Melbourne Planning Scheme Am C208 Development ... · 20140313 Evidence Statement M Spiller (revised...

20140313 Evidence Statement M Spiller (revised 16 9 14)

Evidence statement of Marcus Spiller Melbourne Planning Scheme Am C208 Development Contributions Plan September 2014

20140313 Evidence Statement M Spiller (revised 16 9 14)

SGS Economics and Planning has taken all due care in the preparation of this report. However, SGS and its associated consultants are not liable to any person or entity for any damage or loss that has occurred, or may occur, in relation to that person or entity taking or not taking action in respect of any representation, statement, opinion or advice referred to herein. SGS Economics and Planning Pty Ltd ACN 007 437 729 www.sgsep.com.au Offices in Canberra, Hobart, Melbourne and Sydney

http://www.sgsep.com.au/

Evidence statement of Marcus Spiller

TABLE OF CONTENTS

1 INTRODUCTION 1 1.1 Overview and instructions 1

1.2 Credentials 1

1.3 Role of SGS in preparing the DCP 2

1.4 Correction to calculations 2

2 DCP APPROACH, METHOD & ASSUMPTIONS 4 2.1 Development contributions system review 4

2.2 Calculating the development contribution rates 4

2.3 Equivalence ratios for public realm projects 5

2.4 Project description and cost allocation 6

2.5 Use of community facilities 6

2.6 External usage of streetscape works 7

2.7 Allowance for future usage 7

3 COMMENT ON SUBMISSIONS 8 Scope and appropriateness of the DCP in an established urban area 8

Works in kind 9

Role of key roads as declared arterial roads 9

Nexus 10

Lack of strategic justification 10

Lack of detail regarding the scope and location of infrastructure items to be funded 10

Infrastructure categories 11

Development projections 11

Review of the DCP 12

Active permit applications 12

Project list 13

4 DECLARATION 14

Evidence statement of Marcus Spiller

Evidence statement of Marcus Spiller 1

1 INTRODUCTION

1.1 Overview and instructions

I, Marcus Spiller, make this statement to assist the Panel appointed to hear matters in relation to the proposed amendment to incorporate the Development Contribution Plan Overlay (i.e. DCP) into the Melbourne Planning Scheme. I have been appointed by Melbourne City Council (instructed by Maddocks) to provide expert review regarding the reasonableness of the City of Melbourne Development Contributions Plan (DCP), proposed to be incorporated into the Melbourne Planning Scheme via Amendment C208. SGS acted as an adviser to the City of Melbourne on DCP matters and assisted the Council with the drafting of the exhibited DCP. I am able to provide evidence to Panel regarding the DCP preparation methodology and related technical matters In this statement of evidence, I shall address the following matters:

Methodology of the DCP

The principal assumptions and inputs on which SGS provided advice to Council, and

My views on the public submissions made on the DCP.

1.2 Credentials

My full name is Marcus Luigi Spiller. I am a Principal and Partner of SGS Economics & Planning Pty Ltd, based in the firm’s Melbourne office at Level 5, 171 Latrobe Street, Melbourne. I hold the following academic qualifications:

PhD (Global Studies, Social Science and Planning), RMIT University, Melbourne 2009

Master of Commerce (Economics), University of Melbourne University 1986

Bachelor of Town and Regional Planning, University of Melbourne University 1979 I am a Fellow of the Planning Institute of Australia. In my early professional career, I was employed as a strategic planner in various local government and State Government settings, including the City of Heidelberg and the Melbourne and Metropolitan Board of Works. I have operated in a consultancy role for most of the past 30 years. I worked with Coopers and Lybrand and Econsult before the formation of SGS in 1990. My consulting assignments have focussed on land economics, regional economic development, housing policy, infrastructure funding, policy co-ordination systems and business planning for cultural institutions. From time to time I have taken up longer term secondments and in house consultancies. These have included lecturer in urban economics at Melbourne University, adviser to the Minister for Planning and


Housing in Victoria and senior executive in the Queensland Department of Housing, Local Government and Planning. In this latter role, I had a significant involvement in the development of the (then) Queensland Integrated Planning Act, especially those aspects to do with infrastructure co-ordination and funding. I have worked in development contributions for more than 25 years, commencing with the preparation of the State’s first formal contributions plan in the 1980s (Shire of Cranbourne). I led the SGS team which provided technical support to a Government appointed Committee set up in 1999 to review the Development Contribution System in Victoria. With significant input from SGS, the Committee delivered its final recommendations to Government in 2001. These included detailed content for new guidelines to underpin day to day operations of the current DCP system in Victoria. The bulk of the Committee’s recommendations, including the provision of these new guidelines, were implemented by the then Government, and remain in force today. I have led the preparation of several DCPs covering a range of urban settings, from inner city infill development to major greenfield development. I am regularly called upon to provide lectures and training in the principles and practice of development contribution plans. I am widely published on this topic, including a text book1.

1.3 Role of SGS in preparing the DCP

SGS’s role in the preparation of the City of Melbourne C208 DCP included:

Provision of advice to Council on the various options before it for funding infrastructure in the growth areas in question

Explanation of the DCP methodology as set out in the current State Government guidelines

Advice on the type of information required for each project to be included in the DCP (cost, catchment, strategic justification etc.)

Synthesis of residential and non-residential demand projections on a catchment basis and their conversion into equivalent demand units

Compilation of all data and computation of charges per demand unit, and

Drafting of the DCP report and schedules. The City of Melbourne generated the following inputs to the DCP:

Population and housing projections for the growth areas, and

Project data, specified in line with SGS’s recommendations.

1.4 Correction to calculations

Six minor errors in the input data have been detected since the exhibition of the DCP. One of the public realm projects in the City North area – the Victoria Street works (PR04) was inserted at a value of $9,522,080 whereas the estimated cost is actually $9,542,080. As I understand it, this was a typographical error. In addition:

the discount for future use for the Streetscape improvements - Victoria Street project in City North should have been set at 7.54% rather than 3.60%

1 Wellman, K. and Spiller, M. (eds) 2012 Urban Infrastructure Finance and Management, Wiley Blackwell


the discount for future use for the Intersections upgrades and installations project in City North should have been set at 7.54% rather than 7.20%

the discount for future use for the Stormwater harvesting project in City North should have been set at 7.54% rather than 7.20%

the discount for future use for the QVM Community Centre project in City North should have been set at 7.54% rather than 5.00%, and

the discount for future use for the Local streetscape and drainage upgrade projects (south Quadrant) in City North should have been set at 7.86% rather than 5.00%.

I’m advised that the latter errors arose as a result of adjustments made to the defined catchment areas of the various projects. Correcting for these errors makes no material difference to the contribution rates per demand unit, as shown in the following table. Where affected, contribution rates are fractionally lower than those exhibited.

TABLE 1 CORRECTED VERSUS EXH IBITED CONTRIBUTIONS PER DEMAND UNIT (CITY NORTH)

Exhibited Exhibited Exhibited Corrected Corrected Corrected

DI Drainage DI Public Realm CI Community Infrastructure

DI Drainage DI Public Realm CI Community Infrastructure

North West $216.99 $1,667.79 $900.00 $216.20 $1,655.76 $900.00

South West $216.99 $1,938.46 $900.00 $216.20 $1,926.42 $900.00

East $216.99 $1,481.20 $900.00 $216.20 $1,469.16 $900.00

South $216.99 $922.73 $900.00 $216.20 $894.90 $900.00


2 DCP APPROACH, METHOD & ASSUMPTIONS

2.1 Development contributions system review

At the time that SGS was engaged to provide advice to the City of Melbourne on its proposals to introduce DCPs in its growth areas, the State Government had a review of the overall development contributions system in train. That review has only recently been concluded, the upshot being that the current system remains largely unchanged save for greenfield growth areas and major urban redevelopment areas to be known as “Strategic Development Areas (SDAs)”. In the latter two areas, standard levies, plus potential supplementary levies, will be applicable when the new system is commissioned in mid-2015. I am not aware of an announced process by which SDAs will be nominated and confirmed. But, potentially, Southbank and City North might qualify given the anticipated growth in population and employment numbers in these precincts. Indeed, Plan Melbourne specifically mentions Southbank and City North as ‘Urban Renewal Opportunities’2. Were Southbank and City North to be designated as SDAs, Council could, presumably, initiate a fast track Infrastructure Charges Plan (ICP) for each precinct under the new system. This would yield at least $4,500 per dwelling, $46 per square metre of Gross Floor Area (GFA) for retail and $16 per square metre GFA for commercial and industrial uses, for allowable infrastructure items. If the scope of works to enable development is wide enough, the standard levy in these areas could be as high as $6,000 per dwelling. As the system review was unresolved during our work with Council, our advice was to continue with the existing system. As I understand it, Council received similar advice from the Department. The C208 DCP was duly produced in line with the current State Government Guidelines. It is noteworthy that the ‘new system’ dilutes the nexus principle in SDAs for the sake of simplicity and reduced preparation costs. Arguably, Council’s C208 DCP adheres to a greater degree of rigour in cost apportionment than would be expected under the new system.

2.2 Calculating the development contribution rates

As noted, the provisions of the current DCP system are stated in the State Government’s DCP Guidelines (2007). Ministerial Directions have also been issued to further define operational details of the system. A DCP generally involves:

Documentation of the planning framework for an area

2 Government of Victoria (2014) Plan Melbourne, p 175


Based on the planning framework, identification of infrastructure projects that are deemed to

be required to service the area, and

Generation of development contribution charges, calculated using a project-by-project,

catchment based, cost apportionment method. This system establishes up-front user pays charges for scheduled or planned infrastructure. Under the current system, there is a requirement to justify the project need, prove a reasonable nexus between development and the project, defined by reasonable likelihood of use, and apportion costs based on estimated share of use. Funds collected are only to be used for the DCP projects. The proposed City of Melbourne DCP utilises the correct approach and is suitable for approval. The method adopted by Council was as follows:

Define the infrastructure items required to service the area (other than on-site works carried

out by the developer) and, if necessary and practical, identify a time frame for the delivery of

these infrastructure items

For each infrastructure project or suite of projects, identify the main catchment area

Identify existing demand, and project the growth in demand units (for example, dwellings or

their equivalent) in each catchment area over the life of the funding plan

Adjust the cost of each infrastructure item downwards in line with the estimated share of usage

coming from outside each project’s main catchment area and / or outside the time frame of the

DCP

Divide the infrastructure cost by the number of demand units to arrive at a charge per demand

unit, and

Aggregate all levies that apply to a particular charging area to arrive at a total charge per

demand unit and by floorspace equivalent. The DCP also takes into account cash-flow and financing matters, and adjusts charges based on these time value of money considerations. This is consistent with the DCP Guidelines.

2.3 Equivalence ratios for public realm projects

Southbank and City North are planned as genuine mixed use inner suburban neighbourhoods. They will accommodate significant amounts of both employment and residential uses. The question arises as to the rate at which employment uses will make use of public realm infrastructure by comparison to residential uses. SGS could find no definitive data, or research literature, to resolve this question. Instead, the working assumption was made that a single worker visiting the precincts in question would make a similar level of use of relevant infrastructure items as a single resident. Many of the works in question relate to lifting streetscape amenity and improving drainage and stormwater management as an integrated package. There is no compelling reason, in my opinion, to expect that residents would make heavier use of such streetscape amenities compared to workers, albeit that the bulk of residents and workers will be in occupation of these spaces at different times during the day or week.


Since the completion of the DCP, I have read the research undertaken by Ms Jo Thompson in respect of open space needs and usage in the City of Melbourne3. This shows that workers and residents both place a high value on these assets and make heavy use of them. The public realm projects within the DCP are designed to fulfil many functions of ‘parkland’ in the sense that they offer a pleasant and supportive environment for relaxation, passive recreation and quiet celebration of a shared civic asset. In my opinion, this evidence underlines the robustness of the assumption in the DCP that workers and visitors to the precinct will make equal use of the public realm as residents.

2.4 Project description and cost allocation

The City of Melbourne sought SGS’s advice on how project costs for Local Streetscape and Drainage projects should be allocated in the DCP given that Council was seeking to cap its pre-commitment for annual capital outlays on these types of projects in each urban renewal area to $2m per year or $30million (undiscounted) for the 15 year life of the Plan. This pre-committed investment program represented only a fraction of the total estimated cost of the works which would ultimately be required in the urban renewal areas (that is, around 16% of the costs estimated by AECOM for Local Streetscape and Drainage works in the City North area and 17% in Southbank). SGS advised that it was reasonable within the philosophy of the (current) DCP system to allocate the $30 million ‘budget’ for each urban renewal area to the various sub-areas, known as ‘quadrants’, in line with the proportion of the total cost of required works held by each of these quadrants in turn. The statement of Ms Hodyl (already circulated) provides the details of this calculation. All users across the quadrants in each urban renewal area are treated equitably in that they pay the same proportion of the total cost of works required in their respective quadrants. The funds will be expended on a defined suite of projects, as listed in Ms Hodyl’s statement, and will be auditable on this basis. Therefore, in my opinion, the approach adopted by Council is fair and robust.

2.5 Use of community facilities

Typically, DCPs assume that non-residential uses will not make use of community facilities and therefore will be exempt from sharing in the cost of these items. This is reasonable in the context of greenfield growth areas or parts of the metropolis which have more traditional segmentation of living and working environments. Such segmentation is not appropriate in the case of central city mixed use areas. Workers make significant use of libraries, child care facilities and other community facilities. This was corroborated in separate social infrastructure needs assessments commissioned by the City of Melbourne. Accordingly, SGS advised that it was reasonable and fair to attribute part of the cost of community facilities to users from non-residential developments.

3 Thompson Berrill Landscape Design Pty Ltd and Environment & Land Management Pty Ltd in association with Dr Nigel Tapper and

Dr Serryn Eagleston (June 2012) City of Melbourne Open Space Strategy - Technical Report


2.6 External usage of streetscape works

The public realm projects which dominate the cost of works to be funded by the DCP are largely situated within the street network. This network will be used by travellers passing through the urban renewal areas as well by residents, workers and visitors in these areas. SGS advised the City of Melbourne that the purpose of the public realm works was to support redevelopment of the areas in question. That is to say, any benefit to ‘through travellers’ would be incidental and could be set aside. Accordingly, no allowance for external use by through travellers was made in the DCP calculations. This is shown as a 0% provision for ‘external demand’ for all streetscape projects in Tables 23 and 24 in the DCP.

2.7 Allowance for future usage

As explained in the statement circulated by Ms Hodyl, Council has developed a 30 year vision for regeneration of the two precincts in question. This 30 year vision informs the projects and the costings which have been fed into the DCP. Meanwhile, Council’s development projections for these areas were framed to a 20 year horizon. In the DCP, the 20 year projection is used as the basis for calculating discounts for future use of the various infrastructure projects. Thus, for example, the discount for future use of project PR01 in City North is 4.8%, meaning that 95.2% of the demand which will be in place by year 20 will have been reached by the end year of the DCP (year 15). There, is of course, likely to be continuing development in the precinct after year 20. However, this long term development has been set aside in the DCP calculations. This is prudent and appropriate practice in my view. Future development, even to a 15 year horizon, cannot be regarded as certain, and development projections up to and beyond a 20 year horizon can only be indicative. As a responsible investor in infrastructure on behalf of its citizens, it is appropriate for Melbourne City not to rely on long distant and risky revenue flows. This is particularly so if there is no flexibility for Council on the outlay side of the equation. Under the terms of the DCP, Council is irrevocably committed to delivering a particular set of assets for the districts in question. It therefore needs to mitigate revenue risk and, in my opinion, it is reasonable to do so by excluding long range development from the calculation of charges.


3 COMMENT ON SUBMISSIONS

In this section of my evidence, I comment on selected questions and themes raised in submissions to the exhibited Am C208. These are matters which I judge to be within the scope of my expertise. For each topic area, I firstly reproduce the summary of submissions prepared by the City of Melbourne, then I present my opinion on each point raised.

Scope and appropriateness of the DCP in an established urban area

CoM’s summary - A number of submissions raise issues surrounding the perceived increase in cost to the developer should a Development Contributions Plan Overlay (DCPO) be introduced into the Melbourne Planning Scheme for the identified urban renewal areas of City North and Southbank. Related to this are issues around the potential for a ‘double up’ in public realm costs, in particular where individual development proposals already include improving the public realm around individual subject sites as part of a planning permit application or 173 Agreement, contribution amounts, apportionment and fairness . In addition, a number of submitters question the need for further infrastructure in these areas particularly where an extensive network of infrastructure already exists in these established areas. My opinion - The DCP system enabled by the P&E Act and elaborated in the Government’s guidelines is based on the ‘user pays’ principle. This is layered over other mechanisms for paying for infrastructure, including rates. It is to be expected that development costs will increase with the introduction of a DCP. The question is whether the charges are reasonable against the need, nexus and fair apportionment tests. It should also be noted that development contributions sought under a DCP overlay are but one type of financial or in-kind contribution that might reasonably be sought from a development proponent. As well as pre-notified user charges under a DCP, a responsible authority could reasonably require a proponent to mitigate the immediate adverse impacts of their proposal through permit conditions or s173 agreements. The fact that a proponent has entered into a s173 agreement does not, in and of itself, provide a basis for exemption from DCP charge obligations. The DCP guidelines make clear that ‘double dipping’ is not permissible; that is, requiring a proponent to pay for the same item of infrastructure twice, through different mechanisms. As I understand it, the works covered by s173 agreements are not included within the suite of projects that have been factored into the DCPs for City North and Southbank. The DCP legislation and guidelines place no cap on charges for development infrastructure. In principle, Council is authorised to charge 100% of the cost of required development infrastructure to support these areas. This would have generated charges orders of magnitude greater than those which have been exhibited. Council is seeking a relatively small proportion of the cost of infrastructure that will be required. The contributions proposed for the two areas are broadly in line with development contributions levied in other ‘town centre’ and urban infill environments in Melbourne as indicated in the following table.


TABLE 2 COMPARATIVE CONTRIBU TION RATES

Residential Contributions (Non-residential) Non-residential (per m2)

Manningham – Doncaster Hill DCP

$2,139 per dwelling $855 (per 121m2 commercial; or 19m2 of retail floorspace)

$7 (per m2 commercial); $45 (per m2 retail)

Darebin DCP (expired)

$42-$3,977 per dwelling $1-$3,941 (average per 121m2 commercial or 19m2 of retail floorspace for roads and ancillary; per 360m2 commercial or 300m2 of retail for drainage)

$0-$32 (per m2 commercial for roads and ancillary); $0-$207 (per m2 retail for roads and ancillary); $0-$5 (per m2 commercial for drainage); $0-$6 (per m2 retail for drainage);

Maroondah – Ringwood District Centre DCP

NA $77 (per m2 of additional retail floorspace); $34 (per m2 of additional office/commercial floorspace);

As noted, the charges proposed in the Melbourne DCP are significantly below the State Government’s proposed standard levy in SDAs. The ‘default’ rate proposed by the Government is $4,500 per dwelling with potential for Councils to justify rates up to $6,000 per dwelling.

Works in kind

CoM’s summary - A number of submissions suggest the DCP should include more detail for works in-kind, including the types of projects which would be accepted by Council as in-kind contributions and a description of the method by which credits for works in kind would be provided. My opinion - Through the DCP, Council will be committing itself to delivering certain infrastructure into the two development areas over the life of these plans. If these items are not delivered within the time frame, the monies collected in respect of them must be returned to the current owners of these properties. There are, therefore, some risks to Council in collecting contributions via works in kind rather than cash. Only the latter can be seamlessly deployed against a planned works program. There may be some instances where accepting works in kind is mutually advantageous, but this should be a matter for Council to determine on the merits. The provision set out in Section 7.2 of the DCP report is a standard one that has been accepted in several gazetted schemes.

Development contributions payments are to be made in cash. The Collecting Agency (City of Melbourne), at its discretion, may consider accepting works or land in lieu of cash contributions, provided the value of the credit of the works in question does not exceed the amount provided for that project under this DCP (unless the Collecting Agency agrees).

Role of key roads as declared arterial roads

CoM’s summary - VicRoads is primarily concerned with any works which may compromise the function of key roads as declared arterial roads, in particular City Road, Southbank. VicRoads highlights the role of City Road as a strategic arterial road and the need to retain the existing capacity and function for motor vehicles and as an alternative route to the Burnley Tunnel. VicRoads also highlights a number of other roads in its network that are included in the DCPO areas. My opinion - The works proposed by Council relate to the pedestrian amenity of the roads in question. None of the works are intended to compromise the current or future functionality of these roads as routes of metropolitan or State significance.


Nexus

CoM’s summary - A number of submitters have raised the issue of nexus, in particular the lack of demonstration of a clear nexus between the collection of DCP funds and where the funds are spent by Council. My opinion - The projects in the exhibited DCP are specified in terms of suites of infrastructure works. This is a reasonable and practical way of defining where and how development contributions will be used, given uncertainties about the particular location and timing of development. The Council has clearly defined the works required to support redevelopment in the DCP areas and has shown that new development will be called upon to fund only part of this cost. An auditable list of works against which DCP funds will be expended has been adopted by Council (see Ms Hodyl’s statement). On more specific matters, one submitter (Urban Enterprise) has suggested that the North Charge Area in Southbank will not receive any substantial benefit from the streetscape improvements to Sturt Street, and therefore the nexus between the infrastructure item and North Charge Area has not been demonstrated. However, as I understand it, the works in Sturt Street provide for boulevard pedestrian environment which will benefit the whole Southbank area. Another submitter (Peter Hirst) suggests that “the works resulting from such contribution plan benefit a broader base than those within the area over which the amendment applies”. However, the cost apportionments built into the DCP take into account external usage. As I have discussed, in the case of streetscape works, external usage is judged to be zero because the rationale for these projects is to serve local development and the residents, visitors and workers which it will host. Given this purpose, other usage is incidental and can be set aside.

Lack of strategic justification

CoM’s summary - A number of submissions express concern with a lack strategic justification and detail with regard to the scope and location of infrastructure items. My opinion - The detailed structure plans, Council’s infrastructure needs assessments and AECOM’s costings amount to sufficient strategic justification for the projects included in the DCP.

Lack of detail regarding the scope and location of infrastructure items to be funded

CoM’s summary – One submitter (Urban Enterprise) states … “For example in Southbank the AECOM report estimates that local streetscape and drainage upgrades required will cost at least $290m, however, the DCP proposes to collect approximately $30m for these projects.” My opinion – As explained by Ms Hodyl in her statement, Council undertook a reconciliation process by which the ideal or warranted package of works required in these development areas was aligned with a program of works which Council could commit to, given a prudent approach to capital works budgeting over the DCP period. Importantly, this reconciliation process preserved the proportionality in the cost of the works identified in the initial scoping of the infrastructure required in the various parts of the development areas. The upshot is that proponents are likely to pay only a proportion of the cost of works required to support their projects, and their contributions will be differentiated according to the cost of works that will ultimately be required in their respective areas. These two outcomes are entirely in line with the user pays principles underpinning the DCP system.


Infrastructure categories

CoM’s summary - Submitters have suggested the DCP should more clearly and appropriately delineate between road, drainage and streetscape infrastructure and express levies and costs accordingly. My opinion – The public realm works program developed by CoM address a range of infrastructure functions in an integrated way, reflecting the needs of sustainability as well as traffic movement and ‘drainage’. The categorisation used by Council is suitable and able to be accommodated within the current DCP guidelines.

Development projections

CoM’s summary - Submitters have raised a concern that the DCP underestimates the amount of future development in Southbank and therefore the number of demand units in the DCP area with the effect of underestimating the funds that will be collected. My opinion – The dwelling projections used for calculating infrastructure contributions were based on population forecasts developed by the City of Melbourne, which were current at the time (sourced from id Consulting and deployed in Council’s CLUE Forecast Model). The population projections are based on a ‘top-down’ approach (projections for Victoria, scaled down to projections for the Melbourne Statistical Division (MSD), scaled down to projections for City of Melbourne, scaled down to projections for Southbank/City North). These projections are applied across the gamut of Melbourne City Council’s strategic planning projects and processes. The employment projections in the DCP were also provided by the City of Melbourne via its CLUE Forecast Model. This relied on SGS employment projections which had been supplied to Council previously as part of a separate commission. In both cases (residential and commercial) the projections are long term and designed for strategic planning purposes. They are reconciled with wider official projections for Victoria and Melbourne. Observed near term perturbations or cycles in development activity may not be a good guide for future trends. Nevertheless, I asked my office to provide me with a comparison of projected development activity under the DCP with development activity actually completed, underway or irrevocably committed during the 2002 to 2014 period in Southbank. This was done for both residential and commercial development. The results are summarised in Table 3. It is evident that development patterns in Southbank have been volatile over the past decade or so. This is particularly so for commercial development but also applies to residential projects. The ratio set out in the DCP for converting commercial floorspace into standard demand units for relevant infrastructure projects is 46.15m2. That is, every 46.15m2 of commercial development is deemed to generate the same usage of public realm projects as one dwelling. Applying this ratio to the historic pattern of commercial development shown in Table 3, and adding these equivalent dwellings to the residential units developed over the same period, the annual average demand units developed in Southbank over 2002-14 was 857. The population and employment projections built in the DCP assume that, on average, 280 dwellings will be built in Southbank each year and 654 ‘equivalent dwellings’ in commercial development. This gives a total of 934 demand units per year. The upshot is that if extrapolations of past development trends in Southbank were used to estimate the flow of new development in this precinct over the DCP period – a practice which I would not endorse for


the reasons set out above – total future demand units would be some 8% lower than those built into the DCP. Contribution rates per demand unit would be higher as a result.

TABLE 3 RESIDENTIAL AND COMM ERCIAL DEVELOPMENT I N SOUTHBANK 2002 - 2014

Dwellings

completed or commenced

Commercial floorspace (m2)

Commercial development (demand units)

Total demand units

2002 897 8,385 182 1,079

2003 182 185 4 186

2004 814 1,592 34 848

2005 532 58,773 1,274 1,806

2006 549 3,233 70 619

2007 none recorded none recorded - -

2008 11 1,416 31 42

2009 665 125,943 2,729 3,394

2010 609 6,388 138 747

2011 360 none recorded - 360


2013 1,266 1,166 25 1,291


Average 857

Source: CoM Development Activity Monitor, SGS calculations

Review of the DCP

CoM’s summary - A review period has not been specified. A review period of no more than 5 years has been recommended by a number of submissions. My opinion - No review period is prescribed in the Act. This is so for most other aspects of Planning Schemes. Review of DCP should occur on an as needs basis, rather than committing Council to unnecessary cost.

Active permit applications

CoM’s summary - It is anticipated that the DCPO will be introduced whilst a number of permit applications are active. Development contributions cannot be collected for permitted development or retrospectively collected. Clarification is sought that if a planning permit is issued for a development prior to gazettal of the DCP, contributions are not payable in respect of that development. My opinion - Contributions cannot be secured under the DCPO if a development has been fully approved for construction. However, it should be noted that development contributions may be collected at either the planning permit or building permit stage. A development that has a planning permit, but has not yet secured building approval, can, in theory, be charged development contributions under the Planning Scheme at the building permit stage. I would recommend against this practice as I see it as contrary to the intention of the legislation and out of line with standard arrangements in greenfield areas. Nevertheless, this is a matter for policy resolution on the part of Council.


Project list

CoM’s summary - Submissions have queried the inclusion of drainage upgrades in the infrastructure project lists. It is argued that major drainage issues are picked up through Melbourne Water charges in established suburbs of Melbourne and Council should fund drainage improvements in established areas through ongoing rates and charges and not through a standard drainage charge. My opinion - As noted earlier, proponents cannot be ‘double dipped’ via the DCP system. As I understand it, all drainage works included in the C208 DCP are separate from, and in addition to, works delivered by Melbourne Water.


4 DECLARATION

I provide this statement for the benefit of the Panel. I have made all inquiries that I believe are desirable and appropriate for a review of the Melbourne DCP.

Marcus Spiller Principal, SGS Economics and Planning Pty Ltd 16th September 2014


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