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Reformed Infrastructure Contributions

The MAV presentation on Development Contributions by Kathy Mitchell highlights the complexities in managing infrastructure funding amid divergent interests between councils and developers. It addresses issues such as the inconsistent application of contributions in growth and non-growth areas, lengthy debates, and the need for a standardized levy system. Recommendations include focusing on simplicity, transparency, and flexibility, as well as addressing the equity and accountability of contributions. Effective implementation can lead to better infrastructure financing for sustainable development.

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Reformed Infrastructure Contributions

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  1. Reformed Infrastructure Contributions MAVPresentation Kathy Mitchell, Chair Standard Development Contributions Advisory Committee 23 May 2014

  2. Development Contributions • Complex, time consuming, difficult to implement, unpopular, inconsistent, contested • Vary markedly in Growth Areas, lack of consistency in application, lengthy debates and hearings to implement • Councils – want developers to pay more; Developers - want to pay less • In non Growth Areas, no simple and effective way to capture contributions for infrastructure required to service new development catering for growth

  3. Development Contributions • Part 3B of the Planning and Environment Act 1987 provides for the preparation of DCPs • Key principle – now and post review: • Contribution not full cost recovery

  4. Advisory Committee • Members: Kathy Mitchell (Chair), Trevor McCullough, Rodger Eade, Chris De Silva and Bryce Moore • Terms of Reference: • Advise the Minister on a system of standard levies to apply to all development scenarios • Implementation and operation of a new system • Setting and implementing standard levies for development settings and for different categories of Infrastructure • Fix the system

  5. Key Challenges and Issues • Simplicity and certainty • Ease of introduction and adaptation • Flexibility for users • Transparency • Demonstrating Need, Equity, Nexus and Accountability • Standards and adequate funding for ‘starter’ infrastructure

  6. Consultation and Reporting Process

  7. Urban Infill and Renewal Areas • Typically the contribution to public infrastructure for a development in an urban infill or renewal area is $0 • Negotiated s173 agreements for some developments • A small number of DCPs outside growth areas, e.g. • Darebin $130 to $3,600 per dwelling • Manningham (Doncaster Hill) $2,139 per dwelling

  8. Interstate Comparisons

  9. How was the Growth Area Levy Determined? • Average DCP cost (including open space and $900 per dwelling Community Infrastructure Levy) for Growth Areas: • 2008 $194,000 per net developable Ha • 2009 $215,000 per net developable Ha • 2010 $218,000 per net developable Ha • 2012 $245,000 per net developable Ha • Scope creep in boom market saw ‘blow out’ in DCP costs • Typically spent on: • Community services and open space 30% • Roads and traffic management 30% • Public land purchase 40%

  10. How was the Growth Area Levy Determined? • Showed consistency across regions • Showed ‘normalising’ of total costs over the period • Analysed variations across infrastructure categories: • Land costs higher in the south-east, although average land values had normalised in 2012 (post GFC) • Transport infrastructure costs higher in the west • ‘scope creep’ in community and recreation costs over the years • Open space levies have been inconsistently applied

  11. How was the Growth Area Levy Determined? • Identified the need to: • Achieve consistency in the application of open space costs • Limit the scope of community and recreation facilities • Provide some flexibility in the allocation of levies between land and transport infrastructure • Not leave Councils short • Not unreasonably impact on development viability

  12. How was the Growth Area Levy Determined? • Looked at: • A variable land levy • A number of options for applying Supplementary Levies Used averages over time period Verified costs through economic peer review Strategic Development Areas calculated as % of Growth Area levy

  13. Allowable Items • Provides for a specified lists for each infrastructure category rather than a broad description of ‘basic and essential’ items • No State infrastructure where GAIC applies • No public open space included in Urban Areas or Strategic Development Areas (Clause 52.01 or Subdivision Act to continue to apply) • Budget for spending on the basket of goods

  14. Commercial and Industrial Levy • Two categories selected from complex equivalence tables • Based on demand these uses generate for transport infrastructure, with minor allowance for community and recreation • Quantum informed by recent DCPs • Levies set to minimise possible distortion with non levied areas • Set at low level to encourage job creating uses • Used per square metre as base, not cost of development

  15. Thank You

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