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Housing/Density Targets and Other Policy Tools - Background Research HOUSING/DENSITY TARGETS AND OTHER POLICY TOOLS - BACKGROUND RESEARCH FINAL REPORT Prepared for JULY 2019 Infrastructure Victoria © SGS Economics and Planning Pty Ltd 2019 This report has been prepared for Infrastructure Victoria. SGS Economics and Planning has taken all due care in the preparation of this report. However, SGS and its associated consultants are not liable to any person or entity for any damage or loss that has occurred, or may occur, in relation to that person or entity taking or not taking action in respect of any representation, statement, opinion or advice referred to herein. SGS Economics and Planning Pty Ltd ACN 007 437 729 www.sgsep.com.au Offices in Canberra, Hobart, Melbourne, Sydney 190257 Housing Targets review Final report 20190720 TABLE OF CONTENTS EXECUTIVE SUMMARY III 1. INTRODUCTION 1 1.1 Study context 1 1.2 Project purpose 1 1.3 Method and approach 2 2. HOUSING PLANNING CONTEXT 3 2.1 Metropolitan policy evolution 3 2.2 Current Local Government approaches to planning for housing 8 2.3 Regional Victoria 12 3. CASE STUDIES - TARGETS IN OTHER JURISDICTIONS 13 3.1 Sydney 13 3.2 New York 17 3.3 Toronto 18 3.4 London 20 3.5 Summary and implications 20 4. CONCEPTUAL EVALUATION 22 4.1 Risks and advantages 22 4.2 Evaluation 23 5. OPTIONS FOR HOUSING TARGETS 24 5.1 Introduction 24 5.2 Scope of targets 25 5.3 Summary 31 6. OTHER OPTIONS 33 6.1 Targets for specific sites 33 6.2 Capacity building 33 6.3 Incentivising development via financial structures 34 6.4 Changing Planning controls 34 6.5 Development contributions to fund local infrastructure 34 7. SUMMARY AND CONCLUSIONS 37 7.1 Key conclusions 37 7.2 Further research 38 APPENDIX – LIVEABLE YARRA CASE STUDY 40 Housing/Density Targets and other policy tools - background research i LIST OF FIGURES FIGURE 1: MARIBYRNONG HOUSING FRAMEWORK 9 FIGURE 2. COMPONENTS OF VIF POPULATION GROWTH (VICTORIA) 12 FIGURE 3: SYDNEY HOUSING TARGETS 2016–2036 15 FIGURE 4: GREATER SYDNEY HISTORIC AND FUTURE HOUSING SUPPLY 16 FIGURE 5 NEW HOUSING MARKETPLACE PLAN FISCAL YEAR STARTS 2004-2013 18 FIGURE 6: SUMMARY OF HOUSING TARGET DEVELOPMENT PROCESS 31 FIGURE 7: TYPES OF DEVELOPMENT CONTRIBUTION 35 LIST OF TABLES TABLE 1: POTENTIAL ADVANTAGES AND RISKS OF HOUSING TARGETS 22 TABLE 2: EVALUATION OF HOUSING CAPACITY AND TARGETS 23 TABLE 3. EVOLUTION OF POPULATION PROJECTIONS FOR MELBOURNE 24 TABLE 4: HOUSING TARGET ELEMENTS 26 TABLE 5: ASSESSMENT OF APPROACH OPTIONS 29 Housing/Density Targets and other policy tools - background research ii EXECUTIVE SUMMARY Ensuring supply of the right type of housing, in the right locations across a city provides housing choice. It can also support efficient use of land and infrastructure, by encouraging development in areas with underused infrastructure capacity. In Melbourne, the issues planning seeks to address have changed as the city has grown, and society’s expectations have evolved. This has seen increasing consideration given to the environmental and economic outcomes of the city’s structure, resulting in an increased emphasis on planning for housing growth in the established parts of the city (particularly in locations with good access to jobs and services) to limit the outward expansion of the city’s footprint. The planning and delivery of housing in existing areas is inherently more complex and contested. The views and aspirations of the existing community need to be considered, and in many cases, there is resistance to accommodating additional growth. State Government has limited levers to influence how, where and when housing development happens. Metropolitan strategic planning is an important tool. Other tools such as major infrastructure investment, the Urban Growth Boundary and statutory planning instruments also influence housing outcomes. Councils’ influence on how and where housing development occurs, is primarily through undertaking strategic planning and developing local policy directions. These inform the application of planning controls and decision making regarding the use and development of land. Local planning for housing is generally based on policy neutral projections of demand (eg Victoria in Future population projections). Some strategies and planning frameworks provide a clear approach to accommodating anticipated demand, underpinned by robust analysis of capacity and feasibility. Others have general principles which don’t provide clarity on preferred outcomes for particular areas. Across metropolitan Melbourne there is significant variation in Council approaches to strategic planning for housing, and there is no mechanism to ensure that, at an aggregate level, planning will provide sufficient housing supply across the city. In terms of housing supply, there are locations in Melbourne with good infrastructure which are not KEY DEFINITIONS accommodating significant housing growth. This Population and housing projections: suggests alternative approaches are required to the aggregate level of growth that is planning for housing, and engaging with the anticipated and, in most cases, a community, if the objectives established in Plan spatial distribution of where this Melbourne are to be achieved. growth is anticipated to occur. The challenges of planning for, and delivering, Housing targets: the quantum of housing in established parts of the city are not dwellings which need to be unique to Melbourne, many other cities have faced similar challenges in the past few decades. Several accommodated in a particular area* cities have implemented targets to provide clearer Housing capacity: the quantum of expectations of growth. No robust evaluations of dwellings which an area can these approaches were carried out as part of the accommodate research to inform this paper. The continued *Noting that in Section 5.2 the use of capacity as a refinement of the targets approach in NSW target is also identified suggests that stakeholders see value in the approach. Overall, the experience in NSW suggests Housing/Density Targets and other policy tools - background research iii there are benefits in setting housing targets, but they need to be supported by analysis and planning to be effective. The case studies also indicate there are a range of approaches to negotiating and setting targets. Sydney, Toronto and London have all set housing targets for local government areas and have a similar approach in setting targets. A New York case study provides an alternative approach to housing targets; government leading the financing and construction of significant amounts of housing. There are a range of considerations for the format, content and approach for setting targets. If targets are evidence based, and negotiated with council and the community, they could deliver a range of benefits: ▪ Ensure a consistent approach to planning for housing ▪ Support optimal or improved urban outcomes across a range of indicators by ensuring housing is being delivered in the right locations ▪ Ensure the aggregate level of housing demand is being planned for, contributing to improved housing supply and choice ▪ Housing affordability ▪ Better more efficient housing market Most Councils prepare local housing strategies to provide clarity regarding how an area will accommodate its anticipated growth. Although variable in scope and approach, if prepared using a robust evidence-based approach, with appropriate community engagement, these strategies can deliver a range of benefits, including ▪ Providing certainty to the development sector regarding expectations in specific areas ▪ Potentially resulting in less conflict through the planning system, as it is clear where growth can be accommodated ▪ Providing the community with an understanding of the factors affecting growth, awareness of the trade-offs involved in planning for anticipated growth as well as input into planning for additional infrastructure. While these are important benefits, there is currently no mechanism to ensure that local housing strategies, collectively, will provide the scale of growth that is projected for the metropolitan area, or, that the distribution of growth that is being planned for will deliver optimal outcomes. Setting local housing targets, which consider these two elements (overall scale of growth, and optimal urban structure/ distribution of growth) would provide additional benefits to local and state government, as well as local communities. This would allow more coordinated planning for infrastructure, and potentially a more effective metropolitan housing market, in addition to the benefits of preparing a local housing strategy. In the UK, local authorities in London are encouraged to plan for housing through incentives with negative consequences if they don’t comply. The State government role in facilitating this outcome includes: ▪ Provide the vision and policy regarding urban structure/ settlement patterns, and policy principles regarding appropriate locations for housing ▪ Overseeing the development of a clear and consistent evidence base, to inform targets, and subsequent local planning ▪ Coordinating planning for urban renewal, including Growth Compact approaches ▪ Coordinating regional collaborations in planning for housing ▪ Providing advice, guidance and support for preparing housing strategies in a consistent manner across the city ▪ Delivering and coordinating infrastructure provision that supports and responds to housing and population growth. Housing/Density Targets and other policy tools - background research iv It should be noted that while this scope
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