Agenda of Policy Review Committee Meeting

Policy Review Committee Meeting 10 October 2016

Planning Proposal - 92, 94 and 96 Victoria Street, Werrington

RZ16/0003

Compiled by: Adonna See , Planner

Matthew Rose, Acting City Planning Co-ordinator

Authorised by: Abdul Cheema, Acting City Planning Manager

Outcome	We plan for our future growth
Strategy	Facilitate quality development that encourages a range of housing types, employment, recreation and lifestyle opportunities
Service Activity	Plan for and facilitate delivery of release areas and urban renewal in the City

Procedural note: Section 375A of the Local Government Act 1993 requires that a division be called in relation to this matter.

Executive Summary

This report provides the results of the review of rezoning application RZ16/0003 for 92, 94, and 96 Victoria Street, Werrington. This application seeks the amendment of the current medium density residential planning controls applying to the site to facilitate a development application for a residential flat building(s) providing about 150 dwellings.

The application has sufficient merit for Council to consider the sponsor of a planning proposal that delivers the requested outcomes. The site is within 200 metres of Werrington Train Station and has good access to open space, community facilities, and a neighbourhood shopping centre. The technical information submitted with the report identifies that the traffic created by the proposed development and the noise generated by the main western railway line can both be adequately managed.

The sponsor and submission of a planning proposal to the NSW Planning and Environment Gateway Process (the process for making and amending local environmental plans) allows Council to consult the community on the proposal and consider any submissions, before it decides to amend the planning controls.

Background

The rezoning application applies to 92, 94 and 96 Victoria Street, Werrington (Lots 6A, 6B, and 7A of DP 26950). This approximate 4,200m² site is located about 200 metres from Werrington Train Station, is across the road from sporting and community facilities (Rance Oval, Parks Avenue Reserve, and Arthur Neave Memorial Hall) and adjacent to the Werrington neighbourhood shops. Attachment 1 provides the site’s location and context.

Council’s local environmental plan (Penrith Local Environmental Plan 2010 or LEP 2010) zones the site R3 Medium Density, and sets development standards for building heights (8.5 metres) and lot size (400m²) to encourage the development of 2-storey townhouses. The site is adjacent to an area zoned R4 High Density Residential with standards for building heights and lot size of 15 metres and 800m² respectively. Attachment 2 provides the current zoning.

The application seeks the amendment of LEP 2010 to apply high density residential planning controls to the site to facilitate a proposed development application for a residential flat building or buildings (about 150 dwellings). The application does not seek any changes to current development controls (set in Penrith Development Control Plan 2014) or required development contributions (for the provision of open space and community facilities).

The application is supported by a traffic and parking study and a noise and vibration assessment.

Review of the Application

The application pre-empts Council’s proposed update of its Residential Strategy. This update will examine Penrith’s urban and rural areas (including rural villages) to identify opportunities for additional dwellings to ensure we continue to meet the NSW Government’s housing targets. For the urban areas, this work will focus on sites such as those around Werrington Train Station that have good access to public transport, open space, existing infrastructure, and shops and services, as well as minimal environmental constraints.

However, the NSW Planning and Environment’s Gateway Process (the process for making and amending local environmental plans) allows landowners to request changes to planning controls where they can demonstrate the strategic and/or site specific merit of a proposal. The application is broadly consistent with the aims of the NSW Government’s and Council’s strategic plans to accelerate housing supply and urban renewal, revitalise existing suburbs, and improve housing choice.

The site’s proximity to the train station, bus services, open space, community facilities and neighbourhood shops provides the application with sufficient site specific merit. In addition:

· There are no environmental constraints (flooding, contamination etc) preventing the proposed development.

· The proposed development is unlikely to create any environmental impact.

· the traffic and parking study concludes that:

o the existing road network can accommodate the traffic likely to be generated by the proposed development, and

o all parking can be provided on site.

· the noise and vibration assessment confirms that contemporary construction methods can manage the impacts from the railway.

· The site is serviced with water, sewage, and electricity (with capacity to be confirmed with service providers).

· development controls (set by Council and the NSW Government) will manage the bulk and scale of the future development, overlooking, and overshadowing through the development application process.

Proposed Next Steps

The outcomes requested by the application are considered to have sufficient strategic and site specific merit to warrant Council’s sponsor and submission of a planning proposal, that delivers the requested outcomes, to the Gateway Process. A planning proposal is a document that explains the intended effect of and provides justification for the proposed outcomes. The form and content of a planning proposal is guided by a framework of legislation and practice notes published by NSW Planning & Environment.

Attachment 3 provides a copy of a planning proposal delivering the proposed outcomes. The sponsor of this planning proposal will allow Council, subject to any Gateway Determination issued by NSW Planning and Environment, to consult the community and public agencies (public exhibition), consider any submissions received in response, and decide whether or not to proceed with the proposed amendments to the local environmental plan. To reduce the time for this planning proposal to proceed through the Gateway Process, the Minister for Planning should be asked to delegate his plan making authority to Council.

RECOMMENDATION

That:

1. The information contained in the report on Planning Proposal - 92, 94 and 96 Victoria Street, Werrington be received

2. The Planning Proposal provided as Attachment 3 be sponsored for submission to NSW Planning & Environment with a request for a Gateway Determination.

3. The Minister for Planning be requested to delegate his authority for Council to finalise and make the proposed amendment to Penrith Local Environmental Plan 2010.

4. Consultation with the community and public agencies be undertaken in accordance with any Gateway Determination.

5. A report be presented to Council on the submissions received from the community and public agencies.

ATTACHMENTS/APPENDICES

1. ⇩	Site Location	1 Page	Attachments Included
2. ⇩	Current Zoning	1 Page	Attachments Included
3. ⇩	Planning Proposal	35 Pages	Attachments Included

Policy Review Committee Meeting 10 October 2016

Amendment to Penrith Development Control Plan 2014 - 164 Station Street, Penrith

Compiled by: Nicole Dukinfield, Senior Planner

Authorised by: Abdul Cheema, Acting City Planning Manager

Outcome	We plan for our future growth
Strategy	Ensure services, facilities and infrastructure meet the needs of a growing population
Service Activity	Maintain a contemporary framework of land use and contribution policies, strategies and statutory plans

Procedural note: Section 375A of the Local Government Act 1993 requires that a division be called in relation to this matter.

Executive Summary

Council is in receipt of an application to amend the Penrith Development Control Plan (DCP) 2014 to insert site-specific controls for land at 164 Station Street, Penrith. The subject site is otherwise known as the ‘former Panasonic site’, or ‘Parkview site’.

The subject site is zoned R4 High Density Residential under the Penrith Local Environmental Plan (LEP) 2010 and will be subject to incentives provisions that are currently being finalised as part of a Planning Proposal to amend the LEP.

The key components of the draft DCP include:

· Provision for approximately 2,000 dwellings across the site at varying heights;

· A minimum area of 1 hectare for the purposes of public open space;

· Private open space in the form of communal gardens, rooftop gardens and balconies;

· Vehicular, pedestrian and cycling networks providing connectivity throughout the site;

· On and off-street parking with primary vehicular movements confined to basement level; and

· A minimum of 1,000m2 of non-residential land uses to cater for local resident needs.

In line with the provisions of the Environmental Planning and Assessment Act 1979 (EP&A Act 1979) and Environmental Planning and Assessment Regulation 2000 (Regulation 2000), it is recommended the draft DCP be placed on public exhibition for a period of 28 days.

Background

The site has been subject to previous Council and State Government development approvals, including a current approval for a Concept Plan under the previous Part 3A assessment process (determined by the Minister for Planning) for a staged mixed use development with 570 dwellings, neighbourhood shops, food and drink premises, and a tavern.

Since then, the proposal has not progressed and ownership of the site has changed with current owners looking to develop the site into a high density residential precinct.

Penrith Local Environmental Plan (LEP) 2010

The Penrith LEP 2010 is a statutory document that guides local planning decisions and manages the way land is used within the Penrith Local Government Area (LGA). The Penrith LEP 2010 identifies a range of planning controls such as the zoning for the land, height controls, and other provisions relating to heritage, environmental protection and land reservation.

The subject site is zoned R4 High Density Residential under the Penrith LEP 2010. The objectives for the R4 High Density Residential zone are to:

· To provide for the housing needs of the community within a high density residential environment

· To provide a variety of housing types within a high density residential environment

· To enable other land uses that provide facilities or services to meet the day to day needs of residents

· To ensure that a high level of residential amenity is achieved and maintained

· To encourage the provision of affordable housing

· To ensure that development reflects the desired future character and dwelling densities of the area.

A Planning Proposal is a mechanism for amending a LEP, that must be approved by the Department of Planning & Environment (DP&E). A Planning Proposal affecting the subject land has been prepared that is currently with the DP&E for finalisation. The Planning Proposal seeks to provide incentives in the form of density bonuses in return for a public benefit for a number of sites in the City Centre, including the subject land at 164 Station Street, Penrith.

The Penrith Development Control Plan (DCP) 2014 supplements the Penrith LEP 2010 with more detailed planning and design guidelines.

Proposed controls

An application to amend the DCP was submitted on 1 July 2016 by Tomasy Planning proposing new controls in the form of a draft DCP. The draft DCP includes the following characteristics:

Section 1: Site Analysis and Local Context

This section identifies the land subject to the draft DCP and provides an overview of the site characteristics and local context.

Section 2: Structure Plan

This section outlines the indicative urban structure of the site identifying major site connections, a landscape plan and defined character areas. Controls relating to dwelling density outline the provision for approximately 2,000 dwellings.

Section 3: The Public Domain

This section identifies controls relating to street network and design, pedestrian and cycle networks and the landscape network. A minimum land area of 1 hectare is identified for public open space purposes with the creation of a linear landscape corridor through the central area of the site.

Section 4: Residential Development

This section outlines indicative building heights that are varied across the site and controls relating to housing diversity. Overarching site objectives identify east-west and north-south connectivity throughout the site. This section also includes provisions for private open space through a combination of communal and rooftop gardens, and balconies. Non-residential uses are also provided for within close proximity to the entry of the site to cater for local resident needs.

Section 5: Environmental and Residential Amenity

This section includes controls relating to privacy, acoustic amenity and view corridors.

Section 6: Access, Parking and Servicing

This section outlines indicative vehicular and pedestrian movements, including controls that encourage the majority of vehicle movements to be at the basement level. On-street and off-street parking will be provided in line with the adopted car parking rates in Section C10 of the Penrith DCP 2010.

The submitted draft DCP reflects the density bonuses provided as part of the Planning Proposal to amend the LEP providing development incentives. It is anticipated that the draft DCP will be made effective at the same time that the LEP amendment is gazetted, enabling the proponents to take up the incentives on offer through the LEP and to lodge Development Applications in line with the revised DCP controls.

Part E11 - A of the DCP includes controls for the Penrith City Centre. This section identifies controls for ‘Special Areas’. The subject land is identified as Precinct 2 under these provisions, which provides development principles for the subject land. As the draft DCP proposes more detailed planning principles and controls for the site, the existing controls will be deleted as part of the amendment to the DCP and replaced as a stand-alone section as Part E11 – C 164 Station Street, Penrith.

The draft DCP proposed for public exhibition is provided in Attachment 1.

Public exhibition of the draft DCP

The EP&A Act 1979 and Regulation 2000 outline the requirements for the preparation and amendment of DCP’s. The Regulation 2000 outlines that a DCP must be publicly exhibited for a period of 28 days as well as referred to Council’s design review panel should the DCP include controls that relate to the design quality of residential apartment development.

If Council resolves to publicly exhibit the draft DCP, public exhibition will be held for a 28-day period where members of the community will be able to provide a submission. The draft DCP will be available to view at Council’s administration buildings and libraries at Penrith and St Marys. Advertisements will be placed in the local newspaper advising of the public exhibition.

Council’s Urban Design Review Panel will be provided with a copy of the draft DCP for comment.

Next steps

After the exhibition period has closed, consideration will be given to the submissions received. Council will then receive a report on the matters raised during the public exhibition. The post-exhibition report will identify whether any changes are recommended prior to adopting the DCP.

RECOMMENDATION

That:

1. The information contained in the report on Amendment to Penrith Development Control Plan 2014 - 164 Station Street, Penrith be received

2. Refer the draft Development Control Plan to Council’s Urban Design Review Panel for comment

3. The General Manager be granted delegation to make any necessary minor changes to the Draft Development Control Plan before public exhibition.

4. The Draft Development Control Plan be publicly exhibited, in accordance with the relevant provisions of the Environmental Planning and Assessment Act, 1979 and associated Regulations.

5. A further report be presented to Council following the Public Exhibition.

ATTACHMENTS/APPENDICES

1. ⇩

Draft DCP 164 Station Street, Penrith

29 Pages

Attachments Included

Policy Review Committee Meeting 10 October 2016

Proposed Reclassification of 154 Henry Street, Penrith

Compiled by: Danielle Fox, Planner

Matthew Rose, Acting City Planning Co-ordinator

Authorised by: Abdul Cheema, Acting City Planning Manager

Outcome	We plan for our future growth
Strategy	Protect the City's natural areas, heritage and character
Service Activity	Maintain a contemporary framework of land use and contribution policies, strategies and statutory plans

Previous Items: 3- Property Matter - 154 Henry Street, Penrith (Welsh Place Carpark)- Ordinary Meeting- 08 Feb 2016 7:30PM

8- Reclassification of Council owned land at 53 and 54 Union Road Penrith- Ordinary Meeting- 07 Dec 2015 7:30PM

3- Property Matter - 154 Henry Street (Welsh Place carpark)- Ordinary Meeting- 28 Sep 2015 7:30PM

Procedural note: Section 375A of the Local Government Act 1993 requires that a division be called in relation to this matter.

Executive Summary

This report seeks Council’s resolution to include the proposed reclassification of 154 Henry Street, Penrith (the Welch Place Car Park) in an existing Planning Proposal. Council has resolved to reclassify Welch Place (on 8 February 2016) to facilitate the future sale of the land and a reconfiguration of the current car park access.

The proposed reclassification requires the use of NSW Planning & Environment’s Gateway Process (the process for making and amending local environmental plans). This process requires the preparation and public exhibition of a planning proposal and an independently chaired public hearing. Including the proposed reclassification in an existing planning proposal will save time and resources (as only one planning proposal, public exhibition and public hearing would be required).

Background

Welch Place contains a single storey public car park with access to the ground level provided by Henry Street. Access to the upper level, as well as the private car parking for 521 High Street (Trade Secret), was previously provided by the ramps in the Allen Place Car Park. These ramps are closed because of safety concerns and are due to be demolished. Attachment 1 provides a map of Welch Place and access arrangements.

A development application has been approved for a new ramp to the upper level (within Welch Place). Attachment 2 provides a plan of the new ramp which will, when constructed, restore access to the upper level car parking. It will also allow the demolition of the old ramps which is a significant step in the delivery of the planned City Park. It also resolves the safety concerns.

To allow the future transfer of Welch Place and the construction of the new ramp, the land needs to be reclassified as operational land. Public land is classified as community land or operational land; with community land generally open to the public (parks, reserves and sportsgrounds) and operational land used for other purposes (work depots, car parks, or investment properties). Community land cannot be sold and cannot be leased or licensed for more than 21 years. No such restrictions apply to operational land.

The reclassification will also extinguish a covenant that remains from Council’s original acquisition of Welch Place that requires the land to be used for public car parking.

The Reclassification Process

The proposed reclassification requires the use of the NSW Planning & Environment’s Gateway Process to amend Council’s local environmental plan known as Penrith Local Environmental Plan 2010. This process requires the preparation and public exhibition of a planning proposal (a document that explains the intended effect of and provides justification for the proposed reclassification) and an independently chaired public hearing.

The form and content of a planning proposal is guided by a framework of legislation and practice notes published by NSW Planning and Environment that require it to:

· Set out the reasons for the proposed reclassification,

· Outline strategic or site specific merits (including community benefits), and

· Identify Council’s interest in the land (how, why and when acquired) and any potential financial gain or loss.

Once a planning proposal is prepared it is submitted to the Gateway Process for a Gateway Determination. Once a determination is issued Council can commence the public exhibition of the proposal and arrange an independently chaired public hearing. Council then needs to consider any community submissions and the findings of the hearing before it can finalise the proposal (a 6-9 month process).

Proposed Next Steps

Instead of progressing the proposed reclassification of Welch Place in a standalone planning proposal, there is an opportunity to include it in an existing document. Council has recently sponsored a planning proposal recommending the reclassification of other sites in the City Centre (53 and 55 Union Road) to help deliver the recommendations of Penrith Progression – A Plan for Action.

The planning proposal for the Union Road sites is at a stage in the Gateway Process where Welch Place can be included to provide significant time and resource savings. This would require a single document and a single pass through the Gateway Process and allow us to combine public exhibitions, public hearings and reporting processes. A report on the matters raised during the public exhibition and public hearing will be presented for Council’s consideration once these processes are complete.

RECOMMENDATION

That:

1. The information contained in the report on Proposed Reclassification of 154 Henry Street, Penrith be received, and

2. The proposed reclassification of 154 Henry Street, Penrith be included in the sponsored Planning Proposal reclassifying sites in Union Road, Penrith.

3. The updated Planning Proposal be sponsored for submission to NSW Planning & Environment with a request for a Gateway Determination.

4. The Minister for Planning be requested to delegate his authority for Council to finalise and make the proposed amendment to Penrith Local Environmental Plan 2010.

5. Consultation with the community and public agencies be undertaken in accordance with any Gateway Determination.

6. A report be presented to Council on the submissions received from the community and public agencies.

ATTACHMENTS/APPENDICES

1. ⇩	Site Location & Current Access Arrangements	1 Page	Appendix
2. ⇩	Alternative Access Arrangements	3 Pages	Appendix

Policy Review Committee Meeting 10 October 2016

Initial steps in the Integrated Planning and Reporting Process

Compiled by: Allegra Zakis, Corporate Planning Coordinator

Samantha Sutherland, Corporate Planning Officer

Authorised by: Andrew Moore, Chief Financial Officer

Outcome	We have confidence in our Council
Strategy	Provide opportunities for our community to participate in making decisions about the City's future
Service Activity	Manage Council's corporate planning and engagement program

Executive Summary

The Integrated Planning and Reporting Legislation (IP&R) sets out the requirements for strategic planning across NSW local government. All councils must prepare a suite of strategic planning documents to guide their activities over the term. The documents each have specific requirements around timeframe and content and must be adopted by 30 June 2017.

A strategic planning workshop has been organised for 11and 12 November, during which Councillors will be engaged in setting the direction for the key strategic planning documents. Engaging with the community is another key part of preparing these documents, this process is guided by the Community Engagement Strategy which will be reported to Council for endorsement for exhibition before Christmas.

Background

The Integrated Planning and Reporting Legislation sets out the strategic planning and reporting requirements for all councils in NSW. Under the legislation we must begin preparing the documents listed below following Council elections, with all documents to be publicly exhibited and adopted by 30 June 2017.

1. Community Strategic Plan - sets out the community’s long term aspirations for the City over the next 10 years. The Outcomes in this plan are not just for Council to deliver, but will also need cooperation from our regional partners, other organisation and other levels of government.

2. Delivery Program – this is Council’s four year works program which sets out the activities we will undertake to deliver on the community outcomes.

3. Operational Plan – incorporated into the Delivery Program, the Operational Plan is the annual snapshot of Council’s activities, including specific actions, works programs and the annual budget.

4. Resourcing Strategy – details council’s assets, workforce and finance and how these will be used to deliver on the commitments made in the Delivery Program and Operational Plan. It includes our asset management plans, workforce plan and long term financial plan. The Resourcing Strategy does not need to be publicly exhibited.

5. Community Engagement Strategy – sets out how Council will engage with the community in developing the Community Strategic Plan, Delivery Program and Operational Plan.

More detailed information on the requirements of the IP&R legislation and the process will be available on the Councillor Portal by early November.

Strategic Planning Workshop

A strategic planning workshop has been planned and it is anticipated that Councillors will:

· confirm whether the current Outcomes still represent the community’s priorities, in the context of the results of the recent community engagement activities

· gain a clearer understanding of the results of the Capacity Review and how this will affect capacity to deliver projects over the next four years

· discuss major projects Councillors wish to see delivered within the term

· discuss minor projects Councillors wish to see included in the works program for each year from 2017-18 to 2020-21

A follow up session will occur in February, which will address any outstanding issue from the workshop and present more detailed information on agreed projects including feasibility, cost and expected timeframes for delivery.

An information package to support the discussions during the workshop is currently being prepared. It will provide information on each of Council’s services, including key outputs, resources and potential Key Performance Masseurs. Information will also be provided on the overall financial context of the organisation, capacity available to undertake major projects, principles of asset management and an overview of the current state of all Councils assets.

Community Engagement Strategy

The Community Engagement Strategy establishes our commitment to involving the community in planning for our City and sets out how Council intends to engage with the community during the preparation of the Community Strategic Plan, Delivery Program and Operational Plan. The Community Engagement Strategy needs to be publicly exhibited and adopted by Council as part of complying with the IP&R legislation.

A draft Community Engagement Strategy has been prepared which documents Council’s overall approach to engagement with the community, including key engagement activities across all areas of Council and potential engagement methods to be employed next year as part of developing the Integrated Planning and Reporting Documents. The draft strategy is attached to this report and it is recommended that it be endorsed for exhibition. Any comments received from the community in response to the exhibition will be taken into consideration prior to finalising the strategy and presenting it to Council for adoption.

Next steps

Preparing the strategic planning documents is a key task of the first 9 months of the term of a new Council. It is critical that the documents reflect the aspirations of the community and the priorities of the Council, but do not make commitments that are beyond the capacity of the organisation to deliver. The key steps in this process over the next 9 months are outlined below:

Preparation of draft Community Engagement Strategy and endorsement for exhibition	October 2016
Strategic planning workshop to confirm outcomes, set priorities for the term and identify key projects	11 and 12 November, 2016
Exhibition of Community Engagement Strategy	November 2016
Refinement of strategies and activities to support the community outcomes, including: · Preliminary project planning for agreed major projects to be delivered during the term · Development of draft 4 year works program · Analysis of the capacity of the organisation to deliver; and · Refinement of long term financial plan and proposed annual budgets	November 2016-Febraury 2017
Discussion of the above with Council and the community and preparation of draft Community Strategic Plan, Delivery Program and Operational Plan 2017-18	February – March 2017
Exhibition of draft documents	April – May 2017
Review of Resourcing Strategy to reflect agreed priorities	February – May 2017
Finalisation and adoption of all documents	June 2017

It is critical that the Delivery Program reflects what Councillors wish to see delivered during their term within the context of the capacity of the organisation to undertake both these projects and the range of other activities required by legislation. This will be the focus of the strategic planning workshop and the follow up workshop in February. Councillors will be provided more information in preparation for the workshop.

RECOMMENDATION

That:

1. The information contained in the report on Initial steps in the Integrated Planning and Reporting Process be received

2. In accordance with the Local Government Act 1993 and Local Government (General) Regulation 2005, Council endorse for public exhibition the draft Community Engagement Strategy, including any minor amendments or corrections made to the document after this meeting

3. In accordance with the Local Government Act 1993 and Local Government (General) Regulation 2005, the draft Community Engagement Strategy be placed on public exhibition for 28 days commencing on Wednesday 26 October 2016 and closing on Wednesday 23 November 2016.

4. The public exhibition arrangements are implemented as detailed in this report, and submissions from the community are invited.

ATTACHMENTS/APPENDICES

1. ⇩

Draft Community Engagement Strategy

15 Pages

Attachments Included

Policy Review Committee Meeting 10 October 2016

IPART Review of Local Government Rating System

Compiled by: Brett Richardson, Acting Financial Services Manager

Matthew Saunders, Rates Coordinator

Authorised by: Andrew Moore, Chief Financial Officer

Outcome	We have confidence in our Council
Strategy	Ensure our finances and assets are sustainable and services are delivered efficiently
Service Activity	Manage Council's financial sustainability and meet statutory requirements

Executive Summary

In December 2015 the NSW Government directed the Independent Pricing and Regulatory Tribunal (IPART) to review the rating legislation component of the NSW Local Government Act 1993.

In April 2016 IPART released an Issues Paper in relation to the review and called for submissions from Councils and other stakeholders. Penrith City Council submitted a response to the Issues Paper in May 2016.

On 22 August 2016 IPART released their draft report to the NSW Government outlining their recommendations for changing the rating legislation. The report addressed some of the main concerns raised by Council, particularly in relation to recommending the removal of some rate exemptions and removing council subsidised pensioner concessions.

IPART have called for submissions from Council in relation to their draft report to be provided by no later than 14 October 2016. Council’s draft submission is attached for review.

Current Situation

A summary of IPART’s recommendations from the draft report are discussed below.

Valuation Process

1. Introducing a Capital Improved Value (CIV) method to set rates as an alternative to Land Value (LV). Changing to a CIV would allow councils to more fairly rate strata properties. Councils could use CIV and/or LV. In the previous response, Council did not support the use of CIV due to the cost of changing to this method, however IPART advised that a majority of responses were in support of a change to the CIV. Council’s response proposed instead to retain LV’s but allow a sub-category for strata properties. This was not supported by IPART.

Rating Process

2. Minimum rates will be abolished as the ability for councils to use the CIV for strata properties will negate the need for councils to use minimum rates. The options will be ad valorem only or base amount plus ad valorem.

3. Rate pegging will still be used and Special Rate Variation applications will still need to be submitted where councils wish to increase their income above the rate peg.

4. There will be more options for sub-categorisation. Properties can be sub-categorised according to “communities of interest” rather than the present “centre of population”. This would give councils the option of setting different residential rates and take account of the differences in access to, demand for, and cost of providing council services across their residential ratepayer base. This would allow councils to set differential resident rates for example rural residential properties. Farmland properties could also be sub-categorised according to their geographic location. Business properties could be subcategorised if they are commercial or industrial.

5. Allowing separate rating categories for environmental properties (e.g. flood prone land that is zoned residential but can’t be built on) which would allow a fairer rate for those properties to be adopted).

6. Allowing separate rating categories for vacant land so that a differential rate could be charged for vacant land. Some councils may wish to charge a higher rate to discourage land banking and promote development. Other councils may wish to charge a lower rate as the vacant properties are not drawing on council services.

7. Some exemptions from rates will be removed. The ownership of the property will no longer be the overriding factor for exemptions with land use to be the determining factor. Any properties which are owned by benevolent organisations but are used for residential or commercial purposes will no longer be exempt. Social or affordable housing will no longer be exempt. Presently exemptions that Council grants to social housing amount to approximately $90,000 per year. Retirement villages etc. owned by religious organisations or benevolent organisations will no longer be exempt. Council’s income will not be increased as a result of the exemptions being removed, but the rates base will increase.

8. Private hospitals which are currently rateable will become exempt. Presently the Nepean Private Hospital pays approximately $16,000 rates per annum.

Impact to Council’s Processes

9. Council’s general income would increase (outside the rate peg) in line with the growth in CIV that arises from new developments in their area.

10. Council can use a private valuer and or the Valuer General for their valuations.

11. Council would be able to levy a special rate for new infrastructure that is jointly funded with other levels of government without the need for regulatory approval from IPART under the Special Variation process.

12. Council will be able to provide a discount for people who elect to receive their rates notices electronically.

13. Council subsidised pension rebates will no longer apply. Presently, Council provides $1.2 million in pensioner subsidies annually. A rates deferral scheme funded by the NSW State Government will apply with any “deferred” rates under the scheme to be payable when the property is sold.

14. Postponement of rates will no longer be allowed. Council currently writes off approximately $60,000 per annum in postponed rates and interest.

15. Council will be able to sell properties where rates are three years or more overdue (currently five years).

16. There are some proposed changes to debt recovery also with the recommendation to use the State Debt Recovery Office to pursue unpaid rates with the intention of reducing the number of claims that are sent through the courts.

IPART have indicated that rates per household would not increase, on average, in real terms as a result of their recommendations.

These proposed changes appear to have addressed the major concerns of most councils, particularly around the ability to capture income growth from new strata developments, the removal of the requirement for councils to subsidise pension rebates (as is the case in all other states), and the expanding of the rates base by removing some exemptions from rates.

Council officers attended the Public Forum held by IPART in relation to their recommendations on 19 September 2016. The forum had panel members from different sectors and stakeholders including representatives from the Office of Local Government, Local Government NSW, the NSW Valuer General, NSW Revenue Professionals, NSW Property Council of NSW, and industry academics.

Whilst most of the IPART recommendations were supported at the forum by most of the panel members and other attendees, the contentious issues were mainly about the removal of some exemptions from rates, with some social housing organisations that would lose their exemptions not being satisfied that IPART had properly explained their reasons for the removal of their exemptions.

Council’s draft response to the IPART report is attached for review. The response to the report is due to IPART by 14 October 2016.

IPART will issue their final report to the NSW Government in December 2016 but no further timeline as to when any of the recommended changes will be implemented has been released.

RECOMMENDATION

That:

1. The information contained in the report on IPART Review of Local Government Rating System be received

2. Council’s submission in response to IPART’s Review of the Local Government Rating System (attached) be sent to IPART.

ATTACHMENTS/APPENDICES

1. ⇩

Draft response to IPART's Review of the Local Government Rating System

8 Pages

Attachments Included

Policy Review Committee Meeting 10 October 2016

Attachment 1 - Draft response to IPART's Review of the Local Government Rating System

Document No:

Contact: Matthew Saunders

Telephone: (02) 4732 7756

XX October 2016

IPART

Review of Local Government Rating System

PO Box K35
HAYMARKET POST SHOP NSW 1240

Dear Panel

Review of Local Government Rating System

Penrith City Council welcomes the opportunity to make this submission in response to the Draft Report released in August 2016 for the Review of the Local Government Rating System.

These responses are in relation to the list of recommendations commencing on Page 19 of the Draft Report.

1. Councils should be able to choose between the Capital Improved Value (CIV) and Unimproved Value (UV) methods as the basis for setting rates at the rating category level. A Council’s maximum general income should not change as a result of the valuation method they choose.

Penrith City Council

Penrith City Council does not support the move to a Capital Improved Value as it will be a costly exercise, and it is Council’s view that land value proves the best practice for the ability to pay for ratepayers. We would recommend the continued use of the Unimproved Land Valuation method.

The drawback with the unimproved valuation method is the restrictions that it imposes on Council being able to equitably rate owners of strata properties when compared to owners of similarly market valued freestanding houses. Council recommends other measures be introduced to provide Council with an equitable way of rating strata title properties, while still using a land value, such as enabling sub-categorisation of strata titled properties.

If a CIV is to be adopted for use, the ability to use different valuation types will cause confusion for property owners – a single method would provide a standard base for all rateable properties. If both LV and CIV are retained, Council will be required to maintain a register of both valuations types, even if they are not used which will be onerous and in some cases duplicating work efforts.

We agree that a Council’s general income should not change as a result of which valuation method is used.

2. Section 497 of the Local Government Act 1993 (NSW) should be amended to remove minimum amounts from the structure of a rate, and section 548 of the Local Government Act 1993 (NSW) should be removed.

Penrith City Council

Disagreed. Councils that have been using minimum rates should be able to continue to use minimum rates if they choose, until it decides that transitioning to the other methods is beneficial to do so.

3. The growth in rates revenue outside the rate peg should be calculated by multiplying a Council’s general income by the proportional increase in Capital Improved Value from supplementary valuations.

o This formula would be independent of the valuation method chosen by Councils for rating.

Penrith City Council

Agreed.

4. The Local Government Act 1993 (NSW) should be amended to allow Councils to levy a new type of special rate for new infrastructure jointly funded with other levels of Government. This special rate should be permitted for services or infrastructure that benefit the community, and funds raised under this special rate should not:

o Form part of a Council’s general income permitted under the rate peg, nor require Councils to receive regulatory approval from IPART.

Penrith City Council

Agreed. This should be at the discretion of Council who has knowledge of their area’s characteristics and not forced by other levels of government. It also should not be in lieu of developer contributions.

5. Section 511 of the Local Government Act 1993 (NSW) should be amended to reflect that, where a Council does not apply the full percentage increase of the rate peg (or any applicable Special Variation) in a year, within the following 10-year period, the Council can set rates in a subsequent year to return it to the original rating trajectory for that subsequent year.

Penrith City Council

Agreed.

6. The Local Government Act 1993 (NSW) should be amended to remove the requirement to equalise residential rates by ‘centre of population’. Instead, Councils should be allowed to determine a residential subcategory, and set a residential rate, for an area by:

o A separate town or village, or

o A community of interest.

Penrith City Council

Agreed. The legislation should however state that the boundary of such “community of interest” is as defined by the Council at its own discretion, to avoid court appeals. Property owners should still be given a right to request Council review their category or sub-category.

7. An area should be considered to have a different ‘community of interest’ where it is within a contiguous urban development, and it has different access to, demand for, or costs of providing Council services or infrastructure relative to other areas in that development.

Penrith City Council

Agreed. The legislation should however state that the boundary of such “community of interest” is as defined by the Council at its own discretion, to avoid court appeals.

8. The Local Government Act 1993 (NSW) should be amended so, where a Council uses different residential rates within a contiguous urban development, it should be required to:

o Ensure the highest rate structure is no more than 1.5 times the lowest rate structure across all residential subcategories (i.e., so the maximum difference for ad valorem rates and base amounts is 50%), or obtain approval from IPART to exceed this maximum difference as part of the Special Variation process, and

o Publish the different rates (along with the reasons for the different rates) on its website and in the rates notice received by ratepayers.

Penrith City Council

Agreed, however the requirement to also include the reason on a rates notice should be removed, due to the high number of requirements already to be included on rates notices.

9. At the end of the 4-year rate path freeze, new Councils should determine whether any pre-merger areas are separate towns or villages, or different communities of interest.

o In the event that a new Council determines they are separate towns or villages, or different communities of interest, it should be able to continue the existing rates or set different rates for these pre-merger areas, subject to metropolitan Councils seeking IPART approval if they exceed the 50% maximum differential. It could also choose to equalise rates across the pre-merger areas, using the gradual equalisation process outlined below.

o In the event that a new Council determines they are not separate towns or villages, or different communities of interest, or it chooses to equalise rates, it should undertake a gradual equalisation of residential rates. The amount of rates a resident is liable to pay to the Council should increase by no more than 10 percentage points above the rate peg (as adjusted for permitted Special Variations) each year as a result of this equalisation. The Local Government Act 1993 (NSW) should be amended to facilitate this gradual equalisation. 70

Penrith City Council

Penrith City Council is not a merger Council so does not offer any commentary in relation to this.

Better target rate exemption eligibility

10. Sections 555 and 556 of the Local Government Act 1993 NSW should be amended to:

o Exempt land on the basis of use rather than ownership, and to directly link the exemption to the use of the land, and

o Ensure land used for residential and commercial purposes is rateable unless explicitly exempted.

Penrith City Council

Council supports exemptions from rates in some cases where the benefits of an exempt activity are largely confined within the local government area.

However, if the benefits are distributed beyond the local Council area, it may be more equitable for the state government to share the funding costs of the exemption, or provide no exemption in these circumstances.

If exemptions are to be granted, Councils should be given the discretion to decide if the use of the property provides local benefits and warrants an exemption.

Strong definitions should be used including a non-exhaustive list to reduce any grey areas, particularly for what constitutes a “commercial” use. Does a second-hand clothing store meet the criteria for being commercial?

Exemptions should only be where the land is owned and used by an exempt organisation and not just used as one. Exemptions on land use only will be a high maintenance for Councils as there will be reliance on property owners that lease their properties to provide the details on tenant and lease change-over. This system does not presently work well with Crown properties that are leased, or newly occupied NSW Housing properties.

11. The following exemptions should be retained in the Local Government Act 1993 (NSW):

o Section 555(e) Land used by a religious body occupied for that purpose

o Section 555(g) Land vested in the NSW Aboriginal Land Council

o Section 556(o) Land that is vested in the mines rescue company, and

o Section 556(q) Land that is leased to the Crown for the purpose of cattle dipping.

Penrith City Council

Agree in principal. Partial exemptions could also be introduced, with Council given the ability to grant partial exemptions rather than full exemptions, with the current exemptions list expanded to accommodate ownership or use which are presently not entitled such as owners of heritage properties.

Also, land should be owned and occupied by the religious bodies (not just used and occupied) to receive the exemption. Vacant land that is owned by a religious body but not occupied should be explicitly excluded from an exemption to avoid land banking. Parts of land owned and used for religious purposes which are also used for non-religious use (e.g. cafés) should not be exempt and should be only partly exempt. If “occupation” is a requirement to receive the exemption a definition of “occupation” should be clearly defined.

12. Section 556(i) of the Local Government Act 1993 (NSW) should be amended to include land owned by a private hospital and used for that purpose.

Penrith City Council

Disagreed. This appears to be against the taxation principles. Whilst there is a public benefit provided by the private hospitals, the benefits are not contained wholly within the boundary of the local government area in question and therefore should not be fully subsidised by that Council only.

13. The following exemptions should be removed:

o Land that is vested in, owned by, or within a special or controlled area for, the Hunter Water Corporation, Water NSW or the Sydney Water Corporation (Local Government Act 1993 (NSW) section 555(c) and section 555(d))

o Land that is below the high water mark and is used for the cultivation of oysters (Local Government Act 1993 (NSW) section 555(h))

o Land that is held under a lease from the Crown for private purposes and is the subject of a mineral claim (Local Government Act 1993 (NSW) section 556(g)), and

o Land that is managed by the Teacher Housing Authority and on which a house is erected (Local Government Act 1993 (NSW) section 556(p)).

Penrith City Council

Agreed.

14. The following exemptions should not be funded by local Councils and hence should be removed from the Local Government Act and Regulation

o Land that is vested in the Sydney Cricket and Sports Ground Trust (Local Government Act 1993 (NSW) section 556(m))

o Land that is leased by the Royal Agricultural Society in the Homebush Bay area (Local Government (General) Regulation 2005 regulation 123(a))

o Land that is occupied by the Museum of Contemporary Art Limited (Local Government (General) Regulation 2005 regulation 123(b)), and

o Land comprising the site known as Museum of Sydney (Local Government (General) Regulation 2005 regulation 123(c)).

o The State Government should consider whether to fund these local rates through State taxes.

Penrith City Council

Agreed.

15. Where a portion of land is used for an exempt purpose and the remainder for a non-exempt activity, only the former portion should be exempt, and the remainder should be rateable.

Penrith City Council

Agreed.

16. Where land is used for an exempt purpose only part of the time, a self-assessment process should be used to determine the proportion of rates payable for the non-exempt use.

Penrith City Council

Agreed, however Councils should be able to make a final and binding determination.

17. A Council’s maximum general income should not be modified as a result of any changes to exemptions from implementing our recommendations.

Penrith City Council

Disagreed. Some level of compensation should be provided to Councils.

18. The Local Government Act 1993 (NSW) should be amended to remove the current exemptions from water and sewerage special charges in section 55 and instead allow Councils discretion to exempt these properties from waste and sewerage special rates in a similar manner as occurs under section 558(1).

Penrith City Council

Council is not a provider of water and sewerage charges so does not offer a comment in relation to this.

19. At the start of each rating period, Councils should calculate the increase in rates that are the result of rating exemptions. This information should be published in the Council’s annual report or otherwise made available to the public.

Penrith City Council

Agreed.

Replace the pensioner concession with a rate deferral scheme

20. The current pensioner concession should be replaced with a rate deferral scheme operated by the State Government.

o Eligible pensioners should be allowed to defer payment of rates up to the amount of the current concession, or any other amount as determined by the State Government.

o The liability should be charged interest at the State Government’s 10-year borrowing rate plus an administrative fee. The liability would become due when property ownership changes and a surviving spouse no longer lives in the residence.

Penrith City Council

Council agrees that any pensioner concession scheme should be funded by the State Government. A deferral scheme is very unlikely to be welcomed by pensioners as it will only defer their rates payments out of their estate.

Provide more rating categories

21. Section 493 of the Local Government Act 1993 (NSW) should be amended to add a new environmental land category and a definition of ‘Environmental Land’ should be included in the LG Act.

Penrith City Council

Agreed.

22. Sections 493, 519 and 529 of the Local Government Act 1993 (NSW) should be amended to add a new vacant land category, with subcategories for residential, business, mining and farmland.

Penrith City Council

Disagreed. For Councils with a high number of greenfield release areas, a vacant land category will require a high level of maintenance by Councils.

A vacant land category should be a sub-category of the main categories, with Councils able to choose to sub-categorise vacant land if they see benefit.

23. Section 518 of the Local Government Act 1993 (NSW) should be amended to reflect that a Council may determine by resolution which rating category will act as the residual category.

o The residual category that is determined should not be subject to change for a 5-year period.

o If a Council does not determine a residual category, the Business category should act as the default residual rating category.

Penrith City Council

Agreed.

24. Section 529 (2)(d) of the Local Government Act 1993 (NSW) should be amended to allow business land to be subcategorised as ‘industrial’ and or ‘commercial’ in addition to centre of activity.

Penrith City Council

Agreed, however it is not clear if this means there will be two sub-categories, or one main category and one sub-category.

25. Section 529 (2)(a) of the Local Government Act 1993 (NSW) should be replaced to allow farmland subcategories to be determined based on geographic location.

Penrith City Council

Agreed. For Farmland, Council recommends strict criteria be placed on eligibility such as minimum land area, actual grazing numbers or some kind of “profit to property value” ratio. Perhaps regulations could be adopted with recommendations of eligibility by the NSW Department of Primary Industries. The present definitions are vague and offer no real assistance to owners or Councils and cause many court appeals.

26. Any difference in the rate charged by a Council to a mining category compared to its average business rate should primarily reflect differences in the Council’s costs of providing services to the mining properties.

Penrith City Council

Disagreed. This may be difficult to ascertain, and could change from year-to-year and could result in great fluctuations to other rating categories if the mining rate is required to be changed, and could cause costly and lengthy court cases where there is a difference of opinion as to what costs are included. Perhaps this clause could apply if Councils wish to adopt a mining rate which is more than 50% above the business rate.

Recovery of Council rates

27. Councils should have the option to engage the State Debt Recovery Office to recover outstanding Council rates and charges.

Penrith City Council

IPART states that the SDRO has a success rate of 75%, however the present benchmark for recovery of overdue rates for Councils is 95%. Penrith City Council’s present recovery level is 97% (i.e. only 3% of rates outstanding). The 75% success rate is not considered a high success rate in comparison to Council.

Although the costs would be “passed on” to the ratepayer, it appears that these costs would be paid to the SDRO and not to Councils. Councils will still have costs associated in sending the debts to the SDRO and monitoring the accounts which would therefore have to be subsidised by other ratepayers.

If Councils can use (or are mandated to use) the SDRO, Councils should be able to receive additional charges payable by the property owner, so that recovery action is not borne by other ratepayers. Also, if accounts that are referred to the SDRO are not paid within 3 months, that they should be returned to Councils so that further recovery action can be taken by the Council, including court action.

28. The existing legal and administrative process to recover outstanding rates should be streamlined by reducing the period of time before a property can be sold to recover rates from five years to three years.

Penrith City Council

Agreed.

29. All Councils should adopt an internal review policy, to assist those who are late in paying rates, before commencing legal proceedings to recover unpaid rates.

Penrith City Council

Agreed, as long as the onus sits with the owner to contact the Council to request assistance under the policy.

30. The Local Government Act 1993 (NSW) should be amended or the Office of

Local Government should issue guidelines to clarify that Councils can offer flexible payment options to ratepayers.

Penrith City Council

Agreed, as long as any such agreement is optional and not mandatory and clearly states that interest may still be payable.

31. The Local Government Act 1993 (NSW) should be amended to allow Councils to offer a discount to ratepayers who elect to receive rates notices in electronic formats, e.g., via email.

Penrith City Council

This should only be for the first two years of the new legislation. The legislation should then say that after two years, that Councils can charge a fee where property owners elect to receive their notices by post.

32. The Local Government Act 1993 (NSW) should be amended to remove section 585 and section 595, so that ratepayers are not permitted to postpone rates as a result of land rezoning, and Councils are not required to write-off postponed rates after five years.

Penrith City Council

Agreed.

Other draft recommendations

33. The valuation base date for the Emergency Services Property Levy and Council rates should be aligned.

o The NSW Government should levy the Emergency Services Property Levy on a Capital Improved Value basis when Capital Improved Value data becomes available state-wide.

Penrith City Council

Agreed.

34. Councils should be given the choice to directly buy valuation services from private valuers that have been certified by the Valuer General.

Penrith City Council

Disagreed. We believe that the current system of receiving valuations from the Valuer General is working and that there would be little to gain by changing the system. The present system has a rigorous procurement process which should bring about better economies of scale for pricing, than if individual Councils were allowed to procure their own contract valuer.

Penrith City Council thanks IPART for this opportunity to make this submission and we look forward to a modernised rating system that is efficient, equitable and sustainable.

Yours faithfully,

Matthew Saunders

Rates Coordinator

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