Draft NSW Design and Place SEPP heralds major changes and reveals some surprises - Environmental Law

The release of the draft NSW Design and Place State Environmental Planning Policy (DP SEPP) is a significant milestone in the State Government's efforts to simplify the State's planning system but has attracted immediate criticism from the development industry.

The draft instrument confirms a number of the Government's intentions made clear during the first round of public consultation on the DP SEPP in early 2021, which we discussed here. It also reveals various new features, some of which are likely to alarm development proponents.

Key takeaways

The key takeaways from the DP SEPP are that:

the draft DP SEPP consolidates a number of existing design controls and introduces new design and place principles into many types of developments;
there will be a considerable expansion of the kinds of development that are required to be designed and verified by appropriately qualified design professionals, including architects and landscape architects, and reviewed by a design review panel, potentially increasing the cost of design and development application (DA) assessment timeframes;
the Apartment Design Guide has been revised, but will continue to apply to developments involving buildings of at least three storeys or four dwellings.
a new Urban Design Guide (UDG) will apply to development on land over 1 ha (except for some development on industrial land), where a master plan or Development Control Plan is required, or where a concept DA is proposed; and
planning proposals on sites greater than 1 ha will also need to have regard to the DP SEPP, be considered by a design review panel and consider the UDG.

In addition, the draft DP SEPP reveals three surprising features of the new design regime that were not apparent from the original public exhibition materials. These broadly relate to:

flexibility in the application of the provisions of the draft DP SEPP;
extension of the DP SEPP to modification applications; and
new sustainability measures.

Less flexibility than expected?

There are several requirements in the draft DP SEPP that are framed in terms of things that the consent authority 'must be satisfied of' or where a development must be 'consistent' with a standard. This allows no degree of flexibility, which is broadly inconsistent with a touchstone of NSW planning law that development controls should not be applied rigidly if a superior design outcome can be achieved through a flexible approach. It might also be considered inconsistent with the supporting materials published by the NSW Government alongside the draft DP SEPP.

The most striking example of this rigidity is clause 13 of the draft DP SEPP, which requires a consent authority to be "satisfied that the development is consistent with the design principles".

The design principles, which are specified in clause 12, are high-level, aspirational concepts. Determining whether development is or is not consistent with such principles will involve highly subjective considerations and may not result in predictable approvals and refusals.

To overcome this, the requirement to be 'satisfied' that development is 'consistent' with these principles could be amended to require 'consideration of' or, at its highest, a requirement for development to be 'generally consistent' with the design principles.

Other examples of rigidity in the draft DP SEPP include:

Clause 14: a consent authority must consider whether, 'overall', the development achieves certain criteria. The concept of what a development achieves 'overall' is vague and uncertain and could require a new test to be applied by consent authorities. Until this is tested in the Courts, clause 14 could also result in highly unpredictable DA determinations;
Clause 16: the 'desired character of the area' is difficult to define, yet a consent authority 'must consider whether' development detracts from such character;
Clause 17: a consent authority 'must be satisfied' of various matters related to public spaces. The current wording does not cater for exception where it may be necessary or appropriate in the circumstances, and could be changed to a requirement to 'consider'; and
Clause 22: a consent authority 'must be satisfied' that a development is 'resilient to natural hazards'. There are likely to be circumstances where it is unnecessary for a development to incorporate measures to avoid or reduce exposure to natural hazards, unless this is very broadly defined. Like clause 17, the wording could be changed to a requirement to 'consider'.

DP SEPP set to apply to modification applications

The current wording of the draft instrument means that the DP SEPP will apply equally to new DAs and applications to modify existing development consents.

However, modification applications already need to satisfy the 'substantially the same development' requirement in section 4.55 of the Environmental Planning and Assessment Act 1979. It is on this basis that modification applications do not need to be assessed against development standards, such as maximum height limits.¹

Due to the onerous requirements of the DP SEPP, and the consistency with fundamental design principles already afforded by the 'substantially the same development' test, it seems likely that arguments will be made that the SEPP should not apply to modification applications.

Comprehensive sustainability requirements and standards

The draft DP SEPP and supporting materials propose stricter sustainability standards that will apply to a wider range of developments. These will potentially increase the cost of design, but will also assist the NSW Government to achieve its emissions reduction objectives for the State (50% by 2030; net zero by 2050).

The sustainability measures include:

increasing targets for energy and thermal performance, which are also proposed to be increased in the National Construction Code, and new targets for embodied emissions;
new standards and reporting requirements for all non-residential developments, including a need to consider whether a development minimises greenhouse gas emissions and whether a development will be able to monitor its energy consumption over time;
a merit assessment pathway that allows a recognised professional to complete a sustainability assessment using accredits modelling software as an alternative to a BASIX assessment; and
developments to which the DP SEPP applies (except BASIX-affected development) will need to submit a 'Net Zero Ready Statement', containing information about:
- estimated energy consumption and emissions;
- efforts implemented for the building to achieve net zero emissions by 2035;
- capacity to monitor and report emissions once constructed; and
- for most non-residential development, evidence that non-renewable energy used by the building will be offset.

These measures represent a significant leap forward in the NSW Government's efforts to improve sustainability and reduce emissions and are likely to require some adjustment from the development industry.

What's next?

Until the SEPP is finalised, consent authorities must not consider the draft DP SEPP when assessing DAs.

However, proponents should begin considering aligning their proposals to the SEPP, particularly for DAs that are to be lodged in mid-2022 when the final SEPP is expected to be made. Based on the savings provisions in the draft DP SEPP, it is intended that applications lodged, but not determined before the new SEPP commences, will be determined in accordance with current law and policy.

The draft DP SEPP and supporting material are open for public comment until 28 February 2022.

Footnote

¹North Sydney Council v Michael Standley & Associates Pty Ltd (1998) 43 NSWLR 468 at 481 (Mason P, Stein JA and Sheppard AJA agreeing) and Gann v Sutherland Shire Council [2008] NSWLEC 157 at [18]-[19].

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