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Tuesday, December 14, 2010

Giving with one hand, but taking away with the other

An officers' report to tonight's meeting of the City of Greater Geelong council recommends that landowners in the Central Road area of Clifton Springs can defer paying a 'special charge' for a new drain ... but at a cost of 5% p.a. interest. On a typical 'special charge' of $78,000, 5% p.a. simple interest over ten years increases the bill to $117,000; at compound interest, the bill rises to $127,000.

Three features of the report make it significant:
  1. The report reiterates the council's belief that the new drain will increase the value of local properties, thus conferring a 'special benefit' on local landowners that is reflected in the 'special charge' levied on their property. However, it accepts the principle (argued by DCSCA and others) that such an increase in value is only hypothetical - it is realised ONLY when a property is subdivided and/or sold. Consequently, the proposal is that a 'special charge' is payable only when a property is subdivided and/or sold. Good news! But ...
  2. The report proposes to charge each landowner 5% p.a. interest (it doesn’t specify whether this is simple or compound) on their special charge until they pay it. What is the 5% interest for? The report doesn’t say. However, the council incurs no continuing expense – it just has to make a one-off payment to the developer. Thus, charging 5% p.a. (simple or compound) creates a straight profit for the council.
  3. The report proposes that the council should institute the ‘deferred payment’ (at 5% p.a.) despite the fact that it hasn’t been published for public scrutiny and comment. In other words, officers are suggesting that a major change in policy should be just quietly introduced with no public consultation or discussion.
The proposals around the Central Road ‘special charge’ scheme set a precedent for the operation of the ‘special charge’ scheme across the whole Council. Consequently, DCSCA is alarmed that officers are proposing to introduce these policies without proper public scrutiny and comment.

A continuing argument The report represents the latest phase in an argument between the council and local landowners that began in February 2010.* Then, the council announced its intention to levy a Special Charge on local landowners to recoup money it has committed to a new, $1.5 million drain to serve the area. CoGG has split the cost of the drain with Melbourne-based Pinnacle Holdings, which wishes to build a retirement village in Central Road.

When the council announced the proposed 'Special Charge' in February, thirteen of the eighteen landowners liable to the scheme objected to the proposal, as did the Drysdale & Clifton Springs Community Association. On March 31, the objectors held a public meeting that featured on Channel 9's A Current Affair.

On 15 July, some of the objectors received a letter (postmarked 13 July) from the council inviting them to appear before an internal Submissions Panel established to review objections to the proposal, which would meet on 20 July, i.e. just three working days away. By Friday July 16, other objectors hadn't even received such a letter. DCSCA and others argued strongly to the Panel that three working days was insufficient notice and the Panel hearing was postponed to 16 August.

Submissions Panel chair Cllr. Jan Farrell told people who attended that the Panel would submit its recommendations to the council 'in October or early November'; and that each person who had made a submission concerning the proposal would be notified in advance of the council meeting at which the recommendations will be discussed, so that they can attend if they wish. DCSCA has received no such notice of tonight's discussion, other than seeing the item on the Agenda when it was published on Friday 10 December.

Some points to clarify DCSCA will ask these questions at the council meeting:
  1. When and from whom did council officers receive advice about the legality of proceeding with the option to defer payment - a policy that has not been exhibited for public scrutiny and comment?
  2. On what legal basis will the council proceed with this special charge scheme, given that it has generated objections from a majority (13/18) of landowners and that Section 163B(6) of the Local Government Act stipulates that such a scheme cannot proceed if it is opposed by a majority of those likely to be affected by it?
  3. Is the proposed 5% p.a. interest on a deferred special charge simple or compound; and how does the council justify charging landowners in Central Road 5% interest p.a., when the council will incur no continuing expense after it pays its share of the cost of the drain in Central Road?

* There have been several reports about this argument on drycliftdays. To see them, type 'Central Road' into the blog's 'Search' window.

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