Aaron Gadiel, Partner

The NSW Government has now formally created its new Housing Delivery Authority. We also now have the detail on how the Authority will work. Residential developers will soon be able to make a formal application to the Authority to have their projects declared ‘state significant’.

On 15 November 2024, the NSW Government announced its intention to create a new Housing Delivery Authority. Mills Oakley has previously published an article analysing this announcement.

The Authority is now established

On 19 December 2024, the NSW Minister for Planning and Public Spaces, Paul Scully, formally established Housing Delivery Authority by publishing the Environmental Planning and Assessment (Housing Delivery Authority) Order 2024.

The Authority has been established as a ‘panel’ under the Environmental Planning and Assessment Act 1979. This means that, unlike the former Greater Sydney Commission, it does not have its own act of parliament.

It also means that — unlike the former Growth Centres Commission or the Sydney Metropolitan Development Authority — it has not been established as a development corporation under Growth Centres (Development Corporations) Act 1974.

Authorities established under their own act of parliament — or under development corporation legislation — have traditionally had their own chief executive officer and staff. They generally operated with some degree of independence from the Planning Department.

By constituting the new Housing Delivery Authority as a mere ‘panel’ suggests that the authority will only be nominally independent of the Department of Planning, Housing and Infrastructure.

It is true, that in a legal sense, the panel will not be subject to the direction or control of the Minister or the Planning Secretary (other than on matters of procedure and formal ‘section 9.1’ ministerial directions). It will also be a ‘NSW Government agency’.

Nonetheless, panels created under the planning legislation generally do not have their own staff, and certainly do not have their own chief executives. They are normally heavily dependent on the staff of the Planning Department (and, for some types of panels, local councils) to carry out their functions.

In this case, the work of the Housing Delivery Authority will be supported by staff of the Planning Department. In practice, this likely means that Housing Delivery Authority will effectively function as an arm of the Department.

In its earlier announcement, the Government said that the members of the Housing Delivery Authority will ‘include’:

• the Secretary of the Premier’s Department, Simon Draper;
• the Secretary of the Department of Planning, Kiersten Fishburn; and
• the Chief Executive Officer of Infrastructure NSW, Tom Gellibrand.

These individuals have now been appointed as members of the Authority. It is also not yet clear whether any additional people have been or will be appointed as members.

‘Expressions of interest’ to open on 8 January 2025

The Planning Department has published more information on the Authority operating approach (here).

According to this information, development proponents will be able to submit an ‘expression of interest’ to the Authority from 8 January 2025. An ‘expression of interest’ is a request that a project be declared ‘state significant development’.

Projects eligible for consideration ‘include’ projects valued at over approximately:

• $60 million in Greater Sydney (‘on average 100 or more homes’); and
• $30 million (‘on average 40 or more homes’) in regional NSW.

The ‘expression of interest’ process will be open until June 2029 (the duration of the current national ‘Housing Accord’). ‘Expressions of interest’ submissions will be reviewed monthly.

Before the Housing Delivery Authority recommends a proposal be declared ‘state significant development’, the Department will evaluate the project against criteria set under the objectives of the process. These objectives are to:

• ‘identify high-yield housing proposals by focusing on known high-yield types of residential accommodation’;
• ‘identify housing projects that can be assessed and constructed quickly by focusing on more compliant, major residential proposals that can commence construction quickly’;
• ‘drive quality and affordable housing by focusing on housing development proposals that are well-located, have enabling infrastructure and contribute to affordable housing supply’; and
• ‘complement the State Significant Rezoning Policy by providing a potential pathway for major residential proposals that are seeking concurrent rezoning (spot rezoning)’.

The government says that the Authority:

• will apply flexibility in its evaluation of proposals against the criteria; and
• preference will be given to projects which meet the criteria and could commence construction quickly.

The actual criteria has now been published and is available here.

Analysing the criteria of selecting projects

There are 12 criteria for the selection of projects.

This can be briefly described as follows:

• ‘Development is a type to deliver high yield housing’: This criterion seems to favour infill development over less intensive greenfield development.
• ‘Development is State significant’: This is a reference to the estimated development cost thresholds referred to above.
• ‘Largely consistent with development standards’: Developments that exceed applicable development standards by more than 20 per cent are precluded (unless pursued concurrently with a ‘rezoning proposal’). This may lead to some odd exclusions. For example, where a site has been excavated to accommodate the basement of an existing building, the existing ground level (for the purpose of measuring building height) is the ground underneath the existing basement levels. This necessitates a ‘clause 4.6’ request and a contravention of a development standard. A proposed new building may be completely compliant with the building height when measured from the ground level around the building, but may exceed the development standard when the height is measured from the artificially lowered level created by the excavation for existing basement levels. This means that there could be a notional height exceedance of more than 20 per cent for a building, even though the height actually complies with the underlying intent of the planning controls. This is only one example of how slavish adherence to particular numerical extent of a variation can lead to poor planning decisions. We consider it is a mistake to set a fixed numerical limit in this way.
• ‘Positive commitment to commence’: This criterion requires a demonstrated ability to proceed with a development application within nine months of the issue of ‘SEARs’ (see below) and demonstrated capability to commence the development within 12 months of approval. It appears intended to make it more difficult for passive landowners to participate (if they do not have a track history of developing projects themselves).
• ‘Land tenure is secure’: This criterion requires ‘demonstrated ownership or option to purchase for all land to which the proposal applies’. This may create issues where development is dependent on other land for (say) access or drainage — and easements for that land have not yet been obtained or agreed upon.
• ‘Utilises existing contribution schemes’.
• ‘Has addressed any previously refused proposal’.
• ‘Well-located’: This limits the scheme to the same type of land that is eligible for the ‘in-fill affordable housing’ incentive scheme. In general terms, this requires (in most of the ‘Six Cities Region’) the land to be within an ‘accessible area’ (defined with reference to the level of public transport services) and, in other areas, to be within an 800-metere walking distance of certain zones used for urban centres.
• ‘Free of specific environmental hazards and constraints’: This exclusion extends to land that is mapped as bushfire prone land or in a flood planning area. This surprising exclusion would knock-out a wide range of potential development.
• ‘Well serviced’: There will be a need to demonstrate that there is adequate capacity in enabling infrastructure such as water, sewer and access.
• ‘Positive commitment to affordable housing’: The development will need to contribute to the supply of ‘affordable housing’. In this context, this does not mean merely that the housing should be affordable in a plain-English sense. It means that at least some of the proposed housing must be for very low income households, low income households or moderate income households (being such households under the relevant planning instruments).
• ‘Significant changes to development standards or prohibited development will require a suitable concurrent rezoning proposal’: For a proposal that exceeds applicable development standards by more than 20 per cent — or is prohibited by a planning instrument — the application would need to be lodged in conjunction with a rezoning proposal. To return to our earlier example, it would mean that a site with a notional height variation or more than 20 per cent due to historic or recent excavation, a ‘rezoning proposal’ would need to be lodged to achieve the building height that was already intended by the strategic planners who formulated the existing controls. Presumably, the ‘rezoning proposal’ would have to propose that existing height (expressed in metres) be converted into an ‘RL’ measure. Nonetheless, the Authority’s willingness to consider concurrent rezoning proposals will be welcomed by developers.

The pathway

In brief terms, the Planning Department says the pathway will look like this:

• Stage 1: The applicant submits an ‘expression of interest’ online using the webform to outline the proposal and address the criteria. The form will go live on 8 January 2025.
• Stage 2: The Housing Delivery Authority evaluates the ‘expression of interest’ against relevant criteria. The Authority recommends to the Planning Minister an approval pathway. That is, either ‘state significant development’, ‘state significant development and concurrent rezoning’ or ‘existing DA pathway’.
• Stage 3: Planning Minister declares the proposal state significant (assuming that the recommendation was not ‘existing DA pathway’).
• Stage 4: The Planning Department issues industry-specific ‘SEARs’ within seven days (see below).
• Stage 5: The applicant lodges a development application with the Planning Department (within nine months).
• Stage 6: The Planning Department assess the application (and consider the concurrent spot rezoning when relevant). There would be a public exhibition of the application (and where applicable, concurrent rezoning).
• Stage 7: The Planning Minister or delegate would determine the development application and concurrent rezoning ‘within 275 days’.

Stage 7 appears to assume no role for the Independent Planning Commission. Additionally, the Planning Department’s website says that the Minister for Planning and Public Spaces (or delegate) will be the consent authority ‘for development applications under the state significant development pathway’.

However, for contentious state significant development applications (where local councils have objected, or there are a large number of community objections) the Independent Planning Commission is the consent authority. There is an exclusion for development applications that are reliant on ‘infill affordable housing’ scheme, but this exclusion does (presently) not apply to other housing types. Additionally, where certain reportable political donations have been made, the Independent Planning Commission would be the decision-maker, even if the development includes ‘infill affordable housing’. (It is possible that the Government is intending to make further legal changes to reflect its stated position. Time will tell.)

New ‘SEARs’ for residential development

Before a state significant development application has been lodged, it is necessary to obtain environmental assessment requirements from the Planning Department. These are usually called ‘Secretary’s environmental assessment requirements’ or ‘SEARs’.

A state significant development application must be accompanied by an environmental impact statement that has been prepared in accordance with the SEARs.

The Planning Department says it is streamlining the process of obtaining SEARs by preparing ‘industry specific SEARs’ for all state significant residential development. That document is available here.

The bottom line

Many developers will see this new pathway as a real step forward. It provides an opportunity to overcome local government inertia.

Nonetheless, the criteria used to evaluate projects seems to arbitrarily exclude a wide range of developments that would normally be regarded by decision-makers as being acceptable. The Authority has the discretion to flexibly apply this criteria. It will be interesting to see how well this works in practice.