Wanju and Waterloo – Servicing Needs Investigation and Waterloo_SNI...Commercial in Confidence...

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May 2016

Western Australia - Department of Planning

Final Report

Wanju and Waterloo – Servicing Needs Investigation

Revision 1.3

Document Control

Client Western Australia - Department of Planning

Document Name

Wanju and Waterloo – Servicing Needs Investigation

Client Number 1509-2

File Location M:\1509-2 GoWA - Dept of Planning - Wanju Waterloo\Work\Word\Reports\Final SNI\160506_rep_DOP_Wanju and Waterloo_SNI_Final 1.3.docx

Date May 2016

Project Manager

Jason Natoli

Document Status

Revision No.

Date Description Author Reviewer

0.1 25/05/16 Draft Report JN/ SB

JN

1.0 26/05/16 Final Draft Report to DoP JN SB

1.1 4/5/16 Final Report Amendments JN SB

1.2 6/5/16 Final with minor comments JN SB

1.3 6/5/16 Final – late addendum JN SB

Commercial in Confidence Western Australia - Department of Planning Wanju and Waterloo – Servicing Needs Investigation

May 2016 i

M:\1509-2 GoWA - Dept of Planning - Wanju Waterloo\Work\Word\Reports\Final SNI\160506_rep_DOP_Wanju and Waterloo_SNI_Final 1.3.docx

Table of Contents

1.0 EXECUTIVE SUMMARY ............................................................................................................................. 1

2.0 KEY FINDINGS FROM CONSULTATION ............................................................................................... 4

PURPOSE AND SCOPE ..................................................................................................................................... 4 IDENTIFIED ISSUES AND BARRIERS ................................................................................................................ 4

Local Government Capacity ..................................................................................................................... 4 Regulatory Environment Water Service Providers ................................................................................... 5 Water Management Strategies and Delivery ............................................................................................ 7 NBN .......................................................................................................................................................... 8

ALTERNATIVES TO DCP ................................................................................................................................ 9 DCP Infrastructure Scope ...................................................................................................................... 11

HOUSING AFFORDABILITY ........................................................................................................................... 11 RECOMMENDATIONS ................................................................................................................................... 12

3.0 DCP GENERAL RECOMMENDATIONS ................................................................................................ 12

GEOGRAPHIC COVERAGE OF THE DCP ........................................................................................................ 12 NETWORKS INCLUDED IN THE DCP ............................................................................................................. 14

Local Government Infrastructure ........................................................................................................... 15 Considering Non-Local Government Infrastructure (Utilities and Communication) ............................. 15

INFRASTRUCTURE AND DEVELOPMENT STAGING ........................................................................................ 19 APPORTIONMENT BASIS ............................................................................................................................... 19 COST APPORTIONMENT METHODOLOGY ..................................................................................................... 20

Apportionment base ................................................................................................................................ 20 Apportionment method ........................................................................................................................... 20 Financial modelling method ................................................................................................................... 21

CONTRIBUTION PAYMENT TIMING CERTAINTY ............................................................................................ 21

4.0 SERVICE PROVIDER NETWORK RECOMMENDATIONS ............................................................... 22

KEY CONSULTATION FINDINGS BY NETWORK ............................................................................................. 22 Local Government Infrastructure ........................................................................................................... 22 Water Supply, Sewerage and Total Water Cycle Management .............................................................. 23 Electricity ............................................................................................................................................... 24 Gas .......................................................................................................................................................... 24 Telecommunications (NBN) .................................................................................................................... 25 Main Roads ............................................................................................................................................. 25

DEFINITION OF TRUNK ASSETS .................................................................................................................... 26 COSTING APPROACH .................................................................................................................................... 27

5.0 DCP IMPLEMENTATION AND MANAGEMENT ................................................................................. 28

RESOURCING AND GOVERNANCE ................................................................................................................. 28 DCP REVIEWS ............................................................................................................................................. 29 DCP SYSTEMS AND PROCESSES ................................................................................................................... 29

6.0 ACTIONS ....................................................................................................................................................... 30

CONSULT FINAL REPORT ............................................................................................................................. 30 ADDRESSING THE BARRIERS ........................................................................................................................ 30 PREPARE PROJECT PLAN .............................................................................................................................. 31

ANNEXURE 1 – SERVICING NEEDS INVESTIGATION BRIEFING PAPER ............................................... 32

ANNEXURE 2 – STAKEHOLDER ENGAGEMENT ............................................................................................ 33

ANNEXURE 3 – STAGING PLANS ........................................................................................................................ 34

ANNEXURE 4 – SELECTION OF UNIT RATES.................................................................................................. 36


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1.0 Executive Summary Integran has been engaged by the Bunbury office of the West Australian Department of Planning (Department) to undertake the Servicing Needs Investigation of the proposed development areas Wanju and Waterloo in the Greater Bunbury part of the south-west region. The purpose of this report is to: a. Provide a scope of the types of standard and community infrastructure that will reasonably

be required through the life of the development and how and by whom this infrastructure should be provided.

b. Provide a framework and business case to develop detailed Development Contributions Plans at a later date. Associated costings are not expected to be of standard that will be suitable for commencing any design and construction.

The assessment of the framework responding to the specification has been undertaken by an initial Briefing Paper (Refer Annexure 1) which assessed the key considerations of the brief. This paper was consulted with key stakeholders (set out in Annexure 2) and the results of this consultation are discussed in Sections 2.0 and 4.0 of this report. Given neither the draft Wanju District Structure Plans (DSP) nor the draft Waterloo District Structure Plan had been released at the time of consultation, and network planning was in the early stages of development, the ability to assemble an emulated DCP and develop a business case as set out in b) above was not possible. Notwithstanding, the consultation revealed a number of barrier issues that are critical and require determination as part of a broad business case, as without resolution to these issues the certainty of costing is questionable. These issues are discussed in Section 2.0 and include:

1. Ensuring the Shire of Dardanup has the required financial support and resource capacity to manage a development which will see their population more than treble in the next 30-40 years. This is particularly important now in the early development of the planning and management frameworks;

2. The current form of Regulation over the Water Service Providers creates a market environment whereby no certainty can be achieved as to the form of the network or the preferred provider, restricting good planning and delivery strategies;

3. Clarifying and simplifying the early provision of ‘right of way’ for drainage over varying land ownerships of the site given the approach developed in the flood management and District Water Management Strategy;

4. Working with the NBN, who do not hold their own legislation and regulations that allow for a contributions styled scheme to be developed, to assist in cost sharing in the pioneering infrastructure to the site.

In addition to the resolution of these key issues it has been recommended in this report that a full testing of the power vesting in State Planning Policy 3.6 (SPP 3.6) is undertaken. The Wanju and Waterloo DSPs provide a unique opportunity for the State and Local Government, along with the Service Providers, to explore a fully coordinated and integrated Development Contributions Plan process. This process is advocated by the Productivity Commission Public Infrastructure Inquiry 2014 as being a key reform item to ensure that better planning and delivery frameworks including user charges. The Infrastructure Australia Audit 2015 also advocates for this form of long term integrated infrastructure planning approach.


May 2016 2


What is advocated in the 11 Recommendations is a collaborative model whereby the various parties work together and share information about the growth and form of development envisaged. Opportunities and constraints that exist within the planning and delivery framework of the DSP and Local Structure Plans (LSPs) can also be jointly investigated. This is an important change in the process, which is typically one of silo-based approaches to infrastructure and contributions planning. It is recommended that the integrated DCP approach would involve all those involved in the delivery of the following infrastructure:

Roads;

Drainage and Flood Management;

Public Openspace and Community Facilities

Water supply, Sewerage and Recycled water;

Electricity;

NBN; and

Gas. The framework is discussed in Section 3.0 of the report and is illustrated below. The proposal requires all service providers to become involved earlier in the process through a joint working group. This is in contrast to that typical in the current operational practices of service providers. The approach would aim to:

use a common set of assumptions,

allow service providers to develop their own trunk requirements for the site,

have the infrastructure schedules costed, and then modelled on a common methodology to ensure consistency and fairness.

Upon reaching this milestone all parties would convene to determine the best model for implementation being either the DCP as allowed for under SPP 3.6 or the current legislative framework of each service provider. This approach is outlined in the following process diagram for the DCP formulation.


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This approach is considered to provide significant benefits to the planning and delivery of Wanju and Waterloo. The level of collaboration and certainty gained from this process will aid both development industry and the service providers to ensure the most efficient and cost effective roll out of services.

District Structure Plan

Land Use and Infrastructure Assumptions

Network Planning Service Provider

Trunk Infrastructure Plans and Costs

Consistent Contributions

Modelling

DCP Planning & Development

Act

Conventional Service Provider Contributions Framework

Servicer Provider Legislation and

Regulation

Local Structure Plans

DCP Process

The preparation of a Local Structure Plans will allow for refinement of the broad land use and infrastructure

assumptions initially determined from the DSP. These more detailed plans will then refine components

of the input costs or demands in the DCP.

Upon land use and infrastructure assumptions being developed network

planning can convert those demands into infrastructure needs. This is done over the

DSP initially and then and LSP as they are developed

As proposed all of the work to support the servicing of Wanju and Waterloo is performed on a consistent

methodology and upon finalisation of the draft DCP

the head of power is determined for implementation.

Proposed Approach for Draft DCP


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2.0 Key Findings from Consultation

Purpose and Scope

An important component in the preparation of the Servicing Needs Investigation (SNI) was to obtain direct input from the various infrastructure providers required to support the Wanju and Waterloo developments. The key stakeholders and possible infrastructure providers to the Wanju and Waterloo urban expansion areas were consulted through the SNI Briefing Paper, with the main purpose of gaining an understanding of the processes and practices currently employed around the delivery and funding of development Infrastructure. The participants engaged in this process included:

Shire of Dardanup

Department of Water

Water Corporation

AqWest

Harvey Water

Main Roads WA

Department of Sport and Recreation

Department of Planning (Infrastructure, Projects, Policy and Planning)

Western Power

ATCO Gas

NBN Co

Calibre Consulting (carrying out the Integrated Water Management Strategy)

A schedule of stakeholder meetings undertaken in the Area consultation process is listed in Annexure 2. The key findings of these discussions and the necessary refinements of the draft Discussion Paper are presented below.

Identified Issues and Barriers

Throughout the course of the consultation a number of key issues and barriers were identified that have the potential to impede or in some cases adversely impact on the goals and aspiration of the Wanju and Waterloo project. Fortunately the early identification of these issues and the setting in place appropriate Governance structures, funding streams and action plans will ensure these matters can be overcome improving the successful delivery of the project both in the short and long term.

Local Government Capacity

A large part of the success of the Wanju project will be as a result of the planning and management effort of the Shire of Dardanup to provide clear and well considered advice to the development industry and other service providers. This project will see the Shire transform into a City over the next 20+ years. The Shire is familiar with Greenfield land development and has a track record in delivery of new urban areas. Notwithstanding, this project is of a scale even large established Metropolitan Council’s would find challenging. The key immediate challenge is having appropriate resources now, early in the planning phases to properly manage the scale of the development. The problem being this will incur cost to Council well before the benefits and revenues to the Council of the new development can be realised.


May 2016 5


Furthermore the development can inherently bring on large financial, environmental and political/social risks to Council that unless managed early on can be difficult to correct later in the process. To provide resources and capacity from a standing start will require assistance for a Council of the scale of the Shire of Dardanup. Some key actions for the Shire include: The necessary Local Planning Scheme amendments, including:

the District Structure Plan;

the subsequent assessment and direction of Local Structure Plans;

the assessment and recommendation of subdivision to the WAPC;

the drafting and inclusion of the Development Contribution Plan;

technical expertise to analyse highly detailed matters (e.g LWMS) as part of this work. Resolution and change to ongoing management to account for:

Clarity on internal governance structures;

Capacity to deal with increased development applications and enquiries;

Need for consultation and briefing material;

Systems and processes are implemented to manage the process rather than dependence upon key staff.

The range of matters for consideration includes additional staff, IT systems, training, external consultants and resources including office space and supporting staff. This will initially burden existing staff by requiring significant time to be involved in the planning and procurement of these resources. Given the investment already made by the State Government it may be prudent to provide assistance in the early phases to ensure success and appropriate Governance.

Regulatory Environment Water Service Providers

Current Framework Following consultation Integran briefly analysed the current legislation and regulatory environment in relation to water services. This clarified to some extent our understanding of the West Australian water markets’ planning and delivery process. Our need to consider this in the report was paramount as it was unclear how the prospect of multiple Water Service Providers (WSPs) competing to service the Wanju and Waterloo areas would work in practice. We understand the current practice entails: 1. There is no set government involvement, direction or decision in the choice of a WSP in the

area; 2. A developer negotiates with WSPs and ultimately selects a WSP based on commercial

terms; 3. That negotiation would be based on the parties delivering on the requirements of the District

Structure Plan (DSP) and District Water Management Plan/Strategy (DWMP/S).


May 2016 6


Observations This process reveals potential barrier to the successful delivery of the DCP and the wider development project. This barrier emerges as no certainty can be provided now, at this critical part of the planning process, as to the designated WSP for the project area. Logically without a firm WSP no clarity can be achieved in respect of strategic network planning, major capital investment and long run revenue recovery responding to the DSP and DWMP. Under the current legislation there is no formal competition “for the market” as is practice in other jurisdictions. No upfront process exists without a formal request of the Government and direction to the regulator to run a competitive process to determine a preferred WSP. The reforms in 2012 removed the ability for ‘sole provider status’ to be applied to areas, essentially leaving the door open for on-going competition “in the market”. While this process may be important to allow for competitive tension, the regulator and national competition policy are there to ensure any monopoly supply of services is managed in a competitive manner despite the monopoly. This current approach means that competition both “for and in the market” is always present at any time and location which increases revenue risk and the risk of over capitalisation in infrastructure. This is manifest where either party can intrude on the others market, eroding necessary planned revenue to pay for strategic long run investment. Given that multiple development parties will be developing within Wanju and Waterloo a ‘patch work’ of WSPs may result given that at least two providers have existing trunk networks in the vicinity and there is not control on which WSP is selected. Impacts For Wanju and Waterloo the following constraints to good planning are apparent:

Inability to have a committed entity that has won, on merit, the ‘right to service’ the whole development;

There is no definitive ‘water service partner’ in the planning and delivery process as this may be constantly subject to change;

A preferred delivery strategy meeting innovation, sustainability or other criteria set by the government or planning scheme cannot be collaborated upon, called for or assessed;

Revenue risk is increased as there is not an ability to invest strategically at a large scale in capital works as there is a risk of large areas of service and revenue being lost;

Lack of transparency concerning the network and costs given the extent of competition and the commercial advantage of that information being highly commercially sensitive;

High risk of duplication of assets, for example as at Dalyellup, this form of competition has resulted in duplication of both head works (trunk) infrastructure along with some lower level reticulation assets.

Summary In our view and consistent with other jurisdictions, the right to provide service should be initially competitive with a resultant winning sole WSP status for the whole development. From that point the WSP is subject to regulation and price determinations and/or the prospect of competition “in the market” to ensure competitive neutrality.


May 2016 7


Without this, the process works against good planning practice and in fact acts contrary to intent of competition where there is a high probability of increasing cost to community (duplication), increasing risk to network owners (uncertainty) and is likely to disperse or reduce dividends. This is clearly an outcome which is at odds with the process of reform designed to introduce commercialisation and competition to monopoly providers of infrastructure. The environment created is one of increasing risks for critical asset networks, adding significant issues in delivering quality, efficient and effective outcomes. It is our observation this is primarily driven from the loss of sole provider status by the water service providers, essentially creating a ‘hyper-competitive’ market where it is probable that higher costs or the financial failure of one of the parties could result. This issue stifles the ability to have an environment in which a strategic/long term capital works investment can be made rather than a defensive, risk averse, piecemeal micro staged delivery. The later approach will not be able to keep pace with the scale of development in Wanju and has the prospect of putting the project and the viability of the service providers in jeopardy. Options are available to ensure this issue can be eliminated but it is likely to require intervention by the Government to achieve success.

Water Management Strategies and Delivery

The areas of Wanju and Waterloo are located within a site of challenging overland and ground water systems. As part of the project investigation these regimes have been modelled and tactics are now being developed through the District and Local Water Management Strategies to manage the urbanisation of these areas. The preferred option for the management of water within the DSP areas is the installation of a network of swales that will provide for conveyance of large events, but importantly manage the water table through a network of low flow sub-soil drains. This approach is aimed at the reduction of sand fill through constructed drainage network that flows into either the Collie River or Millars Creek. However, the alignment required to achieve the necessary hydraulic grades to create these swales cuts across multiple properties, thus creating legal and administrative barriers to servicing development in this format. In order to ensure the system can be provided with certainty, efficiency and at overall lower cost, legal rights of way will need to be established prior to development. This process has multiple benefits for an area which has a limited existing road network but is in fragmented ownership, as it provides necessary routes for not only the drainage infrastructure but also:

formalisation of the existing Harvey Water irrigation channels;

options for re-routing of irrigation water in a piped supply;

electricity,

water supply,

sewerage;

telecommunications.


May 2016 8


Options to establish right of way can come in varying forms and be staged over time if necessary. Given the draft Wanju District Structure Plan has set down at some detail the future blue road and major drainage swale network this can be used to undertake a range of actions, including:

Taking of easements by Government on the alignments to allow for the provision of services, with conversion to road where required at a later date:

Resumption of land on these alignments for both road reserve where planned or drainage/services easement otherwise;

Inclusion in the DCP plans to indicate that such land is required and that the processes of easements or resumptions was used to obtain the land and prefund the acquisition.

Funding of this work would have to be initially provided by the Government, with this amount recovered as part of the DCP overtime. Undertaking this early and in full knowledge of all parties has the key outcome of providing certainty and lowering costs as alternative, interim solutions will not be required. It also acquires the land at the ‘raw englobo rate’ providing savings to the community. The establishment of the right of way also opens up the land to a range of development parties providing real competition in the development of the area.

NBN

Discussion with NBN co highlighted they do not have a similar method of managing the funding and rollout of major infrastructure in line with the DCP process and its principles. The process of identifying major shared (i.e trunk) infrastructure items, costing them and sharing the cost through a DCP type process is available through the legislation and regulations for all providers with the exception of NBN. While a form of this approach is applied internally to development through the Fibre Deployment Charge (i.e $600/lot), there is no similar framework to manage the large lead in services to an area like Wanju. The current servicing approach for major trunk lead in services is divided into one of two options:

1. NBN connection of services and backhaul costs will be met by NBN Co where it is within 1km of an existing services; otherwise

2. NBN will undertake an assessment of the developments demand and surrounding demand, the length of connection and if any current ducts exist, and the cost of backhaul cable and necessary exchange works.

This creates a significant distortion and inefficiency in the delivery of NBN services whereby some developments pay:

nothing for the lead in service; or

the initial developer or threshold developer pays for all other landowners in the area. There is a likelihood of no cost within Wanju for the provision of lead in NBN infrastructure if development is staged from the north. Whereas there is likely to be a large cost to the development if the service is provided from the south. The cost difference is likely to be in the millions of dollars based on the direction of growth.


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If the DCP process was established for the delivery of NBN lead in trunk works an incremental cost could be developed akin to akin to current Fibre Deployment Charge. This contribution could be instituted to provide sufficient funds over the life of the development to pay for the initial investment. This is to be investigated as part of the Draft DCP whereby there may be significant benefit for the NBN funding to be recouped through the DCP process with NBN committing to the works with a revenue stream provided through the DCP process for the life of the development

Alternatives to DCP

The Briefing Paper provided a recommendation that the DCP should seek in some way to coordinate the planning and delivery of infrastructure for the Wanju and Waterloo DSP areas given the clear scope provided in SPP 3.6. Notwithstanding the recommendation for a coordinated approach, there are current mechanisms that provide alternative options to provide and fund infrastructure (see Table 1). These alternatives would align more closely with current practice whereby varying frameworks and implementation arrangements are determined on a case-by-case basis with each infrastructure provider. To clarify the options, Table 1 – DCP Infrastructure Types and Delivery Options sets out the:

Infrastructure Form (Standard or Community) and the network items,

Common types of infrastructure in each network required for an area such as Wanju and Waterloo; and

the Head of Power available to obtain the works or fund them.


May 2016 10


Table 1 – DCP Infrastructure Types and Delivery Options Form Required

Infrastructure Types of Infrastructure Delivery Framework Options

Sta

nd

ard

Infr

astr

uct

ure

Water Supply Water Service Provider (Regulated Entity)

Water supply source and treatment (including non-potable or ‘fit for purpose’ water);

Transportation, Distribution and Supply Mains greater than 225mm, reservoirs, booster pump stations;

All necessary land

Infrastructure Conditioned under Water Services Act 2012 Part 5 Div 3; or

Infrastructure Conditioned under Conditions and/or DCP under Planning and Development Act;

Built by WSP and funded from Balance Sheet

Sewerage Water Service Provider (Regulated Entity)

Wastewater treatment, effluent or re-use facilities;

Gravity mains greater than 300mm, pumping stations and rising mains

All necessary land

Infrastructure Conditioned under Water Services Act 2012 Part 5 Div 3; or

Conditions and/or DCP under Planning and Development Act; or

Built by WSP and funded from Balance Sheet

Roads Local Government

Full implementation of the cross section for Neighbourhood Connector up to Integrator A roads (e.g street lighting and landscape); necessary service relocations,

All associated bridges, culverts, round-a-bouts and signalised intersections on the road formation

All necessary land


Built by Local Government and funded from Balance Sheet

Drainage and Flood Management Local Government

Channelised overland flow, arterial drainage systems and flood management systems and devices, Pipe drainage greater than 1200dia RCP, Bio-retention basins, sumps, detention systems.



Electricity Western Power (Regulated Entity)

Major substations and internalised HV distribution, planned and agreed relocations / undergrounding.

Infrastructure Conditioned under Electricity Corporation Act; or


Built by Western Power and funded from Balance Sheet

Gas ATCO (Regulated Entity)

Major pressure stations, trunk gas distributions

Infrastructure Conditioned under National Gas Access (WA) Act; or


Built by ATCO and funded from Balance Sheet

Telecommunications NBN Co (Regulated Entity)

Major nodes and trunk lines;

Possible temporary exchanges (where deemed necessary)

Infrastructure Conditioned under provisions of the Telecommunications and NBN Co Act; or


Built by NBN Co and funded from Balance Sheet

Open Space Local Government

Sporting and Recreational Parks – Local to Regional including foreshores

All necessary embellishment, services and improvements

All necessary land

Conditions and/or DCP under Planning and Development Act;or



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Form Required Infrastructure

Types of Infrastructure Delivery Framework Options

Co

mm

un

ity

Infr

astr

uct

ure

Community Facilities Local Government

All buildings structure and improvements;

All necessary land


Built by Local Government and funded from Balance Sheet and Grants.

DCP Infrastructure Scope

Given the scale and scope of the infrastructure required for the future development of Wanju and Waterloo, it is recommended that the DCP framework is initially used universally to coordinate all of the servicing requirements. These requirements are described in Table 1 above. This is to facilitate a common platform of population, dwelling, employment and floor space assumptions. It would also mean that the calculation of infrastructure cost and apportionment is undertaken in a consistent manner. This approach supports best practice planning and engineering processes. It will also ultimately streamline and provide certainty for typical condition-making for subdivision and consent approvals. The DCP provides a unique opportunity to utilise a common framework for the delivery of infrastructure. This would provide greater coordination and certainty for network owners, the development industry and the community. Further discussion of the options and recommendations are provided in Section 3.0.

Housing Affordability

Within the Briefing Paper the issue of housing affordability was raised and those positions remain valid in the final paper. The DCP process can be criticised as being an added cost or burden on development, which has an impact on project feasibility and impacts on housing affordability and, potentially, housing supply. However, in fact properly constructed and implemented the converse is true: the DCP process does not and should not introduce new costs but simply identify upfront the costs of the infrastructure required to improve the land to the necessary standard to facilitate development. The DCP process then aggregates these costs and shares them more equitably and transparently for all beneficiaries. DCP processes must be developed concurrently with land use planning so that both the land use and infrastructure planning, including the contribution regime, are released simultaneously or within a reasonable time. To maintain its benefit to the urban development process the DCP must be prepared properly and take into account other revenue sources where they exist. It must not be used as a punitive process to boost the revenues of the network owners who have established other revenue pathways to fund new growth-related capital works. The DCP process should only act to highlight and expose costs that developers would have to bear at some point as part of developing the land.


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Without the structure of a DCP in place all of the readily developed ‘least cost’ land is taken up first with the remaining land potentially being financially unviable to develop as the threshold costs to service it are too high to bear from one development party. In an unmanaged environment there is a higher propensity for ‘winners and losers’ where some parties are disproportionally bearing costs and risks for the benefit of others. This outcome has the prospect of impacting on housing affordability. The DCP process acts to standardise these costs across all development and provides a greater opportunity for price parity and sustainable development outcomes. It also ensures the risk of failure is reduced as land purchasing for development has a higher visibility of servicing costs. This is typically a highly variable cost which is hard to define in any meaningful way at the time of speculation following land use zoning. In this way service providers have done all they can in a strategic sense to be clear about the servicing requirements, their costs and how those costs will be shared. This should in fact expedite the land development process and provide greater certainty and delivery of solutions on the ground. In summary, the application of the DCP process in a measured, professional and fair manner acts to lower the overall cost of infrastructure delivery, improve the efficiency of the development process, deliver better quality infrastructure and reduce the whole-of-life-cycle cost. These gains are extremely important to local and national productivity goals, and would deliver clear financial and economic benefits to the region and the State.

Recommendations

The key recommendations are contained in Section 3.0-5.0 that respond to the brief and the Specification;

Section 3.0 – DCP General Recommendations;

Section 4.0 – Service Provider Recommendations;

Section 5.0 – DCP Implementation and Management.

3.0 DCP General Recommendations

Geographic Coverage of the DCP

Given the scale and timeframe for development of the Wanju and Waterloo area it is prudent to understand the infrastructure demands and network solutions for both areas in an integrated manner. The land use planning has been undertaken understanding the interplay between residential and employment outcomes within and between Wanju and Waterloo and within the wider Greater Bunbury region. More critically, infrastructure planning must be strategic and consider the outcomes across boundaries to ensure true nexus is established between the infrastructure and all users not just those in the DSP. This will also ensure all beneficiaries pay and an efficient delivery of infrastructure is achieved not via an incremental manner through a blinkered view of demand and use.


May 2016 13


For example, it is important to know the entire water supply demand now in order to plan the trunk supply system to ensure the degree of infrastructure provided is being delivered in an efficient and effective manner rather than a piecemeal approach based on the existing demand being assessed first and independently to Wanju and separately to Waterloo. The aggregation to a single DCP is not problematic as the determination of a contribution can be reflective of the scale of infrastructure provided, whom it serves and the apportionment determined for those networks. This approach ensures an appropriate planned outcome but importantly the determination of an appropriate nexus between users. Infrastructure planning is not limited to a single land use planning boundary and does not need to be, and indeed should not be limited in this way. This is critical to proper planning and assessment of demand from multiple land use outcomes that transcend these boundaries. Fundamentally, the DCP process should align to the infrastructure geographic coverage required to service the cumulative planned need. For example, the drainage planning under the DWMS responds to the changes in land use, not only within Wanju and Waterloo but, more broadly to changes in the catchment. The approach to make the infrastructure the determinate of the DCP boundary and not the land use planning (i.e DSP) boundary is critical to establishing the most appropriate, efficient and least cost outcome for servicing. This approach clearly provides greater transparency, fairness and equity in the determination of the DCP. It also arguably easier to administer in the longer term as the information is refined and improved at each relative level of servicing within the catchment. It can relate to the DSP and provide clear guidance in line with the development of LSPs and release areas this is not constrained by the use of a broader boundary for the DCP. It also removes the need to update multiple DCP documents and the risks of contradiction where costs are not aligned between the varying DCPs within a Local Government. This also reduces the need for the management of multiple Local Planning Scheme Amendments to cater for a suite of DCPs based on each growth area in the Shire. In order to assist with the timely delivery of information the DCP can contain a number of logical precincts that can allow for provision of more detailed information as it is developed and published. This can include, at the higher level, the DSP boundaries for larger shared trunk infrastructure and below that the LSP boundaries. This approach has been routinely applied in both residential and industrial growth areas in the City of Swan and adaptations of this in the Local Government Infrastructure Plan (LGIP) in Queensland. This approach also allows for flexibility in the determination of nexus and apportionment where required to meet the particular level of detail, scope of infrastructure and nature of land use within the individual Development Contribution Areas (DCAs). In that way broad demand assumptions and infrastructure servicing outcomes can be made across the entire Wanju and Waterloo area and refined as the detail is proven up through the planning process. This practice has been used elsewhere and is very effective at providing early messaging concerning the contextual matters that must be considered in network planning and implications of cost and scale of delivery.


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Networks included in the DCP

The assessment of the scope of networks to include in the Draft DCP is set out on the basis to explore the options to better integrate and coordinate infrastructure and delivery amongst the service providers including the Local Government. This approach sets to challenge the ‘business as usual’ approach which is focuses on disparate planning activities of the various services providers. The intent is to pilot alternative infrastructure planning, funding and delivery processes using the current framework.

This is a recommendation of the process to be used in the development of the Draft DCP working with Local Government infrastructure and that of the regulated service providers.

It is not a recommendation of the outcome, this will ultimately be a decision of each service provider and their use of the Planning and Development Act or their own legislation.

The proposal is to improve the level of efficiency, coordination and potential financial savings by aligning the planning inputs and process of all networks. This will be done through a combined planning process as set out in Figure 2 – Proposed DCP Process set out on page 17. Such an approach will lead to development of infrastructure plans on a consistent basis and timing resulting in plans that detail ‘trunk’ infrastructure to service the areas. This will provide a suite of informative plans and schedules providing certainty to the process. This is important, not only for management and coordination of the service providers, but to provide certainty to the development community in respect of the required outcomes and how they might be called upon to deliver and fund the network on a shared basis. The framework to establish the infrastructure networks will be driven by the demands of the land use outcomes. It will also be informed by the major corridors (drainage and roads) established as part of the district structure planning process. The networks shall be depicted along with their logical servicing catchments so that a clear nexus is established around the delivery of services and to also articulate the boundaries for cost sharing.

Recommendation 1 The DCP boundary encompasses the DSP areas of Wanju and Waterloo. The infrastructure is mapped and related to its servicing catchment where relevant. Sub precincts at the DSP and LSP level to align with land use and infrastructure master planning process and will provide refined information to the DCP as the process is implemented.


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Local Government Infrastructure

Networks of Community and Standard infrastructure are to be included in the DCP administered by the Shire of Dardanup. These networks include:

Roads and transport infrastructure;

Public Open space – passive and active (sport) recreation infrastructure;

Drainage and Flood Management infrastructure

Community infrastructure. The networks will include both land and works at the trunk scale. This is a typical approach and what commonly forms DCP’s at the Local Government level.

Considering Non-Local Government Infrastructure (Utilities and Communication)

A key option which is considered worthy of exploration, which was set out in the Briefing Paper, is the extent to which other infrastructure provided by Water, Energy and Communication providers should be included in the DCP and, if so, to what level. State Planning Policy 3.6 allows for other infrastructure which is not administered by the Local Government to be included (Refer to Table 1 above) and that contributions can be recovered for these items. This may seem logical to coordinate infrastructure provision but this cuts across other legislative, operational and common practice of these agencies and their interface with the development industry. The key question relates to the benefits that may flow from this approach versus potential costs and risks. We have established that clear benefits flow from a cohesive and coordinated set of planning assumptions and clarity of outcomes is paramount to the planning and delivery process. Risks include management of the process and governance arrangements given these activities are the core of the utility businesses. Common feedback from consultation with the service providers included their need to be informed about the type and speed of growth as critical inputs into their planning. Integran believe that the following outcomes should be pursued at a minimum in the development of the Draft DCP and be used as the common platform for all networks as set out in Items 1 & 2. Draft DCP development should include:

1. A common set of demand and growth assumptions for Wanju and Waterloo that can be readily converted to the individual detailed network demands of each of the service providers;

2. A determination of two potential growth fronts and staging options for Wanju (generally a southern or northern approach) which are logically driven from existing network proximity, market readiness for planned development (i.e what will sell first), and aggregated network costing considerations (Refer to Section 3.3).


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Optional inclusions the Draft DCP: Further to the inclusions above, additional aspects of utility networks delivery and funding outcomes are intended to be explored as part of the Draft DCP. These elements as set out below can be included initially, tested as to the veracity of their inclusion through an assessment of the costs versus benefits of the approach. It is recommended that during the Draft DCP coordination the network outcomes can be improved through sharing of trunk infrastructure mapping and tables of infrastructure Information in Items 3 & 4 is provided for coordination purposes only in the Draft DCP and no head of power will be available for implementation of these works or contributions. If in the final DCP these items will be included this will be part of decision making process under Items 7 & 8 below. The inclusions in the extended Draft DCP comprise:

3. Trunk Infrastructure plans for all networks that respond to the drivers quantified in Items 1 & 2 this includes the networks of:

Water supply, Sewerage and Recycled water;

Electricity;

NBN; and

Gas. 4. Prepare schedules of costings of this infrastructure and the likely timings to help inform

the broader process of aggregated pioneering cost to develop from the South or the North;

5. Modelling of the required contributions using a consistent methodology as recommended in this report. This sets contributions which properly considers the early large scale investment to catalyse the development front. This will include an apportionment basis that works across varying land use types (res, commercial and industrial) and the varying time scales of infrastructure and growth (Refer to Section 3.4);

6. Scheduling the results of these contributions within the Draft DCP document to provide a comprehensive picture of not only the works (item 3) and their cost (item 4) but the required ‘fair share’ contributions (item 5).

Having worked up the basis of the DCP this provides a critical milestone for the assessment of all parties particularly the State and Local Government to determine what scope remains in the DCP which will form part of the planning scheme. Once the draft is prepared the next steps will include:

7. Determination if the head of power for implementation of the infrastructure contributions rests under the Planning Act and SPP 3.6 or alternatively that it remains with the entities operating legislation. It must be made clear which instrument is used to manage the planning and delivery phases of the infrastructure as part of the finalisation of the DCP prior to formally sending the draft to the WAPC and advertising for inclusion in the Planning Scheme.

8. Based on the outcomes of Item 7 determine the governance arrangements for implementation (e.g approval management, deeds/agreements, contribution collections and reconciliation, annual cost reviews, expenditure and capital works, oversight and management of process). This will also include referral instructions if the head of power is not the Planning Act.


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To assist in understanding this approach and why it aims to change the current practice the following figures have been prepared. Figure 1 - Current DCP Approach is compared to Figure 2 - Proposed DCP Approach, whereby infrastructure planning and contributions assessment is undertaken on an aligned and consistent basis.


Stand Alone Land Use and Infrastructure

Assumptions


Plans and Costings

Stand Alone Contributions Modelling

Subdivision

Individual Contributions Framework

Local Structure Plan

Some assessment may revert back to earlier planning

documents

Regulated Service Provider planning is undertaken late in the development process at

or just prior to sub-division stage. The procedures generally require involvement only an application is lodged and greater certainty

is known about demand from a specific development. The recommendation is to

challenge that and aim to provide a greater strategic view and documented position to

‘plan’ the outcomes and deliver this through the implementation of development.

The process is generally one of stand-alone assessments of servicing need with varying

assumptions about the form and timing of growth. Generally limited infrastructure planning is documented

in the DSP and LSP process and is left to individual agreement or conditioning negotiations in the

Development Assessment process.

Figure 1 - Current DCP Approach for Non-Local Government Service Providers

Water Service Provider Electricity Gas NBN

Under the current process outcomes are not coordinated or aligned. This is arising from a variety of methods and approaches employed by the service providers to undertake the infrastructure planning task and any contributions framework. This provides

varying levels of certainty in the planning process and decision making for the development industry increasing risk and cost.


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Recommendation 2 That all service providers are encouraged to participate in the development of the integrated Draft DCP as set out in Figure 2 and that agreement is obtained to explore the matters of implementation after the document is drafted as part facilitating real and necessary change for the development of Wanju and Waterloo.


Land Use and Infrastructure Assumptions


Trunk Infrastructure Plans and Costs

Consistent Contributions

Modelling

DCP Planning & Development

Act

Conventional Service Provider Contributions Framework

Servicer Provider Legislation and

Regulation

Local Structure Plans

DCP Process

The preparation of a Local Structure Plans will allow for refinement of the broad land use and infrastructure

assumptions initially determined from the DSP. These more detailed plans will then refine components

of the input costs or demands in the DCP.

Upon land use and infrastructure assumptions being developed network

planning can convert those demands into infrastructure needs. This is done over the

DSP initially and then and LSP as they are developed

As proposed all of the work to support the servicing of Wanju and Waterloo is performed on a consistent

methodology and upon finalisation of the draft DCP

the head of power is determined for implementation.

Figure 2 - Proposed Approach for Draft DCP


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Infrastructure and Development Staging

During consultation on the Briefing Paper it became apparent that many service providers were keen to understand the implications of the land use outcomes and the development staging of the area. It was discussed with the providers that given the early stage of planning, the sequencing and staging can only be undertaken on a speculative basis at this time, armed with an understanding of the varying dynamics that drive growth fronts. The issue of land release was explored in some detail in the Briefing Paper the discussion indicated a number of key driver’s that generally determine where and when development starts. Anecdotally there are two logical fronts that could be initiated for Wanju, one from the south and one from the north. The potential development staging of these two options is depicted in Plans in Annexure 3 – Staging Plans. These approaches focussed on servicing the greatest market in single detached lots is likely to be the area where more significant investment can be made. Given the absence of existing or committed heavy rail and other public transport outcomes, the likelihood of the town centre or medium density development in the early phases is limited. Some feedback indicated a need for this plan to be ‘regulated’ however, this is not warranted nor possible given that the freehold land ownership is the factors the will drive service and will only become apparent after commitments have been made and development commences.

Apportionment Basis

Given the recommendation that the infrastructure planning should be undertaken on a broad scope of networks and a large geographic footprint it is important that the basis of demand on the networks and that of apportioning costs is broadly represented. This is particularly important to ensure equity and fairness between the urban residential and commercial development of Wanju and the industrial development of Waterloo. A number of options exist for the apportionment base and there was no expressed preference during the consultation of the Briefing Paper. From practical experience it is important to use a basis which is aligned to the demand generated by development.

Recommendation 3 A development phasing plan will be developed with two likely options this include:

1. Development from the south via the South Western Highway through permanent connections to the proposed “Carter Boulevard and Wireless Roads” depicted in the DSP; or alternatively

2. Development from the north via the Forest Highway with interim connections onto the alignment of Carnabys Boulevard. Ultimately this area will be serviced by the grade separation and overpass delivered as part of the Bunbury Outer Ring Road (BORR) project.

Planning of infrastructure and costing options shall be developed for both options to better inform decision making.


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This achieves a number of outcomes including:

1. Drive the scope of the required infrastructure through the network modelling; and 2. To apportion the final cost of infrastructure using the same basis to achieve full nexus.

Such an approach ensures nexus, fairness and equity in those generating demand and using the infrastructure and the extent to which they share in the cost. This approach avoids the use of a broadly determined basis such a Cost Contribution Hectares that do not distinguish between varying uses on the development areas. Such approaches decreases the cost for higher density use and increases the relative cost on standard detached development. On this basis we would use:

the dwelling production outcomes for residential (detached and attached products);

the floor space for non-residential development; and

the net hectare rates for industrial.

These would then be converted through known infrastructure demand factors for each network to express the demand in a common apportionment unit. This approach means that aggregated apportionment units can then be used to share the cost equitably through maintaining the nexus to infrastructure use.

Cost Apportionment Methodology

Having established the cost of the infrastructure, its likely timing and the apportionment basis, the key inputs are available for determining the contribution rate. Within the Briefing Paper the types of apportionment methodologies were described and this included a number of key considerations including:

Apportionment base – what is ‘my’ share;

Apportionment method – who pays for what;

Financial Modelling method – do we consider timing.

Apportionment base

Given the need to apportion the costs over varying land use outcomes and to do this maintaining nexus, fairness and equity it is proposed to use the cost apportionment unit as set out in Section 3.4 of the report. This is covered in more detail in the Briefing Paper.

Apportionment method

The apportionment method shall be undertaken on a user pays basis so that both existing and future development shares in the cost of existing and future infrastructure. This maintains intergenerational equity and ensures use of existing capacity is considered as part providing efficient network outcomes.

Recommendation 4 The infrastructure costs are apportioned using a cost apportionment unit which is derived from known infrastructure demand metrics for each network and its relationship to the varying land use types.


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Financial modelling method

In order to set a contribution rate that ensures the timing of expenditures are considered in the context of the timing of revenues, the use of Net Present Value methodology is critical. This ensures that the high degree of upfront early works costs to pioneer the infrastructure into the site can be delivered and the costs shared across multiple land owners. The NPV values ensure that the slower pace of land development and delivery is accounted for, particularly in relation to the timing of assets within the networks of:

Water supply;

Sewerage;

Recycled water;

Electricity;

NBN; and

Gas

Contribution Payment timing certainty

In order to ensure that payments are made in accordance with the DCP, having performance requirements is vitally important. This was explored in the Briefing Paper with the key timing points identified in the process. Timing of payment is best managed whereby the payee has a need for an approval or clearance and there is an opportune time to manage the compliance on a number of matters, including payment. This includes:

For Subdivision – at the time of plan clearance by the Local Government or connection of other service providers;

For Consent uses – prior to the issue of certificate of classification for the building works. This will allow for the capture of primarily non-residential uses and their demand on the network being quantified and contributions determined in the planning process.

In some circumstances bonds in the form of bank guarantees can be taken to secure the payment where other development activities are being managed around these key milestones. Such would normally occur where DCP infrastructure is being constructed and being provided in lieu of the contributions. This is often the case where uncompleted works bonds may be taken to have subdivision plans endorsed prior to practical completion of the estate major and minor works. This approach expedites the registration of titles and reduces the exposure of the costs by being able to settle earlier on properties. Where this is the case, it is likely that bonds for works contributions required under the DCP may also be taken.

Recommendation 5 The contributions are determined using a standard cost apportionment unit, using a user pays basis and all infrastructure provision (expenditures) and demands (i.e revenue) are modelled using a Net Present Value methodology.

Recommendation 6 Payments of contributions are to be made at either Plan Clearance for subdivision or issue of Certificate of Classification for consent uses to ensure payments are made.


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4.0 Service Provider Network Recommendations

Key Consultation Findings by Network

Further to Section 2.0 and the discussions around unresolved issues, limitations and barriers, other network-specific findings identified from the discussions on the draft Discussion Paper are summarised and presented below.

Local Government Infrastructure

The Local Government Infrastructure relating to Roads, Public Open Space and Community Infrastructure were not discussed in detail during the consultation process, given these types of infrastructure can be more readily provided as development progresses or have a greater ability to “tap-in” to existing services (i.e. road network). These network arrangements will be further explored once an understanding of the likely water and sewerage servicing approach is known. As providers of funding to the Local Government for Sporting Parks, discussions held with the Department of Sport and Recreation revealed the following:

A more ‘Strategic’ approach to the provision of sport and recreation facilities is required in Greater Bunbury to ensure that the right facilities are being provided in the best locations. There is a need to reduce unnecessary duplication and to ensure that suitable facilities are being provided to meet the changing demographics of the region.

DSR noted there is currently an under-provision of sporting fields within the region, together with a lack of available / suitable land in existing developed areas to alleviate this issue. Wanju was identified as an opportunity to provide a wider regional benefit in sporting field provision.

Currently, the funding of facilities is being provided on a 1/3 basis, Local Government for the 1/3 and with other funding being provided from other Government Grant and / or Education (where co-located with schools).

Potential to explore a wider reaching funding framework, that supports a regional approach to recreation and sporting facilities in Greater Bunbury.

The Department of Water (DoW) expressed the need for highlight issues related to both catchment flood management and stormwater management that will be assessed at the appropriate level of detail in a Drainage and Water Management Plan and District Water Management Strategy, in accordance with Better Urban Water Management (WAPC 2008). This will be borne out in the DCP plans for both trunk infrastructure related to both operations. For Wanju there is a need to consider major arterial drainage that will need to manage upstream catchment flows. In this situation there long term governance arrangements have as yet not been determined, and multiple options exist. There is also a need to consider who implements the arterial networks ahead of sub-division to provide the critical enabling servicing, is it reasonable for developers to do this as part of the DCP or should the local or state government take the lead role with funding provided as part of the DCP.


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Tied into this process are the Drainage and Water Management Plan and District Water Management Strategy need to consider flood management in terms of catchment flows and the reduction in catchment storage that occurs through urban development. In addition there is a need to consider irrigation water supply (Harvey Water) and agricultural drainage (Water Corporation) and the transitional arrangements that will occur and how these changes are captured and managed through the DCP.

Water Supply, Sewerage and Total Water Cycle Management

Harvey Water, Calibre Consulting, Department of Water, Water Corporation and Aqwest were all consulted on the draft Discussion Paper. The discussions revealed the following: Network Planning Approach

The Wanju / Waterloo urban expansion areas are proposing to implement a Total Water Cycle Management (TWCM) principles. The implementation of this approach to water supply and management does come with issues (some of which are discussed in Section 2.2.2 and 2.2.3 of this report) which will need to resolved during the early phase of the DCP preparation.

The District Water Management Strategy will act as a driver to the water source capacity and potential TWCM response. It will incorporate findings of the Drainage and Water Management Plan (including consideration of flooding).

Foreshore areas to major waterways will need to be defined and protected, with land use and road interfaces carefully considered to ensure opportunities are maximised. This will be informed in part by biophysical studies currently underway.

The two water authorities with current licenses to provide services to the region have differing infrastructure roll-out strategies (one from the north, one from the south).

Opportunities

Opportunities for multiple water sources exist for the Wanju/Waterloo area, including those which are non-climate dependant.

Existing agricultural channels may provide some opportunity for minor flood mitigation and to supplement non-potable water supplies, particularly in the early development phases. Options will be available for the gradual piping of irrigation channels as development encroaches / conflicts. A multi-use corridor aligned with Waterloo Road may be suitable to diverting current channels heading west across the Wanju DSP area and to provide some overland flow relief.

Impediments

There are currently two Water Entities with authority to provide service to the Wanju / Waterloo Region, with the possibility of other business gaining approval to provide service in the future. This has the potential to create the issue around certainty in future customer base for the service providers and may inadvertently deter cost efficient infrastructure planning and provision, potentially driving up costs and hindering their ability to meet the TWCM outcomes and targets. Section 2.2.3 provides further discussion on this issue.

Development staging will be critical to understanding how the ultimate drainage and possible non-potable water supply channels may function. Right of way issues and ground level differences (i.e. current vs final) will create difficulties in delivery of ultimate solutions upfront.


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Electricity

Phone conversations held with Western Power’s representative provided a brief overview of the current practices of Western Power with respect to forward planning, infrastructure charging/funding and construction of assets. The representative also provided links to current literature available online. The phone discussions revealed the following:

The Western Power network consists of two main components: o Transmission Network – 66kv and above o Distribution Network – 33kv and below (high and low voltage).

Current Western Power Policy is for any relocation or undergrounding of the transmission network to be 100% customer funded and provided upfront.

Any capital funding provided by Western Power (e.g. project concerning the relocation of Transmission lines) must have no financial risk associated and always provided upfront prior to project commencement.

Contributions Policies do apply to New / upgraded infrastructure required to provide supply to developments. Standard Contributions Polices do apply in most cases, however these Schemes can be customised depending on the circumstances (e.g. major growth front or development requiring significant connecting infrastructure).

Some further information was provided by Western Power that detailed the process for determining whether a “Distribution Headworks Scheme” was applicable and the basis upon which it can be prepared. The Contributions Policy provided a detailed methodology for determining contributions, based on the principles of fairness and equity in distribution of costs, reasonableness of costs, and simplicity in application.

Before any further detailed network modelling or planning can be performed, the DSP needs to be understood to determine network demands and inform the potential staging / roll-out of infrastructure.

Gas

Limited discussions have been held with the ATCO Gas as attendance to workshops was not possible during the consultation process. Although no comments on the initial briefing paper has been provided by ATCO, some preliminary network planning information was submitted by the organisation. This detailed the following:

The closest gas network to the Wanju and Waterloo DSP areas is the Bunbury HP network

The current gas network has the capacity to supply 70% of the proposed gas load for Wanju and Waterloo.

This will require approximately 5km gas spur line and pressure regulators to connect the proposed new development in Wanju and Waterloo.

There are future works identified to reinforce the Bunbury HP gas networks. Assuming these reinforcements are approved, the future gas network has the capacity to supply 100% of the proposed gas load.

It is hoped that following the release of the DSP and its progression through the State approval and consultation process, that there is further involvement by ATCO in relation to a coordinated infrastructure planning and investigation into the DCP process.


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Telecommunications (NBN)

A meeting held with the NBN Co. representatives identified a key concern in relation to the current practices and Policy employed by the organisation with respect to charging new developments for ‘lead-in’ infrastructure. Refer to Section 2.2.4 of this report for more detailed commentary on this issue. In addition, the following other observations were made during the discussions:

New developments are utilising much of the spare capacity being created in the network (exchanges). This capacity is initially being provided for Brownfield (i.e. existing) areas to be connected.

NBN Co. is subject to the impacts of change in policy from a national level, that may impact upon the way contributions or ‘works in kind’ are sought for the Wanju/Waterloo context.

Telecommunications are typically considered 12months in advance of a new developments’ civil work commencing and therefore future planning is limited and Ad hoc in nature.

There is currently an active NBN network in the Treendale and Australind areas.

Discussions / considerations in the provision of NBN infrastructure include: o Pits and Pipes internal to the development are provided by the Developer; o Telstra ducts are used in existing areas, where possible; o Back hauling generally extends to the nearest exchange site (i.e. Bunbury); o Temporary exchanges are possible, providing service up to 1,600 dwellings.

NBN Co. was interested in understanding the likely demands and staging of the Wanju / Waterloo Development to inform high level servicing strategies / advice.

Main Roads

Main Roads WA was represented at the consultation, with discussion particularly focussing around the future realignment of the Forrest Highway (the Bunbury Outer Ring Road (BORR)) and how the Wanju Development may impact on this infrastructure. Discussions also revealed the following:

A main concern was noted around the DSP and the regulatory changes that may impact on land values on the new BORR corridor;

In relation to the BORR, Main Roads WA noted the following: o The new alignment of BORR was triggered in part by the Wanju DSP proposal; o The staged approach to the BORR corridor providing an urban arterial Integrator

A in the ‘old’ corridor first to delay the BORR and provide a critical north-south connection from the South-West highway to the road into Bunbury;

o MRWA sought to clarify the extent to which interchange impacts can be rolled into DCP as these are a major cost impediment.

Integran noted that a value management exercise needs to be incorporated so that the interchange is fit for purpose and at an appropriate cost;

Integran also noted that modelling of options is preferred to help facilitate earlier provision, but must be tempered by overall aggregated DCP contribution rates;

No decision on the inclusion of any costs can be made at this time as the infrastructure fundamentally red roads are the responsibility of the state;


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These discussions raised a number of considerations that should be made with respect to the DCP, including:

Potential development staging important to understand the implications upon the surrounding road networks, including the existing Forrest Hwy, future BORR, South-West Highway, future north–south arterial and the Arterial into Bunbury.

Funding of external road impacts to be investigated and the potential for the DCP to assist with the funding. This however needs to understand the wider funding mechanisms available to the State for the provision of Red Roads.

Land requirements for the BORR and associated intersections / interchanges are significant. There may need to be investigation into the benefits of acquiring early in the process to reduce cost escalations and to provide flexibility in influencing preferred staging of development at Wanju.

Definition of Trunk Assets

Defining the precise detail of what infrastructure should be included within the DCP at this early stage is difficult to do, and may inadvertently constrain the innovative thinking needed to understand the full potential of servicing outcomes for Wanju and Waterloo. Notwithstanding, some general principles should be used to test the appropriate level of infrastructure being considered in the development of the DCP. Typically the DCP Infrastructure should:

Be of a size and scale that typically provides service to more than one development (i.e. it would be considered unreasonable for a single development to bear the costs of provision);

Include infrastructure that is located external to the DSP area which provides a critical connection to the surrounding infrastructure networks;

May include staged infrastructure to provide appropriate levels of investment in line with long run development timeframes;

Should be built to minimise whole of lifecycle costs; and

Be constructed or provided in its ultimate location and form, providing service connection to adjacent land holdings (where relevant).

Note, however, that these principles above may have some exceptions, particularly in relation to the following circumstances:

Whether the works provides a ‘pioneering’ function for the initial stages of the development.

Some staged works should be considered where these provide the most cost-effective solution to the ultimate infrastructure strategy or where they alleviate a problem associated with access or the ability to construct the ultimate form.

A wider view of possible infrastructure should be investigated during the development of the DCP and subsequently refined through the financial modelling, consideration of the reasonableness of inclusion or potential issues arising at implementation. Table 1 of Section 2.3 of this report identifies a possible list of DCP infrastructure that should be considered at this stage in the DCP development phase. The principles described above should be assessed against these asset types to determine suitability or otherwise in the scheme. This list is not exhaustive and there is likely to be other items identified through the future detailed network planning and modelling exercises.


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Costing Approach

Detailed network plans or capital works programming specific to the DSP are not currently available at this early stage. Given some of the barriers identified in Section 2.2 around uncertainty in staging or network outcomes or final service provider arrangements, the preparation of a preliminary business case or even possible costs associated with DCP infrastructure is not currently possible. Once this information becomes available from the various network plans and future capital works planning, it is important to ensure that there is consistency across service providers in their approach to costing infrastructure. The benefits of applying some consistent parameters around the cost estimating of DCP infrastructure include:

The ease of interpretation of the DCP is maintained;

Future cost review processes are streamlined where possible; and

Consistency in this regard will increase the ability of the DCP to act as the central planning document, providing a consistent platform for the development of the DSP.

Some approaches that will assist in providing this consistency are:

Application of unit rates where possible to allow for quick review and update of costs;

Project specific costs should be identified where such items of infrastructure require more detailed assessment;

Land valuations should be applied consistently across service providers; and

Contingency and project owner’s costs (i.e. on-costs) should be nominated by each service provider and assessed for consistency in approach.

In order to provide benefit to the process moving forward, some unit rates have been included in Annexure 4 – Selection of Unit Rates. These have been provided for water and sewer mains, typical local government roads, bridges and intersections, and POS / community infrastructure. These will provide some general ‘rule of thumb’ costs to assist in the initial of DCP cost assessment.

Recommendation 7 Service Providers should refer to the trunk infrastructure principles and possible DCP Infrastructure identified in Table 1 when undertaking and determining the Network Planning that informs the DCP.

Recommendation 8 That the Service Providers follow an aligned process to costing infrastructure that will inform the DCP. This process and the set parameters should be discussed and confirmed with the relevant parties prior to the finalising of network planning.


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5.0 DCP Implementation and Management There are two distinct phases to consider in the preparation of DCPs:

Phase 1 - Initial Concept to Formal Adoption

Phase 2 - Implementation and On-going Management From the initial concept or inception through to the preparation and adoption is the most resource-intensive phase of the DCP process. This will be undertaken by Council predominantly in conversion of the DSPs and then LSPs into growth and demand projections. Through a working group arrangement information sharing about the development can be provided informing and coordinating other service providers to meet the challenges of growth. It would be expected that the DCP and framework outcomes would be finalised prior to the issuing of any subdivision approval conditions. An early release area would require development deeds or agreements to ensure that consideration is given to the DCP process to capture all development. To ensure that a well-considered and appropriately targeted plan results, it is critical that all stakeholders are provided with sufficient knowledge of the DCP processes and its intended outcomes. This will typically take over 12-18 months to complete thoroughly and requires significant input from a wide breadth of State and Local Government, other infrastructure providers and development industry knowledge base. Upon gazettal of the DCP into the Local Planning Scheme, the project will shift into the Implementation and On-going Management Phase. This phase involves the regular tracking of development obligations under the DCP, including: collection of cost contributions; determination of offsets (and refunds where applicable); and overall supervision of the DCP to ensure sufficient alignment between the planning, financial and engineering outcomes intended.

Resourcing and Governance

The resourcing requirements throughout these phases of the DCP process ebb and flow, with the majority of time and resources required upfront and at major reviews of the DCP (i.e. every 5 to 10 years). Under the current legislation and SPP 3.6 the cost contribution schedules and demand assumptions are recommended to be reviewed at least annually. This approach is recommended, given that the only certainty with in the creation of a DCP is that the assumptions and inputs will constantly change. It is important that this change is continually monitored and fed back into the cost modelling process at regular basis, ensuring fairness and accuracy in the contribution amount and minimise any adverse financial consequences from outdated plans. The internal governance structures built around the DCP is another important component for its effective implementation and management and will ultimately determine its success or otherwise. Acknowledgement of the importance of the DCP and the benefits it provides to the Council businesses of finance, planning and engineering is essential. These three areas of Council (at a minimum) should be intimately involved in all key DCP decisions and matters regarding its direction, to ensure a holistic and considered approach. In the case of the Wanju DCP, given that it is likely involve multiple infrastructure providers, it is even more important that there is wider consultation on all key DCP matters.


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In addition to the key directions committee discussed above, a single DCP point of contact within each service provider is recommended. This will ensure consistency in the application of the framework, with the primary aim of providing absolute certainty to the development industry around the DCP process.

DCP Reviews

Annual reviews of the DCP should be performed, ensuring consistency of the cost input and demand forecast assumptions. In respect of the cost assumptions, processes should be put in place to have independent expert reviews of land and works costs incorporated into the DCP and for these costs to be measured against the “actual” costs paid for DCP infrastructure. This will also incorporate refinements as a result of LSP’s being finalised. This may involve from time to time expert advice and preliminary design performed on more complex or asset built in risk prone situations to ensure the costing is as accurate as possible. Likewise, the demand forecasts that underpin the DCP should be checked against the lot/dwelling productions currently being experienced and ensure alignment with current expected trends in housing levels and types.

DCP Systems and Processes

The tasks set out during the development, implementation and operational phases of a DCP can be greatly assisted by systems and processes to support the professional and administrative tasks. This includes systems and processes to:

Predict and track future development outcomes, infrastructure demand and growth;

Plan infrastructure requirements and their cost;

Undertake the cost apportionment and derivation of the Contribution rates;

Keep track of project costs as infrastructure is delivered;

Track conditioned infrastructure works and those subject to formal agreements;

Recommendation 9 For the Draft DCP key contact should be nominated or each service provider to ensure a single conduit of information between all stakeholders. At the Local Government Level DCP Working Group containing key representatives from the relevant business units of each service provider to monitor and guide the DCP through implementation and ensure the document remains relevant at all times.

Recommendation 10 Annual reviews should be performed, utilising independent expert advice where possible. These reviews should focus on the Costs (expenditure) and Demands (revenue) upon which the DCP is based.


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Plan necessary companion capital expenditure by Local Government or network provider;

Undertake financial assessments to ensure sufficient revenue is available to deliver infrastructure;

Report progress to Council and the Department on a regular basis;

Monitor changes and make necessary amendments to mitigate future risk.

Manage agreements or deeds with developers who are performing works or ceding land in lieu of payment of cost contributions.

These systems and processes should focus on eliminating repetitive tasks, potential for errors and reliance on individuals. The outcomes should be focussed on the management of information from a variety of sources to be combined and delivered into a consolidated DCP document and process.

6.0 Actions

Consult Final Report

Given the scale of new development at Wanju and the innovative approaches set out in the draft Wanju DSP with respect to groundwater management, housing construction types and scope of delivery a revised approach to the delivery of the Contributions system is considered appropriate. This report seeks to fully test the provisions of SPP 3.6 and to fully test the benefit of an integrated and holistic infrastructure planning process. It is therefore necessary to determine support for the recommendations set out in this report to ensure a clear direction is determined, service providers indicate their willingness to participate the governance arrangements are clear. The approach is centred on the request to work in a collaborative environment whereby all service providers work through a common framework to prepare and present the contribution plan outcomes. Feedback on this strategy is critical to gauge the agreement from the service providers to explore this process and to work through coordination and certainty of outcomes. This should be done in a structured manner with a clear requirement for a response from the service providers to indicate to what extent they would participate in an aligned infrastructure planning approach.

Addressing the Barriers

The major barriers set out in Section 2.0 will need to be investigated and resolved as part of the process to improve the infrastructure outcomes for the area. In particular the urgent matters of the resourcing of the Shire of Dardanup and clarification of the regulatory environment surrounding the water service providers have the prospect of being protracted unless urgent attention is provided to these tasks.

Recommendation 11 Put in place systems and processes to streamline the DCP review, refinement and implementation processes to increase efficiency and ensure consistency.


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Prepare Project Plan

Following the consultation and feedback, the scope of assessment is documented and used to inform the extent to which the process of the drafting the DCP will be limited to the Local Government or will be broaden to investigate infrastructure which is under SPP 3.6. This should be undertaken in accordance with the General and Network Specific recommendations made in Section 3.0 & 4.0 Following this determination prepare a Project Plan and Governance framework to manage the collaborative process to deliver the Draft DCP. Such a study will broadly include:

Statement of Planning Principles;

Scope of work;

Methodology broadly and in detail;

Consultation plan;

Project Timelines;

Deliverables;

Budgeting. The responsibility of the preparation of the project plan will primarily be with the State including the coordination effort and the joint meetings with each of the service providers.


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Annexure 1 – Servicing Needs Investigation Briefing Paper


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Annexure 2 – Stakeholder Engagement

Attendees Meeting Details

Meeting # 1 - Shire of Dardanup Eaton Recreation Centre – Monday 21st March 2016 - 9:30 am to 11:30am

Mark Chester – Chief Executive Officer Steve Potter – Principal Planning Officer

Robert Quinn – Director of Development Services

Meeting # 2 – Harvey Water / Calibre Consulting Bunbury Tower – Monday 21st March 2016 - 12:30pm to 2:00pm

Steven Cook – Operations Manager Brendan Oversby – Principal Environmental Scientist

Meeting # 3 – Main Roads WA Bunbury Tower – Monday 21st March 2016 - 2:00pm to 3:30pm

Gerry Zoetelief – Project Manager Development

Meeting # 4 – Department of Sport and Recreation Bunbury Tower – Monday 21st March 2016 - 3:30pm to 5:00pm

Troy Jones – Regional Manager

Meeting # 5 – AQWest Bunbury Tower – Tuesday 22nd March 2016 - 8:30am to 10:00am

Brad Bevis – Chief Executive Officer Joe Smith – Finance Manager

Gary Hallsworth – Water Supply Manager

Meeting # 6 – NBN Co. NBN Offices, Rivervale – Wednesday 23rd March 2016 – 10:00am to 11:30am

Richard Milloy – Developer Account Manager Alex Zimmermann – Developer Account Manager

Meeting # 7 – Department of Planning (Infrastructure, Projects, Policy and Planning)

DoP Offices (Perth CBD) – Wednesday 23rd March – 12:30pm to 2:00pm

Craig Shepherd – Director Strategic Infrastructure & Planning Alex Watson – Senior Planning Officer

Meeting # 8 – Department of Water Teleconference – Thursday 31st March 2016 – 9:00am to 10:00am

Krish Seewraj – Senior Engineer

Meetings unable to be coordinated - Western Power (Christopher Chew) - ATCO Gas (Chris Pemberton) - Water Corporation (Peter Howard)

- Information relating previous contact between DoP and Western Power available for use in the SNA. Brief phone discussion held, with links to existing contributions documents provided. - Information on Project provided by ATCO via email. - Previous meeting minutes provided, together with subsequent emails responding to the Briefing paper.


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Annexure 3 – Staging Plans


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Annexure 4 – Selection of Unit Rates The following Unit Rates are provided for guidance purposes only to assist with preliminary costs assessments and provide examples of possible approaches to the valuing of infrastructure in the DCP. More detailed assessment of the costs should be performed through the preparation and refinement of the network planning that will ultimately inform the DCP.


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Wanju and Waterloo – Servicing Needs Investigation and Waterloo_SNI...Commercial in Confidence...

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Transcript of Wanju and Waterloo – Servicing Needs Investigation and Waterloo_SNI...Commercial in Confidence...