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The NSW Government has released a draft regulation under the Community Improvement Districts Act 2025 (NSW) (CID Act), which amends the short regulations included in sch 3 to the Act.
The draft regulation proposes key details on how "Community Improvement Districts" (CID) contemplated will be established, run, and funded. There is significant complexity in the process.
Snapshot
- The CID Act entered into force on 22 May 2025, aiming to facilitate private initiatives to provide services, activities or projects within CIDs. The Act lacked comprehensive regulations to operationalise it.
- The proposed regulation complements the CID Act by outlining key aspects of how a CID will be established, operated, and funded.
What is a CID?
In essence, CIDs are private initiatives to fund and deliver typically public services, activities or projects in a local area. It is a "place-based partnership between local government and the community, led by local businesses, to support and grow local economies, town centres and main streets" (Regulatory Impact Statement, p 7).
The NSW Government describes some of the services, activities or projects that may be delivered through a CID as district branding, joint strategic planning, events, public art, safety or street cleaning (Transport for NSW (TfNSW)).
The process to establish a CID has some complexity. Perhaps rightly so given, if successful, it will impose a levy as a charge on the land to which it applies.
A CID is administered by a "CID entity", which must be an incorporated association.
A CID is funded through levies imposed on "business land owners" within a CID. That is, owners of rateable lands categorised as "business" under the Local Government Act 1993 (NSW). The levies are collected and disbursed to CID entities by TfNSW.
How is a CID established?
A CID can be established through the following process:
- CID proposal: Following community consultation, a "CID proponent" prepares and submits a CID proposal to TfNSW.
- Business and land owner ballot: If a proposal
is accepted by TfNSW, TfNSW is required to organise a ballot to
determine whether the proposal is supported by businesses and
business land owners within the proposed CID. A CID proposal is
supported if it receives:
- a majority of votes from business land owners in the CID, if at least 25% of enrolled land owners voted; or
- a two-thirds majority of votes from CID businesses in the CID, if at least 25% of enrolled businesses voted.
- Local council support: If a CID proposal is supported in the ballot, local councils are required to provide notice (with reasons) as to whether or not they support the proposal.
- TfNSW approval and CID establishment: If the CID proposal receives support in the ballot and the relevant local councils are supportive, TfNSW must either approve or reject the CID proposal. If TfNSW approves the proposal, the CID is established.
A CID lapses after 5 years, but a fresh proposal can be made to renew the CID.
What is proposed in the draft regulation?
The draft regulation is intended to provide the necessary detailed regulatory regime to support establishment and operation of CIDs. An overview of the key parts of the draft regulation is set out below.
Organisation and conduct of the CID ballot
A significant portion of the proposed regulation is dedicated to
the organisation and conduct of the CID ballot.
Clause 11 of the draft regulation proposes that a CID ballot will
be a secret, postal ballot. Voting will be non-compulsory, but only
the business land owners and CID businesses included in the
"approved roll" can vote.
New consultation requirements
Under the CID Act, a CID proponent is required to consult with certain stakeholders before submitting their proposal to TfNSW.
The draft regulation lists further stakeholders:
- Aboriginal and Torres Strait Islander representative community organisations or groups,
- Cultural and linguistically diverse communities within the CID.
- To the extent reasonably practicable, persons likely to use the proposed services or participate in the proposed activities and projects (eg workers, students, and tourists).
The draft regulation also specifies the content of the community consultation report to be submitted alongside the CID proposal to TfNSW.
Method to calculate and collect levies
A CID proponent must include information on how their proposed levy is to be calculated in the CID proposal.
The draft regulation prescribes two methods of calculating CID levies:
- a proportional value method – levies are calculated as a proportion of a parcel of land's gross land value.
- a tiered method – parcels of land are sorted to multiple tiers according to the gross land value, and the same levy is imposed on the land within the same tier.
These are the same methods prescribed in the existing CID regulations, included as sch 3 to the CID Act.
Under the CID Act, levies must also be imposed by reference to value of ratable land determined by the Valuer-General. The NSW Government expects CID levies to cost approximately between $400 - $700 per business annually (Regulatory Impact Statement, p 21).
TfNSW can recover unpaid levies in court, charge interest and enter into payment agreements.
If land is transferred, the draft regulation specifies that a land owner continues to be liable for levies imposed before the transfer (cl 48). Unpaid levies may also be apportioned if land is subdivided (cl 49).
The CID Act allows the Minister to set a maximum levy for land within a CID, through an order published in the Gazette.
Finally, if a CID entity ceases operating, the draft regulation provides that any unspent levies will be returned to the land owners, in proportion to the levies they paid (cl 50). The levies will first be applied to pay any outstanding expenses in connection with the CID proposal (cl 50).
Operation of the CID – requirements and restrictions
As soon as possible after a proposal is approved, a CID entity will be required to enter into an agreement with relevant local councils on how they will work together on matters relating to the delivery of the CID proposal (cl 40).
The draft regulation proposes to restrict CID entities from conducting certain activities, including:
- undertaking a service, activity or project that replaces those delivered, without charge, by local, NSW, or Commonwealth government;
- undertaking a service, activity or project that promotes a CID business or business land owners to the exclusion of others;
- lobbying for purposes unrelated to the entity's objects; and
- donating to political parties.
Next steps
Consultation for the draft regulation closes Monday, 8 September 2025. Submissions can be made here.
The draft regulation will likely be finalised from October 2025 onwards. The Minister will also need to declare that a local government area is subject to the CID Act for the CID Act to apply to land within a given LGA.
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.
