Recent NSW Planning Reforms Affecting Developer Contributions
As part of the 2008/09 Mini-Budget, the NSW State Government, with NSW Treasury as the lead agency, undertook a review of State infrastructure contributions and water infrastructure levies that apply to the development of greenfield housing sites, infill development and employment lands (including industrial). The review also applied to local government levies charged under sections 94 and 94A of the Environmental Planning and Assessment Act 1979.
The objective of the review was to ensure that infrastructure levies are consistent with the Government’s plans to boost housing supply and affordability as well as support business and provide a stimulus to the construction industry.
On 17 December 2008, the NSW Premier, the Hon. Nathan Rees MP, announced a package of reforms to infrastructure levies.
The Minister for Planning issued a section 94E Direction on 13 January 2009 directing that unless Council's applied for an exemption, Development Consents issued after 30 April 2009 could not required developer contributions that exceed $20,000 per dwelling.
Council's developer contributions average around $15,500 per dwelling and only exceed $20,000 per dwelling in a number of limited areas being:-
- Rural Inner North - current aggregate contribution $23,020
- Rural Inner West - current aggregate contribution $21,148
- Rural Other - current aggregate contribution $23,072
- Seaside City - current aggregate contribution $62,950.80
- Terranora (Area E) - current aggregate contribution $21,207.80
Council submitted a formal application for exemption from the $20,000 cap for the above five areas on 27 February 2009.
The NSW Government set up a Review Panel to consider applications for cap exemptions from around 30 Councils.
Tweed Shire Council's application was formally heard on 18 May 2009.
On 10 July 2009 the Minister issued a further section 94E Direction and accompanying letter advising that Council's application was unsuccessful except for the Seaside City locality.
The Direction advises:-
- Apart from Seaside City, no new consent after 17 July 2009 can be issued that imposes an aggregate contribution greater than $20,000 per residence or equivalent (excluding indexation)
- No new consent after 17 July 2009 can require monetary contributions towards library books or street tree planting
- Council must review all of its existing Section 94 Plans by the end of 2009 to ensure that they comply with the requirements of the June 2008 EP&A Amendment Act, that the NSW Government has not yet proclaimed. In this regard the review must also remove any requirement for contributions towards library book stock (about 40% of CP 11, now $688 per lot), street tree planting (all of CP6 now $297 per lot) and surf life saving facilities (all of CP16, now $200 per lot). In the review, contributions towards administrative costs must be reduced from 10% (all existing s94 plans except CP4 Roads) to no more than 5%
- In regard to the review by end of 2009, cemeteries (CP13, now $131 per lot) and Council administration buildings and depot (CP18, now $1,996.80 per lot) will not comply with the requirements of the June 2008 Amendment Act, however Council has loans that are financed by these contributions and the Amendment Act has a mechanism to apply for an exemption in such cases. The Minister’s Direction 3 of 10 requires Council to prepare a business plan justifying any continued contributions for these facilities and the business plan must be independently verified and be consistent with the requirements of proposed Part 5B of the Amendment Act
A detailed account of these emerging changes was outlined in a report to Council’s Planning Committee Meeting of 21 July 2009. Please 
[ click here ] to view a copy of this report.
Council staff are currently working on a review of all its contributions plans in accordance with the above directions.
Council established a rolling program for the provision of public facilities and capital costs funded by developer contributions received under the Environmental Planning and Assessment Act 1979.
The rolling program aims to deliver on priority works to get the maximum benefit from contributions collected.
The value of the works within the program are forward estimates only and will be reviewed on a quarterly basis to reflect changing demands, available funds, changing work priorities and external factors impacting upon program delivery.
Each year Council identifies a schedule of priority works for that financial year which is adopted in its annual Management Plan.
It should also be noted that given the impacts of inflation upon Council’s operations, there is periodic indexing of the rates of Council’s Section 94 contributions. Council allows a 12 month period from the date of consent for development applications before it will apply an indexing of contributions. After the 12 months has elapsed on a development consent, a proponent will be subject to any indexing at the time that contributions are paid, which generally is due before the issue of a construction or subdivision certificate.