Australia’s peak body for property developers has expressed concerns about the proposed introduction of value capture levies on new housing by recently amalgamated councils in Sydney.

Urban Taskforce Australia is particularly concerned about plans by the newly established City of Parramatta Council to use value capture as a source of funding for future infrastructure, a measure which it claims could render a number of local residential projects unfeasible.

"Essentially the City of Parramatta is selling bonus floor space at a fixed price irrespective of the individual qualities of a development site," said Urban Taskforce CEO Chris Johnson. "[Developers] were concerned that they had been negotiating projects over a number of years and the unexpected imposition of the proposed tax would make their projects unviable.

'This is a huge unanticipated cost which throws out the feasibility of many developments."

Advocates of value capture in the urban planning sector claim the policies represent a fair levy on the benefits enjoyed by property developments situated within close proximity of key public infrastructure.

In the view of the Urban Taskforce, however, the mooted value capture measures represent another revenue grab on the part of Sydney councils that flies directly in the face of state planning guidelines.

"The Urban Taskforce is concerned that a number of metropolitan Sydney councils are developing value capture policies as a way to earn income," said Johnson. "As this is clearly against the Government's practice note of 2005, the Department of Planning must either withdraw the practice note or update the practice note with clearer guidance.

"The Urban Taskforce has written to the Secretary of NSW Planning and Environment raising these concerns and recommending that the department write to councils, particularly those being amalgamated, to inform them that a review of the practice note was underway and that a new state-level policy position on this issue will be developed.”

  • Largely what the Tasforce is actually concerned about from my understanding is not so much the idea of value capture in itself but rather any selective or inequitable application of value capture principles, such as its application to new residential developments only as opposed to existing residential developments and commercial developments.

    On that point, Johnson does have a point. Value capture as a concept is a fair concept but in order to work, it must be captured in an equitable fashion. That means all property owners – not just new property owners but rather new and existing property owners – should pay.

    Having only one group of property owners (new housing developers) slugged with a tax whilst handing a massive uplift to other property owners without them having paid a dime is inequitable, unfair and contrary to how value capture is supposed to work.

  • When council is prepared to share in the risks as well as the potential upside they can get a seat at the table to talk about this in my view.