By Aaron Gadiel, Partner

The NSW Government has (yesterday) announced a major change to the NSW planning system.  For the first time, development proponents are to be given a right to appeal rezoning decisions to ‘unblock the planning system’.

The announcement was made by the Premier of NSW, Gladys Berejiklian, as part of her release of the government’s ‘Planning Reform Action Plan’.  A key feature of this plan is a promise to ‘[b]oost the role and resourcing of the Land and Environment Court by establishing a new class of appeals for rezonings’.

At present this is a promise of action, rather than action itself.  To create a ‘new class of appeals’ in the Land and Environment Court it will be necessary to amend the Land and Environment Court Act 1979 and probably the Environmental Planning and Assessment Act 1979 (the EP&A Act).  This will require the approval of state parliament.  This can never be guaranteed — two government ‘bills’ to amend planning legislation have been stuck in parliament since last year.

According to information published on the government’s website, the timeframe for the implementation of the government’s ‘Planning Reform Action Plan’ is July to October and beyond.

The need for rezonings

The fate of urban development efforts in NSW is closely linked to rezoning (or other changes in planning controls).  This because, in Sydney and NSW, there is a strong emphasis on prescriptive controls.

For example, planning systems in some other jurisdictions might provide for, say, eight different types of standard zones in total.  In NSW, there are 35 standard zones, including eight different types of business zones alone.

This means that development proponents can often face inflexible prohibitions that stop land being put to its highest and best use.

A prohibition might be justified if it is in place as part of a well-thought-out (and current) strategic plan.

However, often development prohibitions only exist because of a past decision made long ago — that may no longer reflect current strategic land use thinking.

Sometimes a prohibition may exist because of a relatively recent review of planning controls.  Nonetheless, it may have been implemented with just a short desktop review by public officials — rather than through any detailed and comprehensive site planning (of the kind that generally only landowners/private developers are able to fund).  This may mean that development is prohibited because of fears about adverse impacts — when, in many cases, such impacts could be avoided through measures that were not anticipated by strategic planners.

Additionally, some prohibitions seem almost accidental — and lack any merit justification.  A judge of the NSW Court of Appeal once famously observed that ‘any attempt to always find planning logic in planning instruments is generally a barren exercise’.  This judicial statement has been relied on by local government in subsequent court proceedings (when defending apparently illogical interpretations of local environmental plans).

The current rules for changing planning controls

Under the EP&A Act there is a set of rules that must be followed before local environmental plans (LEPs) can be changed.

In broad terms, there are normally four key decision points in securing a change in planning controls:

• the adoption of a planning proposal by the ‘planning proposal authority’ and its submission by that authority to the Planning Minister for ‘gateway determination’;
• the making of a gateway determination (ie a decision) by the Minister;
• the public exhibition of the planning proposal and the consideration of the outcome of that public exhibition by the planning proposal authority; and
• the actual changing of planning controls by the ‘local plan-making authority’.

Planning proposal and the ‘planning proposal authority’

A proposed change to  planning controls starts with a ‘planning proposal’.

A private landowner or developer does not have the power to prepare an officially-recognised planning proposal.  While landowners and developers frequently prepare documents titled ‘planning proposals’ (and submit them to local councils) the actual legal status of these documents is that they are requests for a planning proposal to be adopted by the local council.

It is the role of the planning proposal authority to prepare an official planning proposal.

The planning proposal is a document that:

• explains the intended effect of the proposed changes to the LEP; and
• sets out the justification for making the proposed changes.

For each local government area, the local council is the default ‘planning proposal authority’.

The Planning Minister can appoint either:

• a regional or district panel; or
• the Secretary of the Department of Planning, Industry and Environment (the Secretary)

as a planning proposal authority in lieu of the local council in certain (limited) circumstances.

The circumstances in which the Planning Minister may remove the local council as planning proposal authority include:

• the proposal relates to a matter that the Minister considers to be of:
  • state or regional environmental planning significance; or
  • environmental planning significance to a district; or
• the Secretary, the Independent Planning Commission or a district/regional planning panel has recommended:
  • that the proposal should be submitted for a ‘gateway determination’; or
  • that the proposed changes to controls should actually be made; or
• the Minister considers that the local council has:
  • failed to comply with its obligations with respect to the making of the proposed changes to the LEP; or
  • has not carried out those obligations in a satisfactory manner.

Once a planning proposal authority (usually a local council, as per above) adopts a planning proposal, for it to be progressed the local council must forward the planning proposal to the Minister for a ‘gateway determination’.

Gateway determination

A gateway determination is — at its core — a decision by the Minister (or delegate) whether the matter should proceed.  This decision is not a final decision.  It simply means that the planning proposal is considered to be sufficiently robust that it warrants further consideration. Changes to the proposal as often required at this point.

If the decision is that the matter should proceed, the gateway determination will normally also set out any minimum period of public exhibition of the planning proposal.

Final proposal of the plan proposal authority

Once the planning proposal has been publicly exhibited, the planning proposal authority can decide:

• to adopt a final proposal;
• to vary the proposal; or
• request that the Minister decide that the planning proposal is not to proceed.

Decision by the ‘plan-making authority’

Once the above process has been completed, the LEP can be altered by a ‘local plan-making authority’.  This will either be:

• the Planning Minister (‘the Minister for Planning and Public Spaces’; or
• the Council (when a ‘gateway determination’ authorises the Council to perform that role).

When a proposal is blocked …

As can be seen from above, the current process for securing a rezoning of land is complex and time consuming.  There are many opportunities for the process to head off-the-rails.  There is considerable risk and cost for a development proponent.

This is why the government says that it takes an average of 579 days to finalise a rezoning or change a decision on planning controls (in our experience, many proposals take much longer).

The government says that the introduction of an appeal right on rezoning/planning control decisions to the Land and Environment Court will cut the decision-making time by 191 days (33 per cent time savings).  That is, a turnaround time of one-year.

A time saving like this will be a significant improvement.

However, a merit appeal right in the Land and Environment Court has the opportunity to offer more than just time savings.  It can be expected that it will improve the overall quality and consistency of decisions on rezoning (and planning control changes).

In our experience, rezoning decisions are often dealt with in an arbitrary way by public authorities — without any real attempt to justify decisions to block proposed changes.

The existing way of attempting to overcome this type of blockage is via a ‘rezoning review’.  A rezoning review that allows a proponent to make a request that an independent body review a request for a planning proposal.

The current rezoning review process exists as the result of an administrative policy that has been adopted by the NSW Government.  This means that the rules surrounding how and when a rezoning review may be conducted are not rigid (and therefore are unreliable).

The administrative policy lays-down a process by which a panel might decide to make a statutory recommendation to the Minister (or decide as the Minister’s delegate) that it should be a planning proposal authority, rather than the Council.

At the end of the day, the rezoning review process does not offer the kind of robust independent review that a merit appeal does in the Land and Environment Court.  By way of example, for a large complex development, it would not be unusual to a commissioner of the Court to spend four hearing days taking evidence and listening to submissions.  However, a panel could easily only spend one hour holding a meeting for a development of the same complexity.

The rezoning review process can be briefly described as follows:

Step 1 — proponent seeks review

If a proponent (eg developer, landowner) has requested that a council prepare a planning proposal for a proposed instrument (which may merely be a request for changing planning controls in a LEP), it may ask for a rezoning review.

A request for a rezoning review can only be made if:

• the Council has notified the proponent that the request to prepare a planning proposal is not supported;
• the Council has failed to indicate its support 90 days after the proponent submitted a request (accompanied by the required information); or
• has failed to submit a planning proposal for a ‘gateway determination’ within a reasonable time after the Council has indicated its support.

A proponent may request a review by lodging an application with the Department of Planning, Industry and Environment (the Department).

The Department is supposed to forward a rezoning review request to the relevant district or regional panel within three business days of receipt. (In the City of Sydney, the Independent Planning Commission fulfils the role of the panel.)

The local council is formally allowed 21 days to provide its response to the panel. (Although, in practice, a response may arrive much later than this and will still be considered.)

Step 2 — Assessment by the panel

The panel will undertake an assessment to determine whether the proposal:

• has ‘strategic merit’;
• having met the strategic merit test, has ‘site-specific merit’.

Proposals that the panel considers as not ‘reasonably’ meeting the assessment criteria will not be supported by the panel.

Communication of a decision is supposed to be made to the proponent and the local council within 90 days of the Department receiving the initial rezoning review request.

Step 3 — Appointment of a planning proposal authority

If the panel decides that a proposal should proceed for a ‘gateway determination’, it will concurrently notify the relevant local council and ask if it will accept the role of ‘planning proposal authority’ to take the proposal to the gateway and then finalise the proposal.

Where a local council chooses not to accept the role of planning proposal authority, the panel may appoint itself to that role.

(Problems arise when a local council ‘accepts’ the role of planning proposal authority, but then only half-heartedly progresses the planning proposal.  This happens much more than it should.)

Step 4 — Planning proposal submitted to Department for gateway determination

Once the planning proposal authority is appointed the planning proposal is to be submitted (by that authority, with its endorsement) to the Department for a gateway determination.

Not legally binding

However, it is important to understand that there is no strict legal requirement to comply with the above process, given that it is only an administrative policy.   If a district panel does not actually make a decision to appoint a body other than the local council as the planning proposal authority, then its failure to make such a decision is unlikely to be subject to judicial review.

How will a merit-based appeal right in the Court work?

It will be perfectly feasible for the Land and Environment Court to handle appeals for site-specific and precinct-specific rezoning/planning control changes.  This could be done in much the same way that the Court deals with development applications.

The real question for government is how strong will the Court’s powers be?

It would seem obvious that that the Court should have all of the powers that a local council would ordinarily have in the process.  However, a local council current has multiple decision-making roles at different points in the process.  This may either require either:

• a simplification of the procedure (let’s hope so); or
• potentially a multi-stage Court process (or a need for multiple proceedings to progress the same rezoning).

We will have to wait for the government to release more information about its proposal before we know exactly what is going to happen.  However, no matter what it does from here, it will have to be an improvement on the current situation.

The beauty of a merit appeal right in the Court is that it will have benefits for the whole planning system (and not just for the actual matters that end up in Court).  This is because the potential of a Court appeal will, in itself, encourage local councils to be less arbitrary when dealing with planning proposals. Finally a more disciplined, coherent planning system?

Let’s hope that the new regime starts sooner rather than later.