Central Road Area, Clifton Spings/Drysdale - Drainage Proposal - Extract from Geelong Council Minutes 23 February 2010

Below is the background material to the City of Greater Geelongs proposal to have residents contribute to the drainage for the Retirement Village in Clifton Springs. The information has been extracted from the Council Minutes of 23 February 2010 which is available on the Geelong Council's website in adobe acrobat format.

Central Road Area, Clifton Springs - Proposed Construction of Main Drain - SRC 287 - Intention to Declare

Portfolio: Transport and Infrastructure - Cr Richards

Source: City Services - Engineering Services

A/General Manager: Darren Martin

Index Reference: Subject: Special Rate and Charges

Street: Central Road, Clifton Springs

Summary

• This report relates to the proposed construction of a main drain to service the general area of Jetty Road, Ada Street, Thomas Street and Central Road, Clifton Springs, refer Plan – Appendix 3 [See bleow].
• A Retirement Village is planned for the area east of Central Road. This development cannot proceed without the provision of the main drain. The main drain will also facilitate development of the surrounding area which is in the process of being rezoned from rural living to residential 1.
• Council has negotiated an arrangement with the developer of the Retirement Village land who is providing and funding the main drain upfront. The agreement is for Council to use its best endeavours to initiate a special charge scheme for cost recovery from those surrounding, benefiting owners. Failure to recover funds ia this means will result in Council paying the share of cost these owners would have otherwise paid.
• The estimated cost of the work is $1,492,829 with the Retirement Village owner paying $348,919 and other benefiting property owners paying $1,143,908. The estimated cost is based on lot area and varies between $3,361 and $256,888.
• The scheme has been prepared in accordance with the special rate and charge provisions of the Local Government Act, along with Council’s Comprehensive Infrastructure Funding Policy.
• This report seeks a resolution by Council to give notice of its “Intention to Declare” a special charge for the main drain to service the Jetty Road, Ada Street, Thomas Road and Central Road area, Clifton Springs.

Cr Richards moved, Cr Granger seconded -
That Council resolves that it intends to declare a special charge in accordance with Section 163 and 163B (2)(a) of the Local Government Act 1989 (the Act) as follows:
1) The following declaration of a special charge be proposed (“the proposed declaration”):
a) The special charge is declared for a period until the works have been completed and the scheme finalised.
b) The special charge be declared for the purposes of defraying any expenses incurred by Council in relation to construction of a main drain to service properties in the Jetty Road, Ada Street, Thomas Street and Central Road area, Clifton Springs which project:

b1) will provide proper drainage and opportunity for subdivisional development of each of the properties included in the scheme;

b2) Council considers is or will be a special benefit to those persons required to pay the special charge (and who are described in succeeding parts of this Resolution); and

b3) arises out of Council’s function of planning for and provided infrastructure for property owners.
c) The:

c1) total cost of performing the function described in Part 1(b) of this Resolution based on estimated cost be recorded as $1,492,827; and

c2) total amount of the special charge be levied and be recorded as $1,492,827.
d) It be recorded that, for the purposes of section 163(2)(a) of the Local Government Act 1989, the special charge proceeds will not exceed the amount calculated in accordance with the prescribed formula (R x C = S), the:

d1) ‘benefit ratio’ (R) being calculated at 100% and representing the total benefits of the special charge scheme that will accrue as special benefits to all persons liable to pay the special charge; and

d2) ‘community benefit’ (C) being assumed as nil.
e) The following be specified as the area for which the special charge is so declared:

e1) the area within municipal district of Council highlighted in the plan attached (Appendix 3) to this Resolution (“the area”).

f) The following be specified as the land in relation to which the special charge so declared:

f1) all land within the area shown on the plan.
g) The following be specified as the criteria which form the basis of the special charge so declared:

g1) Ownership of any land described in Part 1(e) of this Resolution.
h) The following be specified as the manner in which the special charge so declared will be assessed and levied:

h1) the cost allocated has been based on lot area; and

h2) the special charge will be levied by sending notice to the person who is liable to pay, pursuant to section 163(4) of the Local Government Act 1989.
i) Having regard to the preceding parts of this resolution but subject to Section 166 (1) of the Local Government Act 1989, it be recorded that;

i1) the owners of the land described in column 1 of Schedule B to the resolution are estimated liable for the respective amounts set out in column 2 of Schedule B; and

i2) such owners may, subject to any further resolution of Council pay the special charge in the following manner:

i2a) the charge will become due and payable within one month of the issue of the notice requesting payment pursuant to section 167 (3) of the Local Government Act 1989.

i2b) interest will not be charged for six months after the issue of the notice provided the persons liable make timely payment in accordance with any repayment arrangements that may be agreed on by Council.

i2c) in accordance with Section 172 of the Act, the rate of interest which is payable on the special charge which has not been paid by the specified date is set at Council’s overdraft rate, reviewed every three months (provided that it shall not exceed the rate fixed by the Governor in Council by Order for the purposes of Section 172 (2A) in which case the rate of interest shall be the maximum rate fixed by the Governor in Council by Order for the purposes of this section).

2) Any submissions made under section 223 of the Local Government Act 1989 and the proposed declaration be considered by Council’s Submissions Review Panel, and then by Council at its meeting on 13 April 2010 at which time Council will consider whether to make a declaration in the form of the proposed declaration.

3) Council’s Chief Executive Officer be authorised to give public notice of the proposed declaration in accordance with sections 163 (1A) and (1B) of the Local Government Act 1989 and send a copy of the public notice to each person who is liable to pay the special charge in accordance with section 163 (1C) of the Local Government Act 1989.
Carried.

Report

Background

This project involves the proposed construction of a main drain with its outlet at Griggs Creek, along the north boundary of the Clifton Springs Primary School, south in Jetty Road, Ada Street to Central Road, then south, then entering private property to the east. A Retirement Village has been proposed to the east of Central Road on a 9.68 ha parcel of land (101 Central Road). The developer of this complex approached Council several years ago and was advised such a development could not proceed unless a main drainage system was installed.
A main drainage system would not only service the Retirement Village site but also surrounding property. Some of this surrounding property is zoned Residential 1 and other land zoned Rural Living is presently undergoing a rezoning process. Considerable interest has been shown by some of these landowners, to develop.
As the developer of the proposed Retirement Village could not proceed and after discussions and negotiations a proposal to solve the impasse was put forward. This solution involved the upfront construction and funding of the main drain estimated to cost $1.5m. Council would then make its best endeavours to recover a share of the cost from abutting owners who would benefit from the provision of a drainage outfall. A legal agreement was subsequently put in place and signed by both parties. This agreement essentially involved the following:

• Developer to design, tender and construct the main drain estimated at $1.5m
• Council to initiate a Special Charge Scheme to recover funds from all other benefiting properties.
• Council to return monies paid by other owners as their share, to offset the initial outlay of $1.5m.
• Should Council be unable or unwilling to recover funds by means of a Special Charge Scheme, then Council would pay this amount at the end of a five year period with the addition of interest.

This was considered an appropriate means to facilitate the initial development (the Retirement Village) and given the rezoning, enable subsequent development to take place. It is also cost neutral for Council as there is no necessity for an initial outlay of funds. Using a special charge arrangement, Council is collecting the funds, to pay off the loan, put forward by the initial developer.
The scheme includes 20 properties and 18 owners. There is approximately 1.8ha of existing subdivisional development to the east which would also utilize the drain. This consists of 19 residential lots most already built on. These properties have already been subdivided and would not benefit to the same extent that the other scheme lots would. These lots are therefore included as a cost to Council.

Discussion

Discussions and negotiations have been underway regarding development and particularly the provision of main drainage in this area, for at least a decade. The proposal put forward is now a feasible and practical solution. Council is, in fact, locked into the arrangements through a legal agreement. The penalty cost, should Council wish to void this agreement is approximately $1.1m.
The fundamental concept of all Special Rate and Charge Schemes is special benefit. Council must be confident that special benefit applies to each of the properties in the scheme. Special benefit is essentially a benefit these properties receive as a result of the work, which is over and above any other property which does not form part of the scheme. The important benefit received by the properties in the scheme, is that given other planning and servicing constraints, they can be developed by means of further subdivision. This has the potential to provide a financial gain for property owners. As indicated, without the drain, subdivision cannot proceed even if the current zoning is in place.
Another important benefit is the fact that the properties will use the drain for conveying excess stormwater from the lots. Usage of infrastructure (road and drain) is considered to be one of the highest levels of benefit. Provision of underground drainage also eliminates any public health problems which may arise from discharge of water to surface, particularly when development commences. The estimated cost of the project is as follows:
Cost to initial developer for 2 lots $348,919

Cost to 18 titles, 17 owners $1,078,024

Cost contribution by Council for 19 properties already subdivided $65,884
Total $1,492,827

Environmental Implications

The catchment area is developed to some extent and further development would exacerbate runoff. The main drain will capture this runoff and with the subsequent development roads will be provided as well as grassed areas. In the longer term there is a minimization of silt laden runoff which enters Griggs Creek and eventually Port Phillip Bay.
The Retirement Village is providing some water retarding facilities to capture silt before discharging to the drain. Excavation is required as the drain enters Griggs Creek, however, this is to be restored and a discharge facility provided.
All infrastructure works result in energy consumption and greenhouse emissions. This takes place in the production of materials, such as pipes and the construction phase. This, however, ceases once the works are constructed and there is minimal ongoing maintenance. There are no carbon offsets applicable. Where possible, excavated spoil will be returned to the drainage trench as backfill.
There are no natural habitats on the route of the drain. Natural habitats in Griggs Creek are an unknown quantity; however, the level of disruption of the creek bank is confined to one location with a right angled entry.

Financial Implications

This arrangement is cost neutral, should a Special Charge Scheme proceed successfully. Should this not be the case, Council faces a $1.1m penalty. If this eventuated this money would need to be allocated from the provision of drainage account.

Policy/Legal/Statutory Implications

The Special Charge Scheme couples with the relevant legislative provisions of the Local Government Act.
There are no Human Rights Charter issues considered to be relevant to this special charge scheme.

Officer Direct or Indirect Interest

There are no Council staff engaged in this project who have any pecuniary interest or own land.

Risk Assessment

There is a legal agreement in place and the provision of a Special Charge Scheme is nominated as a condition of the agreement. The condition actually states that Council will use its best endeavours to initiate a Special Charge Scheme.

Social Considerations

Drainage by its nature is underground and is very unlikely to impact on any vulnerable groups within the community. The works, therefore, do not result in the exclusion of any particular groups activities. There is no doubt that some owners will have difficulty paying for the works. There is a longer term financial benefit for these however, as well as a means to pay for the works by instalments over five years.

Communication

Correspondence has been forwarded on several occasions, including recently, regarding the upcoming scheme. Discussions have been held with some owners.
The complete minutes from the Geelong Council meeting of 23 February 2010 are available in pdf format (3656kb).