New approach to rezoning in NSW and implications for industry - Construction & Planning

Released late last year, the NSW Government discussion paper 'A new approach to rezonings' (Discussion Paper) makes the case for a large-scale transformation of the process for rezoning land in NSW. The overall aim is to reduce current timeframes for amendments to Local Environmental Plans (LEPs), which currently sit at an average of around 620 days.

In addition to the Discussion Paper, a revised LEP Making Guideline (Guideline) came into effect in December 2021, replacing the Department of Planning and Environment's (Department) earlier 'A guide to preparing local environmental plans'.

While the Discussion Paper contains the Department's overall vision for rezoning reforms to be progressed throughout 2022, the Guideline is already in effect and applies to all new planning proposals (PPs).

Key takeaways

The new Guideline provides more detailed guidance around the current rezoning process. It introduces four new, informal categories of PPs based on level of complexity, each with maximum benchmark timeframes and minimum information requirements.

Allowing PPs to be 'triaged' according to complexity is likely to improve overall assessment timeframes, particularly for less complex PPs which should now be able to be expedited, rather than being caught up in the overall system. Pre-lodgement consultation with council is strongly recommended for standard and complex PPs.

The Discussion Paper also proposes several significant changes to the rezoning process, many of which will require legislative reform, including:

formalisation of the categorisation of PPs in line with the new Guideline, and the introduction of clearer roles for councils and the Department depending on the category of PP;
restructuring the rezoning process, including the removal of the Gateway determination step;
pre-lodgement consultation with council and other relevant authorities is intended to be made mandatory for all bar basic PPs. While this may add time to the process upfront, it is likely to streamline the assessment component of the process and reduce the likelihood of PPs being delayed or subjected to amendments late in the process, as can currently occur at the post-Gateway stage; and
the introduction of a new merit appeal right for rezoning applications lodged by non-council proponents is being considered. However, the exact operation of the appeal right is not yet clear, and the Department is seeking feedback.

Overall, the changes proposed under the Discussion Paper, if the objectives are achieved, would be positive for the development industry. In addition to reducing overall assessment timeframes, the reforms seek to empower private proponents to progress their own proposals, and are designed to provide greater certainty, transparency and efficiency.

It remains to be seen whether the introduction of a new appeal process does in fact result in shorter overall timeframes, particularly if a court process is adopted in the absence of a corresponding increase to court resources, and particularly in the early stages of adoption, as the court familiarises itself with a new category of appeal.

Critics of an appeal process have also suggested that courts are not best placed to deal with strategic planning matters, suggesting that a review right to an independent panel, such as a new strategic planning panel or the Independent Planning Commission (IPC), may be the preferred option.

The new Guideline

While the Discussion Paper anticipates wholesale reform of the rezoning process, the new Guideline introduces some changes to the current rezoning process which are intended to improve timeframes, particularly for less complex PPs. The Guideline appears to supersede (without officially repealing) the current 'A guide to preparing local environmental plans'.

Category	Description
1 (Basic)	Concerns minor administrative and housekeeping arrangements such as simple reclassification of council land from community to operational (or vice versa) or the listing of a local heritage item
2 (Standard)	Represents most rezoning applications, and involves changes to land-use zones, adding a new permissible land use or altering a development standard (height, floor space ratio, etc) where the change is consistent with strategic plans
3 (Complex)	Includes any item not captured by category 1 or 2 where there is an inconsistency with existing strategic plans or the proposal would lead to increased demand for infrastructure and/or require changes to the development contribution plan
4 (Principal LEP)	Comprehensive updates to a council's LEP, undertaken infrequently by councils in response to long term strategic planning

The Guideline retains the existing 'strategic merit test' for PPs, with some minor updates and changes in language (such as referring more specifically to the types of strategic plans and strategies that will be considered). It also provides examples of matters that may be considered to constitute a 'change in circumstances' justifying progression of a PP notwithstanding that it may be inconsistent with relevant plans and strategies.

The previous presumption against a Rezoning Review request that seeks to amend LEP controls that are less than five years old, unless the proposal can clearly justify that it meets the Strategic Merit Test, is notably absent.

Proposed new approach

The Discussion Paper proposes wholesale reform of the rezoning process, including by simplifying the terminology such that:

'rezoning requests' (a proponent's application to the council to amend its LEP) and 'planning proposals' (the formalised LEP amendment proposal advanced by the planning proposal authority) will be referred to simply as a 'rezoning application'; and
the terms 'planning proposal authority' and 'local plan making authority' will also be scrapped, replaced with the terms 'proponent' (being the applicant for a rezoning application, whether that be a private entity, a public authority, or the council) and 'rezoning authority'.

The Discussion Paper also proposes significant reforms to the rezoning process, including by formalising the four categories of rezoning applications introduced in the new Guideline.

It is also expected that establishing clear pathways for different categories of applications will allow clearer expectations of time, cost and effort to be set, and clarify the different roles for different levels of government in each category, according to the Discussion Paper which shows a breakdown of these roles across PP categories (Figure 4, page 18).

Where assessment timeframes are not met, the Discussion Paper envisages that a 'deemed refusal' period would apply, triggering an appeal right. Further, the Discussion Paper raises the possibility of fee waivers. More details on these options are expected once public submissions have been considered.

Process

While the current process involves up to seven steps, the new approach proposes a streamlined framework of five clearly defined stages. The ultimate goal is to reduce the time a rezoning application takes from inception to finalisation to between 26 weeks (for Category 1) to 50 weeks (for Category 4), down from an estimated current average of nearly 90 weeks. The change in approach is shown in the Discussion Paper (Figure 13 on Page 13) where the current and proposed processes are compared side-by-side, clearly presenting the process the new approach is designed to introduce.

In addition to the categorisation of PPs, key changes proposed under the Discussion Paper include:

the introduction of a mandatory pre-lodgement process for Categories 2-4 PPs, including obtaining agency comments. While the Guideline strongly recommends pre-lodgement consultation, it is not currently mandated, and agency input currently does not occur until post-Gateway. Pre-lodgement consultation will remain optional, though recommended, for Category 1 PPs;
removal of the 'Gateway' determination step. Instead, subject to the rezoning authority checking that the application meets all submission requirements, the application will proceed to exhibition and all merit assessment will be shifted to after exhibition; and
introduction of an appeal right for private proponents against the final decision (discussed further below).

Implementation of each of these reforms is likely to require legislative change. Interestingly, the Department notes that the new approach has been designed to align more closely with the DA process, in the hopes that this will increase the number of combined rezonings and DAs. This is an option that is currently available under the Environmental Planning and Assessment Act 1979 (NSW) and has potential to create further efficiencies, but is currently underutilised.

New appeals pathway

Presently, a proponent has two non-statutory merits review pathways in relation to a rezoning application, rezoning reviews and 'Gateway' reviews, enlivened early in the rezoning process where a council or the IPC, respectively, declines to progress the application.

Councils also currently enjoy a right to seek a Gateway review, allowing them to intervene where a Gateway determination amends an application in a manner that council does not support.

The Discussion Paper suggests two alternative appeal processes, enlivened at the end of the rezoning process, allowing a proponent to challenge an unsatisfactory decision or progress its proposal in the face of a 'deemed refusal'. The two options are:

a merit appeal right to the Land and Environment Court (LEC), in line with the current Class 1 development appeal process for development application refusals and deemed refusals; and
an appeal to the IPC, potentially similar to the current determination process for certain State significant development applications.

Importantly, the Discussion Paper proposes that only private proponent-led rezoning applications would have the benefit of this appeal right. Applications initiated by councils, such as principal LEP amendments, would have no right of appeal to the LEC or IPC, instead relying on internal stakeholder management through the Planning Delivery Unit established within the Department.

The Discussion Paper is silent on whether councils would retain the right to appeal an approved private proponent-led rezoning application which is finalised contrary to council's conditions of support.

What's next?

The Discussion Paper is the start of a process aimed at reforming a crucial but often cumbersome part of the NSW planning system. While feedback is currently being sought on the Discussion Paper, and the changes it seeks to implement are likely to require legislative amendments, the new Guideline is now in operation.

The NSW Government anticipates that the reform approach will be confirmed and put into effect later this year. Following any legislative reform, it is anticipated that further updates to the Guideline will follow.

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.