Rezoning reforms: rewriting the rulebook

The first step in major rezoning reforms, laying the foundation for more to come 10 min read

The release of the new LEP guideline in December 2021 was the first step towards major rezoning reform. The second step - outlined in a discussion paper by the Department of Planning and Environment (DPE) aims to rewrite the rulebook. With it, we’d have a DA-like model that sees councils take over the assessment and determination of planning proposals. Less DPE involvement. And the introduction of a new appeal right.

Here, we explore the changes already made, as well as those open for comment.

Key takeaways

• The new LEP Making Guideline (Guideline) came into force on 21 December 2021 – replacing the two policies which have shaped the process for the last five years. This marks the first step in major rezoning reforms, laying the foundation for more reform to come.
• Step two is the ‘New Approach to Rezonings’ paper (Discussion Paper) – open for comment until 28 February 2022. It aims to rewrite the process – handing over assessment to councils and dialling back DPE's involvement. After exhibition, DPE aims to put the reform in place by mid 2022.
• This new process would more closely reflect that of a development application, and introduce a new appeal right for those unhappy with council's decision.

The new Guideline

Policy’s role in the process

The statutory framework for amending a local environmental plan (LEP) under the Environmental Planning and Assessment Act 1979 (EPA Act) is high level. It provides little clarity on the mechanics, process and timeframes for planning proposals. This allows DPE the flexibility to shape the process through policy documents.

For example, all planning proposals must undergo the strategic and site-specific merit tests , set by policy documents (not the EPA Act). Because of this, these tests are often applied inconsistently.

On 15 December 2021, DPE released the Guideline, following consultation on the wider Planning Reform Action Plan. The Guideline replaces two existing guidelines: Local Environment Plans: A guide to preparing local environmental plans (2018) and Planning Proposals: A guide to preparing planning proposals (2018). 

Key changes to the planning proposal process

The Guideline mostly continues earlier policies. But it also brings in some changes: 

• A new way to categorise planning proposals. This ranges from basic (administrative, housekeeping and minor matters of local significance) or standard (site-specific LEP amendments seeking a change in planning controls) to complex (extensive LEP amendments that may not be consistent with the existing strategic framework) or principal LEP (comprehensive LEP amendments progressed by councils). Councils will select a category for DPE's approval when submitting a planning proposal for Gateway determination.
• Non-mandatory benchmark timeframes in an effort to reduce assessment timeframes by 33%. These are set at 46 weeks for basic, 70 weeks for standard, and 88 weeks for a complex proposal or principal LEP.
• In some cases, increasing the time before proponents can seek a rezoning review by an independent planning panel. Currently, this can happen when council doesn’t support a planning proposal and does not submit it for Gateway determination. Under the proposed reforms, proponents of complex proposals must wait 115 days before they may seek a rezoning revie. Other proposals would still only be subject to a timeframe of 90 days.
• Allowing planning proposal amendments after lodgement. As the former policies didn’t explicity provide for this, some councils didn’t allow them at all. Updating a planning proposal under the Guideline will reset the time before a proponent can seek a review.
• Changing how the strategic merit test works, by:
  • Removing the presumption against satisfying the test where a rezoning review request looks to amend LEP controls under five years old. The Guideline is now silent on this, but it doesn’t replace the presumption with one of strategic merit. It’s likely that independent planning panels will still apply extra scrutiny to review requests that fit this description (when applying the strategic merit test).
  • Providing guidance (lacking in the former policies) about the 'change in circumstances' that would satisfy the strategic merit test for a planning proposal not aligned with existing strategic planning policies. These circumstances include:
    • Investing in future infrastructure not anticipated by the existing strategic planning framework
    • A rezoning that responds to key government priorities, including the Premier's Priorities, climate change or a policy shift
    • Changes to population and demographic trends.

As many councils' local strategic planning statements discourage spot rezonings, this guidance is a welcome change.

• Encouraging pre-lodgement consultation with council and other agencies. While not mandatory, DPE recommends that councils and proponents alike seek early input, particularly for complex proposals. At this stage, councils are also encouraged to advise proponents on any local infrastructure needed - with proponents to investigate infrastructure requirements and funding.
• Providing more guidance about the technical studies needed to support proposals (relative to their complexity). However, the Guideline also creates a new right for councils to reject lodgement within 14 days if the proposal is 'unclear'. The Guideline does not elaborate on the criteria for rejection, which will likely be confusing for proponents if their proposal has the recommended level of technical detail.

The next steps

From 15 December 2021, all new planning proposals must be prepared with the Guideline in mind. All existing planning proposals that achieved Gateway determination by 15 December 2021 will be assessed under the former policies.

The Discussion Paper

An entirely new approach to rezoning

The Discussion Paper outlines a major shift – moving the planning proposals process (now 'rezoning applications') to a DA-like model of lodgement, assessment and determination by council (the 'rezoning authority').

One potential concern is the removal of DPE's direct involvement in planning proposals (and except in limited, unspecified circumstances, independent planning panels). Instead, councils will be responsible for every step, including merit assessment and determination of the rezoning application.  

The step of 'Gateway determination' will be removed.

If a rezoning application isn’t supported by council, the only recourse will be to appeal council's refusal of it. Below, we outline the process. While positive in some ways, it’s also likely to create challenges for proponents.

1. Pre-lodgement scoping

Proponents must first submit a scoping report to the rezoning authority and attend a scoping meeting. Afterwards, the rezoning authority and state agencies will provide written feedback.

This feedback will outline: if the application is consistent with strategic plans, any recommended changes, and the proposal’s nominated category (basic, standard or complex) – including any technical studies needed to support the application.

These study requirements are only valid for 18 months, so if the application is not lodged by then, the scoping process needs to start again.

2. Lodgement

Once a proponent lodges the rezoning application on the NSW Planning Portal, the rezoning authority has seven days to confirm if the study requirements have been met.

The Discussion Paper suggests this adequacy check only applies to study requirements. However, without clear guidance, there is the potential for applications to be rejected if the proposal doesn’t address all of the scoping feedback.

The Paper also suggests there will be more opportunity to lodge concurrent rezoning applications and DAs that rely on the amended LEP controls. However, there are no details on how this will be facilitated.

In another important change, there will be no merit assessment immediately after lodgement. Under the current policy, the merits of a planning proposal are assessed at least twice, first by council immediately after lodgement, and then again by DPE following public exhibition.

Instead, the merit of a rezoning application will be assessed just once, after public exhibition, which could cut the time for an application to be determined. That assessment will be undertaken by councils, without involvement by DPE.

At lodgement, the rezoning authority will apply a category to the application. This will inform the assessment timeframe - as well as the fees. Several ways to calculate fees are explored – all with the aim of creating a consistent approach across councils.  

3. Public exhibition

Public exhibition on the NSW Planning Portal starts immediately after the adequacy check. This could last between 14 to 42 days, depending on the application’s category.

This looks to be another big change. Currently, exhibition only happens much later in the process - after extensive engagement with council.

Although state agencies will already be involved at the scoping stage, they can also make submissions at this point.

4. Post exhibition

Like the process for State significant development, proponents will need to respond to submissions.  At this point, rezoning applications can be amended and re-submitted, at which point the assessment clock begins.  

The Discussion Paper doesn’t say if the assessment timeframe will be hardwired into legislation, or only guided by policy. The approach taken may have a real impact on how closely timeframes are followed.

In another major departure from the current process, the Discussion Paper proposes that a deemed refusal appeal right will arise if the assessment timeframe is exceeded. This will be accompanied by a refund of the lodgement fee, to be known as the 'planning guarantee,'  (there are several suggestions for how this might work) designed to encourage councils to adhere to the assessment timeframe.

5. Assessment and determination

The Discussion Paper is light on detail about the assessment criteria for planning proposals. However, it suggests assessment will be against 'clearly articulated matters for consideration’. This aims to standardise assessments and provide consistency across local government areas. It also suggests the assessment may consider:

• If the proposal has strategic merit (having regard to strategic planning documents, consistency with a local strategic planning statement and any change in circumstances not yet recognised under existing strategic plans).
• Provisions of any relevant SEPP or section 9.1 directions (including the Minister’s Planning Principles).
• Whether the proposal has site-specific merit (including natural and built environments, social and economic conditions, existing and future land uses in the vicinity, and availability of services and infrastructure, including any proposed financial arrangements for the provision of new infrastructure).
• Any submissions made by the public or state agencies.
• The public interest.

Unless these considerations are built into legislation, applying them might be inconsistent. At this stage of the process, the Discussion Paper suggests information requests by the rezoning authority will be strongly discouraged.

In one sense, this reduces the chance of the assessment being delayed. However, it also creates a risk that information gaps, otherwise capable of being easily filled, lead to the application being refused.

Once assessed, the application will either be refused or approved. After this, Parliamentary Counsel will draft the LEP amendment.

6. Appeal

Currently, a proponent’s only recourse if their planning proposal is not supported, is to seek a non-statutory 'rezoning review' by an independent planning panel or 'gateway review' by the NSW Independent Planning Commission (IPC). Neither review process is codified by the EPA Act.

In July 2020, the NSW Government announced it intended to create a new appeal right for rezoning decisions. The Discussion Paper puts forward two options for this:

1. A merit appeal in the NSW Land and Environment Court (LEC) - similar to merit appeals for DAs.
2. An appeal to the IPC, which would need a new process to be developed. The Discussion Paper suggests this would allow various parties to present their position and could be like the process for State significant development – adjusted to be a review function.

There are pros and cons to both. In a LEC appeal, proponents benefit from established Court procedures, and the opportunity to resolve the matter in a conciliation conference. However, time and cost can be a drawback. Plus, given the separation of powers doctrine, could the LEC properly intervene in the making of delegated legislation?

In the case of the IPC, this would be a review function, not an appeal, and would need extra resourcing and a new processes to be established. It is likely other parties will have more opportunity to intervene and be heard (such as state agencies and the public). This differs from LEC proceedings, where there is a strict process for adding extra parties and a clear timetable from the start.

Actions you can take now

• Planning proposals which didn’t receive Gateway determination by 15 December 2021 need to follow the new Guideline, as will those in the early planning stages. You should consider how your project timeline and overall strategy is affected by the new Guidelines.
• The Discussion Paper proposes to rewrite the planning proposal process, and puts forward many options for how this might look. Carefully consider how these changes might affect your future proposals as you have until 28 February 2022 to make a submission.
• If you’d like help preparing a submission, please contact any of the team listed below.