Planning Incentives - Principles and Examples

Planning incentives - Examples

Principles of Leading Practice

Planning incentive - Examples

Ashfield City Council – floor space ratio for shop-top housing

Ashfield City Council has a bonus floor space entitlement to encourage shop-top housing in its commercial area. The incentive is defined in its main planning scheme, the Ashfield Local Environmental Plan. Under the plan, developers may achieve an additional floor space ratio within the commercial zone, if the development combines residential and commercial development. In other words, sites can be used more intensively for mixed housing and commercial development. Shop-top housing is the most common outcome of this incentive. As Ashfield’s commercial areas are close to public transport and services, shop-top accommodation contributes to compact city goals, more affordable housing opportunities in the private market and main street vitality.

East Perth Redevelopment Authority (EPRA)- WA 10 - 15% Social or Affordable housing

In September 2002, EPRA adopted a target of allocating 10-15% of all residential accommodation built on land released after the policy date would be designated for either social or affordable housing. The current policy is being implemented through a three-pronged approach:

1. Social housing through the State’s Department of Housing and Works (including families, singles, aged care and special needs);
2. Affordable rental accommodation (through recognized not-for-profit care based and community housing  co-ops); and
3. Affordable ‘owner occupied’ housing, (AOO) through density bonuses granted to private sector developers.

Affordable Owner-Occupied Housing
This component of the policy involves the private sector purchasing land from EPRA and being granted a density bonus (for extra residential units on the land), subject to some of the extra units being developed and sold as Affordable-Owner Occupied (AOO) housing. Defined as ‘affordable owner-occupied housing’, this will result in eligible people being able to purchase an affordable property and live in the inner city. It provides affordable housing for those on low to middle household incomes that may not be eligible for public housing, but satisfy EPRA’s eligibility criteria.

To ensure AOO units, remain affordable in the future and after resale, EPRA has devised a system where restrictions are placed on the Certificate of Title and Strata Management Scheme. This will ensure that AOO units are only on sold to other eligible buyers and transfer of ownership will only occur through a controlled process (i.e. no wills, private sales or bequests).The AOO units are built as part of a residential or mixed-use development and therefore from the street they will look exactly the same as other units. Different internal fixtures and smaller unit sizes will keep construction costs down.Eligibility’ criteria will differ with each development, but may include:

• Maximum assessed household annual income of $50,000;
• Deposit requirements of $2,000 or 2% of purchase price;
• The maximum levels for mortgage repayments and other housing costs not to exceed 31-35% of assessed household annual income;
• Asset limit test i.e. no ownership of other real property will be allowed after settlement and purchasers will not be able to have liquid assets exceeding 10% of the purchase price at the time of purchase.
• Candidates who meet the eligibility criteria will go into a ballot for the right to purchase one of the AOO units.
• AOO dwelling sale prices vary on each site and will be determined when the public ballot processes are run. The objective is that they will be affordable to people on low to middle incomes.

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Waverley Council – floor space bonus scheme

Waverley Council in is situated in an established, high-value urban area in the eastern suburbs of Sydney. Under the local planning scheme (Waverley Local Environmental Plan 1996), developers may take up a voluntary density bonus if they provide affordable housing as part of a residential development. The bonus mechanism is defined through the planning scheme with detail contained in a supporting instrument (Development Control Plan 1: Multi-Unit Housing). The density bonus is capped at 15 per cent above the base standard floor space ratio, and the projected profit associated with the increased yield shared on a fifty-fifty basis with the Council according to a prescribed formula.

The contribution may be provided as a one-off monetary payment to Council’s Housing Reserve and/or the transfer of individual dwelling units within the development to Council. The units may be transferred in perpetuity or leased to Council at below market rates for a specified period of time. Once procured, the units are managed by a non-profit community housing organisation on behalf of Council. Since its introduction in 1999 the scheme has produced 27 properties, of which 13 are owned in perpetuity and 14 are rent capped. To see the Willoughby Development Control Plan (WDCP) online go to:
www.willoughby.nsw.gov.au/WDCP.html#wdcp

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Blue Mountains Council – incentives for social housing providers

In New South Wales, the Blue Mountains Council on Sydney’s western fringe has identified special provisions to facilitate the development of accessible housing (that which is intended to be used permanently for older people or people with a disability) by social housing providers. To download the Accessible Housing Strategy, go to:
www.bmcc.nsw.gov.au/citydevelopment/localenvironmentalplans/backgroundand
supportingstudies/

United States – planning incentives for affordable housing

Planning incentives for affordable housing are used widely in the US, although in most cases they are matched with mandatory contributions. Most authorities with affordable housing programs in place offer a combination of incentives which may include density bonuses, variations on subdivision sizes, building design, parking or landscaping requirements, permit and infrastructure fee waivers, and expedited processing of applications.

Toronto – density incentive for sustainability and affordable housing

Toronto, in Canada, sought to achieve greater urban consolidation by increasing medium density development. By increasing permissible densities, the local authority was aware that it was also conferring additional value for individual owners. At the same time, new developments might well result in a loss of existing low-cost housing. The authority enabled developers to realise the additional density, but at the same time required a contribution towards affordable housing.

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Principles of leading practice

Planning incentives

Leading practice in the use of planning incentives for affordable housing is consistent with the following principles:

• Use incentives that support other important local or regional planning goals, such as greater urban containment, or reduced reliance on the private car.
• Where incentives vary prevailing standards or controls, ensure they are supported by strong urban design criteria.
• Situate incentives within a strong and transparent policy framework.
• Package a combination of incentives for affordable housing, to make them more valuable for a particular development.

Pitfalls to avoid

• Avoid the use of planning incentives that undermine other important local or regional planning goals.
• Avoid artificially establishing or maintaining controls at low levels to provide an opportunity for bonuses.
• Avoid using a density bonus mechanism in areas where new developments are not maximising existing density opportunities.

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