June 20 - 26, 2021: Issue 499


The Northern Beaches Council’s Affordable Housing Contributions Scheme's first $1.1 million Contributor towards council's housing portfolio

View into Warriewood valley from Powderworks road, Narrabeen

A new development in Narrabeen will be the first on the Northern Beaches to include affordable housing under Council’s Affordable Housing Contributions Scheme.

The Scheme, adopted by Council in May 2019, enables Council to make provision for affordable housing in new or redeveloped housing precincts through a levy on developers.

The redevelopment at 1294-1300 Pittwater Road and 2-4 Albert St Narrabeen will deliver a contribution equivalent to more than $1.1 million, dedicated to Council as affordable rental housing.

Mayor Michael Regan said the Scheme will help Council better meet local affordable housing needs.

“There is a critical shortage of affordable housing on the Northern Beaches for people on very low and low to medium incomes.

“Council is committed to increasing the supply of affordable housing in the region for key workers critical to the economic and social development of the Northern Beaches.”

The Scheme was introduced initially to apply to the Frenchs Forest Planned Precinct. However the Frenchs Forest Town Centre is yet to be rezoned, making the Narrabeen development the first site on which the levy will apply.

As part of the planning process, Council will resubmit a revised planning proposal to the NSW Department of Planning, Industry and Environment with an amended Northern Beaches Affordable Housing Contribution Scheme attached to include the Narrabeen development as a site on which the Scheme applies.

The Scheme can be extended to other areas that are rezoned or are subject to increases in residential density in the future.

A key element goal of the Northern Beaches Council’s Affordable Housing Policy was the inclusion of the Northern Beaches LGA in State Environmental Planning Policy No.70 (SEPP70) . SEPP 70 identifies the need for affordable housing across the whole of the State, describes the kinds of households for which affordable housing may be provided, and establishes requirements for the imposition of conditions of consent relating to the provision of affordable housing.

The SEPP 70 enables Councils to include affordable rental housing requirements in Local Environmental Plans (LEPs) in areas subject to zoning “uplift” through an affordable housing contribution scheme. 

The site had previously been zoned R3 with a height limit of 8.5 metres, it will now be 11 metres and 12 metres. Initially Council wanted a minimum 10% of the additional dwellings on the site resulting from the  changing of the Warringah LEP 2011 and Planning Proposal to be dedicated to Council as affordable rental housing.

Council developed a draft affordable housing contribution scheme consistent with DPI&E’s guidelines. The Scheme would allow Council to collect developer contributions to provide affordable housing either as complete dwellings or as an equivalent monetary contribution.

The Scheme would apply initially to the Frenchs Forest Planned Precinct but as stated above Narrabeen is now first. Each area will be subject to a separate feasibility analysis to determine the required contribution rate.

Where the dedication of dwellings is required, a condition requiring the dedication in favour of the Council, free of cost, of land comprised of one or more complete dwellings as determined by Council’s LEP requirements and the requirements of this Scheme, with each dwelling having a gross floor area of at least 50 square metres. 

Where a monetary contribution is required, a condition requiring the payment of a monetary contribution to the Council calculated by reference to the market value of dwellings of a similar size to those proposed by the development application.

Council may require the applicant to provide evidence of the market value of dwellings prior to the issue of development consent or undertake its own valuation at the applicant’s cost.

The condition of consent will contain but not be limited to, the following information:

• The monetary contribution required including the market price used in the calculations;

• The accountable total floor space used in the calculations;

• The contribution period at the time of determination (i.e. for a consent dated July 2019, the contribution period is 1 June 2019 – 31 August 2019);

• The method of indexation of contribution rates; and

• A requirement that the condition be satisfied (to Council’s satisfaction) prior to the issue of any construction certificate for development. Where a construction certificate is not required, the condition must be satisfied prior to the commencement of work.

In July 2020 the applicant concluded that an affordable housing contribution was not viable. The owners instructed the applicant to offer a 2% contribution, equating to around $320,00. The Northern Beaches Council then engaged SGS Economics and Planning to peer review the proposal with support from sub-consultants Savills to review the property valuation advice and MBM Pty. Ltd. to review the construction cost estimates. Council's documents state that this 'peer-review challenged several assumptions used by the applicant and found that an Affordable Housing Contribution of 5.7% is unlikely to prevent the development from proceeding' .

The 'revised assumptions include a 10% construction contingency', which all bigger builds include as all costs for labour and materials are going up each quarter and you need to include this to ensure you can meet the rising costs over a 12 month build (some products have risen 100% in the last 12 months), 'reduced professional fees per the advice of Savills', and 'the removal of cost escalation as revenues are not escalated'.

Council's Housing webpage on this provides further insight:

The objective of draft Affordable Housing Tenancy Guidelines is to outline the requirements for the allocation and management of tenancies for properties within the Northern Beaches Council Affordable Housing Portfolio.

It also sets out criteria for eligibility, rent, management of waiting lists and asset management.

It is intended the full cost of the program, including day-to-day property and cyclical maintenance, tenancy management, administration fees and major upgrading works is fully covered by rent revenue collected by the Housing Manager (Council or its nominated agent)

Affordable Housing on any Council-owned Land

Any proposals for the redevelopment of Council-owned property will be assessed and considered against the directions in the LHS in the same way as proposals for private land.

Once Council has obtained affordable housing stock it will tender for a Community Housing Provider to manage and deliver affordable rental housing.

As the Northern Beaches Council progresses in advancing and developing and working out the details of how its Affordable Housing Contributions Scheme will manifest rooves over heads, its recent not popular Local Housing Strategy stating there is already a shortfall of 8000 affordable dwellings in the area - that being those that will only require 30% of a persons income to rent - it will be interesting to see whether the 10% contingency in larger projects becomes 20% to meet the add on cost and what 'reduced professional fees' really means - hopefully not a reduced professional Inspection by a Certifier or a Real Estate Agent or Conveyancer who prints out their own qualifications at home.

Either way, the Northern Beaches Council has sent the NSW Department of Planning, Industry and Environment its revised planning proposal and may soon have 1.1 million to bank or commence buying or building its 'Affordable Housing Portfolio', after they've paid all those professional fees...

It also begs the questions - is Australia giving up on the idea of and security that comes with owning your own home? Are Councils to made to become the new 'Community Housing Providers'?