Urbis is pleased the proposed changes aim to deliver improved transparency. However, there are several issues we believe are yet to be addressed, including:
Prioritising the completion of SICs to deliver regional infrastructure
A SIC is paid by developers in growth areas/precincts to support funding for regional infrastructure. So far only four SICs have been implemented since the introduction of the policy in 2006, and only one in the Greater Sydney region, for the Western Sydney Growth Areas. An additional seven have been exhibited as draft but not finalised. The premier has announced there will be 10 new SICs.
The protracted delays compound the uncertainty on the efficient delivery and coordination of infrastructure and the unlocking of housing opportunities. The government must set a timely schedule for implementation of the SICs. This is particularly important for the many planning agreements under negotiation in growth areas, in the absence of the SIC.
Councils seeking higher fixed rate levies than the proposed limit
Whilst it is welcome to see guidelines being proposed for establishing fixed rate levies to a maximum of 3%, ultimate discretion still exists with the Minister to a agree to any proposal seeking more than 1%. The precedent was set some years ago for a 4% levy for Burwood Town Centre and Gosford CBD which remain the highest 7.12 levies in NSW. Several councils have contributions plans currently under review that exceed the thresholds. Will the 3% maximum be held?
Inclusion of Place Infrastructure Compacts in the review
The Greater Sydney Commission have developed the Place Infrastructure Compacts (PIC) model to align growth with infrastructure and services through government collaboration. The proposed guidelines identify a SIC will support the achievement of place objectives, however there is no discussion in the reform agenda on the relationship or role of the PIC.
A recent pilot study for the Greater Parramatta to Sydney Olympic Park (GPOP) found that of the estimated $20 to $30 billion capital infrastructure costs apportioned to GPOP, 50 per cent would need to be funded by the NSW Government and 11 per cent through developer contributions where there was a direct relationship with the new development. The PIC model is now being used as part of the Western Sydney City Deal to help shape growth in the Aerotropolis.
Given that the PIC is essentially the “sum of the parts”, including SICs, any ongoing uncertainty over SIC components will only create further confusion on the future of the PIC, which itself has already been the subject of significant feedback. In our view, the role of the PIC should form part of the broader review.
The impact of lifting caps on local contributions in the current economic climate
The Local Infrastructure Growth Scheme (LIGS) scheme was introduced in 2011 to ensure that the contribution framework supported NSW housing targets. It funded the gap between the maximum contribution and the actual costs for councils to deliver the necessary infrastructure. This capped the contributions.
Announcement of the LIGS closing in June 2020 and the removal of capping will likely result in councils raising contributions rates. While such increases will be reviewed by IPART there is concern that in this current economic climate, development feasibility and housing targets could again be compromised by excessive rates.
No mandatory requirement on Councils to adopt the Planning Agreements guideline
Planning Agreements are a useful component of a flexible planning system. To retain flexibility and impartiality, while allowing for the timely delivery of infrastructure, the process requires certainty.
The wording of the draft Ministerial Direction just indicates Councils must have regard to the Practice Note when negotiating Planning Agreements. The term ‘have regard to’ is not a mandatory requirement, suggesting considerable uncertainty will remain over expectations for chasing “value capture” particularly as part of Planning Proposals.