Australia: NSW Planning, Environment & Government Update: Seniors Living Site Compatibility Certificates

Last Updated: 23 December 2008

In this issue:

  • Seniors Living Site Compatibility Certificates – How Are They Being Assessed?
    Since October 2007, many Seniors Living development applications in NSW have been unable to be submitted to Councils for approval unless the Department of Planning has issued a 'Site Compatibility Certificate' (SCC).
  • 25% Land Tax Hike!
    Land valuation appeals to the NSW Land and Environment Court look set to become the order of the day after the State Government recently announced that the land tax rate will increase from 1.6 per cent to 2% (an approximate 25% increase) for properties over $2.25 million in land value.

Seniors Living Site Compatibility Certificates – How Are They Being Assessed?

Since October 2007, many Seniors Living development applications in NSW have been unable to be submitted to Councils for approval unless the Department of Planning has issued a 'Site Compatibility Certificate' (SCC). In an attempt to unveil some of the mystery surrounding the assessment of these SCC applications, Gadens recently obtained from the Department, under the Freedom of Information Act 1991, all approvals and refusals made with respect to SCC applications lodged in NSW thus far.

To recap, since the October 2007 amendments, developers have had to obtain an SCC from the Department for certain types of developments under the Seniors Living State Environmental Planning Policy (SEPP), most notably for development on land "adjoining land zoned primarily for urban purposes". Development on this land had previously been prohibited, to prevent developments on rural land that were incompatible with the surrounding rural environment and also to prevent "speculative" developments on rural land that did not maintain adequate services to residents following construction. SCC's are therefore the Government's response to these concerns and need to be obtained from the Department as a prerequisite to the lodgement of a development application with the relevant council. In short, an SCC is a threshold or gateway requirement.

Since the amendments were made, concerns have arisen as to how the SCC process will impact on the approval process. Questions arose, for example, as to whether the SCC process would impose stringent conditions that unduly constrain developments, whether costs would escalate in order to meet the Department's conditions placed on the SCC, and whether the Department would take a heavy-handed approach and refuse many SCC's altogether, leaving developers without any recourse to appeal. Many of these questions have been answered by information recently obtained and analysed by Gadens, under the Freedom Of Information Act.

In summary:

  • the Department has determined a total of 18 applications for SCCs to date. 15 were approved (2 of which were issued subsequent to an initial refusal) and 3 were refused.
  • of the 15 SCCs that were approved, all bar one imposed conditions that approval was subject to certain issues being satisfactorily resolved (at DA stage), such as noise, site access arrangements, visual impact, infrastructure provisions and access to services. Also, in most cases, the final number of dwellings permitted in the development is left to be decided by the relevant local council, but a broad upper limit on the number of dwellings is specified by the Department.
  • of the 3 SCCs that were refused, reasons for refusal included: inadequate access to services (e.g. site too far from retail/commercial centre and/or no adequate transport service); the proposal would have an undue visual impact on the area (e.g. in semi-rural areas); environmental concerns (e.g. site is home to particular species of plant or animal, impact of proposal on water quality in the area); loss of land for rural purposes (e.g. where the land is zoned as medium to high quality rural land); and the proposal is not in keeping with local council's plans to develop services and infrastructure in the area (e.g. the proposal would require development of services and infrastructure at a higher rate than the local council had planned).

Gadens can provide further details on these matters upon request.

On a positive note, the rate of approval of SCCs by the Department is quite high at 83%, and important assessment factors such as the number of dwellings permitted on site were left reasonably flexible for determination by the local council (usually subject to a specified upper limit). The Department has therefore given in-principle support but has used the SCC process to highlight issues – usually environmental matters – that require resolution during the council assessment process, thereby influencing density in an indirect way. For example, the Department has in some cases set parameters such as vegetation buffer zones and building height, and has designated some land as unsuitable for development (usually for environmental reasons).

Of the applications that were refused, it is reassuring that several of these were subsequently approved following amendments and the generation of additional information. The applications that were refused outright seem to have raised significant concerns about the isolation of the site to services, and compatibility with the surrounding character of the locality.

It is difficult to predict whether the Departmental process creates additional issues that may not have been raised by the council, thereby adding additional cost to the development process. However, the process at the very least gives the developer a preview of the costs, density issues and environmental investigations that will be required before approval of the development can be considered. In addition, in our view, the SCC issued by the Department will carry much weight, such that Councils will have a difficult time subsequently arguing that the site is not suitable, if the Department has certified it as being broadly so. It will be interesting to see how the Land and Environment Court treats such arguments raised by Councils.

Councils can technically make their own decisions with respect to planning and environmental issues, frustrating developers seeking to move a project forward quickly after an SCC has already been issued by the Department. However Councils may have a difficult time defending any such decisions, where an SCC has already been issued by the Department.

25% Land Tax Hike!

Land valuation appeals to the NSW Land and Environment Court look set to become the order of the day after the State Government recently announced that the land tax rate will increase from 1.6 per cent to 2% (an approximate 25% increase) for properties over $2.25 million in land value.

Critics of the rate hike make the compelling argument that at a time when the NSW property sector is in dire need of stimulus and investment, the increased taxes on even modest investment properties will deter investment in property, increase holding costs for developers seeking to undertake development projects in NSW, and that these increased taxes will be transferred to tenants wherever possible.

Many clients of Gadens have already recognised that they will be left with little choice but to commence Land and Environment Court proceedings to challenge their land valuations, to reduce the land tax payable. In that regard, we remind our readers that although the rate of tax cannot be challenged, the land valuation itself (valuing the land as though it were a vacant site) is often unreasonably inflated. As one example, Gadens was recently successful in proceedings challenging the valuation of a retail site, resulting in a reduction in assessed value from $39.5 million to $25 million.

Arthur Koumoukelis t (02) 9931 4873 e
Anthony Whealy t (02) 9931 4867 e
Isabella Ferguson t (02) 9931 4929 e

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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