Supplementary Agenda of Council Meeting

Council Meeting

28 March 2017

Item No: C0317 Item 3

Subject: ADOPTION OF AFFORDABLE HOUSING POLICY FOLLOWING PUBLIC EXHIBITION

File Ref: 16/5981/27554.17

Prepared By: Jon Atkins - Affordable Housing Officer

Authorised By: Erla Ronan - Group Manager Community Services and Culture

SUMMARY

It is now widely recognised that there is a major shortfall of affordable housing in most cities and many regional and rural communities across Australia. The Inner West Council local government area (LGA) is no exception in this regard. It is also suffering from a shortfall of affordable housing. Research commissioned by Council reveals a large, disproportionate and growing number of local people in housing stress. This research shows that the market is not providing affordable housing for the vast majority of very low, low and moderate income households in the LGA. Nor is the market replacing existing housing stock lost through gentrification and redevelopment that is affordable to these groups.

These findings provide clear justification for the Inner West Council to actively seek to increase the supply of affordable housing through its planning instruments and policies. Not only is this in keeping with Council’s legislative obligations e.g. Object 5(a)(viii) of the Environmental Planning and Assessment Act 1979 (NSW) relating to ‘the maintenance and provision of affordable housing’, but it is also in accordance with the former councils’ affordable housing policies and strategies. In order to contribute to the goal of achieving an increase in affordability for the target groups identified in the Policy, the strategy recommends stronger intervention through the planning system in the form of mechanisms to capture an equitable share of land value uplift, together with mandatory contributions or inclusionary zoning in larger development sites within the LGA and in major State redevelopment projects.

This report presents the feedback and submissions received by Council during the public exhibition period and recommends that Council adopts the Affordable Housing Policy and the Position Paper: Best Practice in Value Capture as provided in ATTACHMENT 1 and ATTACHMENT 2.

RECOMMENDATION

THAT Council:

1. Adopts the Affordable Housing Policy and the Position Paper: Best Practice in Value Capture; and

2. Submits the following recommended notice of motion to the National General Assembly (NGA) of Local Government (18-21 June 2017) to be held in Canberra, namely that the Federal Government give urgent consideration to measures to improve housing affordability in areas effected by high levels of housing stress such as Sydney's Inner West, including taxation and other non-supply side mechanisms that are currently inadequately utilised in initiatives to improve housing affordability.

BACKGROUND

In early 2016 it was evident that State urban renewal projects, together with major planning proposals within the Inner West LGA, had the capacity to generate affordable housing on a reasonably significant scale through inclusionary zoning measures. Given the development pipeline, combined with the imperative for Council to lobby (a) the State government with respect to proposed urban renewal projects and (b) the Greater Sydney Commission during its preparation of the draft District Plans at the time, it was considered urgent to develop an affordable housing policy based upon a credible evidence base.

Consequently Judith Stubbs and Associates were commissioned to prepare an Affordable Housing Policy for Inner West Council. A Background Paper (ATTACHMENT 3) and a Position Paper on Best Practice in Value Capture were produced to provide a land value capture model and evidence base for the Policy. While originally focused on the former LGA of Marrickville, following the amalgamation on 12 May 2016, the research was extended to include data and modelling from the former LGAs of Ashfield and Leichhardt.

DISCUSSION

Key findings of the research underpinning the Policy include the following:

· The Inner West LGA has experienced some of the most rapid real increases in housing prices (rental and purchase) over the past decade, with accelerating trends in recent years. Even the lowest priced strata dwellings are no longer affordable to very low and low income households, and are generally affordable only to the upper end of the moderate income band.

· This is leading to serious impacts on the social and economic fabric of the local community:

o A large, disproportionate and growing number of local people are in housing stress, and sacrificing basic necessities to pay for their housing costs;

o There is a considerable displacement of historical populations through ongoing gentrification and non-replacement of affordable and lower cost housing; and

o There are very high current and projected levels of unmet need for affordable housing for low income emergency and service sector workers, as well as for more vulnerable groups such as aged pensioners and people with a disability.

The socio-economic research strongly indicates that virtually no new housing constructed in the future will be affordable to any very low or low income households, or to moderate income families, without strong intervention through the planning system to capture a reasonable share of land value uplift. Importantly, the economic modelling indicates that there will be significant land value uplift associated with rezoning across the LGA, particularly in larger brownfield sites and State urban renewal projects. Capturing a share of land value uplift before rezoning occurs is reasonable and feasible. It is important to stress that this is not a tax. Rather, it is a mechanism for capturing a reasonable share of the unearned increment in land value uplift created through the planning actions of councils and the State government.

The Policy contends that such value can be captured through voluntary planning agreements negotiated prior to rezoning (voluntary contributions) or through State Government allowing Council to be included under the provisions of State Environmental Policy No 70 (Affordable Housing) (mandatory contributions). Each of these mechanisms is addressed in the Policy. Feasible levels of benefit capture in relation to variations to height and floor space ratio (FSR) are also included in the Policy. The Policy also acknowledges that proposals to amend or exceed planning controls under a planning agreement will need to demonstrate that they have merit in their own right, prior to considering any contribution for a public purpose including affordable housing. As well, the evidence base for the Policy indicates that the implementation of value capture through the method of calculation recommended will not adversely impact on development feasibility and takes into account normal development profit margins.

AFFORDABLE HOUSING TARGETS

It is important to emphasise that a primary objective of the Policy is to determine feasible affordable housing contributions in relation to redevelopment costs across the local government area. Recommending certain density levels by postcode was not part of the Policy’s purpose. Rather it is Council’s existing LEPs associated with the former councils of Ashfield, Marrickville and Leichhardt that set out both the aims of local environmental planning provisions for land as well as the kinds of redevelopment and densities permitted within the LGA. In addition, variations to existing planning controls is a matter for Council to determine in keeping with local environmental planning provisions and identified local heritage values.

In keeping with this primary objective, the Policy establishes that Mandatory Affordable Housing Contributions will apply in the case of a proposed rezoning or amendment to planning controls that Council determines will allow for additional density within a site or precinct. Mandatory contributions will apply to all new release areas, brownfield and infill sites, and major private and public redevelopments, including on State government land and in State urban renewal precincts, including zones within the Parramatta Road Urban Transformation Strategy and the Sydenham to Bankstown Urban Renewal Corridor that fall within Council’s boundaries. With respect to Mandatory Affordable Housing Contributions, Council’s share of land value uplift will be taken as 15% of Gross Floor Area, both residential and commercial, of the development for development projects with a Gross Floor Area of 1,700sqm or greater, or where a development results in 20 or more dwellings. The rate of contributions reflects the relatively high land value uplift associated with inner city renewal areas amid rapid gentrification.

In addition, Council has determined that the Bays Precinct will be subject to a 30% Affordable Housing Contribution, subject to further feasibility analysis. (Refer to pages 11, 12, 17 and 18 of the Policy).

EXHIBITION PERIOD AND PUBLIC SUBMISSIONS

The exhibition period for the Affordable Housing Policy started on 11 December 2016 and ended on 13 February 2017. A total of 29 submissions were received during the exhibition period. An additional four submissions were received up until 14 March 2017. Of all 33 submissions received, 79% supported the Policy while 21% did not support the Policy.

Council thanks all individuals, groups and stakeholders who lodged submissions on the Policy. A wide range of constructive views, queries and recommendations were received and these have been considered during the preparation of the Policy’s final draft.

RESPONSES TO PUBLIC SUBMISSIONS

The document Report on Public Submissions (ATTACHMENT 4) provides responses to observations, concerns and recommendations contained in the 33 submissions. Separate submissions and attachments submitted to Council are at ATTACHMENT 5. Below is a sample of these key observations, concerns and recommendations:

Supportive of the Policy (79%)	Not Supportive of the Policy (21%)
“This is an essential policy for Council.”	“There needs to be a clearer definition and evidence of hardship”
“There is a need for diversity in a healthy, ethical and vibrant community.”	By “mentioning 6 and 14 storeys … in the Haberfield, it is an acknowledgement that such (developments) might be permitted”.
The Policy “is highly relevant for the rapid price escalations taking place in both the housing purchase and rental markets across the inner west.”	“The real issue is declining home ownership rates which this policy fails to address.”
“I support the affordable housing targets but would like to see them even higher.”	“The council’s proposed affordable housing targets should be reduced and not exceed the recommended 5-10 percent target.”
“Council needs a commitment to provide affordable housing. Notably to single parents who work in the local area.”	The Policy “considers Redfern-type 14-storey towers for places like Dulwich Hill which is entirely out of character and inappropriate.”
The policy “is too narrow in that adopts no position on the taxation system” e.g “capital gains taxation and the removal of subsidies such as negative gearing.”	“If Council is to truly represent the views of residents, consultation on issues of such importance must be authentic.”
“(W)ell designed affordable housing and plenty of green space is essential if our community is to thrive.”	“Council should be lobbying the State and Federal governments to undertake other measures to ensure affordable housing and discourage the speculative property investment which is leading to unchecked population growth.”
The Policy contributes “to a socially richer and more diverse community, as well as maintaining housing opportunities for vulnerable groups and workers in essential/community sectors.”	“If the 15% target is adopted, then by the council's own words, there is only one known urban form outcome for the suburb - 14 storey towers in current low density streets. We consider any affordable housing benefits gained from this outcome to be significantly outweighed by the permanent destruction of the area's history, character and community.”
The Policy “should apply for medium and small developments also.”	“(T)he council could lobby government to extend its powers and the scope of this policy in regard to existing housing.”
“I support, but am also conscious of young families like my own, who desire to remain in the area, but not in a unit, rather a home.”	“Overall, the draft policy adopts only supply-side policies to support housing affordability, but not policies to reduce demand or change broader policy settings.”
“We need options and affordable decent places to keep this area vibrant and liveable and retain sense of community.”	The “policy will be counterproductive in the supply of affordable housing. It will be a burden on developers and land owners for the reasons stated and will inevitably lead to a loss of employment generating land.”
The Policy requires “a clearer outline of its affordable housing targets.”
“The Federation is pleased to see that the IWC focus on measures to increase the supply of affordable rental housing, have recognised the need to include essential workers on moderate incomes in the households who should be assisted and have underpinned their policy by sound research.”

SUPPLEMENTARY STRATEGIES AND ACTIONS

On 6 December 2016, Council passed a resolution endorsing the draft Affordable Housing Policy and the Position Paper: Best Practice in Value Capture. Item 7 of this resolution commits Council to preparing a “5-10 year housing action plan to implement the Affordable Housing Policy (AHP) based on the Policy’s background data and Best Practice in Value Capture position paper, and drawing on existing Council research and plans.” Leichhardt Council’s Housing Action Plan 2016 -2025 forms an essential part of existing research and plans. ATTACHMENT 6 Supplementary Strategies and Actions provides an assessment of all actions contained in former Leichhardt Council’s Housing Action Plan.

FINANCIAL IMPLICATIONS

The current Affordable Housing Officer (AHO) was employed on a temporary basis by Marrickville Council for two days a week for a two year period. The amalgamation has resulted in a considerable expansion of this officer’s workload as the position’s responsibilities for policy and program development related to affordable housing, boarding houses, management of Council’s affordable housing units and homelessness now covers the Inner West Council LGA. Any request for additional funds that have resulted in increased costs relating to the development of the Affordable Housing Strategy or Affordable Housing Action Plan for this financial year will be included as a part of the next Quarterly Budget Review Statement. Any future year budget adjustments relating to resourcing will be presented as a part of the Affordable Housing Action Plan.

OTHER STAFF COMMENTS

The development of this Policy has involved ongoing consultation and input from a range of staff across the Inner West Council.

PUBLIC CONSULTATION

The public were invited to make submissions on the Policy via Council’s online submissions form during the public exhibition period. Along with this form, access to the three documents comprising the Policy as well as an outline of the Policy’s rationale were made available on Council’s ‘Have Your Say’ webpage. During the exhibition period, the webpage received a total of 676 visits while document downloads totalled 300. A media release about the Policy being on public exhibition was issued on 16 December 2016. Council also advertised the exhibition period in its eNews editions between December 2016 and February 2017. A presentation on the Policy was made by consultant, Dr Judith Stubbs, to a Joint Local Representation Advisory Committee (LRAC) meeting on 20 September 2016. Various inquiries about the Policy from residents, developers and stakeholders were also responded to by the Affordable Housing Officer and Council’s Consultant during and after the public exhibition period.

On 22 March 2017, Council officers consulted with Unions NSW regarding the Policy’s reference to (a) ‘key workers’ and (b) rent setting of Council’s affordable housing dwellings. Rather than being precisely defined in the Policy, the term ‘key workers’ was used as a generic descriptor of people in the categories of childcare, aged services, health care, tourism, hospitality and emergency services. To avoid any exclusivity with respect to employment categories, the term ‘very low, low and moderate income earners’ has been substituted for ‘key workers’. In addition, in relation to concerns expressed about the income eligibility limits for Council’s affordable housing dwellings, it was pointed out that rents need to comply with the State Environmental Planning Policy (Affordable Rental Housing) 2009.

CONCLUSION

As indicated above, the substantial evidence showing a growing number of local people in housing stress together with current and projected levels of unmet need for affordable housing, provides a significant evidence base to justify Council actively seeking an increase in the supply of affordable housing. The Affordable Housing Policy’s support for stronger interventions in the form of value capture, inclusionary zoning and development partnerships, offers Council the best means of increasing housing affordability for very low to moderate income households in the community.

ATTACHMENTS

1.⇩	Attachment 1 Inner West Council Affordable Housing Policy
2.⇩	Attachment 2 Best Practice in Value Capture
3.⇩	Attachment 3 Background Paper Affordable Housing Policy
4.⇩	Attachment 4 Report on Public Submissions
5.⇩	Attachment 5 Attachments to Public Submissions Received
6.⇩	Attachment 6 Supplementary Strategies and Actions

Council Meeting

28 March 2017

Council Meeting

28 March 2017

Council Meeting

28 March 2017

Item No: C0317 Item 16

Subject: Procurement of asset management consultancy services

File Ref: 17/4718/30057.17

Prepared By: Kelly Loveridge - Group Manager Procurement and Fleet

Authorised By: Peter Gainsford - Deputy General Manager Assets and Environment

SUMMARY

It is necessary for council to consolidate the three existing asset registers of the former Ashfield, Leichhardt and Marrickville councils into a single asset register. This will facilitate the provision of financial transactions as at 30 June 2017 that are required to complete the Financial Statement of Accounts for 2016/17. It has been determined that an external provider would be required to undertake these asset and project management services. This report and its attachment details the process council staff have gone through to procure a consultant for the consolidation, revaluation and associated deliverables of asset data sets and financial transactions.

RECOMMENDATION

THAT:

1. Council moves into closed session to deal with this matter as the information contained in CONFIDENTIAL ATTACHMENT 1 of this report is classified as confidential under the provisions of Section 10A (2) (d)(i) of the Local Government Act 1993 for the following reasons:

a. commercial information of a confidential nature that would, if disclosed

prejudice the commercial position of the person who supplied it;

and in accordance with Sections 10A (4) of the Local Government Act 1993, that the Chairperson allow members of the public to make representations as to whether this part of the meeting should be closed.

2. Council adopt the recommendations contained within Confidential Attachment 1.

BACKGROUND

The former Ashfield, Leichhardt and Marrickville councils maintain significant asset registers in a variety of formats that contain financial transactions, spatial, attribute and condition related data for all infrastructure asset classes. The three asset registers need to be consolidated into a single asset register to facilitate the provision of financial transactions as at 30 June 2017 that are required to complete the Financial Statement of Accounts 2016/17 for the Inner West council.

The Asset Management Project Group reviewed the requirements and agreed that due to the tight timeframes in conjunction with the technical requirements and significance of the deliverables, there was only one consultant in the market who could be considered able to satisfactorily perform the role at an acceptable risk level to council. It was determined that this consultant would be invited via a Request for Proposal process to submit a proposal rather than undertake an open tender process. This is allowed by section 55 of the Local Government Act 1993 where extenuating circumstances warrant it. In this case, the extenuating circumstances are:

a. The services to be performed are specialised, particularly due to the proprietary nature of the software to which the services relate;

b. There is insufficient time to conduct a tender and still have the service performed to meet the legislative requirement to complete Council’s end of financial year statements.

c. Given that the provider is a TechnologyOne company, the services can be performed in a manner that integrates into the broader ICT system Council is procuring which consequently brings with it overall efficiencies that alternate providers are not capable of delivering.

d. The proposed revaluation, asset management plans and strategy are driven by the consolidated data within the new Strategic Asset Management System which only Jeff Roorda and Associates can provide.

Assessment of Submission

The Asset Management project group received and reviewed the proposal, and further detailed information and documentation on the assessment process is provided in the Confidential Attachment under commercial in confidence.

FINANCIAL IMPLICATIONS

Funding for this project has been allocated from the NSW Government New Council Implementation Fund.

OTHER STAFF COMMENTS

The Asset Management Project Group included representatives from Asset planning and systems as well as the Group Manager Properties, Major Building Projects and Facilities, the Group Manager Footpaths, Roads, Traffic and Stormwater, the Group Manager Trees, Parks and Sportsfields and the Group Manager Finance.

PUBLIC CONSULTATION

Nil.

CONCLUSION

Nil.

ATTACHMENTS

1.	Confidential Attachment 1 to report on procurement of asset management consultancy services - Confidential