One component of this strategy has been the review of the current open space contributions program. Areas for improvement that have been addressed in the review include simplifying the schedule of rates, broadening the contribution requirement to all development in the City of Glen Eira, providing direction on when a land contribution should be required, and re-calculating the rate based on the projects included in this strategy and linked to population change in the municipality during the strategy planning period. The strategy establishes the need for all subdivisions to contribute to open space and the type of contribution required, whether as land or equivalent value in cash.
A new schedule is proposed for Clause 52.01 of the Glen Eira Planning Scheme An averaged rate to apply across the municipality would replace the schedule of multiple rates currently in the planning scheme. This would simplify the percentage rate calculation for open space contributions and link the funds collected to the open space projects contained in this strategy. Based on the projects recommended in this draft strategy, it is anticipated that this rate will be in the order of 4 to 5 per cent.
Thus sayeth the consultants in the draft Glen Eira Open Space Strategy. How they justify the recommended 4 to 5% flat rate is anybody’s guess given that:
- No figures are provided on anticipated costs of acquiring new open space
- No figures are provided on anticipated necessary expenditure – for example on pavilion ‘improvements’
- No figures are provided on what income is expected from a 4 to 5% increase and to what extent this meets the anticipated costs.
More important is the fact that this draft strategy TOTALLY IGNORES the possibility of levies higher than 5%. Stonnington for example is currently seeking an 8% levy across its municipality largely based on the fact that it has the second lowest amount of public open space in the state. If Glen Eira has the lowest, and is facing major residential development everywhere, then even a 5% levy is a joke!
We cite the following from the Stonnington review of its open space levy strategy and have uploaded the full document HERE. What is most impressive is the detail, the financial analysis, and the correlation between all of Stonnington’s policies – ie Public Realm, Pavilion Strategy, etc.
For starters, here’s what is not revealed in the Glen Eira version –
Clause 52.01 of the VPPs expressly recognises the power of councils to obtain open space contributions under the Subdivision Act, and provides a mechanism for councils to amend the provisions to suit local circumstances.
The Schedule enables a council to set its own contribution rate(s) subject to strategic justification. This can exceed the 5% limit of the Subdivision Act. The percent contribution can be tailored to meet the specific needs of areas and sub-areas, subdivision types (i.e. residential, commercial and industrial) and method of contribution (i.e. cash, land or both). Details of liability can be more clearly defined to suit local conditions. Councils are effectively immune from challenge to the contribution if a Schedule to Clause 52.01 is incorporated into the Planning Scheme and it is unambiguous and applied appropriately. Implementation of a Schedule to Clause 52.01 requires a Planning Scheme amendment. (page 4)
There is then an overview of the various levy approaches that could be taken by councils. For example:
The main advantage of this is its simplicity, clarity and certainty for subdivision proponents and council. A rate around 5% can deliver a significant income stream to council for open space.
The main weakness or disadvantage of this approach is that the nexus between who pays and who receives open space investment benefit – by area – can be weak. As such, it may be difficult to justify a rate higher than the Subdivision Act benchmark of 5% in using a flat rate even if some parts of a municipality would justify this due to high development pressure and open space need. (page 7)
Precinct Based Fixed Rate
The precinct based levy approach differs from the flat rate in that it seeks to provide a stronger nexus between developments that pay open space contributions and areas that receive benefit from planned open space investment. The upshot is that areas with more open space investment will pay a higher contribution, all other things being equal.
The approach links planned investments in an area to the contribution requirement. If an area is to receive no open space investment, the contribution in the area will be zero. The basis for the levy is therefore the planned investment as follows:
Strategic planning work is undertaken and this identifies infrastructure and open space projects that are required or desired for the planning area. This can be documented in a specific open space strategy or plan or a structure plan
The open space projects are identified and costed from this strategic base. The cost of each project is apportioned to subdivision over the life of the funding plan.
The strength of the precinct based approach is that it provides a stronger nexus between developments that pay open space contributions and areas that receive benefit from planned open space investment
The main weakness of the approach is that more justification may be required to support the Planning Scheme amendment process compared to a simple model. The validity of the approach may be based on the rigour of the supporting strategy and information inputs. (page 8)
The report then goes on to provide the necessary financial framework for the final recommendations-
Across the City as a whole, the current levy schedule has delivered about $3.3m per annum on average over the last four years and $6.2m in the latest full financial year.
If a 5% flat rate levy was used instead of the sliding scale over the last four years of levy operation, the income to Council would have been $15.0m over four years at an annual average of $3.8m (instead of the actual $13.2m at $3.3m).
The 5% flat rate would have delivered $6.8m in the 2011/12 financial year (instead of the actual $6.3m). This marginal change is explained by the fact that in that year most subdivisions applied a rate at or near 5%.
Various scenarios using 5% to 10% flat rate levies are shown in Figure 19 below. These levy rates are applied to:
The four years of levy collection from 2008/09 with an average per annum figure produced
The last financial year of levy collection 2011/12
The figures are extrapolated over 20 years to gauge what might be required to achieve approximately $314m in income to cover the cost of proposed open space works via this tool.
The four year data suggests that a flat rate of well over 10% would be needed if planned open space expenditure were to be fully funded from this levy over 20 years. Using the latest year data, projected revenues would be significantly greater, but even at a 10% levy rate, this mechanism would only collect 87% of projected expenditure.
In terms of the Chapel reVision area the levy would need to be set at 8% to fully recover the cost of acquisition and works planned for the area.
CONCLUSIONS?
- Stonnington has decided that 5% is far from adequate. We suggest that the same holds true for Glen Eira.
- Is Glen Eira Council capable, and/or willing, to do the necessary analysis that will provide the detail for any amendment that has a chance of getting up? Or is it easier to take the simple path and just pluck a figure from the air without really knowing how far this will advance the acquisition of more open space in the municipality?
- Is 4 to 5% seen as the secret threshold that will not put off too many developers – even though these extra costs will undoubtedly be passed on to eventual purchasers.
- And the perennial question is: why can one council do all this work, be upfront with their strategic planning, and our glorious council persists in waffle, lack of detail and financial justifications, and misinformation!?