Explanation of Voluntary Planning Agreements
A voluntary planning agreement (VPA) is an agreement entered into in relation to the development of land by 2 or more parties allowing for a development scheme with specific provisions that are not contained in planning controls under State or local laws. A VPA reflects the agreement of the relevant parties as to the development of land and often introduces new or alternative obligations on either party. A VPA may take the form of a discrete document dealing with the specific subject matter of the agreement or form part of any other agreement required as part of the development process (for example, a contract of sale or lease). The key feature of a VPA is that it provides an avenue for the parties to agree to the terms upon which a delegated authority (typically the planning authority), will exercise its discretion in relation to a proposed development. Parties to a VPA are free to agree to provide for obligations in return for some development incentive. Such development incentives may include the provision of additional height, floor space or lot yield above that available under the applicable planning controls. A VPA may be used to trade off certain statutory benefits to the developer in return for an improved development outcome. Planning policies can be better achieved , with environmental issues better addressed or community aspirations realised as a result of a negotiated outcome. The extent to which a VPA is ultimately relied upon as a tool to facilitate the necessary integration or coordination of infrastructure and services with development proposed by a proponent will depend on the willingness by the relevant parties to enter into a VPA that addresses the relevant subject matter. A VPA allows the relevant parties to be flexible and creative in addressing the solutions to key issues. This may include, for example, the voluntary provision of particular transport, open space, social infrastructure and affordable housing components to the development. Some other potential benefits from VPAs may include: VPAs are also used to provide for the future delivery of infrastructure. A VPA may provide for the design, delivery and funding of infrastructure upfront (rather than through a staged payment or retrospective levy). VPAs are a tool available in many jurisdictions. The content, purpose and use of VPAs vary widely across jurisdictions.
Key Aspects of a Voluntary Planning Agreement
Key features of voluntary planning agreements include:
The negotiated development contributions that parties agree to be paid in respect of the proposed development. This can take multiple forms including cash contributions towards works to be undertaken by the relevant council or an alternative authority, land which is reserved for a public purpose, dedicated road or land to be owned by the Crown in accordance with the Crown Lands Act 1989 and physical provision of the works.
The period (of days) from whom the agreement is entered into and the date upon which the contributions accrue interest if not paid on or before that date.
The date upon which the contributions are to be paid – such as prior to the issue of a construction certificate.
The works to be undertaken (if any) in lieu of, or part payment of, development contributions.
The form of any bond or guarantee that is to be lodged to secure the payment of development contributions.
The period (of days) during which the agreement is to be in force.
If the agreement is to be in force only until the development consent ceases to have effect, a provision setting out the basis upon which the agreement is to cease to be in force.
Legislation Behind a Voluntary Planning Agreement
A legal framework governs the dealing process and has been enacted by all the States and Territories Since the passage of the Land Title System into law, around 2,300 VPA’s have been entered into statewide (up to 1 July 2019) since the launch of the newly created Land Transfer System. VPA’s can be used to cover any on-going development or project; they must include a legally binding commitment to complete the required work in addition to timeframes and standards. There are several other key requirements that must be followed such as public participation for all deals worth over $5 million or are regional in nature. Any VPA’s that fail to adhere to the legal requirements have no force, notify, or effect. Agreements may be amended or released by court order or through a new agreement; however, the legislative guidelines require the use of a public notification for any changes. The public notification must include a project description, reasons for the VPA’s use, and what it aims to achieve, an invitation to provide comment, and the closing date for all comments and date that submissions will be reviewed. VPAs are not meant to be signed until after the public consultation period; however, due to the fact that these matters remain with the Land Court, time limits are not adhered to and, sometimes, can extend for a number of years if the agreement is controversial or it tends toward greater interest. A VPA needs to have approval from the Minister and, in order for an agreement to be entered into, the Development Assessment Processes must be finalised for the development or project. If a disagreement results concerning the decision to enter into a VPA then it is appealable to the Land Court, with the Court deciding on the agreement’s propriety. Finalisation of a VPA can also be appealed to the Land Court if a person feels aggrieved. New South Wales enacted five State Environmental Planning Policies (NSW) together with related Legislation, Codes, and guidance which govern VPAs within the State. Currently only Local Government Areas may enter into agreements with the State having the authority to regulate these through Section 93H of the NSW EPA Act. NSW Council’s may enter into Heath Agreements VPA’s for commercial developments through Division 4 of Part2 of the EPA Act; in addition to Enterprising Land Deal VPA’s through Division 5 Part 3 of the EPA Act for certain types of land. The VPA guidelines in Victoria comprise the Environment Protection Act 1970 and Former Land (Miscellaneous) Acts Part 5. A legal precedent exists for the enforcement of VPA’s through the Courts and it is argued that, under such circumstances President Concrete Pty Ltd v O’Connor & Anor, (2006) QCA371 demonstrates that Courts will uphold the agreement in the face of contractual commitments.
Advantages of a Voluntary Planning Agreement
For the community, the use of voluntary planning agreements can ensure the provision of community benefits in respect of a development or land under consideration. Such benefits can include parks, community facilities, pedestrian or transport links, affordable housing, streetscapes, tree retention, building character, environmental management plans and arrangements for the party responsible for carrying out the work to be undertaken as agreed. For the developer, a benefit may be that they secure additional development consent for the site not otherwise available. Consent may be obtained for a development on a site meriting a different land use and planning controls otherwise applicable to the type of development being carried out may be relaxed under the agreement (for example amendments to building height or floor space ratio restrictions). Such incentives on offer in respect of a site can outweigh a developer’s need to provide such benefits under the agreement.
Considerations and Challenges
Negotiating a voluntary planning agreement can be a complex process. Establishing a proportionate connection with the use or development is one of the critical issues to ensure that the resulting planning benefits are commensurate with the scale and kind of development (and can stand up to scrutiny and challenge if necessary). Another key consideration is that developers are sometimes wary of voluntary planning agreements as they can have a negative impact on their project cashflow (the early years of a development can be challenging enough without additional payments to a council or other body) and/or the process of establishing the agreement can become a protracted negotiation which can hold up development projects.
Other issues include the point at which the agreement is concluded and development management issues such as the manner in which the agreement can be enforced , how long an agreement is intended to run for and what happens where there is any future change of ownership/transfer of responsibility for making the necessary payments (e.g. in the case of on going infrastructure maintenance).
Because there are so many variables involved in negotiating voluntary planning agreements, it is important that these are carefully considered. While there are a number of circumstances where voluntary planning agreements may be appropriate, councils need to be aware that there are also limitations in how they can be used.
Examples of Voluntary Planning Agreement Successes
In many instances, voluntary planning agreements have prompted the completion of otherwise stalled development projects. In two such cases, the City of Toronto and a prominent developer reached agreements to develop waterfront lands into mixed-use developments. Within the Greater Toronto Area, these voluntary planning agreements have led to the completion of stalled development in the City of Toronto and York Region. The first case involves The City of Toronto and the Toronto Port Authority, which both consented to a voluntary planning agreement (VPA) in 2006 for the revitalization of the Toronto Waterfront. This all encompassing VPA committed the parties to design and construction commitments, approval commitments, and funding commitments to facilitate the completion of a large infrastructure project. As part of the VPA, the City agreed to complete a Municipal Class Environmental Assessment Study under the Environmental Assessment Act to assess the impact of the Gardiner Expressway and transit infrastructure on the waterfront. Having completed the Environmental Assessment, the City is also working with the Toronto Port Authority and Waterfront Toronto to obtain required approvals. Waterfront Toronto is charged with overseeing the implementation of the Clean-up of the Great Lakes and construction of new public parks along the waterfront in order to regenerate the western waterfront by transforming it into a sustainable, mixed-use neighbourhood for residences, employment, culture and recreation. As it relates to the Gardiner Expressway, the intent of the Environmental Assessment was to assess the feasibility of redeveloping the Gardiner Expressway along with the public spaces below and adjacent to it, as well as the land between the Metrolinx rail corridor and the Gardiner Expressway. The Environmental Assessment identified removal and replacement of the eastern portion of the Gardiner Expressway as the preferred alternative for its redevelopment. Following completion of the Environmental Assessment, the City and Waterfront Toronto commenced the Gardiner East Environmental Assessment: Ongoing Protection, which involved a detailed assessment of how to protect the Western interior and its tributaries while the easement is constructed. The second case study involved the City of Vaughan and another prominent development company that are now in the process of subdividing and developing approximately 850 acres of land for an $18 billion development deal known as Vaughan Metropolitan Centre ("VMC"). Located north of Highway 407, the site was originally owned by a number of large landowners and developers. However, these landowners could not get agreement on a plan to develop the area for a transit hub, and therefore filed a Joint Application for Review to the Ontario Municipal Board for a settlement hearing. In order to avoid the lengthy Bill 135 hearings, the City urged the landowners to commit to hosting ongoing discussions, and also offered a number of incentives, including the following: Through this process, the City was able to convince all but two landowners to voluntarily sign a Memorandum of Understanding ("MOU") for the City to act as the lead in the planning process for the VMC, whereby the City would fast-track the approval and planning process for one of four precincts for 1,500 residential units, and the City would be responsible for upgrading water, storm water, and sanitary sewer services for the entire area. In exchange, the City would receive 9% of the land for public uses or cash-in-lieu at fair market rate; the developer would accept responsibility for implementing the secondary plan and zonings for the entire area.
The Future of Voluntary Planning Agreements
The landscape around voluntary planning agreements continues to evolve, and there are a number of key trends that warrant consideration. First, the nature and scope of agreements looks likely to broaden in the future. For example, councils may seek to enter into agreements that stipulate standards for light or ventilation controls in developments, not merely the financial contributions necessary to achieve these outcomes. The introduction of additional non-financial obligations in agreements may adversely impact on housing supply by increasing the holding costs of development, as well as increasing the cost of affordable housing (in the short term at least), but this may be tempered by developments being of a better quality long-term. Second, policy-making continues to influence the way that arrangements are reached. Pilot projects over the next year will test the use of a new Affordable Housing and Voluntary Planning Agreement Toolkit that is designed not only to guide councils in their negotiations with developers , but also to increase developer buy-in and awareness by advertising the benefits of voluntary agreements. This will, no doubt, be supported by States’ continuing technical support in the form of a toolkit (to be updated within the next 5 years) and the provision of legal assistance in the negotiation of agreements (for example, through the provision of a template agreement). This policy support signals the importance that governments continue to place on trying to moderate housing prices by expanding the availability of affordable housing. Third, whilst most watertight biodiversity-related covenants are provided for through the voluntary planning agreement framework, there is no guarantee that all such requirements are included in such agreements. The State’s current commitment to assisting landholders to restore and enhance biodiversity may well change the manner in which biodiversity requirements are generated and then rewarded, as well as the applicable access and assessment requirements.