Posted on February 22, 2021 by Lindsay Taylor and Frances Tse 49

ALERT: New Practice Note on Voluntary Planning Agreements in NSW

On 12 February 2021, the Planning Secretary issued a new Planning Agreements Practice Note (VPA Practice Note). On the same day, the Environmental Planning and Assessment Amendment (Development Contributions) Regulation 2021 (Amendment Regulation) made a number of amendments to the Environmental Planning and Assessment Regulation 2000 (EPA Regulation) relating to development contributions.

The VPA Practice Note was issued by the Planning Secretary under cl 25B(2) of the EPA Regulation and provides detailed guidance on the negotiation, administration and making of VPAs under s 7.4 of the Environmental Planning and Assessment Act 1979 (EPA Act). It replaces the Development Contributions – Practice Note – Planning Agreements that was issued on 19 July 2005 (Former VPA Practice Note).

Contents of VPA Practice Note

The VPA Practice Note contains guidance on:

• purpose and rationale for VPAs,
• principles and policy for VPAs, including discussion of fundamental principles, relevant public interest and probity considerations, the use of VPAs for value capture, the relationship between VPAs and development applications and planning proposals, an acceptability test for VPAs, and relevant policies and procedures relating to the use of VPAs,
• strategic considerations when using VPAs, including when to use VPAs and VPAs in the broader context of land use and strategic infrastructure planning,
• VPA procedures and decision making, including the basic procedures for entering into VPAs, the offer and negotiation process, costs and charges, registration and administration, public participation and notification, and explanatory notes to VPAs,
• the use of VPAs, through various examples of their use.

Differences with Former Practice Note

The VPA Practice Note contains a number of differences from the Former VPA Practice Note. The notable differences include:

• clarifying the Department’s position on value capture, and emphasising that VPAs should not be used for the primary purpose of value capture,
• emphasising the role of VPA’s in the broader strategic infrastructure planning framework and expressly stating that VPAs should not be used as de facto substitutes for contributions plans, or proper strategic infrastructure planning,
• emphasising that benefits provided for under a VPA must not be exchanged for a variation from a development standard under any circumstances,
• providing specific guidance on offers to enter into VPAs,
• providing specific guidance on security for enforcement of a developer’s obligations under a VPA,
• providing specific guidance on the registration of VPAs and emphasising its importance,
• providing specific guidance on re-notification of draft VPAs if any material changes are made after public notice has been given,
• providing more detailed guidance on the preparation of explanatory notes,
• providing more detailed guidance on what should be included in a council’s policy and procedure for VPAs,
• specifically referring to State Environmental Planning Policy No. 70 – Affordable Housing (Revised Schemes) as the preferred mechanism for securing affordable housing contributions, and drawing attention to the Environmental Planning Assessment (Planning Agreements) Direction 2019 which sets out matters to be considered by a council if negotiating a VPA which provides for affordable housing,
• including biodiversity offsetting as a specific example of when a VPA can be used,
• removal of the template VPA.

Application and transitional arrangements 

The VPA Practice Note  states that it does not apply to VPAs for mining projects. However, it allows councils to refer to relevant parts for appropriate guidance on use, process and governance of such VPAs.

Clause 25B(3) of the EPA Regulation, inserted by the Amendment Regulation, operates to require councils (but not the Minister for Planning or Ministers and other public authorities) to consider the VPA Practice Note when negotiating or entering into VPAs.

Clause 27 of the Environmental Planning and Assessment (Savings, Transitional and Other Provisions) Regulation 2017, as amended by the Amendment Regulation, provides that cl 25B(3) does not apply to a new VPA or an amendment or revocation of an existing VPA if public notice of the agreement, amendment or revocation was given under s 7.5 of the EPA Act before 12 February 2021.

All planning authorities are required cl 25E(2) of the EPA Regulation, inserted by the Amendment Regulation, to consider the VPA Practice Note when preparing the explanatory note to a VPA.

The VPA Practice Note can be viewed here. The Amendment Regulation can be viewed here.

If you would like to discuss this post, please contact Dr. Lindsay Taylor on 8235 9701 or Frances Tse on 8235 9711.