Level 25, 133 Castlereagh Street NSW 2000 www.stockland.com

28 March 2019

Ms Lisa Honan A/Director, Strategic Infrastructure Planning and Delivery NSW Department of Planning and Environment PO Box 39 Sydney NSW 2001

Subject: Submission to the NSW Department of Planning and Environment on the draft Special Infrastructure Contribution (SIC) Determination

Dear Ms Honan,

Thank you for the opportunity to provide this submission to the draft Hunter Region Special Infrastructure Contribution (SIC) Determination.

Stockland has over $8 billion invested across NSW, with a number of assets and interests in the Hunter Region including shopping centre in North-West Lake Macquarie, shopping centre at East Maitland and our McKeachie’s Run residential community at Aberglasslyn. We have a proud history of partnering with Government for over 65 years, and we welcome the Department’s focus on enabling infrastructure to unlock housing supply in the Hunter Region.

We want to recognise from the outset the need and importance of the SIC, a vital component to delivering the necessary infrastructure to support the Hunter Region and providing long term certainty for the property industry in its investment in this region. The implementation of the SIC has a direct impact on Stockland owned land in Anambah, an area identified by the Department and Maitland Council as an Urban Release Area. Our feedback highlights potential concerns which may impact on development feasibility and viability, which we highlight for the Departments consideration.

We acknowledge the work that has been undertaken to review the SIC and provide the following feedback for your consideration, which we believe will further strengthen the SIC and ensure it supports the State’s broader planning and affordability priorities.

Comment 1. Stockland supports the Infrastructure Schedule items which are critical to supporting the delivery of residential growth areas.

Stockland is supportive of the inclusion of the following infrastructure items: Infrastructure Item Project Cost Recoverable New Ambulance Station at Rutherford $0.3 million New Western Link Road $5.5 million Upgrade Anambah Road $10.0 million Upgrade at Lochinvar $41.4 million Upgrade New England Highway (Rutherford to Lochinvar) $16.2 million Upgrade New England Highway (Anambah Road to Kyle Street) $1.7 million

The new ambulance station is appropriately located and will not only serve Anambah but also the surrounding growth areas already delivering homes in Rutherford and Lochinvar.

Stockland Corporation Ltd ABN 43 00 181 733 1

The upgrade of Anambah Road and the provision of a new Western Link Road are priority items to provide direct access to the Anambah Urban Release Area (AURA). The upgrades planned for the New England Highway are required to support the AURA as well as the release areas in Lochinvar and Rutherford. It is therefore appropriate that upgrades to the New England Highway are captured in the SIC and shared across the release areas.

These items are aligned with the Greater Newcastle Metropolitan Plan, Action 14.2 to plan for a changing climate, Action 17.1 delivery of state infrastructure to support housing release areas. The items are also consistent with the delivery of Action 17.2 align plans for local infrastructure supporting housing release areas, and Action 17.3 identifying priority housing release areas and aligning infrastructure delivery.

- Stockland is supportive of these infrastructure items because they are critical items which will unlock the AURA and support the growth of this community. There is a correlation between these infrastructure items and the planned growth at Anambah, which has been recognised as a key residential land release in the Greater Newcastle Metropolitan Plan, as well as to support surrounding release areas.

Comment 2. Stockland supports the proposed transitional arrangements and would suggest DPE work with Council to ensure Section 7.11 Contributions are aligned to similar arrangements.

Urban Release Areas such as Anambah that are in planning stages were financially planned for some time ago. Feasibility of development was therefore calculated at the time of sale.

- The proposed SIC transitional arrangements phase the contribution rate in over four years which we are supportive of.

There is a long lead time for projects from initial purchase to feasibility assessment, design, planning assessment and approvals. In particular, a large part of this time is out of the control of the developer, and is with Council from the time of lodgement to determination.

- Transitional arrangements may consider applying certain rates to development at the point the application is lodged rather than approved. This would acknowledge the current planning assessment timeframes which can occur.

Finally, it is critical that the implementation of the SIC be aligned to implementation of associated local contributions. This is because the cost of the SIC will always inevitably sit alongside the section 7.11 contributions and must be considered concurrently for development feasibility.

- We urge the Department to work collaboratively with councils to ensure local contribution plans complement the SIC and are also structured with transitional arrangements and feasibility testing. This is critical to ensuring that the ambitions of the Hunter Regional Plan and Greater Newcastle Metropolitan Plan are realised, allowing the market time to adjust and absorb the new policy without a shock to market.

Comment 3. Overall contribution increases present a delivery risk for Public Domain and Built Form Design

Whilst the transitional arrangements for the SIC are known, local contributions for planned release areas are not. Therefore the costs of additional contributions will need to be accounted for in development that will be provided in the near-term.

Without a way to account for the near-term implications, the impact of this will mean development expenditure will be reduced in other areas to cover the additional costs. This may result in reduced spend on built form design, construction materials and public domain elements, as they are one of the few areas of development that are not entirely fixed. This is the most cost efficient way of recovering costs without passing the full costs on to the purchaser.

This is a risk that requires further examination, because it is at odds with other government objectives including the Better Places policy and the Greener Places policy. These new policies aim to encourage better design and public domain, especially in our growing regional communities.

Stockland Corporation Ltd ABN 43 00 181 733 2

- Again, Stockland encourages further analysis is undertaken to consider the cumulative effects of the SIC on broader policy and housing delivery objectives to ensure there is no net loss to the economy or community

Comment 4. The SIC, as proposed, needs minor amendments to ensure it supports appropriate housing densities.

The Greater Newcastle Metropolitan Plan requires local councils to deliver a minimum residential dwelling density of 15 dwellings per hectare in release areas, with 25% of lots capable of providing small lot or multi-dwelling housing types. After a detailed breakdown and feasibility analysis, we believe that achieving these strategic plan targets are at risk and at present, unfeasible.

In practice, the densities across a release area vary significantly, and therefore the new approach may result in a larger increase in costs for some development types such as small lot housing.

There is a risk that the cumulative effect of the SIC and local contributions will act as a barrier to the above strategic planning actions and, in some circumstances unintentionally discouraging density close to transport and local centres or increasing the cost of entry level housing and limiting product diversity.

We know this will not be the intent of the new SIC and so would offer two potential alternative approaches, both of which propose a sliding scale with different SIC rates for different dwelling types or density bands:

1. Breakup the proposed SIC rate into various categories of development, and adjust the fixed rate accordingly (for example, different SIC rates of different dwelling types or density bands)

2. Within the sliding scale, apply fixed SIC rate for certain dwelling types or density bands, but move to a ‘per hectare of net developable area’ SIC rate in key areas such as those within walkable catchments of public transport and town centres.

We believe this will facilitate a strong and transparent SIC that supports the Government’s infrastructure and housing vision for this region. The proposed sliding scale would be intended to maintain the quantum of contributions required to be collected, to ensure all the items can and will be delivered, but adjusts the rate depending on development type taking into account viability.

Comment 5. The SIC, as proposed, needs minor amendments to ensure it aligns with the Government’s broader affordability agenda

Greenfield release areas in the Hunter Region have an important role in providing dwellings for first home buyers and homes at a price point that ensures families have access to affordable dwellings.

The proposed ‘per dwelling/lot’ contribution approach, without amendment, may unintentionally restrict the supply of affordable dwellings. Whilst we acknowledge the market itself will indicate what buyers are willing to pay for, the costs of delivering dwellings is likely to increase. Product size and density are a major factor in providing an affordable product. A per dwelling rate does not incentivise small lot housing or alternative typologies and therefore does not make efficient use of land.

- We would recommend that further analysis and additional feasibility modelling is undertaken to consider the cumulative effects of the SIC (alongside local contributions) on broader policy and housing delivery objectives to ensure there is no net loss to the economy or community. We would be happy to share our modelling to assist.

Comment 6. Industry and Community seek greater transparency in the collection and sharing of information about SIC moneys

Stockland Corporation Ltd ABN 43 00 181 733 3 We encourage the Department to share and provide open data about SIC contributions. Currently, limited information is available publically about the amount of contributions collected, spent, what items have been delivered, and how many credits may exist. Transparency in the collection and sharing of this information would be helpful to both the development industry, the community, and to Government in communicating about the complexities of infrastructure delivery.

Summary

Stockland supports the provision of essential infrastructure in the Hunter Region and we recognise that the SIC is vital to achieving this. We would suggest that aspects of the proposed SIC require additional consideration and refinement, in particular ensuring local contributions are aligned to the SIC transitional arrangements to avoid unintentionally impacting the supply of affordable housing and to meet the Government’s long term vision for Greater Newcastle and the Hunter Region.

Thank you again for the opportunity to provide this submission. We would be happy to provide further material or meet with you to continue discussions. If you have any questions please contact Dean Hosking, NSW Planning Manager on 9035 3536 or [email protected].

Yours Sincerely,

Richard Rhydderch General Manager, Stockland Communities Stockland

Stockland Corporation Ltd ABN 43 00 181 733 4