On 6 May 2005 the NSW Parliament passed the Environmental Planning and Assessment (EP&A) Amendment (Developer Contributions) Bill 2005 which grants planning authorities three methods to collect development contributions from developers. The Bill was granted assent on 18 May 2005.

Since 8 July 2005 Local Council’s within NSW have had the following options for collecting developer contributions:

  Enter into a voluntary planning agreement;
  Set a fixed development consent levy – the maximum rate is 1%; or
  Continue along the traditional path i.e. charge section 94 contributions.

The amendments also allow monetary contributions within different accounts to be pooled together for a particular project. In theory this should create efficiency, as residents will have access to new infrastructure quicker than if funds could not be borrowed. Any borrowed funds must be paid back. Furthermore an inefficiency in the previous system is now rectified. As long as there is a joint development contributions plan a development contribution can be levied by an adjoining Local Council if the particular development impacts upon the Council area.
 

In essence a planning agreement is a contract between the planning authority and the land owner/developer. By entering into a planning agreement the planning authority will attain either free land, a monetary contribution or some form of built benefit to the community. Planning authorities include a development corporation, Local Councils, the Minister or a public authority recognised by Regulations.

The planning authority can dictate whether one or more options are suitable. Benefits to the community can include the provision of public amenities, infrastructure, affordable housing, conservation of the surrounding environment etc.

A planning agreement is ideal for large-scale, staged developments or where the developer feels the infrastructure is imperative to the success of the development. A planning agreement can be entered into at the rezoning or development application stage and must be publicly exhibited for 28 days prior to entering into the agreement.

Disadvantages:

  If you enter into a planning agreement at the rezoning stage and the Local Council
    refuses there is no option for appeal.
  There does not need to be a connection between the subject development and the
    expenditure or provision of services.
  Local Councils can ensure the planning agreement is registered on the Certificate of Title.
    If this is not removed future owners may be liable, if the agreement is outstanding or a
    continuing liability, and this could have a negative impact upon the value of the property.
  The planning authority must agree to amend the planning agreement, which could be a
    lengthy process.


 

Up to 1% of the proposed cost of the development can be charged under the fixed development levy. Under the amendment to the EP&A Act the costs of development that are to be included in the calculation will be noted. When a planning authority chooses to utilise the fixed levy no Section 94 contribution is required.

A fixed levy is ideal for small rural councils which have little continuous development and thus the cost of creating a Section 94 contributions plans is unnecessary. The levy can also be utilised within established areas where land is at a premium i.e. there are few opportunities to give away open space to planning authorities.

Disadvantages:

  There does not need to be nexus between the levy and the how the money will be used.
    The Local Council must identify the areas of spending within the contributions plan.