A long-awaited review into the unpredictable and sometimes extortionate levies imposed by New South Wales local councils has resulted in one Sydney council’s charges being capped at $20,000.
Lane Cove Council is now only able to charge up to $20,000 per site in infrastructure levies for new developments after its application to be exempt from the threshold was refused by the NSW planning department.
Applications to exceed the levy threshold were received from 28 councils across NSW to review 92 separate Section 94 (local contributions) plans above $20,000.
Sydney developer Mark Monk, general manager at Cab, said the change at Lane Cove Council would give developers confidence, which is much needed in the current market.
“All a developer wants is certainty about the costs levies are in advance and to have a clear view of the playing field,” he said.
Monk said many developers in the north west corridor of Sydney have been caught out by council levies of up to $70,000 when they were budgeting for $15,000 to $20,000.
“All of your other costs in a development are fixed. The sale price, the building and civil costs, the land costs, but levies are not,” he said.
Of the 152 councils in NSW, 34 wanted to charge over $20,000 per lot. Of these, 28 applied to charge above the $20,000 per lot threshold while a further five councils voluntarily reduced their contributions below $20,000 per lot. One council’s plan is only at draft stage and yet to be determined.
“Following the first round of the review, which included 11 councils, I have decided to apply the $20,000 threshold to one council,” minister for planning, Kristina Keneally, said.
“Four more councils, Camden, Wyong, Liverpool and Penrith Councils have, via the review process, identified savings of between $2,000 and $18,000 per lot for relevant plans.”
The remaining six councils have been given an exemption to reducing their levies, in nearly all cases on the condition that additional further reviews are undertaken to look into how savings can be made.
Including the five councils which voluntarily dropped their levies below the threshold, so far six councils now have levy plans under $20,000 per block, which did not before.
However, no changes have been made to state government infrastructure levies as yet.
“This council levy is just one piece of a very big pie,” Monk added.
John Dale, principal of DJ Design Functions, said any reduction in levies was a good way to stimulate the industry in the current economic environment. “I think there is a justification for stimulus provided by lowering the levies.”
However, he said the impact of the levies on the community surrounding the development is determined by what the council does with those levies, “which is not always clear”.
“The most important thing is for the applications of levies to be transparent. But there is no way of knowing if they are as some are applied by the councils and others by the state government.”
