COUNCILS looking to get around the state government’s rate cap plan are believed to feel they have found an answer – special charge schemes, which are specifically excluded from the rate cap rules.
Large city law firms who specialise in local government are advising councils, which hotly oppose the plan to end the pattern of big rate rises, on how to deal with the cap.
Councils use special charge schemes to require landowners to pay part of the cost of such works as footpaths, bicycle paths, street kerbing and channelling, drainage, roadworks and off-street parking.
Of these works, the Local Government Act names only drainage required to protect public health. Other references could be interpreted to encompass a wide range of works for which councils could impose a special charge.
Lawyers are emphasising the possibilities of the Act’s wording in section 163, which refers broadly to raising money “in relation to the performance of a function or the exercise of a power of the council”.
But the Essential Services Commission, author of the rate cap proposal, has warned councils it will closely monitor use of the Act to stymie its proposal if it becomes clear section 163 is being used to try to sidestep the cap on council spending.
The cap plan has not yet gone through state Parliament. It could be opposed in the Legislative Council, where the government does not have a majority.
Statewide rates are proposed to be set at around three per cent in 2016-17 after years of annual bills of twice – and often more – that size.
Legal firms studying rate capping are believed to include Maddocks, the city law firm that advises Mornington Peninsula Shire.
Another firm, Macquarie Local Government Lawyers, is telling clients they should use section 163 “to raise special rates and special charges for any purpose considered to be within the attainment of their objectives”. (Macquarie’s emphasis.)
The firm’s website advertises the imminent arrival of its new special charge publication, the 2016 edition of its Special Rates and Charges Manual. This is being “completely revised” to include material not in its $895 first edition of 2012.
The new manual includes “the several cases which have been decided by VCAT on special rates and charges since the publication of the first edition”.
It will, the firm says, “continue to be a valuable tool for all council officers who are required to prepare or administer any special rate or special charge scheme”.
The manual will contain working examples and “completed pro-formas” and will continue to contain “all of the documentation necessary for a council to declare and levy a special rate or special charge under section 163”.
Macquarie specifies five areas:
- Promotion of a retail shopping centre.
- Promotion of a commercial business precinct.
- Construction of a road.
- Construction of a footpath.
- Provision of drainage infrastructure.
While information on special charge schemes proved almost impossible to find on the Mornington Peninsula Shire website, other councils were not so reticent.
Bass Coast Shire speaks of the “user pays system that is known as a special charge” by which the state government “recognises that councils need help to provide improved infrastructure for their local communities”.
“Legislation allows councils to pass on the cost of constructing sealed roads, kerb and channel, footpaths, underground drainage and other capital infrastructure to the owner of a property that generally receives a unique benefit from the construction works,” Bass Coast explains.
The Aireys Inlet & District Association in 2010 told its members that residents “may find projects [proposed as special charge schemes] neither beneficial nor necessary.
“It is questionable whether the benefit of a sealed road outweighs the increase in traffic, the increase in speeding cars, the increase in buses, and the total loss of neighbourhood character,” it said. “Whether infrastructure is necessary is also highly subjective.”
In a rebuttal that anticipates the current case against rate capping, the association went on: “The [Surf Coast Shire’s] policy on infrastructure special rate or charge scheme states that special charge schemes are necessary because infrastructure demands exceed available financial resources.
“This argument is flawed on two counts. First, the job of the council is to allocate limited financial resources in a responsible and expedient manner throughout the shire. If infrastructure is needed, then money will be allocated for that project on a needs basis, as is often the case now…
“Second, residents should not be expected to pay money, often many thousands of dollars, in addition to their rates.”
It then criticises the Surf Coast Shire, saying: “It is disturbing that council’s website indicates the only recourse for objection to a special charge scheme is through VCAT. This is not the case.
“It is only fair that residents should be informed of the provision [in the Local Government Act] … that a council cannot make a declaration to levy a special charge if the council receives objections from the majority of rateable properties in respect to which the special charge scheme would be imposed.
“So, if more than half of the owners of the rateable properties object to a special charge scheme then it will not proceed.”
This writer was unable to find such information on the Mornington Peninsula Shire’s website despite a diligent search using “special charge scheme” and other relevant words.
The futility of the search was reminiscent of lucky dips at fetes where, for a modest sum, boys and girls can rummage for a gift in a barrel filled with sawdust.
While one might be disappointed at what is extracted, a reward always comes to hand. Not necessarily so with the shire website. It is often more efficient to let Google find the information on the shire site than to go to the shire site directly.