Local council development levies

18 August 2010

In a recent case, the NSW Land and Environment Court applied the new $20,000 cap per home to an apartment development in the Ku-ring-gai Council area. The Council sought to have the cap set aside because it was unreasonable in the particular circumstances of the case but this argument was rejected by the Court due to a lack of evidence.

Importantly, even through the development was for five apartments, the developer was only levied $20,000 for four apartments (i.e. $80,0000 in total) because the developer was given a credit for the existing dwelling (which was to be demolished to make way for the apartments).

The case is available here.

On a related point, the NSW Government is currently considering making changes to its policy on local council development levies. It is expected to make an announcement soon after the federal election. The Urban Taskforce has been communicating an industry view to the government and has made a formal submission (available here).

Our submission makes these important points:

1. The government has previously announced reforms to local development levies and subsequently backed down on two prior occasions.

If the government were to back down, for a third time, there would be another very serious collapse in developer investment confidence in NSW which would put at risk the much needed recovery in residential development.

2. The announced requirement that only “essential” infrastructure is funded is a crucial element of the reform package.

The “essential” test should be enshrined in law, as well as in an administrative direction issued to the Independent Pricing and Regulatory Tribunal (IPART) and councils.

The requirement that only “essential” infrastructure be funded should be extended to all local development levies, not just residential development levies.

3. The announced requirement that plans be approved by the IPART should be retained.

4. The hard cap must be retained.

A corresponding cap should also be introduced for non-residential development. Otherwise these levies are likely to get out of hand, in the same way that local development got out of hand in response to rate pegging.

The affordable housing levies imposed by local councils should be included in the $20,000 cap.

5. The NSW government should establish a fund to assist when essential infrastructure exceeds $20,000 per lot.

6. Councils should not be permitted to impose special rates on development sites

7. “Voluntary” planning agreements.

A planning authority should be prohibited from agreeing to (or requiring agreement to) a voluntary planning agreement prior to a gateway approval being issued. This would force a council to decide, in-principle, their position on the rezoning before the negotiations for a voluntary planning agreement can take place. A council would set out their expectations in terms of infrastructure requirements in the planning proposal, and that could inform voluntary planning agreement negotiations after a gateway approval has been issued.

The joint regional planning panels (or the Department of Planning) would be empowered to resolve any impasse arising when a gateway approval for a rezoning has been given, but the matter does not progress further because of a disagreement over the terms of a voluntary planning agreement.

8. A $20,000 cap in infill areas is far too high

Compulsory local council levies in infill/brownfield areas should be a capped to a fixed percentage of construction costs (1 per cent).


Please feel free to contact us if you have any comments or further information that will assist us.