IPART review of section 7.11 plans
Local infrastructure contributions practice notes
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The Independent Pricing and Regulatory Tribunal (IPART) review section 7.11 plans that propose contributions for residential development that exceed the threshold of $20,000 per lot or dwelling, or in some cases $30,000.
IPART is the independent pricing regulator for water, public transport and local government in NSW. Its role in the contributions system is to review whether the cost estimates of a contributions plan are reasonable and provide advice to the Minister on recommended changes to the plan.
This module provides guidance to IPART when undertaking their review and to help councils understand the review process. It sets out the requirements and process for the review, outlines the essential works list and provides links to guidance on the criteria considered by IPART.
Legislative requirements
A ministerial direction sets the thresholds which limit the contributions a council can impose unless the contributions plan is reviewed by IPART. Only IPART reviewed contributions plans may impose contributions over the threshold.
| Legislative requirements | Reference |
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Councils can only impose contributions up to $20,000 per lot or dwelling, unless they have an IPART reviewed contributions plan. Specified plans in greenfield areas are subject to a higher review threshold of $30,000 per lot or dwelling (Schedule 2). Some land to which historic plans apply is exempt from the thresholds. Contributions collected in these areas are not subject to the IPART review process or the essential works list (Schedule 1). There are specific requirements to have a plan become an IPART reviewed contributions plan. |
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Contributions plans must satisfy certain requirements to be considered an IPART reviewed plan
These requirements are defined in clause 5(3) of the direction. An IPART reviewed contributions plan is a contributions plan that satisfies all the following:
A. IPART has reviewed the contributions plan (or a draft of the plan) in accordance with assessment criteria set out in any applicable practice note, including whether the facilities to which the contributions plan relates are on any essential works list set out in the practice note.
B. IPART has published a report of its review on its website and forwarded it to the Minister for Planning.
C. Following the forwarding of the report to the Minister, the Minister (or a nominee of the Minister) has advised the relevant council as to any amendments required to the contributions plan.
D. The Minister’s (or nominee’s) advice to the council has been published on the NSW Planning Portal website.
E. The relevant council has approved the plan, and has made any amendments to the plan, in accordance with the written advice of the Minister or the Minister’s nominee.
Policy positions
Only some section 7.11 plans need to be reviewed by IPART
Councils cannot impose a condition of development consent over the relevant threshold specified in the Ministerial direction unless the plan has been reviewed by IPART and has complied with the requirements above to be considered an IPART reviewed contributions plan.
The direction applies to conditions imposed on development consents. A contributions plan may still contain contribution rates that exceed the relevant threshold, but the threshold will limit the contribution amount that can be levied.
PART assesses plans against seven criteria
When undertaking its review of contributions plans, IPART will assess the following seven criteria:
| Criteria | Assessment |
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1 |
The infrastructure in the plan is on the essential works list. |
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2 |
The proposed infrastructure is reasonable in terms of nexus (the connection between development and the demand created). |
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3 |
The proposed contribution is based on a reasonable estimate of the cost of the proposed infrastructure. |
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4 |
The proposed infrastructure can be provided within a reasonable timeframe. |
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5 |
The proposed contributions are based on a reasonable apportionment between:
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6 |
The council has conducted appropriate community consultation in preparing the contributions plan. |
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7 |
The plan complies with other matters IPART considers relevant. |
Detailed consideration for each criteria
Detailed consideration for each criteria
Each criteria involves detailed consideration, examples include:
- the infrastructure in the plan is on the essential works list as identified within this practice note module
- there is nexus between the development in the area to which the plan applies and the infrastructure identified in the plan, considering:
- What infrastructure types or categories will the proposed development create demand for?
- On what basis have the estimates of demand for the infrastructure been established? Has a needs assessment been done?
- Has the council assessed the implications of the expected types of development catered for by the contributions plan on the demographic structure of the development area?
- Is there a clear and acceptable methodology for estimating population change arising from the expected types of development?
- Is the information on demand both reliable and current?
- Can the new demand be accommodated, in whole or in part, within existing infrastructure?
- Is the infrastructure appropriately located for the expected types of development in the area the plan applies?
- If the expected development did not occur, would the infrastructure still be required?
- the proposed development contribution is based on a reasonable estimate of the cost of infrastructure, considering:
- How were the plan and cost estimates for the land and works prepared? Are the costs current?
- Do cost estimates include all costs required to complete the infrastructure on the essential works list (such as land, capital, fit out, design and project management costs)?
- Have relevant professionals (such as quantity surveyors, chartered surveyors, land valuers) been engaged to provide an independent cost assessment of the infrastructure costs?
- How has the council taken indexation adjustments into account, such as using the Consumer Price Index?
- Are the assumptions and calculations robust?
- Has a Net Present Value methodology been used? If so, has an appropriate discount rate been used?
- Does the plan seek to recoup costs where a council has used other revenue sources to fund the delivery of the infrastructure?
- the proposed infrastructure items can be provided within a reasonable timeframe, considering:
- Is the timeframe (year or threshold) appropriate for the specific infrastructure types or categories?
- Will the infrastructure be provided when the demand requires it?
- Does the plan provide for pooling of funds?
- the proposed development contribution is based on a reasonable apportionment of costs, considering:
- Will the infrastructure service the existing community or is it only required to meet the needs of the new development?
- How is the existing community accounted for in the apportionment of costs?
- How are costs apportioned between different types of land use (such as residential, industrial, and commercial land uses)?
- the council has exhibited its plan and considered the submissions received on exhibition
- IPART may consider any other relevant matters, including but not limited to:
- When did the contributions plan come into effect? When was the plan last reviewed? When was the plan last amended without the need to review the plan?
- What is the relationship with local environmental plans and development control plans? Is there any programmed review of these instruments that may affect the underlying assumptions within the plan?
- Does the plan comply with any other matter IPART considers relevant?
Essential works list
IPART reviewed contributions plans can only include items on this essential works list. The following infrastructure (public amenities or public services) are considered essential works:
- land for open space (for example, parks and sporting facilities) including base level embellishment
- land for community services (for example, childcare centres and libraries)
- land and facilities for transport (for example, road works, traffic management and pedestrian and cyclist facilities), but not including carparking
- land and facilities for stormwater management
- the costs of plan preparation and administration.
The essential works list is relevant only to those contributions plans that propose a contribution level above the relevant threshold (unless otherwise directed by the Minister for Planning). The essential works list does not apply to contributions plans currently below the relevant threshold or to those contributions plans that are exempt from the relevant threshold.
Further clarification and detail of some essential works list terms
Base level embellishment
Base level embellishment
The base level embellishment of open space means work required to bring the space up to a level where it is secure and suitable for passive or active recreation. This may include:
- site regrading
- utilities servicing
- basic landscaping (turfing, asphalt* and other synthetic playing surfaces planting, paths).
- drainage and irrigation
- basic park structures and equipment (park furniture, toilet facilities and change rooms, shade structures, and play equipment)
- security lighting and local sports field floodlighting
- sports fields, tennis courts, netball courts, basketball courts (outdoor only), but does not include skate parks, BMX tracks and the like.
* ‘asphalt’ (under basic landscaping) includes at-grade carparks to the extent that they service the recreation area only and does not include multi-storey carparks.
Community services
Community services
Land for community services can include strata space within a building.
For the purpose of this practice note, ‘community services’ means a building or place:
- owned or controlled by a public authority or non-profit community organisation
- used for the physical, social, cultural or intellectual development or welfare of the community
- but does not include an educational establishment, hospital, retail premises, place of public worship or residential accommodation.
- Community services may include (but are not limited to):
- community centres/halls
- libraries
- neighbourhood centres
- youth centres aged persons facilities (senior citizen centres, home and community care centres)
- childcare facilities
- public art galleries
- performing arts centres.
Plan administration
Plan administration
Plan administration costs are those directly associated with the preparation and administration of the contributions plan. They represent the project management costs to a council and are incorporated into cost estimates in much the same way as the project management costs for individual infrastructure items within a plan.
Plan administration costs may include:
- background studies, concept plans and cost estimates that are required to prepare the plan
- project management costs for preparing and implementing the plan (such as the employment of someone to co-ordinate the plan).
They do not include costs that would otherwise be considered part of a council’s key responsibilities such as core strategic planning responsibilities.
Environmental works
Environmental works
The acquisition of land and the undertaking of works for environmental purposes such as bushland regeneration or riparian corridors are not defined as essential works for the purpose of this practice note module.
The only exception is where it can be demonstrated that the land or works in question serve a dual purpose. If one or more of the categories of work meet the definition of essential infrastructure outlined above, only the component of land or works that serve the dual purpose can be considered essential works.
Procedure and process
Councils should discuss their contributions plan with IPART as early as possible in the review process
Before or during the plan development and before submitting an application, councils should contact IPART and discuss their intention with the Local Government Contributions Plan team. They can be contacted via:
- Email: [email protected]
- Phone: 02 9290 8400
- Website: www.ipart.nsw.gov.au
Councils can apply for a review by completing the application form available on the IPART website. The application form includes a checklist of supporting documents required by IPART. Completed application forms and a copy of the plan should then be emailed to IPART who will acknowledge receipt of the plan and publish it along with information about its review on their website.
Councils can approve a plan either before or after IPART has reviewed it
Councils should consider whether they are replacing an existing IPART reviewed plan before they approve a new plan.
No existing ‘IPART reviewed contributions plan’: Approving a plan before IPART review can allow council to levy contributions subject to the maximum threshold amount. Councils could only impose a contribution above the threshold once the plan becomes an ‘IPART reviewed contributions plan’ as set out in the ministerial direction.
Council should consider including a statement in the contributions plan explaining the effect of the direction and that the contributions are capped at the maximum threshold amount until the plan is an IPART reviewed contributions plan.
Existing ‘IPART reviewed contributions plan’: Approving a new plan after the IPART review process is complete allows councils to continue to levy under the existing IPART reviewed contributions plan while the new plan is under assessment.
Approving a new plan before the IPART review process is complete would repeal an existing IPART reviewed plan, meaning that the new plan would be subject to the maximum thresholds until the new IPART review is completed.
Process for reviewing section 7.11 plans
IPART reviews contributions plans according to terms of reference issued by the NSW Premier that relate to the legislative and policy requirements described in this practice note module.
IPART may also consult with government departments, such as the Department of Planning, Housing and Infrastructure, to obtain specialist advice regarding aspects of the contributions plan (or a draft of the plan). IPART will use this advice to inform its review and recommendations to the Minister for Planning and Public Spaces.
Once IPART completes its assessment, it will provide its advice to the council and the Minister for Planning and Public Spaces. This advice will focus on whether the contributions plan:
- meets the assessment criteria set out above
- complies with the requirements of the EP&A Act, EP&A Regulation and other relevant practice notes.
IPART will publish copies of the contributions plan, relevant consultant reports and its final report of recommendations on its website once the assessment process is finalised.
The Minister for Planning and Public Spaces, or nominee, considers the report and recommendations of IPART. The Minister provides advice to the council on the contributions plan, particularly on whether it should make any changes to the contributions plan and publishes this advice on the NSW Planning Portal website.
Council must make changes and adopt the revised contributions plan in accordance with the Minister’s advice.
The entire review process takes approximately 12 to 18 months.
Council completes the application form and discusses lodgement with IPART.
2-4 weeks
IPART reviews the plan against the assessment criteria in this module (including the essential works list), its terms of reference and prepares a draft report with its recommendations.
6 months
IPART publishes the contributions plan, any consultant reports and its draft report.
6-8 weeks
IPART sends its final report and recommendations to the Minster for Planning and relevant council and publishes the report on its website. The department reviews the report and advises the minister.
4-8 weeks
The minister or nominee advises the council and the council amends and approves the plan. The approved plan will then become an ‘IPART reviewed contributions plan’.
1 month