Luxford v Hobsons Bay CC [2002] VCAT 954

Mr Russell Hocking, planning consultant, appeared for the Applicant for Review/Applicant for Permit.

The written submissions of the parties, their supplementary submissions made after the hearing, together with numerous photographs, policy documents and other material tendered at the hearing, have been retained on the Tribunal's file.

Application under Section 80 of the Planning and Environment Act 1987 to review a condition on a permit.

1. On 11 January 2002 the City of Hobsons Bay issued a planning permit (Permit No. P01.716) which allowed a three lot subdivision of land and common property in accordance with endorsed plans. Condition 8 of that permit states:

Prior to a Statement of Compliance being issued by the Responsible Authority, a public open space contribution fee equivalent to 2 percent of the value of the subject land shall be paid to Council, pursuant to Section 18 of the Subdivision Act 1988.

2. To obtain a Statement of Compliance and allow development of the land to proceed (in accordance with a separate permit allowing a three unit development) Mr Luxford has paid the required fee. I was advised that the development is approximately two-thirds completed. However, a review of Condition 8 is now sought. The Applicant for Review requests that the condition be deleted and that the fee be funded. The grounds of Application for Review, included in an attached copy of a letter sent earlier to the Council's town planner, are:

1. That after consultation with you on 26/0/02 you were unable to provide documents/plans to support current or forecasted projects improving the public open space within the Newport area.

2. That you were unable to provide any further documentation justifying the amount applicable other than your letter dated 14/1/02 relating to council's assessment of the site value to be $250,000.

3. That the site value indicated on my rate notice issued 23/8/01, and the supplementary rates notice issued on 18/1/02, indicating the rating year to be from 1/7/01 to 30/6/02, stipulates the site value to be $162,000. This indicates a significant discrepancy of $88,000 between the current rates notice and council's recent site valuation.

4. That significant contribution of $1975.06 has already been paid to the Hobsons Bay Development and Contribution Plan, and no further contribution fees should be applicable.

5. That additional contribution levy's (sic) in relation to the services listed below have been finalised, and in my opinion have assessed the additional contribution fee of $5000 imposed by council as excessive, and not reasonable in the circumstance.

(a) City West Water Contribution 2@$564 - total $1,128

(b) City West Sewer Contribution 2@$594 - total $1,188

(c) Melbourne Water Drainage Contribution - total $116.23

6. That the public open space within the vicinity of the development, and in general throughout the Newport area, has been established for a significant number of years, therefore I should not be subjected to an additional fee of $5000.

3. Section 18(1) of the Subdivision Act 1988 provides:

If a requirement for public open space is not specified in the planning scheme, a Council, acting as a responsible authority or a referral authority under the Planning and Environment Act 1987 may require the applicant who proposes to create an additional separately disposable parcel of land by a plan of subdivision to-

(a) set aside on the plan, for public open space, in a location satisfactory to the Council, a percentage of all of the land in the subdivision intended to be used for residential, industrial or commercial purposes, being a percentage set by the Council not exceeding 5 per cent; or

(b) pay or agree to pay to the Council a percentage of the site value of all of the land in the subdivision intended to be used for residential, industrial or commercial purposes, being a percentage set by the Council not exceeding 5 per cent; or

(c) do a combination of (a) and (b) so that the total of the percentages required under (a) and (b) does not exceed 5 per cent of the site value of all land in the subdivision.

4. Section 18(1A) states:

The Council may only make a public open space requirement if it considers that, as a result of the subdivision, there will be a need for more open space, having regard to-

(a) the existing and proposed use or development of the land;

(b) any likelihood that the existing open space will be more intensively used after than before the subdivision;

(c) any existing or likely population density in the area of the subdivision and the effect of the subdivision on this;

(d) whether there are existing places of public resort or recreation in the neighbourhood of the subdivision, and the adequacy of these;

(e) how much of the land in the subdivision is likely to be used for places of resort and recreation for lot owners;

(f) any policies of the Council concerning the provision of places of public resort and recreation.

5. Section 18(1B) deals with the timing of the payment of any amount required pursuant to the earlier sections. Essentially, it must be paid before the Council issues a Statement of Compliance unless there is an agreement for an alternative arrangement.

6. Clause 52.01 of the Hobsons Bay Planning Scheme - Public Open Space Contribution and Subdivision - states:

A person who proposes to subdivide land must make a contribution to the council for public open space in an amount specified in the schedule to this clause (being a percentage of the land intended to be used for residential, industrial or commercial purposes, or a percentage of the site value of such land, or a combination of both). If no amount is specified, a contribution may be required under Section 18 of the Subdivision Act 1988.

7. The Schedule to Clause 52.01 does not specify an amount.

8. Clause 52.01 also provides for a subdivision to be exempt from a public open space requirement, in accordance with Section 18(8) of the Subdivision Act 1988 in three specified circumstances. None of those circumstances apply in the current case.

9. Mr Waldon, for the Responsible Authority, acknowledged that the area is

well-served for public open space. He noted that relatively close to the subject site are the Altona Lakes/P J Lynch Reserve, the Loft Reserve and the Newport Football Ground. Mr Waldon advised that as a consequence the further acquisition of public open space is unlikely in the short term. However, he submitted that the areas of open space he referred to "all need ongoing maintenance and renewal." He cited five particular projects which are occurring or have been budgeted for.

10. With regard to the considerations in parts (b) and (d) of s.18(1A) of the Subdivision Act 1988 Mr Waldon submitted that "it is self-evident that medium density housing increases the demand and usage of public open space...and also that Councils have to spend significant sums on the maintenance and upgrade of their open space assets".

11. Mr Waldon also cited a Tribunal decision which, he argued, considered how

"the subdivision of a similar medium density development might satisfy the requirements of Section 18(1A)". He highlighted that in Dragicevic v Bayside CC (Application for Review 2000/72944) Member Komesaroff concluded that an open space contribution was warranted and stated:

Looking at the subdivision as a whole, rather than just lines on a page, it is clear that there will be the following consequences:

(i) an increased number of dwellings built (s.18(1A))a));

(ii) an increased number of persons inhabiting the increased number of dwellings built (s.18(1A)(c);

(iii) diminished open space available for active recreation space, adding to pressure on existing open space, which is likely to be more intensively used than before (s.18(1A)(b));

(iv) a need to ensure the existing places of public resort are improved to adequately cope with the increased use likely to be made of them (s.18(1A)(d));

(v) diminished land in the subdivision itself available for active recreation space for the increased numbers. The permit conceded that the space available is only suitable for passive recreation such as sitting outside (s. 18(1A)(e)).

12. Mr Waldon did not make detailed submissions concerning the s.18(1A) considerations in this instance. He submitted only that the current proposal, "being a relatively standard subdivision of a medium density development would satisfy Section 18 of the Act in the same terms" [as considered in Dragicevic].

13. In relation to the amount of the open space levy required by Condition 8 Mr Waldon advised that it is the Council's practice to use the sliding scale previously contained in VicCode. On this scale a three dwelling development generates a requirement for a 2% open space contribution. Mr Waldon submitted that this scale is used by many metropolitan councils and is "generally held to be fair by VCAT." Given the site value of $250,000 in this instance it would equate to a $5000 contribution.

14. In response to the Applicant for Review's grounds of review Mr Waldon made the following submissions.

* There are several current and future open space projects listed for the Newport area. The Applicant was advised of these by letter dated 20 April 2002 (a copy of which was tendered).

* The Applicant was advised of the basis of the site valuation and the reason for a 2% levy in the earlier letter.

* The Open Space Contribution and the Development Contribution Levy are mutually exclusive - the former relates to public open space and the latter to the upgrade of community and physical infrastructure.

* All developers pay a range of contributions and fees "which are a normal part of development and part of the costs of doing such projects".

* The open space contribution goes to the ongoing maintenance and upgrade of existing open space assets, not just towards the purchase of land. Member Baird in _Ghent v Glen Eira CC (_Application for Review P51833/2001) stated that "Previous Tribunal decisions have accepted that open space contributions do not necessarily need to be for the acquisition of new open space but may be used for improving open space that meets the need created by the development". Newport is experiencing more pressure for medium density development and each development increases the need for open space and its improvement.

15. Mr Waldon tendered a copy of a document entitled "Leisure and Recreation Needs Study Volume One" which was adopted by the Council in September 1997. It includes an itemisation of open space reserves, identifies "issues" and makes recommendations. Mr Waldon was uncertain about the current status of the document or its role in the broader "Hobsons Bay Strategy". He stated only that it is "an indication of some strategic thinking". However, he highlighted one recommendation for action - the development of a policy for the allocation and expenditure of contributions made under the Subdivision Act. Mr Waldon advised that this year the Council has budgeted money to be spent on detailing how the Council will handle contributions.

16. Mr Hocking, for the Applicant for Review, submitted that the open space contribution is not warranted as it does not meet the specific tests set out within s.18(1A) or the principles set out within the 1990 Administrative Appeals Tribunal decision of Eddie Barron Constructions Pty Ltd v Shire of Pakenham & Minister for Planning & Urban Growth [6 AATR 10].

17. Mr Hocking made submissions in relation to each of the considerations at s.18(1A). With respect to (a) he noted that the previous use of the subject site was a substantial bedroom dwelling and that it is proposed to be replaced with a three-bedroom townhouse and two small, two-bedroom villa units. He suggested that the latter are likely to be occupied "by only two or three persons each" and, equally likely, they would be "older persons". He submitted that as a consequence the demand for active open space facilities in the precinct will not change.

18. With respect to (b) Mr Hocking posed the question - what is the potential of the occupants of two, two-bedroom villa units [that is, the extra residents] taking the existing open space facilities of the Newport area "over capacity and

over-extended and exhausted in terms of utilisation". His answer was that such a likelihood is minimal and close to zero.

19. In relation to (c) Mr Hocking noted that there is considerable medium density development occurring in the area and many of the dwellings are large townhouses designed to accommodate families or considerable number of persons. However, he submitted that in this instance "the population density in the areas remains virtually unchanged" and again stressed that the increase in density "is limited to just two, two-bedroom, single storey villa units."

20. With respect to (d) Mr Hocking pointed to the substantial number of existing places of public resort and recreation within the neighbourhood and submitted that these are adequate to meet the needs of existing residents and the increase in population brought about by this development. He tendered a plan demonstrating the extensive number of public open spaces within 400m, 1 kilometre and 2 kilometres of the subject site. He also noted that many of them are large, regional parks which are under-utilised.

21. In relation to (e) Mr Hocking submitted that the development is at a relatively low density and each of the dwellings would have private open space in excess of the minimum requirement of the Good Design. He argued that given the size of the dwellings these spaces "will, in all likelihood, meet the majority of the needs for open space for future residents".

22. With respect to (f) Mr Hocking noted that the Council's Municipal Strategic Statement includes, at Clause 21.11, a vision concerning Open Space, Environment and Conservation. However, he submitted that there are only broad sweeping generalisations about how the vision will be achieved. He highlighted that Newport is not mentioned as an area where opportunities to increase the amount of open space are to be investigated.

23. Mr Hocking was not aware of the "Leisure and Recreation Needs Study". He advised that his client had been told by a Council officer that there was no open space strategy. After he had the opportunity to briefly examine the document tendered by Mr Waldon Mr Hocking questioned its status in that it is not incorporated in the Planning Scheme or a reference document. He suggested that the Study is principally an inventory of open space reserves and noted that the subject site is not within a precinct identified as "under supplied".

24. Mr Hocking highlighted the four essential criteria if money payment in the form of a development levy is to be validly imposed as a planning permit condition, as set out in Eddie Barron (at page 25):

The need created by the development and the measures, to satisfy the need must be adequately identified.

The payment or levy must be a fair and reasonable apportionment of the cost of implementing the need satisfaction measures.

The responsible authority should implement procedures to ensure that the money collected cannot be used for any purpose other than for which it was levied and which clearly show how, when and where the money collected is to be spent.

There must be a reasonable nexus between the development and the need satisfaction measures.

25. In relation to the "need" criterion Mr Hocking again referred to the absence of an open space strategy. He submitted that "the need created by this development for additional open space has not been identified nor will it be, as it is clear that the existing open space facilities within the neighbourhood are sufficient for the net increase of two small households which arise from the development". He argued that the Council has not identified any measures as to how any perceived need may be satisfied.

26. In relation to the "equity" criterion Mr Hocking submitted that the contribution is inequitable given the lack of identification of "need satisfaction measures".

27. In relation to the "accountability" criterion Mr Hocking noted that despite the recommendation in the "Leisure and Recreation Needs Study" that Council develop a policy for the allocation and expenditure of open space contributions this has still not occurred, many years later. He submitted that the Council has a responsibility to be able to justify individual decisions within a clear strategic framework, such as local policies within the planning scheme which have been through a process of consultation and examination in the pubic domain. Mr Hocking submitted that that responsibility has not been met. He argued that the information provided by the Council does not deal with "how, when and where the money collected is to be spent". In particular, despite repeated requests from the applicant for clarification, information and advice the Council has not indicated how monies are to be spent within the neighbourhood of the subject site.

28. With respect to the "nexus" criterion Mr Hocking argued that the Council has been unable to demonstrate what additional services or facilities are to be provided within the Newport area. He argued that the "need satisfaction measures" have not been identified and, at face value, there are no further facilities required.

29. Mr Hocking submitted that the five examples cited in Mr Waldon's written submission do not satisfy the required "nexus". He argued that some are completed capital works which are set out in the Council's 1999 Development Contributions Plan (DCP). He noted that a sign at Lofts Reserve indicates that its upgrading is funded as part of Council's 2001-2002 Capital Works Program with a contribution from the State Government. Mr Hocking submitted that others represent "ongoing maintenance", which should be paid for by municipal rates. Mr Hocking suggested that capital works in the DCP also cover improvements to public open space and that the Council is "double dipping" in collecting money as a contribution to open space.

30. After hearing the submissions of the parties - especially Mr Hocking's critique of the project examples cited by Mr Waldon - I indicated that I did not feel that adequate information had been provided upon which to base a decision. In particular, I was concerned that the Council had not provided information which would establish an appropriate nexus between the development and "need satisfaction measures".

31. Accordingly, I provided the opportunity for the Council to make a further submission regarding any policies concerning the provision of open space and the proposed use of open space contributions.

32. The Council's further submission was received on 31 July 2002. It included a list of open space projects "within close proximity to the appeal site" and a list of further projects at more distant locations. Some were identified as funded through Council's DCP. The further submission also included an extensive list of "open space masterplans prepared for the municipality". It was submitted that "these documents inform the Council decision-making on development and re-development of the City's open space assets". It was noted that while they sit outside the Planning Scheme the Council is "in the process of preparing a municipal open space strategy that will draw all of these documents into a single document" to be incorporated in the Planning Scheme.

33. Mr Hocking's response, received on 6 August 2002, noted that the Council's further submission confirmed that the DCP does fund parks and landscaping projects. Accordingly, it was submitted that it is not possible for a further contribution to be taken for already-funded projects. Mr Hocking also submitted that a contribution under s.18(1A) of the Subdivision Act cannot be for "routine repairs and maintenance" but "must either be for new open space facilities or improvements of a capital nature to existing facilities". It was noted that some of the open space areas now cited by Council are within proximity to the subject site but that others are "nowhere near". Mr Hocking suggested that it "would be fanciful indeed for the Council to submit that the contribution taken from Woods Street in Newport could be used towards the development of Point Gellibrand in Williamstown". Mr Hocking submitted that this illustrated the Council's lack of understanding of the concept of "nexus" that is required. Lastly, Mr Hocking queried whether the projects proximate to the subject site - described by the Council as "ongoing planting program", "fencing" and "upgrading of playing fields - satisfy the s.18(1A) tests or "are anywhere near satisfactorily expressed...in the terms and principles set out within the Eddie Barron matter".

34. There is no schedule to Clause 52.01 requiring a specific open space contribution. However, there is discretion to require a contribution under s.18 of the Subdivision Act 1988 and regard must be had to the considerations set out at s.18(1A).

35. I do not accept Mr Hocking's arguments that those consideration do not warrant a requirement for a contribution in this instance. The case of Dragicivic, to which Mr Waldon referred, was apparently a case of the subdivision of industrial land for residential development and I was not provided with details of the proposal and its context. Nevertheless, I accept Mr Waldon's suggestion that Member Komesaroff's finding in that case indicates how a "similar medium development might satisfy the requirements of Section 18(1A)".

36. As in Dragicevic the proposal in this instance would increase the number of dwellings built, increase the persons inhabiting the increased number of dwellings and diminish the open space available for active recreation. It would also add to the pressure on existing open space and lead to a need to ensure existing open spaces are improved to cope with their increased use. It is obvious that these latter effects would be marginal as a result of the proposal, however, they cannot be denied on that basis.

37. I do not accept the validity of Mr Hocking's assumptions about future occupiers of the proposed dwellings. It is not self-evident that the population density will remain unchanged, the occupiers are likely to be elderly persons generating little demand for active open spaces or that the private open spaces will necessarily meet the open space needs of future residents (or even the "majority of the needs" referred to by Mr Hocking). While the private open spaces proposed may exceed the requirements of the Good Design Guide the overall effect would be the diminution of land available for active recreation on the site and an increased reliance on public open spaces.

38. Mr Hocking's repeated reference to the fact that just two extra two-bedroom are proposed is not persuasive. The number of dwellings is accounted for in the scale used by the Council. Nor do I accept Mr Hocking's submissions concerning the potential impact of the subdivision on the use of open spaces. The correct enquiry is not whether this development would cause existing open space use to be "over capacity or over-extended". Rather, it needs to be considered whether it would result in an incremental change in demand for the use of open spaces. My finding is that it would.

39. I fully appreciate that the subject site is well served by existing passive and active open space areas. As shown by Mr Hocking the area apparently has every type of facility imaginable. I acknowledge that new spaces are not needed. However, as noted by Mr Waldon, the extensive areas of open space necessarily involve continued expenditure for improvement. While I accept Mr Hocking's submission that open space contributions cannot legitimately be spent on "routine maintenance" I note that under the heading "What must the Council do with public open space?" ss.20(2) of the Subdivision Act 1988 states, in part:

The Council must use any payment towards public open space it receives under this Act....to-

(a) buy land for public recreation or public resort, as parklands or for similar purposes; or

(b) improve land already set aside, zoned or reserved (by the Council, the Crown, a planning scheme or otherwise) for use for public recreation or public resort, as parklands or for similar purposes; or

(c) with the approval of the Minister administering the Local Government Act 1989, improve land (whether set aside on a plan or not) used for public recreation or public resort, as parklands or for similar purposes. [emphasis added]

40. The controversial issue in this application for review is whether the Council has adequately identified projects which would "improve land" which can be linked to the proposed subdivision and the s.18(1A) considerations. On that matter I accept Mr Hocking's submission that the criteria set out in Eddie Barron are relevant. Although that case dealt with development contributions, rather than open space contributions, the general principles and criteria established in that case have been adopted as tests in relation to various types of contributions.

41. Of particular significance in this instance is the need for a "nexus" between the need created by the development and specific improvements to open space. Mr Waldon's submission at the hearing suggested that the Council has perhaps not fully appreciated the need for such a "nexus". Clearly, the requirement for an open space contribution when land is subdivided cannot be used as an automatic revenue raising measure. As noted in Eddie Barron (at page 25):

In identifying the need created by the development the responsible authority should have undertaken a comprehensive investigation of the planning area over which the levy will be applied and clearly identified the facilities which need to be provided. Measures to satisfy these needs should be defined, quantified and costed. The basis on which the needs are said to arise should be clear. Without such investigation and detailed appraisal of the specific facilities to be provided, a development levy may be seen as simply another means of raising general revenue.

42. It remains unclear whether the "Leisure and Recreation Needs Study" of 1997 would satisfy that requirement. Although the Council's further submission referred to various "open space masterplans" which "inform the Council decision-making on development and re-development of the City's open space assets" I was not provided with detailed information about this process. Nevertheless, in the light of Council's further submission I am prepared to accept that the Council has identified a number of projects in proximity to the subject site which would fulfil the requirements of ss.20(2)(b) of the Subdivision Act 1988 and the tests in Eddie Barron.

43. On that matter I note that some of the projects listed in the Council's further submission are to be funded by the DCP. Others are remote from the subject site and, as argued by Mr Hocking, cannot reasonable be linked with any open space contribution sought with respect to the subject site. However, there are also projects which are not identified as funded by the DCP, relate to open spaces in close proximity to the subject site and represent the improvement (rather than routine maintenance) of land reserved for public open space or recreation. The projects have been described by the Council as an "on going planting program - 5000 plants per year - $20,000" at Newport Lakes (625m from the subject site), "fencing and irrigation upgrading - $15,000" at Lofts Reserve (125m away) and "upgrading of playing fields - $10,000" at Paisley Park (500m away).

44. I do not consider that a case has been made out to justify a reduction or waiver of an open space contribution associated with the proposed three lot subdivision. The Subdivision Act 1988 allows for a contribution of up to 5 % of the site value. In all the circumstances I consider that a 2% open space contribution is reasonable. Accordingly I will affirm the decision of the Responsible Authority.

45. Finally, I note that a further recommendation in the "Leisure and Recreation Needs Study" was that there be discussions with applicants for subdivision prior to applications being lodged to "ensure that Council's requirements for open space will be understood by the developer from the beginning of the planning process." This was an action for 1997/98. It has clearly not been done, at least in the present case. Mr Luxford's experience as a first time developer suggests that such an initiative would be valuable and is long overdue.