed and overdue, and that the new system allows entry into a new level of funding opportunity.

The Committee has been well supported by key stakeholders and practitioners throughout its review of the development contributions system. There has been overwhelming support for a new system and the Committee is aware that the planning and development industry eagerly awaits this final report. Many submitters have requested that this report be released for further public review prior to adoption of the various levies by Government. The Committee is particular grateful for the level of support that it has received by all stakeholders and for the high level of support and commitment to this review shown by those with an interest in it. It has demonstrated to the Committee a strong willingness for change and innovation, and the Committee is strengthened by the support it has received from local and State Government, and the industry in general.

The Committee held a confidential briefing with a range of stakeholders prior to the release of Report No 1 in 2012. This briefing was beneficial for the Committee as it assisted to confirm its primary findings in terms of its initial thinking with regard to Development Settings, development levies, applying the levies and implementation steps.

The Committee considered whether to undertake a similar briefing towards the end of its Stage 2 process, but determined that providing its key findings in relation to the recommended levies in advance of consideration by Government was not appropriate.

The Committee believes however, that its work to date will benefit from further input from key stakeholders prior to the finalisation of the review by the State Government. It also sees some merit in retaining the SDCAC to work with DPCD in the statutory implementation of final recommendations.

(vii) AcknowledgementsThe Committee wishes to take the opportunity to thank all stakeholders and submitters for the very high standard of submissions and presentations made to the Committee throughout both Stages of its work.

The Committee also wishes to thank the organisations and individuals in NSW and Queensland who assisted in the Committee’s benchmarking and collection of information.

1.5 Recommendations

The Committee makes the following recommendations: That the Standard Development Contributions Advisory Committee be retained to

provide advice to the Minister for Planning and DPCD on all aspects of the proposed Development Levy System and its statutory implementation through the Victoria Planning Provisions.


That the Minister for Planning convene an Implementation Reference Group comprising representatives of the GAA, Councils and peak industry bodies to assist the DPCD and the Standard Development Contributions Advisory Committee in the statutory implementation of the Government’s final approved framework.


2 Development Settings2.1 Overview

In A Preferred Way Forward the Government proposed five Development Settings as follows: Growth Areas; Regional Settlements; Rural Settlements; Established Areas; and Strategic Redevelopment Sites.

In Report 1, the Committee proposed that these be simplified to three Development Settings as follows:

Growth Areas; Strategic Development Areas (large and small); and Urban Areas.

The Committee proposed that provision be made for small scale and large scale Strategic Development Areas but did not propose criteria to distinguish between these.

In the consultations that have been undertaken subsequent to the release of Report 1 and the submissions that have been received, considerable comment has been made on the proposed Development Settings.

From this and the Committee’s further deliberations, the following key issues have been identified:

The appropriateness of the Development Settings proposed and whether in the quest for a simpler system the proposed settings oversimplify what is an essentially complex set of circumstances in which development levies will be applicable;

Whether large scale and small scale Strategic Development Areas are appropriate and if so, the appropriate criteria to distinguish between them;

Whether there is a need to distinguish metropolitan settings from those in rural and regional areas;

Whether activity centres can be appropriately accommodated within the proposed Development Settings; and

The way in which the areas covered by the proposed Development Settings should be defined.


Many of the submissions commented on the proposed Development Settings. There has been overwhelming support for the proposed three Development Settings, including from Manningham, Boroondara, Glen Eira, Frankston, and Hobsons Bay Councils. A number of others submitters gave in-principle support but have made further comments relating to the definition of one or more of the settings or their applicability in particular situations. Support for the three proposed settings was not however unanimous, and Urban Land Developments submitted that in trying to define a simple system there should not be an


over simplification. They argued that, in Ballarat in particular, there needs to be recognition that regional cities have different characteristics and property markets that are significantly different from Melbourne or Geelong.

Others such as the GAA pointed out that the way in which the levies are defined may result in there being little difference between a growth area and a large scale Strategic Development Area. A significant number of submitters commented on the need to clearly define the settings and a number of examples were given where it is not clear what Development Setting might be appropriate. These included Colac Otway Shire who questioned whether a rezoning outside an existing township boundary could be an urban area; Boroondara Council who questioned whether a site could be included in two Development Settings simultaneously i.e. a municipality wide levy as part of a defined Urban Area and then a particular site within that being defined as a Strategic Development Area. Ballarat and Surf Coast Councils submitted that there should be specific quantifiable criteria which would indicate the appropriate Development Setting for a particular defined area. A number of submissions pointed out that there were very wide variations in what the Urban Area setting would need to accommodate. This issue is dealt with in Chapter 6.

A number of submitters supported the concept of allowing for both large scale and small scale Strategic Development Areas but many Councils including Latrobe, Manningham, Surf Coast, Glen Eira, Frankston, Golden Plains, as well as Public Transport Victoria and the GAA commented on the need to clearly distinguish between small scale and large scale Strategic Development Areas. Ballarat Council submitted that there needs to be clarity about what a Strategic Development Area is. Manningham Council acknowledged the Committee’s concern about the confusing range of terminology used in describing strategic development through MSS’s. A number of submitters supported the proposed extension of the application of Growth Areas beyond those currently using this term. These included Latrobe and Ballarat Councils. Latrobe Council also raised the issue of whether new residential areas which are not designated Growth Areas would be Urban Areas or small scale Strategic Development Areas.

Latrobe Council sought clarification of what is defined as a regional city, noting that Report 1 refers to the 10 cities of the regional cities network whereas the SPPF refers to four Major Regional Cities, and 15 Regional Cities and Centres. East Gippsland Council submitted that the terminology used in defining the Development Settings was too vague, particularly with respect to rural municipalities.

It would be fair to say however, that most submissions commented on the proposed Strategic Development Areas and the uncertainty about how ‘large’ and ‘small’ could be defined. This is explored further in Chapter 2.5.

2.3 Growth Areas

Upon review, the definition of Growth Areas in Report 1 seems to have been generally accepted.

Mitchell Council noted that the Committee defined Growth Areas as land in (or planned to be in) the Urban Growth Zone (UGZ). It submitted that any confusion surrounding this definition would be removed for Melbourne by referring to land within the Urban Growth


Boundary (UGB). The Committee considers that this may add clarity in the designated Melbourne ‘growth’ municipalities, but add uncertainty in those municipalities which abut the UGB but are not designated Growth Areas, and which don’t have large parcels of land suitable to be zoned UGZ. It could create confusion in regional areas where a UGB is not always used to define the boundaries of a city.

The Committee considered broader definitions for Growth Areas than those defined by the UGZ in order to pick up smaller growth fronts that are not yet designated UGZ. The Committee concluded however, that this could create considerable overlap with the Strategic Development Areas setting, and the UGZ definition is therefore simpler and less ambiguous.

As discussed later in this Report, the levies and implementation processes for Growth Areas are quite specific and are aimed at large scale green field development typical of that found in the UGZ.

2.4 Urban Areas

An issue often raised in submissions and consultation was the need for the Urban Area setting to accommodate a wide range of different development scenarios in existing urban areas throughout the State, including dual occupancy development, small apartment developments at relatively high density, development of previously undeveloped land scattered throughout country townships, and brownfield re-development of previously non-residential land. The Committee acknowledges that the infrastructure requirements of each of these development scenarios could be quite different, ranging from areas serviced by adequate existing infrastructure to areas where a wide range of new infrastructure may be required to service new development. It is the differing infrastructure needs which are the important factor here, not the different development scenarios as such. The Committee is firmly of the view that this challenge is best met by the Standard Levies proposed.

A further issue raised by Moyne and Wodonga Councils was whether newly identified Urban Areas outside the existing urban area of rural towns or low density residential development (Rural Living Zone or Low Density Residential Zone) can be included in the Urban Areas setting and levied.

The Committee believes that the Urban Areas setting could apply in any residential, industrial or commercial zoned areas, including ‘fringe’ zones such as Low Density Residential and Rural Living Zones, provided that there is a demonstrable need for infrastructure to support growth in these areas (see Chapter 6).

The Committee considers that, in each case, this should be reviewed at the discretion of the Council. The revised definition below provides for the Urban Area setting to apply in all residential, industrial and commercial zones, except the UGZ. The Committee believes however, that the boundaries of the areas designated as Urban Areas or Strategic Development Areas need not coincide with zone boundaries and should reflect planning units in which growth is anticipated, and there will be common infrastructure needs.


2.5 Strategic Development Areas

In Report 1, the Committee proposed that areas where significant development or redevelopment is anticipated could be designated as Strategic Development Areas. It proposed that provision be made for large scale and small scale Strategic Development Areas, but did not specify how the two would be distinguished. From submissions and consultation and from its further deliberations, the Committee has identified the following issues to be addressed:

The threshold between large and small scale Strategic Development Areas; The definition of what should constitute a Strategic Development Area and therefore

the threshold between an Urban Area and a Strategic Development Area; Using the DLS1 in Strategic Development Areas instead of section 173 agreements;

and The type and level of justification required for a Standard Levy and the incentives to

use it.

Many submitters commented on the need for the Committee to clearly distinguish between what will constitute a small scale as opposed to a large scale Strategic Development Area, but relatively few provided suggestions as to how this should be approached. Those commenting on this aspect included Latrobe, Glen Eira, Golden Plains, Frankston and Hobsons Bay Councils, and Public Transport Victoria.

There was broad support from those consulted and in submissions for the application of either a Standard Levy or a DLS to Strategic Development Areas, although relatively few commented on the application of a DLS only to large Strategic Development Areas. Those who did comment on this included the GAA, Moorabool, Hume and Bayside Councils, and PEET Limited. PEET submitted that distinguishing between small and large Strategic Development Areas could be based on:

Where a site is a key strategic site and integrates a number of land owners; Where land is in larger holdings; and Where development is proposed to be at a greater density than the norm.

The GAA submitted that the distinction between large and small Strategic Development Areas should be based on:

The size of the area; The anticipated population; and The extent of existing infrastructure.

Hobsons Bay Council submitted that the number of dwellings proposed to be developed could be used as the basis for distinguishing between large and small Strategic Development Areas. It suggested that a social impact assessment be required where a DLS is proposed.

There was little disagreement with the Committee’s proposal that there will need to be a higher level of justification for a DLS, compared with a Standard Levy. Hobsons Bay Council, in particular, submitted that the requirements for the justification of the different levies should be specified in the Planning Scheme.

1 This relates to the DLS as discussed in Report 1, which the Committee is now not pursuing.


There were a number of requests for clarification by the Committee for what could be included in a Strategic Development Area, in particular whether Activity Centres of various classifications could be Strategic Development Areas.

Boroondara Council submitted that restricting Strategic Development Areas to sites that are identified in either the MSS or the SPPF was restrictive. Manningham Council acknowledged that the array of confusing terminology used in Planning Schemes with respect to strategic development, as identified by the Committee, was an issue. Manningham Council submitted that the use of Section 173 agreements could provide the flexibility required where ‘non typical’ infrastructure needs arise. Surf Coast Council submitted that that if infrastructure provision ratios are used in Strategic Development Areas, they need to be varied from those applied in metropolitan Melbourne to make them applicable in rural settings.

A number of submitters accepted that a Standard Levy should be applied as a default. These included Latrobe and Port Phillip Councils and PEET. Glen Eira Council submitted that the take up of the DLS option may be limited because of the onerous requirements for the preparation of a DLS. Ballarat Council accepted that where a DLS is applied, a higher level of justification should be required. Glen Eira Council submitted that the strategic justification required for the imposition of a DLS in a Strategic Development Area is unclear in Report 1.

Hume Council submitted that a DLS must be a ‘real’ option capable of being used where required. Moorabool Council submitted that the concept of a Standard Levy is strongly supported, but that if the Standard Levy is set too low, this will result in more pressure to develop and apply a DLS. The Master Builders Association did not support a DLS in ‘exceptional circumstances’ as proposed by the Committee in Report 1, but submitted that if it is able to be available, that strict criteria be met before it can be accessed.

There was some questioning by submitters and stakeholders regarding where the decision to develop and apply a DLS should be made. Hume Council questioned whether this should be DPCD. Hobsons Bay Council submitted that a single fixed Standard Levy in Strategic Development Areas may not accommodate the differing development situations likely to be occurring in such areas.

The Committee has given considerable thought to possible approaches to defining the large and small Strategic Development Areas, and it now proposes an alternative approach. The Committee proposes that a Standard Levy should be applied to all Strategic Development Areas regardless of their size. Whilst the quantum of the levy would be higher than for Urban Areas, the level of justification for such a levy would also be higher. The revenue collected from this levy should be able to be spent on any item which is included in the list of Allowable Items. This is consistent with the approach which is proposed for all Development Settings.

The Committee further proposes that where it can be justified, a Supplementary Levy (see Chapter 3) can be applied for larger development opportunities with local infrastructure needs which are demonstrably higher than what could be funded from the Standard Levy. By default, these become what the Committee had previously referred to as large scale Strategic Development Areas, hence the terminology ‘small or large scale’ becomes redundant.


The rationale for Supplementary Levy in Strategic Development Areas is discussed in Chapter 6 and the items of infrastructure that may be funded through a Supplementary Levy are addressed in Chapter 4, Allowable Items.

The Committee therefore concludes that: The Strategic Development Area setting is an appropriate alternative to allow for

higher levies to be applied for areas of more intense development; The distinction between small scale and large scale Strategic Development Areas is

not necessary; and A Supplementary Levy should be available in the Strategic Development Areas, where

it can be justified.

2.6 Applying the Development Settings

The Committee concludes that the three proposed Development Settings will apply equally to metropolitan and non-metropolitan areas (although there is some variation in the quantum of levies to apply – see Chapters 5 and 6).

The Growth Area setting will apply to UGZ zoned land. Ultimately, land in the UGZ may be subsequently rezoned to other zones, and at that time the Urban Areas (or in some cases Strategic Development Area) Development Setting may be applied. This may enable the collection of further development levies, but only where further new dwellings are created by subsequent subdivision or the construction of additional non-residential floor space triggers the collection of the levy. This is not expected to occur until the PSP has run its course.

Some submitters commented on the need for guidance in determining which of the Development Settings are appropriate in a particular circumstance, and some have suggested that clear guidance be given using quantifiable indicators. Whilst the Committee recognises the need to ensure that there is a reasonable level of consistency in the way the Development Settings are applied, it is reluctant to be overly prescriptive. As has been highlighted in submissions and consultations, there is wide variation in the size, nature, complexity, and context of various types of development and existing development throughout the State.

Ultimately, the Committee is of the view that these decisions are best made by Local Government on a strategic basis, moderated through the decision making process proposed in Chapters 5 and 6. The designation of Development Settings should be done at a broad strategic basis and Planning Authorities should not have discretion to vary or waive levies on a site by site basis. The Committee believes that site by site discretion is open to possible corruption and should be prevented.

The planning scheme should make it clear which levy applies to any particular land and multiple levies cannot be applied to any land. The levies proposed in Chapters 5 to 7 are all struck on the basis of them providing appropriate infrastructure for a site in a single proposed Development Setting. Allowing more than one setting to apply would effectively be double dipping. As indicated in Chapters 5 and 6 where a Supplementary Levy is permitted, more than one Supplementary Levy may be applied.


The Committee considers that most Councils will adopt the Urban Areas Development Setting in the first instance, except where designated areas of major growth or redevelopment are clearly identified. For land where the strategic case can be made, and the need for additional infrastructure demonstrated, the Strategic Development Area setting could apply. For land in the UGZ the Growth Area setting may be applied. Further discussion about where to apply each setting and the appropriate levy to apply, is contained in Chapters 3, 5, 6 and 7.


2.7 Recommendations

The Committee makes the following recommendations: That three Development Settings are adopted as follows, and as set out in Table 2:

Growth Areas; Urban Areas; and Strategic Development Areas.

Table 2 Proposed Development Settings

Development Setting

Definition

Growth Areas Land which is in, or planned to be included in, or is appropriate to be included in the Urban Growth Zone, in both metropolitan and non-metropolitan areas.In Melbourne’s Growth Areas this will be land where planning is coordinated by the GAA. In regional cities and other non-metropolitan areas the Council is generally the planning authority

Urban Areas Areas of existing or planned infill urban development in a city, town or settlement. It includes all urban land, metropolitan and non-metropolitan, other than those designated as Growth Areas or Strategic Development Areas.May be applied to land in all residential, industrial and commercial zones, except the UGZ.The Urban Areas setting is the ‘default’ setting and applies to areas where the impact of expected development on infrastructure requires gradual increase in capacity of existing infrastructure to cater for growth.Can be applied with minimal strategic justification.

Strategic Development Areas

For some urban land outside Growth Areas, the Strategic Development Areas Development Setting may be applied. This includes all urban land, metropolitan and non-metropolitan, other than those designated as Growth Areas, and may be applied to land in all residential, industrial and commercial zones except the UGZ.This Development Setting may be applied to key sites or broader areas within a municipality where significant development or redevelopment is proposed to occur and will generally be sites or areas where more significant intensification is planned and social and physical infrastructure needs are high.It is applicable where the scale of development necessitates new infrastructure in its own right or more extensive upgrades to infrastructure than would normally be expected of infill development.It may include green field or brown field development, substantial urban renewal projects, activity centres or identified growth fronts not large enough to be zoned UGZ.Strategic justification for applying the Strategic Development setting would be drawn from the MSS or supporting structure plan, framework plan, settlement plan or similar, and would need to clearly demonstrate why the area has a higher infrastructure requirement.


3 Defining the Levies3.1 Overview

Having confirmed the Development Settings, the next step for the Committee is to define the levies to apply in each setting. Based on submissions and consultations, the Committee’s Report 1, and its further deliberations in this Chapter, the Committee proposes the structure of what it refers to as the new Development Levy System. This includes:

Standard Development Levies and how and where they may be varied, How the proposed Development Levy System relates to other sources of

infrastructure funding; and Key issues in applying and implementing the levies.

3.2 Submissions and Consultations

Submissions generally supported the levy structure proposed by the Committee in Report 1, although there was a general call for a more detailed definition of each of the levies and how they will be applied.

Specifically submissions commented on a number of matters including the level of justification which is likely to be required in order to apply a Standard Levy. Boroondara Council submitted that the justification should not be onerous or too costly, and Brimbank Council acknowledged that the Standard Levy needs to be supported by a structure plan or the equivalent strategic planning. Warrnambool Council suggested that existing long term capital plans required by each Council could be used to justify the levy, and East Gippsland Council submitted that the ‘triggers’ for the Standard Levy should not be set too high and so exclude smaller rural Councils from being able to access them.

There were a number of submissions that commented on how the Standard Levy could be applied in Urban Areas. Manningham Council submitted that a range was needed to accommodate different situations, and Frankston Council suggested that it would need the ability to have the levy at different levels in different areas of the municipality because of differing needs. Charter Keck Cramer pointed out that the same levy applied in areas of low land value was likely to have a distorting impact on the development market by encouraging development to move to areas of high land value. It argued that these are areas where existing infrastructure is likely to be better provided and therefore more attractive to end purchasers. Latrobe Council argued for a single set levy so that there was certainty and transparency in application at the local level. Other submitters and stakeholders suggested that a single levy would avoid political issues at the local level.

There were a number of submissions which raised issues about the process for approval of the Standard Levy for Urban Areas. Warrnambool Council sought clarification on whether the levy would be set by Council, and sought advice on whether developers or other parties would be able to argue for the levy to be lowered in particular circumstances. Other submitters such as Golden Plains and Ballarat Councils sought information on implementation, and Latrobe Council suggested that the Standard Levy be implemented by way of an overlay and a schedule.


3.3 Development Levy System

In response to submissions to Report 1, and upon further deliberation, the Committee favours a consistent approach to the conditions under which levies will apply to the various Development Settings.

The Development Levy System will be implemented through a Development Levy Plan, which in turn will include details of the development levies, land to which the levies will apply, implementation, reporting and accountability requirements. Development Levy Plans may be prepared for each of the Development Settings. In this regard, a Development Levy Plan could be prepared for both the Urban Areas and Strategic Development Area as one document, with the Development Levy Plan for Growth Area prepared as a separate document, due to the complexity of detail in such a plan. The Committee prefers that the Development Levy System be implemented through a new Development Levy Overlay, although it recognises that other mechanisms could also be used.

In specific circumstances where it can be justified, a Supplementary Levy for drainage, public land or transport will be available in the Growth Areas or Strategic Development Area Development Settings. In advocating this, the Committee accepts that there may be exceptional circumstances where this may be necessary, but sees it as the ‘exception’ rather than the ‘norm’.

The development levies recommended by the Committee will have the following features:

A Standard Levy is proposed in each Development Setting; The Standard Levy once applied, cannot be increased and may be reduced only in the

Growth Area setting; Application of the Standard Levy, which will vary between Development Settings, will

require minimum justification; In non-metropolitan areas, two Standard Levy options will be available in the Urban

Area and Strategic Development Area settings; In very limited circumstances, a Supplementary Levy may be applied in Growth Areas

and Strategic Development Areas, but not in Urban Areas; One or more Supplementary Levies may be applied where they are permissible, and

can be justified; The Standard Levy will be capable of delivering an acceptable standard and quantum

of infrastructure; Some levies vary between metropolitan and not metropolitan areas; and Levies are applied to residential, and retail, commercial and industrial land uses.

What the Committee is now proposing varies from the DLS that was canvassed in Report 1. That DLS was offered as an alternative to a Standard Levy whereas Supplementary Levies are now proposed as an ‘add-on’ to the Standard Levy. This has the significant advantage of not requiring the full re-work and costing of all infrastructure requirements, but rather just for the supplementary items.

The Committee is strongly of the view that the Standard Levy should be the default levy and that introduction of one or more Supplementary Levies should not be a ‘choice’ of the


planning authority, but rather should require a form of approval that requires justification of the reasons for its inclusion. This is addressed in detail in Chapters 5.7 and 6.7.

The following sections of this Chapter describe the proposed levies and how each is to be applied. Table 3 in Chapter 3.8 summarises the proposed framework for Development Levies.

3.4 Standard and Supplementary Levies

Standard Levies are proposed to apply as the default levy for a planning unit or charge area in each Development Setting. The Committee has recommended a Standard Levy for each setting which cannot be varied, except in Growth Areas, where under some defined circumstances, it may be reduced. Supplementary Levies may be available in particular circumstances.

(i) Growth AreasThe Standard Levy will apply to all land in the planning unit – usually as a designated Precinct Structure Plan Area. The Standard Levy will be applied for the Community and Recreation, Transport and the Public Land components in Growth Areas.

Supplementary levies can be applied for the following items: Items of transport infrastructure contained in the supplementary Allowable Items; or Public land where certain pre-conditions are met (see Chapter 5.7); or In circumstances where there is diverse land ownership, the Planning Authority may

utilise a Supplementary Levy to implement items of fully developer funded infrastructure. In this situation the Supplementary Levy may be seen as a convenient mechanism to manage contributions to shared items of fully developer funded infrastructure.

The Drainage Levy may also be applied in addition to the Standard Levy where the Council is the responsible drainage authority (non-metropolitan areas).

More than one Supplementary Levy may be applied across a planning unit or a number of planning units, and the cost of supplementary items should be apportioned across relevant planning units as appropriate, and where consistent with the approach to apportionment recommended in Chapter 9.

A Supplementary Levy is not available for Community and Recreation infrastructure items. This is consistent with the view expressed in the Committee’s first report that Community and Recreation component should be a capped.

Land for Community and Recreation items is, however, included in the public land calculation undertaken in the Precinct Structure Plan (PSP) process, and as such land for larger, higher order community or recreation facilities may be included in the public land component if the need is justified at the PSP stage. The additional land for a district facility, in such circumstances, may need to be apportioned over a number of planning units and funded through a Supplementary Levy if the specific conditions as proposed in Chapter 5 are met. The Committee is recommending that land for open space must be included in the


Growth Area Standard Levy and additional land cannot be obtained through Clause 52.01 of the Victoria Planning Provisions or Section 18(8) of the Subdivision Act 1988.

(ii) Urban Areas As noted in Chapter 2, a major challenge in setting a Standard Levy for Urban Areas is accommodating the wide range of development scenarios to which Councils may wish to apply it.

The Standard Levy is the default levy for all residential, industrial or commercial land in Urban Areas throughout the State except for land in, or proposed to be included in the UGZ. Councils must define the land to which to apply an overlay (or similar) introducing the Standard Levy in an Urban Area.

In non-metropolitan areas, provision is made for applying the levy at one of two differing rates. Not applying the levies may be justified where no growth is projected or in areas where a Council may wish to encourage a particular form of development consistent with its MSS, economic development strategy, Activity Centre strategy, settlement plan or other local policy.

A Supplementary Levy is not available in the Urban Area Development Setting.

(iii) Strategic Development AreasStrategic Development Areas may be identified and the relevant Standard Levy applied where it can be demonstrated that development of the land will have a higher impact on infrastructure needs that would normally be expected in an Urban Area setting. The relevant land would be identified in the Development Levy Plan and will require a higher level of strategic justification than for the Urban Area levy.

Supplementary Levies may be applied in a Strategic Development Area and the conditions under which they may be applied are set out in Chapter 6.7.

As for Growth Areas, any Supplementary Levies may be apportioned to the relevant planning unit in proportion to the benefits accrued. More than one Supplementary Levy may be applied to a planning unit if it can be justified. Supplementary Levies are not available for Community and Recreation infrastructure.

(iv) Non- Residential Land UsesLevies for non-residential uses in the following categories are proposed:

Retail Commercial and Industrial

Uses defined as being in these categories together with the Committee’s approach to setting these levies and the details on the levies proposed are set out in Chapter 7.

3.5 Standard and Supplementary Allowable Items

The lists of Allowable Items included in the Committee’s first report has been reviewed and updated in the light of comments received from submitters. The Committee’s approach to Allowable Items is discussed in more detail in Chapter 4.


(i) Community and RecreationThe Community and Recreation components of the Growth Area Standard Levy are regarded as a maximum or capped amount, with Supplementary Levies not available. The reason for this is that while there is proposed to be some flexibility within other infrastructure categories, there were a number of submitters from Stage 1 who commented on the ‘scope creep’ that had occurred in the recent past. In addition, increasing standards for infrastructure provision, which some submitters thought exceeded that which is needed for a new community which is establishing itself, was also a key issue. The Committee is well aware of the amount of time spent on submissions on interpretation of ‘basic and essential’ in recent PSP Panel Hearings. The Committee acknowledges that ‘needs’ in this area are difficult to define and manage, and it believes that the most appropriate approach is to let Councils define their own priorities, and work to a capped budget in this infrastructure category.

The Committee confirms its position in Report 1 that the existing Community Infrastructure Levy (CIL) be discontinued. The Committee has taken the view that, given that no Supplementary Levies area available, the Allowable Items for Community and Recreation should be broad, allowing maximum flexibility for Councils to apply the funds collected to best meet local needs without being overly prescriptive.

Public open space contributions (land or cash in lieu) have been excluded from the Allowable Items in Urban Areas and Strategic Development Areas to avoid doubling up with the provisions of Clause 52.01 of the Victoria Planning Provisions or Section 18 of the Subdivision Act 1988.

(ii) Transport, Drainage and Public LandFor the transport and public land infrastructure components, a Supplementary Levy is available in metropolitan Growth Areas and Strategic Development Areas, together with public realm works in Strategic Development Areas. A variable Drainage Levy is available in non-metropolitan Growth Areas and is not considered as a Supplementary Levy. Allowable Items are now shown as either Standard or Supplementary to distinguish which can be funded from Standard and Supplementary Levies.

In response to submissions from a number of Councils, land has now been included as an Allowable Item in the Urban Areas Standard Levy where need for the land can be clearly demonstrated. It is recognised that land for new facilities may be needed in some Urban Areas to both consolidate existing facilities and to add capacity. It is recognised that the Standard Levy should be able to be applied to the component of such works that is attributable to growth.

(iii) Non-Metropolitan AreasThe Committee has been persuaded that the cost of construction of most infrastructure items in non-metropolitan areas varies slightly compared to metropolitan areas. More importantly, the scope of development for Community and Recreation items varies significantly. Land costs also vary more significantly. Standard Levies for all three Development Settings are proposed to be more flexible in non-metropolitan areas to


accommodate these cost variations and the relatively wider set of growth scenarios. These details are set out in Chapters 5 and 6.

3.6 Relationship to other Funding Sources

The Committee notes that there is some confusion in a number of the submissions about the relationship of development levies to other existing mechanisms for funding infrastructure. The Committee makes the following comments in an effort to clarify.

(i) On-site infrastructureDevelopers in all Development Settings will continue to bear responsibility for providing and funding on-site infrastructure. This includes such items as local drainage, local connector streets, footpaths and landscaping.

(ii) Off-site direct impact infrastructureDevelopers will be required to comply with the conditions of any permit requiring the provision of off-site infrastructure where this is required by the responsible authority or referral authority to mitigate the direct impacts of the proposed development. However, consistent with A Preferred Way Forward and the Committee’s Report 1, Section 173 agreements must not be used to supplement the proposed levies. These arrangements remain unchanged and will continue to operate alongside the Development Levy System.

These ‘direct impact’ conditions or agreements are the primary means by which State agencies obtain contributions to State infrastructure such as roads or tram routes impacted by development. Examples include requirements to construct roadworks or traffic signals to VicRoads requirements, or requirements to construct a new or upgraded tram stop.

Every effort will need to be made to ensure that there is no duplication between permit conditions and development levies. This is discussed further in Chapter 12.

(iii) Council rates, charges and grantsThe Committee recognises that Council rates and charges and grants from other sources continue to make up a large proportion of funding for community infrastructure.

(iv) State funded infrastructureState funded infrastructure is not proposed to be included in any of the Standard or Supplementary Levies.

In Growth Areas, the GAIC applies and the legislation (Planning and Environment Act 1987 Clause 46IA) currently prevents the inclusion of land in a DCP where the development agency is not the municipal Council. The Committee considers that this should continue to avoid any potential double dipping.

For consistency and simplicity, State owned infrastructure is not included in the Urban Area or Strategic Development Area levies. The Committee believes that to do so would create complexities in the collection and distribution of funds that would not justify the benefits.

In the future the State has the policy options of introducing a state infrastructure levy for non-Growth Areas or perhaps adding a Supplementary Levy for Strategic Development Areas


for State infrastructure. The Committee sees any recommendation on this as outside the scope of its current Terms of Reference.

3.7 Implementation Principles

Statutory implementation is dealt with in Chapter 13, but some of the key principles guiding implementation are dealt with here.

(i) Applying the levy – justification and documentationGrowth Areas

The planning authority will be required to produce a Development Levy Plan listing works to be funded by the Standard Levy. The expenditure budget for each infrastructure category will be required to be set out. The amount and percentage of net per developable hectare (NDHa) of land proposed for public purposes as well as the ‘cash’ in lieu rates must also be set out.

The planning authority (or Council where the Council is not the planning authority) may apply to prepare a Supplementary Levy for infrastructure items that meet the description of a supplementary allowable item proposed in Chapter 4. In order to apply for a Supplementary Levy, the planning authority or Council must demonstrate that the supplementary item cannot be funded from within the Standard Levy. The process to apply Standard Levies and to approve Supplementary Levies is addressed further in Chapters 5, 6 and 13 and is shown diagrammatically in Appendix G.

Supplementary Levies will only be approved where it can be demonstrated that there is a clear nexus between the infrastructure item and the proposed development.

Work on preparing a Supplementary Levy should be done as part of the PSP planning process. The levels of justification required are addressed in Chapters 5 and 6.

Urban Areas

All Councils will be required to determine through a Development Levy Plan, the areas to which Urban Area development levies will apply. This should include the justification of the levies and an explanation of the nexus between the planning unit and the infrastructure items to be funded from levies.

The level justification in the Development Levy Plan for the Standard Levy in an Urban Area is intended to be clear and to an appropriate level of detail to demonstrate broad nexus. By ‘broad nexus’ the Committee intends that it is not necessary to show that new households are each likely to be users of each item of the proposed infrastructure. Rather, it will be necessary to demonstrate that the population growth and/or growth in retail, commercial, industrial and tourism activities is likely to justify the type and quantum of infrastructure proposed. The Committee considers that the level of documentation provided for Section 94A development levies in the Central Sydney Development Contributions Plan 2013 (the Sydney Plan) is generally appropriate, as it provides high level strategic justification and a list of proposed projects against which collected funds can be spent.


The Development Levy Plan should include a statement of the expected level of growth in a planning unit, whether it be the entire municipality or a defined area. The justification for this may be documented by population projections, plans for industrial or retail growth, plans to grow tourism or other similar policy positions of Council. Such support will generally be able to be drawn from existing Council strategies, policies or other documents. The Committee expects that Councils will be able to undertake this work in-house and will not have to expend funds to prepare such a plan. Some Councils requested that there be an ‘allowable item’ for preparation of Development Levy Plans or similar. The Committee considers that preparation of the plan will not be onerous, and therefore does not recommend that preparation of the Plan should be an Allowable Item.

The Development Levy Plan should include a list of infrastructure items or types (likely to be drawn from Council’s five or ten year capital works program) which provide a contribution to increasing the capacity of infrastructure to cater for planned growth. The list should include estimates of cost and the proportion of the total cost of the project attributable to increasing capacity (as opposed to asset replacement). The infrastructure listed in the Development Levy Plan will then form the basis against which Council should report the collection and expenditure of revenue raised through the levies. It is expected that the infrastructure list would be reviewed and updated on a regular basis as priorities and needs change. This would be done as part of the Council annual budget process and should also be reported as part of the Council Annual Report.

To assist Councils understand how this might work, Appendix E shows a draft Development Levy Overlay that illustrates how the levies may be implemented into the Planning Scheme. A sample template for a Development Levy Plan is attached as Appendix F. The aim is to make the process simple and to draw from work already done by Councils as part of their normal planning and budgeting processes.

It is proposed that the initial application of the Standard Levies for Urban Areas in a Development Levy Plan be fast tracked and where appropriate be implemented by the Minister exercising his powers under Section 20(4) of the Planning and Environment Act 1987, or a Council Amendment under Section 20(2).


The justification and documentation for the Strategic Development Areas Standard Levy is proposed to be similar to that for Urban Areas Standard Levy. However, more detailed justification is required to define the area to be covered and the reasons why the infrastructure requirements for the area are greater. Justification should include a demonstration of the higher intensity of development and why this creates a greater impact on infrastructure than would be expected in an Urban Area setting.

The justification and identification of Strategic Development Areas should be included in the Development Levy Plan as indicated in the template at Appendix F.

As for Growth Areas, the Supplementary Levy in Strategic Development Areas will only be available for items not included in the Standard Levy and which are not capable of being funded from within the Standard Levy. Supplementary Levies will require a higher level of


justification and detailed documentation. Allowable Items for a Strategic Development Area Supplementary Levy are discussed in more detail in Chapter 4.4.

(ii) Works in kindWorks in kind are encouraged in Growth Areas and Strategic Development Areas in order to facilitate more efficient infrastructure delivery. The Committee supports the use of works in kind credits where appropriate, and this is discussed in more detail in Chapter 10.

Works in kind are not proposed to be permitted in Urban Areas where the provision of infrastructure will be more reliant on other sources of funding over a broader area, with individual developments only making a smaller proportionate contribution to a particular item.

(iii) Using Levy revenue flexibly Growth Areas

In order to better align revenue streams from levies with the timing of expenditure requirements, it is proposed that Councils be able to transfer money collected between infrastructure categories, provided that the amount collected and spent is recorded and reported. Over the life of a Development Levy Plan, Councils are required to be accountable for spending revenue raised by the levy, generally in accordance with the Development Levy Plan and PSP.

Urban Areas

In order to keep the levy system as simple and flexible as possible, Councils are encouraged to apply the Urban Area Standard Levy over a broad area. This will maximise the flexibility of Councils to collect and spend funds on projects anywhere in the planning unit (which can be the whole municipality, especially in inner and middle ring metropolitan municipalities) without the need for complex administration.

In Urban Areas it is recognised that there may be some considerable separation between where and when funds are collected, and where and when they are spent. Councils are to be accountable for funds spent against a prioritised list of infrastructure over the life of the Development Levy Plan.


As with Urban Areas, in Strategic Development Areas expenditure of funds should be generally in accordance with the prioritised infrastructure list in the Development Levy Plan. Reporting and accountability requirements will be the same as for Urban Areas

Supplementary Levies

Supplementary Levies, where applied, are required to be spent only on the infrastructure items they were collected for, and will be required to be accounted for separately.


3.8 Recommendations

The Committee makes the following recommendations: That the framework for the Development Levies be adopted as set out in Table 3.

Table 3 Framework for the Development Levies

Levy Application Allowable Items

Growth Areas

Growth AreasStandard Levy

Applies to all land in designated as Growth Areas in the relevant Planning Scheme.Includes capped Community and Recreation, standard Transport and standard Public Land components.

Allowable Items on which the Standard Levy may be spent are discussed in Chapter 4 and are in the categories of:

Community and Recreation ‘Standard’ Transport items ‘Standard’ Public Land

Growth AreasSupplementary Levy

A Supplementary Levy may be applied in Growth Areas but is limited to additional items of public land or transport infrastructure not included in the Standard Levy where it can be demonstrated that there is need and a clear nexus to the development AND the supplementary item cannot be accommodated within the Standard Levy.It is not available for Community and Recreation infrastructure which is as a ‘fixed’ or ‘capped’ Levy.There may be more than one Supplementary Levy applying to a planning unit, each covering infrastructure, the costs are apportioned over more than one PSP area.

Allowable Items to which a Supplementary Levy may apply are discussed in Chapter 4 and are in the categories of:

Transport infrastructure not in the Standard Levy and which meet the exceptional circumstances criterion

Variations to Public Land requirements which meet the criteria proposed in Chapter 5

Items which might normally be developer provided infrastructure but which are most efficiently collected through a levy.

Drainage in Non-Metro Areas

Urban Areas

Urban AreasStandard Levy

Standard Levy is applied to all areas designated as Urban Areas in the relevant Planning Scheme. Applies in infill areas with incremental impact on infrastructure.

Allowable Items on which the Standard Levy may be spent are discussed in Chapter 4 and are in the categories of:

Community and recreation Transport Drainage Public realm Land, with the exception of land

for open space.The Standard Levy may not be spent on State infrastructure. Excludes open space contributions that are provided from Clause 52.01 of the VPP or s18 of the Subdivision Act 1988.


Levy Application Allowable Items


Strategic Development AreasStandard Levy

A Standard Levy for a Strategic Development Area may be applied where the area is designated as such in the relevant Planning Scheme. These are areas where the scale of development has a higher impact on infrastructure needs.

Allowable Items on which the Standard Levy may be spent are discussed in Chapter 4 and are the same as proposed for Urban Areas above. New facilities are more likely to be warranted in their own right.Excludes open space contributions that are provided from Clause 52.01 of the VPP or s18 of the Subdivision Act 1988.

Strategic Development AreaSupplementary Levy

A Supplementary Levy may be applied in a Strategic Development Area but is limited Allowable Items where it can be demonstrated that there is need and a clear nexus to the development.May be available where there are ‘extraordinary’ items of Council infrastructure that are able to be funded through the Standard Levy.May be more than one Supplementary Levy applying to a planning unit, apportioned to different infrastructure items.

Allowable Items to which a Supplementary Levy may apply are discussed in Chapter 4 and are in the categories of:

Transport infrastructure not in the Standard Levy and which meet the exceptional circumstances criterion

Items which might normally be developer provided infrastructure but which are most efficiently collected through a levy.

Drainage Public realm infrastructure not in

the Standard Levy

Note to Table 3:

State owned infrastructure is not included in any of the levies.


4 Allowable Items4.1 Overview

The Committee introduced the concept of Allowable Items in Report 1. The concept of Allowable Items is intended to define infrastructure items to support the development of a new community. The Committee prefers this more specific description of the scope of items of infrastructure that are allowable under each levy rather than rely on the broader interpretation of what was previously identified as ‘basic and essential’. Allowable Items will also be used to identify the infrastructure projects that can be applied in the Urban and Strategic Development Areas.


The Committee proposed draft lists of Allowable Items for each levy scenario in Report 1, and sought feedback on these lists. Submissions received in response were generally supportive of the concept of specifying Allowable Items, and commented that this would assist in preventing scope creep. The most common themes that emerged from Council submissions on Allowable Items included that there is a general need to broaden the definitions, especially for community and recreation. Suggested additions to the list of Allowable Items included:

Land in Urban Areas; Libraries; Synthetic surfaces; Indoor recreation; Lighting, fencing and pathways; New and replacement facilities; and Public realm works.

Submissions from the Bus Association of Victoria, Public Transport Victoria and VicRoads all proposed that land for public transport facilities should be included as an Allowable Item. The Committee has taken the view that where required, land for public transport facilities will be provided either as a planning permit condition (where a development has a direct impact on services) or via a Public Acquisition Overlay. Similarly, a submission was received from the CFA proposing that emergency service land and infrastructure be included in the Allowable Items. As noted in Chapter 3, the Committee believes that the current legislation effectively prevents funds being included in a Development Levy for State infrastructure in Growth Areas, and the Committee believes that this principle should be applied consistently across all Development Settings at this point in time.

More specific responses to Allowable Items lists for individual levies are discussed where relevant further in this Chapter.


4.3 Growth Areas

(i) Community and Recreation Component of the Standard LevyThe vast majority of submitters and stakeholders supported the concept of having a fixed or capped Community and Recreation levy in metropolitan Growth Areas. Some Councils queried why this levy should be fixed when others were variable, and argued that the cost and scope of Community and Recreation items varied considerably from place to place. As discussed later in this Report, the evidence is that whilst the nature of projects and the scope of works does vary, the cost of community and recreation facilities in recent DCPs has had a level of consistency and is tending to ‘converge’ to a more standard level.

The majority of submissions from Growth Area Councils argued that the Allowable Items for Community and Recreation should be broadened to allow Councils to apply funding to facilities on a local needs basis. There was widespread support for the inclusion of libraries, and several Councils called for the addition of synthetic surfaces to the list.

Greater Geelong Council questioned why there needed to be any restriction on how levy funds are spent given that it was a fixed levy, as Council would, in any case be required to make up any shortfall in funds to provide basic facilities. The Committee supports the general thrust of this comment, although it believes that there needs to be guidance to ensure that there is consistency in approach and some assurance that a basic level of service will be provided.

Developers and property industry representatives were mainly concerned about putting limits on the quantum of funds collected for Community and Recreation items, and clearly justifying the land set aside for community facilities, as well as for active and passive recreation. There was strong support from developers for a fixed or capped levy and leaving it up to Councils to determine how they spend any revenue raised from the levy.

The Committee agrees that Community and Recreation Allowable Items in the Growth Areas Standard Levy should be very broad in scope. As the levy for Community and Recreation infrastructure is capped, with no opportunity to add a Supplementary Levy, the Committee believes that it is not necessary to be too restrictive in defining the items that the revenue raised by the levy can be spent on. The Committee believes that the relevant Council should be given scope to tailor the provision of community facilities and recreation facilities to meet the needs of each particular community. In noting this, the Committee does not support the proposition that there should necessarily be a ‘standard’ of development for the type of facility to be provided. The Committee recognises that there needs to be a high degree of scope to provide facilities that respect local characteristics and emerging needs.

The Committee does consider, however, that there needs to be a level of consistency and rigour in Council plans to deliver infrastructure to the community. The Committee proposes that a Development Levy Plan should be prepared with each PSP and that the GAA should (in conjunction with Growth Area Councils) develop guidelines for the design and implementation of community and recreation facilities. The PSP should enable the creation of a prioritised list of works and a land budget for all proposed community and recreation facilities, including planned passive and active open space.


It is proposed that the Development Levy Plan be approved as part of the PSP process (albeit as part of a Section 20(4) process if the Standard levy is adopted), and that Councils be held accountable to report against progress on the Development Levy Plan as part of the annual reporting process. The proposed revised Allowable Items for the Growth Areas Community and Recreation components of the Standard Levy are shown in Table 4.

Table 4 Growth Areas Community and Recreation Levy – Allowable Items

Facility Allowable Items1 Land included in Standard Public Land levy?

Construction funded from Standard Levy?

COMMUNITY FACILITIES

Community facilities

Community facilities typically incorporating some of the following:Multi-purpose community roomsKindergarten/pre-school/3 year old groupChildcare, including occasional childcare Maternal and child health Adult EducationCommunity arts and cultural facilitiesNeighbourhood HouseAdult day care/planned activity groupBusiness acceleratorCommunity learning centre/LibraryYouth ServicesPerforming arts Delivered meals facility Kitchen/sAncillary space including storage, toilets, amenities, circulation space, waiting rooms, foyer, office space etcOutdoor space, playground, car parking, landscaping

Yes Yes


Facility Allowable Items1 Land included in Standard Public Land levy?

Construction funded from Standard Levy?

OPEN SPACE

Local and district sports facility

Local and district sports facilities including, but not limited to, Football ovals, Soccer pitches, Cricket ovals, Rugby fields, Tennis courts, Basketball courts, Netball courts, Bowls lawns, Bocce lawns, Baseball diamonds, Softball diamonds, Hockey fields, and other local sports2 facilities which may include:

Earthworks, levelling and preparation of playing surfaces

Turf, drainage and irrigation Synthetic playing surfaces Goal posts, score boards, fencing, lights,

practice facilities Coaches and interchange shelter/seating Buildings for indoor sports Pavilion, clubhouse, change rooms (player

and umpire), toilets, seating, first aid, kiosk

Yes Yes

Higher Order Parks and Open Space Reserves4 (including drainage reserves)

Improvements to parks and open space reserves including, but not limited to:

playgrounds car parking and internal roads bicycle facilities and pedestrian paths seating landscaping BBQ and picnic facilities lighting

Yes Yes

Regional sports facility

Higher order facilities such as Aquatic Centres, Velodromes, Ice Skating Rinks

Yes Yes3

Notes to Table 4:

1. Councils can direct funds collected via the capped Community and Recreation infrastructure levy to construction for the items listed in the tables as indicated. Land for these facilities should be included in the public land category. Public land is to be set aside in accordance with the PSP.

2. Other sports may be appropriate, depending on local needs and the demographics of the area.3. An apportioned contribution to the construction of these higher order facilities may be allowable in some

circumstances but only if it can be demonstrated that the proposed regional sports facility is clearly justified in the PSP and other lower order items are able to be accommodated from within the levy.

4. This does not include Local and Neighbourhood Parks that would be treated as developer funded works.


(ii) Transport Component of the Standard LevyAs discussed in Chapter 3, it is proposed to have a component of the Standard Levy for Transport infrastructure in Growth Areas, but to allow under specific circumstances, access to a Supplementary Levy for ‘exceptional’ items of infrastructure not normally contained in a Standard Levy. This approach requires defining what is to be contained in the Standard Levy and what is allowable in a Supplementary Levy.

Standard Levy

The Committee concluded in Report 1 that it is impractical to develop a schedule of standard transport infrastructure rates for transport infrastructure as required in paragraph 23 of the Committee’s Terms of Reference. The level of variation in local conditions means that the use of set standard per metre or per item rates for road works is not helpful. (See the discussion in Chapter 7.6 of Report 1.)

The Committee prefers to set an overall ‘budget’ for the Transport component of the Standard Levy and for the definition of what is to be funded from the Standard Levy to be defined in terms of:

The type of works; The scope of works; and The standards to apply.

The type of works included in the Transport component of the Standard Levy can generally be described as road and intersections works on Council arterial roads. This is described in general terms in Table 5 which sets out the Allowable Items for the Transport infrastructure, and makes the distinction between Council roads and declared VicRoads roads.

The scope and standards of works are a little harder to define, and these issues have caused much debate in previous growth area PSP and DCP Panel Hearings. The Committee’s Report 1 identified issues with the current system in the interpretation of the VicRoads Draft Arterial Road Protocol, particularly the issue of defining ‘interim works’. VicRoads, in its submission and in follow up discussion with the Committee, acknowledged the current lack of clarity. It proposed that in order to improve the level of certainty, the principles of the Draft Arterial Road Protocol be directly incorporated into growth area design guidelines, and that these guidelines, if necessary, be incorporated into the Planning Scheme. The Committee generally supports this approach. The form of the principles, and in particular the definition of ‘interim works’ does, in the opinion of the Committee, need some further work.

Design Guidelines for Roads in Growth Areas

The Committee believes that the Standard Levy should be applied to the ‘typical’ configuration of roads that would normally be required in a Growth Area and that the scope of the work should be sufficient to cater for a ten year period. The Committee agrees that the concept of ‘interim works’ as it appears in the current Draft Arterial Road Protocol is a useful one but the definition needs further review. As highlighted in the Committee’s first report, the definition that seems to have evolved of ‘works required to cater for 80% build of a development’ is problematic and, in some cases, unfair. The Committee believes that a better working definition of ‘interim road works’ would be:


Works to a level required to provide safely for traffic generated by the development for ten years after commencement of development.

The Committee further believes that there would be value in the definition of interim works being further discussed and agreed between VicRoads, GAA, Councils and developers.

The GAA publication PSP Notes – Our Roads: Connecting People sets out guidelines and principles for developing road networks in Growth Areas. The PSP Note, amongst other things, sets out typical spacing of arterial roads, typical cross sections and provides guidance on the design principles and elements that should be provided. The Committee considers that a modified form of this document, incorporating a clear definition of ‘interim works’ should form the basis for defining what can be funded from the Transport component of the Growth Area Standard Levy.

The Committee recommends the creation of Growth Areas Road Design Guidelines (Design Guidelines) to bring together:

A clear definition of the responsibilities of the Planning Authority, VicRoads and developers in planning for roads in Growth Areas (from the Draft Arterial Road Protocol);

A definition of ‘interim works’ (based on the Draft Arterial Road Protocol but modified as discussed above);

The guidelines currently set out in the GAA PSP Note, (including access requirements, kerbs, street lighting, nature strips, footpaths, bicycle facilities, parking);

Typical road cross sections (from the GAA PSP Note); Typical intersection designs (currently being developed by VicRoads); and Design standards (perhaps based on the Infrastructure Design Manual recently

developed by a number of Councils and incorporating any VicRoads requirements.

The Committee has not attempted to prepare these Design Guidelines as part of its work, but rather recommends that the Design Guidelines be produced by the GAA in close consultation with VicRoads, Growth Area Councils and developers.

Land for State infrastructure

The Committee identified in Report 1 the uncertainty about whether land for future VicRoads arterial roads or for public transport corridors can be funded from a Development Levy. Since the introduction of the GAIC in July 2010, Section 46IA of the Act specifies that growth area DCPs cannot include a development agency that is not a municipal council. As stated in Report 1, the Committee believes that it is clear that land required for an arterial road that is the responsibility of VicRoads at the time of preparing a PSP should be identified in a Public Acquisition Overlay (PAO) and funded separately. The Committee believes that this also applies to other State infrastructure such as public transport corridors.

It was noted in submissions that it is current practice in some DCPs that land for State infrastructure has been included. The Committee believes that this is not good practice and leads to further confusion about the status of land and how it will ultimately be transferred.

VicRoads and PEET submitted that in these situations it would be useful for the transfer of the land to be recognised as a credit against the GAIC. This is further discussed in Chapter 11, but in summary the Committee believes this proposal may have some advantages.



As discussed in Report 1, the Committee acknowledges the variable nature of road works in different Growth Areas. In order to cater for genuine ‘exceptional’ circumstances, the use of Supplementary Levies is proposed.

The purpose of Supplementary Levies is not to allow for differences in soil conditions or climatic conditions. The Committee is not convinced that there is sufficient evidence that there is any significant difference in costs of construction from one growth corridor to another. Whilst one area may encounter rocks, another encounters sandy ‘soft spots’. Overall, the Committee’s review of actual costs reveals a high level of consistency in per metre road construction costs between Growth Areas.

Nor is it the purpose of Supplementary Levies to provide for differences in construction standards applied by Councils. The Committee considers that if a Council wishes to impose a higher construction standard than that set out in the proposed Design Guidelines, it should accommodate any additional costs from within the Standard Levy or from Council funds.

Supplementary Levies should only be applied where the development creates (either in its own right or contributes in part) the need for higher order additional infrastructure or the scope of the infrastructure is clearly over and above that capable of being funded from a Standard Levy. Examples may include:

A bridge across a river would create an infrastructure project not normally encountered in a typical scenario. In this example a bridge may create benefits over a wider area and the cost may need to be apportioned accordingly; or

If the spacing of secondary arterial roads was required (for topographical or other reasons) to be substantially less than the typical 1.6 kilometre grid, or if an additional primary arterial was required.

Chapter 5 sets out the proposed process for determining whether a Supplementary Levy is warranted or not in a Growth Area.

Table 5 sets out Transport infrastructure Allowable Items for Standard and Supplementary Levies in Growth Areas.


Table 5 Growth Areas Transport component - Allowable and Supplementary Items

Category Allowable Items Land in Public Land levy?

Construction in Standard Levy?

TRANSPORT - Standard Levy

Arterial road - Council

Interim as per Design Guidelines, including upgrade to existing to restore to pre-development operating conditions

Yes Yes

Ultimate as per Design Guidelines Yes Yes

Arterial road –VicRoads


Yes Yes

Ultimate as per Design Guidelines No *1 No

Intersections with Council arterial roads


Yes Yes

Ultimate as per Design Guidelines Yes Yes

Intersections with VicRoads arterial roads


Yes Yes

Ultimate as per Design Guidelines No1 No

TRANSPORT - Supplementary Levy

Roads Council primary or secondary arterial road infrastructure demonstrably over and above the ‘Standard’ expectations of scope and spacing set out in the Design Guidelines

Apportioned in Supplementary Levy


Bridges Bridges for Council arterial roads over and above the ‘Standard’ expectation set out in the Design Guidelines



Developer funded local or collector roads

Local or collector road projects that are fully developer funded but, for expediency, are managed through a Supplementary levy

Yes Yes

State owned infrastructure

State road or public transport infrastructure No1 No (GAIC)

Note to Table 5:

1. Land required for VicRoads arterials should be reserved via a Public Acquisition Overlay. It has also been suggested that there may be merit in enabling GAIC credits for land required for State infrastructure


(iii) Drainage Levy in Growth AreasThe Drainage Levy will only apply in non-metropolitan Growth Areas where Council is the drainage authority. The Committee considered whether drainage should be removed as an Allowable Item, and instead have drainage scheme funds collected as a special rate or charge under Section 163 of the Local Government Act 1989, or as tariff under Section 259 of the Water Act 1989.2

The feedback from rural and regional Councils, including Greater Geelong, Ballarat and Greater Shepparton, is that the current DCP system is a more convenient and more easily implementable system than the alternatives. All would prefer to see access to a Drainage Levy retained in the Development Levy System.

The Committee supports the retention of a Drainage Levy but, given the wide variability of such levies, recommends that the Drainage Levy should be an additional levy available where the Council is the relevant drainage authority for the head works required in the Growth Area.

Table 6 Growth Areas Drainage Levy - Allowable Items

Category Allowable Items Land in Public Land levy?

Construction in Drainage levy?

DRAINAGE LEVY

In areas where a Council is the drainage authority

As specified in drainage plan for the catchmentIncludes retarding basins and stormwater treatment

Yes Yes

(iv) Public Land Component of the Standard LevyThe Public Land requirements are proposed to be determined as part of the PSP and developed in conjunction with the Development Levy Plan. The Allowable Items of public land for community facilities, passive and active recreation and transport to be funded from the Standard Levy are set out in the Allowable Items list for each infrastructure category.

A review of completed PSPs in Growth Areas shows that the proportion of land in the planning unit that is typically required for public land is around 15%, including all areas of open space that would be otherwise required under the Subdivision Act 1988 or Clause 52.01 of the Planning Schemes. The Committee recognises that this proportion will vary across different PSPs. It proposes that a Supplementary Levy may be employed where the product of the percentage of public land and the per hectare value substantially exceeds the Public Land component of the Standard Levy and the additional cost cannot be accommodated within the overall Standard Levy, as discussed in more detail in Chapter 5.

(v) Costs of plan preparationCurrently the cost of preparation of PSPs and DCPs is included as an item to be funded under some DCPs, particularly in Growth Areas. The Committee understands and accepts this

2 Department of Sustainability 2013 – Submission to Environment and Natural Resources Committee Inquiry into Rural Drainage within Victoria


practice. The Committee is of the view that up to 1% of the funds raised through a Growth Area Standard Levy should be able to be spent on the preparation of the PSP.

4.4 Urban Areas and Strategic Development Areas

(i) Urban AreasA number of Councils submitted that the scope of Allowable Items in the Urban Areas Standard Levy should be broadened. The most common item raised (Mornington Peninsula, Moreland, Boroondara, Yarra Ranges, Bayside, Darebin, and Whittlesea Councils, and the MAV) was the need to include land where required in conjunction with expansion of facilities (excluded in Urban Areas in the Committee’s Report 1).

Several Councils, including Bayside and Greater Geelong, argued that it is legitimate for Councils to seek to consolidate land when planning to replace facilities and to expand capacity. This often requires the construction of a new facility on a new site to replace several older facilities. Examples of this included child care centres, where smaller centres are no longer viable, libraries and maternal and child health centres.

The Committee accepts this argument and agrees that the additional capacity component of new facilities and infrastructure should be allowable, including a contribution to land. The nexus between any nominated infrastructure item and growth will need to be made in the Development Levy Plan and the proportion of any project linked to growth needs to be nominated. The Committee believes that this process will preserve a high level of nexus and accountability in the Levy and it is therefore not necessary to be overly restrictive in defining Allowable Items.

Several submitters and industry stakeholders pointed out the potential for overlap between the proposed levy and the ability to collect open space contributions (land or cash in lieu) via Clause 52.01 of the VPP (typically between 5 and 10% of land value) or Section 18 of the Subdivision Act 1988 (up to 5% of land value). Open space contributions may be required on subdivision, but are only able to be levied once. This adds a further complication as subdivision contributions may have already been paid on earlier subdivision and further contributions would therefore not be payable.

The Committee considered the merits of incorporating subdivision open space contributions into the Standard Levy but has not pursued this for a number of reasons, including:

Use of a levy not based on land value would be significantly different from the current method of collecting open space contributions;

Any new method of including open space contributions would need to be complex to retain a similar basis of collection as currently exists, and avoid doubling up on contributions; and

A change in arrangements has not been canvassed in any of the work done by the Committee and hence no submissions have been received in relation to the matter.

The Committee has concluded that the most appropriate way to treat open space contributions in the Urban Areas and Strategic Development Areas levies is to specifically exclude open space contributions as an Allowable Item.


The Committee is however, comfortable that improvements to open space such as paths, seating and playgrounds that improve the capacity and useability of parks and reserves are legitimate Allowable Items in a Levy. It is noted that it is common practice that open space contributions from s18 of the Subdivision Act 1988 or Clause 52.01 of the Planning Schemes are used for open space enhancement, particularly in inner city areas where purchase of new areas of open space may be more difficult and expensive. The Committee notes that this may cause some overlap, but believes that it is not an undesirable outcome and need not be prevented.

A number of Councils, including Hume, Ballarat, Bayside, Cardinia, Wodonga, Maribyrnong and Wyndham argued that libraries should be included in the list of Allowable Items. The Committee has no objection to this on the basis that the levies are effectively capped and Councils should be able to determine their own priorities for the community facilities most needed by the community.

The Committee has included drainage as an Allowable Item as it is recognised that Council will have responsibility for considerable local drainage infrastructure (that in many cases it will have assumed responsibility from an earlier developer) which may require increased capacity as part of renewal programs.

As mentioned in Chapter 3, the Committee has not included any State infrastructure in the levies. Contributions to State roads and State owned public transport are therefore not included in the Allowable Items. In some cases Council own and maintain bus and tram shelters on Council land. These items have been included as Allowable Items. Table 7 shows the proposed list of Allowable Items for Urban Areas.

The Committee does not believe that it is appropriate to include any allowance for planning costs in items to be funded by the Urban Areas Standard Levy as the level of work that is required to implement a Standard Levy is minimal and utilises existing strategic work and capital works planning.


Table 7 Urban Areas Standard Levy – Allowable Items

Facility Allowable Items Included in Standard Levy?

Community Services Contribution to expanding or upgrading space for: Multi-Purpose Community Centre/Library Kindergarten/Pre-School/Occasional childcare Maternal and Child Health consulting room Other community services facilities

Yes

Sporting facilities Upgrade or extension of sporting facilities including: Additional outdoor sporting fields or courts Upgrading surfaces, installing synthetic surfaces,

installing irrigation or installing lights to increase usage

Additional or upgraded change rooms Additional courts for indoor facilities

Yes

Park and reserve improvements (inc. drainage reserves)

Upgrades to: Playgrounds, lighting, car parking, internal roads,

bicycle, pedestrian paths, seating, landscaping, BBQs, picnic facilities

Yes

Drainage Upgrades to existing Council drainage assetsStormwater treatment projects to improve water quality including Water Sensitive Urban Design treatments and wetlands

Yes

Roads Road widening and intersection upgrades on Council roads including Council local roads, collectors and arterialsInstallation of traffic management items to reduce the impact of increased trafficImprovements to bicycle and pedestrian connectivity

Yes

Public realm Urban design elements that improve pedestrian access or enable higher density livingCreation of high quality public spaces – including paving, seating, landscaping, lighting

Yes

Land Land required as an integral part of providing any of the Allowable Items

Yes

Public transport Council owned bus, tram shelters on Council land Yes

Facility Items not allowed Included in Standard Levy?


VicRoads arterialsState owned public transport facilities and services

No

Public open space Land or cash contributions as defined in Clause 52.01 of the Victorian Planning Provisions and Section 18 of the Subdivision Act 1988.

No


Note to Table 7: Projects included in the Development Levy Plan may be expansions or upgrades to existing facilities or may be part of a new or replacement facility.

(ii) Strategic Development AreasIt is proposed that the Allowable Items for Strategic Development Areas should be the same as for Urban Areas. The distinction is in the extent of infrastructure required to support development. In a Strategic Development Area, a higher level of facility may be required or a new stand alone facility may be warranted in its own right as a consequence of the extent or intensity of the development.

Councils will be required to nominate in the Development Levy Plan, the specific additional items of infrastructure that are needed and demonstrate that the additional infrastructure requirement (over and above that of an Urban Area) justifies the higher levy. The requirements for applying the Strategic Development Area Standard Levy are discussed in Chapter 6.

As with Growth Areas, it is considered by the Committee appropriate to include a proportion of the cost of underlying strategic planning for Strategic Development Areas as an allowable item. This should be limited to 1% of the revenue raised through the Standard Levy.

Table 8 Strategic Development Areas Supplementary Levy – Allowable Items

Facility Allowable Items Land in Levy?

Construction in Levy?

Drainage New drainage scheme where Council is the drainage authority (non-metropolitan areas)

Yes Yes

Roads New Council owned roads not funded directly by developers Yes Yes

Works on Council arterial roads and intersections to restore network capacity to pre-development conditions

Yes Yes

Public Realm Projects

Specific larger scale public realm improvement works as part of urban renewal projects

Developer funded local or collector roads

Local or collector road projects that are fully developer funded but, for expediency, are managed through a Supplementary Levy

Yes Yes

Facility Items not allowed Land in Levy?

Construction in Levy?


State road or public transport infrastructure No (PAO) No


4.5 Recommendations

The Committee makes the following recommendations: That the Allowable Items as set out in Tables 4, 5, 6, 7, and 8 be mandated through

a Ministerial Direction or the Victoria Planning Provisions as a basis for the Standard Levies to be applied as part of the Development Levy System.

That new Design Guidelines be produced by the GAA in close consultation with VicRoads, Growth Area Councils and developers to bring together:

A clear definition of the responsibilities of the Planning Authority, VicRoads and developers in planning for roads in Growth Areas (from the Draft Arterial Road Protocol);

A definition of ‘interim works’ (based on the Draft Arterial Road Protocol but modified as discussed);


Typical road cross sections (from the GAA PSP Note); Typical intersection designs (currently being developed by VicRoads); and Design standards (based on the Infrastructure Design Manual recently

developed by a number of Councils and incorporating any VicRoads requirements.


5 Levies for Growth Areas5.1 Overview

The Committee has considered various submissions regarding the principle of whether it was conceptually possible to introduce a Standard Levy for Growth Areas in metropolitan and non-metropolitan locations.

In arriving at the view that it was possible to introduce standard levies for Growth Areas, the Committee then considered two possible methods for setting a Standard Levy in Growth Areas including:

Using averages of recent DCP costs, and Calculating ‘bottom up’ levies based on infrastructure requirements from a typical

area of growth area development.

The Committee prefers the first approach. The second approach presents considerable difficulties in terms of defining a typical area and typical infrastructure. The variability in standards across Growth Areas is also problematic, making it difficult to arrive at consistent costings. The recent costs analysis approach has generated outcomes which the Committee believes are consistent and robust.

The analysis has provided the Committee with the basis to support introduction of a Standard Levy for Growth Areas with an ability to reduce the Standard Levy where circumstances warrant, and to increase the overall levy via the use of one or more Supplementary Levies where circumstances warrant and sufficient additional justification can be provided.


Written submissions and feedback from consultation generally supported the concept of applying Standard Levies in Growth Areas, provided that genuine ‘exceptional circumstances’ were able to be recognised.

There was a strong level of support from the development industry for Growth Area Standard Levies in order to increase the level of certainty in development costs, provided that they were set at a low enough level that did not affect the overall viability of development.

Council submissions generally supported Growth Area Standard Levies in principle, provided that they were set at a high enough level that did not unreasonably create infrastructure funding gaps. This highlights the Committee’s challenge, to find a levy that is fair to all parties. This requires a compromise between the wishes of the key players.

A number of submissions from Councils commented that under the system for the DLS proposed in Report 1, they would want to do the detailed work to determine a DLS in preference to a Standard Levy in order to reduce the chance of funding gaps. Developers, including PEET, commented on the need to incentivise the use of Standard Levies to prevent the additional work and time required for a DLS.


Councils requested that a level of flexibility be provided between infrastructure categories within the Standard Levy, arguing that it is impractical to administer separate ‘buckets of money’ for the same planning unit.

There was strong support from all regional Councils for the retention of a levy for drainage in non-metropolitan Growth Areas, with a strong preference for it not to be part of the Standard Levy, due to the wide variety of costs in different areas.

The HIA supported Standard Levies for Community and Recreation, and Transport infrastructure costs, and a variable levy for public land.

The Committee asked many of the groups and individuals to nominate what they thought was an appropriate level for a Growth Area Standard Levy and, almost without exception, the responses were qualified or submitters were not prepared to commit. Only the submission from Whittlesea Council ventured a suggested rate based on its recent experience. Whittlesea nominated a figure of $355,000 per net developable hectare, but included in this some State funded infrastructure that is more appropriately funded by the GAIC and added a ‘contingency’ of 20% on top of the average total that it arrived at. The Committee believes that allowing for contingencies in this way is not appropriate as the base for the figure was actual average costs. Adjusting for this, and allowing for State funded items, the Whittlesea suggestion equates more to $250,000 to $280,000 per net developable hectare.

There was general support for Standard Levies being applied on a per hectare basis, although some submitters argued that, particularly for Community and Recreation facilities, the nexus was greater if a per dwelling rate was applied.

5.3 Basis for Standard Levy

(i) IntroductionIn Report 1 the Committee indicated that it proposed to base the setting of the Standard Levy for residential uses in Growth Areas using a bottom up approach using the cost of ‘typical’ infrastructure. Early in its Stage 2 investigations and deliberations, two things became clear. Firstly, the proposed approach would involve significant data challenges and some conceptual issues around defining ‘typical’ infrastructure. Secondly, a further examination of recent DCPs (2008 – 2012), having made some adjustments to make them more directly comparable, showed a greater degree of commonality than the Committee first expected.

The analysis undertaken and the observations made are based on data which the Committee commissioned Urban Enterprise to produce, focusing on all DCPs approved (or nearing approval) since 2008 within metropolitan Growth Areas. This report titled DCP Benchmarking dated April 2013, provided all DCP values indexed to July 2012 dollars.

The DCP Benchmarking report provides the ‘full’ per net developable hectare DCP levy amount currently applying to each DCP area. This amount includes uncapped CIL (converted to a per hectare charge using the dwelling density) and the total public land contribution included in both the DCP and from Clause 52.01 contributions.


In analysing the data set from 2008 to 2012, the Committee has observed a convergence in the methods by which PSPs have been formulated, including infrastructure needs, costing and apportionment. Average land values and the area of land that is being set aside for public purposes have also converged to a point where there is increased predictability associated with these costs.

The detailed examination of the most recent metropolitan DCPs revealed the following: The types of projects included in the various DCPs are generally consistent (i.e. only

higher order roads are included, standard provision ratios for community and active recreation are generally accepted and applied);

The scope of projects are generally consistent; The costing methods are generally consistent (i.e. a Quantity Surveyor costing based

on detailed plans such as Functional Layout Plan), however, discrepancies remain in terms of calculation of total cost i.e. rate applied, contingency allowance etc; and

The land valuation method applied is usually a site specific valuation to establish the ‘market rate’ rather than applying a lower broad hectare rate.

The metropolitan DCPs approved since 2008 form the largest and most relevant source of up to date DCP data. These documents represent the latest generation of DCPs approved under the current legislation. It is significant that the DCPs that have been prepared and approved in this period reflect contemporary practice in terms of the integration of activity centre and employment planning. The Committee notes that the geographic location and conditions found within the recent PSP areas are likely to be encountered in future PSP areas, such as less developed transport networks compared to earlier DCPs.

The proposed approach to the introduction of a Standard Levy for Growth Areas relies on analysis of:

Components of DCP rates inclusive of DCP and Clause 52.01 land costs (2008-2012) and for 2012;

Amount, value and type of land being secured for public purposes; Gross and net developable area of PSPs; Overall average DCP rates for Growth Areas 2008-2012; and Overall average DCP rates for Growth Areas in 2012.

(ii) Components of DCP rates In terms of amounts of funds collected for the three infrastructure categories, Table 9 shows that over the period 2008-2012, the land cost (which includes all land in the DCP and secured through Clause 52.01) is consistently the highest proportion of total cost per infrastructure category with the balance of contributions being split fairly evenly between the Community and Recreation, and Transport construction categories. On average the split is 30% Community and Recreation construction; 29% Transport construction and 41% for securing land for a public purpose.

There is a consistent trend in the data over recent years that shows that spending on Community and Recreation infrastructure has become roughly equal to spending on transport infrastructure. This is shown in Table 9 and reflects the change in provision standards of community and recreation infrastructure and a shift of priorities towards community and recreation infrastructure since earlier DCPs.


Table 9 Breakdown of DCP rates by infrastructure category for all DCPs approved (or pending approval) 2008 - 2012 by Region in 2012$

Infrastructure Category All DCP areas DCP areas in the north

DCP areas in the south east

DCP areas in the west

Average $ value for all DCP Areas

Community and Active Recreation Construction

30% 35% 30% 24% $72,000

Transport Construction 29% 19% 26% 39% $72,000

Public Land (incl. Clause 52.01)

41% 45% 43% 36% $101,000

Source: Figures derived from data in the DCP Benchmarking report, Urban Enterprise 2013

Table 10 presents the same data but just for 2012 and demonstrates that the average proportions for each infrastructure category are similar in 2012 as over the period 2008 to 2012, demonstrating the convergence that has occurred. In 2012, these equate to $80,000 per hectare for Community and Recreation construction, $77,000 per hectare for transport construction and $111,000 per hectare for land.

Table 10 Breakdown of DCP rates by infrastructure category for all DCPs approved (or pending approval) in 2012 by Region in 2012$

Infrastructure Category All DCP areas DCP areas in the north

DCP areas in the south east

DCP areas in the west

Average $ value for all DCP Areas

Community and Active Recreation Construction

30% 31% 37% 27% $80,000

Transport Construction 29% 23% 22% 37% $77,000

Public Land (incl. Clause 52.01)

41% 46% 41% 36% $111,000


(iii) Amount, value and type of land being secured for public purposesThe Committee has analysed the land budget of all PSPs/DCPs approved (or pending approval) since 2008 to determine the total amount of land required for a public purpose (this includes all land funded by the DCP and Clause 52.01 contributions). Table 11 shows that on average, 54 hectares of land is required for public purposes but that this amount has varied between PSPs in the three main growth corridors.

Table 11 shows that the average gross area for PSPs is 464 hectares of which 334 hectares (or 72% of total site area) comprises the net developable area (NDA). The allocation of land to each category is 26% for Transport, 6% for community facilities, and 68% towards open space.

When examined separately, that is the land take for 2012 as a proportion of the total NDA, it is important to note that whilst the total amount of hectares shown in Table 11 varies, when it is converted to a proportion of NDA, the variation reduces considerably as demonstrated:


70.91 hectares in the south is equal to 18.0% of NDA; 45.98 hectares in the north is equal to 13.9% of NDA; and 43.99 hectares in the west is equal to 15.8% of NDA.

Table 11 Overview of amount of land being secured by Region, 2008 - 2012

Tota

l PS

P A

rea

(Ha)

NDA

(Ha)

Tran

spor

t La

nd

(Ha)

Com

mun

ity

Land

(Ha)

Activ

e

Ope

n sp

ace

(Ha)

Pass

ive

O

pen

Spac

e (H

a)

Dist

rict

O

pen

Spac

e

Tota

l

Land

Re

quire

d (H

a)

Average Land take of ALL DCPs and 52.01 for 2008-2012

463.64 334.33 13.89 3.22 19.91 13.65 3.29 53.96

% of total land take 26% 6% 37% 25% 6% 100%

Average of South (Casey-Cardinia)

543.07 393.63 17.04 5.63 26.82 19.07 2.35 70.91

Average of North (Hume, Mitchell & Whittlesea)

465.57 330.22 10.55 2.50 16.75 10.43 5.75 45.98

Average of West (Wyndham & Melton)

382.51 278.62 13.66 1.43 15.78 11.05 2.07 43.99


The average land value being determined per Region for all DCPs approved (or pending approval) between 2008 - 2012 in 2012 dollar figures is set out in Table 12 below. The overall average for 2008 to 2012 is $801,000 per hectare, increasing to $816,000 per hectare in 2012. Whilst it is acknowledged that the valuation methodologies vary among the DCPs, it is important to note that there is significantly less variation in land value between the Growth Areas in 2012 than between 2008 and 2012, again demonstrating some convergence.

Table 12 Average land value per NDHa for all DCPs approved (or pending approval) in 2012$

Average land values per NDha 2008 – 2012 (in 2012$)

Average land value per NDHa in 2012$

All Areas $801,000 $816,000

North $980,000 $800,652

South east $746,000 $789,000

West $742,000 $841,035

(iv) Analysis of overall DCP rates Figure 1 shows that the total amount of contributions being collected has steadily risen in the period from 2008 - 2012. However, what is more important to note is that there is


significantly less variability between the metropolitan Growth Area municipalities in terms of the total amount collected in 2012.

Figure 1 Metropolitan Growth Area residential rates average total cost included in DCP and Clause 52.01 by Growth Area, 2008 - 2012 in 2012$

2008 2010 2011 2012$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

NorthSouth EastWest

Year DCP Approved

Tota

l DCP

& 5

2.01

Rat

e pe

r Ha


The average contribution for each of the three growth corridors in 2012 is set out in Table 13, which shows the average across all metropolitan Growth Areas in 2012 is $268,000 per NDHa. The range is from $205,000 to $308,000 per NDHa. It might be argued that 2012 was a coincidental ‘one-off’, but the Committee is convinced that there are strong logical reasons based around more uniform standards and approaches that underpin this convergence.

Table 13 Total DCP rates being collected for all DCPs approved (or pending approval) 2012 in 2012$ (including Clause 52.01 contributions)

DCP Area Average Total contribution payable per NDHa in 2012 $

All Areas $268,000

North $283,000

South east $257,000

West $256,000


In summary, the main conclusions that can be drawn from this analysis as they influence the Committee’s proposal for a Growth Areas Standard Levy are:

There has been a significant adjustment in the quantum of funds that are being collected for community infrastructure in the period from 2008 - 2012;


There is general consistency in the quantum of funds that are being collected for the three infrastructure categories (30% Community and Recreation construction, 29% Transport construction and 41% Public Land) from 2008 - 2012;

There is increasing consistency in the average value of land that is being collected for public purposes;

The average value of land that is being collected for public purposes was $816,000/ha in 2012; and

The average land take for public purposes is 15-18% of the NDA.

The Committee is of the view that the analysis indicates some important general trends about the composition of DCPs for the period from 2008-2012. The trends are significant not only in terms of the relative consistency in approach and quantum of funds that are being collected, but also in terms of the indirect expression of priorities for infrastructure funding and delivery in Growth Areas. As discussed previously, this is particularly evident in relation to increased expenditure on Community and Recreation construction.

The Committee is persuaded that there is a reasonable basis in the data from recent DCPs to establish a Standard Levy rate for Growth Areas, but in coming to this conclusion is mindful that there are examples of recent DCPs that are both substantially lower and substantially higher than the recorded averages. It is also acknowledged that there is some variability between infrastructure categories.

In acknowledging this variability, the Committee is of the view that the Growth Areas should not all be the same in terms of the type of infrastructure projects, or of vision. That should be properly determined during a PSP process, taking into account the relevant conditions and aspirations for the area in question. The Development Levy Plan should be seen as an implementation tool rather than a strategic planning instrument in its own right.

The Committee believes that a Standard Levy for Growth Areas is highly desirable and should have the following characteristics:

A mandatory Standard Levy per net developable hectare for all metropolitan Growth Areas;

An ability to seek a Supplementary Levy for specific transport construction and public land projects, but only in certain circumstances where set standards and quantum of infrastructure provision cannot be met without additional contributions and the additional projects cannot be funded within the Standard Levy;

A capped Community and Recreation component of the Standard Levy that cannot be increased via a Supplementary Levy. Funds can, however, be redirected from the community and recreation component to other infrastructure categories (Transport and Public Land) if savings can be identified;

An ability of the Planning Authority (with the consent of the local Council) or developer to lower the Standard Levy if the total cost of the required infrastructure is less than the Standard Levy.

No opportunity to challenge the Standard Levy via Panel or other processes; An ability for Councils to spend funds on infrastructure projects from a list of

Allowable Items;


An ability for Councils to pool funds to assist in infrastructure delivery but with a requirement to ultimately reconcile infrastructure expenditure within the infrastructure categories; and

A template for preparation of a Development Levy Plan that sets out infrastructure and land requirements.

The Committee is of the opinion that setting a Standard Levy and the necessity to accommodate variability are not mutually exclusive. The proposed Standard Levy should accommodate the majority of future PSPs, whilst allowing for variability in certain circumstances.

The Committee is of the view that the recommended approach involving introduction of a Standard Levy for Growth Areas would deliver significant benefits including:

Certainty for Councils and the development industry; and Removal or significant reduction of the need for external review with associated time

and cost savings.

(v) Holding CostsThe DCP Benchmarking report prepared for the Committee by Urban Enterprise includes an analysis of holding costs incurred by developers in Melbourne’s Growth Areas. The analysis was based on information provided by developers who are working on projects within the Growth Areas. The analysis concluded that based on an average land cost of $723,481 per hectare, the per annum holding costs is $57,619 per hectare, or approximately 8% of the total value of the land. This figure is made up as shown in Table 14.

Table 14 Holding Costs for land in Growth Areas

Item Cost

Average per hectare land cost $723,481

Interest paid on debt component (Assumes equity to debt of 25%) $39,773

Council rates $2,528

State land tax $15,318

Total holding costs per annum $57,619

Total holding cost as a percentage of land cost 7.96%

Source: DCP Benchmarking report, Urban Enterprise 2013

The assumptions used in arriving at this figure are fairly broad, but nevertheless it provides a useful indication of the order of magnitude of holding costs being experienced by developers in Growth Areas.

Holding costs are relevant with respect to the delays that are currently being experienced in the process of applying DCPs. Some developers and Councils the Committee spoke to estimated that the current system of DCPs adds between 12 and 24 months to the process of getting land to the market.

One of the main aims of the new Development Levy System is to significantly reduce approval times. It is difficult to estimate just how much time would be saved under the new


system, and clearly it depends what form the system finally takes. The Committee believes that it is reasonable to anticipate (conservatively) at least three to six months time saving through the new system, although it believes much greater savings are achievable. If these conservative time savings can be delivered, then reduced holding costs of between $15,000 and $30,000 per hectare are achievable.

5.4 Recommended Standard Levies for Metropolitan Melbourne Growth Areas

Based on the analysis as set out previously, the Committee carefully considered the basis upon which a standard levy could be established. During this process the Committee was mindful to ensure that:

The Standard Levy would be high enough to ensure that the majority of infrastructure requirements could be funded without the need to introduce Supplementary Levies;

The Standard Levy would not be so high as to result in an overall unnecessary increase that would cause affordability problems; and

The Standard Levy was struck at a rate that could provide for increases and decreases in legitimate circumstances.

With these objectives in mind, the Committee tested the range of DCP rates from 2008-2012 of $205,000 to $308,000 per NDHa. The outcome of this process led the Committee to conclude that the lowest and highest DCP rates were the outcome of PSP/DCP processes that were not typical and that in both instances some divergence from a typical condition was warranted.

With reference to the analysis on the preceding section however, the Committee is persuaded that the 2012 average rate is more representative of the typical condition. In terms of potential use of the 2012 average as opposed to the 2008-2012 average, the Committee is of the opinion that the 2012 average is a more reliable and relevant basis for introduction of the Standard Levy for Growth Areas as the 2012 average rate:

Would have accommodated 8 of the 12 recently approved DCPs; and Recognises significantly less variation between the main growth corridors in 2012.

On this basis the recommended Growth Areas Standard Levy is $268,000 per net developable hectare.

The recommended Growth Area Standard Levy of $268,000 has then been divided into the three main infrastructure categories as set out below in Table 15. It is recommended that the Standard Levy for Growth Areas be comprised of:

A capped Community and Recreation component of $80,000 per NDHa; A variable Transport construction component of $77,000 per NDHa; and A variable Public Land component of $111,000 per NDHa.


Table 15 Components of the Growth Areas Standard Levy

Infrastructure Category Capped or Variable Average $ value of infrastructure Category in 2012 $ per NDHa

Average % of Infrastructure Category

Community and Recreation Capped $80,000 30%

Transport Construction Variable $77,000 30%

Public Land (incl. 52.01) Variable $111,000 40%

Based on an average net developable area of 343 hectares, this equates to a total infrastructure and land contribution of $91.6M or $17,866/lot at an average density of 15 lots/ha as set out below in Table 16.

Table 16 Standard Levy for Metropolitan Growth Areas

Infrastructure Category Average $ value per hectare of NDA of infrastructure in 2012$

Revenue raised assuming average NDA of 334ha in 2012$

Value of per lot equivalent @ 15 lots/ha

Community and Recreation Construction

$80,000 $27.44M $5,333/lot

Transport Construction $77,000 $26.41M $5,133 /lot

Public Land $111,000 $36.74M $7,400/lot

Total $268,000 $91.62M $17,866/lot

In recommending the Standard Levy for metropolitan Growth Areas of $268,000 (2012 dollar figures), the Committee is of the opinion that the Standard Levy will accommodate the typical Growth Area conditions. The Committee remains supportive of the need to accommodate potential for the Standard Levy to be decreased or increased where particular circumstances warrant. The Committee is also supportive of the concept that there should be some variation within and between Growth Areas in infrastructure provision to meet local circumstances and priorities and that this objective can be met via introduction of the allowable items concept.

In making any comparisons between existing per hectare rates for DCPs and the proposed new Standard Levy, it must be borne in mind that the proposed Standard Levy incorporates all public land, including all contributions for open space previously required via Clause 52.01 of the VPP (in addition to any land required for open space purposes in the relevant DCP). This can typically add up to $30,000 per hectare to current DCPs.

The other important factor that should be considered is that, as discussed in Section 5.3 (v), the new Development Levy System could be expected to deliver substantial savings in approval time and consequent holding cost savings conservatively estimated by the Committee at $15,000 to $30,000 per hectare.


5.5 Recommended Standard Levies for Non-Metropolitan Growth Areas

(i) OverviewIn developing Standard Levies for Growth Areas in non-metropolitan areas the Committee has examined the commonalities and differences between metropolitan and non-metropolitan areas. In particular, the Committee has sought to arrive at rates for the Standard Levies in non-metropolitan locations that:

Recognise the differing circumstances in regional locations, particularly in relation to the need to deliver affordable development;

Recognise some differences in cost structures, particularly relating to land cost; Have some relativity to metropolitan Growth Areas; Are easy to implement; Will be able to deliver Allowable Items to support the establishment of new

communities; Are flexible enough to respond to genuine ‘exceptional’ circumstances; and Do not disadvantage regional areas in comparison to metropolitan areas.

There is limited data available for DCPs approved for regional growth areas since 2008, however the Committee believes that there is sufficient data and experience available to draw conclusions and set base rates as a starting point, acknowledging that the rates will be able to be refined as further development occurs.

Notwithstanding the limited data set (which is indicative of limited application of DCPs throughout regional Victoria for a range of reasons), the Committee is mindful of the relationship between the scale and rate of development in regional locations and the infrastructure provision thresholds that are reached (or not) by comparison to metropolitan Growth Areas. In discussion with a number of regional Councils there was often a comment made that it costs just as much, if not more, to deliver infrastructure in regional locations. The Committee does not take issue with this comment in terms of the actual cost of provision of necessary infrastructure but in arriving at an assessment of what infrastructure is required, the Committee is of the view that the following are substantive matters that need to be considered in arriving at recommended standard levies for non-metropolitan Growth Areas:

The scale of planned/projected growth is typically substantially less than in metropolitan locations;

The lesser scale of planned/projected growth causes fewer provision triggers to be reached for higher order/shared infrastructure;

Land costs are highly variable throughout regional Victoria and the highest costs are still substantially less than the average land values in the metropolitan Growth Areas; and

There is often an existing level of infrastructure provision in regional locations that has the capacity to be augmented to accommodate additional needs.

In observing these underlying differences between metropolitan and non-metropolitan Growth Areas, the Committee is aware that some regional locations such as Armstrong Creek in Geelong and Ballarat West are of a scale that is comparable to some of the metropolitan Growth Areas, whereas others are substantially smaller in scale. For this


reason the Committee is of the view that it is not possible, or appropriate, to set one Standard Levy for all non-metropolitan Growth Areas.

In contemplating whether one or more standard rates could be set for regional locations, the Committee has reviewed the following recent DCPs for larger regional Councils as presented by Urban Enterprise in two reports: Indicative Standard Levies for Local Development Contributions, May 2012 and DCP Benchmarking, April 2013:

Warrnambool – North Dennington (2008 under review); Shepparton – Mooroopna West (2009); Geelong – Jetty Road (2011); Geelong - Armstrong Creek East (2012); Geelong – Armstrong Creek West (2013); Warrnambool – North of the Merri River (2012); and Ballarat – Ballarat West (2012).

(ii) Large Regional CouncilsThe recent DCPs for Ballarat and Geelong (the only areas in the UGZ outside the metropolitan area) are summarised in Table 17.

Table 17 Ballarat West and Armstrong Creek DCP costs per hectare

DCP Community and Recreation

Transport Public Land (excl drainage)

Total (excl drainage)

Drainage (incl drainage land)

Ballarat West $105,281 $65,231 $37,721 $208,233 $90,831

Armstrong Creek East $106,326 $31,535 $23,284 $161,145 $70,139

Armstrong Creek West $126,653 $34,482 $51,648 $212,783 $85,817

Average $112,753 $43,749 $37,551 $194,054 $82,262

The public land figures in this table have been adjusted to include open space required under Clause 52.01 and the Subdivision Act 1988. Drainage costs include land required for drainage.

The observations from this limited data set are that: The cost of construction of open space and community facilities are higher in these

non-metropolitan areas than in metropolitan DCPs due to specific community and recreation provision strategies involving embellishment of regional or higher order active open space and comparatively higher construction costs for community centres, including provision for Council provided child care in Armstrong Creek in particular;

Transport construction costs are lower than in metropolitan DCPs. In Armstrong Creek this is due to a higher reliance on connector roads that are outside the DCP system;

Land costs are considerably lower than metropolitan DCPs, and appear to vary by a greater degree, as indicated by the difference in the two Armstrong Creek land components, noting that Armstrong Creek East has a significantly higher proportion of encumbered land that is being used for drainage and recreation purposes;


There is a level of consistency of the overall cost of these DCPs, excluding drainage costs; and

Drainage costs are a high proportion of the overall cost of DCPs in non-metropolitan areas.

As discussed earlier, the Committee believes that drainage in non-metropolitan areas is best dealt with as a separate Drainage Levy and not included in the Standard Levy.

The limited data set would appear to indicate that a Standard Levy of $210,000 per net developable hectare (excluding drainage but including all forms of open space) in these large regional Growth Areas would be an appropriate budget to cover the vast majority of cases and deliver the majority of Allowable Items to support the establishment of new communities.

To assess the appropriateness of a Standard Levy of $210,000 per NDHa, the Committee tested application of the community and recreation and transport components of the metropolitan standard levy of $80,000 per NDHa and $77,000 per NDHa respectively and adjusted the average land value to $400,000 NDHa. The results of this analysis are set out below in Table 18.

Table 18 Possible basis for Larger Non-Metropolitan Growth Areas

Community and Recreation

Transport Public Land

(inc 52.01 but excl. drainage)

Total

$80,000/ha $77,000/ha $50,0001/ha $207,000/ha

Note to Table 181 Based on an average land value of $400,000/ha

The Committee is of the view that a Standard Levy of $210,000 per NDHa represents a fair budget to work to, bearing in mind that Supplementary Levies would be available in genuine cases, and the overall levy can be lowered if the Development Levy Plan does not identify sufficient costs to warrant the full Standard Levy. (This is discussed further in Chapters 5.6 and 5.7.)

A Standard Levy of $210,000 in non-metropolitan Growth Areas for larger regional centres represents a 22% reduction on the metropolitan Standard Levy of $268,000 per NDHa. The Committee considered whether there should be a corresponding reduction in the budgets for each infrastructure category and, if so, on what basis should the budgets be set. Given the apparent higher level of variation in the infrastructure categories in non-metropolitan areas, the Committee is reluctant at this time, to impose the same restrictions on expenditure for the infrastructure categories as in the metropolitan Growth Areas. It may be that, in the future, expenditure targets or limits could be set for each category but for the time being, the Committee believes that $210,000 per hectare represents an appropriate overall budget for Community and Recreation, Transport and Public Land in larger regional Growth Areas. In this context the Committee notes that a standard rate of $210,000 per hectare equates to $14,000 per lot at an average density of 15 lots per hectare.


The Committee believes that this Standard Levy will be appropriate to apply to UGZ zoned land in the largest regional Councils such as Ballarat, Geelong and possibly Bendigo (however it is noted that the scale of development is lower on a comparative basis for the individual Growth Areas which may indicate that the ’middle growth regional Councils’ rate or the Strategic Development area rate may be more appropriate in Bendigo). The Committee is firm in its view however, that this rate would only be applied in locations that have planned growth that is comparable to metropolitan Growth Areas and where the UGZ applies. With specific reference to the City of Greater Geelong this would not include other smaller scale growth areas outside of Armstrong Creek (e.g. Leopold and Lara).

While the Committee is reluctant to set budgets for individual infrastructure categories in the larger regional growth areas, the Committee is of the view that the metropolitan averages (that is, $80,000 Community and Recreation, and $77,000 Transport) should be used as a guide in applying the levy and in assessing any request for introduction of a Supplementary Levy for transport or public land.

(iii) Middle Growth Regional CouncilsTo date the UGZ has only been applied in Geelong and Ballarat, but there are other non-metropolitan growth locations such as Warrnambool, Shepparton, Latrobe, Mildura and others which could conceivably be candidates for use of the UGZ in the future. The Committee believes that there is value in having a Growth Area Standard Levy to apply to those anticipated situations, although notes that, in most cases the Strategic Development Area Standard Levy, with the possible addition of a Supplementary Levy for drainage in some circumstances, will generally be adequate in most regional cities.

The only data available is from DCPs in smaller growth areas that did not have the UGZ applied, but nevertheless they provide some indication of the order of magnitude that may be appropriate in middle growth non-metropolitan Growth Areas. Table 19 shows information from recent regional city DCPs.

Table 19 Summary of DCPs from Regional Cities, per NDHa

DCP Total average DCP levy (excl drainage)

Drainage

Warrnambool – North Dennington $89,456 $18,551

Shepparton – Mooroopna West $90,944 N/A

Warrnambool – North of the Merri River $108,014 $23,012

Geelong – Jetty Road $82,349 $0

Average $92,691 per ha

This limited data set suggests that the infrastructure provision triggers are not reached to the same extent where the extent and intensity of development is lower. There are also examples of lower land costs and also lower costs of providing transport infrastructure, community facilities and recreation and open space. In arriving at an appropriate Standard Levy to apply to land that may have the UGZ applied, the Committee believes that a figure


higher than the average for these DCPs would be appropriate. This view takes into account the general absence of Community and Recreation projects from the approved DCPs.

Taking into account the limited data set and the lower land values, the Committee proposes $120,000 per NDHa, excluding drainage. At this level, the Committee is confident that it would be an appropriate budget to cover the vast majority of cases and deliver the key Allowable Items to support the establishment of new communities. As with larger regional Council levies, the Committee believes that this amount represents a fair budget to work to, bearing in mind that Supplementary Levies would be available in genuine cases (if required but in the first instance an attempt should be made to accommodate all infrastructure types including drainage within the Standard Levy), and the overall levy can be lowered if the Development Levy Plan does not identify sufficient costs to warrant the full Standard Levy. In this context the Committee notes that the Standard Levy of $120,000 per NDHa (excluding drainage) equates to $8,000 per lot at an average density of 15 lots per hectare.

As for the Large Regional Councils Standard Levy, the Committee does not propose any restrictions on the budgets for infrastructure categories for Medium Growth Regional Councils. The Committee recommends that the Medium Growth Regional Standard Levy be kept under review and revised if necessary once further experience is gained with growth area developments in non-metropolitan areas.

The Committee believes that this Medium Growth Regional Standard Levy will be appropriate to apply to UGZ zoned land in the middle level regional Councils such as Warrnambool, Shepparton, Mildura and Latrobe.

(iv) Strategic Development Areas in Non-Metropolitan MunicipalitiesThe Committee considered whether there should be a third tier Growth Area Standard Levy for non-metropolitan areas further ‘scaled down’ from the medium growth regional levies. It concluded that it was not necessary, as the Strategic Development Area Standard Levy, at $6,000 per dwelling (or $90,000 per hectare at 15 dwellings per hectare), is available and provides adequately for infrastructure in smaller growth fronts in non-metropolitan (and metropolitan) areas.

It is noted that, at $90,000 per hectare, the Strategic Development Area Standard Levy would have covered three of the four examples of regional growth fronts in Table 19 and will be appropriate for most smaller-scale growth fronts.

5.6 Implementing the Standard Levy in Growth Areas

A number of submitters lodged submissions and raised concerns directly with the Committee in relation to the affordability implications of increasing levies in Growth Areas. Whilst the reasons for the increasing levies are varied, most submitters (developers and Councils) raised concern in relation to scope creep, the unforseen cost implications of Government policy and transference of funding responsibilities between agencies and levels of Government.

In response to some of these concerns, developers have requested the introduction of standardised project descriptions and costings for the typical types of infrastructure that is required in Growth Areas. Key items for which standard costings of infrastructure have been


requested include standard lineal rates for various types of roads, intersections, community centres (of varying types) and construction of playing fields and pavilions. This is also in line with the requirements of the Terms of Reference of the Committee.

As indicated earlier in this Chapter, the Committee has not embarked on this exercise for both data and conceptual reasons. In recognition of this variability, and the desire to avoid attempting to predetermine infrastructure needs on the one hand, but in response to escalating costs on the other, the Committee has recommended the introduction of a Standard Levy for Growth Areas to be spent on a list of Allowable Items.

The introduction of a Standard Levy changes the way in which infrastructure planning will occur. In the current situation, the process commences with a PSP where infrastructure needs are identified and planned. However the introduction of the Standard Levy provides a ‘revenue envelope’ within which priorities for infrastructure from the list of Allowable Items must be determined in a Development Levy Plan. Infrastructure not able to be included in the priority list will be funded from other sources, or its provision delayed, or not included in the infrastructure list in the PSP.

In this way, the PSP commences with a ‘budget’ for infrastructure provision with the flexibility to determine infrastructure expenditure priorities taking into account local conditions and other strategic objectives (provided that the infrastructure is within the list of Allowable Items). What must be emphasised, however, is the significance of the change in approach and the basis for the recommended changes.

In arriving at a recommended Standard Levy for Growth Areas of $268,000 per hectare (in 2012 dollars), the Committee has concluded that a rate at this level is capable of achieving an acceptable standard of infrastructure provision in Growth Areas, but that it is not necessary or desirable to specify precise infrastructure requirements or standards for Growth Areas.

In terms of affordability, this conclusion takes into account GAIC and other charges including the recently announced vegetation and threatened species offsets that will collectively contribute to the cost of delivery of land in Growth Areas.

Where PSPs and the associated DCPs have in the past enabled identification of a list of infrastructure requirements and costings from a bottom-up perspective (in accordance with the requirements of the Planning and Environment Act 1987), the new approach will require Planning Authorities to work to a budget for infrastructure provision with one capped infrastructure category (Community and Recreation construction capped at $80,000 per ha) and two variable infrastructure categories (Transport construction and Public Land). In this way, the list of Allowable Items will support identification of local priorities. Infrastructure priorities and standards will be considered within a Standard Levy which the Committee believes should not impact significantly on affordability.

Importantly, assessment of overall affordability implications should not rest solely with the Planning Authority. The Committee is of the view that other referral authorities should progressively have regard to and take into account the possible affordability implications of their requirements. Likewise affordability should be considered when assessing whether there is sufficient justification to pursue introduction of a Supplementary Levy.


At this point, it is important to highlight that the Committee has recommended a significant review of the current methods associated with identifying, valuing and securing land for a range of public purposes. As set out in Chapter 8, the review has been recommended to reduce the risks associated with the process that currently threatens successful implementation of the current DCPs. It will define a more transparent and equitable approach toward land valuation and compensation.

The infrastructure priorities are to be set out in a Development Levy Plan for each planning unit. The level of work required to produce the Development Levy Plan in Growth Areas will be greater than in Urban Areas. In Growth Areas sufficient work will need to be done to identify and cost each item of infrastructure and specify the public land requirements (or land budget). It is expected that this will involve the use of functional layouts and/or quantity surveyor assessments for buildings, roads and other construction so that there is a reasonable level of certainty in determining what can be accommodated in the Standard Levy, and whether there is a case for a Supplementary Levy. More detailed plans and cost estimates will be required to provide greater certainty for Councils and developers in negotiating works in kind agreements.

5.7 Additional Levies in Growth Areas

(i) Supplementary LeviesIn the Committee’s Report 1, it was suggested that there may be an option to prepare a DLS as an alternative to the Standard Levy, and that the DLS would effectively take the form of a modified DCP.

In this report, the Committee has confirmed that the Standard Levy for Growth Areas as proposed would be mandatory, and that any variation to the Standard Levy would take the form of either a reduction to the Standard Levy, or the introduction of one or more Supplementary Levies. The important distinction is that the Supplementary Levy is not an alternative to the Standard Levy, but rather an additional levy available only under specific circumstances. The Planning Authority cannot of its own volition simply choose to pursue the introduction of one or more Supplementary Levies.

It is proposed that through the PSP process, the Planning Authority (in conjunction with the relevant Council where the Council is not the Planning Authority) will determine the necessary infrastructure requirements and costings as per the current typical PSP approach.

The Planning Authority will be required to assess infrastructure requirements in relation to the ‘budget’ provided by revenue raised by the overall Growth Area Standard Levy and within the three infrastructure categories. This process assumes that if savings can be identified within one infrastructure category that funds can be redirected from one category to the other within the overall ‘budget’ of $268,000. The only restriction to this is that the total money allocated to Community and Recreation construction must not exceed the fixed cap ($80,000 per hectare).

Where a reasonable standard of infrastructure provision cannot be achieved within the Standard Levy, the Planning Authority may make an application to pursue introduction of one or more Supplementary Levies. The Committee proposes that such applications be


referred to an Infrastructure Standing Advisory Committee (ISAC3) for advice on whether authorisation should be granted to proceed with the Supplementary Levy/s via a full Planning Scheme Amendment process. The ISAC will be required to assess the validity of the request for exhibition purposes. During the assessment process, the ISAC will meet with the Planning Authority (and relevant Council), and developers to consider:

Whether there are physical or other conditions that warrant introduction of one or more Supplementary Levies for particular items;

Whether the Standard Levy could achieve an acceptable level of infrastructure provision without introduction of a Supplementary Levy/s;

Whether other infrastructure could be provided at a lesser standard/cost to avoid introduction of a Supplementary Levy/s;

The standard and costing of the Supplementary Levy project/s to ensure that they have been reasonably defined and costed; and

The affordability implications of the inclusion of a Supplementary Levy.

In making its assessment, the ISAC will have the ability to seek further information in relation to any matter that it considers relevant to make this assessment. In making its assessment and providing advice, the ISAC will either recommend:

Rejection of the request for authorisation and further recommend that the Development Levy System proceed without inclusion of a Supplementary Levy; or

Rejection of the request for authorisation and recommend that the Supplementary Levies be reduced in scope; or

Approval of the request for authorisation of a Supplementary Levy.

What must be noted, however, is that the authorisation process does not guarantee that the Supplementary Levy/s will be ultimately approved, as authorisation will only achieve approval to exhibit an Amendment. Should an Amendment that includes one or more Supplementary Levy/s be exhibited, the entire Development Levy System will be the subject of more detailed analysis and review. A further ISAC or Panel Hearing will be held to consider not only the merits or otherwise of the Supplementary Levy, but also critically examine whether the additional items can be accommodated within the Standard Levy. This approach is more onerous than the process associated with an Amendment that only seeks to apply the Standard Levy, where the Levy amounts will not be subject of external review and submission. (See Appendix G for a flowchart that summarises the proposed process.)

(ii) Reducing a Standard LevyA Planning Authority may seek to reduce the Standard Levy where the Development Levy Plan clearly shows that the cost of infrastructure and land requirements are below the Standard Levy. The Planning Authority will be required to provide reasons why a reduction is proposed.

3 The Committee has discussed the concept of an Infrastructure Standing Advisory Committee (ISAC) as an example of the type of review body it is advocating to assist in the introduction and implementation of the new Development Levy System. This is but one example of how it might operate, and there may be other forms or models which DPCD might want to explore. For consistency throughout the remainder of the report, the Committee will continue to refer to the ISAC.


Where an application is referred to the ISAC, that Committee will meet with the Planning Authority and developer to consider:

Whether there are physical or other conditions that warrant reduction of the Standard Levy;

Whether the reduced Standard Levy could achieve an acceptable level of infrastructure provision; and

The affordability implications of a reduced Standard Levy.

If requested in making its assessment and providing its advice, the ISAC will either recommend:

Rejection of the request for authorisation and further recommend that the Standard Levy be applied; or

Approval of the request for authorisation.

Once authorised for exhibition, an Amendment that includes any reduction to the Standard Levy will not be subject of submission.

The process for seeking approval of a Supplementary Levy is further dealt with in Chapter 13 (Administration and Implementation) and included in the draft Practice Note included in Appendix E and the Overview of Implementation Processes at Appendix G.

(iii) Drainage LevyThe Drainage Levy is available as an additional levy in non-metropolitan areas where the Council is the responsible authority for drainage head works. Drainage has been excluded from the Standard Levy due to the wide variation in costs of drainage schemes and the difficulty in aligning drainage scheme boundaries to planning unit boundaries.

The level of justification for applying the Drainage Levy will simply be the existence of a catchment drainage plan. It will not be necessary to demonstrate any relationship to the Standard Levy and the calculation of the quantum of the levy is independent of the Standard Levy. The Drainage Levy is available at the discretion of the Planning Authority and should be based on the catchment drainage plan.

(iv) Developer funded worksA separate Supplementary Levy may also be struck for fully developer funded works in some circumstances where it is desirable to use the Development Levy System to administer funds and coordinate works in kind. Examples might include where local collector roads are the joint responsibility of multiple landowners and a mechanism is needed to collect and distribute funds for construction.

In these cases, the work must be fully funded by developers and the separate levy will be available only at the discretion of the Planning Authority and by agreement of the owners of the majority of the land.

5.8 Overall Conclusions

The Committee concludes that the Standard Levy should be mandatory in all future PSPs, and there should be a requirement to actively work towards an infrastructure budget that is known from the outset once the net developable area has been calculated.


The requirement to work to a known budget will ensure that overall affordability levels are vigilantly maintained and that any increases or reductions are assessed and treated as exceptions rather than a choice. Where the Planning Authority seeks to pursue a Supplementary Levy/s, there will be significantly increased information and assessment requirements involving both the ISAC authorisation process and the prospect of a further ISAC and/or Panel Hearing.

The Committee is of the view that the Planning Authority should make every effort to utilise the Standard Levy before contemplating lodgement of an application to pursue a Supplementary Levy. In terms of the ISAC assessment process, it is likely that the process will be iterative and will require the ISAC to fully and carefully consider the basis of the request.

5.9 Recommendations

The Committee makes the following recommendations: That the levies for residential development in Growth Areas be adopted as set out

in Table 20.

Table 20 Recommended Levies for Residential Development in Growth Areas

Setting Standard Levy

Residential

Additional Levies

Growth Areas Metropolitan

$268,000 per net developable hectare

Supplementary Levy available only in specific circumstances for transport or landDeveloper funded works levy

Growth Areas Non-metropolitan

Large Regional Councils$210,000 per net developable

hectareORMiddle Growth Regional Councils$120,000 per net developable

hectare

Supplementary Levy available only in specific circumstances for, transport or landDrainage Levy availableDeveloper funded works levy


6 Levies for Urban and Strategic Development Areas6.1 Overview

The Committee has reviewed three possible methods for setting levies in Urban Areas and Strategic Development Areas including:

Using averages of historical DCP costs; Examining relativities to the Growth Areas levies; and Building up levies from typical infrastructure requirements for a typical Council.

The Committee reviewed capital works data provided by Local Government Victoria and quickly concluded that the wide variability in the type of infrastructure included in Councils capital works programs and the variation in needs for new infrastructure makes it impractical to attempt to build up a picture of a ‘typical’ levy from current data.

The Committee has therefore relied on an analysis of previous DCPs and comparisons with proposed Growth Area levies to formulate a recommended levy for Urban Areas and Strategic Development Areas. In arriving at the recommended levies, the Committee has also considered:

Benchmarking with other states; and The impact of the proposed levies on Councils annual capital works program.


Councils supported the introduction of a Standard Levy in Urban Areas and strongly supported the concept of the levies being available with a lower level of justification than exists under the current DCP system. Councils and other stakeholders submitted that development in existing Urban Areas was getting somewhat of a ‘free ride’ by generally not contributing to the upgrade of infrastructure in those areas. Submitters generally accepted that allowing for a Standard Levy in Urban Areas as well in Growth Areas was more equitable.

The Housing Industry Association however, opposed the application of Standard Levies in Urban Areas, arguing that to do so would adversely affect small developers and builders, further exacerbating housing affordability issues and discouraging the supply of housing in inner areas. The HIA argued that it is “not equitable to charge small scale urban infill developments a contribution towards the provision of infrastructure upgrades that benefit a much broader area”. The Committee can understand the thrust of this argument, but believes that new development should pay a share of costs in proportion to likely usage.

Notwithstanding there was general support for the levy being applied on a per dwelling basis for residential development, that is, for an increase in net dwellings on a lot – not for replacement dwellings or renovations.


6.3 Review of Previous DCPs

(i) Urban Enterprise reviewsThe Urban Enterprise report Indicative Standard Levies for Local Development Contributions May 2012 reviewed 24 metropolitan and 14 non-metropolitan DCPs completed between 2006 and 2012. The work reviewed greenfield and infill DCPs, concluding that infill development typically generates infrastructure costs at approximately 25% of the cost of equivalent greenfield development. Based on this approximation, a fixed infill levy of $3,629 per dwelling can be derived in Urban Areas excluding drainage and land cost. In regional areas the fixed levy derived using the same methodology was $3,660 per dwelling including drainage but excluding land cost.

A further report by Urban Enterprise, Review of Local Infrastructure Charges for Regional and Rural Councils June 2012, analysed 10 non-metropolitan DCPs completed between 2005 and 2011 and reported that average contributions were $2,671 per dwelling for infill areas and $6,867 per dwelling for Growth Areas. This analysis included development infrastructure and community infrastructure and included allowance for land for roads, community facilities and open space.

(ii) Existing urban DCPsTable 21 provides a review of existing DCPs in planning schemes in metropolitan areas:

Table 21 Current Metropolitan DCPs

Range Most typical Charge areas Comments

Moreland(on exhibition 2013)

$193 to $2,285 per dwelling

$200 to $600 per dwelling

12 10 year plan proposed based on very detailed list of projects

Darebin (2004) $128 to $3,626 per unit for works greater than $100,000

$500 to $1500 225 Very complex charge area system, due to expire in 2014.

Manningham (Doncaster Hill)

$2,139 per dwelling 1

Maribyrnong $450 per dwelling 1 Community Services charge only

Nillumbik $2,066 to $16,382 per dwelling

4 3 separate DCPs, more akin to a Strategic Development Area

(iii) Proportion of Growth Area leviesAnother approach to arriving at an appropriate levy in Urban Areas would be to apply a levy that is proportionately reduced from the Growth Areas levy. Using the 25% comparison figure adopted by Urban Enterprises in Indicative Standard Levies for Local Development Contributions May 2012 this would lead to a figure of $268,000 divided by 15 dwellings per hectare x 25%, that is - $4,467 per dwelling. This effectively ‘discounts’ all elements of the


Growth Areas levy equally by 75%. The Committee considers that the infrastructure components should be looked at individually to give a more accurate comparison.

The components of the metropolitan Growth Areas levy are as follows: Community and Recreation $80,000 per hectare = $5,333 per dwelling; Transport $77,000 per hectare = $5,133 per dwelling; Public Land $111,000 per hectare = $7,400 per dwelling; and Drainage $0 (applies to non-metropolitan only).

The Committee considers that it is reasonable to assume the 75% reduction for the Community and Recreation and Transport components. This allows for the pre-existence of a reasonable degree of these facilities and infrastructure in established Urban Areas. Land is generally not required for infrastructure upgrades in established Urban Areas and the Committee believes a much greater reduction could apply. A 95% reduction is suggested as more appropriate for land. Some allowance for drainage upgrades is also appropriate to be added, as in Urban Areas Councils will have assumed responsibility for drainage assets that in Growth Areas are initially provided as fully developer funded items.

This leads to a derived levy using this method of: Community and Recreation = $5,333 per dwelling x 25% = $1,333; PLUS Transport = $5,133 per dwelling x 25% = $1,027; PLUS Public Land = $7,400 per dwelling x 5% = $370 PLUS Drainage = Allow (say) $300 based on existing urban DCPs. This gives a TOTAL of $3,030 per dwelling.

This equates to a figure of around 17% of the total Standard Levy for Growth Areas based on 15 dwellings per hectare, or 23% based on 20 dwellings per hectare in the established Urban Areas.

(iv) Levies in other StatesAs noted in Chapter 1, the Committee looked at development levy systems in New South Wales and Queensland. In NSW, development levies are typically charged at 1% of the cost of development or, if a Council wants to prepare a more detailed contributions plan, levies are capped at $20,000 per dwelling in established Urban Areas. A recent NSW government White Paper (April 2013) proposes a review of infrastructure contributions and suggests the use of a ‘standard rate’ system where Councils can apply to increase the standard rate where justified. There is nothing in the White Paper in relation to the quantum of any proposed new standard rates.

Under the most commonly used Section 94A system, Councils in NSW typically have a lower rate for smaller developments (e.g. Up to $100,000 development cost = Nil; $100,000 to $200,000 development cost = 0.5% of development cost; greater than $200,000 = 1% of development cost) and, in some cases, identify particular areas such as activity centres or higher Growth Areas at a higher percentage (e.g. Gosford City Centre = 4%; Parramatta and Newcastle City Centres = 3%).

The NSW Section 94A levies equate to between $2,000 and $3,000 per dwelling for a typical $200,000 to $300,000 new house build, increasing up to $8,000 to $12,000 per dwelling for the same type of development in activity centres such as Gosford.


In Queensland, levies in infill areas are capped at $20,000 per lot for dwellings up to 2 bedrooms and $28,000 per lot for dwellings for 3 bedrooms or more. The Committee was advised that many Councils, even in rural areas with low growth levels, charged the maximum levy as a default. In other municipalities, local variations have been made to encourage certain types of development. For example, Brisbane City Council has waived development charges for developers wanting to build a 5 star hotel in Central Brisbane. Development contributions in Queensland can also be triggered by a change of use. It is noted that the Queensland Government is in the process of reviewing development charges.

6.4 Proposed Levies

(i) Metropolitan Urban AreasAs can be demonstrated from the discussion above, there are a number of possible ways to look at an appropriate level for levies in Urban Areas and Strategic Development Areas. There is no one method of coming up with a scientifically defensible ‘right answer’.

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. One of the challenges of trying to come up with a Standard Levy that can be broadly applied is to arrive at a figure that is appropriate in most cases. For that reason the Committee favours a levy that is at the lower end, but not at the bottom of the range, and proposes a metropolitan Urban Areas Standard Levy of $3,000 per dwelling for any net increase in the number of dwellings on a lot. This includes houses, units, apartments, and townhouses, irrespective of size, location and the number of bedrooms. The Committee has acknowledged however, that there should be some exemptions to this, and these are provided for in Chapter 6.6.

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.

The Committee believes that in metropolitan Melbourne, there is clear evidence that urban consolidation is placing increasing demands on infrastructure. Unless there is a convincing case to the contrary, a levy of $3000 per new dwelling is justifiable, and should be regarded as the default Levy. In most existing areas there is currently no levy on new dwellings. The Committee notes that some of the existing DCPs in metropolitan municipalities are charging significantly less than $3,000 per dwelling. The Committee considers that this is more a function of the complexity of the current system and perhaps an unwillingness to set a levy too high when neighbouring Councils have no levy. Further, the Committee considers that the low existing levies do not go far enough to assist with infrastructure delivery in any meaningful way.

The Committee is conscious that there is a large inequity in the current system with Growth Area developers paying upwards of $15,000 per dwelling and developers in in-fill areas generally paying very little or nothing in most cases. A broad based levy in the Urban Areas and access to a higher levy in Strategic Development Areas goes some way to addressing this


inequity and ensuring that the standard of infrastructure delivery in in-fill areas is not significantly worse than in new Growth Areas.

The Committee looked at the option of having a range of levies for different Councils, with the levy to apply to each level based on average land value in the Municipality. It was suggested to the Committee that this may provide better relativity between the levy and the cost of building a dwelling. The Committee elected not to have a range for a number of reasons. Firstly, the infrastructure requirement generated by an expensive dwelling is no greater than for a less expensive one. The nexus is based on population increase. Secondly, it would be difficult, and in some cases unfair, to assign an average land value to an area when the land values within a municipality can vary greatly. Thirdly, having a Standard Levy that is fixed removes any chance of political influence at the local level.

The Committee also considered whether the Urban Areas Standard Levy should be calculated on a per bedroom basis as it is in Queensland. The Committee felt that this introduced a level of complexity that is unwarranted and potentially open to misuse.

(ii) Non-Metropolitan Urban AreasThe Committee received submissions that there are circumstances in regional and rural areas where a lower levy might be appropriate in smaller scale Urban Areas or townships. Reasons why a lower levy might be appropriate include:

Some smaller settlements have spare capacity in existing facilities because certain items of infrastructure are already provided or readily accessible, even though population levels are below those which would trigger the need for such infrastructure in Melbourne or regional cities. This may include infrastructure such as community halls and sports ovals;

There are only small increases in population in some rural townships. These cannot be seen in the same context as much of the urban consolidation occurring in larger centres. The growth may be such that the extent of impact on infrastructure is lower and therefore a higher levy cannot be justified;

New dwellings may be constructed in some townships which are experiencing overall population decline and it may be considered anomalous to impose a levy in such a situation;

The proposed default levy of $3,000 as a percentage of the typical house/land package is likely to be much higher in many rural townships and a lower levy (or waiving the levy) maintains some equity with respect to the percentage of the house land package; and/or

Where population growth is low but there are some infrastructure needs, and the Council believes that a levy of $3000 per dwelling may result in investment being directed elsewhere.

For these reasons the Committee proposes the additional option in non-metropolitan areas of a $1,500 per new dwelling levy. The option of this lower levy, along with the option of waiving the levy in certain circumstances, will provide non-metropolitan Councils with the flexibility to deal with the needs of smaller settlements without compromising the growth of larger centres, where the $3,000 per dwelling option will still be available.


(iii) Strategic Development AreasThe Committee believes that the Strategic Development Area Standard Levy should provide the opportunity to fund the infrastructure needs of developments that range from significant intensification of use to new greenfield development (or brownfield) which does not have the scale to be considered a Growth Area. The Committee feels that the quantum of the levies for Strategic Development Areas should similarly occupy this middle ground between the Urban Area and Growth Area Standard Levies. Based on the analysis and benchmarking discussed above, and the relativity to the levy for other Development Settings, the Committee considers that Strategic Development Area Standard Levies could be in the range $4,500 to $12,000 per net new dwelling. Bearing in mind that a higher level of justification will be required to demonstrate that the higher levies are warranted, and Supplementary Levies are available in Strategic Development Areas for exceptional circumstances, the Committee believes that levies should be set towards the lower end of this range.

The Committee proposes a Standard Levy for Strategic Development Areas of $4,500 and $6,000 per new dwelling. To justify the lower of these two levels, the demonstrated level of infrastructure needed must be significantly in excess of what could be funded by the application of a Standard Levy of $3,000. To have a Levy of $6,000 approved, demonstrated infrastructure needs will need to be significantly in excess of the revenue that the $6,000 levy would generate given that revenue from the Levy is expected to be only a contribution to infrastructure needs.

The Committee recognises that this sets a higher bar for accessing the Strategic Development Area Standard Levy, which it considers to be appropriate.

6.5 Contributions to Councils Capital Works Programs

The Committee has reviewed the level of revenue that would be generated by the new Urban Areas Standard Levy at the recommended rates. For the purposes of this review, the Committee has grouped each Local Government Area (LGA) based on its location and the volume of new development (Refer to Appendix D).

In order to understand the impact a Standard Levy may have, the Committee has considered data on the number of dwelling approvals (past and projected) for each Victorian LGA. The Committee has used the annual building approvals for dwellings by LGA since 2008 based on ABS data. This is the number of dwellings approved per year based on building permit data from the Building Commission. While this does not illustrate net increase in dwellings because it does not account for demolitions and replacement dwellings, it is considered appropriate as only a small number of dwelling approvals involves the demolition and replacement of a dwelling.

The Committee has also considered the Victoria in Future dwelling projections which include dwelling projections for a 5 year and 20 year period for each LGA in Victoria.

Based on the proposed rate for the Urban Areas Standard Levy, Councils could raise substantial additional funds to support infrastructure upgrades. Table 22 shows average annual levies based on applying $3,000 per dwelling for metropolitan Councils, peri-urban


and larger regional centres. An average of $1,500 per dwelling has been applied for the other regional areas. Metropolitan Growth Area Councils and Geelong and Ballarat have been excluded from this analysis as they would distort the figures.

Table 22 Indicative Levy Revenue for Victorian LGAs

LGA Group Average Levy Assumed

Annual Average Dwelling Approvals 2008-2012 (ABS, 2011)

Approx. Annual 2008-2012 Development Contribution

Annual Average Projected net change in no. Dwellings (VIF 2011-2016)

Approx. Annual 2011-2016 Development Contribution

(per dwelling)

(per LGA) (per LGA) (per LGA) (per LGA)

City of Melbourne $3,000 3,432 $10.3m 2,607 $7.8m

Inner City $3,000 998 $3m 638 $1.9m

Inner-Middle $3,000 1,011 $3m 775 $2.3m

Middle Ring $3,000 750 $2.3m 452 $1.4m

Outer $3,000 756 $2.3m 666 $2m

Outer Peri-urban $3,000 703 $2.1m 447 $1.3m

Regional Centres $3,000 357 $1.1m 364 $1.1m

Regional LGAs $1,500 362 $543.2k 346 $518.4k

Regional LGAs without significant Growth

$1,500 70 $104.6k 69 $103.8k

Note to Table 22:

This data takes into account all dwellings, not the net increase in dwellings which the Committee proposes will be subject to the Standard Levy

The Committee has considered how much revenue the Urban Areas Levy would raise as a percentage of each Council’s annual Capital works program. Table 23 is based on the ABS Capital Asset Outlay 2011-2012 obtained from Local Government Victoria and the number of dwelling approvals in 2012. It illustrates that Councils may be able to raise between 1% to 14% of capital works programs from the new Urban Areas Standard Levy. This is considered reasonable given that the large majority of capital works in existing areas will be replacement or upgrading of infrastructure, the benefits of which will go largely to existing residents. The Committee acknowledges that the level of development will vary significantly from year to year and that capital expenditure is also ‘lumpy’.

Whilst it is theoretically possible under the current DCP system to raise these levies, the current system is difficult and time consuming to implement and, in practice, is seldom used. The level of funds raised from the new levies should allow Councils to bring forward proposed projects, or implement new projects that fall within the Allowable Items, that would not have been possible under the existing approach.


Table 23 Indicative Levy Revenue as percentage of Capital Expenditure

LGA Group Average Levy Assumed

ABS Capital Asset Outlay 2011 -2012

Dwelling Approvals in 2012

Development Contributions 2012

% of Annual Capital Expenditure

(per dwelling) (per LGA) (per LGA) (per LGA) (per LGA)

City of Melbourne $3,000 $136,926,000 6522 $19,566,000.00 14%

Inner City $3,000 $26,113,617 709 $2,126,000 8%

Inner-Middle $3,000 $48,706,563 1286 $3,859,000 12%

Middle Ring $3,000 $36,599,043 817 $2,451,900 8%

Outer $3,000 $35,741,989 707 $2,119,800 6%

Outer Peri-urban $3,000 $28,212,378 586 $1,759,000 6%

Regional Centres $3,000 $24,376,476 303 $910,000 4%

Regional LGAs $1,500 $17,515,890 315 $472,666 3%


$1,500 $11,404,014 64 $95,275 1%

Source: Victoria in Future projections and data provided by Local Government Victoria

The data for each Victorian LGA is provided in Appendix D. It should be noted that the information on capital expenditure and estimated levies is based on a 2012 ‘snapshot’ of data and therefore is indicative only. The Committee nevertheless believes that the information is useful in showing the order of magnitude of revenue that might be able to be collected through the new Development Levy System.

6.6 Exemptions to the Standard Levy

The trigger point for the obligation to pay the Standard Levy in residential areas is proposed to be the creation of a dwelling. Unless exempted this would include both the construction of a new dwelling and the modification of an existing dwelling to create a new dwelling.

The following development and uses are proposed to be exempt from the Standard Levy: An extension to an existing dwelling that does not create a new dwelling; The replacement of an existing dwelling; Building a single dwelling on a vacant lot which has not previously been built on; A dependant persons unit; Residential aged care facility; and Social or affordable housing projects undertaken by a State agency (such as the Office

of Housing or Places Victoria) or recognised Housing Associations.

Other exemptions may be considered and applied upon finalisation of the legislation to introduce the Development Levy System.


6.7 Supplementary Levies in Strategic Development Areas

The Committee has proposed that a Supplementary Levy can be applied in Strategic Development Areas where it can be demonstrated that the infrastructure costs to be incurred as a result of the proposed development exceed the amount of revenue to be generated by the Strategic Development Area Standard Levy by a significant margin. This would usually occur because of the scale and complexity of the development, such as Fishermen’s Bend, Moonee Valley Racecourse and the Amcor site.

The Committee has found the task of identifying the circumstances where a Supplementary Levy might be justified in Strategic Development Areas to be particularly challenging. The key reasons for this is the wide variety of development scenarios this Development Setting needs to be able to accommodate, and the fact that there are no readily definable benchmarks for what scale of infrastructure could be covered by the Standard Levy, or even what proportions of the revenue collected might be allocated to particular infrastructure categories. Both of these factors are better defined in the Growth Areas Development Setting. The second of these two factors is the reason flexibility is given to what infrastructure types the revenue collected from the Standard Levy is expended upon.

Whichever approach is used to identifying infrastructure upon which a Supplementary Levy might be based, there is a clear first step to this process. A Structure Plan would be prepared for the planning unit, including an infrastructure plan which provides strategic justification for the infrastructure proposed and a list of items of infrastructure from the list of Allowable Items for the Supplementary Levy for the Strategic Development Areas. It should be noted that in Strategic Development Areas this does not include items of Community and Recreation infrastructure. Where it is intended that a Supplementary Levy apply, the ‘non-normal’ items of infrastructure which will add significantly to the total cost should be strategically justified in terms of:

Need generated by the development; Nexus to the development; How the infrastructure is aligned with the target market of the development

(particularly for works in the public realm); and Affordability in relation to the market niche for the development.

Costs of the infrastructure must then be apportioned to the Strategic Development Area in proportion to projected usage (if applicable).

The Committee considered a number of approaches to defining the conditions under which a Supplementary Levy might be applied and these can be broadly termed:

Meeting defined conditions; When exceptional circumstances apply; Defined proportions applied to the main infrastructure categories; Where there are abnormal costs; and Applied to new infrastructure only.

The Committee is recommending the first approach, that is a Supplementary Levy might apply if certain conditions are met. These are proposed to be as follows:


One or more items of strategically justified infrastructure are of such scale and/or cost that funding of the infrastructure, appropriately apportioned to the development, demonstrably cannot be provided from the revenue proposed to be raised by applying the maximum Standard Levy; plus one of the following two conditions: 1. The location of the development is such that the item(s) of infrastructure is

required for efficient access to, or operation of, the community the development serves; OR

2. The strategically justified item(s) of infrastructure are required to ensure that the development implements a clearly defined vision which serves a specialist market or need that cannot be appropriately met from the Standard Levy.

Where these conditions are met in proposing a Supplementary Levy the Planning Authority should indicate:

The total amount of funds to be raised from the Supplementary Levy proposed for each item of infrastructure, and the Levy for each category of land use to which it is proposed apply the levy;

The proportion of the cost of each item of infrastructure to be funded from the Standard Levy (if any), the Supplementary Levy, and other sources of revenue; and

How the conditions set out above are met for each item of infrastructure.

In addition, infrastructure items considered to be normally fully funded by the developer may be funded through a Supplementary Levy where there is fragmented ownership of the area and this is the most efficient method of funding such infrastructure.

The other approaches considered by the Committee and the reasons why they have not been used are as follows:

Exceptional circumstances

The Committee is of the view that most infrastructure should be able to be funded from the Standard Levy and that it is only in ‘exceptional circumstances’ that a Supplementary Levy might apply. However the Committee was counselled strongly by VPELA against the use of this term as a criterion. The reason for this is that it is a term which is very difficult to define and consequently, this approach is not proposed.

Proportions of infrastructure expenditure

The Committee examined the possibility of defining an approach based around the costs of particular infrastructure categories being significantly above the norm for that category. This approach was not pursued for two reasons, firstly the proportion of expenditure on infrastructure types varies widely between developments in areas that the Committee views as most likely to be considered as Strategic Development Areas; and secondly there is no supportive data upon which to base such ‘norms’.

Abnormal costs

Intuitively, significantly above normal costs would seem to be a reasonable basis for a Supplementary Levy. However because of widely varying types of infrastructure and infrastructure needs, there is again no easily definable ‘norm’ around which such an


approach is readily based. Strategic Development Areas are somewhat different from Growth Areas in this respect.

New infrastructure

In Chapter 2, the Committee indicated that one characteristic which differentiates Strategic Development Areas from Urban Areas is that the former is likely to be of a scale that more likely will give rise to the need for new infrastructure in its own right. Whilst not resiling from this description, the Committee is of the view that there may be other situations where significant costs are incurred from adding to existing infrastructure, for example the addition of an extra traffic lane to an existing arterial road, major intersection works or enhancing existing public space by significant high quality public realm improvements. For these reasons this approach was not pursued.

6.8 Recommendations

The Committee makes the following recommendations: That the levies for residential development in Urban Areas and Strategic

Development Areas be adopted as set out in Table 24.

Table 24 Recommended Levies for Urban Areas and Strategic Development Areas

Setting Standard Levy

Residential


Urban Areas: Metropolitan

$3,000 per dwelling Not available

Urban Areas: Non-Metropolitan

$1,500 per dwellingOR$3,000 per dwelling

Not available

Strategic Development Areas:Metropolitan

$4,500 per dwelling OR$6,000 per dwelling Subject to justifying additional projects with clear nexus to the planning unit

Available only in specific circumstances for drainage, transport or land or Developer funded items

Strategic Development Areas:Non-Metropolitan

$4,500 per dwelling OR$6,000 per dwellingSubject to justifying additional projects with clear nexus to the planning unit

Available only in specific circumstances for drainage, transport or land or developer funded items


7 Levies for Non-Residential Land Uses7.1 Overview

The Terms of Reference require the Committee to provide:

Advice on how development contributions should be applied to residential and non residential development, including retail, commercial and industrial‐ development, in each of these Development Settings.

The Committee determined not to deal with this issue as part of its Stage 1 process, as it was keen to consult more widely about a non-residential levy and receive specific submissions on this aspect.

It is proposed by the Committee that residential levies be set as follows: Growth Areas: per net developable hectare; Strategic Development Areas: per net increase in dwellings; and Urban Areas: per net increase in dwellings.

The issue addressed here is how the levies set could apply to a wide range of non-residential uses in addition.

The overarching principle adopted by the Committee is that non-residential development should be levied in proportion to the demand for infrastructure that the development generates a demand for.

The current development contributions system provides for levies to be applied to some non-residential uses. The Development Contributions Guidelines 2007 applies levies to a ‘demand unit’ where one dwelling is one demand unit. The Guidelines include a table to convert a range of other uses to the common base of a demand unit. This equivalence table is reproduced as Table 25.


Table 25 Equivalence Table from the DCP Guidelines, 2007

Land Use

Infrastructure Category

Road Drainage Parkland Community Facilities

Residential 1 dwelling = 1 demand unit

1 dwelling = 1 demand unit



Retail premises 19 m2 fl. space = 1 demand unit

300 m2 site area = 1 demand unit

not applicable not applicable

Office/ service industry

121 m2 fl. space = 1 demand unit



Industry (other than service industry)

67 m2 fl. space = 1 demand unit



Primary schools 3.42 students = 1 demand unit



Secondary schools 3.48 students = 1 demand unit



Tertiary institution 5.06 students = 1 demand unit



Hospitals 0.67 beds = 1 demand unit


not applicable not applicable.

Source: DCP Guidelines, as amended.

The Guidelines state that these equivalence ratios may need to be altered to suit local conditions. The equivalence ratios assume that non-residential uses generate no demand for recreation and community infrastructure. In the consultation undertaken for Report 1, the Committee was informed that this is not the case in the City of Melbourne, where workers who reside in other areas can place significant demand on City of Melbourne community and recreation infrastructure. The Committee notes that this may be the case in other major employment nodes, including Activity Centres. Equivalence ratios have not been used in the preparation of growth area DCPs since 2010.

Table 25 above includes equivalence ratios for schools. The Committee notes that development levies are not imposed on state schools. The Government has recently determined that development levies should not be imposed on private schools in Growth Areas as set out in a Ministerial Direction issued in January 2012.

To assist in developing Levies for non-residential development uses, the Committee commissioned Urban Enterprise to provide detailed documentation of the comparative approach to levies for non-residential uses in Growth Area DCPs prepared since 2008.

Part of the data presented as part of that work is set out in Table 26.


Table 26 Non-Residential Levy Amounts by DCP Area and Development Type

Year DCP 2012 Residential DIL Levy (per Ha)

Development Type (As defined by each DCP)

Development Units in DCP Area

Non-Residential Development Levy Payment ($2012)

Payment made per unit

2008 Cardinia Road Precinct Cell 1 $176,712

Retail 350m2 $80,814 266.3m2

Non-Retail/Peripheral Commercial 150m2 $80,814 1696.2m2


Retail 17500m2 $49,203 266.3m2



Retail 3500m2 $41,142 266.3m2



Retail 350m2 $82,891 266.3m2



Retail 7000m2 $83,588 266.3m2


2010 Cranbourne West Area 1 $24,415

Business AC 7.98ha $120,268 1 ha

Industry 341.55ha $74,668 1 ha

2010 Cranbourne West Area 2 $200,997 Activity Centre 7.45ha $127,000 1 ha

2010 Cranbourne East $156,136 Employment 33.96ha $101,353 1 ha

2010 Taylors Hill West $223,427

Retail 900m2 $118,745 295m2

Non-Retail/Peripheral Commercial 200m2 $118,745 1882m2

2010 Toolern Area 4 (Employ.) $0 Employment 498.75ha $89,962 1 ha

2011 Clyde North $257,720 AC/Employment 5.87ha $110,372 1 ha

2011 Officer $284,441 Differential Rate 14.25ha $190,081 1 ha

2011 Cranbourne North (Sg 2) $227,562 Employment 37.19ha $100,581 1 ha

2012 Manor Lakes $123,517 Activity Centres 10.33ha $123,517 1 ha

2012 Merrifield West $219,151 AC/Mixed Use 12.4ha $219,151 1 ha

2012 Diggers Rest $209,043Retail/Employment/Non-Govt School

35.4ha $102,259 1 ha

2012 Lockerbie North $254,858 Activity Centre 11.4ha $254,858 1 ha

2012 Ballarat West $247,562 Commercial & Ind. 37.77ha $163,834 1 ha

2012 Armstrong Creek East $207,613 Activity Centres 6.5ha $103,569 1 ha

2012 Armstrong Creek West $234,747 Activity Centres 2.17ha $120,075 1 ha

Source: DCP Benchmarking report, Urban Enterprise 2013


The following observations are made about this data:

It is based on DCPs prepared by different organisations including the GAA, Urban Enterprise, and SGS Economics and Planning;

Equivalence ratios were used in many DCPs up to about 2010. As a result of the way in which the impact of commercial traffic is accommodated using equivalence ratios, resulted in much higher per hectare levies both in absolute terms and relative to the relevant residential levy;

The DCPs prepared by Urban Enterprise use each of the approaches i.e. equivalence ratios and a per hectare approach;

The more recent DCPs base the charge for non-residential uses on per hectare of site area;

The per hectare rate applied to non-residential uses has varied greatly and shows greater variance than the residential rate; and

Whilst based on very few observations, the rate applied to ‘employment’ uses appears to be high compared with the retail rate when compared with that proposed in the equivalence ratios in the guidelines.

In recent years, the GAA has used the approach of attributing the usage of various infrastructure items on an item by item basis, based on its assessment of the likely usage of that infrastructure by non-residential uses. It then applies a common per hectare rate to each use, with uses such as employment generally paying a lower rate by virtue of the lesser number of infrastructure items which it assessed as creating a need for. The general rule of thumb is that non-residential uses are not levied for community infrastructure. This said, it is noted that using either approach, non-residential uses have been levied for some items of community infrastructure where these have been included as development infrastructure. In the Armstrong Creek East DCP prepared by Urban Enterprise, recreation and community infrastructure is charged against residential development only, on a per hectare basis, but all other infrastructure is charged against all development on a uniform per hectare basis. This is broadly consistent with the GAA approach.

It is not simple to make a direct comparison between these two approaches. To do so requires assumptions to be made about site coverage for the various uses. Urban Enterprise have estimated this in Table 26 where it has assumed a site coverage of 50% for all non-residential uses in order to convert site area to gross floor area (GFA). This is perhaps easier to do in the case of Activity Centres, but site coverage varies widely for other uses, and conversion to GFA becomes much more variable when multiple level development is involved. The Committee notes that there has been little comment made in submissions about either of the methodologies outlined above.

In the proposed new scheme, the challenge is to ensure that all users pay their fair share for the delivery and use of infrastructure. Based on the above and the lack of evidence that the current approach is fundamentally flawed, the Committee sees its challenge as refining the current approach, making it consistent with the new approach to development levies and then extending it to each of the proposed Development Settings and to the approaches to setting levies in a way that is both fair and consistent. In particular, how Standard Levies which have been initially developed as a levy on residential development should be applied


to non-residential development and to situations where there is a mix of residential and other uses.


Several submissions commented on the proposal to set levies for non-residential uses, but apart from a level of general support, little else was noted in many of these. Some Councils indicated support for the non-residential levy, with Cardinia requesting the opportunity to provide feedback on the proposed rate. There were more detailed submissions from the Shopping Centre Council of Australia, Colonial First State, MAB and the City of Yarra.

The Shopping Centre Council proposed a separate levy for shopping centres of $50-$75 per square metre of incremental Gross Leasable Area for Retail (GLAR). It submitted that the cap of $180 per square metre levied in Queensland is too high and is open to abuse. It further submitted that activity centre development should not be levied for community and recreation infrastructure. This approach was generally supported by the Shire of Baw Baw. The Shopping Centre Council further submitted that there should be equity of burden across all users, with no ‘free riders’ who do not contribute to infrastructure. It submitted that the levy should be clearly related to infrastructure for which shopping centres generate a demand and that there should be accountability for delivery of that infrastructure.

MAB’s written submission was supplemented in a meeting between the Committee and its Chief Operating Officer, Mr David Hall. In its written submission, MAB emphasised that non-residential development should be levied for essential servicing infrastructure such as roads and intersections only, and that the funds collected should be accounted for separately, so that there is no cross subsidisation of infrastructure which serves residential development. Mr Hall emphasised that he would prefer to see levies developed on a site by site basis as MAB are often providing key enabling infrastructure for which credit is not given. Mr Hall reminded the Committee that for the new approach there needs to be consistency with broader government policy, particularly where it relates to encouraging employment development in Growth Areas. The Committee is cognisant of the need to encourage job growth as an integral part of the growth area planning process. Whilst not specifically provided for in its Terms of Reference, the Committee is aware that the new system should align with other proposed changes to the planning system and government policy more broadly.

The non-Council submitters generally suggested that community and recreation uses not be included in the levy. As indicated in Chapter 5.4 of Report 1, the City of Melbourne submitted that because a number of those working in the City of Melbourne add to the demand for some community and recreation infrastructure, there is a case for community and recreation levies to be imposed on non-residential uses. Its further submission on Report 1 reiterated that position. The Committee accepts that this is a valid point that is likely to extend to other major employment nodes.


7.3 Developing an Approach to Non-Residential Levies

In considering the approach that should be used to derive levies for non-residential uses, the Committee started by identifying the factors which it believes should underpin the approach to the levy charged. These have been derived from the characteristics of the new system as described in A Preferred Way Forward, the purpose of development levies, submissions made to the Committee and the Committee’s own deliberations. These include:

That the approach should help to achieve or at least be consistent with proposed planning outcomes. This is an important principle that should be adhered to when considering the size and implementation of levies.

That the basis for the levy is a fair proxy for the impact that the use may have on the local infrastructure in relevant infrastructure categories. Generally it is population and cars or mode of transport that are the basis of the impact. Neither of these is easily measurable ahead of time and so a proxy for the impact they are likely to generate is needed.

An approach that is both simple to understand and to implement. The approach has a high level of transparency. The Committee is of the view that

this is not the case in many situations at the moment where section 173 agreements are used as the basis of collecting contributions towards infrastructure from non-residential uses.

An approach that can be applied fairly and equitably across both a wide range of non-residential uses and Development Settings. Whilst different approaches could be proposed for different settings, the Committee is of the view that for simplicity it is desirable to have the same approach, if possible. This will minimise complexity in mixed use developments.

An approach that is appropriate to a range of developments of significantly different magnitude. The approach must be able to be applied fairly and equitably across all developments ranging from an extension to a major retail centre to extensions of shop and offices.

An approach that does not introduce significant distortions into the property market. The Committee acknowledges that the levy however applied, will send price signals to the property market which has the potential to both impact viability and to influence behaviour of investors and decision makers. The Committee believes that where possible distortions should be minimised, but at the very least they need to be understood.

An approach that can be readily linked to a trigger for the imposition of the levy. Whichever approach is adopted, it must be readily and simply implementable.

The approach does not result in double or multiple dipping over time. Non-residential development should only be levied for infrastructure for which they

generate a demand. In the current system non-residential uses are generally not levied for community and recreation infrastructure although the Committee accepts that there may be cases where this is justified.

If different approaches are proposed for different Development Settings, the outcomes should be consistent. Ideally the same approach should be used across all possible Development Settings but if this is not achievable it is necessary to ensure


that outcomes in terms of the amount of levy payable between the Development Settings is relatively consistent so that distortions of the market are not inadvertently introduced.

The Committee acknowledges that it is not likely to be able to propose an approach that will meet all these factors, and is faced with the task of proposing a mechanism which is at best sub-optimal. The same comment may be made about existing approaches described above.

The Committee has assessed three likely bases upon which the levy on non-residential uses may be charged. These three are at best only ‘indicators’ of the impact on infrastructure of non-residential uses. The three bases and their potential as proxies for infrastructure demand is described further below.

(i) Site AreaThis is effectively the approach currently used by the GAA in Growth Areas where it identifies each item of infrastructure which the non-residential use generates a demand for. This approach has not been widely contested. It does have shortcomings across different non-residential uses. It is considered by the Committee that site area is not a good proxy for impact on demand for infrastructure across a wide range of non-residential uses. For example a retail centre and a warehouse occupying similar site areas are going to generate significantly different impacts on infrastructure.

(ii) Floor spaceA number of measures could be used but it is probably Gross Floor Area which is the appropriate proxy for the users of that floor area. The issue of intensity of use is again evident here when comparing different non-residential uses. The Shopping Centre Council submitted that the measure should be the GLAR, but the Committee believes that for simplicity the same measure should be applied across all non-residential uses. It considers that Gross Floor Area is a measure more suited. An increase in floorspace has the advantage of a clear trigger of a building permit, albeit this has some administrative difficulties associated with it. Floor space may not be a good measure in Growth Areas where it may not be known with any degree of certainty early in the planning process

(iii) Value of DevelopmentThe value of development has been put to the Committee by some industry experts as a viable and preferable alternative. The Committee notes that it is used in the Central Sydney Development Contributions Plan 2013. The major issue here appears to be the value of what development? It has been put to the Committee that significant proportions of expenditure in retail centres in particular do not result in any increase in use and therefore generate no increased impact on infrastructure. Examples given include some fit out to accommodate change of use, repair, updating services, and replacement of plant involving building works. The Committee acknowledges that not all development expenditure will result in an increase in use, and therefore increased demand for infrastructure.

In the Central Sydney Development Contributions Plan, this is accommodated to at least some extent by both included and excluded items, and also a floor level of development, beneath which the levy is not imposed. A variant suggested to the Committee was the net


increase in value of a development attributable to works that have been undertaken, as this will be a more accurate proxy of the likely increase in usage than a gross value of development figure. The Committee notes this, but observes that it is a figure that can only be reliably arrived at after development is completed, and whilst it may be feasible to calculate it for major retail developments, it would be administratively cumbersome for a range of other uses, particularly smaller developments.

Whichever approach is used, it is noted by the Committee that the workability of the scheme is to a significant extent impacted by the infrastructure provided by the developer as part of the development costs. In Growth Areas this is now relatively clearly defined and understood, although the provision of infrastructure to mitigate off-site impacts is regularly contested in the growth area context. Having clear guidelines as to the distinction between developer provided – development levy funded infrastructure and infrastructure funded by the State or other sources is integral to a workable development levy system and is further addressed in Chapter 11.

7.4 Preferred Approach

The Committee addresses a series of issues which form the basis of its proposed approach. It then summarises its proposed approach.

(i) Basis of the LevyAt a conceptual level, the Committee’s preferred approach is to charge on the basis of floor area of development across all Development Settings as it believes that this is the most appropriate proxy for impact on development. Different rates would need to be applied to different uses. However the Committee is persuaded that site area is a more pragmatic indicator in Growth Areas, particularly Melbourne’s Growth Areas. For at least some PSPs likely to be developed in the next few years, an indicative floor area and proposed use may well change significantly by the time development occurs, and for this reason the Committee proposes to use hectares of site area as the GAA has done in recent DCPs. For the other Development Settings it is proposed that the levy be based on Gross Floor Area.

(ii) Categories of Non-residential Use to be Levied As will be observed from Table 26, different approaches have been taken in recent DCPs to define the categories of non-residential use as the basis of charges. Some could be zone based, while others more generally describe the types of uses proposed. Consistent with the approach taken in defining Development Settings, the Committee proposes not to use zones as the basis for determining the settings. The reason for this is that increasingly many zones are proposed to provide flexibility of use, therefore charging anomalies are likely to arise if this approach is used. The Committee proposes the following use categories be used to determine the categories for the non-residential uses to be levied:

Retail (that is generally the uses listed under the retail premise group in Clause 75 of the Planning Scheme).

Commercial and industrial (that is generally the uses listed under the following groups in Clause 75 of the Planning Scheme, and specifically: Industry


Office Transport terminal Warehouse

Because warehousing is a significant use in some Growth Areas and tends to have a large footprint, often with minimal employment and impact on some infrastructure, consideration was given to creating it as a separate category and this could be revisited at the first review of the new system.

In developments where there is a mix of uses, the per hectare rate for each category of use should be applied in proportion to proposed floorspace for each use by the Planning Authority. It is acknowledged that this means that residential use will be treated differently in mixed use settings. It is difficult to assess the extent to which this might generate anomalous outcomes, as actual outcomes will vary depending on the proportion of space proposed for each use in different developments.

The Committee acknowledges that there will be some exemptions to application of the Standard Levy for non-residential uses, some of these are likely to include:

Nursing homes; Child care centres; Education centres; Leisure and recreation Places of assembly and worship

These exemptions will need to be refined and set out in detail once the Development Levy System is in place.

(iii) Which categories of infrastructure should non-residential uses be levied for?The Committee proposes that levies for non-residential uses in Growth Areas be based on the demand for transport infrastructure and associated land with a very minor allowance for some community and recreation infrastructure. The Committee accepts the point made by the City of Melbourne and others that non-residential uses can increase the demand for some community and recreation facilities. The Committee agrees with the argument put by the Shopping Centre Council that there should be a nexus between the use and the infrastructure funded but makes the point that as in residential areas, a broader view be taken when determining nexus. In Strategic Development Areas the proposed Standard Levy is not tied to any infrastructure category. This allows for some discretion in infrastructure funded by the levy.

MAB argued that revenue collected from non-residential uses should be accounted for separately so that developers could clearly see that the revenue collected is spent on infrastructure that the development generates the demand for. The Committee acknowledges the principle espoused by MAB, but believes that this would place an unnecessary administrative burden on Councils, with only a minimum benefit in terms of increased transparency. It may also result in some funds not being expended as not enough is collected to fund the identified infrastructure.


(iv) Relationship between the residential levy and the levy proposed for non-residential uses

As can be seen from the data presented in Table 26 the levy charged for non-residential uses varies between some 45% and 900% of the residential levy on a per hectare basis. Figures in excess of 100% of the residential levy are related to the use of equivalence tables discussed above. There is a distinct group of DCPs, generally more recent ones where the non-residential levy is some 50% of the residential levy on a per hectare basis.

As indicated in Chapter 5, for DCPs prepared for metropolitan Growth Areas since 2008, transport infrastructure accounted for between 19% and 39% of the proposed expenditure, with the overall average being 29%.

Public land accounted for between 36% and 45% of proposed expenditure with an average of 41%. In neither case have these averages varied greatly over time.

If the Committee makes the bold assumption that on average transport infrastructure accounts for some 50% of the public land proposed, this provides some 50% of the proposed expenditure being on transport infrastructure and associated land. This is broadly consistent with many of the more recent DCPs represented in Table 26. It is noted that a number of activity centres have been levied at 100% of the residential rate per hectare in the recent past.

7.5 Proposed Levies

(i) Metropolitan AreasThe Committee’s preferred approach to applying the proposed Standard Levies to non-residential uses is to base these on contributions made in recent DCPs using the data outlined previously. The Committee proposes this approach because it is both consistent with the approach underpinning the proposed residential levy, and it believes that it is a simpler approach which is evidence driven, but without the need for case by case analysis.

In proposing this approach, the Committee is aware that in Growth Areas in particular, this will not take into account the variances between cases observed in Table 26, but points out that in this Development Setting in particular, the proportion of non-residential uses that comprise the total development is usually small, so any impact on overall revenue generated will be similarly very small.

In proposing different rates for different non-residential uses across all Development Settings, the Committee identifies three key drivers:

The levies for industry and commercial uses should be relatively lower than for retail, because of the lower need for infrastructure usually generated, as represented in the equivalence ratios in the existing DCP guidelines.

The need to ensure that there is a price signal, albeit probably a relatively weak one, which supports job growth in the industrial and commercial areas in Growth Areas. This is a key aspect of Government and planning policy.

The need to ensure that job generating uses are encouraged or at least not discouraged in the Growth Areas.


For the job generating uses, the challenge is to balance the need to levy a fair and reasonable contribution towards the infrastructure for which a need is generated, and the desire to encourage job generating development, particularly in Growth Areas. The Committee emphasises that it has consciously recommended rates which broadly align with recent DCPs, but are set at levels which are deliberately low, so that there is minimum impediment to job generating development. The Committee notes that its proposed levy for retail uses at the lower end of the range proposed by the Shopping Centres Council when considering that the proposed levy is based on GFA, but the Shopping Centres Council has expressed its position in terms of GLAR, which is generally about 70% to 75% of GFA.

In its deliberations, the Committee examined the options of a lower levy for non-residential uses in Urban Areas compared with Strategic Development Areas or the same levy in each Development Setting.

The case for a lower levy could be based around the following: In most Urban Area settings, there will have been a prior use on the site and

infrastructure can be assumed to have been provided to accommodate that use. It cannot be assumed that the new non-residential use in an Urban Area necessarily

leads to a significant intensification of use, unlike the situations where the residential levy is applied only to a new increase in dwellings.

The case for the same or a similar levy could be based around the following: The new Commercial and Industrial zones recently announced allow greater flexibility

in the location of some uses and they should be treated the same or similar, irrespective of their setting.

The same levy in each of the two Development Settings sends no potentially distorting price signal to the market and removes the potential pressure for some areas to be included in one Development Setting or the other.

On balance, the Committee is of the view that it is more appropriate to apply the same levy for non-residential uses in both the Urban Area and Strategic Development Area settings. It believes that this is a fair outcome that will result in less distortions or perverse behaviour.

The Committee is concerned that small and marginal additions to Gross Floor Area should neither be discouraged nor in many cases will they add in any measurable way to an impact on infrastructure. For this reason the non-residential levy is proposed to apply to net increase in Gross Floor Area for increases in excess of 100 square metres. However, when determining the levy for development over 100 square metres GFA, it is calculated on the total increase in GFA.

The proposed Standard Levy for non-residential uses in metropolitan areas is set out in Table 27. In proposing levies at relatively low levels, the Committee is conscious that developer provided infrastructure will continue to be provided in each of the development setting and where both residential and non-residential uses are proposed. The levies proposed are in addition to this and are a contribution to other infrastructure which the development will in part generate the need for. As indicated in Chapter 10, works in kind will continue to be a feature in each of settings except Urban Areas where they will not be permitted in lieu of the Urban Area Standard Levy. As indicated in Chapter 12, section 173 agreements will not be permitted to supplement the proposed levies.


The Committee is conscious that in the recent past there have been a limited number of PSPs for areas that are predominantly or totally commercial and industrial, and that in such areas the proposed Standard Levy of $80,000 per net developable hectare may not cover the costs of the transport infrastructure which may reasonably be attributed to the planning unit. For this reason the Committee proposes that in these circumstances a Supplementary Levy should be available. The Committee prefers this approach rather than propose a higher Standard Levy which may act as a disincentive to employment related development.

Recent examples of 'employment precinct' developments such as in the Craigieburn, Toolern and Cranbourne West PSPs would legitimately have DCP costs over $80,000 per hectare. For larger employment only precincts such as these (as opposed to mixed residential and employment precincts), the cost of roads and public land may well exceed $80,000 per net developable hectare and a Supplementary Levy may be necessary in these cases.Table 27 Proposed Standard Levies for Non-residential Uses in Metropolitan Melbourne

Use Growth Areas Strategic Development Areas1

Urban Areas1

Residential Levy (Growth Areas) $268,000/NDHa2

Retail Levy (% of Growth Area residential levy) 60%3

Retail levy per NDHa $160,800/NDHa

Implied Levy per square metre (35% site coverage)

$45.94/square metre4

Proposed Retail Levy $161,000/NDHa $46.00/square metre GFA

$46.00/square metre GFA

Commercial and Industrial Levy (% of Growth Area residential levy)

30%5

Commercial and Industry Levy per NDHa $80,400/NDHa

Implied levy per square metre. (50% site coverage)

$16.10/square metre6

Proposed Commercial and Industrial Levy $80,000/NDHa $16.00/square metre GFA


Notes to Table 27:1. In both Urban Areas and Strategic Development Areas the levy is applied to a net increase in floorspace

above a threshold of 100 square metres GFA. Where the threshold is exceeded the levy is applied to all of the net increase in floorspace not just the amount above the threshold. Where there is an existing use, the levy will only be applied to additional floorspace which is constructed.

2. The proposed residential Standard Levy for Growth Areas. 3. Based on the 50% that transport and related land has comprised on average in recent DCPs, with some

recognition that these uses generate some demand for community and recreation infrastructure. 4. Assumes 3,500 square metres of retail use on a 1 hectare site which paid $80,400 per hectare which is

$16.10 per square metre. 5. This is set at a lower level than residential on the basis that the impacts on infrastructure are highly likely

to be lower in most instances. It is acknowledged that this will not always be the case. The lower levy is also consistent with attempts to provide create jobs in Growth Areas.

6. Assumes 5,000 square metres of industrial or commercial use on a 1 hectare site which paid $81,000 per NDHa which is $16.08 per square metre.


Where a residential Standard Levy is supplemented as a result of the application of a Supplementary Levy, the case for extending that Supplementary Levy to non-residential uses should be made as part of the process to approve a Supplementary Levy. If relevant, it should include a specific proposal for a Supplementary Levy on particular non-residential uses. The funds raised may only be expended on the identified infrastructure. Otherwise, where a Supplementary Levy is applied it will not be extended to non-residential uses.

(ii) Non-Metropolitan AreasThe residential levy in non-metropolitan areas is proposed to be lower than for metropolitan Melbourne, mainly because of lower land costs and observed lower costs in other infrastructure categories. Based on this logic, the levy for non-residential uses should also be proportionately lower. Proposed Standard Levies for non-residential uses in non-metropolitan areas are set out in Table 28. These have been factored down in proportion to the higher of the two residential levies on the basis of proportionately lower land costs.

The Committee proposes that only one level of levies for non-residential uses apply in non-metropolitan areas despite there being two possible levels at which the Residential Standard Levy may be applied. Whilst an argument might be made for two levels for non-residential uses, the Committee points out that it has proposed non-residential levies at levels which are low and in particular low as a percentage of likely development costs, compared with the residential levy. It is for these reasons the Committee has opted for the simplicity of a single level for non-residential levies.

Table 28 Proposed Standard Levies for Non-Residential Uses in Non-Metropolitan areas

Use Growth Areas Strategic Development Areas

Urban Areas

Residential Levy (Growth Areas) $210,000/NDHa$120,000/NDHa

Retail Levy (% of Growth Area residential levy) 60%

Retail levy per NDHa $126,000/NDHa

Implied Levy per square metre (35% site coverage)

$36.00/square metre

Proposed Retail Levy $126,000/NDHa $36.00/square metre GFA


Commercial and Industrial Levy (% of Growth Area residential levy)

30%

Commercial and Industry Levy per NDHa $63,000/NDHa

Implied levy per square metre. (50% site coverage)

$12.60/square metre

Proposed Commercial and Industrial Levy $63,000/NDHa $13.00/square metre GFA


Note to Table 28:The points and caveats made in notes to Table 27 are applicable to this Table.


7.6 Recommendations

The Committee makes the following recommendations: That Levies should be charged in each of the Development Settings for two

categories of non-residential uses as follows: Retail Commercial and industry

That the Levy be charged per net developable hectare in Growth Areas and per net increase in Gross Floor Area in Urban Areas and Strategic Development Areas, above 100 square metres.

That the Levies for non-residential development be adopted as set out in Table 29.

Table 29 Recommended Levies for Non-Residential Development

Setting Non-residential1 Standard Levy

Growth Areas

Metropolitan $161,000 per NDHa Retail$80,000 per NDHa Commercial and Industrial

Non-metropolitan $126,000 per NDHa Retail$63,000 per NDHa Commercial and Industrial

Urban Areas

Metropolitan $46 per square metre GFA Retail$16 per square metre GFA Commercial and Industrial

Non-Metropolitan $36 per square metre GFA Retail$13 per square metre GFA Commercial and Industrial


Metropolitan $46 per square metre GFA Retail$16 per square metre GFA Commercial and Industrial

Non-Metropolitan $36 per square metre GFA Retail$13 per square metre GFA Commercial and Industrial

Note to Table 29:1 Where the levy is expressed per square metre it refers to per square metre of net additional Gross Floor

Area, above 100 square metres GFA.


8 Valuing and Securing Public Land, and Open Space 8.1 Overview

Chapter 11 of Report 1 sought to partially respond to the Committee’s Terms of Reference that seeks:

A simple methodology for valuing the public land infrastructure component.

The Committee made the following findings in Report 1: A detailed review of the issues relating to land valuation and transfer should be

conducted as part of the Stage 2 report. The review of land valuation in Stage 2 should seek to identify available options to:

Simplify and give certainty to the process of securing land for public purposes; Ensure that there is an equitable approach toward the valuation of land for

public purposes; and Ensure that the principles of the recommended levy framework cannot be

undermined.

The Committee takes the recommendations forward in the context of Public Land in Growth Areas.

Additionally, the Committee responds to submissions that sought clarification on how open space is dealt with, particularly with regard to distinctions between active and passive open space, and encumbered and unencumbered land.


Inconsistency and lack of certainty associated with the process by which land is identified, valued and ultimately secured for public purposes has been identified as the most significant risk to successful implementation of a development contributions plan.

Several submissions, including that of the Property Council, commented on the process of valuing and securing public land, with general support for a review of the process to achieve a fair and equitable approach where the total cost of public land is spread across a planning unit.

The rising cost of land was highlighted as a concern with the GAA, Master Builders Association, and Cardinia and Melton Councils being among the submitters supporting setting an agreed consistent process for setting aside and valuing public land. PEET and the UDIA requested a better definition of “fit for purpose” and submitted that encumbered and unencumbered land should be part of any review of this issue. The UDIA considered there should be a sliding scale relating to encumbered land for open space. Melbourne Water raised the possibility of adding land for retardation and water quality treatment at pre-development valuations.

The rising cost of land over time was raised in many submissions, with support for mechanisms to secure land at the earliest possible time. Greater Geelong Council submitted that options for low interest loans be considered. There were varying suggestions about


intervals for revaluation, ranging from PIA providing an example of quarterly revaluation, with the Property Council suggesting every two years. Wyndham Council submitted that the most desirable outcome would be a return to valuation based on common values for both contributions and compensation, but noted that this would require an amendment to the Land Acquisition and Compensation Act 1986.

The varying methods of acquisition were canvassed, with the use of the Public Acquisition Overlay being supported by VicRoads, PEET, and Greater Shepparton Council, however VicRoads submitted that this also raised issues about the timing of budget allocation and availability of contribution funds early in the life of a scheme. The GAA does not support the use of Public Acquisition Overlay except where land is required for State infrastructure.

There was generally a strong desire amongst submitters to simplify the process, avoid double dipping, provide a fair and equitable distribution of contributions across a planning unit and provide for the potential for early acquisition to lower the cost of land.

To assist the Committee in this matter, it met with VCAT (Deputy President Dwyer), and then separately with two Valuers (Mr Brian Dudakov of Urbis and Mr Bradley Papworth of Charter Keck Cramer) as part of discussion forums.

8.3 Discussion

In terms of threats to successful implementation of the Development Levy System, the Committee has taken into account issues raised in consultation and through the written submissions, as well as the experience of its own members. It has determined that a significant threat to successful implementation of the Development Levy System is the uncertainty and risk associated with the process by which land is secured for a public purpose.

The Committee has observed that the uncertainty and risk is associated with how land that is required for a public purpose is identified, valued and secured (i.e. under which Act). The complexity associated with the process by which land is secured for a public purpose is increased by the common introduction of land ‘equalisation’ schemes. In simple terms, equalisation schemes seek to apportion the cost of land that is required for a public purpose on an equitable basis across all landholdings within the PSP area.

Whilst the concept of equalisation schemes is relatively simple, there is very significant risk associated with such schemes if affected landowners seek to challenge the ‘compensation’ value that is set out in the scheme. The shift toward inclusion of equalisation schemes is a significant departure from the site specific approach that has commonly been adopted via the Subdivision Act 1988. The shift toward an ‘equalised’ approach toward land required for public purposes has been driven by more holistic approaches to the preparation of PSPs, however this shift in methodology and philosophy has not been not fully recognised or supported by the relevant Acts.

In summary, issues associated with the system that currently operates include: There is no single head of power that is used to secure land; There is no consistent or prescribed land valuation methodology; There is no clear list of land allowed to be acquired for a public purpose;


Land value and resultant contributions are calculated and levied differently under the various Acts;

There is no single clear requirement as to how a land contribution is satisfied; and Timing of payment differs depending on the Act that is utilised.

It is clear that assumptions made during formulation of a DCP (under the current system) that require calculation of a project value/s (notwithstanding indexation), are at risk of being exceeded should a compensation claim be triggered.

The Committee considers that the risks are very significant for all parties and is of the view that the process by which land is valued and secured for a public purpose requires a complete review. It is recommended that this review be undertaken concurrently with introduction of the Standard Levy for Growth Areas. In this way the threats associated with the current system could be overcome providing increased confidence in application of the Standard Levy for Growth Areas.

8.4 A New Approach to Securing Public Land in Growth Areas

In response to the limitations of the current system, the Committee recommends legislative changes to simplify the process of valuing and securing land in Growth Areas and creating greater certainty for all parties. This may take the form of a new division to the Planning and Environment Act 1987 and changes to related legislation, including the Subdivision Act 1988 and the Land Acquisition and Compensation Act 1986, to support the implementation of the new approach.

It is recommended that legislative changes be enacted to give effect to the following main features of a new approach to valuing and securing public land in Growth Areas:

Specify that the Standard Levy is comprised of a capped Community and Recreation component and variable Transport Construction and Public Land components;

Provide for a Planning Scheme to specify a Public Land component and a Construction component within the Standard Levy;

Provide for a Planning Scheme to specify potential for Supplementary Levy/s for the variable transport construction and public land infrastructure but only under specific circumstances;

Specify that levies for Public Land may only be gathered for purposes set out in the list of allowable public land contributions;

Specify that a levy for the provision for public land be expressed as a percentage of the net developable area of total land and an equivalent a dollar per hectare value;

Specify that the levy for the provision of public land can be discharged by the provision of land, money or a combination of the two;

Specify that the levies in Growth Areas are triggered by the subdivision of land; Specify the requirement for adoption of a standardised process for both the

valuation of land that is required to be set aside for public purposes and compensation for this requirement; and

Specify that the Planning Authority cannot pursue additional land or cash contributions under s18 of the Subdivision Act 1988 or clause 52.01 of the VPP (for


contribution of public land in addition to any land that is required under the Development Levy Plan).

8.5 Valuing Public Land

Integral to the new approach to Public Land in Growth Areas will be the specification and adoption of a standard method for valuing land that is required to be set aside for a public purpose. Whilst the Committee is mindful that the PSP process occurs as a result of rezoning land typically from non-urban to urban, that generally results in a significant increase in the value of the land, the Committee considers that the valuation methodology should have the following main features:

A site specific approach to identification and valuation of land but not a full before and after compensation based assessment in recognition of the limitations in available information at the time of preparing a PSP;

A prescribed process for preparation of a valuation report and direct notification to affected landowners at the time of preparation of a PSP (as part of the Amendment notification);

Provision for review by an independent valuer (acting as an ‘umpire’) appointed by the Valuer General should the affected landowner disagree with the outcome of the valuation;

Once the value of land is determined (with or without the need for review by an independent valuer) such value should be fixed via approval of the PSP and cannot be challenged subsequently;

The defined value of each parcel of land that is required for a public purpose once fixed is not subject to annual re-valuation but an annual index is applied to the specified value of the land and the balance of the levy.

The Committee is of the view that the recommended methodology will fairly recognise the specific circumstances associated with land that is required for a public purpose and will fairly compensate affected landowners. The Committee recommends that the valuation methodology be formalised via Ministerial Direction or equivalent similar mechanism. Again, changes may be required to other related legislation to ensure consistency.

8.6 Securing and Transferring Public Land

In order to secure land for public purposes via a Levy, it will be necessary for a Levy percentage and dollar value to be specified. The Committee recommends that the following process be adopted to enable the Levy for public land to be determined and administered:

The PSP or equivalent plan will determine the type, amount and location of all land required for a local public purpose;

The combined area of the land that is required for a local public purpose will be used to establish the contribution percentage (generally 15-16% of the net developable area);

The valuation report/s will determine the cash rate of the Levy to be charged for public land per net developable hectare;


The valuation report will determine the amount of ‘cash in lieu’ payments required where the development area has less than the percentage of public land required by the Levy for public land;

The valuation report will determine the ‘compensation’ value where more than the specified public land levy area is required to be set aside for public purposes at the time of subdivision.

The Levy for public land will set the percentage of the NDA of the area covered by the respective Development Levy Plan. The legislative changes should provide that the development applicant can only satisfy the Levy for public land by:

Providing to Council all land identified in the PSP and the Development Levy Plan for a public purpose on their site up to the percentage nominated in the Levy; or

Providing the monetary value for the Levy if none of the public land is contained on the site or if the land to be developed contains less than the percentage of the public land specified in the Development Levy Plan.

Where a property has an amount of land required for public purpose that exceeds the percentage set in the Development Levy Plan, the development proponent must provide to Council all land up to the percentage set in the Development Levy Plan and Council must purchase the additional land in excess of the percentage from the land owner.

The Committee is of the view that the recommended reforms to the process by which land is identified and secured for public purposes will provide greater certainty and equity for all landowners. The recommended reforms to the process will also significantly reduce the level of risk for Councils and will increase the likelihood and confidence that they will be able to apply the Standard Levy in Growth Areas without the need for Supplementary Levies in the vast majority of cases.

8.7 Open Space in Growth Areas

(i) OverviewAs discussed in Chapter 5, public land, including land for passive and active open space constitutes the most expensive component of the DCPs that have been approved in the period from 2008 - 2012.

During this period, the area of land that has been set aside for public open space has increased on average to 10 - 12% (unencumbered land) of the NDA for passive and active open space purposes. In some PSP areas, significant areas of encumbered land (typically drainage and conservation land), has also been set aside in addition to the unencumbered open space. This additional undevelopable land has typically been transferred into public ownership without any form of open space credit or at a significantly reduced value as a DCP project.

During the period from 2008-2012, ratios of active open space provision have become more formalised. Growth Area Councils have typically sought to achieve service provision efficiencies by requiring dual oval sporting fields as a minimum, with sufficient area to accommodate parking and other amenities. During this period, Growth Area Councils have also sought contributions for district or regional active open space in addition to local active


open space, and have applied more standardised requirements in relation to the area and distribution of passive open space.

Taking into account the increasing land area requirements and associated costs, developers have requested that consideration be given to introduction of open space credits for encumbered land. Open space credits are sought in recognition of the potential open space uses and value that encumbered land can offer for both passive and active purposes. There has also been some suggestion that the distinction between passive and active open space is problematic or redundant, and should be removed.

(ii) Submissions and ConsultationGrowth Area Councils, the GAA and developers raised issues about the confusion that exists in the current system around the assignment of open space in Growth Areas, and have called for clarification and simplification of the approach.

(iii) DiscussionIn reflecting on submissions, discussion with various developers and Growth Area Councils during the consultation phase, and its own experience, the Committee is of the view that encumbered land can, and often does, have secondary open space purposes. The often cited example of a watercourse with extensive adjacent land that is flood affected in the 1:100 year or 1:20 year flood events that can, at other times, be used for a range of active or passive open space purposes is commonly encountered in both metropolitan and regional areas.

In arriving at this view, however, the Committee is mindful that whilst the more recent PSPs have typically included open space contributions of 10 - 12%, in the preceding 10 year period open space contributions were substantially lower. There were few examples of PSPs that sought to define and seek contributions toward establishment of a well developed and connected open space network. As a consequence, open spaces were typically fewer in number and piecemeal in their distribution.

In recognition of the limitations of such an approach, the Committee is supportive of the general thrust of more recent PSPs that have sought contributions for establishment of well developed and connected open space networks that will ultimately achieve a range of benefits. Notwithstanding this general support, the Committee is concerned with the principle of typical contributions of 10 - 12% (of unencumbered land) becoming viewed as a minimum standard, irrespective of the circumstances, which may include provision of significant areas of encumbered land.

For these reasons the Committee has considered various ways of giving partial or reduced open space credits for encumbered land. Having considered various options, however, the Committee is not inclined to recommend introduction of partial or reduced open space credits for encumbered land as part of this current process for the following reasons:

The types of encumbered land vary widely throughout the Growth Areas; The value and possible open space uses of encumbered land varies widely

throughout the growth areas; Calculation and administration of partial credits (particularly where open space

equalisation schemes apply) is highly problematic; and


Making provision for credits for encumbered land is open to abuse if the suitability of the land is not determined from the outset.

In recognition of these limitations but with the intent of recognising the possible benefits of use of encumbered land for open space purposes, the Committee favours the approach set out below.

The GAA Precinct Structure Plan Guidelines include a diagram that depicts the preferred approach to open space planning. This diagram (Figure 2) recommends that planning for establishment of an integrated open space network should have regard to a combination of quantitative and qualitative indicators. The intent of this diagram is to recognise that quantitative indicators (usually expressed as a land area requirement per head of population) should not be used as the sole basis for planning for an open space network. Importantly, proper regard to the qualitative indicators such as the site conditions, land ownership patterns, proximity to existing facilities and role in achievement of related strategic objectives, for example, will result in an open space network that fully responds to its context and is capable of meeting future needs.

Figure 2 GAA Preferred Approach to Open Space Planning

Source: GAA Precinct Structure Plan Guidelines Part 2 – Page 35

Where this process identifies encumbered land (such as a broad floodplain for example) that is suitable for open space purposes, it should be possible to reduce the unencumbered land contributions. In this way the following benefits can be achieved:

The secondary value of the encumbered land is recognised via a reduction in the unencumbered contributions;

There is no need to introduce or administer complex partial or reduced credits for encumbered land;


The encumbered land is properly assessed for open space purposes and can form part of the planned open space network; and

All landowners receive a benefit via reduced land area and/or financial contributions.

The Committee is of the view that this is the appropriate way to plan for an open space network that properly responds to its context. It is noted that in coming to this conclusion, the potential to achieve some combined use of encumbered and unencumbered land for open space purposes must be given careful and deliberate consideration in order to achieve the benefits above. Clearly, suitability of the encumbered land will be the primary criterion that should be used to determine the potential use of encumbered land.

From the Committee’s perspective, possible use of land that is set aside to protect vegetation or cultural values if combined with a reduced passive open space area should provide a positive open space setting and as such form a complementary use. This outcome is, however, reliant on acceptance that public access will be possible within the ‘conservation’ land (for passive purposes). The Committee is of the view that this outcome will reinforce the value that retained vegetation, for example, can offer within an urban development context and will support creation of diverse Urban Areas that have a sense of place.

In terms of the importance of the open space network in contributing to creation of a positive sense of place in Growth Areas, the Committee offers the general observation that standardised active and passive requirements (in terms of land area, general location and configuration) can result in a ‘sameness’ of outcome. Notwithstanding maintenance and service provision efficiencies that may be able to be achieved in standardised configurations, the Committee encourages Planning Authorities to consider other possible open space planning options that may assist in creating diverse urban environments, including more distributed passive open space areas, particularly in higher density locations.

(iv) ConclusionsIn response to the request for consideration of introduction of partial or reduced open space credits for encumbered land, the Committee does not support the introduction of such credits at this time for the following reasons:

The types of encumbered land vary widely throughout the growth areas; The value and possible open space uses of encumbered land varies widely

throughout the growth areas; Calculation and administration of partial credits (particularly where open space

equalisation schemes apply) is highly problematic; and Making provision for credits for encumbered land is open to abuse if the suitability of

the land is not determined from the outset.

Notwithstanding this view regarding introduction of encumbered land credits, the Committee considers that some encumbered land has potential to be utilised for open space purposes and suggests that Planning Authorities and the GAA give further consideration to the following:

Plan for open space networks in Growth Areas having regard to a range of qualitative and quantitative indicators;


Deliberately assess the potential use of encumbered land for open space purposes and where possible seek to reduce the requirement for unencumbered land for open space purposes in recognition of the potential to use some encumbered land if such land is deemed as suitable for open space purposes; and

Consider other possible open space planning options that may assist in creating diverse urban environments including more distributed passive open space areas particularly in higher density locations.

8.8 Recommendations

The Committee makes the following recommendations: That the Planning and Environment Act 1987 (and other legislation if required) be

reviewed to enable improvements to the process of the valuation and securing of public land in Growth Areas as set out in this Report.

That the valuation methodology for land in Growth Areas be formalised via Ministerial Direction or equivalent, and include the features as set out in Chapter 8.5 of this Report.

That a revised process be adopted to enable the components of the public land levy in Growth Areas to be properly determined and administered.


9 Apportionment 9.1 Overview

A Preferred Way Forward identified that cost apportionment would not normally be necessary under the proposed system as the cost is to be apportioned across the whole of a planning unit.

Chapter 10 of Report 1 responded to the Committee’s Terms of Reference that seeks:

The circumstances, if any, in which a simple apportionment of development contributions levies is needed. For example, the ability to apportion standard rates may need to be retained for transport infrastructure located on or across the boundary of a contribution area.

In this regard, the Committee made the following findings: External apportionment should be minimised by the careful choice of planning unit

boundaries. External apportionment should not be permitted for lower order community and

recreation infrastructure. External apportionment will generally only be permitted for larger and more complex

planning units. Where external apportionment is to occur, it should be in proportion to external

usage.

In Report 1, the Committee noted that generally the planning unit or the area to which the levy applies should be chosen so that internal apportionment is not required. The Committee recognises that apportionment of costs external to the area under consideration is appropriate in certain circumstances.

In its Stage 2 considerations, the Committee has identified the following key issues: The changes that need to be made to the approach to apportionment proposed by

the Committee in Report 1; and The approach that should be taken to decision making and disputes on external

apportionment of costs.


Relatively few of those who made submissions on Report 1 or those with whom the Committee consulted, commented on the proposed approach to apportionment. Those who did comment either supported the approach proposed by the Committee or provided conditional support.

SKM submitted that some internal apportionment should be permitted particularly within the Urban Areas setting, as failure to allow this is likely to result in some cross subsidisation between areas in some municipalities, particularly if a municipality wide levy is imposed. The Committee agrees with SKM that need and nexus are key principles, but comments that to ensure flexibility, nexus should not be interpreted too tightly and the provision for


multiple planning units within a municipality could minimise cross-subsidisation where it is a significant issue, for example in a rural municipality with two or more discrete townships.

Melton Council supported the approach proposed by the Committee and in particular would like the ability to prepare a ‘global’ DCP along the lines used by Wyndham Council for arterial roads across an entire growth fronts, as this obviates the need for external apportionment in many instances. The Committee believes that its proposed approaches to permitting Supplementary Levies in Growth Areas and Strategic Development Areas and for certain infrastructure, except Community and Recreation infrastructure, serves this purpose.

Both Ballarat and Greater Geelong Councils submitted that external apportionment is necessary in non-metropolitan areas to provide for regional drainage infrastructure. The Committee notes that it proposes an alternative approach to handling the drainage issue in Chapter 5.

Greater Dandenong Council does not believe that the need for external apportionment will be minimised by the careful choice of planning unit boundaries, and submitted that planning unit boundaries should be backed by strategic justification. The Committee concurs with this latter point and believes that the proposed approach to apportionment and the provision for multiple Supplementary Levies should meet Greater Dandenong Council’s concerns.

The HIA generally supported the Committee’s proposed approach to apportionment with the caveat that funds paid by developers should be reimbursed if growth is not as high as anticipated, and as a consequence external usage is higher than anticipated. The Committee notes that reimbursement is a complex issue, particularly if it needs to occur many years on. In addition, it notes that apportionment to external usage can at best be based on information at a point in time. In most instances, revisiting it where those estimates are proven to be inaccurate, it is likely to introduce complexities, where the costs of the revisiting are likely to exceed any supposed benefits.

The GAA supported the proposed approach, but noted that external apportionment for transport infrastructure on the edge or adjacent to a planning unit, should be provided for. The Committee concurs. The GAA believed that drainage in non-metropolitan areas might be best dealt with by removing drainage from the system and addressing it through other mechanisms. The Committee believes that drainage should be addressed through a separate Drainage Levy where this is considered appropriate.

Yarra Council envisaged a mix of Strategic Development Areas interfacing Urban Areas with complex interactions with respect to cross boundary usage of some infrastructure and as a consequence the need for flexibility. The Committee believes that its approach to defining these Development Settings in which there is provision for some Strategic Development Area infrastructure to be located in adjacent areas, together with its proposed approach to apportionment should provide the flexibility required to address complex development scenarios as envisaged by Yarra Council.

The issue of disputes arising with respect to external apportionment of costs is not addressed directly here as it is considered by the Committee to be an issue best addressed in the broader context of resolving disputes arising in the implementation of the new system. As such it is addressed in Chapter 13 of this report


9.3 Approach to Apportionment

The Committee has amended the principles which it set out in Report 1, in line with the approach to Development Settings and the Standard Levies which it now proposes.

(i) Broad PrinciplesSet out here is discussion of a number of underpinning principles which the Committee believe should guide the application of external apportionment. The Committee is firmly of the view that external apportionment should be minimised. This may be achieved by choosing boundaries for a planning unit which internalise as much infrastructure as possible. In Report 1, the Committee indicated that it regards the Wyndham Council approach to this where it has overarching DCPs for arterial roads across multiple planning units as a good approach. This minimises external apportionment. The Committee accepts that external apportionment will continue to be required for some higher order infrastructure and in these instances, every effort should be made to minimise the apportionment to existing development. This inevitably results in a Council having to fund this proportion and thus becomes another unfunded liability. A Supplementary Levy can be applied where higher order infrastructure, other than Community and Recreation infrastructure, provides clear and readily identifiable benefits across a number of proposed planning units. An example is a proposed arterial road network. This approach, whilst minimising the need for external apportionment, does not obviate the need for it. It is acknowledged that applying a Supplementary Levy across multiple planning units is only achievable in a limited range of circumstances in some growth area settings. Consequently external apportionment is permitted for higher order infrastructure items.

In proposing this approach, the Committee is aware that significant inequities can exist in the amount of major transport infrastructure which is apportioned to a planning unit. External apportionment, where it is to occur, should be in proportion to the projected external usage. Where applicable, external usage should be based on standard population thresholds for the provision of individual infrastructure items. Where no such thresholds exist, external apportionment should be justified by relevant usage data within and outside the planning unit.

Where out of sequence development is proposed by a developer, a Supplementary Levy may be applied in accordance with the Arterial Road Protocol (in future the Growth Area Road Design Guidelines), if applicable, to ensure appropriate arterial road connection to the nearest existing development or approved PSP area.

Where infrastructure is required external to the planning unit, and it can be demonstrated that it is only required because of the development in the planning unit, full costs should be apportioned to the planning unit regardless of any minor or incidental benefits which may flow to users external to the planning unit.

A single planning unit in a proposed PSP area or structure plan area should generally be the norm. Multiple planning units will need to be justified. Where external apportionment is to occur, the total cost that is to be apportioned should be adjusted for any grants or contributions, or as a result of co-located infrastructure and should be deducted before costs are apportioned.


(ii) Infrastructure specific external apportionment guidelinesThe Committee notes that in a number of Development Settings, apportionment will not be required or permitted. These circumstances are set out below. Where apportionment is permitted, it will be guided by the following:

Arterial Roads, Intersections and Roundabouts

Where these works are internal to a planning unit i.e. not on a boundary, there should be no external apportionment.

Where these works are on the boundary of a planning unit and adjacent to another existing or proposed planning unit, the cost should be shared equally (adjusted for the length of common frontage where necessary). Intersections at the corner of a planning unit may be externally apportioned up to 75% as appropriate. Where the boundary of the planning unit abuts a growth boundary or an existing area, the cost may be fully apportioned to the planning unit. The Committee acknowledges that this raises equity issues, but this approach is consistent with some recent GAA prepared DCPs and has been generally accepted by Panels on the basis that future residents of the planning unit will also use road infrastructure external to the planning unit to which they will make no contribution.

Community and Recreation Infrastructure

Apportionment is permitted for high order infrastructure which serves a wider community only. External apportionment should be in proportion to the projected external usage. When calculating likely external usage it should be assumed that this will only occur when the population threshold for the provision of an infrastructure item is higher than the projected population of the planning unit. External usage should be in proportion to the difference between the two.

Public Land

Where there is external apportionment of higher order infrastructure in the two infrastructure categories discussed above, any public land associated with the provision of those infrastructure items should also be apportioned using the same proportion to external users as the infrastructure item itself.

External apportionment for each of the proposed Development Settings is proposed to be as set out in Table 30.

Table 30 External Apportionment for the Development Settings

Development Settings

Standard Levy

GROWTH AREAS



Standard Levy

Transport infrastructure

External apportionment permitted in proportion to projected external usage. It should not be permitted where the need for the infrastructure is entirely dependent on the development in the planning unit, even if there is some minor benefit to external users.

Drainage infrastructure

External apportionment permitted in proportion to projected external usage. It should not be permitted where the need for the infrastructure is entirely dependent on the development in the planning unit, even if there is some minor benefit to external users.

Community and Recreation infrastructure

External apportionment permitted for higher order infrastructure items only and in proportion to projected external usage. It should be based on standard population thresholds for the provision of infrastructure where these exist.

STRATEGIC DEVELOPMENT AREAS


Funds collected through application of the Standard Levy may be expended either inside or outside the defined development area but expenditure outside the area must be justified. External apportionment is permitted based on proportion of projected usage.External funds will generally be rate revenue or grants, not other planning units. Grants will generally be deducted before apportionment of external usage.


As for transport infrastructure (where relevant).

Community and Recreation infrastructure

External apportionment permitted for high order infrastructure items only and in proportion to projected external usage.

URBAN AREAS

All infrastructure

External apportionment not permitted.

Where a Supplementary Levy is permitted, external costs may be apportioned and where this occurs they should be based on both the principles set out in this chapter and the provisions in Table 30 above.

9.4 Recommendations

The Committee makes the following recommendations: That external apportionment be minimised by the careful choice of planning unit

boundaries and the use of Supplementary Levies across a number of planning units. That external apportionment not be permitted for lower order community and

recreation infrastructure. That external apportionment generally only be permitted for larger and more

complex planning units, and in accord with the conditions set out in Table 30.


10 Works in Kind10.1 Overview

Chapter 12 of Report 1 sought to partially respond to the Committee’s Terms of Reference that seeks:

The circumstances, if any, in which Councils should be able to agree to the provision of infrastructure or building works in kind (including their valuation) in lieu of cash.

In this regard, the Committee made the following findings: It is essential for the new Development Levy System to retain the potential for

acceptance of works in kind. Acceptance of works in kind proposals should be at the discretion of the collecting

agency. Accepted works in kind proposals should be documented in a section 173 Agreement

or other suitable form of agreement. Credit for the full cost of the infrastructure up to the value specified in the

contributions plan should be provided (on the assumption that the infrastructure is delivered to the required specifications and standard) to encourage efficiency in infrastructure delivery.

The ability to exempt works in kind projects from the requirements of section 186 of the Local Government Act 1989 should be explored and documented in the Stage 2 report.


Several submissions commented on works in kind, with strong support to reinforce this approach. Melton Council commented that this is a timely opportunity to review and clarify some the existing issues being experienced. A number of Councils including Latrobe, Boroondara, and Ballarat expressed the view that works in kind be available at the discretion of the collecting agency. In contrast, the UDIA, Property Council and PEET suggested that it should be available wherever possible or as of right, and not at the discretion of the collecting agency.

Darebin Council’s submission supported the ability to specify the standard, monitor the construction and approve the quality of works, with the HIA requesting that there be an agreed standard of works that is consistent across all Council areas. The Master Builders Association commented that the system should ensure that Councils do not seek to recoup more than the correct value of works.

Several Council submissions pointed out that DCPs are sometimes currently used to assist the implementation of developer funded local or collector roads where there are a large number of land owners or developers involved in a development. In these situations DCPs are used as a convenient mechanism to collect funds, manage works in kind and implement


works. The Committee believes that this mechanism should still be available if agreed by developers and recommends that a levy be available for this purpose.

The Shopping Centre Council welcomed maintaining the ability to credit and offset works in kind, and submitted that provisions be made for State Agency requirements to be credited against local contributions.

Whittlesea Council suggested there are still some issues to be addressed, including: impact on staging and potential conflict with the Council’s capital works program; and if funds are available, or who pays, in cases where the cost of works exceed contribution liability. Greater Shepparton and Boroondara Councils asked that work in kind value over $200,000 be exempt from the provisions of section 186 of the Local Government Act 1989 to avoid any potential breach of that Act.

10.3 Discussion

The Committee believes that there is considerable merit in the widespread use of works in kind agreements and that this approach should be preferred wherever possible, particularly in Growth Areas. In this context, the Committee notes that whilst the circumstances in which works in kind arrangements may be proposed vary considerably, it is generally the case that greater efficiencies can be gained if infrastructure (to required standards) is provided by the private sector in association with other works.

In arriving at this general conclusion however, the Committee is of the view that acceptance of works in kind must be at the discretion of the Collecting Agency as a decision to support a works in kind proposal is likely to require an assessment of the broader contribution implications, including the potentially competing interests of other land owners/developers and the Planning Authority.

With the general objective in mind of simplifying and achieving efficiencies in infrastructure provision (including land for public purposes) wherever possible, the Committee is of the opinion that the methodology for preparing Development Levy Plans needs to be reviewed and that greater regard should be given to the ‘development context’ including the scale and location of land holdings within the contributing catchment during formulation of the Development Levy Plan. Early regard to the context within which the Development Levy Plan is being formulated may enable direct provision responsibilities, particularly for larger landholdings, to be nominated from the outset.

Once need and nexus for infrastructure provision has been determined, identification and nomination of direct provision responsibilities for key land holdings will avoid complex apportionment methodologies where each landholding is theoretically contributing a share of the cost of every item of infrastructure. The recommended approach will assist in ease of delivery of necessary infrastructure. Recent DCPs in Growth Areas have included an Implementation Strategy in an attempt to provide some guidance in relation to delivery, however the Committee is of the opinion that consideration of delivery strategies should occur earlier in the formulation process, particularly in Growth Areas.

With the shift to the Levy being a contribution towards delivery of a selection of Allowable Items in Growth Areas, it will still be necessary for the Planning Authority to identify and cost


the preferred or necessary infrastructure in the Development Levy Plan. As discussed in Chapter 5, it is expected that the Development Levy Plan will be based on functional layouts and/or quantity surveyors assessments for buildings, roads and other construction items. The Development Levy Plan is effectively the infrastructure plan for the planning unit and is used to determine what infrastructure items are to be funded via the Standard Levy. In this sense the Development Levy Plan is essentially a list of works that the Council is committing to and a budget for how the Levy will be spent. It is recognised that some infrastructure priorities in the Development Levy Plan may change over time, and the Plan should be flexible, up to a point, within the overall Standard Levy budget. In particular, the configuration of Community and Recreation facilities may change within the capped levy component once local needs are better understood.

While the Committee believes that functional layouts are a satisfactory level of detail for preparing the Development Levy Plan, it is recognised that developers will generally require a higher level of design and costing certainty before they are willing to commit to works in kind agreements. The Committee acknowledges this, and therefore believes that credits for works in kind should be based on more detailed design and more refined cost estimates than in the Development Levy Plan. This may take the form of tender documents where a developer or council intends to put a project out to tender. Where the refined cost estimate differs from that in the Development Levy Plan, the more refined cost estimate (whether it be higher or lower) should be used as the basis for the works in kind agreement. Any new cost estimate (or tender price) will need to be agreed by both the Council and the developer. In cases where a developer proposes a revised estimate, Council would have the right, as part of the works in kind agreement negotiation, to undertake their own estimates, modify the scope of works (to meet the budget), or decline the works in kind offer. The developer will receive a credit for the agreed amount with no further claims if the actual costs are greater. In any event, the total revenue collected from the Levy will not change and the Council will need to adjust the budget for any ‘unders’ and ‘overs’ within the Standard Levy budget.

The Committee believes this is the fairest approach. While the developer still takes a risk of over-runs, this risk is much reduced if the more refined cost estimate is used as the basis for the works in kind agreement. The approach will still provide some incentive for developers to achieve efficiencies in design and construction as they are able to retain any difference between the agreed credit amount and the actual cost. Although, in the experience of the Committee, developers do not seek to deliver works in kind just to capture any margin between the DCP amount and their actual works cost. It is not a motivation to deliver works in kind. Developers will generally seek works in kind as a means of positioning their developments and in many instances as a means of getting projects off the ground. In most cases they are bringing forward cash flow to do this in order to get projects to the market earlier. With the bringing forward of cash flow, developers will be trying to do what they can to offset that impact and will value certainty of outcome more highly than the potential to pocket the difference.

Credit for land required to be set aside for public purposes should be treated as a works in kind item wherever possible in Growth Areas. As noted in Report 1, it is desirable that Public


Land be secured and paid for as early in the life of the levy as possible. The credit value for land should be determined in accordance with the approach discussed in Chapter 8.

In the other Development Settings, the availability of works in kind arrangements will vary. In the Urban Areas, the Standard Levy is more likely to be collected and applied to incremental infrastructure improvements and as such works in kind agreements will be less valuable. Works in kind agreements should not be available in this Development Setting. In Strategic Development Areas, there will be the possibility of acceptance of works in kind arrangements.

In terms of the process by which works in kind arrangements may be considered and with specific regard to the requirements of the Local Government Act 1989, the Committee believes that there is merit in providing an exemption for contracts involving ‘works in kind’ agreements from the requirements of section 186 of the Local Government Act 1989. Section 186(5) provides the ability to exempt certain contracts by regulation and presently the only contracts that benefit from this exemption are those relating to the provision of legal services. Given the potential efficiencies and benefits of works in kind arrangements for delivering public infrastructure, the Committee believes that such an exemption could be justified. Consideration should be given to amending the Local Government (General) Regulations 2004 to exempt contracts for the construction of infrastructure that are to partly or fully satisfy a liability arising under an approved Development Levy Plan.

10.4 Recommendations

The Committee make the following recommendations: That acceptance of works in kind is an essential and valuable component of the

Development Levy System for Growth Areas and Strategic Development Areas. That acceptance of works in kind agreements in these settings, while preferred, is

to be at the discretion of the Collecting Agency. That works in kind credits should be determined based on the most detailed design

and costing information available at the time of negotiating the works in kind agreement.

That Section 173 Agreements should continue to be utilised for the documentation of works in kind agreements.

That consideration be given to amending the Local Government (General) Regulations 2004 to exempt contracts for the construction of infrastructure that are to partly or fully satisfy a liability arising under an approved Development Levy Plan from the requirements of section 186 of the Local Government Act 1989.


11 Developer Delivered Infrastructure and GAIC11.1 Overview

A Preferred Way Forward assumed that there will be three levels of contribution toward infrastructure provision in Growth Areas:

Site specific infrastructure that will be directly provided by developers (as set out in Attachment 4 of A Preferred Way Forward);

Precinct or growth area based shared contributions for which monetary payments (and/or works in kind) will be sought from developers as development takes place; and

State wide shared contributions for which monetary payments (and/or works in kind) will be sought from developers in metropolitan Growth Areas as development takes place (GAIC).

Chapter 13 of Report 1 responded the Committee’s Terms of Reference that seeks:

Clarification of the infrastructure to be directly provided by the developer and what infrastructure should be provided by the State through other sources such as the Growth Area Infrastructure Contribution.

In this regard, the Committee made the following findings: The framework for the proposed Development Levy System confirms the need for

developer provided infrastructure. As part of its Stage 2 work, the Committee will review Appendix 4 of A Preferred Way

Forward to remove any items, such as the construction of a football field, that are included within the new system as direct developer provided items.

The affordability implications of GAIC charges should be reviewed within the Stage 2 report.

The definitions of State and local infrastructure be reviewed as part of the Committee’s Stage 2 work with reference to the recommended development levy framework and allowable funding items.

The Minister’s Direction dated May 2003 be further examined by the Committee within the context of the recommended development levy framework and the GAIC provisions as part of its Stage 2 work.


Submissions that addressed developer delivered infrastructure and the GAIC highlighted the need to develop a clearer definition of State and local infrastructure. The Property Council and HIA submitted that a review of the definition of State Infrastructure is a matter of priority and that this be done in close consultation with the industry. The UDIA submitted that the GAIC legislation currently is very vague and does not adequately define ‘State Infrastructure’. The GAA pointed out that there is a lack of clarity about how regional pedestrian and bike trails are to be delivered, and it supported local contributions being applied, as this will result in this infrastructure being delivered in a timely fashion. It suggested that level 1 and 2 components be local, with level 3 being State.


Wyndham Council suggested that infrastructure be classified in three clear groups, that is, State infrastructure being funded by GAIC and regional and local infrastructure both being funded by development contributions. Hume, Cardinia and Whittlesea Councils provided examples of uncertainty of the workings and operation of the GAIC and development contributions, and would like to be involved further to clarify the working of the new levy system. Greater Geelong Council supported the GAIC being included for long term use in regional Growth Areas.

PEET sought better integration and transparency between GAIC and development contributions, and suggested that the GAIC reporting system be similar to development contributions. PEET also suggested that in-kind land contributions, in lieu of cash be available for GAIC payment where the infrastructure is to be provided by the State or an agency other than Council.

MAB, UDIA and GAA all expressed concern that the multiple funding sources and responsibility hampers the delivery of State and regional road and transport networks, which again highlighted the need to clarify the relationship between GAIC and development contributions. MAB expressed concern that there is inequality between competing employment areas that are subject to GAIC and pre GAIC areas that have significantly lower development costs, and submitted that a new system address this inequity.

The Bus Association of Victoria argued that at a minimum, the development contribution system should facilitate land acquisition to reserve corridors for public transport.

VicRoads and PEET raised the potential for GAIC credits to be utilised to secure land for future VicRoads arterial road widening.

11.3 Discussion

Consistent with the findings of Report 1, the Committee has further reviewed Appendix 4 of A Preferred Way Forward and believes that the list of developer provided infrastructure is appropriate, save for the removal of the construction of a football field. As a matter of principle, developer provided infrastructure should be limited to the actual works necessary to produce the new lot/dwelling with the Standard and Supplementary Levies to fund the additional works as provided in the Allowable Items.

There continues to be significant confusion with respect to application of the funds collected under the GAIC and the potential for overlap with the Standard Levy or Supplementary Levy as potential funding sources.

The Committee considers that the new proposed framework for Development Levies reduces confusion and provides clarification through the identification of developer provided infrastructure and Allowable Items for the Standard Levy and Supplementary Levy.

The Committee notes that some of the existing confusion stems from the desire of Government Agencies and Growth Areas Councils to gain access to GAIC funds. Developers also appear to be seeking access to the GAIC for works in kind.

The Committee notes that a review of the GAIC is being undertaken by DPCD and believes that it would be appropriate for that review to establish guidelines for how the GAIC is to be


applied and to make those guidelines widely available to address the widespread confusion and expectation as to how it is managed.

The Committee expects that there will be continuing overlap between some of the Allowable Items under the Standard and Supplementary Levies, and the GAIC. This is seemingly inevitable where, for example, a local shared path which ultimately becomes part of a wider regional and perhaps metropolitan network. The Committee notes that these Levies are a contribution to the required infrastructure and therefore the GAIC should be regarded as one of a number of potential funding sources.

The Committee notes that the ability to reserve and secure land where VicRoads is the road authority is problematic. As discussed in Report 1, the Committee believes that land required for VicRoads roads should be reserved via a PAO, and not as part of a DCP as is sometimes the current practice. VicRoads and PEET both suggested the option of enabling GAIC credits for land reserved for a public purpose under a PAO, with land transferred and credits attributed at the time that the GAIC is triggered. It was submitted that this would be an advantage to developers as it avoids ‘sterilising’ the land (in that the developer can do nothing with the land but is still charged rates and taxes on it) and it would ultimately be an advantage to the State (VicRoads) in that land would be secured at a lower cost.

The Committee notes that, whilst this could be argued to create a financial liability for the State, it could also be argued that the liability is created anyway when the PAO is applied and that a GAIC credit would add certainty and secure the land at a lower price. The Committee believes that the proposed approach may have merit and suggests that this issue be taken up in any review of the GAIC.


The Committee makes the following recommendations: That Appendix 4 from A Preferred Way Forward be adopted as the schedule for

direct developer provided infrastructure, save for deletion of the construction of a football field.

That the current review of the GAIC establish transparent guidelines for how the GAIC is to be applied, and that those guidelines be made widely available.

That any further review of the GAIC consider the merits of enabling GAIC credits for the transfer of land required for State infrastructure.


12 Using Permit Conditions for Infrastructure12.1 Overview


The circumstances where Councils and State agencies should be able to require a developer to enter into an agreement to provide funds for additional off-site infrastructure required to mitigate the off-site impacts of a proposal through a permit condition.

In this regard, the Committee made the following findings: The existing legislative framework be retained to enable responsible authorities to

mitigate the off-site impacts of individual developments through permit conditions. New guidelines for the simplified levy system reinforce the principles which are

currently applied to permit conditions for off-site infrastructure. The new guidelines should provide advice and examples of circumstances in which it

is appropriate to use permit conditions to provide additional off-site infrastructure, in particular for out of sequence developments.


Few submissions were made about using permit conditions for infrastructure, with the main emphasis being the need to limit ‘scope creep’ by agencies and eliminating ‘double dipping’ where a Standard Levy or a Development Levy System is in place (UDIA and Whittlesea Council). The HIA submitted that any conflict be addressed by clear guidance being provided about when and how permit conditions can be used. Boroondara Council supported retaining the existing legislative framework to enable responsible authorities to mitigate the off-site impacts of individual developments through permit conditions, and it supported new guidelines as part of the simplified levy system.

12.3 Discussion

(i) Permit Conditions and section 173 agreementsThe Committee’s Report 1 (Chapter 14) described the circumstances in which permit conditions can currently be imposed to require the provision of off-site infrastructure under sections 62(5) and (6) of the Planning and Environment Act 1987. In summary, the following principles were seen to emerge from the legislation and case law in relation to the use of permit conditions to require the provision of infrastructure:

The works, services or facilities must be considered necessary as a result of the grant of a permit;

The works, services or facilities must be paid for in whole by the developer or in part where the responsible authority or other public authority is to meet the remaining amount. This requirement reflects the causal nature of the nexus of the proposed development with the works services or facilities, which must be deemed necessary to mitigate its impacts;


The above requirements do not preclude the provision of infrastructure that provides benefits to other land, but the extent to which other land benefits may be reflected in the reasonable proportion of the cost to be borne by the developer;

DCPs are the only means by which contributions to the provision of works, services or facilities can be obtained from more than one developer;

It is not open for a responsible authority to include a condition in a permit requiring the provision of works, services or facilities where they are already included in a DCP.

Responsible authorities may not ‘double dip’ by collecting levies and requiring the provision of the infrastructure by permit condition; and

Any permit condition must also meet the other general requirements of validity in every other respect, including reasonableness, certainty and relevance.

It is important to note that section 62(5)(b) of the Act can only be used to require the provision of infrastructure though a section 173 agreement where there is a voluntary agreement 4. In the absence of a voluntary or consensual arrangement it cannot be relied upon and cannot be used to circumvent Part 3B of the Act.

The Committee supports the continued application of permit conditions for off-site infrastructure on the basis of these principles, as embodied in the current legislative framework, in the context of the new Development Levy System.

Given that development levies under the new system will be much more broadly applied than DCPs, in particular across Urban Areas, it is anticipated that there will be greater potential for ‘double dipping’ i.e. where impact mitigation conditions are imposed concurrently with development levies.

Clearly, where infrastructure is proposed to be funded through development levies it should not be possible to require further provision through a permit condition under the guise of ‘impact mitigation’. Given the existing requirements for such permit conditions, in particular the more direct or causal ‘nexus’ required, such conditions would fail these tests.

In light of the above the Committee believes that it will be important for any new guidelines to explain and reinforce the existing principles applying to the use of permit conditions in this manner. In particular it will be important to emphasise the need to avoid ‘double-dipping’ given that there is likely to be more instances where impact mitigation conditions and development levies will apply to the same development.

(ii) Referral authoritiesIn Report 1 (Chapter 14.4) the Committee briefly discussed the powers of referral authorities to direct a responsible authority to impose conditions which may include a condition that the permit applicant provide works, services or facilities on other land (section 62(1)(a)) of the Act.

Unlike conditions imposed by responsible authorities, conditions imposed at the direction of referral authorities are not subject to the same requirements of section 62(5)(c) of the Act. These conditions must still meet the normal validity requirements and are subject to review on their merits.

4 See Cameron Manor Pty Ltd v Mornington Peninsula SC (Red Dot) [2007] VCAT 1822 (5 October 2007)


The Committee believes that it is appropriate that responsible authorities continue to have the power to use permit conditions to require the provision of infrastructure in order to mitigate off-site impacts of a particular development, whether or not it is affected by a development levy. Each matter will need to be considered on a case by case basis and it is simply not possible to anticipate or codify every circumstance in which it will be appropriate for referral authorities to exercise this power.

The Committee supports the provision of further guidance about the circumstances in which the use of permit conditions by referral authorities to require the provision of infrastructure is appropriate.


The Committee makes the following recommendations: That the existing legislative framework be retained to enable responsible

authorities to mitigate the off-site impacts of individual developments through permit conditions.

That new Guidelines for the Development Levy System reinforce the principles currently applied to permit conditions for off-site infrastructure, with particular regard for the need to avoid overlap or ‘double-dipping’ where Levies also apply.

That the new Guidelines provide advice and examples of circumstances in which it is appropriate to use permit conditions to provide additional off-site infrastructure, in particular for out of sequence developments.


13 Administration and Implementation 13.1 Overview

This Chapter deals with the key issues relating to the administration and implementation of the proposed Development Levy System.

The success of any regulatory system is not only determined by the concepts and ideas which underpin it, but perhaps more critically by how its users interact with its regulatory architecture and the administrative mechanisms which seek to apply the concepts to the real world and translate them into action. How the implementation framework of the new Development Levy System interfaces with Councils, Government agencies, the GAA, developers and the community will be critical to its success.

Through its consultations and deliberations, the Committee is cognisant that many of the failings and complexities of the existing development contributions system have their roots in its implementation, including at a legislative and administrative level. In particular, the Committee is aware of the onerous requirements of Part 3B of the Act for the preparation of DCPs and the lack of clear guidance provided in existing Ministerial Directions on the scope of contributions.

These features have resulted in an overly complex system, not often used outside Growth Areas and ultimately undermining the effectiveness of the existing system in meeting planning needs by providing revenue to meet identified infrastructure needs.

Consequently, the Committee believes that it is important for it to provide a detailed level of consideration to the manner in which the new system should be implemented so as to avoid the mistakes of the past.

A Preferred Way Forward identifies that similar to the current system, revenue would be collected by each Council and held in a special account established for this purpose.


The appropriate requirements for accountability and reporting of the contributions by councils.

The appropriate financial and administrative processes for councils to ensure development contributions funded infrastructure is delivered at the time it is required. This may include recommendations on funding options for the delivery of infrastructure in advance of sufficient funds being collected.

An appropriate method for annual indexation of the standard levies and charges, construction costs and land valuations (for example, by reference to an appropriate industry index), and for periodic review to ensure that the levies reflect contemporary infrastructure requirements.

In this regard, the Committee made the following findings: To ensure accountability and transparency, Councils should be required to account

for and report annually on the receipt and expenditure of the development contributions.


Council annual reports should detail the following in relation to development levies: Any amounts received; Any land received; Any items of works and facilities received as works in kind; Council’s expenditure on infrastructure.

The framework for development levies should include standardised construction and land indexes and a general index for standard cost rates.

Feedback is sought on the most appropriate standardised indexes for each development setting.

A standardised timing and process for application of the preferred indexes will be specified in the Committee’s Stage 2 report.

Project contingencies should generally not exceed 10% of the project value. There should be a five yearly review of a Development Levy System and the approach

to Standard Levies under the new system. A decision making and advice mechanism to address a range of Development Levy

implementation issues will be proposed as part of its Stage 2 work.

The implementation framework will need to accommodate the following key components of the new system:

Applying the levies – justification; Defining the Development Settings; Allowable Infrastructure Items; Setting the Levies; Securing and Valuing Public Land; Administration and Expenditure of levies; and Transitional matters.

These are addressed below.

Before addressing the implementation in detail the Committee believes that it is important to set out the key objectives and principles which the implementation framework of the new system should address.

The Committee believes that the success of implementation of the new Development Levy System should be measured by the extent to which it is likely to meet the following objectives, which are:

To reduce the costs and time associated with the preparation and approval of plans and levies which are integral to the Development Levy System;

To improve the transparency and usability of the system for all stakeholders; To increase the take-up of development levies by Councils and the overall proportion

of new infrastructure that is funded by new development levies; To increase the flexibility and responsiveness of the new system in adapting to

changing community need; and To provide the opportunity for all Councils to have access to the new system, with

minimal resourcing imposition.


In determining the architecture of the new system and its implementation, the Committee has had regard to the following principles, which arise from A Preferred Way Forward and the discussion in preceding chapters:

The new system is to be a clean break from the past and will therefore supersede DCPs under Part 3B, requiring its own discrete set of provisions within the Act, albeit existing approved DCPs will remain in force;

Once the Standard Levies are set for each Development Setting, their quantum or scope will not be up for debate;

Councils should be required to 'turn on' the levies and identify the basis for any levy within the planning scheme through a fast track Planning Scheme Amendment process; and

The new system must be implemented in the context of a constrained budget environment and it should be implementable within existing resources and capacities of both DPCD and Councils.

The Committee believes the existing framework provides a reasonable starting point for considering how the new system should be implemented. It is noted that there are aspects of the existing system which are not proposed to change significantly, and these can be applied to the new system with minor modifications, e.g. provisions relating to the administration and collection of levies. There are also mechanisms under the existing system which have been underutilised and which the Committee believes have the potential to provide greater clarity and certainty, for example, a revised SPPF, a new Ministerial Direction, a new Practice Note and the like.


A number of submitters, including PIA and the MAV, commented that a simple and effective implementation process is required to encourage Councils to take up the new system. Hobsons Bay Council strongly encouraged the Standard Levy system be introduced via a Ministerial amendment whereas Wodonga Council supported a simplified process outside the planning system.

The Property Council suggested that an expert advisory group of State and local government, industry representatives and subject matter experts be appointed to address matters such as road standards, provision requirements and other implementation issues. It submitted that such a body develop a suit of guidelines and implementation tools for the roll-out of the new system. Yarra Council provided examples of matters that should be covered in Guidelines and practice notes for implementation.

Likewise, Melton, Moreland and Greater Geelong Councils support the establishment of a steering committee or Advisory Committee to streamline the approval of the levy system provisions in planning schemes. Moreland Council pointed out that a streamlined implementation process will make it more likely that Councils will take up Standard Levies. Moreland Council would like more information about how administrative efficiencies and reduced costs can be achieved under the new system.

Moonee Valley Council expressed concern that the new approach still appears to be costly and onerous, like the current system. In particular, the justification required for


Development Levy Systems, five yearly reviews and whether planning scheme amendments are required to implement them. Glen Eira Council was not convinced that strategic justification will be any easier as this requirement has not been made clear. Melton Council sought clarification about the level of justification will be required and who will assess the justification.

There was some discussion about indexation in the submissions, with general support for the indexation of cost as part of the system with a range of mechanisms and timeframes suggested. Hume Council supported that an indexation process be mandated through legislation of similar.

SKM submitted that different indices should be used for different components of the Standard Levy:

Road projects – VicRoads Roads and Bridge Construction Index, June Quarter; Drainage and Community Facilities – Rawlinsons Building Price Index, June quarter,

Melbourne; and Land Acquisition- based on two registered valuations, one of which should be

provided by the Victorian Valuer General.

Melton, Surf Coast, Hobsons Bay, Whittlesea, and Maribyrnong Councils, and Public Transport Victoria were amongst submitters that supported applying the Rawlinson’s Building Price Index for project construction costs. Wyndham and Frankston Councils suggested that the ABS Consumer Price Index be used. In relation to other infrastructure items the following mechanisms were also suggested:

ABS Non-Residential Building Construction Victorian Index for building costs and community infrastructure (Wyndham Council);

ABS Road and Building Construction Index for civil projects (VicRoads, and Cardinia and Wyndham Councils).

There was a divergence of views from the development industry in relation to contingencies. These included PEET and Hume Council submitting that it be capped at 10%, the GAA recommending capping at between 5% and 10%. Some Councils sought higher percentages, such as Greater Geelong suggesting greater than 10% was required to manage long term projects and Melton Council which suggested a rate of 20%. Port Phillip was an example of an inner Council that suggested higher land cost in inner areas should be factored into setting levies and suggested that the Subdivision Act provided a model.

A number of Councils including Melton, as well as the GAA, supported the cost of preparing plans (i.e. planning costs) being included as Allowable Items in Standard Levies. The HIA took the opposing view. In contrast, the Property Council submitted that the developer’s cost towards development of PSPs and development contribution plans be recoverable via credits against contributions.

The ability to pool funds between infrastructure categories was supported by a number of Councils including Boroondara, Frankston, Mitchell and Bayside.

There is support for a dispute resolution mechanism to be part of the new system. The development industry including the Master Builders, UDIA, Property Council and HIA urged that a specialist body or Standing Advisory Committee (or the like) be established as part of


the new system to deal with dispute resolutions or appeals and to govern and review of the system over time. These submissions have resonated in the Committee’s deliberations on this issue.

13.3 Collection of Levies

A number of submitters raised issues regarding the arrangements and timing for the collection of levies, which generally occurs at the subdivision permit stage, with conditions generally requiring payment prior to a statement of compliance issuing. Consistent with most submissions on this issue, the Committee agrees that this will continue to be the most practical approach for the collections of levies and should be the preferred timing for the collection of levies where subdivision occurs.

The existing DCP provisions (see section 46N of the Act) require Councils to impose permit conditions requiring applicants to pay development infrastructure levies within a specified time or to enter into an agreement to pay the levy. Where a permit is not required, the Act requires the timing to be specified in a DCP.

The Committee is aware of practical issues associated with the collection of the CIL, which currently occurs prior to the issue of building permits for dwellings (see section 46O of the Act).

Whilst the new system will dispense with the CIL distinction and collection arrangements, it is expected that the broader application of levies across urban areas, where growth will be more incremental, may raise new challenges for the collection of levies. In particular, Councils will need to consider appropriate triggers for payment of levies where a development results in an increase in dwellings or commercial floor area but where subdivision is not initially proposed or where a planning permit is not required.

In these situations it is possible that the most practical trigger point for collection will be prior to the issue of a building permit for the proposed development. Provisions contained within section 24 of the Building Act 1993 may need to be amended to reflect the new system and to support the collection of levies where the timing for payment is prior to the issue of a building permit.

Consideration may also need to be given to establishing appropriate enforcement mechanisms in circumstances where a permit condition and planning enforcement procedures cannot be used to require compliance or payment of a levy.

These issues will need to be addressed in the drafting of the legislative provisions and overlay to ensure that Councils can adopt the most practical approach to the collection of levies which is effective and suited to their administrative capabilities.

13.4 Regulatory Implementation

Section 2.2 of the Committee's Report 1 described the implementation of the existing DCP system which is relevant to the following discussion.

As previously noted, the current system for development contributions is implemented at a number of different levels within the Victorian planning system and local planning schemes.


How the Committee considers this might be taken forward is noted below. In setting this indicative framework out, the Committee is mindful that while it has made a number of suggestions and recommendations for consideration by the Minister for Planning, the final legislative requirements will be determined once the new system in its final form is adopted by Government. For these reasons, the Committee is cautious about putting too much emphasis on a final legislation package until the final form of the new system is resolved. A diagram at Appendix G provides an overview of the implementation framework envisaged for the new system.

The Committee is cognisant that the final implementation arrangements for the Development Levy Plan, in particular its mechanism for approval, may have significant implications for the usability of the new system and whether it achieves both the flexibility and certainty desired by stakeholders.

The Committee is acutely aware of issues arising from the inflexibility of the current system, but it is also mindful that any new system needs to legally robust, particularly in Growth Areas where these plans will be relied upon to fund significant infrastructure investment.

For Growth Areas, where PSPs typically include a higher level of detail for infrastructure projects, it will be appropriate for the Development Levy Plan to reflect this level of detail when it is approved. However in Urban Areas, where growth is more incremental and the detail and priority of infrastructure projects less certain, a greater level of flexibility will be required. The extent to which such information needs to be captured and incorporated into planning schemes will have some bearing on the workability of the new Development Levy System across the Development Settings, particularly in Urban Areas.

The implementation arrangements, including the justification and processes required, will need to accommodate the differences between the Development Settings and be proportionate to the strategic issues at stake, as the 'one-size fits all' approach of the current system has clearly failed in this regard.

With these issues in mind, the Committee has made recommendations for establishing a speedy decision-making and dispute resolution process which could militate against the inherent inflexibility and time constraints of the planning scheme amendment processes.

(i) Planning and Environment Act 1987Part 3B of the Act provides the legislative framework for the preparation and administration of DCPs. Section 46K of the Act sets out the requirements for the contents of a DCP. It is clear from A Preferred Way Forward that the new system is to be a clean break from the past and will likely require its own discrete set of legislative provisions, perhaps as a new Part to the Act, for example, Part 3BA. Whilst new DCPs will no longer be permitted, there will clearly be a need for transitional arrangements given the timeframe of existing approved DCPs and the need for these to be administered and possibly updated over their life.

It is suggested that the existing provisions in Part 3B of the Planning and Environment Act 1987 would need to be retained in relation to all existing Development Contributions Plans made pursuant to these provisions. These provisions could form Division 1 of the Part. The Act would need to be amended to prevent new DCPs being made pursuant to these provisions; but to allow amendments to be made to existing DCPs.


A new Division of Part 3B of the Act would need to be added to govern arrangements for the introduction of the proposed Development Levy System and standard levies.

Having regard to the Committee’s recommendations for the new system, it is envisaged that the package of legislative reforms would address the issues as set out in Table 31:

Table 31 Legislative Reforms

Issue Purpose of reform

Development Levy Plans andApplying the levies - justification

Establish a new part or division of the Act to provide a new system for the preparation and approval of Development Levy Plans to levy, collect and administer contributions towards infrastructure through local planning schemes. It should provide that a Development Levy Plan: Must identify the planning unit to which the plan applies. Can apply a Standard Levy and a Supplementary Levy, where

permitted, in respect of the development of land within the planning unit.

Must identify the infrastructure or classes of infrastructure that are to be funded by any levies to benefit growth in the planning unit.

Must identify the strategic basis for the application of the levies.

Must specify any individual infrastructure items that are proposed to be funded by a Supplementary Levy.

Must specify when a development levy is payable in respect of development of land in the planning unit.

May identify methods of indexation which are to be applied to levies on an annual basis.

May specify whether particular levies can be satisfied through cash or in-kind works or identified ‘public land’ or a combination of both.

Must be prepared in accordance with any Ministerial Directions issued under the new part of the Act.

Defining the Development Settings Provide a head of power for different Development Settings and Standard Levies to be defined by a Ministerial Direction.

Allowable Items Similar to section 46M (2)(a), provide a head of power for a Ministerial Direction to define the Allowable Items of infrastructure which may be funded from Standard Levies across different Development Settings.

Setting the Levies Similar to the existing sections 46M (2)(a), (b) and (c), provide a head of power for a Ministerial Direction to specify Standard Levies for different Development Settings in respect of classes of infrastructure.

Provide a head of power for a Ministerial Direction to also direct that specified methods of indexation be applied to different infrastructure categories funded by the Standard Levies.

Securing and valuing public land Establish a new head of power to provide for authority to



identify and gather contributions for land for public purposes.

Provide that a DLP can set a Public Land component of the Standard Levy, comprising a percentage of NDA and dollar value, and identify ‘public land’ within the planning unit.

Provide that the Public Land component of the Standard Levy may only be satisfied through in-kind provision of ‘public land’ or cash or a combination of cash and land where a lot does not contain sufficient ‘public land’ to satisfy the public land requirement.

Changes may also be required to the Subdivision Act to provide a head of power, similar to section 18, to require land identified as ‘public land’ in a DLP to be set aside on a plan of subdivision, in a location and up to the amount specified in the DLP.

Where a DLP applies to land in a Growth Area the provisions should indicate that it will not be possible to impose any open space contribution requirements pursuant section 18 of the Subdivision Act or clause 52.01 of local planning schemes.

Provide a head of power for a Ministerial Direction to specify a land valuation methodology for determining the cash value of the Public Land to be included in a DLP.

Administration and expenditure of levies

Similar to section 46P, the new legislation should allow Councils to accept money or in-kind land or works in satisfaction of any levy.

Similar to section 46N, the new legislation will need to provide that a DLP must specify when a development levy is payable, which will usually be prior to a statement of compliance in Growth Areas. The DLP will need to specify the timing for payment where a planning permit is not required for a development.

Where a planning permit is not required, a Council may specify that it is payable prior to the issue of a building permit. Similar to section 24(5) of the Building Act 1993, the new legislative provisions will need to prevent the issue of a building permit for buildings and works in respect of which a levy is payable and has not been paid. These changes will need to be developed in consultation with the Building Commission.

Amendments to section 62 of the Act will need to provide for the imposition of permit conditions to collect development levies in accordance with an approved DLP, similar to the existing 62(5)(a).

Section 62 should provide that where a DLP is in place a section 173 can not be used to require contributions towards infrastructure included in a DLP.

Similar to section 46Q of the Act, Councils should be required to keep proper accounts of any monetary and in-kind



contributions paid and to refund monies which have not been expended within the timeframe of the DLP. The new provisions should require Councils to report this information annually, including a list of priority projects for year ahead.

Transitional matters Part 3B of the Act should be amended to limit its operation to the amendment and administration of existing approved DCPs. It should no longer be possible to prepare a new DCP under Part 3B the new legislation.

The collection and administrative provisions will need to continue to apply to existing approved DCPs over their lifetime.

(ii) Victoria Planning ProvisionsState Planning Policy Framework

State planning policy for development contributions is set out at Clause 19.03 of the State Planning Policy Framework (SPPF).

The Committee sees scope for the SPPF to provide clarity about the how the new system should be applied in planning schemes. The Committee is aware that the SPPF is likely to be reviewed in the context of the residential and commercial zone reviews, the release of the Metropolitan Planning Strategy and this current review. The implications of this current review should be considered as part of the forthcoming SPPF review.

Local Planning Policy Framework

There is no requirement for planning authorities to include strategies or policies for collecting development contributions in their Local Planning Policy Frameworks (LPPF).

For Urban Area settings or other areas where stand-alone strategic documents like PSPs are not warranted, the LPPF plays a clear role in identifying the strategic basis for the application of Standard Levies. Following on from the SPPF review, it is likely that each Council will need to review its LPPF in this context.

Additionally, the Committee is aware that many municipalities have undertaken a great deal of strategic planning work over the years. It considers that the introduction of Urban Area levies and in many cases, Strategic Development Areas levies could be based on that strategic planning work. In implementing the new Development Levy System, the Committee is mindful that Councils are concerned about the amount of work that might be required. In this regard, the Committee is cognisant that its recommendations should enable most Councils to use in-house resources and its existing Planning Scheme to identify the Development Settings, and to ultimately apply the levies. The only area (apart from Growth Areas where a Precinct Structure Plan will be required and that more extensive work would need to be undertaken in any event) that might require additional strategic justification is in identifying Strategic Development Areas where none currently exist.

However, the Committee considers that where Council has undertaken strategic reviews for areas such as Principal or Major Activity Centres, or major redevelopment sites and opportunities, and where these are already identified within the Planning Scheme (thus


having been through an Amendment process), no further work need be undertaken to justify the application of a Strategic Development Area. The only additional work in this case might be to undertake further research to justify the application of the levy proposed – that is selection of the $4,500 or $6,000 Levy.

A new Development Levy Overlay

The existing Development Contributions Plan Overly (DCPO) currently performs two important functions within planning schemes. As an overlay, it maps the area where the DCP applies and provides notice to landowners/developers whose properties are affected by a DCP incorporated into a planning scheme. Secondly, it distils the key information from the DCP i.e. the charges, rates and liabilities for easy reference and application, and avoids the need to refer to the full incorporated document which are typically voluminous. The existing Development Contributions Overlay, together with the existing provisions and schedules would need to be retained for legacy purposes.

The Committee considers there will need to be a similar VPP mechanism to identify areas subject to a Standard Levy and the amount of levies which are payable in respect of particular types of development.

It is envisaged that the new overlay could operate and be drafted in a manner similar to the existing DCPO, which requires conditions to be included on permits to give effect to any applicable Levy. The new VPP provisions should address the issues as set out in Table 32:

Table 32 Issues for the new Overlays


Applying the levies - justification Map the planning units where a levy is to apply and identify the levies that are to apply in respect of different classes of development. It is anticipated that the same overlay will apply across all Development Settings within a municipality.

Identify the DLP and the relevant parts of the planning scheme that provide the strategic basis for the schedule of levies.

Transitional issues The existing DCPO will need to be retained for current approved DCPs however it should not be available to be utilised for any new DCPs.

(iii) A new Ministerial DirectionSection 46M of the Act currently provides a broad power for the Minister to issue written directions to planning authorities in relation to detailed aspects of the preparation of DCPs. Ministerial Directions are a flexible mechanism which can be approved and amended by the Minister in response to implementation issues as they arise in the Victorian planning system. In addition, section 12(2) of the Act requires that planning authorities must have regard to Ministerial Directions generally in preparing a planning scheme amendment. Notice of any approved Ministerial Directions must be provided in the Government Gazette (s46M(3)) of the Act.


The Committee believes that the flexibility offered by this mechanism is suited to implementing many of the detailed aspects of the new system, in particular setting the levies and how they should be applied across each Development Setting. The Committee has set out a number of matters that could be included in a new Ministerial Direction as part of the package of proposed implementation mechanisms provide in Appendices E and F.

Having regard to the Committee’s recommendations in the preceding Chapters, it is envisaged that a new Ministerial Direction would need to address the issues as set out in Table 33:

Table 33 Issues for a new Ministerial Direction


Defining the development settings Provide for the definition of various of Development Settings to which Standard Levies can be applied, in accordance with the descriptions set out in Chapter 2: Growth Areas Urban Areas Strategic Development Areas

Allowable Infrastructure Items Define the Allowable Items of infrastructure and direct that only these items can be funded by Development Levies, in accordance with the tables provided in Chapter 4.

Provide a schedule including diagrammatic specifications for particular Allowable Items eg. intersection templates and typical road cross-sections.

Where infrastructure standards are not contained within the Direction, it should refer users to other relevant documents e.g. the proposed Growth Areas Road Design Guidelines.

Setting the levies Specify Standard Levies which can be applied with respect to each of the Development Settings in accordance with the amounts recommended in Chapters 5 to 7.

Provide that a Supplementary Levy may be applied to a Standard Levy but only where specified information and justification can be met eg. see Chapter 5.8 for Growth Areas and Chapter 6.7 for Strategic Development Areas.

Applying the levies - justification Provide clear direction as to the level of information to be included in a DLP for each Development Setting and what level of justification is required.

Administration and expenditure of levies

Provide direction about the level of information required to be included in a DLP with regard to the administration of levies, which will vary according to the Development Setting.

Valuing public land Provide direction in relation to the land valuation methodology that must be followed for determining the cash value of the public land for the implementation of the Standard Levy in Growth Areas (see Chapter 8).


(iv) New Guidelines and Practice NoteThe Development Contributions Guidelines (DSE June 2003, as amended March 2007) are a reference document at Clause 19.03-1 and must be considered by planning authorities as they relate to planning scheme amendments. It is anticipated that new Guidelines and a Practice Note will be required to support the implementation of the new system and to replace the existing guidelines. The Committee has made recommendations in this regard.

The Committee has drafted a Practice Note that could accompany the Development Levy Overlay – principally so that interested stakeholders gain a better understanding of how the Development Levy System might all work upon its introduction. Both of these documents are provided in Appendix D.

It may be appropriate for some aspects of the new Guidelines to be referenced or incorporated into the VPP, possibly within the SPPF or as a stand alone incorporated document. Having regard to the Committee’s recommendations in the preceding Chapters, it is envisaged that the new Guidelines and Practice Note would need to address the issues as set out in Table 34:

Table 34 Issues for Guidelines and Practice Note


Applying the levies - justification Overall guidance should be provided for the preparation of a DLP, including templates, in particular on how and where the various Standard Levies should be applied.

Guidance should be provided on how to meet the strategic justification requirements of the Act and Ministerial Direction in each Development Setting.

Provide clear guidance on what is required to meet the information and justification requirements of the Act and Ministerial Direction to support the application of a Supplementary Levy.

Allowable infrastructure items Some guidance should be provided on how to apply the Allowable Items list to local circumstances and Development Settings.

New Growth Areas Road Design Guidelines are proposed to address the design standards and specification of new roads in Growth Areas (see Chapter 4).

Administration and expenditure Some guidance should be provided on establishing systems to account for and administer the Standard and Supplementary Levies, including the establishment of systems to monitor their collection and satisfying annual reporting requirements.

Permit conditions Some guidance should be provided about when it is appropriate to use permit conditions to require the provision of infrastructure to mitigate the direct impacts of a development (see Chapter 12).

Transitional matters Guidance should encourage and provide guidance on conversion of DCPs in preparation to the new system.


13.5 Decision Making and Dispute Resolution

Many submissions called for the Committee to recommend an appropriate mechanism for a decision making and dispute resolution process that allows for a fast track introduction of the levy, and in the event of disputes, a process that negates the need to go to VCAT, at least in the first instance. This was reiterated at various the stakeholder and industry briefings. A key issue is to determine is whether such a body should have determinative or recommending powers.

(i) Infrastructure Standing Advisory Committee In taking this forward, the Committee considered whether this could be undertaken by Council or DPCD, but determined that an independent advisory body might be the best option. For clarity, it has named this body as the Infrastructure Standing Advisory Committee (ISAC). The Committee considers it should be appointed to comprise members with expertise and experience in DCPs, Structure Plans, and PSP processes to assist with implementation and ongoing monitoring and review of the new Development Levy System. A quorum of members could be assembled fairly quickly so efficient decision making could be achieved. Advisory Committees by their nature are not determinative, and a further decision making mechanism may need to be explored.

(ii) Matters which the body would addressThe Committee has identified a range of matters which it believes could fall within the jurisdiction of such a body. Some of these would currently be considered by a Panel, usually in the context of a planning scheme amendment. The Committee is of the view that a number of matters which either go through a full and usually time consuming planning scheme amendment process could be more effectively dealt with by a truncated process resulting in an Amendment under section 20(4) of the Act. Other issues raised with the Committee might fall to VCAT to determine. There is no intention to remove the right of recourse to VCAT where this is currently available. However it has been put to the Committee that an efficient decision making body may prevent the need to go to VCAT in some circumstances.

The key roles of the ISAC, through Terms of Reference to be agreed and signed by the Minister for Planning could include:

Reviewing and recommending approval of Development Levy Plans; Review of Supplementary Levies; Review of the annual indexation process; Review of Allowable Items; Applying a Standard Levy to a particular planning unit or planning units into a

Planning Scheme. This could be a truncated amendment process with or without third party participation, eg through a Section 20(4) process;

Approval of a Supplementary Levy - again a possible truncated Amendment process concluding with a 20(4) amendment.

The ISAC could assist in reviewing post-approval changes to Standard Levies and Supplementary Levies. It has been put to the Committee that there are numerous situations where a minor amendment is required currently to an approved DCP. This does not warrant


a full planning scheme amendment process but it can become bogged down in negotiations between stakeholders with no clear circuit breaker where there different positions are adopted by the various stakeholders. The ISAC could have a role here.

It has been put to the Committee that there are a significant number of disputes that arise on a range of implementation issues of PSPs and DCPs, particularly with respect to the timing of infrastructure provision where it relates to staging of development. In some instances at least it would appear that Councils have the ultimate decision making power but there is currently no mechanism to resolve disputes where these arise. However there may be a useful circuit breaking role for the ISAC to play in at least some circumstances.

13.6 Development Levy Plan

The Committee is recommending that the new Development Levy System be realised through a Development Levy Plan, with legislation requiring all Councils to prepare a Development Levy Plan for Urban and Strategic Development Areas, and Growth Areas. The Development Levy Plan for Urban and Strategic Development Areas can be in the one plan, with the Development Levy Plan for Growth Areas being prepared and developed in conjunction with Precinct Structure Plans. In summary, the Committee provides some guidance on how this plan might be prepared.

Council resolves to commence work on adopting the new Development Levy System for all or part of their municipality – as single planning unit or multiple planning units.

Councils will have to determine the planning unit to which the Urban Area Standard Levy might apply. Inner City municipalities might resolve that the whole of their municipality is one planning unit. For a middle or fringe municipality, it might resolve that one part is one planning unit (based on infrastructure needs) and another part is a second planning unit. For a municipality such as Yarra Ranges, it might resolve that each major urban area or township be deemed as separate planning units, due to the generally dispersed nature of each township. It might resolve that other smaller townships not be included in any levy due to lack of growth opportunities, unless there was an established nexus with another town.

In regional Victoria, municipalities might resolve that individual towns be separate planning units and that some townships not be designated as an Urban Area due to the fact that little growth is anticipated.

If a Council resolves not to prepare a Plan, they will need to seek an exemption from the Minister for Planning via the ISAC. The exemption should be based on whether there is sufficient population and housing growth in an area or within the municipality to raise funds from a levy. It should not based on matters such as lack of staff, already adequate provision of infrastructure items and the like.

In preparing the Plan, Council identifies the Development Settings (Urban Areas, Strategic Development Areas or Growth Areas) within its municipality. Council might then have a preliminary meeting with the ISAC to discuss the requirements for completion of the Plan, and how it has determined its Development Settings and planning units. Based on strategic work already in the Planning Scheme, Council prepares a Development Levy Plan and seeks a


resolution to submit it for approval. The Committee believes that public notice – either informally or formally is not required.

The ISAC could review the Development Levy Plan in a short time turn around time (including having a meeting with the Council) and either:

Recommend the Plan for approval via a s20(4) amendment process; or Refer the Plan back to Council for further work (with written comment) for further

review;

In the second instance, the Plan can be resubmitted back to the ISAC, once the further required work is undertaken to the satisfaction of the Committee.

Once this work is complete, the Committee supports a process whereby the Minister for Planning through a delegated officer of DPCD approves the endorsed Council Development Levy Plan which is then gazetted and becomes operational.

To assist Councils understand the extent of work required for a Development Levy Plan, the Committee has attached an indicative ‘Gumnut’ Plan in Appendix F.

13.7 Indexation

In Report 1, the Committee identified that one of the main failings of many early DCPs was the inadequate indexation of infrastructure and land costs. The Committee concluded that the Development Levy System should include standardised construction and land indices, nominate a general index for standard cost rates, and specify the timing of indexation reviews.

Some earlier DCPs used the Consumer Price Index to index both construction and land levies. This has been regarded as inappropriate given that the basket of goods for CPI is very different and varies in vastly different ways to construction and land costs contained in DCPs.

The Committee sought feedback on the most appropriate standardised indexes for each Development Setting and the submissions are summarised in section 13.2 above.

The Committee recognises that it is critically important that the real value of the proposed Standard Levies is maintained over time. The failure of some of the DCPs approved early to the middle part of the last decade, to properly adjust for price and value changes has led to significant funding gaps in them, and a significant funding gap challenge for the Councils involved. The major problem was that land values increased in many instances much faster than the Consumer Price Index (CPI) which was used to index price changes. CPI is not constructed for this purpose and is manifestly inadequate.

In many recent DCPs, this shortcoming has been addressed by the annual revaluation of land, often on a site specific basis. This is a costly and administratively cumbersome process. Industry indexes such as those produced by Rawlinsons and Cordell are a better measure construction cost increases, as is the ABS produced Non-Residential Building and Construction – Victoria Index. These too have been used in recent DCPs.

The ABS is in the process of fundamentally changing its suite of Producer Price Indexes and the Committee is unable at this stage to identify appropriate ABS indices. It is firmly of the view that ABS indices appropriate to non-residential construction road and to road and


associated civil works should be used for indexation purposes as appropriate when these become available.

A key indexation issue facing the Committee is maintaining the real value of the proposed Standard Levies for each of the Development Settings as they are to be applied for new Growth Areas, and Standard Levies some years into the future. As far as the Growth Area Standard Levies are concerned, the Committee believes that different indexes should be used for each of the main infrastructure categories weighted by their approximate contribution to the metropolitan Standard Levy for Growth Area residential uses as follows:

Transport (30% weighting), an ABS index which most closely reflects price increases in the road and civil construction industry;

Community and Recreation (30% weighting), an ABS index which most closely reflects price increases in the non-residential building sector; and

Public Land (40% weighting), the annual change in the median cost of vacant house blocks across metropolitan Melbourne or regional Victoria, as appropriate, based on price information from the publication A Guide to Property Values as published by the Department of Sustainability and Environment (DSE) (based on data from the Valuer General).

For the Urban Area and Strategic Development Area settings, the Committee recommends that the ABS index which most closely reflects price indexes in the non-residential construction industry should be used. This same index should be applied to both the residential and non-residential Standard Levies.

Indexation of the Standard Levies should be applied annually. The Committee is aware that the Standard Levies which it has proposed are in 2012$s. Given that the introduction of the new system may be some time away, there is likely to be a need to index the Standard Levies to establish levies which will apply at the proposed implementation date for the new Development Levy System.

The Committee notes that the proposed approach to securing public land overcomes some of the major challenges of the past by introducing a process to establish the value of the land at the start of the process and thereafter an annual valuation will not be required. This assumes that the legislative changes required to implement this new approach to securing public land are made. It is proposed that the dollar value of the land should then be maintained by applying an index such as CPI. It is important to recognise that projects are only indexed with reference to a relevant ABS building price index as set above, until such time as they are delivered and thereafter, once the value of the project has been ‘crystallised’, the project value should only be indexed by CPI to ensure that the value of ‘money’ is maintained over time.

13.8 Contingencies

The Committee notes the submissions regarding the level of contingencies that should apply. Contingencies are relevant in calculating the project costs to go into Development Levy Plans. The Committee notes that in recent Growth Area PSPs there has been a trend to specify projects to a higher level of detail. This has reduced the need for contingencies of the order that was common in earlier DCPs.


In Urban Areas and Strategic Development Areas, expenditure budgets will be drawn from Council capital works programs. For Urban Areas it is not critical what level of contingency is used as there is no strict requirement to demonstrate that the total cost of projects exceeds the levy income at any given time. In Strategic Development Areas the expectation is that level of specification of projects will be more detailed and therefore the level of contingency required to be included in costings lower.

The Committee supports the use of contingencies of no greater than 10% when calculating project costs in the Development Levy Plan and determining the projects to be funded by the Standard Levy or calculating Supplementary Levies in both Growth Areas and Strategic Development Areas. The Committee is firmly of the view that these should be included within the revenue raised by the Standard Levy and are not an add-on to it.


The Committee makes the following recommendations: That the preferred timing for the collection of levies should continue to be at the

subdivision permit stage, but that any legislative changes provide the opportunity for Councils to adopt collection practices best suited to its Development Settings and administrative capabilities. This may require changes to other legislation to support the collection and enforcement of levies where subdivision is not proposed.

That the new Development Levy System be implemented generally in the manner described in Chapter 13.4.

That DPCD adopt flexible approval mechanisms and processes for Development Levy Plans in order to accommodate the different Development Settings and to ensure that they are proportionate to the strategic issues at stake.

That an Infrastructure Standing Advisory Committee (or similar) be appointed to assist in the implementation, review and monitoring of the Development Levy System.

That indexation of Standard and Supplementary Levies be applied using appropriate ABS indices and Valuer General’s valuations as set out in Chapter 13.7.

That once the value of land for a particular planning unit has been fixed (in accordance with the new approach proposed in Chapter 8), it should be indexed by CPI.

That CPI indexation should apply to the value of any completed construction Projects contained within a Development Levy Plan.

That contingencies of no greater than 10% apply to the costing of projects included in Development Levy Plans, and determining the projects to be funded by the Standard Levy or calculating Supplementary Levies in Growth Areas and Strategic Development Areas. The contingency is to be included within the revenue raised by applying the Standard Levy.


14 Conclusions and Recommendations 14.1 Response to the Terms of Reference

The Committee’s Terms of Reference require it to make findings to the Minister on a number of matters and a summary of the response to each of these is summarised in Table 35.

Table 35 Response to the Terms of Reference

Terms of Reference Committee response Report Chapter

Any required changes or improvements to the proposed framework as outlined in the attached Position Paper, A new Victorian Local Development Contributions System (July 2012).

The framework proposed by the Committee adheres broadly to that proposed in the Position Paper but includes a number of proposed adjustments and refinements.

2 - 7

Advice on the definition of the development settings for which levies will be established. These may include, but are not limited to, growth areas (both Melbourne’s growth areas and similar scale growth areas in some regional cities), regional settlements, rural settlements, established areas and strategic redevelopment sites.

Three Development Settings are recommended:

Growth Areas; Urban Areas; Strategic Development Areas.

2

Advice on how development contributions should be applied to residential and non-residential development, including retail, commercial and industrial development, in each of these development settings.

The Committee has recommended Standard Levies for each setting and for residential and non-residential development.

3 - 7

Advice on how the new system should operate in different development settings

Standard Levies, and in some instances the possibility of applying for a Supplementary Levy, have been outlined for each of the proposed Development Settings.

3, 5, 6

The scope of basis and essential infrastructure to be included in the Standard Levy for each of the infrastructure categories (community facilities, open space facilities, transport infrastructure, drainage infrastructure, public land).

The Committee is recommending lists of Allowable Items upon which revenue collected may be expended.

4

The circumstances, if any in which a simpler apportionment of development contributions levies is needed. For example the ability to apportion standard rates may need to be retained, for transport infrastructure on or across the boundary of a contribution area.

General principles upon which apportionment should be permitted are proposed and apportionment principles are proposed for particular infrastructure types.

9

The circumstances, if any, in which councils should be able to agree to the provision of infrastructure or building works in kind, (including their valuation), in lieu of cash.

Works in kind are to be permitted at the discretion of the Collecting Agency. Works in Kind are encouraged in Growth Areas and Strategic Development Areas but not in Urban

10



Areas.


The Committee has recommended legislation changes to simplify the process of valuing and securing public land in Growth Areas.

8

An appropriate method for annual indexation of the standard levies and charges, construction costs and land valuations and for periodic review to ensure that the levies reflect contemporary infrastructure requirements.

The Committee recommends a combination of ABS indices for construction, and Valuer General’s valuation for indexing land.

13

Clarification of the infrastructure to be directly provided by the developer and what infrastructure should be provided by the State through other funds sources such as the GAIC.

The Committee generally agrees with the approach to developer funded infrastructure as set out in A Preferred Way Forward. The Committee recommends that aspects of the GAIC be reviewed and clarified.

11

The circumstances where councils and State agencies should be able to require developers to enter into an agreement to provide funds for additional off site infrastructure required to mitigate the off-site impacts of a proposal through a permit condition.

The use of both permit conditions and section 173 agreements for the provision of infrastructure, particularly to mitigate off-site impacts is discussed and it is proposed that new guidelines be developed to reinforce existing principles.

12

The appropriate requirements for accountability and reporting of the contributions by councils.

The Committee proposes that Councils be required to be accountable through reporting on the Development Levy Plan through its Annual Report.

13

The appropriate financial and administrative processes for councils to ensure development contributions on funding options for delivery if infrastructure in advance of sufficient funds being collected.

The Committee discusses the most appropriate mechanisms for collection and administration of funds.

13

A schedule of standard levies for each category of infrastructure for each development setting including levies for residential and non‐residential development.

The Committee has proposed a schedule of Standard Levies for each development setting, including residential and non-residential levies.

5, 6, 7


The Committee has reviewed this issue and in general has not supported separate levies for infrastructure categories. Some guidance is given on ‘budgets’ for infrastructure categories as part of the Growth Area Standard Levy, and a cap of $80,000 per ha is proposed for Community and Recreation infrastructure in metropolitan Growth Areas.

5, 6

A schedule of standard transport infrastructure rates (fixed rate for each item) for transport infrastructure for each of the defined development settings. If appropriate, different rates for transport items may be required for

The Committee has determined that it is not practical or useful to attempt to develop standard rates for transport infrastructure items due to the wide variation in local standards and conditions.

4



each Metropolitan Growth area corridor and for different regions of Victoria, including:

Roads – per linear metre, by type. Signalised intersections – per item, by

type. Roundabouts – per item, by type. Pedestrian operated signals – per

item. Culverts – per linear metre, by type. Pedestrian paths – per linear metre. Cycle paths – per linear metre. Shared paths – per linear metre. Standard bridges – per square metre

by type (e.g. vehicular or pedestrian/cycle over creek, road or railway).

The Committee has instead proposed that Design Guidelines be developed that provide benchmarks for what could normally be expected to be provided by a Standard Levy.The Committee recommends that the Design Guidelines be developed by the GAA in consultation with Councils and the development industry.

A definition of non standard transport ‐infrastructure for which a standard construction cost cannot be determined and which will need to be individually costed (e.g. larger, more complex structures).

The Committee has recommended Design Guidelines be developed that provide benchmarks for what could normally be expected to be provided by a Standard Levy.The recommended framework provides for Supplementary Levies to be available where the scope of works required is clearly greater than standard.The list of Allowable Items identifies items that may be allowable in a Supplementary Levy.

4

The level of justification required to access the levies for each development setting.

The Committee has recommended varying levels of justification for each development setting, ranging from simple access to the ‘default’ Standard Levies to more rigorous justification for Strategic Development Areas and Supplementary Levies.

3, 5, 6

An analysis of the issues identified by the Committee.

The report includes detailed analysis of the key issues raised in these Terms of Reference and other issues raised in submissions.

2 - 13

A list of persons and organisations consulted. Lists of all those consulted with are provided in the Appendices.

App B, C


14.2 Consolidated Recommendations

The Committee makes the following recommendations:

Implementation1. That the Standard Development Contributions Advisory Committee be retained to

provide advice to the Minister for Planning and DPCD on all aspects of the proposed Development Levy System and its statutory implementation through the Victoria Planning Provisions.

2. That the Minister for Planning convene an Implementation Reference Group comprising representatives of the GAA, Councils and peak industry bodies to assist the DPCD and the Standard Development Contributions Advisory Committee in the statutory implementation of the Government’s final approved framework.

Development Settings3. That three Development Settings are adopted as follows, and as set out in Table 2:

Growth Areas; Urban Areas; and Strategic Development Areas.

Levy Framework4. That the framework for the Development Levies be adopted as set out in Table 3.

Allowable Items5. That the Allowable Items as set out in Tables 4, 5, 6, 7, and 8 be mandated through a

Ministerial Direction or the Victoria Planning Provisions as a basis for the Standard Levies to be applied as part of the Development Levy System.

6. That new Design Guidelines be produced by the GAA in close consultation with VicRoads, Growth Area Councils and developers to bring together: A clear definition of the responsibilities of the Planning Authority, VicRoads and

developers in planning for roads in Growth Areas (from the Draft Arterial Road Protocol);

A definition of ‘interim works’ (based on the Draft Arterial Road Protocol but modified as discussed);


Typical road cross sections (from the GAA PSP Note); Typical intersection designs (currently being developed by VicRoads); and Design standards (based on the Infrastructure Design Manual recently developed

by a number of Councils and incorporating any VicRoads requirements.

The Proposed Levies7. That the levies for residential development in Growth Areas be adopted as set out in

Table 20.


8. That the levies for residential development in Urban Areas and Strategic Development Areas be adopted as set out in Table 24.

9. That Levies should be charged in each of the Development Settings for two categories of non-residential uses as follows: Retail Commercial and industry

10. That the Levy be charged per net developable hectare in Growth Areas and per net increase in Gross Floor Area in Urban Areas and Strategic Development Areas, above 100 square metres.

11. That the Levies for non-residential development be adopted as set out in Table 29.

Valuing and Securing Public Land12. That the Planning and Environment Act 1987 (and other legislation if required) be

reviewed to enable improvements to the process of the valuation and securing of public land in Growth Areas as set out in this Report.

13. That the valuation methodology for land in Growth Areas be formalised via Ministerial Direction or equivalent, and include the features as set out in Chapter 8.5 of this Report.

14. That a revised process be adopted to enable the components of the public land levy in Growth Areas to be properly determined and administered.

Apportionment15. That external apportionment be minimised by the careful choice of planning unit

boundaries and the use of Supplementary Levies across a number of planning units.16. That external apportionment not be permitted for lower order community and

recreation infrastructure.17. That external apportionment generally only be permitted for larger and more

complex planning units, and in accord with the conditions set out in Table 30.

Works in Kind18. That acceptance of works in kind is an essential and valuable component of the

Development Levy System for Growth Areas and Strategic Development Areas.19. That acceptance of works in kind agreements in these settings, while preferred, is to

be at the discretion of the Collecting Agency.20. That works in kind credits should be determined based on the most detailed design

and costing information available at the time of negotiating the works in kind agreement.

21. That Section 173 Agreements should continue to be utilised for the documentation of works in kind agreements.

22. That consideration be given to amending the Local Government (General) Regulations 2004 to exempt contracts for the construction of infrastructure that are to partly or fully satisfy a liability arising under an approved Development Levy Plan from the requirements of section 186 of the Local Government Act 1989.


Developer Delivered Infrastructure and GAIC23. That Appendix 4 from A Preferred Way Forward be adopted as the schedule for

direct developer provided infrastructure, save for deletion of the construction of a football field.

24. That the current review of the GAIC establish transparent guidelines for how the GAIC is to be applied, and that those guidelines be made widely available.

25. That any further review of the GAIC consider the merits of enabling GAIC credits for the transfer of land required for State infrastructure.

Using Permit Conditions for Infrastructure26. That the existing legislative framework be retained to enable responsible authorities

to mitigate the off-site impacts of individual developments through permit conditions.

27. That new Guidelines for the Development Levy System reinforce the principles currently applied to permit conditions for off-site infrastructure, with particular regard for the need to avoid overlap or ‘double-dipping’ where Levies also apply.

28. That the new Guidelines provide advice and examples of circumstances in which it is appropriate to use permit conditions to provide additional off-site infrastructure, in particular for out of sequence developments.

Administration and Implementation29. That the preferred timing for the collection of levies should continue to be at the

subdivision permit stage, but that any legislative changes provide the opportunity for Councils to adopt collection practices best suited to its Development Settings and administrative capabilities. This may require changes to other legislation to support the collection and enforcement of levies where subdivision is not proposed.

30. That the new Development Levy System be implemented generally in the manner described in Chapter 13.4.

31. That DPCD adopt flexible approval mechanisms and processes for Development Levy Plans in order to accommodate the different Development Settings and to ensure that they are proportionate to the strategic issues at stake.

32. That an Infrastructure Standing Advisory Committee (or similar) be appointed to assist in the implementation, review and monitoring of the Development Levy System.

33. That indexation of Standard and Supplementary Levies be applied using appropriate ABS indices and Valuer General’s valuations as set out in Chapter 13.7.

34. That once the value of land for a particular planning unit has been fixed (in accordance with the new approach proposed in Chapter 8), it should be indexed by CPI.

35. That CPI indexation should apply to the value of any completed construction Projects contained within a Development Levy Plan.

36. That contingencies of no greater than 10% apply to the costing of projects included in Development Levy Plans, and determining the projects to be funded by the Standard Levy or calculating Supplementary Levies in Growth Areas and Strategic Development Areas. The contingency is to be included within the revenue raised by applying the Standard Levy.


Appendix A Terms of Reference

Standard Development Contributions Advisory Committee | Report 2 | 31 May 2013 | Appendices

Planning Panels Victoria | Department of Planning and Community Development | Level 1, 8 Nicholson Street, East Melbourne 3002

Terms of ReferenceStandard Development Contributions Advisory CommitteeAdvisory Committee appointed pursuant to Part 7, Section 151 of the Planning and Environment Act 1987 to report on the finalisation of a new standard levies system for the provision of basic and essential infrastructure to local communities.

Version: 21 September 2012

Name The Advisory Committee is to be known as the ‘Standard Development Contributions Advisory

Committee’.

The Advisory Committee is to have members with the following skills:

Expert knowledge and experience in land use planning in different Development Settings, including urban renewal and Growth Areas

Land development experience

Expertise in the preparation and administration of Development Contribution Plans.

Purpose The purpose of the Advisory Committee is to provide advice to inform the Minister for Planning’s

decision on the final framework for a new development contributions system and for the establishment of standard levies.

The Position Paper A new Victorian Local Development Contribution System (July 2012) at Attachment 1 outlines the policy framework and the Government’s preferred new system.

The Advisory Committee is to provide advice on the implementation of the new system, including:

Recommended operational arrangements for the new system

Recommended scope of works that should be included in each infrastructure category

Recommended standard development contributions levies for each infrastructure category and development setting.

The new system should:

Ensure guaranteed delivery of land required for infrastructure in the long term

Ensure delivery of works in kind by developers can be provided as an alternative to a cash payment to achieve efficiencies and deliver infrastructure earlier


Ensure the development contribution requirement clearly articulates the infrastructure contribution obligation.

In setting standard development levies, the Committee should seek to ensure that levies:

Are simple to implement and administer

Are based on the basic and essential local infrastructure required to support the development of land and support the foundation of new communities

Do not unreasonably affect housing affordability for new home owners

Retain a nexus to the development which triggers the levy.

Background The current local development contributions system, based on the preparation of a Development

Contributions Plan (DCP) under the Planning and Environment Act 1987, has been in place since 1995.

Each DCP must identify and justify the total cost of all works, services and facilities proposed to be funded and apportion the costs for that infrastructure according to the projected share of usage, taking into account both existing and future development.

Currently, DCPs are often expensive and complicated to prepare because a high level of justification for the charges and apportionment is required. DCPs can also be inconsistent in their application across areas and can be restrictive in their administration.

There has been a steady increase in the contributions required under DCPs as community expectations have changed. For example, in the late 90s, DCP levies in new growth area suburbs were around $50,000 per hectare. By 2008, this had risen to around $150,000 per hectare and by 2011, to around $250,000 per hectare, with some exceeding $300,000 per hectare.

This is having a significant impact on the cost of development and affordability of housing in these areas for new home owners. In June 2011 the Minister for Planning established a Stakeholder Reference Group from industry and Council representatives who provided advice on the possible models for a new standardised development contributions system.

In May 2012, the Minister for Planning announced a preferred framework for a new Victorian Local Development Contribution System. The new system will provide a standard contribution levy based around five infrastructure categories:


Open Space facilities



Public land.

Under the new system a different levy will be set for different Development Settings such as greenfield development, metropolitan infill development and regional and rural development as well as a levy for residential and non-residential development including retail, commercial and industrial development.

Method The Advisory Committee may inform itself in anyway it sees fit, but must consider:


The policy framework and issues outlined in the attached Position Paper.

Recent DCPs approved in across Victoria including in Growth Areas and in regional Victoria.

Three reports prepared by Urban Enterprise titled:

DPC Levy Analysis (August 2011) at Attachment 2

Review of Local Infrastructure Charges for Regional and Rural Councils (December 2011) at Attachment 3

Indicative Standard Levies for Local Development Contributions (May 2012) at Attachment 4.

The Advisory Committee will conduct targeted consultation, workshops or forums to explore the issues or other matters: including:

Targeted consultation in October 2012; and

A call for submissions in January/ February 2013 in response to Report 1 (which may include further consultation as required by the Committee).

The Advisory Committee may meet and invite others to meet with them when there is a quorum of at least two of the Committee members.

The Advisory Committee may ask the Minister for Planning to vary these Terms of Reference in any way it sees fit prior to submission of its report.

Submissions are public documents The Advisory Committee must retain a library of any written submissions or other supporting

documentation provided to it directly to it until a decision has been made on its report or five years has passed from the time of its appointment.

Any written submissions or other supporting documentation provided to the Advisory Committee must be available for public inspection until the submission of its report, unless the Advisory Committee specifically directs that the material is to remain ‘in camera’.

Outcomes The Advisory Committee must produce two written reports for the Minister for Planning.

Report 1: Setting the framework for the new standardised levy system

This report is to provide recommendations on matters required to finalise the features and operation of the new system including:

Any required changes or improvements to the proposed framework as outlined in the attached Position Paper A new Victorian Local Development Contribution System (July 2012).

Advice on the definition of the Development Settings for which levies will be established. These may include, but are not limited to, Growth Areas (both Melbourne’s Growth Areas and similar scale Growth Areas in some regional cities), regional settlements, rural settlements, established areas and strategic redevelopment sites.

Advice on how development contributions should be applied to residential and non-residential development, including retail, commercial and industrial development, in each of these Development Settings.

Advice on how the new system should operate in the different Development Settings.


The scope of the basic and essential infrastructure to be included in the Standard Levy for each of the following infrastructure categories:


Open Space facilities



Public land.

The circumstances, if any, in which a simple apportionment of development contributions levies is needed. For example, the ability to apportion standard rates may need to be retained for transport infrastructure located on or across the boundary of a contribution area.

The circumstances, if any, in which Councils should be able to agree to the provision of infrastructure or building works in kind (including their valuation) in lieu of cash.


An appropriate method for annual indexation of the standard levies and charges, construction costs and land valuations (for example, by reference to an appropriate industry index), and for periodic review to ensure that the levies reflect contemporary infrastructure requirements.

Clarification of the infrastructure to be directly provided by the developer and what infrastructure should be provided by the State through other funds sources such as the Growth Area Infrastructure Contribution.

The circumstances where Councils and State agencies should be able to require a developer to enter into an agreement to provide funds for additional off-site infrastructure required to mitigate the off-site impacts of a proposal through a permit condition.

The appropriate requirements for accountability and reporting of the contributions by Councils.

The appropriate financial and administrative processes for Councils to ensure development contributions funded infrastructure is delivered at the time it is required. This may include recommendations on funding options for the delivery of infrastructure in advance of sufficient funds being collected.

An analysis of issues identified by the Committee.

A list of persons and organisations consulted. Report 2: Setting the standard levies for the new system

This report is to include:

A schedule of standard levies for each category of infrastructure for each development setting including levies for residential and non-residential development.


A schedule of standard transport infrastructure rates (fixed rate for each item) for transport infrastructure for each of the defined Development Settings. If appropriate, different rates for transport items may be required for each Metropolitan Growth area corridor and for different regions of Victoria, including:

Roads – per linear metre, by type.

Signalised intersections – per item, by type.


Roundabouts – per item, by type.

Pedestrian operated signals – per item.

Culverts – per linear metre, by type.

Pedestrian paths – per linear metre.

Cycle paths – per linear metre.

Shared paths – per linear metre.

Standard bridges – per square metre by type (e.g. vehicular or pedestrian/cycle over creek, road or railway).

A definition of non-standard transport infrastructure for which a standard construction cost cannot be determined and which will need to be individually costed (e.g. larger, more complex structures).

The level of justification required to access the levies for each development setting. An analysis of issues identified by the Committee.

A list of persons and organisations consulted.

Timing The Advisory Committee must submit its findings and recommendations in two stages:

A report detailing the framework of the new system (Report 1) by Monday 17 December 2012 following which it will be will be released for public comment.

A report detailing the schedule of standard levies (Report 2) by Friday 31 May 2013.

Fee The fee for the Advisory Committee will be set at the current rate for a Panel appointed under Part 8

of the Planning and Environment Act 1987.

The costs of the Advisory Committee and any necessary research will be met by the Department of Planning and Community Development.

Project Manager The Department of Planning and Community Development will provide administrative and

operational support to the Committee.

.



Appendix B Stakeholder Consultation


B1 Stakeholder Consultation (2013)Organisation Represented by

Department of Planning and Community Development, and Places Victoria (various meetings on 29 January, 22 February, 16 April)

Adrian Salmon, Assistant Director Statutory Approvals, State Planning ServicesFiona DePreu, Project Director, Central Activities Areas, Urban Development Jodi Sneddon, Manager Social Inclusion, Urban DevelopmentAnna Batters, Urban Economic Policy and Projects, State Planning Strategy and ForecastingStephen Leitch, Senior Planning Officer, Statutory Approvals, Planning Statutory ServicesCon Tsotsoros, Assistant Director, Statutory SystemsJim Papadimitriou, Manager Statutory SystemsJohn Phillips, Director, Planning and Building SystemsDan Harper, Manager Funding Programs, Local Government Victoria Denise Francisco, Program Manager, Community Support Grants, Community Development Charlotte Winterbottom, Program Manager, Community Support Grants, Community DevelopmentDan Nicholls, Project Officer, Integrated Investment, Community DevelopmentKate Stapleton, Senior Project Manager, Urban Development Phillip Saikaly, Group Manager, Community Facilitation, Sport and RecreationAnna Batters, Senior Planner, Planning Policy, Metropolitan Planning StrategyMartina Johnson, Senior Project Manager, Urban Development Adam Crupi, Senior Planner, Planning Services, Central City

Growth Areas Authority (1 and 15 February) Peter Seamer, Chief Executive OfficerMark Knudsen, Director Technical ServicesBruce Hunter, Structure Planning ManagerLisel Thomas, Infrastructure Planning ManagerMegan Taylor, Senior Precinct Structure PlannerChris Braddock, Integrated Water EngineerTim Peggie, Director, Structure Planning Ed Small, Director, Corporate Services

Metropolitan Planning Strategy Ministerial Advisory Committee (4 February)

Roz Hansen, ChairChris Gallagher, Committee MemberBernard McNamara, Committee MemberBrian Haratsis, Committee Member

VicRoads (15 February and 20 March) Anita Kurnow, Director Network Strategy and PlanningPaul Noisette, Manager Regional Planning Metropolitan North West


Organisation Represented by

Giles Michaux, Team Leader Regional Strategies Metropolitan South EastJohn Murphy, Acting Manager Network StrategiesCharlie Broadhurst, Project Director Network South East

Local Government Victoria (20 February) Mark Grant, Acting Director Sector DevelopmentColin Morrison, Director Governance and Funding ProgramsPaul Roache, Senior Project Manager

Shadow Minister for Planning (28 February) Brian Tee MP

Victoria Civil and Administrative Tribunal (6 March)

Mark Dwyer, Deputy President

Places Victoria (14 March) Cameron Brenton, Senior Development ManagerLee Eklund, Senior PlannerPhillip Roth, Senior Statutory Planner

Non-residential Discussion Forum – Consultants (14 March)

Brian Haratsis, Managing Director, MacroPlan DimasiBernard McNamara, Principal, BMDARobert Papaleo, Director, Strategic Research, Charter Keck CramerJames Mansour, Development Consultant, Charter Keck Cramer

Non-residential Discussion Forum – Urbis (14 March)

Sarah Emons, Director, UrbisBrendan Rogers, Director, UrbisSarah Wallbank, Associate Director, UrbisShane Robb, UrbisRichard Johnson, MABPaul Neilson, GPTSeamus Van Der Westhuizen, Regional Development Manager, Colonial First State Global Asset Management

Casey City Council Officers Forum (26 March) Peter Fitchett, Director Planning and Development ServicesSophia Petrov, Director Community Development Liam Hodgetts, Manager Strategic Development Jo Birkett, Executive Project Officer Community Development Kelly Reynolds, Kindergarten CoordinatorJames Rouse, Acting Manager Community StrengtheningWayne Mack, Team Leader Transport Network Planning Ryan Czarnecki, Team Leader Recreation PlanningKathryn Seirlis, Team Leader Integrated Planning

Country Fire Association (16 April) Phil Harbutt, Manager Research and StrategyGreg Esnouf, Deputy Chief Officer, Regional Manager, Northern and Western Metropolitan Region

Peet Ltd Penny Forrest, Senior Development Manager, South East RegionKris Wilson, Development Manager, West Region

Discussion Group with Valuers Bradley Papworth, Director Residential Subdivision Practice,


Organisation Represented by

Charter Keck CramerBrian Dudakov, Director Urbis

City of Melton Forum (22 April) Ten Council officers, led by Bronwyn Pettit (Coordinator Major Developments) and approximately 25 industry and developer representatives

MAB Corporation (1 May) David Hall, Chief Operating Officer

Maxine Cooper, Consultant to DPCD (31 January)Greg Bursill (28 February)

B2 Small Group Meeting ParticipantsMetropolitan Councils, 22 February

Yarra David Walmsley, Manager City StrategyPeter Mollison, Senior Strategic Planner

Glen Eira Ron Torres, Manager of Planning & Transport Rocky Camera, Coordinator Strategic Planning

Darebin Chris Meulblok, Manager Assets and Property

Frankston Fiona Johnstone, Acting Coordinator Strategic Planning

Manningham Vivien Williamson, Manager – Economic and Environmental Planning

Metropolitan and Non Metropolitan Growth Area Councils, 27 February

Cardinia John Holland, Manager Strategic Planning Hilary Rutledge, Coordinator Growth Area Planning

Casey Liam Hodgetts, Manager Strategic DevelopmentKathryn Seirlis, Team Leader Integrated Planning

Greater Geelong Rob Anderson, Coordinator Urban GrowthShelly Taylor, Project Engineer Development Contributions

Hume Michael Sharp, Manager Strategic PlanningAaron Chiles, Growth Areas Planning Coordinator

Melton Bronwyn Pettit, Coordinator Major Developments Laura-Jo Mellan, Strategic Planning Coordinator

Mitchell Stacey Gardiner, Manager Strategic Planning and Environment

Whittlesea Aidan O'Neill, Coordinator Strategic Land Use Planning

Wyndham Dean Ellis, Acting Manager Strategic Planning & Transport PlannerPaul Rickard, Development Contributions Officer

Industry Groups, Wednesday 27 February


Metropolitan Councils, 22 February

Housing Industry Australia (HIA) Fiona Nield, Executive Director – Planning and DevelopmentCraig Muse, Chair Planning CommitteeStuart Grigg, Planning Advisor

Planning Institute of Australia (PIA) Gavin Alford, Victorian Vice PresidentJason Black, Planning Consultant and Past PIA National Board Director

Property Council Australia (PCA) Danni Addison, Policy Advisor and Public Affairs Manager Brad Paddon, Residential Developers Committee

Urban Development Institute of Australia (UDIA)

Martin Musgrave, Policy Officer

Victorian Planning and Environmental Law Association (VPELA)

Tamara Brezzi, PresidentFrank Butera, Board Member

B3 Industry Forums Industry Group

Municipal Association Victoria (MAV) (20 February)

Approximately 90 participants

Property Council of Australia (PCA) (20 February)


Urban Development Institute Australia (UDIA) (21 February)


Planning Institute of Australia (PIA) (4 March) Approximately 35 participants

Victorian Planning and Environmental Law Association (VPELA) (14 March)


B4 DPCD Forums Regions

Barwon South West Region (21 March) Approximately 35 participants

Metropolitan Region (22 March) Approximately 100 participants

Grampians Region (25 March) Approximately 30 participants

Gippsland Region (26 March) Approximately 30 participants

Hume Region (11 April) Approximately 14 participants

Loddon Mallee Region (11 April) Approximately 16 participants

Planning Panels Victoria (30 April) Approximately 25 participants


B5 Queensland and New South Wales MeetingsParticipants

Brisbane City Council (7 March) Martin Reason, Infrastructure Coordination and Urban DesignAndrea Kenafake, Manager Development Assessment Branch

Toowoomba City Council (7 March) Dyan Currie, Manager Strategic Planning and Economic Development (and National President, Planning Institute of Australia)

Gold Coast City Council (7 March) Gail Connolly, Director Planning, Environment and Transport

Department of State Development, Infrastructure and Planning (7 March)

Greg Chemello, Deputy Director-General, Planning GroupPaul eagles, Special AdviserJames Coutts, Executive Director

Queensland Government (7 March) Rob Molhoek, Assistant Minister for Planning Greg Chemello, Deputy Director-General, Planning Group (Department of State Development, Infrastructure and Planning)Stephen Petith, Southport Electoral Officer

KPMG (8 March) Paul Low, Director Advisory

Property Council of Australia (8 March) Kathy McDermott, Executive DirectorChris Mountford, Deputy Executive Director

Local Government Association (8 March) Greg Hallam, Chief Executive Officer

Housing Industry Association (8 March) Warwick Temby, Executive DirectorMichael Roberts, Assistant Planning and Environment

Urban Development Institute of Australia (12 March)

Stephen Albin, Chief Executive Officer

Urbis (12 March) David Hoy, Director

Urban Growth NSW (12 March) Sean O’Toole, Managing DirectorMick Owens, General Manager Development

Shopping Centre Council of Australia (12 March)

Milton Cockburn, Executive Director, Shopping Centre Council of Australia Angus Nardi, Deputy Director, Shopping Centre Council of Australia Mark Kirkland, Head of Development, AMP Capital Shopping CentresSeamus Van Der Westhuizen, Regional Development Manager, Colonial First State Global Asset ManagementJonathan Bradhurst, Regional General Manager – Development and Asset Strategy, Federation CentresKylie O’Connor, Investment Manager – Australian Prime Property Fund Retail, Lend LeaseTim Beattie, Regional Development Manager – Commercial Property, Stockland Andrew Robertson, General Manager, Development and Asset Group, Westfield Group


Participants

Lillian Fadel, Development Executive, Westfield Group

Campbelltown City Council (12 March) Paul Tosi, General ManagerJeff Lawrence, Director – Planning and Environment

City of Sydney (13 March) Sally Peters, Senior Specialist PlannerJonathon Carle, Senior Specialist Planner

Department of Planning and Infrastructure NSW (13 March)

Sam Haddad, Director GeneralAndrew Jackson, Acting Executive Director, Infrastructure and Planning Strategies


Appendix C Written Submissions – Stage 2


Written Submissions – Stage 2


No Submitter

1 City of Stonnington

2 City of Moonee Valley

3 Rural City of Wangaratta

4 Bus Association Victoria

5 Melbourne Water Corporation

6 SKM

7 Melton City Council

8 Mornington Peninsula Shire

9 Moreland City Council

10 Latrobe City Council

11 Urban Land Developments Pty Ltd

12 Manningham City Council

13 Catholic Education Office Melbourne

14 Moorabool Shire Council

15 Bicycle Network Victoria

16 Boroondara City Council

17 Australand Holdings, Commercial and Industrial Division

18 Surf Coast Shire

19 Glen Eira City Council

20 Country Fire Association

21 Frankston City Council

22 Landmack Developments Pty Ltd

23 Mitchell Shire Council

24 Brimbank City Council

25 Hume City Council

26 City of Ballarat

27 Golden Plains Shire

28 Warrnambool City Council

29 Yarra Ranges Council

30 Hobsons Bay City Council

31 Port Phillip City Council

32 Colac Otway Shire

33 Public Transport Victoria

34 Peet Limited

35 East Gippsland Shire


No Submitter

36 Growth Areas Authority

37 Bayside City Council

38 Master Builders Association of Victoria

39 VicRoads

40 Cardinia Shire Council

41 Planning Institute of Australia (Victorian Division)

42 Charter Keck Cramer

43 City of Melbourne

44 City of Wodonga

45 Urban Development Institute of Australia (Vic)

46 Property Council of Australia (Victoria Division)

47 Urban Design and Management Pty Ltd

48 Darebin City Council

49 Yarra City Council

50 MAB Corporation

51 Whittlesea Council

52 Housing Industry Association

53 Colonial First State Global Asset Management

54 Macedon Ranges Shire

55 Municipal Association of Victoria

56 City of Greater Dandenong

57 Victorian Coastal Council

58 City of Greater Geelong

59 Bass Coast Shire Council

60 Shopping Centre Council of Australia

61 Moyne Shire Council

62 Maribyrnong City Council

63 Sibelco Australia

64 Moira Shire Council

65 Mildura Rural City Council

66 Greater Shepparton City Council

67 Wyndham City

68 Victorian Planning and Environmental Law Association

69 Casey City Council


Appendix D Dwelling Approvals and Projections


Dwelling Approvals and Projections

LGA Name ABS Capital Asset Outlay 2011-2012

Dwelling Approvals 2008-2012

VIF Projected net change in no. Dwellings 2011-2016

Dwelling Approvals 2008





Growth Area

Wyndham (C) $96,342,782.00 19,770 19,449 3,326 4,691 5,596 3,790 2,367

Whittlesea (C) $12,610,000.00 16,356 14,174 2,407 3,397 3,809 3,588 3,155

Casey (C) $49,366,176.00 12,388 12,906 2,552 2,610 2,597 2,261 2,368

Melton (S) $34,266,862.00 9,822 10,680 2,238 2,239 2,223 1,675 1,447

Hume (C) $52,252,541.47 8,286 7,496 1,337 1,788 1,762 1,610 1,789

Cardinia (S) $24,488,038.32 7,750 8,453 1,270 1,758 1,858 1,736 1,128

Mitchell (S) $11,378,500.00 2,479 3,641 253 476 657 597 496

City of Melbourne

Melbourne (C) $136,926,000.00 17,162 13,035 873 2,718 3,809 3,240 6,522

Inner City

Stonnington (C) $29,076,876.57 5,610 3,210 648 556 1,828 1,678 900

Yarra (C) $26,936,453.00 4,766 3,052 583 511 1,577 1,253 842

Port Phillip (C) $22,327,522.00 4,587 3,307 646 362 577 2,618 384

Inner-Middle

Moreland (C) $29,308,865.05 6,278 4,108 1,001 1,147 1,363 1,119 1,648

Darebin (C) $20,584,759.00 4,658 3,816 755 931 1,081 869 1,022

Maribyrnong (C) $96,226,066.00 4,228 3,695 731 814 796 698 1,189

Middle Ring

Monash (C) $38,595,665.00 5,152 3,092 902 841 1,388 980 1,041










Whitehorse (C) $31,352,996.00 4,769 2,314 699 582 1,232 1,052 1,204

Boroondara (C) $60,784,157.96 4,620 2,623 786 671 892 940 1,331

Kingston (C) $28,854,243.00 4,428 3,019 896 654 1,007 1,107 764

Moonee Valley (C) $22,948,485.10 4,195 2,428 514 923 1,291 705 762

Glen Eira (C) $34,945,756.00 3,993 2,488 736 615 802 1,025 815

Bayside (C) $15,198,840.00 3,172 1,347 603 473 663 599 834

Manningham (C) $54,414,000.00 2,535 1,937 336 556 844 348 451

Hobsons Bay (C) $32,251,060.66 2,447 1,567 392 414 531 568 542

Banyule (C) $46,645,229.24 2,204 1,771 399 457 469 450 429

Outer

Brimbank (C) $47,260,016.00 5,521 5,589 1,203 1,515 1,123 969 711

Frankston (C) $28,107,000.00 4,454 3,165 719 717 1,365 669 984

Greater Dandenong (C) $42,863,160.00 3,856 3,445 696 632 837 873 818

Knox (C) $37,819,460.00 2,568 2,057 512 436 516 600 504

Maroondah (C) $22,660,309.27 2,499 2,388 432 564 462 525 516

Outer Peri-urban

Mornington Peninsula (S) $28,238,390.31 6,214 3,899 1,376 1,138 1,294 1,328 1,078

Yarra Ranges (S) $38,847,744.98 3,253 2,052 598 616 891 642 506

Nillumbik (S) $17,551,000.00 1,073 759 268 203 227 200 175

Big 3 Regional Centres

Greater Geelong (C) $65,268,959.52 9,036 10,432 1,476 1,634 2,132 1,774 2,020










Greater Bendigo (C) $50,945,546.36 4,979 4,278 635 997 1,014 1,078 1,255

Ballarat (C) $55,168,709.00 4,836 4,236 747 1,005 1,120 1,034 930

Regional Centres

Latrobe (C) $23,050,000.00 2,071 2,040 448 526 531 299 267

Greater Shepparton (C) $26,177,303.90 2,012 2,140 396 454 462 360 340

Wodonga (RC) $23,961,116.00 1,699 1,566 226 418 412 335 308

East Gippsland (S) $22,854,000.00 1,937 2,036 370 379 450 385 353

Mildura (RC) $29,515,437.00 1,731 1,721 265 404 422 327 313

Warrnambool (C) $20,701,000.00 1,248 1,404 200 239 271 299 239

Regional LGAs

Baw Baw (S) $14,909,011.00 2,998 2,665 545 701 726 544 482

Bass Coast (S) $19,415,663.00 2,547 3,624 510 498 662 508 369

Surf Coast (S) $22,475,645.00 2,045 2,089 409 408 480 448 300

Macedon Ranges (S) $18,450,253.13 1,813 1,962 323 387 436 345 322

Moorabool (S) $16,055,759.00 1,876 1,739 209 450 451 318 448

Wellington (S) $21,088,910.97 1,535 907 294 330 346 309 256

Murrindindi (S) $19,988,444.00 1,067 889 95 318 342 176 136

South Gippsland (S) $14,162,585.00 1,355 795 236 291 312 276 240

Golden Plains (S) $11,096,745.00 1,060 882 142 182 217 236 283


Moira (S) $12,496,339.62 896 1,093 167 178 225 188 138










Wangaratta (RC) $12,284,812.75 726 540 100 171 187 135 133

Campaspe (S) $25,918,553.23 692 888 140 150 175 125 102

Colac-Otway (S) $11,464,485.00 664 762 150 135 146 124 109

Moyne (S) $11,716,473.00 599 528 114 117 128 116 124

Mount Alexander (S) $9,169,170.00 585 527 97 108 124 126 130

Hepburn (S) $16,023,880.00 569 672 114 117 114 120 104

Swan Hill (RC) $10,970,758.00 499 474 109 128 129 81 52

Horsham (RC) $29,431,749.00 496 482 78 119 125 84 90

Indigo (S) $9,529,974.00 472 362 105 92 103 85 87

Glenelg (S) $9,586,719.17 426 412 108 84 91 71 72

Mansfield (S) $4,596,000.00 406 430 83 62 79 82 100

Benalla (RC) $8,033,307.00 370 355 56 93 91 64 66

Alpine (S) $6,923,000.00 368 246 61 71 76 80 80

Strathbogie (S) $6,833,445.00 346 234 65 67 71 70 73

Central Goldfields (S) $5,939,281.00 314 300 41 50 69 77 77

Southern Grampians (S) $11,461,332.77 258 330 55 52 63 45 43

Corangamite (S) $11,695,357.00 245 313 61 53 52 36 43

Ararat (RC) $5,185,381.00 193 272 41 38 48 34 32

Pyrenees (S) $6,714,000.00 178 210 27 31 37 37 46

Queenscliffe (B) $2,191,720.00 178 115 49 42 43 22 22

Northern Grampians (S) $16,929,759.00 167 148 35 42 41 27 22










Gannawarra (S) $24,412,352.00 106 126 32 26 19 15 14

Loddon (S) $24,633,392.00 98 23 8 16 26 17 31

Towong (S) $4,060,000.00 97 97 24 24 20 11 18

Yarriambiack (S) $10,617,126.05 54 20 16 2 9 13 14

Buloke (S) $10,123,000.00 42 41 12 6 8 8 8

Hindmarsh (S) $6,561,724.00 37 9 8 8 8 6 7

West Wimmera (S) $5,213,330.97 27 25 3 8 7 4 5


Appendix E Implementation Mechanisms


Practice Note XX

Draft – May 2013

Development Levy System This Practice Note provides guidance about the preparation of Development Levy Systems. It explains what a Development Levy System is and the general implementation process.

Development Levy System Before a Planning Scheme Amendment is drafted, it will be necessary to prepare a Development Levy Plan that identifies the how the revenue raised by the Levy will be spent based on a list of Allowable Items. Information about preparing a Development Levy Plan is provided in this Practice Note.

Once prepared, a Development Levy Plan can provide the basis for, and be implemented through a Planning Scheme Amendment.

Role of the ISACThe Infrastructure Standing Advisory Committee (ISAC) will assist in the implementation, monitoring and review of the Development Levy System.

The key roles of the ISAC will be outlined in its Terms of Reference.

Preparing a Development Levy Plan Development Levy Plans are required to justify the levy to be applied to a specific area or precinct. An Infrastructure Standing Advisory Committee will be appointed to provide oversight of the preparation of Development Levy Plans

The Development Levy Plan is prepared by the Council or relevant Planning Authority. The Development Levy Plan must:

Specify the area to which the plan applies.

Set out the infrastructure to be funded through the plan.

Identify the strategic basis for the infrastructure.

Identify any infrastructure items that are proposed to be funded by a Supplementary Levy.

Provide for the procedures for the collection of a levy in respect to any development for which a permit is not required.

Be prepared in accordance with any Ministerial Direction issued under Part xx of the Planning and Environment Act 1987.


In preparing the Development Levy Plan, Council needs to identify the development settings to apply to each planning unit. The three Development Settings are defined in the table below.

Growth Areas

Specify

Urban Areas

Specify


Specify

Draft Practice Note, Development Levy System

Standard Levies for Metropolitan Areas

The following Levies can be applied to land in Metropolitan Areas.

Growth Areas

Residential


Retail


Industrial/ Commercial


Urban Areas

Residential

$3,000 per dwelling for a net increase in dwellings

Retail

$46 per square metre of new gross floor area




Residential

$4,500 OR $6,000 per dwelling

Retail




The Planning Authority must apply the levy as specified in the table. It cannot be reduced other than in Growth Areas.

Standard Levies for Non-Metropolitan Areas

The following levies can be applied to land in Non-Metropolitan Areas.

Growth Areas

Residential

$210,000 per net developable hectare OR


Retail




Urban Areas

Residential

$3,000 per dwelling or

$1,500 per dwelling for a net increase in dwellings

Retail





Residential

$6,000 per dwelling or $4,500 per dwelling for a net increase in dwellings

Retail





Urban AreasJustification

A Development Levy Plan must provide the strategic justification for applying the Urban Areas Levy. Information will be drawn from the Victoria in Future population projections, the Municipal Strategic Statement, structure plans, framework plans, settlement plans or other Council documents. It is expected that most Council’s will already have this information available.

Exhibition

If the ISAC supports the application of the Urban Areas Standard Levy, the Planning Authority when preparing a Planning Scheme Amendment can request the Minister:

Exempt it from the notice requirements of Section 19 of the Planning and Environment Act 1987; and

Authorise it to approve the Amendment under Section 11 of the Planning and Environment Act 1987.

Applying for an exemption

If the Planning Authority resolves not apply the Urban Areas Levy, they can seek an exemption from the Minister for Planning via the ISAC.

An exemption may be granted if the ISAC considers that there is insufficient population and housing growth in a municipality to raise funds from a levy.

An exemption will not be granted for matters such as lack of staff or already adequate provision of infrastructure items.

Strategic Development AreasThe Planning Authority may want to apply Strategic Development Areas Levy to areas identified as such. The Planning Authority must prepare or have and existing Structure Plan.

Justification

A Development Levy Plan will provide the strategic justification for applying the Strategic Development Areas Levy. Information will be drawn from the Victoria in

Future population projections, the Municipal Strategic Statement, structure plans, framework plans, settlement plans or other Council documents.

The strategic justification for applying the Strategic Development Area Levy must clearly demonstrate why the area has a higher infrastructure upgrade requirement.

The Planning Authority will need identify that: the Strategic Development Area is

strategically justified; and there is a demonstrated need to

additional infrastructure.

Areas identified for growth outside Melbourne’s Growth Areas and the three regional centres of Geelong, Ballarat and Bendigo may fall into the category of Strategic Redevelopment Areas.

Supplementary Levy

A Supplementary Levy is able to be applied in Strategic Development Areas where it can be demonstrated that the infrastructure costs to be incurred as a result of the proposed development exceed the amount of revenue to be generated by the Strategic Development Area Standard Levy by a significant margin. This would usually occur because of the scale and complexity of the development.

In the Development Levy Plan, the ‘non-normal’ items of infrastructure which will add significantly to the total cost should be strategically justified in terms of:

Need generated by the development; Nexus to the development; How the infrastructure is aligned with

the target market of the development (particularly for works in the public realm); and

Affordability in relation to the market niche for the development.

Infrastructure items considered to be normally fully funded by the developer may be funded through a Supplementary Levy where there is fragmented ownership of the area and this is the most efficient method of funding such infrastructure.

In proposing a Supplementary Levy the Planning Authority should illustrate:


The total amount of funds to be raised from the Supplementary Levy proposed for each item of infrastructure, and the Levy for each use to which it is proposed the levy apply.

The proportion of the cost of each item of infrastructure to be funded from the Standard Levy (if any), the Supplementary Levy, and other sources of revenue.

When considering whether the Supplementary Levy is appropriate, the ISAC must be satisfied that:

One or more items of strategically justified infrastructure are of such scale and/ or cost that funding of the infrastructure, appropriately apportioned to the development, demonstrably cannot be provided from the revenue proposed to be raised by applying the maximum Standard Levy.AND

The location of the development is such that the item(s) of infrastructure is required for efficient access to, or operation of, the community the development serves;OR

The strategically justified item(s) of infrastructure are required to ensure that the development appropriately serves the infrastructure needs of a specified specialist market niche.

Exhibition

If the ISAC supports the application of the Strategic Development Areas Standard Levy and is satisfied that the area is currently identified in the Planning Scheme, the Planning Authority when preparing a Planning Scheme Amendment can request the Minister:



If the Strategic Development Area is not currently identified in the Planning Scheme and/or the Planning Authority has prepared a new Structure Plan for the area, the Amendment will need to follow the standard Planning Scheme Amendment process, with notification.

The normal Planning Scheme Amendment process will need to be undertaken if a Supplementary Levy is proposed.

Growth AreasCalculating the Levies

The Standard Levy in Growth Areas is made up of capped Community and Recreation, and variable Transport and Public Land components.

When preparing a Development Levy Plan for Growth Areas, infrastructure requirements should be developed to meet identified strategic needs and cognisant of the range of funding sources available including the revenue from the Standard Levy.

The Planning Authority (in conjunction with the relevant Council where the Council is not the Planning Authority) will determine the necessary infrastructure requirements and costings as per the current typical PSP approach.

The Planning Authority will be required to progressively assess infrastructure costs having regard to the overall Growth Area Standard Levy and the three Levy components; Community and Recreation, Transport and Pubic Land.

If savings can be identified within the variable infrastructure categories (Transport and Public Land) that funds can redirected from one category to the other. The only restriction of this is that the total revenue allocated to Community and Recreation must not exceed the cap ($80,000 per ha).


The ISAC will need to consider:


Whether there are physical or other conditions that warrant introduction of one or more Supplementary Levies for particular items;

Whether the Standard Levy could achieve an acceptable level of infrastructure provision without introduction of a Supplementary Levy/s;

Whether other infrastructure could be provided at a lesser standard/cost to avoid introduction of a Supplementary Levy/s;

The standard and costing of the Supplementary Levy project/s to ensure that they have been reasonably defined and costed; and

The affordability implications of the inclusion of a Supplementary Levy.

Meeting the tests does not guarantee approval of the Supplementary Levy by the ISAC.

Exhibition

If the ISAC supports the application of the Growth Areas Standard Levy the Planning Authority when preparing a Planning Scheme Amendment can request the Minister:



The approved Development Levy Plan must be in accordance with the approved Precinct Structure Plan for the areas

The normal Planning Scheme Amendment process will need to be undertaken if a Supplementary Levy is proposed.

Implementation A new Overlay such as a Development Levy Overlay (or VPP Implementation tool) will need to be prepared to implement the Development Levy Plan. The Schedules to the Overlay are illustrated in the table below.

Schedule 1 Urban Areas

Schedule 2 Strategic Development Areas

Schedule 3 Growth Areas

The Overlay should generally be applied to land that is zoned to allow for residential, business or industrial purposes. The Overlay does not need to follow zone boundaries but it should only be applied to zones where permitted use and development create a need for local infrastructure. The following table illustrates what zones the Development Levy Overlay can be applied to.

Can the DLO be applied?

Residential Zones Yes

Industrial Zones Yes

Business Zones Yes

Rural Zones1 No

Pubic Land Zones No

Special Use Zones2 Yes1 May be applied to the Rural Living Zone 2 May not be applied to the Urban Floodway Zone

Monitoring and Review It is important that the Development Levy System is regularly monitored and reviewed. Council’s Annual report will provide an overview of revenue collected and used, and Schedules to the Development Levy Overlay will be reviewed concurrently with Council’s Municipal Strategic Statement.


Table A Summary of Recommended Levies in each Development Setting

Setting Standard LevyResidential

Standard LevyNon-residential

Additional Levies

Growth Areas

Metropolitan Residential$268,000 per net developable hectare


Supplementary Levy available only in specific circumstances for transport or public land

Non-Metropolitan

Residential$210,000 per net developable hectare OR$120,000 per net developable hectare


Supplementary Levy available only in specific circumstances for transport or public landDrainage Levy available

Urban Areas

Metropolitan Residential$3,000 per dwelling


Not available

Non-Metropolitan

Residential$1,500 per dwellingOR$3,000 per dwelling


Not available

Strategic Development Growth Areas

Metropolitan Residential$4,500 per dwelling OR$6,000 per dwelling



Non-Metropolitan

Residential$4,500 per dwelling OR$6,000 per dwelling



Notes to Table A: Growth Area Standard Levy include all public land contributions, including Clause 52.01 contributions In Urban Areas, the Residential Standard Levy applies to the net increase in dwellings or lots. The Non-Residential levies apply to all new floor space, based on Gross Floor Area, above 100m2


45.## DEVELOPMENT LEVY OVERLAY (COMMITTEE DRAFT)

Shown on the planning scheme map as DLO with a number.

Purpose To implement the State Planning Policy Framework and the Local Planning Policy Framework, including the Municipal Strategic Statement and local planning policies.

To identify areas for the purpose of levying contributions for the provision of public infrastructure in accordance with an approved development levy plan.

45.##-1 Scope

Clause 45.## applies to:

the construction of a dwelling where there is a net increase in the number of dwellings; or

an increase in the floor area a retail, industrial, or commercial use by more than 100 square metres

Need to list exemptions

45.##-2 Payment of development levyIf an application is made for a permit to carry out that development land covered by this Overlay the responsible authority must include a condition in the permit that the applicant:

pay the amount of the levy specified in the relevant schedule to this overlay to the relevant collecting agency within a specified time or within a time specified by the collecting agency; or

enter into an agreement with the relevant collecting agency to pay the amount of the levy within a time specified in the agreement; or

enter into an agreement with the relevant collecting agency to carry out specified works in kind instead paying the levy or part of the levy.

If a permit is not required under this Act for the development a person who proposes to carry out that development of the land must:

pay the amount of the levy to the relevant collecting agency within three months of the completion of the development; or

enter into an agreement with the relevant collecting agency to pay the amount of the levy within a time specified in the agreement; or

enter into an agreement with the relevant collecting agency to carry out specified works in kind instead paying the levy or part of the levy

45.##-3 Preparation of a Development Levy Plan A development levy plan may consist of plans or other documents.

The development levy plan must:

Specify the area to which the plan applies.

Set out the infrastructure to be funded through the plan.

Identify the strategic basis for the infrastructure.

Specify any infrastructure items that are proposed to be funded by a Supplementary Levy.

Provide for the procedures for the collection of a Levy in respect to any development for which a permit is not required.

Be prepared in accordance with any Ministerial Direction issued under Part # of the Planning and Environment Act 1987.


SCHEDULE 1 TO THE DEVELOPMENT LEVY OVERLAY (COMMITTEE DRAFT)

Shown on the planning scheme map as DLO1.

URBAN AREAS

1.0 Area covered by this development levy plan

This overlay applies to all land identified on the planning scheme map as DLO1

2.0 Levy to be Applied

The levy to be applied is shown in the Table to the Schedule.

Table to Schedule 1

AREA NAME LEVY

DLO1 Gumnut Urban Area

Residential

$X,000 per dwelling

Retail

$XX per square metre, Gross Floor Area



Urban Area Standard Levy Options

Metro Residential$3,000 per dwelling


Non-Metro Residential$1,500 or $3,000 per dwelling





STRATEGIC DEVELOPMENT AREAS





Table to Schedule 2

AREA STANDARD LEVY SUPPLEMENTARY LEVY

DLO2(a) New Gumnut Strategic Development Area

Residential

$X,000 per dwelling

Retail




As approved in the DLP

DLO2(b) Name Strategic Development Area

Residential

$X,000 per dwelling

Retail





Each Strategic Development Area to be identified separately (a, b, c).

Strategic Development Area Standard Levy Options

Metro Residential$4,500 or $6,000 per dwelling


Non-Metro Residential$4,500or $6,000 per dwelling





GROWTH AREAS





Table to Schedule 3

AREA STANDARD LEVY SUPPLEMENTARY LEVY

DLO3(a) Nutbush City Limit Growth Area

Residential

$XXX,000 per net developable hectare

Retail





DLO3(b) Name Growth Area

Residential


Retail





Each Growth Area to be identified separately (a, b, c).

Growth Area Standard Levy Options

Metro Residential$268,000 per net developable hectare


Non-Metro Residential$210,000 or $120,000 per net developable hectare

Retail$126,000 per net developable hectare Commercial and Industrial




Appendix F Sample Development Levy Plan


Gumnut Shire Council‘From Gum to Nut’

Gumnut Shire Council

Development Levy Plan 2013

Urban Areas Strategic Redevelopment Areas

Gumnut Shire Council Development Levy Plan

Urban and Strategic Development Areas

1 Background1.1 The Plan

This Plan is titled Gumnut Development Levy Plan 2013 (The Plan).

The Plan has been prepared in accordance with Section XX.X of the Planning and Environment Act 1987.

1.2 Purpose

The primary purpose of this Plan is to enable the Shire of Gumnut to apply an Urban Area Standard Levy to all development included in the Development Plan Instrument to provide funds to assist the upgrade and development of Council owned community facilities, recreational facilities, transport infrastructure, drainage infrastructure and public realm assets to meet the needs of the growing population, expanding tourism industry and growing industrial, retail and commercial sectors.

The Plan enables the application of the Strategic Development Area Standard Levy to designated areas and enables Supplementary Levies where applicable.

The Plan helps deliver the objectives of Council’s Municipal Strategic Statement and assists in meeting the demands for infrastructure as set out in Schedule 1 of this Plan.

Schedule 2 sets out the Expenditure Budget for public works proposed to be funded from levies collected.

Schedule 3 sets out the strategic justification and expenditure budget for the Newgumnut Strategic Development Area.

1.3 Transitional arrangements

This Plan replaces the Gumnut South Development Contributions Plan (1994) and the Gumnut West Drainage Contributions Plan (1999). These Plans cease to have effect as from the date of approval of this Plan by the Minister.

1.4 Life of the Plan

This Plan has effect from the date of approval by the Minister for a period of five years, unless amended or replaced by Council (with the Minister’s approval) at an earlier date.




2 The Levies2.1 Land and development to which the levies applies

The Standard Levies apply to all residential development where there is a net increase in the number of dwellings, and to non-residential development that results in an increase in gross floor area of greater than 100 square metres.

The Urban Area Standard Levy applies to the land and development as set out in the Development Plan Instrument in Schedule 1 to Clause YY.XX of the Gumnut Planning Scheme.

The Newgumnut Strategic Development Area Standard Levy applies to the land and development as set out in the Development Plan Instrument in Schedule 2 to Clause YY.XX of the Gumnut Planning Scheme.

The following plan is reproduced from Clause YY.XX of the Gumnut Planning Scheme.

2.2 Paying the levies

i) When are the levies payable?

The levies are payable:

Where land is to be subdivided and new lots are created, on the certification of the plan of subdivision;

Where land is not subdivided but new dwellings or new non-residential floor space is created, on certificate of occupancy.

ii) Indexing the levies

The levies are indexed in accordance with Clause YY.XX of the Gumnut Planning Scheme.

iii) Payments by instalment

Council may, at its absolute discretion grant approval for levies to be paid by instalment. This includes where development is to be undertaken in stages.


Plan



iv) Refunds

Council may consider refunds where the development that is the subject of the levy has not commenced and the planning permit for the development is cancelled or lapses.

2.3 Works in kind

The Standard Urban Area Levy can only be paid by cash payment and no works in kind is available.

Payment by works in kind or land dedication may be considered in the Strategic Development Area.

The Council has discretion in determining any applications for works in kind or land dedication in lieu of levies payable in Strategic Development Areas.




3 Strategic Justification3.1 Urban Area Levy

i) Population Projections

Victoria in Future sets out projected population growth for settlements in Gumnut as shown in the following table.

Locality Population in 2012 Projected annual growth 2012 - 2022

Projected new dwellings 2012 - 2022

Gumnut City Centre 3,500 2.3% 350

South Gumnut 23,000 0.9% 900

Gumnut Waters 19,000 1.2% 990

Gumnut Meadows 17,000 1.5% 1,108

Newgumnut 37,000 2.6% 4,182

Inner Gumnut West 16,000 0.7% 490

Inner Gumnut North 18,000 0.5% 390

Outer Gumnut 4,500 3.2% 626

Backa Gumnut 1,500 1.5% 98

Total 139,500 1.8% 9,134

The population projections are supported in Clause 21.04 of the Gumnut Planning Scheme which sets out structure plans for each of these settlements and nominates residential growth areas.

The Gumnut Settlement Plan 2013 provides further support for the nominated residential growth areas, nominating Newgumnut as the primary growth corridor; significant infill in Gumnut Meadows, Gumnut Waters and South Gumnut; and low level infill in Inner Gumnut West and Inner Gumnut North.

Infrastructure in Newgumnut is still developing as the needs of the growing community also grow. Although the area is well served for open space, new community and sporting facilities continue to be Council’s greatest challenge in this area. The Urban Areas Standard Levy will assist in enhancing the limited existing facilities and the Strategic Development Areas Standard Levy has been approved to provide specific new facilities.

Conversely Gumnut Meadows is well served for sporting facilities, being home to Gumnut Fields and its regional sporting fields. Community facilities are, however not well developed and Council has prioritised new child care and community centre facilities in this area over the next 5 years.

The older inner suburbs of Inner Gumnut West and Inner Gumnut North have an aging population and existing community facilities need to be re-configured for changing needs.




ii) Tourism Strategy

The Gumnut Tourism Strategy 2009 continues to highlight the coastal areas of Gumnut as the prime tourism precinct. Council has developed a program of tourism infrastructure to facilitate a projected growth in tourist numbers of 4% per annum over the next decade.

iii) Gumnut Economic Development Strategy

The Gumnut Economic Development Strategy 2007 cites a number of infrastructure upgrade priorities to facilitate the objectives of the strategy. The Priorities include:

Developing additional car parking in the Gumnut Central Shopping Precinct. Traffic management and streetscape improvements in the Nutgum South industrial

precinct. Widening and additional service road access to Southcoast Road. Streetscape and pavement replacement at the Gumnut West and Gumnut Meadows

strip shopping centres. Gumnut Meadows business park drainage system upgrade. Flood mitigation works at Gumnut River office precinct.

Specific works programs will be developed in consultation with the individual chambers of commerce and traders associations.

iv) Other Council Policies

The following further Council policies and strategies inform the Council’s capital works priorities:

Newgumnut Structure Plan 2010;

Gumnut Open Space Strategy 2004;

Gumnut Regional Housing Plan 2011;

Gumnut Aged Care Strategy 2008; and

Gumnut Community Facilities Study 2011.

3.2 Newgumnut Strategic Development Area

i) Population Projections

Victoria in Future projects population growth for Newgumnut of 2.6% per annum over the next ten years.

The Gumnut Settlement Plan 2013 identifies Newgumnut as the primary corridor for residential growth with 4,182 new dwellings projected in the period 2012 to 2022 and 3,050 in the five year period 2013 to 2018. Whilst not an identified Urban Growth Corridor in the Metropolitan Strategy, Newgumnut represents a substantial growth corridor in its own right. Development of the area will be progressive in accordance with the Newgumnut Structure Plan 2010.

Development of this extent can draw on existing sporting and community facilities to some degree, and the new road and drainage network will be constructed by developers on a staged basis.




ii) Structure Plan

The Newgumnut Structure Plan 2010, Chapter 4 – Infrastructure Plan, provides detailed justification for the new infrastructure requirements as set out in the expenditure budget.

4 Reporting and Accountability4.1 Monitoring

The Council is responsible for the following administration activities in relation to the Plan: Maintain an up to date register of all funds received and spent; Separate registers must be kept for each Strategic Development Area; Maintain a record of all works completed utilising levy funds; Maintain a record of all payment by instalment agreements; Maintain a record of all works in kind agreements; and Provide public access to all records kept in relation to the Levies.

4.2 Annual reporting

Council’s Annual Report will include a record of all levy funds received and spent, and all projects completed utilising levy funds.

The Annual Report may be used to update the expenditure budget to ensure alignment with Councils adopted capital works budget.

4.3 Council review procedures

The Council will review the entire Plan at least every five years to ensure that the Plan is aligned with contemporary growth projections and Council policies. The revised Plan must be submitted to the Minister for Planning for approval.

Schedule 2 – the Expenditure Budget – must be reviewed at least every two years to ensure it is aligned with Council’s most recent capital works priorities. The revised Expenditure budget may be approved by Council and should be included in the Council’s Annual Report.

Schedule 3 – the Newgumnut Strategic Development Area Levy Plan – must be reviewed at least every five years. The expenditure budget must be reviewed at least every two years, can be approved by Council and should be included in the Council’s Annual Report.




Schedule 1 – Expenditure budget – Urban Areas Standard Levy (updated July 2013)i) Completed Works (to 30 June 2013)

Project Completed Total Actual Cost

Proportion attributed to growth

Comments

Roads and traffic

West Road widening 2011 $2.4m 35%

South Gumnut traffic calming

2012 $0.9m 100%

West Road/North Road intersection upgrade

2012 $1.8m 40% In conjunction with developer funded works

Community and Recreation Facilities

Memorial Hall renovation 2011 $1.1m 10% Extended meeting rooms

AAA recreation centre 2012 $3.0m 25% Extended gym, occasional child care centre

Drainage

Southern drainage scheme 2012 $4.2m 10% In conjunction with replacement

Public Realm

Footpath upgrade Sid St 2011 $0.6m 10% In conjunction with replacement

Footpath upgrade South Gumnut industrial park

2011 $3.2m 50% To facilitate new incubator sites

North foreshore park upgrade

2012 $0.7m 80% From tourism strategy




ii) Proposed Levy expenditure budget 2013 – 2018 (updated July 2013)

Project Planned delivery

Estimated Cost (2013 $)


Comments

Roads and traffic

Southcoast Road widening 2014 $5.4m 15%

North Gumnut traffic calming

2013 $0.9m 100%

Nutgum South industrial precinct traffic plan

2015 $1.4m 60% From Economic Development plan

Bus shelter upgrade 2013 - 2015

$0.5m 50% In conjunction with replacement program

East Road/North Road intersection upgrade

2016 $2.8m 20% In conjunction with VicRoads funded works

Gum Bay trail 2015 - 2017

$1.5m 55% Tourism strategy, bicycle strategy, part State funded

Gumnut river footbridge 2018 $3.5m 50% Access to new residential areas

Traffic light upgrade South St

2018 $0.4m 40% Improve access


Memorial Hall extension 2014 $1.8m 90% New adult day care

Gumnut Meadows Community Centre

2015 $4.8m 40% New facility Part State funded. Services Newgumnut as well

Gumnut East maternal and child health centre upgrade

2015 $1.8m 95% Consolidating two centres and extending

Gumnut North Senior Citizens Centre upgrade

2017 $0.9m 75% Extending to cater for growing aged population

BBB recreation centre 2015 $1.0m 50% New bocce rink

Newgumnut park upgrade 2014 $1.8m 70% Open space strategy

New female change rooms 2015 - 2017

$2.6m 70%

Playground upgrade 2014 - 2018

$0.7m 30%

Gumnut West oval lights 2015 $0.9m 60%

Hockey centre artificial turf 2017 $1.8m 80%

Hockey centre lights 2018 $0.7m 80%

Drainage

Western drainage scheme 2014 $4.2m 10% In conjunction with







Comments

replacement

River flood mitigation Gumnut River office park

2016 $2.0m 15% Economic Development Strategy

Gumnut Meadows business park


Public Realm

Footpath upgrade Sid St 2011 $0.6m 10% In conjunction with replacement

North foreshore park upgrade

2012 $0.7m 80% From tourism strategy

Gumnut West shopping centre footpath and streetscape


Gumnut Meadows shopping centre footpath and streetscape


Land

Gumnut East maternal and child health centre

2014 $0.8m 60%

Gumnut Meadows community centre

2014 $2.0m 40%




Schedule 2 – Expenditure Budget - Newgumnut Strategic Development AreaIn addition to the items in Schedule 1 the following infrastructure items are specifically attributable to the Newgumnut Strategic Development Area.




Comments

Roads and traffic

Newgumnut Arterial Road extension

2014 $3.4m 90% Access between Newgumnut and Gumnut Meadows


Newgumnut Community Centre

2018 $4.5m 100% New facility Part State funded

Newgumnut reserve Oval 3 2014 $1.4m 80%

Newgumnut reserve Oval 4 2016 $1.1m 80%

Newgumnut soccer facility 2017 $2.0m 40% District facility

Land

Newgumnut soccer facility 2016 $0.8m 40% District facility

Newgumnut community centre

2017 $1.3m 100%

Total expenditure budget proportion attributable to the Newgumnut area is $11.98m. Applied over the projected 3,050 dwellings this represents $3,928 per dwelling. Allowing $3,000 per dwelling contribution to the items listed in Schedule 2 (which also benefit the Newgumnut area), the combined works adds to $6,928 per dwelling, well above the threshold required in Clause YY.XX to justify the Strategic Development Area Standard Levy of $6,000 per dwelling.

The Standard Strategic Development Area Levy of $6,000 is to be charged. Council will be responsible for funding the balance of funds required to implement the projects from rates, grants and charges.


Appendix G Overview of Implementation Processes


Overview of Development Levy System


Development Levy System – Growth Areas


Development Levy System – Strategic Development Areas


Development Levy System – Urban Areas


Documents

delwp-internet-m5.clients.squiz.net · Web viewDraft Practice Note, Development Levy System. Gumnut Shire Council Development Levy Plan . Urban and Strategic Development Areas