draft hunter region sic – submissions report...welcome to reproduce the material that appears in...

Submissions report on the Proposed Approach Paper

November 2018

Draft Hunter

Region SIC – Submissions

Report

Draft Hunter Region SIC – Submissions Report | November 2018 2

November 2018 © Crown Copyright, State of NSW through its Department of Planning and Environment 2018

Disclaimer

While every reasonable effort has been made to ensure this document is correct at time of printing, the State of NSW, its agents and employees, disclaim any and all liability to any person in respect of anything or the consequences of anything done or omitted to be done in reliance or upon the whole or any part of this document.

Copyright notice

In keeping with the NSW Government’s commitment to encourage the availability of information, you are welcome to reproduce the material that appears in the draft Hunter Region SIC – submissions report on the proposed approach paper. This material is licensed under the Creative Commons Attribution 4.0 International (CC BY 4.0). You are required to comply with the terms of CC BY 4.0 and the requirements of the Department of Planning and Environment. More information can be found at: http://www.planning.nsw.gov.au/Copyright-and-Disclaimer.


Contents

Introduction 4

Draft Hunter Region Special Infrastructure Contribution proposed approach consultation 4

Submissions report 5

Background 5

Previous consultation 5

Part 1: Submissions summary 6

Overview 6

Summary by theme 6

Apportionment 7

Residential and industrial contributions rates 7

Transparency and accountability of infrastructure list 8

Timing of payment 8

Industrial net developable area (NDA) calculation 9

Governance and delivery 9

Part 2: Response to submissions 10

Apportionment 10

Transparency and accountability of infrastructure list 11

Timing of payment 12

Industrial net developable area (NDA) calculation 12

Governance and delivery 13

Next Steps 13

Appendix A – subjects raised in submissions 14

Appendix B – infrastructure nominations 16

Appendix C – Draft Hunter Region SIC list of infrastructure 19


Introduction Draft Hunter Region Special Infrastructure Contribution proposed approach consultation

On 15 December 2017, the Department of Planning and Environment released the Draft Hunter Region Special Infrastructure Contribution (SIC) proposed approach paper for public consultation. The proposed approach was exhibited for ten weeks, between 15 December 2017 to 28 February 2018. Feedback received on the proposed approach informed preparation of the draft Determination for the Hunter Region SIC.

The proposed approach paper and factsheet on the proposed Hunter Region SIC were made available on the Department of Planning and Environment’s website, and stakeholders were directly notified of the release via email. The Department of Planning and Environment held dedicated briefing sessions with Hunter Region councils, committee members of peak industry bodies for the Hunter – Urban Development Institute Australia (UDIA), Property Council Australia (PCA), and Planning Institute Australia (PIA), and peak industry body members in February 2018.

Table 1 – Summary of briefing sessions on the proposed approach

A series of follow-up sessions were then held with peak development industry committee representatives and councils in early April, following the end of the exhibition period, to discuss submissions received and provide an overview of the issues raised in submissions.

Session Date Attendees

Peak Development Industry Committee Representatives

2 February 2018 UDIA, PCA, PIA representatives

Lower Hunter councils 7 February 2018 Staff from Newcastle City Council, Maitland City Council, Port Stephens Council, Lake Macquarie City Council, Cessnock City Council

Development industry/interested parties

7 February 2018 Local Developers, Members from UDIA, PCA, PIA, Staff from Mid Coast Council

Dungog Council 8 February 2018 Staff from Dungog Shire Council

Upper Hunter councils 8 February 2018 Staff from Singleton Council, Muswellbrook Shire Council, Upper Hunter Shire Council


Submissions report

A total of 24 written submissions were received from councils, peak industry bodies, individual developers, and members of the public during the exhibition period. An additional submission was received in March 2018, after exhibition closed, from the Industry Reference Group consisting of UDIA, PCA, PIA and Hunter Business Chamber. This report provides an overview of the issues raised in the submissions received.

Background

The State Government is proposing a SIC for the Hunter Region to support future development in the region. A SIC is paid by developers and is a way to equitably apportion the costs of new infrastructure to development growth.

Previous consultation

The following consultation activities were undertaken to inform development of the Draft Hunter Region SIC proposed approach paper:

• release of a discussion paper on the Hunter Special Infrastructure Contribution Plan, alongside the Hunter regional Plan 2036 in October 2016.

• three consultation sessions with councils and the development industry on the discussion paper in November 2016.

• analysis of 16 written submissions received in response to the discussion paper from Hunter region and Central Coast councils, peak body groups for the development industry, and local community groups.

• analysis on feedback received in the November 2016 workshops with development industry representatives (UDIA, PCA, PIA, Housing Institute of Australia (HIA)), local councils in the Hunter Region, and interested members of the community.

• two follow-up workshops with development industry representatives (UDIA, PCA, PIA, HIA) and local councils on Hunter Region SIC policy directions in March 2017.

• ongoing dialogue between March and September 2017 with the development industry peak bodies (UDIA, PCA, PIA) and councils to gather information on greenfield development sites and development costs and infrastructure to inform development of the Hunter Region SIC and test development feasibility impacts.


Part 1: Submissions summary Overview

A total of 24 written submissions were received in the exhibition period from stakeholders in response to the draft Hunter Region Special Infrastructure Contribution proposed approach paper. The positions of each submission were recorded to either be generally supportive, partially supportive or object to the proposed approach.

There were 4 submissions that were supportive. Supportive submissions clearly included positive feedback and support for the proposed approach.

There were 11 submissions that were partially supportive. Partially supportive submissions contained comments or remarks that identify elements of the proposed approach that should be altered to provide a better outcome, but were generally supportive of the implementation of a Hunter Region SIC.

There were 9 submissions that objected the proposal. Objection submissions clearly objected the proposed approach and objected to the implementation of a Hunter Region SIC.

Summary by theme

Submissions received raised subjects categorised under 6 key themes. A full list of subjects is provided in Appendix A. Submissions frequently discussed more than one subject.

Object9

Support4

Partial support

11

Figure 1 – Submissions by group Figure 2 – Position of the submission

Council7

Private Organisation

15*

Other2

* 5 Industry representatives & 10 Developers/ Landowners


Figure 3 – Summary of themes raised in submissions

Apportionment

A total of 16 submissions (67%) discussed subjects relating to apportionment. Issues raised include queries on the nexus between infrastructure and development, the application of service catchments in the apportionment of infrastructure costs, or commented on where expenditure of the SIC should occur.

Some submissions raised concern that there appeared to be limited nexus between the infrastructure to be funded by the SIC and development across a whole service catchment area.

Submissions proposed that a SIC be administered at both a regional and precinct scale to ensure the rate is fair, reasonable and proportional. In this instance, all new development would contribute to the costs of regional infrastructure, such as health, education, emergency services facilities, and appropriate regional roads. At a precinct scale, a charge would be developed by identifying the infrastructure works critical for the delivery of specific precincts to ensure a distribution of costs based on each precinct’s requirements.

Some submissions raised concern over the use of SIC collected in the Hunter Region in other regions. Submissions include requests that cross-subsidisation of different regions does not occur, so that contributions collected from development in a service catchment area is only spent in that same service catchment area.

Residential and industrial contributions rates

A total of 15 (63%) submissions discussed subjects in relation to residential or industrial contribution rates. Submissions included comments on the contributions being too high, satisfactory, or provided a general comment on the need for a SIC. Of the 15 submissions received, 10 suggested that the rates were too high.

Most of the submissions suggested that the contribution rates were not sustainable in the Hunter region, and that the adoption of these rates would cause a detrimental impact on the feasibility of existing and future development. These submissions raised concerns that any contributions would add to the cost of development and negatively impact housing affordability.

Apportionment16

Transparency and accountability of infrastructure list

8Residential and industrial

charge rates15

Timing of payment7

Governance and delivery6

Industrial NDA calculation7


Some submissions raised that it is unreasonable to apply the same contribution rate across all service catchment areas, given the significant differences in land values and demand for developable land between each. These submissions suggested that the application of the same industrial contribution rate across all three service catchment areas could act as a major inhibiter to economic development, and hinder the development of employment land.

Several submissions recognised that the application of a SIC is essential in supporting the provision of the enabling infrastructure necessary to meet the aims of the region. However, some developers raised concerns that rates from the draft 2011 Hunter SIC has resulted in the inability to consistently convert zoned land into saleable lots at a rate required to meet targets set in the Hunter Regional Plan 2036. The submissions noted that an increase in these rates through the Hunter Region SIC will push land values beyond the reach of median income earners of the region.


A total of 8 (33%) submissions commented on the SIC infrastructure list included in the proposed approach paper. A few submissions suggested infrastructure projects to add to the list, or that the list should be reviewed and items removed. Some submissions requested greater clarity around road projects, or commented that there had not been enough transparency on the methodology and criteria used to develop the list of SIC roads.

Some submissions sought transparency in defining the nexus between the SIC infrastructure list and population growth and new development. Submissions requested an explanation of how infrastructure was selected, as well as greater detail to support the costing of infrastructure, such as identifying specific sections of a road that the SIC would fund.

A small number of submissions raised that infrastructure that is currently at capacity or representing existing constraints should not be funded by development through the SIC, but rather be included in the annual state road budget.

A limited number of submissions suggested that active transport should be considered essential infrastructure, and that the SIC infrastructure list should be expanded to include regionally significant active transport network.

The full list of infrastructure that has been nominated in submissions for inclusion on to the Special Infrastructure Contribution infrastructure list can be found in Appendix B.

Timing of payment

A total of 7 (29%) submissions discussed the timing of payment. These submissions commented on the stage of the development application process that the SIC should be paid.

Submissions suggested that the requirement to pay contributions before applying for a subdivision or construction certificate will have a negative impact on project feasibility, due to the time required to recover the costs through sales. Submissions also noted that as demand on infrastructure does not increase until developments are occupied, payment should not be triggered until as late in the process as possible. To increase feasibility, and align payment with infrastructure use, submissions suggested that payment should be made at settlement of lot sales.

Submissions noted that deferring payment of the contribution avoids the need for developers to borrow funds, reducing the upfront costs incurred in the development process and assists with housing affordability.


Industrial net developable area (NDA) calculation

A total of 7 (29%) submissions discussed the calculation of the net developable area in relation to the contribution charge for industrial development.

Submissions suggested that the inclusion of internal roads in the calculation of the NDA will negatively impact development feasibility, and is not appropriate as internal roads do not create the need for state infrastructure. Submissions note that a rate based on floor space, for example, enables a contribution closer to the actual creation of demand.

Submissions suggested, that whilst there is no strong objection to the calculation of the NDA, it would be beneficial to understand the other options that were considered for application in calculation of the SIC. For example, a couple of submissions suggested that applying gross floor area to calculate the SIC may be preferred as it may more closely reflect the actual use of the land and demand on infrastructure.

Governance and delivery

A total of 6 (25%) submissions discussed governance of the SIC. Submissions considered under this theme commented on the need for a governance framework and/or clear commitments regarding the delivery of infrastructure.

Submissions suggested that there must be a robust and transparent governance process around the collection, monitoring, distribution and reporting of funds. Additionally, submissions noted that there is lack of information on when infrastructure will be delivered, or how infrastructure development will occur before sufficient funds are collected.

Submissions raised that construction of essential infrastructure should not be delayed until contributions are collected in their entirety, as this will only lead to further infrastructure blockages. Rather, infrastructure delivery must be aligned with the appropriate government budgets and asset management plans, ensuring that all sources of delivery capital are available.


Part 2: Response to submissions Apportionment

The Lower Hunter, Upper Hunter, and Mid-Coast service catchment areas were determined based on infrastructure service catchments for all listed infrastructure and their relationship to development growth.

Applying a precinct approach could be considered in future reviews of the Hunter Region SIC, however detailed precinct planning for all urban release areas is not sufficiently mature to support a precinct based SIC at this stage.

In determining the SIC contribution rates, development feasibility was a core consideration. Development feasibility analysis was undertaken by a third-party consultant. Assumption costs for development and construction within the Hunter Region were tabled with industry, and where there were any anomalies, industry’s cost assumptions were used. Development feasibility was modelled across 100 locations. The contribution rate has been considerably discounted based on development feasibility, with analysis showing that a residential contribution rate at $10,644 per dwelling or lot was, on average for the Lower Hunter service catchment area, feasible.

The proposed SIC rate included a significant subsidy to infrastructure costs from State Government. The contribution paid by developers represents 4-20% of total infrastructure costs across the different infrastructure networks, with SIC revenue to be collected projected to represent approximately 15% of the total cost of infrastructure. Without any State Government subsidy to infrastructure costs, the residential contribution rate for the Lower Hunter would be $58,702 (with the current update of the infrastructure list to remove the Upgrade of New England Highway (Golden Highway to Singleton)), to reflect the full cost of infrastructure required to support development.

The contribution rates will be amended as presented in Table 2 and Table 3 below, to reflect the amendment to the infrastructure list – removing the Upgrade of New England Highway (Golden Highway to Singleton).

Table 2 – Updated residential contribution rates (per lot or dwelling)

* The residential contribution rate for the Lower Hunter service catchment area is subject to an additional transitional discount.

Service catchment area

Residential contribution rate from proposed approach (Dec 2017)

Revised residential contribution (Sep 2018)

Reduction

Lower Hunter $10,664 $9,857* $807

Mid-Coast $658 $658 Nil change

Upper Hunter $658 $658 Nil change


Table 3 – Updated industrial contribution rates (per hectare of net developable area)

In recognition of the potential immediate cost impacts of the new Hunter Region SIC, a discount to the residential contribution rate for the Lower Hunter is recommended to allow a gradual transition from current rates paid based on the 2011 draft Hunter SIC, to the new rate under the Hunter Region SIC over a period of 4 years. It is proposed that a 10% discount be applied in the first year, with the discount gradually reduced over the next three years. This will allow developers to program these new costs into their projects.

The discounted residential contribution rates over the transition period for the Lower Hunter service catchment area are show in Table 4 below:

Table 4 – Lower Hunter discounted residential contribution rates over the transition period

** Note the residential contribution rate will still be subject to indexation as outlined in the determination.


Road project inputs to and nominations for the infrastructure long list came from councils, industry groups, developers, TfNSW and RMS. The longlist of road projects totaled approximately 220 for Hunter Region, with the majority of projects relating to the Lower Hunter service catchment area.

Projects that have a stronger relationship to growth and mapped development sites, created additional capacity and benefits to the broader road network and services new development were shortlisted for inclusion in the SIC infrastructure list. Generally, projects that addressed existing congestion, were already funded through local contributions or identified to be delivered through developer works in kind, were not included.

Service catchment area

Industrial contribution rate from proposed approach (Dec 2017)

Revised industrial contribution (Sep 2018)

Reduction

Lower Hunter $38,232 $34,197 $4,035

Mid-Coast $38,232 Nil $38,232

Upper Hunter $38,232 Nil $38,232

Original rate Discount Residential contribution rate**

First year $9,857 10% $8,871.30

Second year $9,857 7% $9,167.01

Third year $9,857 3% $9,561.29

Fourth year $9,857 0% $9,857


Figure 4 – Process for shortlisting infrastructure projects for inclusion in the SIC infrastructure list

A comprehensive list of infrastructure nominations received during consultation is included in Appendix B of this submissions report. This includes commentary on nominated road infrastructure projects.

The infrastructure list has been revised to exclude the New England Highway (Golden Highway to Singleton) in response to feedback received regarding the incorrect apportionment of this road to the Lower Hunter service catchment. This project will remain a priority for the Hunter Region however it is proposed to be removed from the Hunter SIC at this time. This has resulted in the reduction of the residential SIC rate for the Lower Hunter service catchment area. A map showing the indicative locations of SIC infrastructure items is included in Appendix C.

The infrastructure nominations received during consultation is valuable infroamtion to inform the ongoing review of infrastructure needs in the Hunter Region. The list has been shared with other government agencies. The SIC infrastructure list will be reviewed in line with updated growth assumptions and development activity.

Timing of payment

The proposed approach regarding timing of payment presents the greatest delay possible, whilst still enabling the Department of Planning and Environment to enforcing the charge. The delay of payment, at lot settlement for example, would require caveats and legal agreements for every lot/dwelling to enforce payment. This practice would be resource intensive and create a burden on all parties, including future purchasers, contrary to the proposed streamlined process that can be administered and resolved with ease.

The Department of Planning and Environment will continue to review opportunities where later payment of contributions can be supported without generating an unnecessary administrative burden on developers and Government to administer and enforce.


The inclusion of internal roads in the calculation of NDA is consistent with existing policy for the calculation of NDA in determining contributions for voluntary planning agreements and for SIC in the Western Sydney Growth Areas.


As a result of the feedback received during consultation, the Department of Planning and Environment will take a different approach to the calculation of NDA in determining the SIC for industrial development in the Hunter. Internal roads will be excluded from the calculation of NDA.

Governance and delivery

The Department of Planning and Environment has established an implementation framework to support the expenditure of contributions for each SIC area. Development growth activity information and review of regional priorities will inform the expenditure of contributions for the region.

The Hunter Urban Development Program can provide regular updates to development activity and inform where development is occurring and therefore where infrastructure servicing is required. The long list of infrastructure collected throughout consultation on the draft Hunter Region SIC can be reviewed in relation to this development activity information.

As discussed during consultation sessions with councils and development industry peak bodies, the proposed establishment of a council and a development industry forum for the Hunter Region will also be important for implementation of the Hunter Region SIC. These forums will inform where development is occurring, as well as provide nominations for infrastructure prioritisation.

The monitoring of development activity information and long list of infrastructure will allow the Department of Planning and Environment to review the SIC infrastructure list and contributions rates where necessary. Any review of the Hunter Region SIC will involve relevant state agencies, Hunter Region councils and the development industry forum.

Next Steps

Issues raised in submissions have informed a review of the proposed approach and preparation of the Hunter Region Special Infrastructure Contribution draft determination. The draft determination for the Hunter SIC is being exhibited for further comment prior to finalisation.


Appendix A – subjects raised in submissions

Theme Subject

Apportionment Other - Queries the nexus between infrastructure and SIC

Apportionment Service catchments - disagree

Apportionment Applicable development - disagree

Apportionment Residential land definition - disagree with land use zones

Apportionment Residential charge exclusions - disagree

Apportionment Industrial land definition - disagree with land use zones


Residential charge rate - too high


Industrial charge rate - too high


Other - Request for feasibility assessment/other study


Residential charge rate – satisfactory


Infrastructure list - request to add to


Infrastructure list - disagree


Applicable infrastructure - disagree


Infrastructure list - agree


Timing of payment Timing of monetary contributions - disagree

Timing of payment Payment process - supportive

Timing of payment Timing of monetary contributions - agree


Industrial NDA calculation - disagree


Industrial NDA charge exclusions - disagree

Governance and delivery Other - Requests confidence on timeframe for infrastructure delivery/statutory commitment for infrastructure delivery

Governance and delivery Other - General comment on the need for developer contributions to support infrastructure delivery

Governance and delivery Other - SIC expenditure to be contained within catchment it was sourced

Governance and delivery Other - Unclear how works in kind will be applied

Governance and delivery Management, monitoring, reporting - seeks further information/suggests approach

Other Other - Submitter wants to clarify site specific exemption

Other Existing Voluntary Planning Agreements - agree

Other Other - The proposed SIC approach is reasonable and understood

Other Existing Voluntary Planning Agreements - disagree

Other Other - The proposed SIC approach is unreasonable and difficult to interpret

Other Other - Preference for the use of Voluntary Planning Agreements to continue

Other Other - Recommendations for biodiversity


Appendix B – infrastructure nominations

Suggested infrastructure inclusions Commentary

Connection between Kurri Kurri and Maitland - growth corridor main road upgrades

Included in SIC infrastructure list: Upgrade of Main Road (Cessnock), Upgrade of Cessnock Road (between Cessnock and Kurri Kurri)

Weston Bypass Addressing existing traffic management issues, relationship to development is lower. RMS is investigating matters raised by council to manage traffic on local roads through Weston

Wollombi Road between Cessnock and Millfield Does not relate to growth and mapped development sites

Old Maitland Road Upgrade between Cessnock and New England Highway

Relationship to development is lower and there are limited benefits to the broader road network

Commuter carpark to encourage Park and Ride and Carpooling on Main Road, Heddon Greta

Could be considered for inclusion in the future

Commuter carpark to encourage Park and Ride and Carpooling John Renshaw Drive, Buchanan

Does not directly increase capacity in the road or public transport network

Commuter carpark to encourage Park and Ride and Carpooling on New England Highway, Branxton

Does not directly increase in capacity in the road or public transport network

Corridor preservation for future rail (Cessnock to Maitland and Maitland to Branxton)

Does not directly increase in capacity in the road or public transport network

Upgrades to Cessnock Airport, incl. runway extension Does not relate to growth and mapped development sites

Regionally significant active transport e.g. extension of the Fernleigh Track to Swansea

Does not directly increase in capacity in the road or public transport network, relationship to development is lower


Regionally significant active transport e.g. extension of cycleway from Booragul train station to Toronto

Does not directly increase in capacity in the road or public transport network, relationship to development is lower

Richmond Vale Rail Trail Does not directly increase in capacity in the road or public transport network - relationship to development is lower

Upgrade to the intersection of Hillsborough Road, Macquarie Road, Medcalf Street and King Street, Warners Bay

Addressing existing issues with congestion, relationship to development is lower

Signalisation of the intersection of King Street and The Esplanade, Warners Bay

Relationship to development is lower

Widening of Main Road/Toronto Road from Fennell Bay to Booragul

Addressing existing issues with congestion, relationship to development is lower

Implementation of the traffic calming along the Pacific Highway through Charlestown


Upgrade of the intersection of Munibung Road, Myall Road and Macquarie Roads, Cardiff


Upgrade of the intersection of Fishery Point Road and Macquarie Street, Morisset

Developer contributions already funding components of this project

Upgrade of the intersection of Main Road and Minmi Road, Edgeworth

RMS have identified the intersection upgrade as a part of wider network improvements for classified roads. Additional scoping is required to determine upgrade requirements to service growth

Signalised intersection at Thompson Street New England Highway

Does not relate to growth and mapped development sites

Significant biodiversity corridors Funding for biodiversity can be a future consideration once ecology assessments are available

HEX Hart Road Interchange (maximising freight potential)

Addressing existing issues, relationship to development is lower

Intersection works, development frontage upgrades and flood free access of Cessnock Road (between

RMS is developing a preferred option to reduce flooding and improve access reliability along Cessnock Road at Testers Hollow between Gillieston Heights and Cliftleigh. Other intersection improvements


Cessnock and Kurri Kurri), to service relevant development

through Heddon Greta are being investigated to improve access for developments north and south of the town

Intersection works, development frontage upgrades and flood free access of Main Road, Cessnock, to service relevant development

Potentially included in upgrade of Cessnock Road. Detailed works covered through the SIC yet to be determined

John Renshaw Drive Upgrade, incl. Western access, Eastern access


For the purposes of the SIC, a road should be defined to include active-transport facilities within the same corridor (an off-road shared pathway along the most cost-effective route)

Relationship to development is lower in greenfield areas. If active transport facilities are provided, they are not intended to be funded through the SIC at this stage.

Traffic signals at Glenwood Drive and Weakleys Drive intersection


Upgrade Glenwood Drive to 4+ lanes between Thornton Road and Weakleys Drive


Transport signals at Glenwood Drive and Thornton Road intersection


Upgrade Thornton Road and Railway Street between Glenwood Drive and Glenroy Street


Transport signals at Huntingdale Drive and Thornton Road intersection


Long Bridge Upgrade or suitable alternative for flood evacuation route


New bridge or the elevation of Cessnock Road to rectify frequent flood inundation at Testers Hollow

RMS is developing a preferred option to reduce flooding and improve access reliability along Cessnock Road at Testers Hollow between Gillieston Heights and Cliftleigh

Upgrade of Allandale Road between Hunter Expressway and New England Highway


Main Road 101 (connecting Dungog to Maitland) Does not relate to growth and mapped development sites


Appendix C – Draft Hunter Region SIC list of infrastructure

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