Agenda - Byron Shire Council - NSW Government

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BYRON SHIRE COUNCIL ORDINARY MEETING 9 MAY 2013 (94) Report 5 10 15 20 25 30 35 40 45 50 55 In March Council considered the recommendations of the 21 February meeting of the Water, Waste and Sewer Advisory Committee and one of the resolutions was in part: 13-134 Resolved: 3. That the Water and Sewer S64 Development Charging Plans be amended to include a clause on deferred and periodic payments as per the S94 Plan and that lessees be encouraged to investigate s64 charges before taking up a lease, and be encouraged to ask landlords to contribute (relates to Committee Recommendation WW&S 4.3). 4. That Council receive a report on the option of implementing a policy mechanism for lessee change of use development applications that would allow delayed timing for obtaining a certificate of compliance pursuant to legislation and ensure that any consent would lapse if the certificate is not obtained within the timeframe. The purpose of this report is to address point 4 of the resolution and present to Council an option for lessee change of use development applications. Overview Section 64 headworks charges for water supply and sewerage are substantial. In some parts of Byron Shire, an Equivalent Tenement (ET) of demand is worth nearly $30,000 in combined charges. S64 charges apply to all DA's where there is a demand (or increasing demand) on the infrastructure. The effect of S64 charges is most dramatic on Lessee DA's where a proposed change of use is assessed as increasing the demand/ load and therefore attracts associated S64 charges. In most cases start up businesses have poor cash flow, poor access to loans and even if the charges can be paid, the tenant faces the very real risk that the large investment in the charges is completely lost if the business fails for whatever reason. It is important to note from the outset that the Bulk Water component of the S64 charge is a matter for Rous Water who have their own policy. Byron Shire Council only collects the Bulk Water S64 charge on behalf of Rous Water. S64s are calculated on the estimated water and sewerage load from a DA proposal. The DA approval and any paid S64 ET (equivalent tenement) credit is attached to the property. The ET credits influences potential future use and where the credit is substantial can certainly add value to the property. Potential way forward Lessee DAs lodged with owners consent is the category of development applications where the impact of S64 charges is most acutely felt and where Council has been approached to develop some form of flexibility that would assist in the payment of applicable S64 charges. When a lessee is proposing a change of use to a property that involves a higher assessed water and sewerage load, the associated S64 charges can be significant. The lessee may well be attempting to establish a business, may have limited cash flow, and may have limited access to a bank guarantee. As stated above, the DA approval and any paid S64 ET (equivalent tenement) credit is attached to the property. If a Lessee gains DA approval, pays the S64 charges and subsequently fails for whatever reason, the approval and ET credit stays with the property and property owner. Ordinary Meeting Agenda 09/05/13
BYRON SHIRE COUNCIL ORDINARY MEETING 9 MAY 2013 (95) 5 10 Legal advice has confirmed that a DA approval and any associated ET credit cannot be legally attached to the lessee business; it can only be attached to the property. The advice also confirms that no conditions can be attached to a Section 307 certificate such that an ET credit lapses with non payment (see Annexure 13(a)). It appears that the most effective approach to provide flexibility is to condition the DA consent. This would be a period of time granted in which a proponent a can obtain a 307 certificate. Payment could be made by installments throughout the period (probably a good thing) based on a separate agreement (see Annexure 13(b)). The most viable way of incorporating this approach into policy is to modify Council’s existing Local Approvals Policy. Implications of a change to Policy 15 20 25 30 35 40 45 50 55 Council would need to set out the consequences of not complying with the consent. The key consequences are: the development would be illegal and subject to regulatory action. Council would not recognize the ET entitlement for any future development because the S64 charge associated with the ET credit was not paid. Whilst regulatory action is permissible it may not be feasible due to a lack of resources and or not efficient due to the costs of attempting to enforce compliance. A property with an approved DA for change of use maybe sold before a section 307 certificate is obtained or potentially leased to a new tenant. In both cases the new owner or tenant maybe unaware that whilst an approved DA is in place the necessary certificate of compliance has not been obtained and the associated section 64 charges have not been paid. There are a number of key effects of this circumstance: The new owner or tenants are unwittingly placed in conflict with Council. There is the potential for further change of use with no reference to Council. Council will be forced to take costly regulatory action. Council may never recover the required section 64 charges but has facilitated the increased load on the water and sewerage system via an approved DA but with the provision of a delayed compliance certificate. Council will need to keep a strong administrative approach and deploy a reminder system for the proponent and also find and deploy a warning mechanism for potential property buyers regarding any illegal status and nonpayment of charges. Conclusion Potential economic and social benefits associated with payment flexibility of S64 charges will come with the increased risk and cost of Council needing to take regulatory action to recover charges where payment does not occur. However, it is also possible a flexible approach will increase approved activity and hence S64 charge cash flow and this would help offset the costs and losses associated with the increased risk of non payment. The actual implications of a change in policy can only be established over time. In this case the value of the charges and the costs of implementation are substantial, as such it is recommended that Council make the change to policy but review the outcomes in two years time. Financial Implications The financial implications of the proposed change to the Local Approvals Policy to allow a period of time to be granted in which a proponent a can obtain a 307 certificate, cannot be accurately quantified. As detailed above there are potential positive financial outcomes and some potential Ordinary Meeting Agenda 09/05/13
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Agenda - Byron Shire Council - NSW Government

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