The Geelong Council has on its agenda for this Tuesday 14 December their proposal to levy a special charge to construct a main drain in the Central Road area of Clifton Springs / Drysdale.
Below is the extract from the agenda - which is available in pdf format on the Council's website (11,391kb). (This document requires the use of Adobe Acrobat Reader).
CENTRAL ROAD AREA, CLIFTON SPRINGS - CONSTRUCTION OF A MAIN DRAIN - SRC 299 DECLARATION OF CHARGE
Portfolio: Transport and Infrastructure - Cr Richards
Source: City Services - Engineering Services
General Manager: Gary Van Driel
Index Reference: Subject: Special Rates 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 3-3.
- 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 via 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 was advertised and submissions invited. Fourteen objections were received and considered by a Submissions Review Panel. The Panel recommended Council proceed with the scheme on the basis of a deferred payment arrangement being put in place which related to development or sale of the property.
- 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 "Declare the Charges" for the main drain to service the Jetty Road, Ada Street, Thomas Road and Central Road area, Clifton Springs.
Recommendation A – Declaration of the Charges
That in accordance with Section 163 and 163 B(2)(a) of the Local Government Act 1989:
1) the following declaration of a Special Charge be confirmed:
a) a special charge be declared for the period until the work has been completed and the scheme finalized.
b) the special charge be declared for the purpose of defraying any expenses incurred by Council in relation to the 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 facilitate subdivision both now and in the future, of each of the properties 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 providing infrastructure for property owners.
c) the:
c1) 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 to be levied, as based on estimated cost, 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 rate is so declared:
e1) the area within municipal district of Council highlighted in the plan attached to this Resolution ("the area").
f) the following be specified as the land in relation to which the special charge so declared:
f1) 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, subject to any further Resolution of Council, the special charge will be due and payable on the date(s) fixed under Section 167 of the Local Government Act 1989 as the date or dates as specified in Councils repayment schedule.
2) there are no incentives declared as incentives to be given by Council for the payment of the special charge before the date(s) specified for its payment under Section 167 (3) of the Local Government Act 1989.
3) Council's Chief Executive Officer be authorised to levy the Special Charge in accordance with Section 163 (4) of the Local Government Act 1989.
Recommendation B – Grant of a Concession
That;
a) the concession be applied to the special charges applicable for main drainage construction for the Jetty Road, Ada Street, Thomas Street and Central Road, Clifton Springs (Central Road Area).
b) the concession be applied to those properties forming part of the scheme which are shown in Schedule B attached to this resolution.
c) it be recorded that Council may grant a concession in accordance with Section 169 (i)(d) of the Local Government Act 1989 (the Act) in order to assist the proper development of the Central Road area.
d) Council considers the granting of a concession to the specified properties will provide Community benefit in that it facilitates and increases the likelihood of success of the special charge scheme for main drainage construction which will ultimately benefit all property owners forming part of the scheme in the Central Road area. Construction of the main drain is required for the orderly, proper and safe development of the Central Road area properties within the drainage catchment.
e) having regard to the Section 169(1B)(a) of the Act, Council confirms that the concession to owners of the specified properties, does not exceed one third of the rateable properties in the municipal district.
f) the following be specified as the measure in which the concession shall be given:
f1) all properties included in the scheme at the time of declaration of the charges; and
f2) properties in accordance with (f1) above shall have the charges resulting from the scheme, deferred (the deferred charges).
g) the following be specified as the manner in which the deferred charges shall become due and payable:
g1) deferred charges relating to properties in accordance with (f1) above shall become due and payable by the owners of the properties as follows:
g1a) on sale of the property by the owner, to another party, within 30 days of the finalization of the contract of sale and on receipt of a notice from Council requesting payment;
g1b) on the transfer in any way of the property to other parties;
g1c) on sub-divisional development of the property by the owner, within 30 days of the issue of a certificate of compliance and on receipt of a notice from Council requesting payment.
g1d) on development of the property not described in (g1b) above, but substantially changes or alters the land by building works or otherwise, within 30 days of completion of the project, at the issue of a certificate of occupancy, or as deemed substantially completed by Council and on receipt of a notice from Council requesting payment.
g1e) the amount of the special charge shall be adjusted at 1 July each
year until the amount is paid, by an interest rate of five percent.
g2) in accordance with (g1a), (g1b), (g1c) and (g1d) above, it be recorded that the concession will be revoked and the special charge will become due and payable in accordance with those provisions.
h) having regard to the previous parts of this Resolution when charges become due and payable pursuant to (g2) above, it be recorded that, subject to any further Resolution of Council, the special charge will be due and payable on the date(s) fixed under Section 167 of the Local Government Act 1989 as the date or dates on or by which Council's general rates are due.
i) there are no incentives declared as incentives to be given by Council for the payment of the deferred special charge before the date(s) specified for its payment under Section 167(3) of the Local Government Act 1989.
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; and
- 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.
Council considered an "Intention to Declare" report of 23 February 2010 and resolved to proceed to advertise the scheme. Fourteen objections were received and the scheme caused a considerable amount of discussion and concern in the local community.
As a result of the submissions process a number of matters were raised and briefly these are as follows:
- already have sufficient drainage on property'
- lack or nil, special benefit;
- cannot subdivide at present;
- already paid a drainage charge when subdivision took place;
- Subdividers and Developers should pay;
- no evidence that drain is fit for purpose;
- timing has excluded many people from participating in the process;
- inappropriate consultation;
- no evidence that drain will accommodate proposed development;
- contradiction of Council Structure plan;
- how will Council pay if it does not receive income from the scheme;
- inconsistent approach regarding some land proposed for re-zoning;
- all others should have same agreement as those whose land is to be rezoned i.e. Section 173 Agreement;
- land will not increase in value; and
- the special rate and charge scheme not intended for this purpose.
Prior to the Submissions Panel all Councillors were distributed with a copy of the individual submissions. Attached at Appendix 3-4 is an "Issues Sheet" which was sent out to all owners recently which addresses a variety of matters raised.
The special charge scheme, as proposed covers the relevant drainage catchment, and due to various differences in zoning and a proposed rezoning, creates some inconsistencies.
The major issue, which was raised by many of the objectors was the inconsistency in the fact that the owners of properties in the area subject to a rezoning were offered an arrangement through a Section 173 Agreement whereby the charge would only proceed when development takes place. Many owners believed this should apply to all.
The Submissions Panel carefully considered all matters raised by property owners and others. The Panel recommendation to Council included three matters:
- the scheme should proceed;
- all owners should be subject to a deferral of the charge until development took place; and
- at a point where any future property sale takes place, the charge should be paid immediately by the vendor.
Associated with the above, is that the Consumer Price Index should apply as Council may not receive funds for a considerable period of time.
Legal advice was obtained regarding the way this arrangement could be effectively implemented though a Council resolution. Council has powers under Section 169(i)(d) of the Local Government Act to grant a rate concession. It is of note that this method has been used for the Belmont Street carpark to defer payment by those owners who currently use commercially zoned properties for residential purpose only.
The matter of deferral of the charge was not raised in Council's original special charge scheme proposal i.e. the "Intention to Declare" stage. Therefore there is some risk of challenge given this is a change in the way Council is approaching the scheme.
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
The basic framework of a special rate or charge scheme is that there is an initial proposal, it is advertised, participants can place submissions or objections before Council and then Council arbitrates on the scheme.
In this instance owners have not had the opportunity to comment on the deferral proposal, although many appear to be strong advocates. This provides a risk factor in Council proceeding with the scheme. The alternative is to halt the process and recommence the scheme. This is not a desirable option and should be avoided as the local community has already been subjected to a difficult and sometimes confusing process.
On balance and given the advice received, Council should proceed with the scheme in its current form and include the deferred payment arrangements. 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
The project is cost neutral regarding the ultimate return of capital. However the timing of the return of funds is unknown and Council will incur some opportunity cost, loss, having to pay out the Retirement Village Developer within 5 years. Should Council not proceed with the scheme, or the scheme be unsuccessful, Council faces a $1.1m penalty. If this eventuated, this money needs to be allocated from main drainage funds.
Policy/Legal/Statutory Implications
The Special Charge Scheme complies with the relevant legislative provisions of the Local Government Act.
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
Property owners will be advised of the outcome of Council's decision on this main drainage proposal.
SCHEDULE 'A'
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 which consists of excavation, supply and placement of underground drains and pits, miscellaneous works, reinstatement, legal advice, professional services associated with survey, engineering design, drafting, supervision and administration of the project all as included in the cost estimate shown below.
Refer copy of PDF of the agenda for detailed cost estimates.
SCHEDULE 'B'
SPECIAL CHARGE SCHEME FOR MAIN DRAIN
TO SERVICE THE GENERAL AREA OF JETTY ROAD, ADA STREET,
THOMAS STREET AND CENTRAL ROAD CLIFTON SPRINGS - individual details of the properties affected - please refer copy of PDF of the agenda for detailed charges against each property.
Appendix 3-4: Central Road Area, Drysdale Proposed Special Charge Scheme for Provision of Main Drainage
Issues Sheet
- The proposal involves a number of different zonings and arrangements which are summarized as follows:
1. Residential blocks fronting Eastwood Crescent, Flinders View Drive and Lacoora Avenue. These are recently developed traditional 'residential' style allotments which are within the drainage catchment and it was always the intention to include these in the scheme. There is no charge on these properties, it is paid for by Council.
2. The Retirement Village site is currently partly zoned Residential 1 Zone (R1Z) and part subject to re-zoning from Rural Living Zone (RLZ) to R1Z.
3. Area bounded by Thomas Street, Ada Street, Jetty Road and Central Road. This area is currently being rezoned from RLZ to R1Z. Most owners have signed a Section 173 agreement with a set of conditions and importantly "…the Owner shall not later than upon the date which a Statement of Compliance issues in respect of a Plan of Subdivision of the subject land which creates any residential lot, pay the Council the drainage works contribution". A Section 173 agreement can only be initiated when rezoning or a planning application applies and cannot be invoked where no such action is taking place and the land is "static" with respect to development.
4. Larger lots which are currently zoned RLZ (2 ha or 5 acres) and not subject to the current re-zoning. It is a reasonable assumption however, that these lots, shortly to be bordering R1Z would be the subject of favourable consideration given an application for rezoning.
5. R1Z land to the north of Ada Street and to the east and west of Central Road. These lots have potential for further subdivision.
- The special charge scheme has been initiated to resolve the issue of main drainage in
the area and enable development, in various ways, to proceed. In order to be a valid
scheme, it needs to take consideration of the entire catchment, regardless of the varying
circumstances referred to above.
- Council is at a point where it is and will consider the fairest best option given the circumstances and local community views. Special rate and charge schemes have as their legal basis, the Local Government Act, the enabling legislation. The format of schemes also relies on precedent set through previous considerations of the Victorian Civil and Administrative Tribunal (VCAT) and its predecessor.
- The definition of "special benefit" has been derived through the Courts and confirmed by the Tribunal. For this proposed scheme, the predominant special benefit is the fact that infrastructure planned will assist in realizing the potential for development of land within the catchment (excluding residential sized blocks) and the ability of owners to profit from this.
- Owners of larger blocks indicated their existing drainage is quite adequate. To a degree this is correct, although there would likely be some runoff from the property given medium to high rainfall events. The proposal however, the main drain, is to drain properties in the correct manner when they are subdivided. Subdivision could not occur without the drain.
- Owners indicated they had no intention of subdividing. It is accepted this could be the current owners view. However this may not always be the case, properties change ownership and it is more than likely new owners (or for that matter current owners) are likely to want to realize the full potential of the property they purchased.
- The benefit which comes about via the main drainage scheme (or special benefit) is not necessarily considered an instantaneous benefit, but rather a benefit realized over many years.
- Some owners have agreed, quite correctly, that their property cannot be subdivided, because of RLZ. Some of the RLZ is being presently converted to R1Z. The remaining RLZ is, or will be, virtually surrounded by R1Z. As indicated above, and given the rezoning taking place in the area, and infrastructure already in place (the main drain), rezoning is likely. Owners however would need to initiate the process.
- The area to the north of Ada Street, west of Central Road has been subdivided into larger lots in recent years. Council obviously approved this subdivision with drainage extending partly down Ada Street. This however, discharges into a system which is considerably under capacity. This area would be connected directly to the proposed main drain. If and when, owners choose to subdivide, the enabling infrastructure, the drain, would be in place and the benefits able to be realized.
- Many discussions have been held about benefit and why should owners pay if they see no immediate benefit. In our view, and on review by VCAT, benefit would likely be considered to apply, both now and in the future. The drainage system would facilitate the development.
- Most of the above discussion has centered on the drainage proposal and the benefit it provides to owners. There are of course a number of other matters relating to infrastructure which would need to be resolved at the time of subdivision and these are common with any development and include:
- a planning permit and variety of conditions normally included within;
- provision of roads;
- provision of water supply;
- provision of sewerage;
- internal drainage and connection to the main drain; and
- provision of other utilities
These are the "normal" matters which must be attended to by a developer. A number of these are within the jurisdiction of other authorities, for example Barwon Water (water supply and sewerage).
- the issue of rates payable is directly related to the value of a property and as values change, so will rates.
- The legislation relating to the special rate and charge process and its predecessor was enacted by State Government in the 1960's for the express purpose of what is being proposed, that is "catch-up" infrastructure. This infrastructure, for whatever reason, was not put in place previously.
- The special charge scheme has been put in place over the drainage catchment as it is the only effective means Council has to resolve the main drainage issues in its entirety. Council will need to consider how best to manage the issue of apparent inconsistency with the re-zoning and the Section 173 Agreement.
- Many have indicated that developers should pay the full amount. A VCAT view would most likely be that the cost of works should be borne by all those properties (owners) who would benefit. Therefore the ultimate test is benefit. Council cannot, of course, pre-empt any decisions VCAT may make, on review of the scheme.
- The City of Greater Geelong is not necessarily a beneficiary of the works. In this role, it is facilitating a process.
- At no stage has Council advised owners it would pay for the main drainage outfall. Around 2006, a different developer approached some owners regarding the creation of easements and installation of underground drainage. This did not proceed.
- The outfall drain is designed to capture the 10 year developed Average Recurrence Interval (ARI) flows from all the contributing catchments while the 100 year ARI will be stored on-site.
The drain has been designed to current best practice and is based on the assumption of 70% impervious area for the catchment.
- All subdivisional development will be designed in accordance with current state and local planning policy relating to stormwater management including storage, treatment and reuse.
- The drain outlet to Griggs Creek will be constructed to dissipate the flow to prevent erosion of the banks and beds of the Creek. Council is currently engaging consultants to undertake a detailed design for the rehabilitation of Griggs Creek.
The Drysdale / Clifton Springs structure plan makes specific mention of the Central Road area and the use of "A Development Contribution Plan (DCP) may also be appropriate to assist in the delivery of drainage infrastructure…".
The complete agenda is available in pdf format on the Council's website (11,391kb). (This document requires the use of Adobe Acrobat Reader).
