What’s so Special about a Special Charge Scheme?
Residents of Aireys Inlet and Fairhaven may have had the unpleasant experience of paylng a special charge to fund capital works proposed by Surf Coast Shire. There have been examples where residents feel so strongly about the capital works proposed that, not only do they notwish to contribute, but they would happily pay for the works not to go ahead.
The council’s website states that the local Government Act (1989):
‘provides Council with the ability to introduce a Special Rate or Charge Scheme seeking property owner contributions towards infrastructure projects such as roads, footpaths and drainage improvements. A Special Rate or Charge Scheme may also be appropriate for projects such as streetscapes and traffic management’
In other words the council may charge property owners for ‘necessary’ infrastructure. In return the property owners will receive a ‘special benefit’.
Residents may flnd the projects neither beneficial nor necessary. It is questionable whether the benefit of a sealed road outweighs the increase in traffic, the increase in speeding cars, the increase in buses, and the total loss of neighbourhood character. Whether infrastructure is necessary is also highly subjective.
The council’s policy on Infrastructure Special Rate or Charge Scheme states that special charge schemes are necessary because infrastructure demands exceed available flnancial resources.
This argument is flawed on two counts. First, the job of the council is to allocate limited flnancial resources in a responsible and expedient manner throughout the Shire. If infrastructure is needed, then money will be allocated for that project on a needs basis, as is often the case now.
A special charge scheme, funded by residents, enables projects to go ahead that would perhaps never stand up to the rigors of allocation of funds through general revenue. Second, residents should not be expected to pay money, often many thousands of dollars, in addition to their rates.
It is disturbing that council’s website indicates the only recourse for objection to a special charge scheme is through VCAT. This is not the case. It is only fair that residents should be informed of the provision contained in Section 6 of the Local
Government Act ( 1989) s163b, but no mention is made of it on the council’s website. Section 6 states that a council cannot make a declaration to levy a special charge if the council receives objections from the majority of rateable properties in respect to which the special charge scheme would be imposed. So, if more than half of the owners ofthe rateable properties object to a special charge scheme then it will not proceed. This was the case in Bambra Road with the proposal for a footpath in 2008, and also in Boundary Road with a proposal to seal the road in 2006.
AIDA believes that residents should be informed of Section 6 in all preliminary information concerning special charge schemes as a matter of good corporate governance. Further, the information should be presented in simple language; it is not reasonable to expect residents to trawl through the Act to flnd this information.
Frieda Wachsmann AIDA Newsletter December 2010
New Rules for Special Charge Schemes
On 1 June 2012 council’s revised ‘Infrastructure Rate or Charge Scheme Policy’ was mailed to all Precinct 2 owners, along with formal advice that the proposed scheme had been abandoned. This new policy introduces special provisions, which have been designed to address many of the objections raised as a result of the proposed design, financing and management of the Precinct 2 special charge scheme. (For more information about the saga of proposed roads and drainage works in Aireys Precinct 2 click here)
The new provisions are important improvements in the shire’s approach to such schemes, and will go a long way towards satisfying local disquiet in future major infrastructure projects. The provisions are:
- Construction standard – A reduced construction standard through the use of gravel instead of crushed rock will be applied for low volume rural / coastal roads.
- Council contribution – With the following exceptions, Council contribution to all special charge schemes will be based on the community benefit calculated
in accordance with the Special Rates and Charges Ministerial Guidelines.‘For pathway schemes based on a precinct approach, Council will contribute 50% of the project cost.‘For Road construction schemes, Council will contribute equivalent of the cost of a 100mm gravel re- sheet. Council will also contribute all costs associated with the traffic management works included in the scheme.
- Community engagement – A community based Reference Panel will be appointed for all schemes involving over 100 properties.
- Objections to the scheme (Section 163 B of the Local Government Act 1989) – With the exception of schemes prepared in accordance with Section 163
B (2) of the Local Government Act, Council will discontinue a scheme if more than 40% objections are received in instances where Council is seeking to raise over two thirds of the total project cost through the special charge.
- Properties with subdivision potential – Properties which demonstrate subdivision potential will be included in the scheme in accordance with the relevant zoning provisions. Property owners will have the option to defer the special charge on the additional lots (lots created after subdivision) until such time the subdivision is released (Statement of Compliance). A Section 173 Agreement will be required to enable deferment of the additional special charge.
- Payment terms – Property owners liable for scheme contributions over $5,000 will have the option to pay the charge over a period of 10 years. The applicable borrowing interest rate will be applied to the unpaid special charge.’
AIDA is pleased to have contributed to the criticisms driving a number of these changes, but full credit must go to our local councillors for specifying their scope and detail, and full credit also, to all of the objectors of Precinct 2 for providing the political underpinning for such a change.
Ian Godfrey AIDA Newsletter July 2012