10 December 2010
The Government has re-commenced an earlier consultation process (that took place in mid 2009) on the details of a new special infrastructure contribution (SIC) “determination”.
This determination will ultimately apply in all areas that may be subject to a formal SIC levy. In time, this may include the Hunter, the Illawarra, other high growth regions, as well as the Sydney growth centres, and the Western Sydney Employment Area.
The main purpose of this new determination is to document a mechanism for the deferral arrangement for the SIC levy. This would apply when a developer seeks to postpone payment of a SIC levy until after the issue of a subdivision certificate; to be paid immediately prior to an exchange with a purchaser on a subdivided lot.
When consultation last took place on this matter the Urban Taskforce made a submission expressing serious concerns at some elements of the proposal then under discussion (our previous submission is here).
It is apparent that some of our concerns have been addressed. For example, it is now proposed to only index the SIC levy in-line with CPI, rather than a dodgy artificial formula based around local land values (although the benefits of this commitment are weakened by a statement that the rate may be unilaterally revised if there are significant changes in land values). The proposed bank guarantee has been reduced from 110 per cent to 100 per cent of the liability.
The Department of Planning says it is going to be more flexible on security for deferred SIC levy payments (i.e. it will not necessarily insist on being a first mortgagee), however, little detail has been provided on this revised position. In particular, they still seem to be insisting that they will have a registered charge over the land (or a bank guarantee) and have not explained what priority they will expect in relation to second mortgagees or others with a registered interest.
A number of documents are available for comment. These are:
- a PowerPoint presentation on the proposed arrangements;
- Western Sydney Growth Centres Special Contribution Area: Practice Note;
- Practice Notes Schedule;
- the Western Sydney Growth Areas Special Contributions Area map;
- Western Sydney Employment State Contribution Area map; and
- Western Sydney Employment Area Special Infrastructure Contribution: Practice Note.
The Department has not provided a copy of a draft determination (the practice notes are not now legal documents, they are just plain English explanations of the determination), nor have they provided a copy of the proposed deed of charge (there were serious problems with the draft deed they were consulting on in June 2009). We are pursuing these additional documents.
We’ve been asked to provide comment by Friday next week, so please urgently advise us of any matters you think we should raise.