COVID-19 | Managing infrastructure charges and currency periods

3 April 2020
Stafford Hopewell, Partner, Brisbane Danny O'Brien, Director, Brisbane

Gadens understands the immediate and multi-faceted pressures placed on companies dealing with the fall out of the COVID-19 pandemic.  In these troubling circumstances, Gadens are sharing, across a variety of practice areas, some of our thoughts on practical measures which can be taken to relieve some of the pressure.  Our Planning and Environment Team has identified two issues which are particularly relevant to approved projects, including those which are currently under construction.

Infrastructure charges

A significant cost associated with any project is infrastructure charges. Infrastructure charges are typically payable prior to the new use commencing.  With a variety of commercial pressures being applied to projects, relief from the payment of infrastructure charges (either permanent or temporary) would no doubt be welcomed and provide some assistance with cash flows.

Governments of all levels are proactively working to assist the private sector, including the Sunshine Coast Regional Council which is offering the deferral of infrastructure charges for up to three years with no interest payments in the first 12 months.  We will continue to monitor whether other local governments adopt formal policies with respect to infrastructure charging.  That said, an opportunity exists to approach local governments to enter into an Infrastructure Agreement to waive, reduce or delay the payment of charges.

An Infrastructure Agreement contractually binds a local government and a proponent to obligations and entitlements associated with the delivery of the relevant project.  Such agreements may include:

  • provisions relating to the timing of payments;
  • a schedule of modified infrastructure payments;
  • bonding of works; and
  • alternative requirements for the provision of infrastructure.

An Infrastructure Agreement is, at its heart, a commercial document. While a local government must act in accordance with its ordinary statutory obligations in negotiating such agreements (including, for example, acting in the interest of its rate payers), the current circumstances enliven several considerations which may be favourable for a proponent.

Primarily, this would include a strong desire to maintain economic activity within its local government boundary.  In achieving this goal, a local government can also be comforted by the statutory security afforded by a formal Infrastructure Agreement.

Gadens is experienced in negotiating Infrastructure Agreements for both proponents and local government and is pleased to offer its support in this regard.

Currency Periods

For most use approvals, the currency period is four years under the now repealed Sustainable Planning Act or six years under the current Planning Act, while for many ancillary approvals (building works, operational works etc), the currency period is two years.

If a building site is shut down or the commencement of development is delayed, it is prudent to review all currency periods to establish whether an extension is necessary.  Given the uncertainties associated with the timing of the impacts of the virus and even if the lapsing of an approval is not imminent, a conservative approach would be to seek to extend the currency period to minimise the risk of the issue arising in the future.

An application to extend a currency period can be made to the assessment manager – in most cases, a local government, but in some instances the Court or a private certifier.  A proponent can take comfort that in the current times, it is highly unlikely that any application for an extension would be resisted.

 

For details of all our COVID-19 tips and updates, visit the Gadens COVID-19 Hub.

 


Authored by:

Stafford Hopewell, Partner
Danny O’Brien, Director

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

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