Submission on Improving the NSW Planning System – January 2008

From: Lesli Berger
Sent: Wednesday, 2 January 2008 12:55 PM
To: planningreform
Cc: Ken Morrison
Subject: submission RE: IMPROVING the NSW Planning System

To Whom It May Concern,

On behalf of Fivex Commercial Property (” Fivex “), I was very interested to read the November 2007 discussion paper titled “IMPROVING the NSW planning system” (“ the discussion paper “).

Fivex has been in the property business for over 30 years and owns and manages about 12 properties across New South Wales ranging in size from a small retail strip shop to mid sized commercial office buildings in the CBD and North Sydney. We have developed numerous projects in our 30 year history and at any point in time we have at least one development application (” DA “) being assessed by a Council.

The majority of our property portfolio is commercial in nature, however, we have built the occasional boutique single-dweling residential development and the occasional mixed use development with a residential component. It is fair to say that Fivex is a regular user of the town planning system and has considerable experience doing so.

1. What has been Fivex’s experiences with the current town planning system?

The current development assessment system is complex, unwieldy and quite bizarrely basic merit assessment has been lost due to the politicisation of development assessment and the inappropriate issues and sheer volume of information that most Councils insist be considered at the DA stage.

In a nutshell, the current town planning system can lead to perverse results, is far too burdensome on applicants and objectors alike, leads to considerable uncertainty and is unduly politicised. From our experience, the only way to achieve a sensible outcome in the current town planning system is to lodge an appeal with the Land and Environment Court and hopefully settle the case on the footsteps of the court, failing that putting your case to a commissioner for a reasonable and impartial assessment of the merits of the particular DA. From our perspective, this is a very time consuming and expensive way to resolve whether or not a particular DA is worthy of development approval or not.

In the last ten years, Fivex Commercial Property has experienced significant delays in obtaining development approval. The delays for the most part are expensive because of the time cost of money.  Fivex is an experienced property investor and developer and uses well respected and sensible architects, town planners, urban designers and the like. Notwithstanding the calibre of the professional team that supports all of the development applications  Fivex has made, the assessment process is always hugely time consuming, complex and resource intensive. From our experience, it is irrelevant if the proposal complies or breaches development standards, is a large or small project, or the project has few or many objectors. Irrespective of the complexity of the DA the development assessment process is the same. In our view, the proposed changes to the development assessment process as envisaged by the discussion paper are sensible and should be implemented in order to make appropriate distinctions between simple and complex development applications.

Recommendation 1:

Fivex recommends that the current town planning system is due for major structural and technical reform and the discussion papers recommendations go a long way towards solving some of the more pressing concerns that exist with the current town planning system. Where fivex disagrees with a particular recommendation or feels that a particular issue has not been addressed in the discussion paper, we make our position clear in the balance of our submission. In some cases, particularly in regard to the recommendations relating to IHAPs, Fivex feels that the recommendations do not go far enough.

2. What problems with the current town planning system does the discussion paper fail to address?

(a) There is no longer a distinction between development assessment and building assessment:

As a result of the introduction of the private certification system, Councils have brought forward many of the construction and building issues that used to be assessed at the Building Application stage to be assessed at the DA stage.

Fivex’s most recent project was a 4 storey commercial building on the corner of New South Head Road and Knox Street, Double Bay. Quite extraordinarily, Fivex was forced to provide not only geotechnical reports, traffic reports, fire engineering reports, a waste management plan and heritage reports for a development in Woollahra that already had approval to be demolished and a basement car park to be built on site, but we had to provide a construction management plan at the DA stage even though we had not yet appointed a builder to the project. The sheer perversity of this requirement was not lost on the Council Officers, but the Council Officers informed me that Councillors had previously delayed the approval of projects when a detailed construction management plan was not provided at the DA stage. In order to avoid any further expensive delays in the development assessment process, we had no choice but to provide a construction management plan.

Recommendations 2(a):

Fivex recommends that the State Government prohibits Councils from assessing construction issues at the DA stage.

Fivex further recommends that the State Government make it an objective of s97 of the EPA Act that DAs only deal with town planning issues as opposed to construction issues and that the regulations that give Councils the power to request information of a construction nature at the DA stage be removed.

(b) There is little professional scrutiny of the reasonableness of Councils LEP’s and DCP’s:

At the moment there is minimal scrutiny of the reasonableness of Council’s LEP’s and DCP’s. Notwithstanding the notification requirements as provided by the Environmental Planning and Assessment Act, one of the severe weaknesses of the current town planning systems is that there is no economic scrutiny of non-CBD DCPs and LEPs by the development industry, which means that vocal resident groups invariably influence the numeric controls that are put into LEPs and DCPs. The current system is not balanced and some form of State Government oversight of the merits of particular town planning controls needs to occur to ensure that local town planning controls are consistent and promote the State Government’s planning objectives for a particular local government area and that the economic rammifications of LEP’s and DCP’s are properly taken into consideration.

Recommendation 2(b):

Fivex recommends that an impartial institution should be set up to independently assess the reasonableness of Councils LEP’s and DCP’s before they become law and to ensure that economic considerations are given appropriate weight.

In Fivex’s view, the Land and Environment Court is an appropriate independent institution that could be given the power to assess Council’s LEPs and DCPs  in circumstances where applicants wish to challenge the merits of town planning controls for a particular area or specific site.

Alternatively, a special section of the planning department could be set up to assess these issues before LEPs and DCPs become law.

Fivex recommends that one appropriate way to reasonably increase the independent assessment of the merits of a Councils LEPs and DCPs is to strengthen and expand the role of SEPP 1 to make it clear that a paramount objective of SEPP 1 is to ensure flexibility in the town planning system and that SEPP 1 grants the Court the right to assess the merits of an LEP and DCP as it applies to a particular site.

In Fivex’s view, SEPP 1 should apply to not only development standards, but it should also be used as a tool to justify variations from development controls in DCP’s and also to allow flexibility in the range of permissible uses of land, especially in anomalous or site specific applications.

(c) The economic benefits of development are ignored:

How can you have sustainable development, unless the economic as well as environmental impacts of a development are taken into account? The economic benefits of small to medium sized developments are only given lip-service in the environmental planning and assessment act. It is only for the largest and highest profile projects where the Minister intervenes that economic issues are properly considered. In my view, the potential economic advantages brought about by small as well as mid-sized development should factor as one of the reasons why a project should be approved or refused. Where a proposal complies with the town planning controls, it should only be in the most exceptional circumstances that a project is refused. Where a proposal does not comply with the town planning controls, then in my view there should be an assessment as to whether or not the town planning controls are reasonable in that particular location and then a further assessment as to whether or not the economic benefits of the project outweigh the amenity impacts on surrounding neighbours.

Recommendation 2(c):

Fivex recommends that the economic benefits of a project be considered for all development applications greater than $5 million in value and that s79C of the Environmental Planning and Assessment Act be amended accordingly.

3. What recommendations of the discussion paper need more work?

I applaud the initiative of introducing IHAP’s to the current development assessment process as per recommendation A6. However, if the objective of introducing IHAPs is to de-politicise the development assessment system, then the recommendation as it currently stands, will fail because IHAP’s will only operate in an advisory role. In my view, there should be a clear separation of powers between the Council acting in its capacity as legislator and the Council acting in its capacity as a regulator. If as a society, we can have an independent Department of Public Prosecutions dealing with the enforcement of criminal law, then it is only appropriate that we ensure a similar level of de-politicisation of the town planning system occur and IHAPs be made compulsory and their decision is final and binding on the Council with ongoing appeal rights to the Land and Environment Court.

I cannot understand why the number of s96 applications for any particular development proposal should be limited as per page 58 of the Report and recommendation A14.1. The proposed changes to the s96 system will not lead to any simplification of the process or a reduction in applications, rather it will simply change the form of subsequent applications from what would have been a s96 application to a new DA. From my experience, most Councils charge a higher scale of fees for DAs as opposed to s96 applications, so unless this is some sort of convoluted proposal to increase the fees to Council for minor changes to a development proposal, I would suggest these proposed changes to the s96 system be scrapped.

It has been a significant weakness in the current town planning system that maximum assessment times have not been a feature of the system. Whilst I strongly support recommendation A15, I would suggest that appropriate accountability measures be put in place to ensure that Councils do not simply reject DAs they have not properly assessed within the given time frame in order to avoid the effects of this worthy recommendation.

I think the proposed changes to exempt and complying development are fantastic and will mean that minor development applications will no longer clog the development assessment system.

I am seriously concerned about some of the miscellaneous amendments contemplated by section 10 of the discussion paper.

I understand the rationale behind recommendation M1, however, the recommendation in my view is too vague. I think the appropriate test regarding the lapsing of consents is to go back to the old “substantially commenced” test that the current “physical commencement” test replaced.

I strongly oppose recommendation M6. If a hearing at the Land and Environment Court is a hearing “de novo” then the Court must have the flexibility to allow amended plans. The whole rationale of the Court is to allow applicants to put forward amended drawings to ensure that a reasonable outcome is achieved. If the Government wishes to encourage settlement of disputes between Council and Developers, then as much flexibility as possible must be built into the Court system to allow Commissioners and Judges to nudge parties down the path of compromise. Arbitrary restrictions on the Courts power will be unhelpful and the proposed limitations will simply increase the cost to applicants by forcing them to bring solicitors and barristers into the early stages of the assessment of DAs. I am not clear how that will lead to better town planning results.

4. The current town planning system and the discussion paper do not properly address ecologically sustainable development:

The only weakness I see in the discussion paper as a whole is that the issue of ecologically sustainable development is not addressed in this discussion paper. Fivex’s most recent development was the multi-award winning sustainable commercial development at 376-382 New South Head Road, Double Bay. The project is a 4 storey commercial building with ground floor retail and no basement parking. The office component of the project is self-sufficient for all water usage and the building was designed to have no connection to mains sewer. The building is energy efficient and has an energy efficient heat-exchange VRV (variable refrigerant volume) air conditioning system. In order to discourage the use of air conditioning, the windows to the building are openable and the fire stair doubles up as a heat chimney in order to encourage cross-ventilation.

Fivex spent approximately $5 million building the 2000 sqm development and spent approximately $500,000 on voluntary sustainable initiatives. A further 40sqm in prime retail space was lost to allow for the access to the underground grey water and black water tanks, which we have conservatively valued at $800,000 in lost capital value. Notwithstanding the environmental initiatives demonstrated in our project, the Council had no policies to award bonus height or floor space to the project. No concessions in terms of rate reductions, land taxes or s94 contributions were contemplated by the Council or State Government for the site. Clearly, there is a significant problem with the development assessment system when ecologically sustainable development is treated the same as conventional development. If Governments want ecologically sustainable developments to become the norm and for Australia to actually meet its obligations under the Kyoto protocol, then it is incumbent on Governments at all levels to ensure that ecologically sustainable development is more profitable than conventional development.

The current approach using regulation such as BASIX and the City of Sydney’s draft DCP on sustainable development are not enough to change the behaviour of the development industry for two reasons:

(i) Sustainable development costs more to build than conventional development; and
(ii) The end user of sustainable development is not willing to pay a premium in order to buy or use the sustainable building.

Therefore there is no return on investment for the property developer to build sustainably and therefore until it becomes profitable to build sustainably it will not become the norm that all new developments and major refurbishments of existing buildings will be sustainable.

Recommendation 4:

Fivex recommends that sustainable developments be granted bonus height and floor space, reductions in s94 contributions, Council rate and land tax concessions and be granted priority in the development assessment process to ensure it is more profitable for developers to build sustainable development as opposed to conventional unsustainable developments.

If you have any queries regarding my submission please feel free to contact me. Can you please acknowledge receipt of this submission.

Yours truly,

—
Lesli Berger
General Manager
Fivex Commercial Property