Comprehensive Infrastructure Funding Policy

Comprehensive Infrastructure Funding

Document No:

CPL235.1

Approval Date:

12 Nov 2002

Approved By:

Council

Review Date:

12 Nov 2005

Responsible Officer: General Manager Infrastructure Services

Expiry Date:

N/a

Version No:

00

Authorising Officer:

Chief Executive

1. Purpose

  • To establish how the provision of infrastructure is to be funded within the municipality.

  • To provide:

    • Direction for the implementation of Council’s statutory responsibilities with regard to development contributions.

    • Direction for the use of special rates/charges for the funding of infrastructure provision.

  • To maximise the consistency of cost apportionment within the different funding mechanisms available for the funding of infrastructure provision, based on equitable and practical cost apportionment principles.

  • To apply equitable and justifiable principles, which comply with statutory provisions, for the apportionment of costs for the provision of infrastructure.

  • To ensure:

    • Council receives all appropriate developer contributions for the provision of infrastructure which are payable under the provisions of the Planning and Environment Act 1987.

    • All developer contributions are levied primarily by means of a Development Contributions Plan.

  • To facilitate the provision of infrastructure in an appropriate, efficient, equitable, accessible and timely manner.


2. Scope

This policy deals with the funding of infrastructure provision for which Council is responsible, defined as ‘Items of infrastructure’ in Section 4 Definitions of this policy. The infrastructure provision situations considered within this policy comprise replacement, backlog and development-related infrastructure.

The policy identifies which infrastructure assets and which portions of infrastructure assets are to be provided on a user pays basis and which are to be provided as ‘social infrastructure’, ie, funded at Council expense, or by State and Federal government grants.

With respect to user pay infrastructure, the policy prescribes that Council will make maximum use of special rates and charges as well as securing all available developer contributions which are to be treated as an upfront charge on users rather than a tax on the developer or land seller, through the use of Developer Contribution Plans.

The funding of the operation and maintenance of infrastructure is not considered within this policy.

The provision of recreation, cultural and environmental infrastructure on Council owned or controlled land is not covered by this policy but rather by the policy for Council Contributions for Recreation, Cultural and Environmental Projects on Council Owned or Controlled Land.


3. References

  • Australian Accounting Standard AAS27, Financial Reporting by Local Governments.

  • Greater Geelong City Council, Minutes of Ordinary Meeting 14 May 1997: Functional Report 15; Council Contributions for Recreation, Cultural and Environmental Projects on Council Owned or Controlled Land.

  • Greater Geelong City Council, Minutes of Ordinary Meeting 14 May 1997: Functional Report 20; Infrastructure Funding Policy.

  • Greater Geelong City Council, Minutes of Ordinary Meeting 10 December 1997: Functional Report 21; Capital Projects Planning and Evaluation Process.

  • Guidelines for Development Contributions; Office of Planning and Heritage, Department of Planning and Development, December 1995.

  • Local Government Act 1989.

  • Planning and Environment Act 1987 (as amended by Planning and Environment Act (Development Contributions) Act 1995).

  • Subdivisions Act 1988.

  • Asset Accounting Management Policy MPL505.4.1.


4. Definitions

  • ‘Approved Development Contributions Plan’ means a Development Contributions Plan which forms part of an approved planning scheme.

  • ‘Backlog infrastructure’ means infrastructure within the infrastructure provision situation where new infrastructure is required to serve established areas (currently without such infrastructure) or where augmentation/upgrade of existing infrastructure is required to provide increased capacity to serve established areas.

  • ‘Benchmark sequencing plan’ means a plan indicating the optimum staging of development from the point of view of the whole community.

  • ‘Community infrastructure’ means infrastructure of a communal, human or social nature, which is required progressively as the community grows. Examples of community infrastructure are community halls, maternal and child health centres, and leisure, recreation and sporting facilities.

  • ‘Council funds’ means an indirect funding mechanism comprising funds derived from general rate revenue, accumulated surplus funds, untied grants, general revenue from fees and charges, funds from non-statutory or discretionary reserves, and borrowings.

  • ‘Cross subsidy’ means the subsidisation of infrastructure provision within a particular area by ratepayers located within a different area.

  • ‘Development contribution’ means a contribution of cash, land or works in kind obtained from a developer for the purpose of partly or wholly funding infrastructure. Development contributions are levied in accordance with the provisions of the Planning and Environment Act 1987. Within the context of this Act, development contributions do not include land reserved for the purpose of acquisition at market value by a public authority or municipal council, nor does it include land for open space which is provided by the developer under the provisions of the Subdivision Act 1988.

  • ‘Development Contributions Plan (DCP)’ means a plan prepared in accordance with the provisions of the Planning and Environment Act 1987 which sets out, for any development or part thereof, the infrastructure to be provided, the sources of funds for this infrastructure, the amount and timing of development contributions to be levied for this infrastructure, and other relevant matters. On approval it is incorporated into the planning scheme as an amendment.

  • ‘Development infrastructure’ means infrastructure of a physical nature that is required to be in place before or when development commences. Examples of development infrastructure are roads, drains, as well as land for community infrastructure.

  • ‘Development-related infrastructure’ means infrastructure within the infrastructure provision situation where new infrastructure is required to serve developing areas or where augmentation/upgrade of existing infrastructure is required to provide increased capacity to serve developing areas. Developing areas may be the subject of development of undeveloped land or redevelopment of previously developed land. A planning permit is generally required.

  • ‘Double dipping’ means charging for infrastructure that has already been paid for or is proposed to be paid for from other sources.

  • ‘Infrastructure’ means tong term or non-current Council assets that provide services to the community directly or indirectly through their use. Within the context of this policy, infrastructure includes land, buildings, roads and drainage, but generally excludes moveable plant and equipment such as motor vehicles and information technology (hardware and software).

  • ‘Infrastructure Funding Plan (IFP)’ is a generic term for a plan that indicates what infrastructure is required within a subject area, the estimated cost of the proposed infrastructure, how the proposed infrastructure will be funded and the timing of the provision of the proposed infrastructure. An Infrastructure Funding Plan may comprise a DCP and/or Special Rate/Charge Schemes.

  • ‘Items of infrastructure’ are considered to be roads, drainage, traffic management works, carparks, streetscape and environmental works, community centres, etc., as per usage of term in Guidelines for Development Contributions.

  • ‘Off-site infrastructure’ means higher order infrastructure that is generally off-site for subdivisional development and subject of Development Contributions Plans, eg, main drainage, elements of collector roads, public carparks, community infrastructure, public open space in excess of 5% subdivisional requirement, etc. ‘Off –site infrastructure’ may include infrastructure located on larger subdivisions that are of an arterial nature or shared with other developing areas (or established areas).

  • ‘On-site infrastructure’ means lower order or local infrastructure that is generally ‘on-site’ within subdivisional development and provided to service the properties within the subdivision, eg, local roads, kerb and channel, footpaths, easement drainage and street drainage. On-site infrastructure is provided by the developer in development related situations in accordance with the relevant statutory provisions.

  • ‘Out-of-sequence development’ means development that is not in sequence with the stages indicated on a benchmark sequencing plan.

  • ‘Planned infrastructure’ means infrastructure that has been identified in an appropriate plan as being required to service development in an area.

  • ‘Replacement infrastructure’ means infrastructure within the infrastructure provision situation where new infrastructure is required to replace existing assets that have reached the end of their operational life or economic life. Service capability of asset is not increased beyond previous design standard. Reconstruction works generally create replacement infrastructure.

  • ‘Section 173 agreement’ means a legally binding agreement in accordance with the provisions of Section 173 of the Planning and Environment Act 1987.

  • ‘Service catchment’ means the properties that can be identified as gaining a benefit from the proposed infrastructure, which is greater than any general benefit to the wider community. With respect to main drainage, the service catchment is the area of land drained by the relevant drainage infrastructure.

  • ‘Social infrastructure’ within the context of this policy means infrastructure which is funded in an indirect or non-user pays manner, by the wider community by means of Council funds or taxes (Government). ‘Social infrastructure’ may be community infrastructure or development infrastructure.

  • ‘Special Rate/Charge (SRC) scheme’, within the context of this policy, means an arrangement for the funding and provision of infrastructure by means of Special Rates and/or Special Charges in accordance with Section 163 of the Local Government Act 1989. A SRC scheme includes any Council contribution towards the cost.

  • ‘Statutory reserve’ means a financial reserve established and administered in accordance with legislative requirements for the purpose of holding funds in trust. Development contributions comprising cash payments are generally held within such reserves. The funds held in statutory reserves may only be used for the purpose for which they were levied.

  • ‘User-charge funding mechanism’ means a direct funding mechanism based on user pays principles, eg, special rates and charges, development contributions and admission fees.


5. Council Policy

5.1. The Council Meeting of 14 May 1997 endorsed the following key principles:

  • Council will clearly distinguish which infrastructure items and parts of infrastructure items are to be provided on a user pays basis and which are to be provided as ‘social infrastructure’ ie funded at the wider community’s expense.

  • ‘Social infrastructure’ will be funded through general rates and tax revenue transfers from State and Federal Governments.

  • With respect to user pays infrastructure, Council will make maximum use of special rates and charges. But in recognition of the borrowing implications of these funding methods and taking into account their administrative shortcomings, development contributions involving ‘up front’ payment by developers will also play an important part in funding infrastructure in the City.

5.2. The Council Meeting of 14 May 1997 endorsed the following operational or guiding principles for development contributions:

  • Development contributions for planned infrastructure to be treated as an up-front charge on users, rather than a tax on the developer or land seller.

  • Development contributions to be limited to ‘basic infrastructure’; that is, roads, drainage, recreation land and sites for community facilities.

  • Cross subsidies to be avoided when applying development contributions.

  • Proponents of out-of-sequence development should meet any additional hard infrastructure costs (generally roads, drainage, recreation land and sites for community facilities).

  • Proponents of out-of-sequence development should meet any additional social infrastructure costs (non user pays infrastructure generally funded by Council and/or Government).

5.3. Further to the above principles:

  • No items of infrastructure will be automatically exempt from a funding plan analysis which may identify a user charges funding mechanism as an appropriate means of fully or partially funding the provision of such infrastructure.

  • Development Contributions Plans (DCP) must be prepared, in conjunction with benchmark sequencing plans, for developing areas where the levying of development contributions by means of a DCP is considered to be feasible and viable.

  • Development contributions for community infrastructure will not be sought up front within Development Contributions Plans (DCP). The provision of community infrastructure, which is deferred from a DCP, will be funded by means of future Special Rate/Charge Schemes. These schemes will be prepared at the time that a need for the community infrastructure can be established.

  • Development contributions will be levied, wherever feasible, in cases where an approved Development Contributions Plan is proposed but is not yet in place. Contributions shall be negotiated and agreed with developers, and made the subject of a Section 173 or suitable non-statutory agreement.

  • Development contributions will be levied by means of planning permit conditions in cases where a Development Contributions Plan is not required and the use of planning permit conditions is permissible by legislation.

  • Development contributions will be considered as part of the planning scheme amendment process. Proponents of significant amendments may be required to prepare or revise Development Contributions Plans (DCP) for Council approval or to fund the preparation or revision of DCPs by Council. Proponents of less significant amendments may be required to enter into Section 173 agreements regarding development contributions.

  • Opportunities for partnerships with developers and Government for the provision or sharing of off-site infrastructure will be investigated where such arrangements may be mutually beneficial.

  • Necessary development-related infrastructure may be provided in anticipation of development, utilising Council funds, if Council is able to recoup this expenditure by means of future development contributions. Any interest charges incurred by Council shall be included in the costs recovered by Council.

  • Council may negotiate with a developer for the developer to provide necessary development-related infrastructure, in excess of the developer’s normal contribution and in anticipation of development, in cases where Council funds are not available and expenditure is recoverable by means of future development contributions within a reasonable time period. Expenditure incurred by the developer in excess of development contributions attributable to the developer shall be reimbursed by means of future development contributions (including any interest charges).

  • Consideration will be given to the allocation of Council funds, in the first instance, to facilitate infrastructure projects where Government grants are available and conditional on a local contribution. Council shall investigate the recoupment of Council expenditure by means of user-charge funding mechanisms where appropriate. Any interest charges incurred by Council shall be included in the costs recovered by Council.

  • Cost apportionment principles for user-charge funding mechanisms, such as development contributions and special rates/charges, will be consistent for backlog and development-related infrastructure, whilst recognising that differences in the legislation for these funding mechanisms and precedents established by rulings from appeal bodies may preclude absolute consistency in some cases.

  • Infrastructure within backlog and development-related situations will be funded in a manner that minimises cross subsidies and avoids double dipping. Infrastructure provision within backlog and development-related situations will be funded as follows:

    • Infrastructure of regional significance, which is provided for the benefit of the whole municipality, will be funded by means of Council funds, Government funds and donations/sponsorship where appropriate.

    • On-site infrastructure, where benefit is deemed to be restricted to the immediate locality of the infrastructure, will generally be funded in full by abutting property owners or site developers by means of user-charge funding mechanisms. Donations/ sponsorship may be appropriate in some cases.

    • Infrastructure which is neither on-site infrastructure or infrastructure of regional significance, will be funded on the basis of a cost apportionment between the service catchment for the proposed infrastructure and the wider community. This cost apportionment shall reflect the expected usage or benefit deemed to be gained from the proposed infrastructure by the service catchment and the wider community.

      The cost attributed to the wider community shall be funded by means of a contribution from Council funds and Government funds. Donations/sponsorship may be appropriate in some cases.

      The residual cost attributed to the service catchment shall be funded by means of a user-charge on properties within the catchment with a fair and equitable apportionment of the cost amongst the properties, generally on the basis of expected usage or benefit deemed to be gained from the proposed infrastructure.

      In implementing this policy the Council shall honour previous commitments on cost apportionment arrangements made by adopted Council resolutions.

  • Submissions on the grounds of hardship and ability to pay, within Special Rate/Charge Schemes, will be considered by Council in accordance with Sections 170 and 171 of the Local Government Act 1989.

  • Submissions from developers of industrial sites, for reduced development contributions, will be considered where the proposed development complies with the Council’s economic development objectives and declared criteria regarding employment creation.

  • Replacement infrastructure will be funded in full or in part by means of Council funds, with partial funding by Government funds and donations/sponsorship where appropriate. In cases where damage to Council infrastructure can be attributed to a specific party, Council shall pursue the recovery of replacement costs from the culpable party.

  • Appropriate processes and systems that comply with legislative requirements will be established and maintained for the administration of funds collected by Council for the funding of infrastructure provision.

  • The intent of the above policies will be applied to specific cases that do not conform to typical situations.


6. Quality Records

Quality Records shall be retained for at least the period shown below.

Record
Retention/Disposal Responsibility
Retention Period
Location
Special Rates & Charges Files – G249-##-##
Corporate Records
Permanent
Corporate

7. Attachments

  • Nil



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