PPV Volume 10 No 5

1. Mornington Peninsula’s housing strategy – will be there enough supply to meet demand?

In Mornington Peninsula C219morn (PSA) [2023] PPV 21, it was proposed to implement the Housing and Settlement Strategy: Refresh 2020 (HSS) and Neighbourhood Character Study and Guidelines (NCSG) by proposing to substantially change zone and overlay schedules and residential-related policies.

Over 32 per cent of all dwellings are holiday homes or vacant, compared to 9.6 per cent in Greater Melbourne.

The HSS found that in March 2019, Mornington Peninsula had capacity for an additional 52,895 dwellings which includes 11,360 (21.5 per cent) in activity centres based on its existing zones and overlays. This means that 45.4 per cent of the municipality’s capacity would have to be available and developed by 2036 to meet population demand.

The Panel considered the NCSG applies a clear and robust methodology but within this framework, it seeks to generally adopt existing neighbourhood character as the preferred character in most residential areas.

Amendment C219morn implements the HSS and NCSG by changing zones and overlay schedules and policies affecting residential areas. This includes:

  • replacing most of the General Residential Zone with the Neighbourhood Residential Zone
  • retaining existing mandatory maximum building heights, most of which are less than the default zone heights
  • retaining other existing provisions which restrict housing capacity including the single dwelling requirement
  • applying more restrictive Clause 54 and 55 standard variations which seek, among other things, larger setbacks.

Council received 317 submissions in response to the exhibition of the Amendment. Key issues raised in submissions include:

  • the approach taken for the HSS and NCSG including change area categories and neighbourhood character objectives, the zone and overlay schedules, Vegetation Protection Overlay, building heights and investigation areas
  • whether the zone and overlay schedule provisions are justified and appropriate, including the single dwelling requirement, building height permit trigger, building alteration and construction exemption, subdivision area requirement, Clauses 54 and 55 variations, Planning Scheme approval date, and transitional provisions
  • specific area issues, affordable housing and bushfire risk.

The Panel questioned whether the HSS will achieve sufficient supply of residential land to meet projected demand. It stated:

The Panel considers that it is unclear whether Mornington Peninsula can achieve State planning policy that seek municipalities to provide sufficient land supply for projected population growth over at least a 15 year period. Based on the data presented and tested during the Hearing, the Panel finds that Mornington Peninsula needs about 17,750 dwellings to accommodate its future population from 2021 to 2036. This would average about 1,183 dwellings each year which, based on the 2005 to 2016 dwelling construction rate, is unlikely to be met.

The uncertainty stems from the approach taken by the HSS to calculate housing supply. The Panel considers the HSS should have: 

    • assessed the potential impact of the provisions proposed by the Amendment rather than existing Planning Scheme provisions because the Amendment proposes more focussed neighbourhood character objectives combined with more restrictive provisions 
    • applied at least one, if not a few different likely take up figures, to differentiate between potential housing capacity and likely housing supply.

As a result, the Panel considered Mornington Peninsula is likely to have capacity for less than about 26,960 dwellings, though a more exact estimate is unknown at this stage based on available information. It would need at least 66 per cent of these dwellings to be constructed from 2021 to 2036 to achieve 15 years housing supply, which is an optimistic take-up.

The Panel recommended that Council should reassess its dwelling capacity to determine a more accurate estimated figure. It should estimate how much dwelling supply will be available to 2036 by assessing the likely take up of the estimated dwelling capacity before progressing the Amendment. If the estimated take up is less than 15 years supply, then Council should:

  • review its Planning Scheme provisions to enable more housing supply, or
  • explain why other planning policy objectives have been given greater weight than the Clause 11.02-1S objective which seeks at least 15 years housing supply.

In relation the HSS designation of substantial, incremental and limited change areas, the Panel observed that the key characteristic differences between a minimal and incremental change area are relatively modest.

Further, the Panel considered the HSS approach to categorising land for minimal change solely because it is in a Bushfire Prone Area, flood mapping or an overlay is an overreach because it pre-determines they have physical constraints to change before assessing actual circumstances. It considered a deeper and more nuanced assessment is needed to understand whether they will seriously affect the capacity for change.

In relation to substantial change areas, the Panel expressed concern whether sufficient change was proposed:

An activity centre is where substantial change is expected and planned. Even for the Mornington Peninsula, the extent of development capacity enabled through the proposed provisions cannot be regarded as substantial change.

It recommended that:

  • All residential land identified through a structure plan as being in a major activity centre boundary should be categorised for substantial change.

In making this recommendation, the Panel stated that re-categorising properties to substantial change would not result in a notable impact because based on what the Amendment proposes, this would result in an additional storey only.

On the NCSG and preferred neighbourhood statements, the Panel expressed concern that all neighbourhoods were considered so unique that schedules were required:

The preferred character statements appear to consider every existing neighbourhood to be special enough to generally retain their character. Though the statements refer to new development and reflecting rather than preserving character, the extent of enabled change is relatively modest. It is possible for neighbourhood character in some areas to change without negatively impacting on the Mornington Peninsula’s overall character. This is assured through existing Planning Scheme policies and provisions which seek to protect its identified special areas. Within this context, the Panel considers there should be preferred character statements which enable some further evolution in the incremental change areas.

The Panel can understand why there were submissions which believed the preferred character statements and objectives broadly reflect existing neighbourhood character. 

Existing neighbourhood character, particularly those in incremental change areas, should not have been accepted at face value as the preferred future character. This was a missed opportunity to explore more thoroughly with the community an evolved character which achieves broad State and local planning policy objectives. The Panel does not accept that allowing more evolved neighbourhood character with greater development will transform the Mornington Peninsula into metropolitan Melbourne.

The Panel was also concerned with the ‘legacy issue’ of mandatory maximum building heights specified in DDO schedules which were introduced decades ago, during a different planning regime. It noted that in many areas these heights are more restrictive than the default maximum height of 9 metres (2 storeys) specified in NRZ and 11 metres (3 storeys) in the GRZ:

The Panel considers that Mornington Peninsula’s current restrictive planning provisions have made it very difficult to accommodate considerable growth and have been the key influence in the municipality’s predominantly single and double storey character.

It further stated:

After several decades, the Panel considers the Amendment should have reviewed existing building heights rather than accepting them at face value as still being appropriate. This is particularly because the maximum building heights would not have complied with Ministerial Direction 7(5) if they were specified in an NRZ schedule. A more rounded review would have helped to:

    • explain 1 or 2 storey areas should remain as an area of up to 2 storeys
    • explain why retaining an existing height (which is 1 metre less than the default maximum height of 9 metres in the NRZ) in non-sensitive areas is necessary to achieve neighbourhood character objectives
    • determine whether policy objectives could be met through different building heights
    • confirm whether existing building heights are overly restrictive in achieving policy objectives.

Despite this finding, the Panel stated it would be inappropriate for it to recommend increasing maximum building heights beyond what has been applied for many years until there is a more in-depth strategic review of building heights.

Accordingly, the Panel formed the view that, until strategic work concludes otherwise, any land in General Residential Zone Schedule 1 and without an overlay should retain the maximum building height of 11 metres (3 storeys). None of the significant volume of information presented through submissions and evidence provides clear justification to reduce the maximum building height in these areas.

A feature of the Mornington Peninsula’s planning scheme is the single dwelling restriction in a number of the DDO schedules. Council submitted that if accommodating enhanced growth was a priority for Council, then a requirement to limit one dwelling to each lot would be a barrier to that outcome. However, with the Mornington Peninsula Localised Planning Statement (MPLPS11F) vision for the Peninsula being upon differentiating it from the metropolis on housing growth and prioritising upon landscape, environmental and special township values there is strategic justification and merit upon retaining this legacy feature of land subdivision. This was another area of concern for the Panel:

The mandatory requirement of a single dwelling on a lot applied across the DDO schedules, although with a strong planning heritage in Mornington Peninsula, works against Council’s contemporary diverse housing objectives. It does this by retaining and strengthening a dwelling provision, without capacity for discretion. Council justifies this on the basis that the restriction is needed to preserve character and the existing subdivision pattern. The Panel does not share this view. The mandatory single dwelling provision comes at the expense of the identified need for diverse and affordable housing options throughout the municipality including in larger towns and adjacent to smaller activity centres. Council does not appear to have revisited the single dwelling requirement in light of the strategic directions of the Triple A Housing Plan.

It concluded that future work on the HSS should comprehensively review the necessity for the mandatory single dwelling on a lot provision to assess its impact on delivering housing diversity and housing supply across the residential zones, particularly in larger townships.

Overall, the Panel recommended that before Amendment C219morn is adopted, it review a number of issues and make change as recommended in the report.

See also:

  • Guide to Planning Panels: Housing > Housing strategies

2. Issues arising from Heritage amendments

Amendments to introduce the Heritage Overlay comprise a large part of Planning Panels Victoria’s workload. Some recent Panel reports draw attention to some significant issues about Planning Practice Note No 1 Applying the Heritage Overlay and introducing heritage controls in the planning scheme.

In Boroondara C386boro (PSA) [2023] PPV 28, it was proposed to apply the Heritage Overlay on a permanent basis to four individual properties and one heritage precinct comprising seven properties in Balwyn and Deepdene.

In relation to the one of the individual places in Deepdene, the property owner submitted the house was constructed in 1916 and neither the 2015 Study or the citation places any historical significance on the pre-war period. Rather, the focus of the 2015 Study is the residential boom of the 1920s and 1930s. The property owner added that to satisfy Criterion A the importance of the development of the subject site needs to be demonstrated. In addition, it was submitted that both experts agreed that Federation dwellings are common throughout Boroondara.

Because the statement of significance fails to attach any elevated historical importance of the house, it was argued that in using the Victorian Heritage Register Criteria and Threshold Guidelines 2022 (VHR Guidelines) as a guide to local level assessment of the criteria, the house fails the first step because it has no clear association with a historically important event, phase or period and the Estate is of no historic importance to the municipality.

The property owner also submitted that the threshold for local significance under Criterion D was not achieved because the house has been significantly modified. The statement of significance continues to identify the house as ‘largely intact’ even though the owner had submitted a list of the alterations and Council proposed revisions to the statement.

The Panel commented on the appropriateness of using the Victorian Heritage Register Guidelines for assessing local significance and stated:

The Panel is faced with the challenging situation of two experts with significantly differing assessments of the same building and with both relying on interpretations of the VHR Guidelines to support their position. While the absence of any clear guidance on how a threshold can be met in PP01 is challenging, using the VHR Guidelines can be helpful but also has inherent risk because they guide assessment of state-level heritage significance which have a different threshold than local-level heritage significance.

As discussed above, the basis for the application of the Heritage Overlay is meeting the threshold on one of the eight criteria detailed in PPN01. In this case, Council and Mr Huntersmith identified Criteria A and D as relevant. 

Criterion A is defined in PPN01 as “Importance to the course or pattern of our cultural or natural history (historical significance)”. The VHR Guidelines provide three tests, outlined in Mr Huntersmith’s evidence to assess whether the threshold of importance is achieved. Mr Huntersmith’s view is that this early house is important and Mr Raworth’s view is the significant development of Deepdene occurs in the interwar period and this initial development is not typical of what occurs after the First World War. 

The Panel agrees with the property owner and Mr Raworth that the 2015 Study, pays little attention to the period 1900 to 1920 as significant in the development of the area. While the house at 6 Creswick Street may have been the first built in the street, its construction is out of step with the majority of the development that occurred from 1920 onwards. Consequently, this Federation house does not have a clear association with the interwar bungalows that underpinned what the 2015 Study called the residential and commercial boom of the 1920s and 1930s. The Panel concludes that the place does not meet the threshold for Criterion A.

The Panel agreed with the property owner’s heritage expert that the alteration to the house diminishes its importance to an extent it does not meet the threshold of local heritage significance for Criterion D.

An issue that was debated concerning another potential individual property was the relevance of structural condition in considering whether to apply the Heritage Overlay. The property owner tabled a consulting engineers report which concluded that the building had been neglected and had a number of serious issues.

The Panel agreed with Council’s heritage expert that the house is “highly intact” and is comparable, although smaller in scale, to the examples provided in the comparative analysis. The modifications to the house are minor and do not impact the integrity of the building. Consequently, the house meets the threshold for Criterion D. It noted that a number of Panels have been of the opinion that the structural condition of a building is not a relevant consideration in the application of the Heritage Overlay and is generally a matter for assessment as part of the planning permit process.

In Melbourne C403melb (PSA) [2023] PPV 30, it was proposed to implement the recommendations of the North Melbourne Heritage Review 2022 by:

  • applying the Heritage Overlay to four individual places
  • amending the boundary of the existing North & West Melbourne Precinct (HO3)
  • deleting the Heritage Overlay from two place (HO284, HO953)
  • making associated changes to Statements of Significance and other planning scheme provisions.

The Panel also addressed the issue of the relevance of the condition of a building when considering the application of the Heritage Overlay. Other issues it considered were the use of gradings and whether separate Statements of Significance for individual sites should form part of the Statement of Significance for the precinct.

In relation to gradings of heritage places, which were common place in many older conservations studies, and were used by the City of Melbourne until July 2020 when a new heritage category system was introduced to the Planning Scheme through Amendment C258, the Panel stated:

Planning Practice Note 1 (Applying the Heritage Overlay) advises that letter gradings (such as A to D) should not be used. These gradings were phased out because their misleading nature resulted in confusion, debate and unintended consequences such as demolition.

One of the misleading aspects of this approach was reference to the term ‘grading’. It infers there is a heritage hierarchy which does not exist. This was demonstrated at the Hearing where there were references to ‘upgrading’ and ‘downgrading’ properties. A precinct is a single heritage place comprising multiple properties. Each property is a piece of the overall place and is objectively assessed to determine its role and relationship in the precinct. Each property may:

    • have buildings with form and features which contribute to the precinct’s significance, with some being significant in their own right, or
    • be insufficiently intact to contribute to the precinct but be important in having new development sensitively respond to the surrounding heritage fabric.

Planning Practice Note 1 continues to refer to ‘grades’.

Council’s Heritage Places Inventory assigns a ‘building category’ to each property listing. For the purposes of the report, the Panel has adopted Council’s terminology by referring to the terms significant, contributory or non-contributory as heritage categories rather than grades.

In relation to the relevance of the condition of a building, the Panel stated:

The Panel agrees with Council’s submission regarding building condition and development opportunity. The planning scheme amendment stage is to simply identify places of heritage significance and consider whether the Heritage Overlay should be applied, having regard to Planning Practice Note 1.

Building condition is not an issue unless the heritage fabric is unlikely to exist by the time the Amendment is introduced into the Planning Scheme. No submission demonstrated this. The Panel is required to consider each property in its current form, even if there is an approved permit to redevelop the site. There is no assurance an owner will act on the permit and if they do, Council can reassess the property through a future heritage review.

Irrespective, it is not possible to measure the potential impact on development opportunity because aspirations will vary from property to property. For example, the Heritage Overlay will not impact a person seeking to maintain their property in its current form. For someone with development interests, the Heritage Overlay does not prohibit the ability to apply to alter, add to, or demolish a building. It is acknowledged that local policy may influence how a permit application is assessed. Those seeking to add a multi-level addition to the rear of the property again may be largely unaffected if the design responds sensitive to the heritage fabric. All these scenarios are hypothetical at this stage of the process. 

The planning permit application process is appropriate for assessing development related issues because it is at this stage when:

    • there will be definitive plans to better understand potential impact on heritage fabric
    • property owner’s intentions are clear, rather than aspirational ideas which may not realise the proposal can be formally assessed against Planning Scheme policy and provisions.

In relation to the question whether individual places Statements of Significance (which are to be Incorporated Documents) should be included in a precinct’s Statement of Significance, Council submitted:

The advice as we’ve understood it, is that there is either one Statement of Significance for the heritage place, or Statements of Significance for all significant heritage properties comprising the heritage place in the one precinct Statement of Significance. It is not understood what the statutory basis is for this position.

Council noted Clause 43.01-5 Statements of Significance provides:

The schedule to this overlay must specify a statement of significance for each heritage place included in the schedule after the commencement of Amendment VC148. This does not apply to:

    • A heritage place included in the schedule to this overlay by an amendment prepared or authorised by the Minister under section 8(1)(b) or section 8A(4) of the Act before or within three months after the commencement of Amendment VC148.
    • A registered heritage place included in the Victorian Heritage Register established under Part 3 of the Heritage Act 2017.
    • A heritage place included in the schedule to this overlay on an interim basis. 

The Panel acknowledged Council has prepared the Amendment with respect to these places in response to advice from the Department of Transport and Planning regarding the interpretation of Planning Practice Note 1. The Panel interpreted Planning Practice Note 1 differently.

However, it considered Planning Practice Note 1 is unclear. For example, it states:

How are heritage precincts and areas treated?

Significant precincts and areas should be identified in the schedule and mapped.

Immediately following this text, it states:

How are individual buildings, trees or properties of significance located within significant areas treated?

The provisions applying to individual buildings and structures are the same as the provisions applying to areas, so there is no need to separately schedule and map a significant building, feature or property located within a significant area.

The only instance where an individual property within a significant area should be scheduled and mapped is where it is proposed that a different requirement should apply. For example, external painting controls may be justified for an individual building of significance but not over the heritage precinct surrounding the building.

The Panel made the following comments about the confusion within the Practice Note:

It is unclear why Planning Practice Note 1 differentiates between ‘significant precincts’, ‘areas’, ‘significant areas’ and ‘heritage precinct’.

The context for the content under ‘How are individual buildings, trees or properties of significance located within significant areas treated?’ is also unclear. The guidance is made for instances where an individual place is significant to the heritage values in a precinct. In that context, the Panel accepts it is not necessary for individually significant places in the HO3 Precinct to have their own Statements of Significance as Incorporated documents. The HO3 Statement of Significance should be sufficient to capture the heritage values of all significant (and contributory) places. It may be appropriate to apply the Heritage Overlay for an individually significant place through a separate listing where the place has different requirements in the Heritage Overlay Schedule (such as paint controls) compared to the HO3 Precinct.

Planning Practice Note 1 does not specifically refer to a circumstance where a place in a precinct such as Wes Lofts Office and the Ukrainian Catholic Cathedral may be individually significant but does not contribute to the significance of the precinct. In the absence of this guidance, Planning Practice Note 1 should not be interpreted as advising that a brutalist building be included in a Victorian and Edwardian Precinct where the HO3 Statement of Significance does not relate to the building’s construction era or brutalist typology.

The Panel found the proposal to include two individual places in the precinct Statement of Significance to be problematic because:

  • the places are not significant to the HO3 Precinct (they do not contribute to the Precinct)
  • neither place is relevant to the HO3 Statement of Significance, however, this document will be given significant weight during the permit application assessment because it is an Incorporated Document and forms part of the Planning Scheme
  • the ‘alternative’ Statements of Significance for the places (included in the Heritage Review, Attachment D) provide a sound description of the relevant heritage values but are proposed to be included as a Background document, which provides less weight than the Incorporated document.

The Panel encouraged the Department of Transport and Planning to revise Planning Practice Note 1 to clarify the context and intent of the advice regarding the issues raised above, particularly to circumstances where a place in a precinct is individually significant but it does not contribute to the heritage values of the precinct.

See also:

  • Guide to Planning Panels: Heritage > Criteria and thresholds > Intactness of buildings > Precincts and individual controls

3. Whitehorse Development Contributions Plan gets green light

Whitehorse City Council is the latest planning authority to introduce a municipal-wide Development Plans Contributions Overlay, which was considered by a Panel in Whitehorse C241whse (PSA) [2023] PPV 25.

Unlike other amendments proposing the DCP, the amendment only attracted 14 submitters and no submitter wished to be heard. The matter was therefore considered on the papers.

Features of the DCP are:

  • includes 133 infrastructure projects with a total estimated cost of $211,555,000
  • is expected to generate around $31,264,586 from levies (around 15 per cent of the estimated cost of the DCP projects)
  • has a lifespan of 20 years.

The levies for dwellings are calculated per dwelling. Levies for other development types are calculated per square metre of non-residential floorspace. Different levies are payable by different types of development (residential and non-residential), and in the different charge areas.

Key issues raised in submissions included:

  • issues around how the DCP projects were selected, and whether other projects (including State infrastructure projects) should be included
  • the appropriateness of charge areas based on suburb boundaries
  • the amount of the levies
  • the increase in development costs, which will have knock-on effects including:
    • costs being passed on to purchasers
    • impacts on the attractiveness of development sites
    • impacts on housing affordability
  • inaccuracies in the calculation of non-residential floor space, which could result in an underestimation of infrastructure needs and funding shortfalls
  • whether affordable housing should be exempt from contributions
  • whether works in kind can be considered in lieu of a cash payment
  • whether the Amendment appropriately considers existing planning approvals, especially those that provide necessary infrastructure
  • when and how the DCP should be reviewed, including adjustments to the list of funded projects
  • whether the DCP will encourage bribery.

The Panel’s findings are as follows:

  • The Panel has no reason to doubt the appropriateness of the list of DCP projects. It is not appropriate for the DCP to include State infrastructure projects.
  • The general approach of basing charge area boundaries on suburb boundaries is appropriate, but may require future amendments if a particular area (such as an activity centre) is found to merit its own development contributions plan or charge.
  • The levies are relatively modest and commensurate with those that apply under other established area development contribution plans. While the DCP will increase the development costs, the increases are marginal and will not substantially impact housing affordability or the attractiveness of sites within Whitehorse compared to other municipalities within established areas of Melbourne.
  • No material was put before the Panel to suggest the non-residential floorspace projections are inappropriately low.
  • The Panel was not persuaded that an exemption for affordable housing (other than social housing, which is already exempt) is strategically justified.
  • Both the DCP and the DCPO Schedule 1 allow for contributions to be made as works in lieu of cash payments.
  • Large development sites that deliver site specific infrastructure (that is required to enable the site to be developed) should not be exempt from contributing to the costs of community infrastructure that will be used by that development.
  • The DCP should be reviewed every three years, but reviews should not be mandatory.
  • There is no basis for the assertion that the DCP will lead to bribery or corruption.

See also:

  • Guide to Planning Panels: Development Contributions >Development Contributions associated with stand alone amendments