The Environmental Planning and Assessment Amendment (Paper Subdivisions) Regulation 2013 (Regulation) and corresponding paper subdivision provisions now contained in Schedule 5 of the Environmental Planning and Assessment Act 1979 (EPA Act) (PS Amendments) commenced on 8 March 2013. The effect of these amendments is considered below.
What are “paper subdivisions”?
“Paper subdivisions” is a term used to describe land which has been subdivided by way of survey and registered plans, but the lots only have recognition on paper and usually have no roads, drainage or utility services. Generally, such land has little development potential as a result of non-urban land use zoning and fragmented ownership.
Land in paper subdivisions is often held in multiple ownership by investors hoping to achieve an uplift in value when (if) the land is ever properly serviced for development.
The PS Amendments enable the Minister for Planning and Infrastructure (Minister) to make a Subdivision Order, which confers specified functions on a relevant authority, such as a local council, Landcom or other specified body.
Those functions include the power to carry out subdivision works, enter and deal with land (including the acquisition of land by agreement or compulsory process) and the requirement for the payment of development contributions. These powers are designed to allow a relevant authority to carry out the provisions of a Development Plan (which are considered below).
The Minister may only make such a Subdivision Order if:
- the Minister is of the opinion that it is desirable to do so to promote and co-ordinate the orderly and economic use and development of the land affected by the order;
- the land has been subdivided and is held by more than one owner and the Minister is satisfied that the land is land for which no provision or inadequate provision has been made for subdivision works;
- that land is subject to an environmental planning instrument, or a planning proposal, that will facilitate the proposed planning purpose;
- the Minister has consulted with the proposed relevant authority, any other Minister responsible for that authority and the council of the area in which that land is situated;
- the Minister is satisfied that a development plan for that land has been prepared by the relevant authority in accordance with this Schedule; and
- the Minister has considered any provisions of the development plan that modify or disapply the provisions of Division 4 of Part 3 of the Land Acquisition (Just Terms Compensation) Act 1991; and
- at least 60% of the total number of owners of that land, and the owners of at least 60% of the total area of that land, have consented to the proposed development plan.
A particular pre-condition to the making of a Subdivision Order is the preparation of a Development Plan, which may occur on the initiative of an authority or at the Minister’s direction. A Development Plan must include:
- a proposed plan of subdivision for the land;
- details of subdivision works to be undertaken for the land;
- details of the costs of the subdivision works and of the proposed means of funding those works;
- details of the proportion of those costs to be borne by the owners of the land and of the manner in which the owners may meet those costs (including details of any proposed voluntary land trading scheme, voluntary contributions, compulsory land acquisition or compulsory contributions);
- details of any voluntary land trading scheme or voluntary contributions or, if voluntary measures are not agreed to by owners, of compulsory land acquisition or compulsory contributions;
- rules as to the form of compensation for land that is compulsorily acquired and how entitlement to compensation is to be calculated;
- rules as to the distribution of any surplus funds after the completion of subdivision works for the land; and
- any other matters prescribed by the Regulation.
The Regulation also requires that a Development Plan includes:
- the land value of the land as determined by the Valuer-General under the Valuation of Land Act 1916; and
- if the development is to be staged, a description of the proposed stages.
Consultation and notification requirements
Authorities are required to consult with any public authorities likely to be affected by a proposed Development Plan as well as any local councils in control of land the subject of the plan. Authorities are also encouraged to undertake preliminary consultation with owners of land. Though this is not a legislative requirement, the need for 60% of landowners to consent to a Development Plan is likely to be a sufficient incentive for a more rigorous consultation process.
When an authority proposes to adopt a Development Plan, it must comply with certain notification requirements and make the Development Plan publicly available.
After complying with the stipulated notification requirements, the authority must conduct a ballot to obtain the requisite consent of landowners.
A Development Plan may provide that an owner of land is required to make a reasonable monetary contribution for the provision, extension or augmentation of subdivision works and for the Development Plan costs. To meet this requirement, land may be dedicated or traded to, or compulsorily acquired by, a relevant authority in lieu of the payment of monetary contributions.
Where an owner refuses to make a required monetary contribution, that amount is recoverable in a court as a debt due to the relevant authority.
Amendment to the Land Acquisition (Just Terms Compensation) Act 1991 (JTC Act)
The PS Amendments allow a Development Plan to modify, or render inapplicable, the provisions of Division 4 of Part 3 of the JTC Act. This includes section 54(1) of the JTC Act which states that the amount of compensation to which a person is entitled under the JTC Act is such amount as “will justly compensate the person for the acquisition of the land”.
Where a Development Plan so provides, it must contain replacement rules which apply fairly to all landowners and be comprehensive enough to replace the JTC Act provisions which they are substituting, including mechanisms for the calculation of compensation.
The stated goal of this amendment is to allow for non-monetary compensation, such as works in-kind or other benefits accruing to land held by land owners, to be provided in lieu of statutory monetary compensation under the JTC Act.
Further consequences of the PS Amendments
Two further consequential amendments have been made as a result of the creation of Subdivision Orders and Development Plans.
Firstly, any planning certificate issued pursuant to section 149 of the EPA Act is now required to indicate whether a Subdivision Order or Development Plan applies to the land.
Secondly, any assessment of a development application will now be required to take into account the provisions of any Subdivision Order and Development Plan which includes the land the subject of the development application.
The PS Amendments represent a positive step forward for the development of fragmented land holdings throughout New South Wales. The legislation grants broad powers to the Minister and specified authorities to coordinate the development of land. While not specifically provided for in the PS Amendments, there is scope for ‘developer initiated’ Development Plans in paper subdivision areas, where the relevant authority gives its consent to this course of action.
In order to assist in the understanding of the PS Amendments, the Department has released a draft “Guidelines on Planning for Paper Subdivisions”. That document can be accessed here.