The Sustainable Planning (Infrastructure Charges) and Other Legislation Amendment Act 2014(Qld) (Amendment Act) received royal assent on 19 June 2014.
Infrastructure charges reforms for Councils are expected to commence on 4 July 2014, amending the Sustainable Planning Act 2009 (Qld) (SPA). These reforms maintain the current ‘capped’ infrastructure charges framework – but be wary as they bring about some substantial changes.
Due to the transitional provisions, Councils do not need to immediately respond to the Amendment Act, but it may be worthwhile kick-starting your processes surrounding the new charges resolutions. Note that under the impending Ministerial guidelines the default provisions may be suitable to all Councils.
Importantly, the Amendment Act will apply to any existing development applications that have not been decided before the commencement date.
Some of the published material also refers to a co-investment funding program through use of a fair value schedule of charges but the details of that program are not yet available.
Continuation of capped infrastructure charges regime
The existing State planning regulatory provision dated 1 July 2012 will continue, under the transitional provisions of the Amendment Act, to be an SPRP (adopted charges) instrument for the purposes of the Amendment Act. The current SPRP sets a maximum amount for an adopted infrastructure charge and has been an integral feature of the infrastructure charging framework in Queensland since 1 July 2011.
Councils are restricted from imposing an adopted charge under its charges resolution which exceeds the maximum charge identified in an SPRP (adopted charges).
PIP to LGIP
The terminology for the relevant infrastructure planning instrument has changed over a number of years. Currently, the document is referred to as a Priority Infrastructure Plan (PIP), although a large number of Councils do not have such an instrument and are relying on the identified matters stated under a Council adopted infrastructure charges resolution.
Under the Amendment Act, a PIP will be replaced with an instrument known as a Local Government Infrastructure Plan (LGIP). An LGIP will form part of a Council planning scheme. There is no immediate requirement for a Council to prepare an LGIP but, under the transitional provisions of the Amendment Act, this document is required to be in place by 1 July 2016. An LGIP is required to be reviewed over five year intervals. Any existing PIP will become an LGIP upon the commencement of the Amendment Act.
An LGIP is similar to but differs from a PIP. An LGIP is quite specific to a Council and its infrastructure planning rather than having components relevant to a State infrastructure provider. The Priority Infrastructure Area (PIA) will be a prominent aspect of an LGIP.
An LGIP will also not have an infrastructure charges schedule, as that aspect will be under a charges resolution. The terms ‘population and employment growth’ are used for the first time and matters related to type, scale, location and timing are identified with reference to ‘future development’ rather than ‘future growth’.
The transitional continuation of existing Council adopted infrastructure charges resolutions has been outlined below.
The PIA is an acronym for priority infrastructure area which is an important component of an LGIP. It means an area:
- used, or approved for use, for non-rural purposes
- serviced, or intended to be serviced, with development infrastructure networks, and
- that will accommodate at least 10 (but no more than 15) years of growth for non-rural purposes.
Local Government charges resolution
Since 1 July 2011 Councils have been levying infrastructure charges primarily through an adopted infrastructure charges resolution.
The Amendment Act continues with that general framework but the resolution is to be called a charges resolution. A Council can levy an adopted charge in accordance with this resolution to support the issuing of an infrastructure charges notice (ICN) for approved assessable development.
Under the transitional provisions in the Amendment Act, all existing Council adopted infrastructure charges resolutions become charges resolutions for the purposes of the Amendment Act and will continue in effect, until 1 July 2015, unless otherwise repealed. In addition, until 1 July 2016, an existing resolution may also continue to identify development infrastructure as trunk infrastructure for its local government area and, for the identifying trunk infrastructure, state the required standard of service and establishment costs.
The charges resolution is required to include additional matters when compared with the adopted infrastructure charges resolution under the current regime. These further requirements are set out below and include matters relating to the new conversion application and offset/refund requirements. Transitional provisions also exist in relation to these requirements.
The charges resolution can also declare that there is no adopted charge for part or all of the relevant local government area and provide for automatic increases in levied charges from when they are levied to when they are paid (an automatic increase provision).
Infrastructure charges notices (ICNs)
The current regime is somewhat confusing because it refers to a number of different notices which can be issued by a Council, such as an infrastructure charges notice, a regulated infrastructure charges notice and an adopted infrastructure charges notice. It is only upon reading the transitional provisions of the existing SPA that it is understood that the only relevant notice that can be issued since 1 July 2011 is an adopted infrastructure charges notice (or negotiated adopted infrastructure charges notice).
The Amendment Act streamlines all of these other notices such that the only notice that is issued by a Council following the commencement of the Amending Act is an ICN. A ‘negotiated notice’ is still an ICN.
The timing for the issuing of an ICN has not substantially changed and importantly only relates to assessable development. The Amendment Act also clarifies specifically that a charge may only be levied for ‘additional demand’ placed upon trunk infrastructure that will be generated by the development. This requires excluding matters such as an existing lawful use.
The ICN must also include an information notice that states the reasons for the ICN. This is an important new requirement that is likely to be the focus in any dispute about the charges payable under an ICN. The information notice must also outline rights of appeal.
ICNs attach to the land and can be recovered as a rate if unpaid. The relevant triggers for payment under the Amendment Act remain unchanged. The ‘negotiated’ charge procedure also remains relatively unchanged. The content of what is required to be included in an ICN is clearly specified. New matters to be incorporated include whether an offset or refund under the part applies.
The Amendment Act also clarifies that it is open for a local government to amend an ICN (or a previously issued adopted infrastructure charges notice) in considering an application for a permissible change to a development approval.
There are some important amendments that are made to the definition of ‘trunk infrastructure’. Under the current regime, trunk infrastructure is development infrastructure that is identified under a PIP or adopted infrastructure charges resolution. If development infrastructure is not trunk infrastructure then it is by default ‘non-trunk infrastructure’.
Trunk infrastructure under the Amendment Act will be infrastructure identified in an LGIP and also development infrastructure that, because of a conversion application, becomes trunk infrastructure. The new process relating to a conversion application is set out in further detail below. In addition, development infrastructure that is required to be provided under a condition relating to delivery of necessary trunk infrastructure will also be ‘trunk infrastructure’ by definition. Transitional provisions exist for those Councils which do not have an LGIP.
New definition of establishment cost
The meaning of ‘establishment cost’ is particularly relevant to the question of working out offsets or refunds which is an important new feature brought about by the Amendment Act. The definition is relevant to trunk infrastructure only.
The establishment cost for existing infrastructure means the current replacement cost of the infrastructure as reflected in the relevant local government’s asset register, and the current value of the land acquired for the infrastructure.
The establishment cost for future infrastructure includes all costs of land acquisition, financing, and design and construction, for the infrastructure.
Offsets or refunds
One fairly significant change brought about by the Amendment Act requires a Council in its charges resolution to specify the method for working out the costs of infrastructure the subject of an offset or refund.
This new framework is relevant to charges resolutions and ICNs. A charges resolution must include a method for working out the cost of the infrastructure the subject of the offset or refund which is consistent with the parameters provided under:
- the SPRP (adopted charges), and
- if the parameters are not provided for under the SPRP (adopted charges) – a guideline made by the Minister and prescribed by regulation.
For an offset or refund for the provision of trunk infrastructure required under a condition of approval where that infrastructure services, or is planned to service, premises other than the subject premises and an adopted charge applies to the development:
- if the cost of the infrastructure is equal to or less than the adopted charge, the cost must be offset by that amount, or
- if the cost of the infrastructure is more than the adopted charge, then no amount is payable for the development approval and Council must refund to the applicant the proportion of the establishment cost of the trunk infrastructure that may be apportioned reasonably to users of premises other than the subject premises.
It is likely that working out offsets or refunds having regard to the methods referred to above and definition of ‘establishment cost’ noted will be one of the biggest challenges for Councils in the implementation of the reforms under the Amendment Act. This is also against a background whereby there are timing requirements under the Integrated Development Assessment System (IDAS) for a Council to meet which link in with the requirement to issue an ICN at the same time as any development approval is issued. Some clarification is expected with the Ministerial guideline noted above.
An applicant who does not agree with the value of the establishment cost may, by notice, require the Council to use the method under the relevant charges resolution to recalculate the establishment cost. That notice must be given before the ICN in that circumstance becomes payable. Council must amend the existing ICN. As noted below, appeals may exist in relation to offsets or refunds.
Under earlier charging regimes, contributions were required to be made according to the relevant infrastructure network. That is no longer the case and the example in the proposed new section provides that if an offset exists (e.g. as a result of road infrastructure to be provided) it can be used against the total charge (which will relate to a number of networks).
Principles of equity may therefore arise in circumstances where a particular development proposal involves significant provision of road infrastructure which is required to be offset under the Amendment Act. This may impact upon the ability of Councils to fund required trunk infrastructure relevant to other networks including parks, water, sewerage and stormwater.
Conditions relating to trunk infrastructure
The typical restrictions about Council imposing conditions relating to infrastructure which have been in place for a number of years continue. In other words, conditions relating to infrastructure must have nexus with chapter 8, part 2 or 3 of SPA.
A specific restriction will exist under the Amendment Act following commencement whereby a local government will not be able to impose a condition requiring an applicant to enter into an infrastructure agreement.
Similar provisions to the current SPA provisions exist which allow a local government to impose conditions about trunk infrastructure, additional trunk infrastructure costs and other matters depending on the assumptions under an LGIP or PIA. Under the Amendment Act, the conditioning power only relates to development applications and not requests for compliance assessment.
Different requirements exist depending upon whether the development proposal is on land outside or within the PIA under an LGIP. As noted above, transitional provisions exist for Councils which have an existing adopted infrastructure charges resolution or a charges resolution under the Amendment Act but no LGIP. The transitional provisions save, until 1 July 2016, those parts of the resolution relating to trunk infrastructure identification, standards of service and establishment costs as if they were done under an LGIP.
Generally, the provisions relating to the conditioning of infrastructure are relatively easier to follow than the current provisions.
In addition, for a condition about infrastructure, a decision notice for a development approval must include a reference to the provision of SPA under which the condition was imposed.
This is a new process established by the Amendment Act. As noted above, infrastructure which is agreed to be trunk infrastructure under the conversion application will fit within the relevant definition of trunk infrastructure.
The ability to make a conversion application only exists if:
- a particular condition of a development approval requires non-trunk infrastructure to be provided, and
- the construction of the non-trunk infrastructure has not started.
There appears to be no standard forms for the making of the application but it must be in writing. A Council can set the criteria for deciding the conversion application in its charges resolution. The criteria must be consistent with parameters for the criteria provided for under a guideline made by the Minister and prescribed by regulation.
A Council can make information requests and the applicant is required to provide relevant information in response to those requests. A failure to do so may result in the application lapsing.
If the application is approved then this can impact upon existing conditions of approval relating to non-trunk infrastructure as well as an ICN. A Council must follow a process to implement relevant changes within a particular time frame.
Given the ongoing transitional effect of existing Council adopted infrastructure charges resolutions, questions arise as to how offsets or refunds are to be calculated and the criteria for deciding conversion applications following the commencement of the Amendment Act.
The Amendment Act clarifies that questions will be resolved in a default sense through a guideline made by the Minister and prescribed by regulation.
The ability for Councils to impose conditions relating to non-trunk infrastructure is essentially unchanged by the Amendment Act and clarifies that the power relates to ‘development infrastructure’.
Under the current regime, only limited rights of appeal exist in relation to a local government issued adopted infrastructure charges notice (and the other notices referred to above). The restriction on the ground relating to the charge in the notice being so unreasonable that no reasonable relevant local government could have imposed it continues.
However under the current regime there was not a lot of clarification about the second ground of appeal relating to an error in the calculation of the charge. It appeared that the appeal right could have related to something quite minor although the point was never tested and resolved by the court in any relevant judgment. The provision brought about by the Amendment Act provides that appeal rights exist for a decision which involve an error relating to:
- the application of the relevant adopted charge
- the working out of the additional demand created by the proposed development, and
- an offset or refund.
Appeal rights exist if there is no decision made about an offset or refund and also if an ICN specifies that a refund will be given, the timing for the giving of the refund.
An additional appeal right is created in relation to the new conversion application process noted above.
Appeals exist to both the Planning and Environment Court and the Building and Development Dispute Resolution Committee.
It is relevant to note that appeals are not open ended. An appeal must not be about:
- the adopted charge itself, or
- for a decision about an offset or refund:
- the establishment cost of infrastructure identified in an LGIP, or
- the cost of infrastructure decided using the method included in the Council’s charges resolution.
It is also relevant to note the transitional provisions which indicate that the existing adopted infrastructure charges resolution (which is not required to refer to offsets/refunds or conversion related matters) will continue in force for the time being and only cease operation on 1 July 2015 unless otherwise repealed. However, as noted above, Ministerial guidelines will provide default provisions in the interim.
The changes brought about by the Amendment Act for infrastructure agreements are largely insignificant. Given some of the likely timing issues associated with working out offsets or refunds as well as conversion applications, it is expected that infrastructure agreements will still feature predominantly in the overall system to provide some flexibility for applicants and Councils.
However, as noted above there is a restriction on an assessment manager imposing a condition requiring an applicant to enter into an infrastructure agreement. Given that restriction, this may impact upon a local government’s approach to the assessment of out of sequence development which is premature to the provision of infrastructure. Where a local government may have been satisfied that the development proposal was capable of approval provided an infrastructure agreement was negotiated, it may have to seriously consider refusing the proposal or issuing a preliminary approval only rather than a development permit. Strategic use of a Council’s condition power for trunk infrastructure may also be warranted.
Another important change relating to infrastructure agreements is the requirement for both Council and the relevant entity to negotiate the infrastructure agreement in good faith. This may have implications in terms of interpretation of whether negotiations relating to an infrastructure agreement did proceed on good faith. The Queensland Environmental Law Association (QELA) made a submission about these points to the State Development Infrastructure and Industry Parliamentary Committee raising some concerns about that particular issue. However, those concerns were not taken up by the Parliament.
Some of the key impacts of the transitional provisions are noted above and it is apparent that immediate implementation will not be required with the continuation of existing PIPs and adopted infrastructure charges resolutions for the moment. In addition, a Council which has started the process to make a PIP may continue to do so as if the Amendment Act had not commenced.
The Amendment Act does not impact on existing infrastructure charges related notices nor development approvals. Existing infrastructure agreements will continue to have effect. Undecided appeals at the commencement are to be decided as if the Amendment Act had not commenced. However, the Amendment Act will apply to existing but undecided development applications in the circumstances specified.
Given that the Amendment Act provides for new processes such as conversion applications, there may be some incentive for a Council to action the creation of its charges resolution to ensure that it has appropriate criteria in which to assess applications of this nature. This also relates to working out offsets or refunds. Otherwise, the default position will be the methodology established by a guideline made by the Minister and prescribed by regulation.
State infrastructure providers
State infrastructure providers will continue to have powers to impose conditions on a development approval about infrastructure and works to protect or maintain infrastructure operation. The provisions relating to State infrastructure providers are largely unchanged.
A provision exists for a local government to reimburse a State infrastructure provider if infrastructure is provided under a State-related condition and has replaced, or is to replace, infrastructure, for which there has been, or is to be a levied charge by a local government and provides the same desired standard of service as the replaced infrastructure.
In South East Queensland, water entities which are distributor-retailers will also be impacted by the changes brought about by the Amendment Act. Processes are put in place for affected Councils to enter into agreements with a distributor-retailer about the relevant charges breakup for adopted charges.
It is a requirement for a charges resolution for those affected Councils to state the charges breakup for all adopted charges under the resolution which flow from the breakup agreement.
If a distributor-retailer had entered into an infrastructure agreement that does not involve a Council, a copy of the agreement needs to be provided to a Council. Similarly, if a Council is party to the infrastructure agreement and the distributor-retailer is not a party, the Council must give a copy of the agreement to the distributor-retailer.
Distributor-retailers will also continue to act in a concurrence agency role for existing undecided development applications. The Amendment Act also brings about a number of significant reforms to the South-East Queensland Water (Distribution and Retail Restructuring) Act 2009(Qld) which are beyond the scope of this article.
Maintenance of the ‘capped’ infrastructure charges regime will continue to pose a challenge for Councils and their communities into the future in that a true ‘user pays’ approach is not a feature of the system. A ‘capped’ regime has its advantages in that it provides greater certainty for applicants about the maximum charges that are likely to be payable for a development proposal. However, that approach does not necessarily reflect the true cost for Councils in the provision of infrastructure.
Planning for the delivery of trunk infrastructure by Councils will involve careful cost and economic analysis as to the viability of the provision of trunk infrastructure in circumstances where the costs of doing so may result in a shortfall for Councils in their recovery of monies payable under ICNs or in accordance with infrastructure agreements.
Councils will need to consider the implementation of new processes such as conversion applications brought about by the Amendment Act. New charges resolutions will also need to incorporate further requirements associated with conversion applications and offset or refund methodology.
One expects that this will not be the final word on infrastructure charging, a framework which has been in constant change since early 1998.