HOUSING CONSTRAINTS AND ISSUES PAPER

Strategic Planning Unit City Development Darebin City Council Housing Constraints and Issues Paper

DISCLAIMER

Any representation, statement, opinion or advice expressed or implied in this public is made in good faith but on the basis that the City of Darebin, its agents and employees are not liable (whether by reason of negligence, lack of care or otherwise) to any person for any damages or loss whatsoever which has occurred or may occur in relation to that person taking action in respect to representation, statement, or advice referred to above. The information contained in this document is to be solely used for the purposes of the Darebin Housing Strategy. Any use of the data contained in this document will require a prior written approval from the Strategic Planning Unit of Darebin City Council.

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This report has been peer reviewed by the RMIT AHURI Research Centre

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Table of Contents

ACRONYMS ...... 6 EXECUTIVE SUMMARY ...... 7 1.1 Purpose of the Issues Paper ...... 10 1.2 The Role of Council ...... 11 1.3 Darebin Profile...... 12 1.4 Policy Context...... 14 2 KEY CONSTRAINTS...... 15 2.1 PLANNING ...... 16 2.1.1 Planning and Environment Act 1987 ...... 16 2.1.2 Victoria Planning Provisions ...... 19 2.1.3 State Planning Policy Framework...... 20 2.1.4 Municipal Strategic Statement...... 20 2.1.5 Local Planning Policy Framework...... 23 2.1.5.1 Clause 22.04 – Neighbourhood Character...... 23 2.1.6 Overlay Controls...... 25 2.1.6.1 Environmental Audit Overlay...... 25 2.1.6.2 Heritage Overlay...... 26 2.1.6.3 Environmental Significance Overlay ...... 27 2.1.6.4 Developer Contributions Plan Overlay ...... 27 2.1.6.5 Vegetation Protection Overlay ...... 28 2.1.6.6 Public Acquisition Overlay...... 28 2.1.7 Single Dwelling Covenants...... 29 2.2 INFRASTRUCTURAL AND SERVICES CONSTRAINTS...... 31 2.2.1 Proximity to Food Outlets ...... 31 2.2.2 Road Access ...... 33 2.2.3 Car Parking...... 34 2.2.4 Drainage and Sewerage Capacity...... 35 2.3 FINANCIAL CONSTRAINTS ...... 36 2.3.1 Project Feasibility ...... 36 2.3.2 Cost Differentials ...... 36 2.3.3 Land Values...... 37 2.3.4 Project Financing...... 38

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2.3.5 Financial Feasibility Modelling...... 39 2.3.6 Land Fragmentation ...... 40 2.3.7 Risk tolerance...... 40 2.3.8 The Apartment Market...... 41 2.3.9 Existing Housing Stock...... 42 2.4 SOCIAL CONSTRAINTS...... 43 2.4.1 Density Preference...... 43 2.4.2 Social Exclusion and Stigma ...... 45 3 CONCLUSION...... 49 4 SOURCES ...... 52

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ACRONYMS

BZ Business Zone CBD Central Business District CSHA Commonwealth State Housing Agreement DCC Darebin City Council DCP Developer Contributions Plan DPCD Department of Planning and Community Development EAO Environmental Audit Overlay ESO Environmental Significance Overlay HO Heritage Overlay MSS Municipal Strategic Statement NCP Neighbourhood Character Policy PAO Public Acquisition Overlay PDZ Priority Development Zone PPP Public Private Partnerships PPTN Principal Public Transport Network RZ Residential Zone SEIFA Socio-economic Indexes for Areas SPPF State Planning Policy Framework URS Urban Renewal Strategy VCAT Victorian Civil and Alternative Dispute Tribunal VPO Vegetation Protection Overlay VIF Victoria In Future VPP Victorian Planning Provisions

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EXECUTIVE SUMMARY

INTRODUCTION The purpose of the report is to identify housing constraints and issues in Darebin. There is a strong focus on constraints to delivering higher density housing and social, public, and affordable housing. The constraints will extend into; land-use planning, physical and environmental, economic and financial, infrastructural and service provisions and social. By understanding the constraints to housing growth in the municipality, Council can investigate appropriate solutions to facilitate appropriate housing developments.

Role of Council Council has two complimentary roles in the provision of housing: one as a planning authority to facilitate the timely and orderly provision of housing, and the other as a community representative expressed through the provision of housing related advocacy, services and facilities

Darebin Profile In 2009, it was estimated that Darebin’s population was 139,608, an increase of over 4,000 persons from the 2007 population estimate of 135,552. According to the Victoria In Future (VIF) 2008 population projections, Darebin’s population is expected to increase by an additional 20,863 people bringing the population to approximately 154,477 by 2026.

CONSTRAINTS High costs of development infrastructure, fragmentation of land holdings, protecting areas of heritage and environmental significance, community reluctance for change, utility provision and capacity, adequacy of existing physical and social infrastructure, upgrades to the existing infrastructure, economic downturn and financial difficulties, and marketability of new developments and associated developer risks are some of the constraints that require careful consideration.

Some constraints are beyond the control of local governments and may require an integrated approach between all three tiers of government; however, there is some private sector and market based housing issues that cannot be influenced or regulated.

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Planning related Constraints Section 1.1 will focus on constraints and gaps within the planning system with a particular emphasis on social and affordable housing. The section analyses the gaps or constraints in the Planning and Environment Act 1987 and the relevant tools in the Victoria Planning Provisions. A discussion is provided on the following:

 Planning and Environment Act 1987  Victoria Planning Provisions  State Planning Policy Framework  Municipal Strategic Statement  Local Planning Policy Framework  Clause 22.04 – Neighbourhood Character  Environmental Audit Overlay  Heritage Overlay  Environmental Significance Overlay  Developer Contributions Plan Overlay  Vegetation Protection Overlay  Public Acquisition Overlay

Infrastructural and Service Related Constraints Section 1.2 will focus on spatial issues such as the location of existing services, public transport infrastructure, the road networks, car parking and drainage capacity and how it can impact the location and scale of future housing developments in Darebin.

Financial Constraints Section 1.3 will explore financial related issues that influence supply and demand of housing in Darebin. This part of the report will have a particular emphasis on higher density housing and social housing. The analysis is primarily based on the findings of the Urban Renewal Strategy for High Street and Plenty Road and a discussion of the following financial drivers is provided:

 Project Feasibility  Cost Differentials  Land Values  Project Financing  Financial Feasibility Modelling

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 Land Fragmentation  Risk Tolerance  The Apartment Market

Social Constraints Section 1.4 will focus on social trends and issues that influence housing development in Darebin. This chapter will examine and explore how past trends and perception have influenced housing demand and tolerances for new housing development within the municipality. This will then flow onto a discussion about social and public housing in Darebin and how existing perceptions and prejudices can not only influence the location and layout of these developments in the urban environment but exacerbate social exclusion and stigma for those who live in these types of houses.

CONCLUSION The management of housing growth and demand in Darebin is principally guided by land-use planning however housing in itself is a complex and challenging issue, particularly location, design and overall affordability. A coordinated approach should be adopted by Council which includes integration and collaboration across relevant Council departments to ensure housing is not just a matter of density and location but also it is fundamental to the standard of living and quality of life. Other non-planning related measures that must be considered to facilitate housing development include improvements to accessibility, amenities, employment and infrastructure.

While Council cannot directly mitigate all the constraints identified in this report as that would be beyond the scope and capacity of local government, there are opportunities for it to adopt a facilitative and advocacy role to address housing issues that are otherwise beyond its scope and levels of jurisdiction. The preparation of the Darebin Housing Strategy will seek to improve the various constraints identified in the report.

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1 INTRODUCTION

Following the announcement of ‘Melbourne @ 5 Million’, pilot projects were commissioned in early 2009 by the Department of Planning and Community Development (DPCD) to produce Housing Capacity Assessments: Method Implementations. Darebin was involved in the pilot project and received subsequent funding to undertake the project.

Darebin City Council (Darebin) in conjunction with other metropolitan councils received additional funding in 2010 to further investigate housing capacity and growth requirements within the Municipality. The funds have been partially used to undertake the development of this Issues Paper, which will explore the constraints to housing development and redevelopment within the Municipality.

The constraints will focus on various issues, ranging from planning to economic/financial, social, environment/physical and infrastructural and service provision. The paper has drawn on:  Informal consultation with relevant internal and external personnel (both public and private)  Assessment of: . Existing federal, state and local government housing policies and strategies . Development activity in the municipality . Housing capacity in the municipality . Appropriate housing locations in the municipality This constraints paper will guide the development of the Darebin Integrated Housing Strategy in conjunction with Housing Initiatives Analysis Report, Urban Renewal Investigation Areas Report and the Housing Opportunities Report.

1.1 Purpose of the Issues Paper

The purpose of this report is to identify housing constraints and issues in Darebin. There is a strong focus on constraints to delivering higher density housing and social, public, and affordable housing. The constraints will extend into:  Planning;  Physical and Environmental;  Economic and Financial;

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 Infrastructural and Service provisions related;  Social; and  Political. By understanding the constraints to housing growth in the municipality, Council can investigate appropriate solutions to facilitate appropriate housing developments.

This constraints paper in conjunction with three other key reports forms the foundation of the Darebin Housing Strategy., This report therefore does not provide answers; rather it poses questions and points of discussion, based on desktop research and consultation. The other three reports have explored:

 Housing capacity, locations and opportunities in Darebin;  Potential Urban Renewal Areas; and  Policy gap analysis.

Community engagement for the housing strategy is proposed to commence early 2012. It is anticipated that a final draft will be complete by the end of 2012.

1.2 The Role of Council

Council has two complimentary roles in the provision of housing: one as a planning authority to facilitate the timely and orderly provision of housing, and the other as a community representative expressed through the provision of housing related advocacy, services and facilities.

In order to undertake both these roles effectively the Council has a responsibility to constantly understand and monitor the housing market, building industry, housing needs of its residents and future residents, and the future directions of key stakeholders, such as tertiary institutes, government agencies, community housing groups and the state and federal governments.

As a planning authority, Council should play a proactive role in facilitating and encouraging certain types of housing to meet specific needs of its community. These specific requirements together with overall housing needs for the current and future residents will be investigated through the Darebin Housing Strategy.

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1.3 Darebin Profile

The City of Darebin is located in the northern suburbs of Melbourne, between 5 and 15 kilometres north of the Melbourne CBD. It is bounded by the City of Whittlesea in the north, the City of Banyule and Darebin Creek in the east, the City of Yarra in the south, and the City of Moreland and Merri Creek in the west. The City of Darebin includes the suburbs of Alphington (part), Bundoora (part), Fairfield (part), Kingsbury, Macleod (part), Northcote, Preston, Reservoir and Thornbury.

Darebin is an established residential, industrial, commercial, cultural and educational area with substantial parklands. The City encompasses a total land area of about 53 square kilometres. According to the Municipal Strategic Statement (MSS), Darebin had an estimated population of 133,614 persons in 2006. In 2009, it was estimated that Darebin’s population was 139, 608, an increase of over 4,000 persons from the 2007 population estimate of 135,552. According to the Victoria In Future (VIF) 2008 population projections, Darebin’s population is expected to increase by an additional 20,863 people bringing the population to approximately 154,477 by 2026. This represents a 13.5% increase or an average annual growth rate of approximately 0.7%. As shown in Figure 1 below, Darebin is the third most populous and third fastest growing Municipality in the north-western region with a growth rate reflecting the regional average.

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Figure 1: VIF 2008 Population Projections

VIF 2008 Population Projections

300,000 Darebin 250,000 Yarra 200,000 Whittlesea 150,000 Banyule

100,000 Moreland

Total Number of People 50,000 Northwest Regional Average 0

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Year

Source: Department of Planning and Community Development

In addition to the increase in numbers and age cohort household size, occupation, income levels, lifestyle and community needs also have been changing. These changes have significant implications for most aspects of land use planning at the local level. Provision for housing, economic activity, employment, transport, services, environmentally sustainable development, maintaining amenity and heritage conservation are some of the challenges that require proactive planning to efficiently manage the changes.

Darebin has a richly diverse community made up of people from a range of backgrounds, cultures, languages, religions, ages, socio-economic status, sexual orientation, levels of ability, interests, expectations and aspirations. Darebin is recognised as an important area of Indigenous history and is home to the largest metropolitan Aboriginal population. Darebin is also multicultural and multi-linguistic with 32% of the population born overseas and 39% speaking a language other than English at home.

Compared to metropolitan Melbourne, Darebin has higher proportions of people who are over 65 years, are not proficient in English, are renting, and speak languages

13 Housing Constraints and Issues Paper other than English at home. Compared to metropolitan Melbourne, the Darebin population has a significantly lower median weekly income and smaller proportions of people with access to the internet at home. Darebin is rated as the 5th most disadvantaged Local Government Area in metropolitan Melbourne on the index of relative social disadvantage (SEIFA) however this is more prevalent in the suburbs located north of Bell Street, mainly in Preston and Reservoir. The north and south of Darebin differ in terms of demography, socio-economic status, dwelling stock, housing market activity, economic structure and overall levels of service.

Changes in population and household sizes will continue to create demand for additional and diverse housing in Darebin. Based on the Housing Development Data 2008, there was on average a net gain of 600 additional dwellings per year from 2004 to 2008. Provision of timely, affordable and appropriate housing for the different demographic groups (including for the ageing population, people with limited mobility, student population, essential workers, low income earners, socially disadvantaged people and lifestyle living); facilitating a range of housing types and densities in suitable locations are some of the key housing issues requiring direction in the planning scheme.

It is also noted that affordable and appropriate housing for the low income and socially disadvantaged sectors of the community needs to be comfortable and efficient to run and maintain as well as to purchase or rent - this requires the incorporation of Ecologically Sustainable Design into housing developments.

1.4 Policy Context

This report was prepared under the guidance of the ‘Housing Initiatives Analysis Report’ which provides an overview of past and present housing initiatives (policies and programs) at a federal, state and local level. The aforementioned report focuses on distilling opportunities and implications in terms of housing policy development.

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2 KEY CONSTRAINTS

Darebin’s housing needs are predominantly influenced by changing demographic patterns, population growth, and the demand for well located affordable housing. In order to facilitate the timely delivery of a mix of housing types within the municipality an appreciation of the existing housing issues and constraints is needed.

High costs of development infrastructure, fragmentation of land holdings, protecting areas of heritage and environmental significance, community reluctance for change, utility provision and capacity, adequacy of existing physical and social infrastructure, upgrades to the existing infrastructure, economic downturn and financial difficulties, and marketability of new developments and associated developer risks are some of the constraints that require careful consideration. Difficulties associated with the provision of affordable housing to reduce disadvantage and improve equity, incorporating sustainable design requirements to decrease impacts on the natural environment and household running costs, and enhancing residential amenity are also challenges that require creative solutions and strong commitment.

Some constraints are beyond the control of local governments and may require an integrated approach between all three tiers of government; however, there are some private sector and market based housing issues that cannot be influenced or regulated. When these issues are presented, governments should endeavour to assist where appropriate to facilitate the timely delivery of future housing at the appropriate density and types in suitable locations across the municipality.

Section 1.1 will focus on constraints and gaps within the planning system with a particular emphasis on social and affordable housing. The section analyses the gaps or constraints in the Planning and Environment Act 1987 and the relevant tools in the Victoria Planning Provisions. Section 1.2 analyses infrastructure constraints, such as access to public transport, fresh food, road networks, car-parking and the drainage system. Section 1.3 will look at financial constraints including land values, risks, credit control, and project feasibility. An insight into social constraints for affordable and social housing development will be provided in Section 1.4.

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2.1 PLANNING This chapter will focus on issues within the current Victorian planning system that affect housing development, in particular higher density housing. The chapter will also explore the gaps within the current system to recognise the need and importance of social and affordable housing.

2.1.1 Planning and Environment Act 1987 The Planning and Environment Act 1987 (the Act) has the purpose of establishing a framework for the planning, use, development and protection of land in Victoria in the current and long-term interest of all Victorians. Whilst the Act makes provisions for the inclusion of affordable housing in growth areas, there are no references to this elsewhere in the legislation.

Many issues are now at the forefront of state and local government planning agendas with population growth and housing shortages reaching critical point. Whilst it is considered that current issues, whether economic, environmental or social, are inherently captured in Section 4 (objectives) of the Act, there are a selection of pressing topics that have been identified as needing individual recognition in a revised planning legal framework, which are discussed in the Planning & Environment Act 1987: Review Discussion Paper (2009). Melbourne’s exponential population growth and the matter of housing supply and affordability has, among other issues, garnered significant interest in the discussion paper (amongst other issues).

There are often discussions on whether the Act should be amended to mandate the provision of affordable and social housing either through state or local government level intervention. It has been argued that legislation should not be encumbered by issue specific matters and that the current Act is sufficient in addressing matters relating to housing supply and affordability.12

1 Modernising Victoria’s Planning Act, ‘VPELA’s Submission in Respect of the Planning and Environment Act Review Discussion Paper’ May 2009.

2 UDIA (VIC), ‘Submission to Government in Response to: Modernising Victoria’s Planning Act Discussion Paper on Opportunities to Improve the Planning & Environment Act 1987’ April 2009.

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The provision of affordable and social housing should not solely rest within the realm of government and the power of the markets should be harnessed. However, enticing private interest can be difficult, if developer certainty cannot be guaranteed. Legislation providing developer certainty has been suggested as a solution to this.

If the Act cannot be amended to explicitly address housing affordability issues, the discussion paper has suggested that additional legislation could be introduced to govern projects that are subject to an alternative legislative framework. This has been suggested in the context of projects that are of state significance. Perhaps this is an idea that could be considered for the provision of social, public and affordable housing in Victoria.

The Commonwealth State Housing Agreement (CSHA), established in 1945 envisaged that social housing would serve as a stepping stone for Australians, particularly key workers and other moderate income households’ to enter the property market. However, social housing has now dwindled to a sector that makes up approximately 5% of all private dwellings and only caters for people in extreme need of housing, rather than a wider catchment of people as originally intended. It is estimated that in order to achieve the original vision set out by the CSHA, the percentage of social housing stock in Australia will need to be increased to between 10% and 15% from current levels3——a modest target compared to other developed countries. To achieve this vision, it has been calculated that an annual investment of $19 billion per year is required for the next 10 years.4 This large figure sums up the housing concerns in Australia and raises the question of whether it is financially sustainable to rely on government as the sole provider of social and affordable housing.

The 2011 report by the National Housing Supply Council5 (NHSC) reveals that Australia and its capital cities continue to face a severe and growing housing supply shortage. The report reveals that from 2001 to 2010, Victoria faced a dwelling ‘gap’

3 SGS Economics and Planning on behalf of Power Housing Australia “A Vision and Plan for Social Housing in Australia”, July 2009

4 Spiller, M 2010, ‘Social Housing – a vision and a plan’, The Fifth Real Estate V – Our Planet Our Real Estate, 9 March, accessed 10 May 2010. 5 The NHSC was established by the Australian Government in 2008 to monitor national housing demand, supply and affordability.

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(where underlying demand is greater than total supply) of approximately 17,600 dwellings.

This imbalance between strong demand and weak supply will persist due to the stronger than anticipated population growth experienced in Victoria and metropolitan Melbourne, which is expected to continue at high levels. This persistent imbalance will underpin house prices and because of the limited supply of rental accommodation, continue to support high rents.

The housing ‘gap’ experienced in Victoria will have a cumulative effect on overall housing affordability, putting pressure on rental markets, public housing and social housing.

Key housing challenges identified by the NHSC include lags associated with construction, planning and regulatory approval, recent market issues (Global Financial Crisis and Euro-zone crisis) which have all stifled the private development industry. These challenges exacerbate housing affordability in Victoria therefore making it more difficult, particularly for First Home Buyers (FHB) to enter the market. The NHSC highlights key socio-economic challenges as affordability worsens and overall lack of supply:

 Tightening of the rental markets as household’s post-pone home purchase.  People are staying at home longer (adult children)  More group households  Couples delaying having children  Increases in rent assistance as rental prices increase due to strained rental markets.

The NHSC further highlights that as overall affordability is eroded across the capital cities, there will be increased pressure for affordable housing (rent and purchase), social housing and public housing. The challenge that governments face is that whilst social housing stock has increased, public housing stock has decreased and the current demand for public and social housing significantly outstrips supply.

A key message outlined in the 2011 report is that the housing shortage witnessed across Australia is not about simply building more houses (i.e. building more

18 Housing Constraints and Issues Paper detached homes in the fringe suburbs) it is about building the right types of homes – a diversity in housing stock to meet the diverse range of housing needs.

2.1.2 Victoria Planning Provisions The VPPs provide a state-wide template from which planning schemes are constructed. The VPPs provide planning tools such as zones and overlays for individual planning schemes to guide land use and development, however the provision of affordable, social and public housing are inadequately addressed and receive minimal recognition.

A number of zones have been introduced to facilitate more housing development (among other things). Three of these are:  Priority Development Zone  Activity Centre Zone  Comprehensive Development Zone

The VPPs could be amended to introduce a means to facilitate affordable and social housing development. There is a deficit of affordable housing in Victoria, and a shortage of social and public housing as reflected in the approximate 21,000 Victorian’s sleeping rough on any given night6. An appropriate level of resourcing and focus should be allocated for the development of a means to facilitate inclusionary zoning. Inclusionary zoning “is a tool to create affordable housing. The basic approach to such zoning is the requirement that a certain percentage of new housing units be affordable”7. The purpose of inclusionary zoning would be to facilitate the development of affordable, social and public housing through the planning process in areas that can foster long-term housing affordability by being located near existing services and infrastructure.

Change to the existing VPPs is imperative for the facilitation and timely delivery of affordable, social and public housing stock for Victorians in the absence of an amendment to the existing Victorian Legislative Planning Framework. If inclusionary zoning cannot be facilitated via the VPPs, the continual emphasis and policy guidance on these matters via the State Planning Policy Framework (SPPF) can

6 Darebin City Council ‘Housing – Responding to Housing Stress: A local Action Plan 2010 – 2013”. (2010) 7 Conservation Law Foundation and Vermont Forum on Sprawl, ‘Community Rules: A New England Guide to Smart Growth Strategies’, 2002, p.77-79.

19 Housing Constraints and Issues Paper greatly assist and benefit local government in the delivery of affordable, social and public housing.

2.1.3 State Planning Policy Framework Amendment VC71 was gazetted on the 21 September 2010 and made changes to the structure and content of the SPPF. Important state level housing related strategies were introduced as mandatory referenced documents which included Melbourne @ 5 million, 2008 and the Victorian Integrated Housing Strategy 2010,. Revised Clause 16 – Housing, provides greater policy guidance and direction particularly to Local Governments for the provision of;

. Integrated Housing . Housing Diversity . Housing Affordability . Urban consolidation . Residential Aged Care . Design and location of Residential Aged Care . Crisis Accommodation and Community care

Further to the above points, the clause gives greater emphasis by encouraging urban consolidation and redevelopment of strategic sites which include areas that are;

. In and around activity centres, . along employment corridors, and; . areas serviced by infrastructure and services.

Amendment VC75 made further changes to the SPPF by removing Melbourne @ 5 Million as a referenced document, however clause 16 continues to provide a great deal of policy guidance and support to local governments. Whilst the policy is considered relatively comprehensive in its focus on housing issues, the policy does not provide guidance on student accommodation and rooming houses, which are both relevant in Darebin.

2.1.4 Municipal Strategic Statement The MSS is a concise statement of the key strategic planning, land use and development objectives for the municipality and the strategies and actions for

20 Housing Constraints and Issues Paper achieving these objectives. Housing matters are captured as Element 2 under Clause 21.05-2 of the MSS.

The MSS is in need of a review to reflect and recognise housing issues affecting Darebin such as; affordability, supply, capacity, location and typology. Key housing issues such as accessible housing for the elderly and people with limited mobility, student accommodation, increasing densities in and around activity areas also need further emphasis. While matters relating to neighbourhood character and heritage are important and need to be considered, these issues appear to dominate the MSS. The MSS could be amended to provide more of a balance between the aforementioned issues and the competing issues of housing demand and population growth within Darebin.

The MSS gives effect to Melbourne 2030 policy directions by outlining that the ‘preferred’ locations for residential intensification be concentrated in and around activity centres. However, this falls short of current state planning direction as it does not consider strategic areas such as:

. Employment corridors: and . Areas outside of named activity centres which also offer good access to existing services and public transport.

Council can find it difficult to satisfy the housing objectives outlined in the SPPF whilst also addressing matters related to neighbourhood character and heritage retention. This is particularly evident in the MSS policy guidance to discourage residential or mixed use development of four or more storeys in areas that display the following characteristics;

. High Street bound by Westgarth Street/Merri Parade and Separation Street/Arthurton Road. . Sites located in a Heritage Overlay or adjacent to properties of recognised heritage value in the Darebin Heritage Review. . Sites located where residential or mixed use development of four or more storeys would unreasonably diminish valued views from public parks, main roads and other significant vantage points. . Sites located where development would unreasonably overshadow areas of public amenity including parks and other significant public spaces.

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The above mentioned descriptions are generally characteristics of areas that are suitable to absorb increased housing development of increased densities. There are no guidelines or allowances in place to provide flexibility for increasing housing densities if positive social or environmental outcomes can be achieved. There appears to be tensions within ‘strategies’ identified to achieve ‘Objective 2: Encourage ecologically sustainable housing and facilitate where possible’, the first being;

. Encourage the adaptive reuse of buildings to reduce the amount of waste to landfill.

The concern with this particular strategy is its blanket application to all identified heritage buildings. There are examples where an existing heritage building has been identified as having capacity to accommodate a significant redevelopment project however lack of policy guidance has made it difficult to achieve this. Whilst heritage recognition and retention is important, Council also has the responsibility to facilitate housing development that meets the need of the community. The conservation guidelines outlined in past and current Darebin Heritage Studies8 have been and can continue to be used to guide the re-use and redevelopment of heritage listed buildings.

Tensions can also be identified in the following two strategies:

. Ensure the integration of transport; and . Ensure that new housing is sufficiently serviced by public transport.

These strategy recommendations are vague as they do not specify how housing can be integrated with transport or the types of densities that are encouraged near public transport infrastructure, given recent changes to the SPPF. Likewise, Council can only advocate for the upgrade and increases in the provision of public transport infrastructure, in particular, areas that are less serviced and cannot directly control this as it is a state and federally government funding issue.

8 Past reviews include ‘Allan Lovell Review 1996 – 1997’, ‘Andrew Ward Review 1999 – 2000’ and the current 2008 – 2009 Heritage Review undertaken by Context.

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The MSS could be improved to provide greater clarity and direction by defining different housing types and the appropriate locations for accommodating these. This is a matter that needs to be clearly identified and resolved in order to provide the strategic basis and policy guidance to support the decision making process of local government planners.

Affordable housing is captured in the MSS as highlighted in the Housing Vision;

“Sufficiently diverse to provide more affordable, accessible and appropriate choices and opportunities”.

Whilst the affordable housing issue is identified in the vision, the MSS did not provide clear strategic direction as to how this can be achieved. Clear strategies are necessary to achieve the vision. The vision does not recognise the constraints and challenges that affect Local government in the provision of affordable housing as this is demonstrated through the following recommendation:

. “Retain access to affordable housing throughout the municipality”.

How this will be achieved depends on the existing planning framework (as previously discussed in Section 1.1.1). In the absence of State directions for mandatory requirements of affordable housing, Council cannot mandatorily require affordable housing (as demonstrated in a recent VCAT decision Merri Merri Developments Pty Ltd v Darebin – [2010] VCAT 1045).

2.1.5 Local Planning Policy Framework This section of the report discusses the planning constraints from the local policies of the Local Planning Policy Framework (LPPF). There are a total of 12 Local Planning Policies in the Darebin Planning Scheme. A discussion of the policies that serve a constraint to housing in the municipality will be provided.

2.1.5.1 Clause 22.04 – Neighbourhood Character A key impediment for increased densities is the Local Planning Policy 22.04 – Neighbourhood Character. The policy applies to all R1Z properties within the municipality, irrespective of the properties location to the Principal Public Transport Network, Activity Areas and employment corridors. There are eight neighbourhood

23 Housing Constraints and Issues Paper character precincts identified within the study, of the eight precincts there are 41 sub precinct design guidelines which guide the design, scale, layout, massing and overall character of new developments proposed on a site zoned R1Z. Key concerns identified in the design guidelines revolve around the overall intent of the guidelines, which is to retain the existing low scale built form of a given area. This objective is achieved through character statements (amongst others) such as;

 “Maintaining the predominant scale of the area.”

“Maintaining the predominant single storey scale of building frontages of the area. Second storey additions at the rear must be designed to have minimal impact upon the streetscape.” The assessment of the design guidelines, which form part of the reference document to the policy, reveal that majority of the guidelines aim to maintain and retain the predominant low scale character in respective precincts, irrespective of the precincts strategic location within the municipality. This is achieved by a ‘Preferred Character Statement’ and ‘Design Guidelines’ present in all NCS guidelines, which specify:

 Height and Building Form;  Materials and Design Detail;  Front Boundary Treatment;  Siting; and  Vegetation.

The policy deters urban consolidation and increased densities even in the strategic areas that are suitable for increased densities. There are various examples of this constraint, such as the R1Z properties fronting St Georges Road, Plenty Road, which are within 800m walkable distance to activity centres and train stations. The policy can conflict with housing diversity, affordability and efforts for increasing densities as outlined in Element 2 – Housing of the MSS and Clause 16 – Housing of the SPPF.

The guidelines conflict with State level planning objectives in particular Clause 16 as the policy is applicable even to opportunity sites located in accessible areas. The tensions between State and Local Planning Policy are reflected in the local policies application to approximately 530 properties fronting a tram route within Darebin. This

24 Housing Constraints and Issues Paper figure is considered small compared to the thousands of R1Z properties within close proximity to an activity centre, train station and employment corridor.

Various VCAT decisions highlight that the Tribunal routinely refers to the policy and the relevant NCS precinct guidelines. In doing so, it has often remarked how site inspections revealed a character that is different to what the relevant NCS statement suggests that character to be. The extent of the policy’s application across Darebin should be refined to more suitable areas as it serves as a valuable tool for guiding the decision making process.

Local Planning Policy 22.09 applies to residential development and mixed-use development which includes a residential use of less than four storeys, excluding basement levels, in the Business 1 Zones (B1Z), Business 2 Zones (B2Z) Priority Development Zones 1 and 2 (PDZ1 and PDZ2). A key concern with the application of this policy is that it also makes references to issues of neighbourhood character under the ‘building height objective’. As discussed in Sections 1.1.5.1 and 1.1.4, the issue of neighbourhood character in Darebin is it may conflict with urban consolidation efforts, generally guided in a Council’s MSS, SPPF and State government strategies. Properties located in these zones are generally located in commercial areas having a walkable catchment to existing services and infrastructure. The development capacity of these strategic areas should not be constrained.

2.1.6 Overlay Controls This section discusses the overlays that constrain housing opportunities in Darebin.

2.1.6.1 Environmental Audit Overlay The overlay serve as a significant financial disincentive for redevelopment as the costs associated with the undertaking of an environmental audit can be very costly. Some properties are affected by the Environmental Audit Overlay (EAO) even though there is no history of uses to validate the application of the overlay. When the new format planning scheme introduced the EAO, Councils applied the EAO to all previously industrial zoned land, irrespective of the nature of uses on the property.

In Darebin, the application of EAO along High Street in parts of Preston, Thornbury and Northcote was applied when many properties were rezoned from the Industrial Zones to Business 1 and 2 Zones. As it would have been difficult conduct an in-depth

25 Housing Constraints and Issues Paper analysis of contamination of all properties Council took a precautionary approach and applied the EAO to all former industrial properties. This was undertaken before the release of General Practice Note – Potentially Contaminated Land (2005).

The issue of investigating the application of the EAO along High Street will need to be prioritised by both State and Local Government as the High Street Spine is a significant corridor, characterised by a combination of retail, employment opportunities, services and infrastructure. These areas are considered opportunity areas where higher density developments comprising social and affordable housing should be encouraged, consistent with existing State and Local Government Planning direction.

2.1.6.2 Heritage Overlay The current Heritage Overlay (HO) has one schedule with 311 places listed (including buildings and structures) to precincts. A permit is generally required for the undertaking of most buildings and works to a property that is affected by the HO. Similarly to the issue of neighbourhood character, the HO can serve as a constraint to redevelopment as there are further delays associated with obtaining a planning permit for a building that is affected or located in proximity to a building/precinct affected by the HO.

As discussed in 1.1.4, the MSS discourages redevelopment of higher density developments on “sites located in a Heritage Overlay or adjacent to properties of recognised heritage value in the Darebin Heritage Review”. The ‘blanket’ application of this guideline does not consider that the HO is applied to many precincts and properties across the municipality, as the more recent 2007 Heritage Study undertaken by Context Pty Ltd, has identified an additional 119 places and 27 precincts. The natural heritage, pre-contact heritage and migrant heritage should be carefully considered in the future stages of the Darebin Heritage Study. In reviewing the distribution patterns of the overlay, the following trends were identified;

 Concentration in the southern parts of the municipality. This corresponds to the earlier settlement patterns of Northcote, Thornbury and Preston.  Along key transport corridors (such as High Street, Plenty Road and St. Georges Road) and transport infrastructure (such as train stations).  Employment corridors.  In and around activity centres.

26 Housing Constraints and Issues Paper

Whilst Council has the role to ensure heritage significant places are protected it also needs to consider the best outcomes for the local community which includes the provision of housing opportunities for current and future residents. Given the population projection and Darebin’s strategic position in metropolitan Melbourne it is vital for the Council to maximise its development capacity. The HO Schedule, Incorporated Documents and any other heritage control should be carefully written to ensure that heritage significant places and precincts are conserved without undermining development potential of key strategic areas. Situations where a single heritage building controls development capacity of the street should be avoided.

There are opportunities for State Government to contribute to this issue, such as recognition in the SPPF or releasing guidelines for the re-use and re-development of Heritage buildings or developments near existing heritage places. There are various examples in Darebin and Melbourne where heritage conservation has been incorporated into modern redevelopments.

2.1.6.3 Environmental Significance Overlay The Environmental Significance Overlay (ESO) is generally applied to properties that fall within a 200 metre catchment of the Darebin Creek and Merri Creek. The analysis of this overlay tool as a constraint to housing redevelopment will be examined in conjunction with the areas subject to ‘Aboriginal Cultural Heritage Sensitivity Areas’. The overlay performs an important function for the respective creek environments, consisting of extensive decision guidelines and to provide permit exemptions for minor works that do not add value through the planning process. Properties that fall within the ‘Aboriginal Cultural Heritage Sensitivity Areas’ and/or affected by the ESO are subject to the Aboriginal Heritage Act 2006 which specifies certain controls and guidelines additional to the requirements set out in this Act. Certain redevelopments trigger the need for the preparation of a Cultural Heritage Management Plan for developments within this buffer zone. The time and cost associated can serve as a constraint to housing redevelopment opportunities.

2.1.6.4 Developer Contributions Plan Overlay The City of Darebin Development Contributions Plan (DCP) is an important tool has been in operation since 2004 and applies to the entire municipality (implemented by Schedule 1 to the Overlay). The DCP is an important tool for Council as it levies development with a cost of works more than $100,000 to contribute towards Council infrastructure projects. However, as outlined in the Darebin Planning Scheme Review

27 Housing Constraints and Issues Paper

Report (2011), the application of municipality-wide DCP may result in inequitable outcomes across the municipality. Moreover, developer consultations9 revealed that the DCP serves as a major disincentive for development in the municipality.

A review into the DCP is currently being undertaken by Council with an expected completion date of June 2012.

2.1.6.5 Vegetation Protection Overlay The Vegetation Protection Overlay (VPO) is applied primarily to the north-western parts of the municipality affecting estates such as Springthorpe, Mount Cooper and Lancaster Gate. These areas are characterised by significant exotic and native trees and have been identified for protection under the many plans, maps and tree assessments referenced in the VPO and incorporated into the Darebin Planning Scheme10. There is a permit trigger in the VPO to lop, remove, destroy or relocate any trees identified for protection. Future housing redevelopment in these areas can be constrained if a tree identified for protection is located within the properties boundary.

2.1.6.6 Public Acquisition Overlay The Public Acquisition Overlay Schedule 1 – Road Construction or Widening (PAO1) applies to 202 properties across Darebin. The following permit triggers are applicable to properties affected by the PAO:

 Use land for any Section 1 or Section 2 use in the zone.

9 Consultations with major developers were undertaken as part of the ‘Urban Renewal Strategy for High Street and Plenty Road’ (2011). 10 (1) Tree Assessment for Darebin City Council, Mount Cooper Estate, Bundoora, Homewood Consulting Pty Ltd, August 2008, (2) Springthorpe Development Plan, Urban Pacific, August 2000, (3) Mont Park Development Principles, David Lock and Associates and City of Darebin, August 1998, Mont Park Development Plan South Boundary Pine Trees Arboricultural Assessment, (4) Tree Logic in association with Mark McWha Pty Ltd, September 1999, (5) Mont Park Development Plan Landscape Master Plan Report, Mark McWha Pty Ltd, January 2000, (6) Mont Park Development Plan Existing Tree Survey and Arboricultural Assessment, Tree Logic in association with Mark McWha Pty Ltd, September 1999, (7) Mont Park Development Plan Cherry Street Avenue of Honour Arboricultural Assessment, Tree Logic in association with Mark McWha Pty Ltd, September 1999, (9) Mont Park Development Plan, Urban Pacific, 1999, (10) Mont Park Development Flora and Fauna Conservation Issues, Ecology Australia, 2000, (11) Darebin North East Corridor Strategic Plan, David Lock and Associates and City of Darebin, September 1998

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 Construct a building or construct or carry out works, including:  Damage, demolish or remove a building or works.  Damage, remove, destroy or lop any vegetation.  Subdivide land.

It is an objective of the overlay to ensure that changes to the use or development of the land does not prejudice the purpose for which the land was acquired. The PAO1 was applied to allow for future road construction or widening by VicRoads and changes in use or developments that contravene the overlay’s intended purpose may be refused.

The overlay affects 118 properties fronting Murray Road (between Plenty Road and Albert Street) and 73 properties fronting Heidelberg Road (from Darebin Creek to Station Street). The remaining 11 properties affected by the PAO1 are sparsely distributed across the municipality.

The extent of the overlay’s application over the frontage of the properties can vary from a depth of two to sixteen metres. Some properties have a lot depth of 30 metres which can limit the sites redevelopment potential.

2.1.7 Single Dwelling Covenants Whilst there is no database (at a local and state government level) to pinpoint the distribution of all single building covenants, it appears that there is a high concentration in Reservoir, particularly in and around the Merrilands Estate and Central Creek area.

The covenant is bound to the title of the land and restricts current and future landowners from developing the site for more than one dwelling. Covenants are placed on the title by the developer at the time of subdivision. Across Reservoir, these are placed uniformly in some locations and indiscriminately in other areas. Until a request is made to remove or vary a covenant Council cannot issue a planning permit or approve plans for use and development that is in breach of a covenant. Under the ‘Act’ if an objection is received to remove or vary a covenant then Council must refuse the application. This mechanism works to control the rate and density of residential development in the suburb.

29 Housing Constraints and Issues Paper

In light of population growth and housing demands, the covenants should be reviewed to allow for some additional housing growth as Reservoir West does not have a walkable catchment to higher order public transport and services like the suburbs to the south of Bell Street.

30 Housing Constraints and Issues Paper

2.2 INFRASTRUCTURAL AND SERVICES CONSTRAINTS

This chapter will explore and discuss how the shortage of infrastructure and services can serve as a constraint to housing redevelopment in Darebin. In proceeding with this chapter, it is acknowledged that all of Darebin is considered well serviced; however, the discussion will focus on the walkable catchments of the existing infrastructure and services in the municipality relative to medium and higher density development.

2.2.1 Proximity to Food Outlets The Darebin Food Security Report 2009 reveals that the northern parts of Darebin, in particular Reservoir East and West, are characterised by ‘food deserts’.11 What this suggests is that these areas are susceptible to ‘food security’ issues. Food security is defined as when ‘all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life’.12 This presents a problem for current and future residents who may be located in food desert areas with limited mobility. The southern parts of Darebin such as Northcote, Preston, Thornbury, Fairfield and Alphington are better serviced by fresh food outlets, corresponding to the higher levels of serviceability of these suburbs. Another recurring pattern is the distribution of key food outlets being clustered in and around the Principal Public Transport Network (PPTN). This spatial characterisation highlights the need to facilitate and direct more housing growth to parts of the municipality that benefit from greater access to existing services and infrastructure to encourage more sustainable forms of transportation such as walking and cycling to and from services. Public Transport Infrastructure The Darebin Transport Strategy 2007 reveals that approximately 15% of households in Darebin do not own a car compared to the Melbourne Metropolitan average of 9.5%. This information suggests that the provision of high quality public transport infrastructure is vital in Darebin considering the lower rate of car ownership. A review

11 Food deserts are areas in the municipality where fresh, nutritious food is virtually unobtainable within a 500 metre radius.

12 Food and Agriculture Organisation (FAO) (n.d) World Food Summit 13 – 17 November 1996 Rome Italy Rome Declaration on World Food Security [online]. Available: http://www.fao.org/docrep/003/w3613e00.htm

31 Housing Constraints and Issues Paper of Darebin’s public transport network13 shows that a large percentage of the municipality is serviced by some form of public transport, except Bundoora Homestead and the Core Industrial Areas. What this information masks is that the quality and frequency of public transport in some areas are much lower than others. This is noticeable in parts of Reservoir and West Preston where there is not only a lack of higher order public transport (such as tram and train) but the intervals between bus times are much greater compared to the southern parts of Darebin. The integration of land use planning and transport is critical in tackling housing affordability as travel expenses can make up a significant portion of an average households weekly income.

It has been argued that average weekly household income expenditure on travel can be greatly reduced if located near most services and excellent public transport.14 There is significant scope for local and state government to influence this issue in providing direction for housing growth and densities. By directing and supporting increased residential development in and around public transport infrastructure, current and projected demands for housing can be met while simultaneously addressing issues of housing affordability by reducing weekly expenditure on travel. It has been demonstrated that households living in areas with poor public transport infrastructure will have a greater dependency on private automobile use, in turn, greater dependency on oil15, 16. Oil prices have increased over the past decade and the continued rise of oil prices have and will put many households at financial risk.17 Higher density housing developments will be constrained in parts of the municipality where there is a lack of access to high quality public transport.

13 The review is undertaken by applying a 400 metre catchment or buffer around public transport infrastructure such as bus stops, tram stops and train stations. This highlights all the areas in Darebin that are serviced by public transport.

14 SGS Economics ‘Local Action on Affordable Housing – Defining Affordable Housing’, 2009

15 Dodson, J, & Sipe, N. ‘Shocking the Suburbs: Urban Location, Housing Debt and Oil Vulnerability in the Australian City’, Griffith University: Brisbane, 2006.

16 Dodson, J, & Sipe, N. ‘Unsettling Suburbia: The new landscape of oil and mortgage vulnerability in Australian cities’, Urban Research Program. Research Paper No.17, 2008

17 Climate Risk ‘Darebin Climate Change and Peak Oil Adaptation Plan’ 2009, pp 35 - 40

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2.2.2 Road Access Strategic redevelopment sites and strategic redevelopment areas such as activity centres are generally located on or around Darebin’s major road networks such as:

- Bell Street - Plenty Road - High Street - Gilbert Road - St Georges Road - Spring street, and; - Heidelberg Road

Higher density housing can be constrained on strategic sites that do not have rear laneway access and in areas that are characterised by narrow roads with one way traffic flow. The issue is further compounded commercial areas as vehicle access points are discouraged and sometimes restricted from street frontages. This is highlighted in Objectives 3.2, 3.3 and 3.5 of the Guidelines for Higher Density Housing for Residential Development (DSE 2004). These designs are mainly discouraged in key activity areas due to visual impacts on streetscape and impacts on pedestrian movement and safety. These opportunity sites are limited in Darebin therefore proposals for higher density residential developments should be maximised and supported.

The Darebin Transport Strategy 2007 identities the major roads as a combination of strategic corridors, primary multi-modal and secondary multi-modal streets that attract large flows of traffic from a variety of transportation modes. Strategic redevelopment sites and strategic redevelopment areas such as activity centres are generally located on or around Darebin’s major road networks such as:

- Bell Street - Plenty Road - High Street - Gilbert Road - St Georges Road - Spring street, and; - Heidelberg Road

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The Darebin Transport Strategy 2007 identities the abovementioned roads as a combination of strategic corridors, primary multi-modal and secondary multi-modal streets that attract large flows of traffic from a variety of transportation modes.

Whilst these are the areas considered ideal for increased housing densities, access and traffic flow can serve as an inhibitor for redevelopment if the sites do not have access to rear laneways. Properties located on the road networks, identified above, are generally characterised by having access to rear laneways however a combination of site visits, plan and aerial imagery examination reveals that there are some areas that do not.

2.2.3 Car Parking State Government Planning Policy encourages Council to support developments of increased densities in and around public transport infrastructure. An issue that Council may be faced with when considering applications for future redevelopment sites located near public transport infrastructure is the request made by some developers to waiver the parking requirements. Clause 52.06 contains a decision guideline allowing the responsible Authority to waiver car-parking requirements based on (amongst others):

- The availability of car parking in the locality - The availability of public transport in the locality.

Throughout Darebin and common to most inner to middle ring municipalities are parking restrictions placed on certain areas. This is prevalent in areas that attract higher levels of pedestrian and vehicle movement such as activity centres and retail and employment areas. Correspondingly, these areas are also characterised by public transport infrastructure. The lack of on-street car parking is a potential constraint for transit-orientated developments of increased densities that seek a waiver car parking requirements. This constraint will not completely inhibit housing redevelopment as the issue can be resolved through changes to design and dwelling yield, however it may limit Council’s ability to negotiate with developers for the provision of social and affordable housing in exchange for flexibility in planning requirements.

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2.2.4 Drainage and Sewerage Capacity A key consideration in identifying areas for increased housing densities is ensuring that the local sewer and drainage networks have the capacity to support increases in development densities. Infrastructure planning will need to ensure that the local sewer and drainage networks will not be strained from increased development activity. This is particularly important for designated high change areas that are already characterised by existing higher density development and areas with a higher concentration of impermeable surfaces. These areas can become problematic in the event of heavy rain if the existing physical infrastructure is beyond its operating capacity.

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2.3 FINANCIAL CONSTRAINTS This section will explore financial constraints such as project financing, risks, lending and capital that can affect housing development in Darebin. These matters are generally beyond the scope of planning policy and cannot be manipulated as they are market driven forces. The discussions will primarily draw on the findings from the Urban Renewal Strategy for High Street and Plenty Road 2011 (URS). There will be a greater emphasis on higher density developments as it is considered that this type of development generally encounters greater financial constraints.

2.3.1 Project Feasibility For most private developers, housing development projects are primarily driven by gains (excluding not-for-profit housing organisations) and a 20 percent profit margin usually serves as a minimum benchmark for projects to be initiated. Whilst there is little scope for local government to influence the feasibility of a project, it can have a role in decreasing financial risk and perceived financial risks by providing planning certainty. Whilst Councils are bound to the requirements of the Act, there are instances where discretion can influence a project’s timeline and hence overall end costs. Most significant projects will undergo a financial feasibility analysis to determine if the project should proceed. Assessments of the planning constraints and perceived planning risks can sometimes serve as a major driver or inhibitor for redevelopment to occur. When there are costs associated with delays in the planning permit process, which can greatly escalate if the matter is taken to VCAT, these costs are ultimately factored into the return (such as the sale price for a dwelling) of the project, which creates tensions with housing affordability. There is scope for Council to contribute to this during the planning scheme amendment stage where certain VPP tools can be introduced to provide a greater level of planning certainty.

2.3.2 Cost Differentials There are significant cost differences of up to 40%18 between what is considered a ‘domestic’ scale development and a ‘commercial’ scale development. Once a given development exceeds a certain building height limit (it is generally accepted that

18 “First Home Ownership – Productivity Commission Inquiry Report”, (2004) – Productivity Commission, Australia (2004).

36 Housing Constraints and Issues Paper residential developments exceeding four storeys19 can be classified as a commercial development) the following additional costs may need to be considered in the overall cost of a project:

- Site allowances - C-bus superannuation fund memberships - Incolink20 long service leave - Redundancy fund membership, and; - A higher standard of amenities for on-site workers

The additional costs highlighted above can significantly increase the total cost of the project.

In tackling housing affordability for people susceptible to and experiencing severe housing stress and homelessness; it is encouraged to locate affordable and social housing developments in highly urbanised areas that have walkable catchments to existing services and public transport infrastructure. In the context of Darebin, these areas generally attract higher land values making low scale residential developments unviable. Medium to higher density developments are considered the more viable alternative in these locations particularly for social and affordable housing. A review of major developments in Darebin over the past 10 years revealed that one and two bedroom units are the dominant products of higher density developments and are considered more suited for social housing recipients21. The additional costs identified above can often serve as a disincentive for affordable and social housing providers when purchasing the aforesaid housing stock.

2.3.3 Land Values The Urban Renewal Strategy for High Street and Plenty Road 2011 identifies that for medium to higher density developments to become financially viable, surrounding land values will need to average approximately $1000 per square metre. This is because the costs associated with constructing medium to high density dwellings

19 The average floor to ceiling height of a residential storey ranges from 2.1 metres to 2.7 metres.

20 A joint enterprise of employer associations and unions in the building and construction industry. http://www.incolink.org.au/Default.aspx

21 The “Rooming House Standards Taskforce – Chairpersons Report” (2009) identifies that low-income singles are the main group of people who experience the most difficulty in purchasing or renting low-cost accommodation.

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(such as apartments) are significantly more expensive compared to detached dwellings, with a cost variance ranging from 80% - 90%22.This cost needs to be offset on the land. Generally higher density living becomes more preferential when competing house prices are too expensive but there are benefits of living in the area, such as proximity to the Central Activities District, existing services, public transport infrastructure and amenities (parks, cafes, retail etc). There is a prevailing assumption that most households are generally attracted to larger (mainly detached) homes, however a recent report by the Grattan Institute23 reveals that although whether the house is detached or not is generally important, locational factors such as being in close proximity to friends and family, services and infrastructure are more important.

The housing market for medium to high density developments are, as discussed in 1.2.1, driven by profit and project feasibility. If these elements are missing then there will be little opportunity for these types of developments to occur.

2.3.4 Project Financing Since the downturn of the property market in the early 1990s and the Global Financial Crisis of late 2008, banks have significantly tightened the control on credit in order to minimise exposure to risk.24,25,26 In the context of Darebin, this may serve as a constraint as the municipality is ranked 5th most disadvantaged in Metropolitan Melbourne.27 There is a correlation between the areas within the municipality that are more susceptible to socio-economic disadvantage and areas where there are concentrations of public housing predominantly in East Reservoir and Preston. Basic property development principles involve a combination of both debt and equity, with greater risk premiums and tighter controls placed on credit for development projects

22 Rawlinsons (2010) Australian Construction Handbook.

23 Kelly, J, F. ‘The housing we’d choose’, Grattan Institute, June 2011 p. 12

24 Lekakis, G 2010, ‘CBA tightens screws on lending’, Herald Sun 9 March, accessed 19 May 2011 http://www.heraldsun.com.au/businessold/cba-tightens-screws-on-lending/story- e6frfh4f-1225838448648.

25 Hass, D, R and Horen, V, N. “The crisis as a wake-up call. Do banks tighten lending standards during a financial crisis”? (2009).

26 Jones Lang Laselle “The Property Market Downturn of 2009: Just Another Market Cycle – or A Whole New Ballgame?” (2009).

27 “Characteristics of Darebin Communities Vulnerable to Social Exclusion”, Darebin City Council (2010).

38 Housing Constraints and Issues Paper in low socio-economic profiled areas as these areas are considered ‘risky’. There are two noticeable issues with this: firstly areas with a lower socio-economic profile will have a higher ‘risk premium’ attached to them which are generally factored into the feasibility of project – these additional costs will be included in the sale price of the completed dwelling. Secondly, low socio-economic profile areas will arguably benefit more from greater private sector interest and investment, such as housing redevelopment and urban renewal projects. Culminating to this issue, due to the perceived risks associated with financing affordable or social housing projects banks have been reluctant to provide financing.28 Irrespective of this trend, there are financiers who are willing to finance social and affordable housing projects based on the concern that for the first time in Australia, there will be an emerging generation of Australians who will be unable to purchase their own home29.

2.3.5 Financial Feasibility Modelling An assessment of major planning permit applications30 undertaken as part of the URS in Darebin reveals that approximately 38% of major applications were approved but never developed. This information may suggest that there are instances when a permit has been granted for a given project but the project is eventually abandoned due to it being unviable.

Though having larger applications undergo a financial feasibility modelling can improve efficient use of staff time and resources, it can potentially undermine housing supply in general and affect affordable and social housing projects in Darebin. As discussed in Section 1.2.4, social and affordable housing projects are considered a risk and financiers are reluctant to provide credit for these types of projects. There is a strong possibility that in undertaking a financial feasibility assessment for a major development, if the social or affordable housing component of the given development is considered a risk, it may be rejected or avoided.

28 Berry, M, Whitehead, C, Williams, P & Yates J, Financing affordable housing: A critical comparative review of the United Kingdom and Australia, AHURI Sydney Research, Issue 84 October 2006.

29 De Blas, A. “Banking on values in affordable housing”, in Housing Works - Australasian Housing Institute, vol. 7, November 2009, pp 8 – 11.

30 It is considered that any projects that exceed (AUD) 3 Million in development cost will be classified as a major development project. This information is obtained via the planning permit application form.

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2.3.6 Land Fragmentation Larger redevelopment projects require large parcels, as identified in the URS a minimum of 1000sqm is required however it is optimal if sites are generally over 1,500sqm as a matter of yield, profit and overall feasibility. As outlined in Section 1.2.3, higher density housing projects are predominant in inner and middle ring suburbs where land values are significantly high, however, these areas are generally characterised by smaller lots (with the exception of industrial properties) as a result of early 20th century settlement patterns31 32. This is particularly evident in the average lot sizes in Darebin where higher density developments are considered financially viable as shown in table 1 below.

Suburb Average Lot Size Northcote 464sqm Thornbury 584sqm Preston 549sqm Fairfield 513sqm

Alphington 606sqm Table 1: Average Lot Sizes in suburbs where higher density developments are viable (Source: Darebin City Council).

Where larger sites are unavailable, developers will need to rely on lot consolidation for larger developments. The process of individually purchasing lots to overcome land fragmentation issues can be very expensive as areas where higher density projects are considered feasible often command significantly higher prices in the housing market. Unanimity amongst land holders can be very difficult and there are situations where different owners may not agree to sell up required land or agree to the kind of development proposed for a particular site, which adds further complexity to the lot consolidation process.

2.3.7 Risk tolerance In the context of Darebin there are some large parcels of land located in strategic areas that are owned by ‘passive land-owners’. These properties are usually

31 Salt, B. 2004, “City and Beach”, The Big Shift, Hardie Grant Books, South Yarra, ch. 2 (29p)

32 Davison G. 1978, “Suburban Dreams and Urban Realities”, The Rise and Fall of Marvellous Melbourne, Melbourne University Press, Carlton. Chapter 7, p.137

40 Housing Constraints and Issues Paper inherited from the family and will likely remain in the family. Often the perceived risks with undertaking a housing redevelopment project, lack of understanding of the planning system and process, and a lack of capital can prevent the redevelopment of these sites. These problems can be further worsened in the breakdown of communication between the land-owners and interested developers due to the negative perception of the development industry33.

2.3.8 The Apartment Market Higher density developments (such as apartments) are predominantly characterised by 1 and 2 bedroom dwellings and that do not cater or appeal to larger households. Research undertaken by Charter Keck Cramer for the URS suggests that the household types,, ‘Young Families (Children under 5 years)’ and ‘Established Families (Children aged 10 – 20)’, have a preference for dwellings that can provide the following amenities:

 Full kitchen  Ensuite and Central Bathroom  Need for space  Preferably two car spaces  Larger living areas  Bedrooms

The abovementioned features are characteristic of low to medium density housing such as detached houses and townhouses. Higher density developments such as apartments can provide these amenities however are not an affordable option for most families. Developers of higher density developments are not inclined to provide 3 bedroom apartments due to the costs associated with its construction, which will need to be covered in property sales. Increasingly as property prices continue to increase in middle ring areas or areas that are well serviced by services and infrastructure it will become increasingly difficult to purchase a property that is suited for the average family (with dependants).

33 Farris, Terrence J. 2001. “The Barriers to Using Urban Infill Development to Achieve Smart Growth,” Housing Policy Debate, Volume 12, Issue I. Fannie Mae Foundation, Clemson University

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2.3.9 Existing Housing Stock Newer estates such as Mount Cooper (Macleod) and Springthorpe (Bundoora) were built in the early 2000’s. As it would be considered unfeasible to redevelop these areas due to the predominantly newer building stock as highlighted in the Urban Renewal Investigation Areas Report 2011, housing opportunities for increased densities will need to be sought in the older parts of these suburbs particularly in and around accessible areas.

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2.4 SOCIAL CONSTRAINTS

This chapter will consider the social barriers to achieving higher density housing and affordable, social, and public housing.

2.4.1 Density Preference Historically, there has been a strong preference for lower density housing as it is entrenched in Australian suburban history34 however the recent report by the Grattan Institute (referred to previously) suggest that this is gradually changing as more households opt for smaller dwellings if it means they can be located near services and infrastructure. Like many other middle-ring municipalities, Darebin is in the midst of change where some households still prefer lower density housing (usually comprised a large detached dwelling set on a generous lot with a front-yard, backyard, garage, three or more bedrooms accompanied by large living areas35 36) whilst others prefer smaller dwellings. As general household size continues to decrease (due to the rise of single person and couples with no dependants households) dwelling size in terms of floor area have shown an increase in size37. As explored by Goodman et al 201038 this trend is prevalent in growth areas where on average, new dwellings have shown a trend in growth in the median floor space of 25 percent, from 132m2 in 1990 to approximately 165m2 in 2007. The growth in dwelling size and general decline in average lot sizes in growth areas has resulted in a reduction in private open space where it is revealed that percentage of site coverage has shown a 62 percent increase from 21 percent in 1991 to 34 percent in 2007. Although it would appear that the traditional Australian home was still being replicated (mainly in the growth areas) the overall decline in private open space highlights a departure from the traditional homes that characterised Australian suburbs in the past.

34 Freestone, R. (2000). ‘Planning, Housing, Gardening: Home as a Garden Suburb’. In P. Troy (Ed.), ‘A History of European Housing in Australia’ (pp. 125-141). Cambridge: Cambridge University Press.

35 Boyd, R. (1987). ‘Australia's Home’ (5 ed.). Carlton: Melbourne University Press.

36 Charter Keck Cramer, Urban Renewal Strategy for High Street and Plenty Road (2011).

37 SGS Economics and Planning ‘Affordable Housing in Context – Foundation Paper no.2’ (2009).

38 Goodman, R, Buxton M, Chhetri, P, Taylor, E and Wood, G. (2010). ‘Planning and characteristics of housing supply in Melbourne’, Australian Housing and Urban Research Institute RMIT Research Centre, Final Report No. 157 November 2010.

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Pushes for increasing housing densities have been argued to be driven by the oil scare of the 1970s and the then government’s self-assessment of how to reduce expenditure on creating new urban infrastructure was the Australian urban form initially questioned. This period drove the idea of urban consolidation39 40.

Darebin is predominantly characterised by detached housing even in key strategic areas such as employment corridors, in and around activity centres, and public transport infrastructure. These areas are considered accessible and provide opportunities to absorb increases in housing development in particular higher density housing and social and affordable housing. This can be challenging for Council to facilitate as it has the objective, role and function to represent the views, interests and needs of the entire community within its municipal district as emphasised under the Local Government Act 1989.

The socio-economic mix of the Darebin population is diverse and so are the needs and expectations of the community. Housing is a challenging issue for Council as the community is made up of not only those who are disadvantaged and are in need of appropriate accommodation but also home to property owners and long term residents with certain expectations of the Council.

There is a general perception within the community that the facilitation of higher density development within existing urban areas will have a negative flow-on effect such as the erosion of existing amenity and liveability of a given area. Whilst there is general consensus that urban consolidation is needed to mitigate social, economic, and environmental issues there is unfortunately a strong belief that it should occur elsewhere. This strong opposition can undermine Local and State Government efforts for improving the cities overall performance as a place to live, work and play.

The 2010 KPMG report ‘Built Environment Meets Parliament – Spotlight on Australia’s Capital Cities’ provides an assessment of existing capital city strategic planning systems and its performance against external indicators such as actual budget alignment, population management, housing affordability for key workers and

39 Frost, L., & Dingel, T. (1995). ‘Australian cities: issues, strategies and policies for urban Australia in the 1990s’ / edited by Patrick Troy. In P. N. Troy (Ed.), ‘Sustaining Suburbia: An Historical Perspective on Australia's Urban Growth’. Cambridge; Melbourne: Cambridge University Press.

40 Newman, P., & Kenworthy, J. (1989). ‘Cities and Automobile Dependence: An International’ Sourcebook. Aldershot: Gower.

44 Housing Constraints and Issues Paper congestion. The capital cities strategic planning frameworks were assessed against the COAG national criteria which include:

1. Integration – the level of integration of the strategic planning system 2. Presence of Plans – existence of a consistent hierarchy of future orientated and publicly available plans 3. Infrastructure – inclusion of nationally significant economic infrastructure 4. Addressing Policy Issues – specifically addressing nationally significant policy issues 5. Emphasis on Networks – consideration and strengthening of the networks between capital cities and other important regions 6. Land Release Policies – land release and balance of infill and Greenfield development 7. Encouraging Investment – identified priorities for investment and policy efforts by Government and the private sector 8. Urban Design – world class urban design and architecture 9. Implementation – effective implementation arrangements and supporting mechanisms

Melbourne was ranked no.1 due to the strong representation of a capital strategic planning system supported by a metropolitan plan, a transport plan, land supply program and the 2010 Housing Strategy. However, whilst there is a strong strategic foundation for guiding the cities development the system is lacking strong implementation, monitoring and reporting mechanisms to achieve current state planning objectives. As a result, Melbourne is ranked no.6 when assessed against the external indicators, or what is actually being delivered in light of the planning frameworks in place.

2.4.2 Social Exclusion and Stigma Since the 1970s Australia has witnessed a decline in the total amount of public housing stock being constructed, with demand significantly outstripping supply This issue has become a major topic in Australian housing debate41 however the amount of social housing stock has experienced growth due to funding from the Rudd government as part of the stimulus package in response to the GFC. There were

41 Howie, W, D. “Public Housing in Australia is in Decline: The Facts Speak for Themselves”, in Housing Works - Australasian Housing Institute, vol. 2, November 2004, pp 8 – 9.

45 Housing Constraints and Issues Paper several factors contributing to the shift in government spending for the construction of public housing however as Dalton (2004) pointed out, there were two occurrences that redirected government focus on the issue: housing affordability and poverty research. It is argued that these two factors served as the drivers for additional public housing construction in the 21st century. During the 1970s, public housing stock experienced gradual decline due to home ownership becoming more accessible and affordable for the majority of Australian families, rendering the need for public housing obsolete. This trend was then followed by poverty researchers suggesting that the majority of public housing tenants were financially capable of surviving in the private rental market, further raising questions on whether public housing was actually needed. The research served as a catalyst for changes to government policy which was then amended to encourage public housing tenants to move into the private rental market. Following this push, the eligibility criteria for public housing became increasingly stringent making it harder for certain households to be entitled for public housing. These were the main factors that lead the shift in government spending on public housing; rather than build more public housing it was perceived to be more financially viable and effective to direct funding towards rent assistance. This shift became increasingly problematic due to stronger than anticipated capital growth in the housing market corresponding in higher rents, surpassing rental assistance programs. Hall (2004)42 suggests that in order to address the considerable housing affordability issues affecting most Australian capital cities, funding and public housing policy needs to be redirected back to increasing public housing stock as witnessed from the 1940s through to the early 1970s. It is suggested that grant funded public housing is approximately 20 – 24 times more efficient than rent assistance programs aimed at mitigating housing affordability issues in Australia.

Governments have now redirected their focus to the provision of additional public housing stock rather than rent assistance programs. The problem is a significant number of public housing stock was sold off during the late 1970s through to early 2000s. The key challenge for state government as a public housing provider is to now increase public housing stock given the ‘sell-off’ of stock witnessed over the past 30 – 40 years. This can be achieved through:

a) Redevelopment of existing public housing estate to maximise yield, or;

42 Hall, J. “Public Housing: Residualisation or Reinvigoration?” in Housing Works - Australasian Housing Institute, vol. 2, November 2004, pp 13 – 16.

46 Housing Constraints and Issues Paper

b) Purchase private land for public housing construction.

There is stigma attached to social, public, and affordable housing. Proposals can be constrained due to the strong community opposition to it.

Social and public housing estates have been generalised by the wider community as generally being problematic. Affordable housing research undertaken by SGS43 shows that when established communities oppose these types of housing developments, it is primarily driven by perceived fears of the future occupants. There is unfounded fear that by allowing public or social housing to be constructed within close proximity to them, personal safety and well being will be jeopardised. Jacobs and Arthurton (2004) point out that fears and concerns primarily revolve around excessive noise, verbal abuse, uncontrolled pets, vandalism, intimidation, harassment and burglary fuelling discrimination and fierce rejection of any form of government driven housing.

A common argument or ‘solution’ put forth by community members who oppose these types of housing developments is to simply locate and concentrate them elsewhere – away from the existing community as to isolate the ‘problem’. There are several issues with this approach as it can polarise and exclude certain individuals from the community. If this approach was taken for all forms of public or social housing, certain areas will become stigmatised. Stigmatisation will conjure undesirable images of a given place as being associated with crime, violence and rife with anti-social behaviour. Households living in these stigmatised areas can become victims of prejudice and subject to additional barriers such as employment, housing and access to credit, as discussed in Section 1.2.4.

By concentrating stigmatised and disadvantaged communities together there is often the effect of further exacerbating the problem. The initial effect stigmatisation has on an area is the fall or stagnation of property prices, which can deter private sector investment resulting in the loss of services, amenities and upgrades to infrastructure as it is not seen as financially viable (refer to Sections 1.2.3 to 1.2.5). The loss of services and infrastructure further contributes to disadvantage, particularly for households that are mobility limited (lack of car ownership and convenient access to

43 SGS Economics and Planning “Affordable Housing in Context – Foundation Paper #2 – Local Action on Affordable Housing” (2009).

47 Housing Constraints and Issues Paper public transport infrastructure). This problem is recognised by all three tiers of government. As a result, emerging models for the redevelopment of public housing estates now often incorporate a certain percentage of private dwelling stock for the private market. This is believed to mitigate or disperse concentrations of disadvantage by ‘mixing’ or ‘diversifying’ the community.

48 Housing Constraints and Issues Paper

3 CONCLUSION

Darebin is a well-established and serviced municipality consisting of opportunity areas that can absorb an increasing population and housing demand. A key housing issue in Darebin is to provide the required density and mix of housing for its future communities. This report has revealed the constraints in achieving the required housing and in particular, higher density developments and social and affordable housing in Darebin.

While the rate of housing development will continue in Darebin, there is an undersupply of affordable and mix of housing located in well serviced areas. The annual increases in housing stock will generally benefit and be accessible to higher income earning households who can afford to purchase a home in Darebin. . This results in the exclusion of socio-economically disadvantaged households who are arguably in greater need of housing from entering the market. While Darebin’s north- south divide has resulted in demographic and socio-economic differences, the south has been observed to enjoy greater access to services and infrastructure resulting in two very different housing markets. As the south continues to gentrify and becomes more affluent it will not only result in the exclusion of lower income earning households, there is also a very strong possibility of some existing households being pushed out.

The Local Government Act 1989 and the Planning and Environment Act 1987 mandates Council to undertake strategic and land-use planning for the municipal district providing Council the opportunity to address the land-use planning related constraints identified in this report. This can be a challenge for Council considering it must be done in a manner that is representative of the views, interests and needs of the community. Darebin’s community is socially and economically diverse and so are the housing requirements and expectations. This can lead to conflict within the community as the housing needs and expectations of the disadvantaged who may experience housing stress can differ to those of higher income households and property owners in the municipality. These are issues that need to be addressed in a manner that involves continuous community involvement and engagement.

The financial constraints identified are generally beyond the scope of local government and Victoria’s planning system; however a planning scheme that is free of constraints and facilitative of housing diversity can improve the timely delivery of a

49 Housing Constraints and Issues Paper range of dwelling types to meet the needs of current and future populations in a more cost effective way. As discussed in this report, there is a shortage of affordable housing not only in Darebin but across the country, a shortage that cannot be handled by the three tiers of government alone. The private development industry accounts for a significant proportion of dwelling constructions in Australia and need to be considered in order to address the affordable housing debate. Public private partnerships need to be considered and a land-use planning system that is facilitative of this can improve the timely delivery of more affordable housing.

Access to existing infrastructure and services need to be considered in planning for Darebin’s housing growth. Whilst a significant proportion of the municipality is considered serviced, the levels of accessibility and serviceability for suburbs south of Bell Street are different to suburbs north of Bell Street. Council needs to recognise this north-south divide in planning for the future housing growth as access to existing assets is a significant policy driver. Whilst there is financial capacity for Council to fund local infrastructural projects such as drainage, bicycle paths and streetscape improvements (among other things), significant projects such as public transport infrastructure upgrades require financial contributions from State and Federal government. Continuous advocacy is required to highlight the need for further upgrades to services and infrastructure, in particular public transport for areas north of Bell Street. The challenge for Council is to demonstrate that the municipality will continue to grow and there will be a cost benefit to the upper tiers of government to further fund infrastructural upgrades in Darebin. This can be difficult considering the many local government areas across Australia that may experience similar issues.

The management of housing growth and demand in Darebin is principally guided by land-use planning however housing in itself is a complex and challenging issue, particularly location, design and overall affordability. A coordinated approach should be adopted by Council which includes integration and collaboration across relevant Council departments to ensure housing is not just a matter of density and location but also it is fundamental to the standard of living and quality of life. Other non-planning related measures that must be considered to facilitate housing development include improvements to accessibility, amenities, employment and infrastructure.

While Council cannot directly mitigate all the constraints identified in this report as it is beyond the scope and capacity of local government, there are opportunities for it to adopt a facilitative and advocacy role to address housing issues that are otherwise

50 Housing Constraints and Issues Paper beyond its scope and levels of jurisdiction. The preparation of the Darebin Housing Strategy will seek to improve the various constraints identified in the report.

51 Housing Constraints and Issues Paper

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