New Bill promising to shake up infrastructure contributions in NSW
The NSW Government recently introduced the Environmental Planning and Assessment Amendment (Infrastructure Contributions) Bill which would implement sweeping reforms to the infrastructure contributions framework in NSW.
The Environmental Planning and Assessment Amendment (Infrastructure Contributions) Bill (Bill) amends or replaces many of the existing provisions contained in Part 7 of the Environmental Planning and Assessment Act 1979 (EP&A Act). Here are the five key changes to be aware of.
New ‘land value contributions’
The Bill makes provisions on a new type of local infrastructure contribution described as a ‘land value contribution’. This appears to be a reflection of the recommendation in the PC Report for ‘direct land contributions’.
A land value contribution can be imposed for land within a ‘land value contribution area’ where:
- there has been a change to the planning controls that apply to the land which enables more intensive development of the land and, as a result, increases the value of the land
- that intensive development will require land to be provided for a public purpose.
The land value contribution area is required to be mapped under a contributions plan, to identify the land which is required for a public purpose.
All landowners who own land within that land value contributions area may then be required to make a contribution towards that public purpose land by payment of a monetary contribution, or land dedication, or both.
A land value contribution is proposed to be expressed as a percentage of the value of the land. although, it appears that the calculation of land value will be a matter dealt with in the regulations.
Critically, what distinguishes a land value contribution from an ordinary local infrastructure contribution under s 7.11 is that it can be required to be paid on sale of the land (even where no proposal has been made to develop the land), although, it can also be imposed via condition of consent.
For satisfaction on sale of land, the Bill establishes a framework which requires the following:
- a vendor must apply for a ‘land value contribution certificate’ from the relevant council
- the certificate will identify if a contribution is owing and the relevant sum and whether it can be satisfied on completion
- the instrument of transfer is then ‘endorsed’ with a unique number recorded on the land value contributions certificate to indicate that the contribution is satisfied or can be satisfied on completion
- if a contribution is owing, the contribution sum is then directed to the council on completion
- the Registrar-General is authorised to register the instrument affecting the transfer of land.
This has considerable implications for conveyancing practice, including because a land value contributions certificate will be a prescribed document for the purpose of Conveyancing (Sale of Land) Regulation 2017 and potential risks that this contribution could be a road block to completion.
Amendments to the calculation of a ‘local levy condition’ under s 7.12
The Bill redrafts s 7.12 so that the levy is not necessarily a percentage of the costs of carrying out the development.
Rather, the amount of the new ‘local levy condition’ is to be determined in accordance with the regulations which are yet to be announced. The regulations may also determine:
- the maximum amount of the levy
- the types of development which may be subject to the levy
- the local government areas in which a consent authority may impose the levy.
This amendment flows from recommendation 4.11 in the PC Report which is directed at increasing the maximum rate for s 7.12 levies. Specifically, the PC Report identifies that the levy should be equivalent to 3% of the capital cost for residential development and 1% for non-residential. It will be interesting to see whether the calculation in the regulations reflects this position.
Replacing ‘Special Infrastructure Contributions’ (SICs) with ‘Regional Infrastructure Contributions’ (RICs)
The Bill proposes to replace the existing SIC framework in Subdivisions 4 and 5 of the EP&A Act with RICs.
The big differences between RICs and SICs are that:
- the RIC is likely to be applied more broadly than has been the case with SICs, based on the recommendation in the PC Report that RICs be imposed as 'a broad, flat rate'
- the RIC framework will largely be contained in a new State Environmental Planning Policy (SEPP)
- the SEPP can specify components of a RIC, including:
- a ‘transport project component’, for development that benefits or will benefit, from the provision of specified transport infrastructure
- a ‘strategic biodiversity component’, for development on biodiversity certified land as a contribution towards a measure to conserve or enhance the natural environment (as defined)
- the RIC framework does away with discretion, mandating that if the SEPP requires a RIC for the development, then a consent authority (or certifier in the case of complying development) must impose a condition of consent requiring the RIC
- If a consent authority or certifier fails to impose a condition requiring a RIC, the condition is taken to have been imposed in the terms required by the SEPP.
There will of course be a period of transition to the new RIC framework and the existing SIC provisions will continue to apply to existing determinations and directions made under the EP&A Act, as per the proposed savings and transitional arrangements in the Bill.
Increased prescription regarding contributions plans
The Bill notably expands the role of the regulations in prescribing what can be recorded in a contributions plan.
For example, the Bill provides that the regulations may make provision for:
- the way in which local infrastructure contributions must be determined
- indexation of contributions and levies
- how and when contributions and levies must be paid
- reporting on contributions and levies by consent authorities
- the circumstances in which a consent authority may refuse to consider a DA for land on which a land value contribution has not been satisfied
In addition to this, the Minister is also empowered to issue directions about the matters that must be considered when preparing a contributions plan, including matters for the efficient design of infrastructure. The Minister can also prescribe the circumstances in which a draft contributions plan must accompany a planning proposal.
Review of Local Strategic Planning Statements every five years (LSPSs)
The Bill requires councils to review their LSPSs at least every five years, instead of every seven years.
This change comes directly from Recommendation 6.5 in the PC Report which identified that there was a misalignment between the various layers of strategic planning, with State Infrastructure Strategies and regional plans being viewed every five years and LSPSs every seven years. The Bill with therefore address this discrepancy.
The Bill is due to come before the LC Committee on 16 July and it is anticipated that the Committee will report back to Parliament when sittings resume. We eagerly await the release of further information on the regulations and new RIC SEPP which will give effect to the Bill.
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