Financial costs of
settlement
patterns in rural
Victoria
Final Report
June 2013
20120275 SGS Final Report and User Manual.docx
This report has been prepared for Rural Councils Victoria to
document the activities and outcomes of the financial costs of
different settlement patterns under the Networked Rural Councils
Program.
Rural Councils Victoria is the collective voice for Victoria’s 38 rural
councils and is a collaborator on the reform agenda for Victoria’s
small towns contributing to the development of evidence based
policy and strategy.
As a thought leader in developing liveable rural communities with
sustainable economies, Rural Councils Victoria builds the capability of
local councils to plan and support their community to adapt to
change and address future challenges.
The Victorian Government has recognised that the 38 rural councils
are often better able to understand and meet challenges by working
in collaboration and this project underpins a policy of empowering
rural councils to plan and adapt to change in a more sustainable way
and participate in decision making processes that impact on their
region through coordinated, collaborative and networked approaches.
This project was supported by Rural Councils Victoria with funding
from the Victorian Government. The funding commitment for the
Networked Rural Councils Program is $3.3 million over four years
commencing 1 July 2011 through to 30 June 2015.
This project was prepared alongside Rural Councils Victoria by SGS
Economics and Planning in partnership with Aurecon.
In conjunction with:
For more information contact Rural Councils Victoria at:
Level12/ 60 Collins Street Melbourne
PH. 03 9667 5555
www.ruralcouncilsvictoria.org.au
© Copyright Municipal Association of Victoria, June 2013
The Municipal Association of Victoria is the owner of the copyright in
this publication.
No part of this publication may be reproduced, stored or transmitted
in any form or by any means without the prior permission in writing
from the Municipal Association of Victoria.
All requests to reproduce, store or transmit material contained in the
publication should be addressed to The Chair, Rural Councils Victoria,
GPO Box 4326, Melbourne VIC 3001
20120275 SGS Final Report and User Manual.docx
TABLE OF CONTENTS
1
1.1
1.2
1.3
INTRODUCTION
Project background
Project brief
Project methodology
Stage One – Plan
Stage Two – Research
Stage Three - Analyse and Develop
Stage Four - Pilot
Stage Five - Refine and deliver
1.4 This report
1
1
1
3
4
5
5
6
6
7
2
SETTLEMENT PATTERNS & INFRASTRUCTURE REQUIREMENTS
2.1 Defining settlement patterns
Greenfield development
Dispersed development
Infill development
2.2 Council–provided infrastructure and services
Typical infrastructure and services provision
2.3 Drivers of infrastructure costs
The scale and needs of new development
Distance from existing settlements
The level of existing development
Community demographics
Residential density
2.4 Infrastructure requirements of settlement patterns
8
8
8
9
9
9
10
11
12
12
13
13
13
15
3
THE COSTS OF SETTLEMENT PATTERNS TO COUNCILS
3.1 Approach
Database of infrastructure costs
Types of infrastructure provided to each settlement type
Typical infrastructure quantities of infrastructure
3.2 Default infrastructure items
Roads
Paths19
Stormwater drainage
Open space
Community infrastructure
Environmental management
3.3 Default infrastructure items for settlement types
Dispersed development
Greenfield development
18
18
18
18
18
19
19
Financial costs of settlement patterns in rural Victoria
20
20
20
21
21
21
23
Infill development
3.4 Default infrastructure quantities for settlement types
Approach
Community infrastructure
3.5 Findings
Scenario 1: 100 additional dwellings over 30 years
Scenario 2: 20 additional dwellings over 50 years
3.6 Concluding remarks
24
25
25
28
28
28
31
34
USER GUIDE
Welcome
Menu
Input Sheet
Assumption sheet 1. Infrastructure items and quantities
Assumption Sheet 2: Infrastructure items (detailed)
Assumption Sheet 3: Maintenance and operation of infrastructure
Assumption sheet 4: Rates Revenue
Revenue streams
Key results
Financial Impacts
35
35
35
36
37
38
39
40
41
42
43
REFERENCES
44
Financial costs of settlement patterns in rural Victoria
FIGURES
F I G U RE 1.
F I G U RE 2.
F I G U RE 3.
F I G U RE
F I G U RE
F I G UR E
F I G U RE
F I G U RE
F I G U RE
F I G U RE
F I G U RE
F I G U RE
F I G U RE
F I G U RE
F I G U RE
4.
5.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
T H E 3 8 R U R A L C O U N C I L S O F V I C TO R I A
2
P R O J E C T P R O CE S S
3
R U R A L A N D G R E E N F I E L D / E S TA B L I S H E D A E R I A L P HO TO G R A P H Y A N A LY S I S
25
S C E N A R I O 1 T OTA L C O S T S A N D R E V E N U E S C O M PA R I S O N
29
S C E N A R I O 2 R E S U LT S ( E X C L U D I N G R E N E W A L )
31
S C E N A R I O 2 R E S U LT S ( I N C L U D I N G R E N E W A L )
32
S C R E E N S HO T O F M E N U
35
S C R E E N S HO T O F I N P U T S HE E T
36
S C R E E N S HO T O F A S S U M P T I O N S H E E T 1
37
S C R E E N S HO T O F A S S U M P T I O N S H E E T 2
38
S C R E E N S HO R T O F A S S U M PT I O N S H E E T 3
39
S C R E E N S HO T O F A S S U M P T I O N S H E E T 4
40
S C R E E N S HO T O F R E V E N U E S T R E A M S
41
S C R E E N S HO T O F K E Y R E S U LT S
42
S C R E E N S HO T O F F I N A N C I A L I M PA C T S
43
TABLES
TA B L E 1 . C O U N C I L - P R O V I DE D I N F R A S T R U C T U R E F O R R E S I DE N T I A L D E V E L O PM E N T 10
TA B L E 2 . O N G O I N G M A I N T E N A N C E A N D O PE R AT I O N A L R E S P O N S I B I L I T I E S F O R L O C A L
G O V E R N ME N T
11
TA B L E 3 . E S T I M AT E D A N N UA L C O S T P E R H O U S E HO L D
14
TA B L E 4 . G R E E N F I E L D D E V E L O PM E N T I N F R A S T R U C T U R E P R O V I S I O N A N D
R E S PO N S I BI L I TY
15
TA B L E 5 . D I S P E R S E D D E V E LO P M E N T I N F R A S T R U C T U R E P R O V I S I O N A N D
R E S PO N S I BI L I TY
16
TA B L E 6 . I N F I L L D E V E LO PM E N T I N F R A S T R U C T U R E PR O V I S I O N A N D R E S PO N S I B I L I TY
17
TA B L E 7 . D E FA U LT R O A D T Y PE S
19
TA B L E 8 . D E FA U LT PAT H T Y PE S
20
TA B L E 9 . D I S P E R S E D D E V E LO P M E N T D E FA U LT A S S U M PT I O N S
22
TA B L E 1 0 .
G R E E N F I E L D D E V E L O PM E N T D E FA U LT A S S U M PT I O NS
23
TA B L E 1 1 .
I N F I L L D E V E LO PM E N T D E FA U LT A S S U M PT I O N S
24
TA B L E 1 2 .
G I S A N A LY S I S F I N D I N G S
26
TA B L E 1 3 .
D E FA U LT Q U A N T I T Y O F I N F R A S T R U C T U R E
27
TA B L E 1 4 .
S CE N A RI O 1 I NP UT S
28
TA B L E 1 5 .
S C E N A R I O 1 R E S U LT S
30
TA B L E 1 6 .
S CE N A RI O 2 I NP UT S
31
TA B L E 1 7 .
S C E N A R I O 2 R E S U LT S ( I N C L U D I N G R E N E W A L )
33
Financial costs of settlement patterns in rural Victoria
1
1.1
INTRODUCTION
Project background
The cost of providing, maintaining and operating infrastructure and services can vary substantially
between local governments in rural locations. Often faced with limited or declining levels of population,
new development is often welcomed as not only an additional source of rates revenue, but as a
contribution to a town or region’s vitality and social and economic prosperity. However, the shape of this
new development can impact upon council budgets in varying ways.
Over recent years the Municipal Association of Victoria (MAV) identified an emerging gap between the
costs faced by rural councils and the revenue which is collected through additional population growth.
Based on feedback from rural councils at various forums and seminars, the role different settlement
patterns may play in infrastructure provision was highlighted as an area for further research.
In 2011 MAV engaged SGS Economics and Planning (SGS) to explore the relationship between
infrastructure costs and settlement patterns. Whilst this study did not produce definitive cost
comparisons between settlement types, it did identify that rural councils acknowledge different
settlement types can drive varying cost patterns over time. The study also highlighted that limited
population growth means that formal agreements, such as development contributions plans, do not
exist in many rural locations. This places pressure on councils to negotiate with developers to recoup
capital costs.
The study’s key findings were:
A significant information gap exists around the cost of different settlement types
That non-contiguous development is more expensive to service
Ongoing costs were higher than the initial capital overlay over the life of the asset.
The study also highlighted that closing the ‘information gap’ needed:
Expert input around costs of different settlement patterns
Council input to ensure outputs were relevant and useful
Involvement from councils which had experienced growth in recent years, as they were better placed
to provide insights into development and cost pressures.
The findings from Where and How Should We Grow shaped this current brief.
1.2
Project brief
SGS, together with Aurecon, were engaged by MAV on behalf of Rural Councils Victoria (RCV) to
investigate the financial impacts of different forms of residential development in rural Victoria.
The project aimed to:
Improve the understanding of the costs of capital, maintenance and service provision of different rural
settlement typologies and the cumulative effect of development decisions over time
Create a modelling tool that can be easily used and adapted by councils
Ensure key metrics can be easily updated for tailoring to local circumstances
Make more obvious the financial (and other) benefits of development in areas with under-utilised
infrastructure and latent service capacity.
Financial costs of settlement patterns in rural Victoria 1
The project’s key success indicators were:
Builds capacity amongst rural councils to understand the costs and benefits of different settlement
patterns and utilize the tool in strategic planning, infrastructure planning, rating strategies and
population attraction initiatives
Is informed by and aligned to the regional settlement hierarchy and the Infrastructure Design Manual
and relevant state government policy
Distinguishes different levels of infrastructure and service provision applicable to rural settlement
types
Identifies, accesses and documents cost data to inform councils of the costs of different settlement
typologies based on typical infrastructure and service provision
Highlights the likely longer term financial implications (rates and budgets) of different rural settlement
typologies
Assists councils’ understanding of unit cost data to enable them to update the tool over time.
Source: Project Brief, page 3
F I G U R E 1 . T H E 3 8 R U R A L C O U N C I L S O F V I C TO R I A
Source: S GS Economics and P lanning
Financial costs of settlement patterns in rural Victoria 2
Project methodology
1.3
Four questions framed the project methodology.
1.
2.
3.
4.
How can we define settlement patterns?
What types of infrastructure do councils provide for residential development and does this vary
between settlement patterns?
What are the typical costs of different infrastructure items and services that council are
responsible for? What can vary these costs?
What are the typical quantities of infrastructure required for different settlement patterns and
what can vary these quantities?
To answer these questions, SGS applied an approach that focused on information and data collection
through council consultation, expert input from Aurecon, and GIS analysis.
F I G U R E 2 . P R O J E C T P RO CE S S
Inception
meeting
Expert
Reference
Group
Confirmed
councils and
settlement types
Project plan
Council
briefing and
consultation
Data
collection
Draft
Electronic Tool
Pilot of tool
and evaluation
period
Final
Electronic Tool
Expert review
of data
Database
development and
tool framework
Expert
Reference
Group
Expert
Reference
Group
Wider briefing
Financial costs of settlement patterns in rural Victoria 3
Project
completion
meeting
Stage One – Plan
Task 1.1
Inception meeting
An inception meeting took place between SGS and MAV which provided the opportunity to clarify and
confirm the project’s objectives and the proposed methodology and timing. Members of the Expert
Reference Group were also identified, including representatives from:
MAV
RCV
Rural local governments, and
SGS/Aurecon project team.
Task 1.2
Convene an Expert Reference Group
Following the inception meeting, a workshop was organised with members of the Expert Reference
Group. The purpose of this workshop was to:
Acquaint the Expert Reference Group with the project and its objectives
Set out the proposed approach for discussion, and
Establish expectations for the Group’s ongoing involvement with the project.
Case Study Councils
SGS’s involvement in the Where and How Should We Grow project highlighted the limited capacity of
some rural councils to provide detailed input around cost data. As a result, the local governments
selected for the case study were those which:
Were expecting high growth in population, relative to other rural councils, and
Had undertaken detailed planning (for example, had completed DCPs) in the past and could therefore
more readily access relevant data.
To ensure realistic costs were presented in the tool, the selection of these councils was informed by state
government DCP benchmarking work, in-house developer contribution plans, and Aurecon’s previous
work.
Case study councils selected for the project were Macedon Ranges, Baw Baw and Surf Coast.
Settlement Types
From an infrastructure provision perspective, there are four variables which affect the quantum and unit
cost of infrastructure:
The proximity of new development from existing infrastructure networks
The density of the new development
The location of development, noting regional variations in costs, and
Location-specific variables, such as soil type and gradient.
Therefore, there are a substantial number of possible settlement types in rural locations. To ensure a
simple tool was created for the end user, and to enable efficient collection of data, three settlement
types were adopted: Residential Infill, Greenfield and Dispersed.
Task 1.3
Detailed project plan
Based on the outcomes of the Expert Reference Group workshop, SGS prepared a detailed project plan
that was circulated to all members of the Group. This plan outlined the project approach and project
timing.
Financial costs of settlement patterns in rural Victoria 4
Stage Two – Research
Task 2.1
Approach councils
SGS arranged telephone conversations with respective local government CEOs to introduce the project,
explain expectations and outline the benefits of the project.
CEOs of all case study councils nominated another council officer to provide input to the project and to
be the first point of contact for the project.
Task 2.2
Council consultation
Following the telephone briefing, SGS sent information about the project to the case study councils.
Information was developed with the assistance of Aurecon.
SGS convened meetings with high level representatives from case study councils, including
property/finance, strategic planning, engineering and asset management, to describe the project,
outline what was needed and the benefits that it would bring.
The data collection focussed on:
The type, quantity and unit costs of infrastructure that councils pay for up front and on an
ongoing/maintenance basis
The factors which can increase/decrease this cost, for example, negotiations with developers, DCPs
The variables in the cost equation. On a settlement type basis, this involved:
total land area covered/serviced
gradient
soil type
density, and
existing infrastructure networks/proximity to networks.
Any other elements that were identified in the Expert Reference Group stage and by Aurecon.
Councils were asked to provide any relevant data to help develop the database and to allow costs and
quantities of infrastructure to be determined for each settlement type.
Stage Three - Analyse and Develop
Task 3.1
Development of a database
SGS compiled benchmark data provided by Aurecon and collected and incorporated additional data
provided by councils into the database informing the tool. The database was created in a way that
ensured it could be updated and that the tool could remain up to date. Importantly, a simple layout
ensured that local government users could update background data themselves.
Task 3.2
Cross checking of collected data
To address any gaps in the data collected from councils, Aurecon provided benchmark data on the costs of
local government-provided infrastructure items, including both capital and ongoing costs. An
understanding of how variables could shift these costs was included. For example, certain slopes of land,
soil types or even regions of Victoria may have higher or lower materials and labour costs. Aurecon’s
inputs helped to define these variations and to fill in the gaps of local government-provided data.
Specifically, Aurecon:
Reviewed the existing information collected from councils
Provided input into the types of infrastructure that could be considered
Provided typical infrastructure costs, and
Compared recent council construction values to standardise for rural areas.
Financial costs of settlement patterns in rural Victoria 5
Task 3.3
Developing electronic tool framework
SGS developed a framework for the electronic tool which set out its layout and functionality. The
framework and model were provided to the Expert Reference Group for comment and feedback.
Task 3.4
Develop a draft electronic tool
SGS developed a draft version of the electronic tool, with a view to user functionality.
Task 3.5
Draft electronic tool user manual
SGS prepared a draft user manual for the tool.
Stage Four - Pilot
Task 4.1
Expert Reference Group meeting/ pilot council electronic tool workshop
The pilot stage of the project aimed to test and ‘ground truth’ the model to ensure it was relevant and
realistic. A workshop with the Expert Reference Group was held in Melbourne to demonstrate how the
tool is used and its functionality. SGS presented the draft electronic tool and draft user manual. The
meeting was used to obtain high level feedback on the outputs so that edits could be made prior to the
pilot tool being sent to councils. The workshop also provided the opportunity to explain the evaluation
process and the types of feedback being sought.
Task 4.2
Evaluation period
The three councils involved in the data collection process were provided with the draft tool to test.
Councils were encouraged to compare some of the tool’s outputs to past examples of development to
see how costs matched up. It was envisaged that council would test the tool against real life scenarios,
which might not be comparable across councils.
It was recommended that councils test the draft tool with staff across departments (planning,
engineering, asset management etc) to ensure that the data informing the tool was accurate, that the tool
was easy to use and that the tool’s outputs were relevant. Councils were also encouraged to provide SGS
with additional data during the review process.
Stage Five - Refine and deliver
Task 5.1
Refined electronic tool and user manual
Taking on board feedback from the Expert Reference Group and case study councils, SGS and Aurecon
made required changes to the electronic tool and manual.
Based on the findings from the evaluation period and feedback from MAV several changes were made.
These findings were:
1.
2.
3.
Councils were unable to provide data around the quantities of infrastructure required for
different settlement patterns.
Some feedback suggested the draft tool was too complex, whilst other feedback highlighted
that the assumptions were over simplified.
The potential usefulness of the tool was unclear for councils.
Based on these findings, several revisions were made to the project.
Financial costs of settlement patterns in rural Victoria 6
To address the existing data gap, SGS devised a case study approach which would allow broad level
assumptions to be made around infrastructure quantities. The approach involved using GIS analysis to
identify typical length of road and drainage infrastructure in dispersed and greenfield locations. Whilst
these assumptions close the information gap, the case studies highlighted a degree of variability
between locations. This suggests that councils would derive most value from using the tool by varying
assumptions to suit local conditions.
The tool was revised in two ways. Firstly, the information around assumptions made was bolstered, and
secondly, the format of the tool and the ability to vary assumptions was made simpler.
Using some hypothetical development examples, SGS tested the tool to report on the findings in this
report.
Task 5.2
Wider briefing
SGS participated in a wider briefing (to rural councils, and other stakeholders as identified by MAV) on
the tool on Wednesday 15 May. The purpose of the briefing was to increase awareness of the tool.
Task 4.3
Expert Reference Group briefing on final electronic tool
After comments were collated, an Expert Reference Group briefing was held to present group members
with the final model and user manual.
1.4
This report
This report is framed around the four key questions:
Section 2: Settlement patterns and
infrastructure requirements
This chapter identifies settlement patterns. This
chapter examines the types of infrastructure and
services provided by council and how this can vary
by settlement type.
Section 3: Costs of settlement patterns
to Councils
This section outlines the infrastructure
assumptions made in the electronic tool and
presents high level results.
Appendix: Electronic tool user manual
This chapter provides instruction for using and
updating the electronic tool.
Financial costs of settlement patterns in rural Victoria 7
2
2.1
SETTLEMENT PATTERNS
& INFRASTRUCTURE
REQUIREMENTS
Defining settlement patterns
Residential development can take on a variety of forms in rural locations. Patterns of settlement vary by
residential density, ranging from concentrated or high density development to low density, dispersed
development. Related to this is the rate of development, ranging from incremental development to
large-scale delivery of multiple dwellings.
From a development cost perspective however, the proximity of existing infrastructure networks (with
sufficient capacity) and the responsibility of different parties to provide infrastructure are the main
factors which differentiate settlement patterns.
In defining settlement patterns, there is a need to balance simplicity and to define settlement types that
are applicable across rural locations. As such, three general settlement patterns have been identified,
noting that there are variations within these. These settlement patterns are:
Greenfield
Dispersed, and
Infill development.
Greenfield development
Greenfield development is defined as development of multiple dwellings which takes place on
undeveloped land and is typically of a low to average density. It can be defined as the development of
planned communities on previously undeveloped (green) land. In rural locations, greenfield
development often occurs on the outskirts of towns or as satellite suburbs along highways and coastal
regions.
Some examples of current greenfield development include the outskirts of regional centres and towns,
such as Ararat, Wangaratta, Bairnsdale and Lakes Entrance surrounds, Benalla, Wodonga, Warrnambool,
Hamilton, Shepparton, Swan Hill and Mildura.
There are also multiple examples of greenfield development occurring in peri-urban locations, just
outside of metropolitan Melbourne. These include Wallan, Gisborne, Bannockburn, Kyneton, Lancefield,
Inverloch, Wonthaggi and Whittlesea, among many others.
Greenfield development usually requires completely new infrastructure networks to be constructed and
the volume of development places additional ‘at once’ pressure on service provision.
The case study councils consulted as part of this project (Baw Baw Shire, Macedon Ranges Shire and Surf
Coast Shire) indicated that most of the development occurring within their municipality was greenfield
development on the outskirts of existing settlements.
Financial costs of settlement patterns in rural Victoria 8
Greenfield development is typically delivered by private developers, often a single developer for an
entire estate. Local governments plan for residential development through usually applying the Low
Density Residential Zone or the Rural Living Zone.
Tools such as developer contributions (when developer contribution plans are in place) and negotiated
agreements help to take the burden off councils by requiring developers to provide infrastructure and
contribute towards required upgrades which occur upstream (such as road and intersection expansions).
From this perspective, greenfield development is seen as a cost effective settlement type. However,
consultation in the Where and How Should We Grow project identified that ongoing maintenance costs,
which are the responsibility of councils, can be quite significant for greenfield development locations over
time.
Dispersed development
Dispersed development is usually incremental and takes place gradually as large rural lots are subdivided,
often at some distance from existing development. This type of development is evident through growth
of hobby farms. For a single development, dispersed development is usually inexpensive to service as it
can utilise nearby infrastructure, and any works to connect the development to existing infrastructure
networks are usually provided for by the property owner. As there is typically less infrastructure
provided in rural locations, costs are also reduced.
However, over time, dispersed development can result in significant costs to councils. High levels of
dispersed development can be difficult to efficiently service with community infrastructure and
environmental management (for example, rubbish collection), due to distance.
Potential issues around dispersed development were highlighted in the RCV funded project on small rural
lots. A survey undertaken as part of this project highlighted pressure placed on rural planners to approve
dwelling development on small lots. At the same time, a high level review of planning schemes as part of
this project showed that many rural councils discourage development on small lots unless there is good
proximity to existing infrastructure (highlighted in Clause 21.04-1 of Moorabool PS; 22.01.4
Murrindindi PS; Clause 22.02 Wellington PS).
Infill development
Infill development usually takes place within established locations. Examples include the development of
a vacant lot within a town or on a former development site. Generally, infill development sites are
surrounded by existing development, which means that infrastructure is usually already in place and can
be utilised by the new infill development.
Typically infill development costs the least to council, but this is dependent on the capacity of existing
infrastructure to accommodate growth and the number of new dwellings. Depending on capacity,
additional development in an infill location may require the upgrade of existing infrastructure , as well as
additional maintenance. Infill development is not common in rural locations, as the cost of developing
‘in town’ is often higher to proponents than developing on the outskirts of a town.
In rural locations, the development of a vacant lot in town is the most common example of infill
development. Here there is limited incentive to build in-town, as lots are generally smaller, residents
aren’t necessarily employed in town and there are relatively low levels of traffic.
2.2
Council–provided infrastructure and services
Councils face a range of upfront and ongoing infrastructure and service costs for residential development.
This section details typical upfront and ongoing infrastructure costs, responsibility for infrastructure
provision and maintenance and funding mechanisms.
Financial costs of settlement patterns in rural Victoria 9
Typical infrastructure and services provision
There are a variety of upfront costs that local government can face in servicing new development.
Table 1 contains a summary of infrastructure items which can be provided by local government, based
on previous research. It is a comprehensive list of all items that would generally be required for a new
community. As noted earlier in Section 2, there are instances, particularly for large-scale development,
where a private developer will incur costs for infrastructure provision. As such, the following table
should be viewed as the ‘upper limit’ of infrastructure items that council would need to provide.
TA B L E 1 .
C O U N C I L - P R O V I D E D I N F R A S T R U C T U R E F O R R E S I DE N T I A L D E V E L O PM E N T
Infrastructure type
Roads
Provision of new local and collector roads, roundabouts, pathways, bicycle
lanes (may include land acquisition).
Upgrade of existing road network in terms of material (gravel to asphalt) or
in terms of capacity should vehicles per day increase by certain levels.
Paths
Provision of new paths on either one or both sides of street.
Drainage
Provision of new stormwater drainage infrastructure (may include land
acquisition). This includes connecting to existing pipes, provision of new pits
and grates, and kerbside drainage infrastructure whether underground or
on land (i.e. table drain or open flow channel).
Street furniture and signage
Provision of street lighting, street furniture, signage, bus shelters.
Open space
Creation of new public open space, landscaping, wetlands and parks.
Community infrastructure
Provision of new libraries, recreational facilities, community facilities,
neighbourhood houses, men’s sheds. Also, council-run childcare facilities,
kindergartens, aged care facilities, community care facilities maternal and
child health, youth outreach centres. Community transport (community
bus).
Source: Trubka et al (2006), SGS Economics and Planning (2002), University of Canberra (2001)
Unlike upfront costs, which can be borne by other parties, local government usually pays for all ongoing
cost items. For example, a developer may pay for new local roads and drainage for a new subdivision,
however local government will typically pay the ongoing maintenance costs of these new assets . Table 2
lists the typical ongoing costs faced by local government.
One particular thesis (Lovell 1996) examined the economic impacts of converting farmland into hobby
farms in Strathfieldsaye in the City of Greater Bendigo. The thesis found that, following development in
rural locations, the maintenance of roads was one of the largest costs borne by councils; maintenance
costs for maintaining gravel roads in most hobby farm locations and maintaining urban residential streets
on a per property basis are comparable, while costs increase when roads are long, steep or have
Financial costs of settlement patterns in rural Victoria 10
high volumes of traffic. The thesis highlighted the risk of even higher maintenance costs once vacant lots
are developed.
The findings of this work bring to light the possible fiscal pressures faced by local government,
particularly in instances where there is a gap between costs and rate revenues.
Table 2 outlines the ongoing maintenance and operational responsibilities for local government.
TA B L E 2 .
O N G O I N G M A I N T E N A N C E A N D O PE R AT I O N A L R E S P O N S I B I L I T I E S F O R
L O C A L G O VE R NM E NT
Ongoing costs
Roads
Maintenance of local road network, including resealing, gravel re-sheeting,
routine maintenance and rehabilitation.
Paths
Maintenance of paths, including resealing, gravel re-sheeting, routine
maintenance and rehabilitation.
Drainage
Maintenance of drainage infrastructure from legal point of discharge to
network. Stormwater which is captured within a private property must be
directed from/to a legal point of discharge which is typically either an
underground council drain, or at a kerb and channel or open earth drain.
Councils are responsible for maintaining from this point forward, which for
open drains can include clearing blockages, excavating debris and removing
or maintaining vegetation. For underground drains, councils are responsible
for the barrel drain and associated pits.
Street furniture and signage
Maintenance of street lighting, street furniture, signage, bus shelters.
Open space
Ongoing maintenance of open space, including landscaping, mowing,
weeding, etc.
Community infrastructure
Maintenance of building assets as well as operating council-run facilities.
Environmental management
Rubbish collection (labour, truck hire), operation of landfill and transfer
stations.
Source: Trubka et al (2006), SGS Economics and Planning (2002), University of Canberra (2001)
2.3
Drivers of infrastructure costs
In the Where and How Should We Grow study, a significant information gap was identified around the
understanding of infrastructure requirements and costs in rural locations in Australia. Whilst some
studies examining the link between settlement types and infrastructure have been undertaken, these
largely focused on metropolitan locations. A review of these studies was undertaken to try and distil any
higher level principles and take home messages that could be applicable to rural locations.
Financial costs of settlement patterns in rural Victoria 11
Some research, looking at the drivers of infrastructure requirements and costs, has been completed by
Roman Trubka of Curtin University in Western Australia, who has produced two key reports. The
research is focused on urban locations; however the drivers of cost variation are not restricted to
metropolitan areas.
Future Perth - Costs of Urban Form (2001), prepared for the Western Australian Planning Commission,
considers past studies to determine how the location and pattern of settlement may affect development
costs. The analysis considers a large range of previous studies conducted in Australia, Canada and the
United States. Following on from this initial study, Trubka prepared a report on Assessing the Costs of
Alternative Development Paths in Australian Cities with Peter Newman and Darren Bilsborough in 2006.
The key finding from Trubka’s research is that non-contiguous development can attract higher costs.
Non-contiguous development is defined as development which takes place at a distance from existing
development (such as ‘leapfrog’ development). Consequently, it is less able to utilise existing
infrastructure and services, requiring new investment. Non-contiguous development is typically of a
dispersed, ad-hoc nature; however greenfield subdivisions that are not located near existing
development may also be thought of as non-contiguous.
The key characteristics of a new development which may lead to a variation in fiscal costs are outlined as
follows.
The scale and needs of new development
A key driver in the cost of providing new infrastructure is the size of a new development. A larger
development area or site is more likely to have a formal developer contributions plan associated with it.
If one has not been prepared, it is likely council will be able to negotiate the terms of infrastructure
provision with the developer through a Section 173 agreement.
Typically greenfield subdivisions are the largest type of development and are the easiest to apply a
developer contributions plan to. In greenfield developments, the capital outlay for new roads, footpaths,
street furniture, drainage and other new assets is usually covered, in full or in part, by the developer.
Ribbon-type, infill and dispersed development usually occurs on an incremental basis, relying on existing
infrastructure and services where possible. Incremental development is more difficult to charge
development contributions for, as smaller developers are often involved, and it is difficult to establish
new infrastructure requirements or expansions in an established area.
Lovell (1996) identified that, in Strathsfieldsaye, the upgrading and maintenance of infrastructure and
provision of services (particularly of collector roads and garbage collection) greatly exceeded the rates
they generated, leading to an uneven share of direct services without sufficient contribution.
Distance from existing settlements
A number of municipal services are provided by local councils. These include rubbish collection, street
cleaning and weeding/mowing of council-owned open space, drainage, recreation reserves.
Development which occurs at a significant distance from existing settlements can lead to greater costs
for councils. For example, dispersed, isolated development will attract higher costs due to the distance
that needs to be covered for those services to be provided.
Local government will generally collect costs for waste management through Section 162 of the Local
Government Act. However, these charges do not usually vary for households throughout a municipality,
leading to a potential gap in charges collected and actual costs where distances covered are significant.
Distance between settlements can also raise the cost of local government-provided emergency services.
Under the Emergency Management Act 1986, councils have a number of emergency management roles
in their municipality. These include co-ordinating emergency responses and recovery, appointing a
Financial costs of settlement patterns in rural Victoria 12
Municipal Emergency Planning Committee, and preparing a Municipal Emergency Management Plan
(Department of Justice 2011).
Trubka et al (2006) identifies that the capital costs of providing emergency services are considerably lower
in locations that have existing capacity. For operating and maintenance costs, the recurrent annual cost
per additional dwelling is higher in non-contiguous locations that require new capacity. However, these
costs are linked to population levels and location-specific factors such as risk of fire, crime rates, and
emergency rates. Generally the cost of emergency response is higher as a result of increased distances.
This can also have implications for service levels.
Generally however, residential growth can increase the cost of service provision regardless of distance.
This ‘cost of growth’ includes required additional open space and drainage reserves and the
maintenance of these assets. Additional housing will boost the quantum of assets that require
maintenance and service provision by local government.
The level of existing development
The level of existing development in a location, and whether it is urbanised, is a key driver of costs.
Development in rural locations will often rely on different road and drainage systems. For example, many
rural locations have gravel roads and open-cut drainage systems. These can attract different, sometimes
higher ongoing maintenance costs than sealed roads and underground drainage systems. Further to this, a
number of developments taking place in a rural location may necessitate upgrading of infrastructure
(sealing of roads, placing drainage systems underground), which would require upfront investment by
councils.
Community demographics
The cost of providing social services, such as education, health and commu nity facilities, is largely driven
by demographic characteristics rather than settlement patterns. For example, a higher population of
school-age children will increase demand for schools, while an ageing population might result in higher
demand for health and medical services. The cost of providing these services is therefore tied to levels of
demand. However, significant development in locations with limited access to existing capacity may
necessitate new investments in social infrastructure and services at a cost to council.
Residential density
A study undertaken by the Halifax regional municipality in Canada (2005) sought to gain a better
understanding of the cost implications of different patterns of growth. The study looked at nine services
provided by the municipality including roads, transit, water, wastewater and stormwater, solid waste,
parks and recreation, libraries, police and fire. It considered the impact of nine different residential
settlement patterns, ranging from larger rural lots to low/ medium density suburban and high density
urban patterns, on the costs of delivering these services.
The study considered the operational and capital replacement costs required for each service. The
overall costs for each settlement pattern identified some clear trends between density and costs. Most
notable was the influence of density on service costs, with per unit costs decreasing as neighbourhoods
increased in density. The rural low density settlement pattern was found to be nearly three times more
expensive than the urban settlement pattern. The table below shows a summary of the estimated annual
costs per household by settlement type. Low density settlement patterns are located in the left columns
and density increases towards the right columns in the table.
Financial costs of settlement patterns in rural Victoria 13
TA B L E 3 .
E S T I M AT E D A N N UA L C O S T P E R H O U S E HO L D
Source: Halifax Regional Municipality (2005) p11
An additional study (Smart Growth America 2013) conducted in the United States compared the cost of
‘smart growth development’ and ‘conventional suburban development’. In this context, smart growth
development is development that includes buildings located close to each other, walkable
neighbourhoods, better connected streets, more choice regarding dwelling types and more transport
options. Conversely, conventional development has a greater reliance on private vehicles, fewer transport
options, less dwelling density and less connected streets with longer distances to destinations.
The study reviewed and analysed 17 different United States studies that compared the two development
types.
The study looked at the costs associated with the two development patterns, as well as the revenue
potential of each. The headline finding was that smart growth strategies can help any town or city
improve its finances. Specifically:
Smart growth development costs one third less than conventional suburban development for upfront
infrastructure. The study found that smart growth development saves an average of 38 per cent on
upfront costs for the construction of roads, sewers, water lines and other infrastructure. Other studies
have found this to be up to 50 per cent.
Financial costs of settlement patterns in rural Victoria 14
Compared to conventional suburban development, smart growth development saves an average of 10
per cent on the ongoing delivery of police, ambulance and fire services costs.
Compared to conventional suburban development, smart growth development generates 10 times
more tax revenue per acre. This means that smart growth development can lead to municipalities
operating development at a surplus, as opposed to a deficit.
2.4
Infrastructure requirements of settlement patterns
The discussion in Section 2.3 identifies a series of drivers of infrastructure requirements and costs. These
drivers tend to vary by settlement type. This sub-section synthesises research findings to identify typical
infrastructure provision and maintenance requirements by council for different settlement types (see
Tables 4 to 6 below).
TA B L E 4 .
G R E E N F I E L D D E V E L O PM E N T I N F R A S T R U C T U R E P R O V I S I O N A N D
R E S PO N S I BIL ITY
Infrastructure Item
New local roads, required
upgrades, intersections and
roundabouts within the
development site
Provision
Developer pays proportion or
entire cost
Maintenance
Council
Required road upgrades,
intersections and roundabouts
around the development site
Council usually pays entire cost
Council
New/upgraded drainage
Developer pays proportion or
entire cost
Council
New footpaths, cycle paths and
shared paths
Developer pays proportion or
entire cost
Council
Street signage, furniture and
lighting
Developer pays proportion or
entire cost
Council
Environmental management
Not applicable
Council
Open space, recreation, reserves,
playgrounds
Developer pays a proportion via
open space levy or DCP
Council
Community facilities
Council usually pays cost.
Funding is sometimes obtained
from State or Federal
Government.
Council
Financial costs of settlement patterns in rural Victoria 15
TA B L E 5 .
D I S P E R S E D D E V E LO P M E N T I N F R A S T R U C T U R E P R O V I S I O N A N D
R E S PO N S I BIL ITY
Infrastructure Item
New local roads, required
upgrades, intersections and
roundabouts within the
development site
Provision
Not often required unless traffic
reaches a certain threshold.
Council will pay.
Maintenance
Council
Required road upgrades,
intersections and roundabouts
around the development site
Not often required unless traffic
reaches a certain threshold.
Council will pay.
Council
New/upgraded drainage
Developer/resident pays for new
or upgraded infrastructure from
property to street.
Council
Council pays for new/upgraded
infrastructure otherwise.
New footpaths, cycle paths and
shared paths
Not often required. Otherwise,
Council.
Council
Street signage, furniture and
lighting
Not often required. Otherwise,
Council.
Council
Environmental management
Not often required. Otherwise,
Council.
Council
Open space, recreation, reserves,
playgrounds
Not often required. Otherwise,
Council.
Council
Community facilities
Council usually pays cost.
Funding is sometimes obtained
from State or Federal
Government.
Council
Financial costs of settlement patterns in rural Victoria 16
TA B L E 6 .
I N F I L L D E V E LO PM E N T I N F R A S T R U C T U R E PR O V I S I O N A N D R E S PO N S I B I L I T Y
Infrastructure Item
New local roads, required
upgrades, intersections and
roundabouts within the
development site
Provision
Not often required unless traffic
reaches a certain threshold.
Council will pay.
Maintenance
Council
Required road upgrades,
intersections and roundabouts
around the development site
Not often required unless traffic
reaches a certain threshold.
Council will pay.
Council
New/upgraded drainage
Developer/resident pays for new
or upgraded infrastructure from
property to street.
Council
Council pays for new/upgraded
infrastructure otherwise.
New footpaths, cycle paths and
shared paths
Not often required. Otherwise,
Council.
Council
Street signage, furniture and
lighting
Not often required. Otherwise,
Council.
Council
Environmental management
Not often required. Otherwise,
Council.
Council
Open space, recreation, reserves,
playgrounds
Not often required. Otherwise,
Council.
Council
Community facilities
Council usually pays cost.
Funding is sometimes obtained
from State or Federal
Government.
Council
Financial costs of settlement patterns in rural Victoria 17
3
3.1
THE COSTS OF
SETTLEMENT PATTERNS
TO COUNCILS
Approach
To estimate the relative costs councils face for different settlement patterns, an electronic tool was
developed which enables the upfront and ongoing costs of a range of land areas and densities to be
tested. Appendix A details the structure and use of this model.
Importantly, there are three key sets of data which drive the model.
1. Database of infrastructure costs
2. The types of infrastructure typically provided to each settlement type, and
3. The quantities of infrastructure typically provided within a set area of each settlement type.
Database of infrastructure costs
Per unit costs of infrastructure items were obtained by reviewing past projects undertaken by Aurecon. A
series of infrastructure-related projects, including road provision in various locations in Victoria, were
reviewed and per unit costs of infrastructure extracted. Rawlinsons Construction Handbook was used as
the industry guideline to supplement the findings and establish a database of over 400 in frastructure
items. Where possible, averages were determined using costs from a variety of projects.
During the evaluation period of the draft tool, some councils provided additional cost data. This
information has been included into the overall cost database.
A comprehensive list of infrastructure items is provided in the electronic tool.
Types of infrastructure provided to each settlement type
After a comprehensive database of infrastructure items was prepared, the next step was to identify
which items were typically used in residential development in rural locations. This was done by
reviewing infrastructure design and provision manuals.
The costs of items were aggregated to produce overall costs. For example, provision of an asphalt path
includes spreading and compacting crushed rock, mesh reinforcement and asphalt. These costs were
added to create an overall per square metre cost for asphalt paths. For roads, materials and the need to
cut/fill depths were added.
Asset management plans from a range of rural councils were used to identify typical maintenance
requirements.
Typical infrastructure quantities of infrastructure
To enable the costs of different settlement types to be tested, a standard ‘basket of infrastructure’ was
determined for each settlement type. Using findings from the literature review, previous work, council
consultation and expert input from Aurecon, a series of default assumptions were established for each
settlement type.
Financial costs of settlement patterns in rural Victoria 18
The types of infrastructure provided for different development can vary, even within specific settlement
types. Factors which can vary the types of infrastructure provided include:
Location in Victoria
Council-specific standards for infrastructure provision, and
The age, quality and capacity of existing infrastructure.
As such, the standard basket of infrastructure provided as a default in the model is not exactly applicable
to all development scenarios. For this reason, councils are able to vary these assumptions in the model
and select from the range of over 400 items which have been costed. Councils are also able to add new
items as required.
3.2
Default infrastructure items
This sub-section details the ‘summary infrastructure items’ developed for the electronic tool. The items
here are intended to represent the majority of infrastructure requirements associated with residential
development in rural Victoria. The items here have a purposely ‘local’ slant, that is, the model does not
consider upstream implications of growth. To predict upstream infrastructure requirements, a very
detailed understanding of the capacity of infrastructure networks across Victoria is required.
Roads
A range of typical roads found in rural locations was developed through review of infrastructure design
manuals. These roads are shown in the table below.
TA B L E 7 .
D E FA U LT R O A D T Y PE S
Road Type
Maximum traffic volume Dimensions
(vehicles per day)
Rural living access road
1000
Reserve of 20m, 6.2m width, 1.5m shoulder
Rural living collector road
6000
Reserve of 25m, 6.6m width, 1.5m shoulder
Rural living/low density
residential court bowls
n.a
Reserve of 32m, 10m width, 1.5m shoulder
Low density residential access
road
1000
Reserve of ~17m, 6.0m width, 1.5m
shoulder
Low density residential collector 6000
road
Reserve of ~18m, 6.0m width, 1.5m
shoulder
Rural access – gravel
0-50
Reserve of 20m, 4.0m width, 1.5m shoulder
Rural access – asphalt
51-150
Reserve of 20m, 4.0m width, 1.5m shoulder
Rural access - asphalt
150+
Reserve of 20m, 6.2width, 1.5m shoulder
Paths
In most rural locations, if a path is provided alongside a road, it is typically gravel. In low density
residential locations, a concrete path is provided
Financial costs of settlement patterns in rural Victoria 19
TA B L E 8 .
D E FA U LT PAT H T Y PE S
Path Type
Asphalt path, one or both sides of road
Asphalt path, one or both sides of road (shared use)
Gravel path, one or both sides of road
Widths
1.25m, 1.5m
2.5m
1.25m, 1.5m
Gravel path, one or both sides of road (shared)
2.5m
Stormwater drainage
Stormwater drainage infrastructure is highly variable to suit local conditions, such as gradient, soil type
and typical run off. At a high level however, stormwater drainage is either underground or at ground
level. In most rural locations, drainage is provided at ground level.
The capacity of drainage used is dependent on the maximum flow rate of water, which is linked to levels of
permeable surface and local climate conditions. For this reason, estimating drainage is highly localised. A
list of typical drainage types is shown below:
Street based
Brick Drain 300-600mm wide
Barrier Kerb - concrete
Concrete open drain 300, 400 and 1200mm
Concrete kerb and channel 450-600mm
Kerb of timber construction
Laid back kerb 900mm
Open drain (earthen)
Plinth kerb concrete 15mm
Semi-mountable kerb and channel 300-600mm
Semi-mountable kerb and channel 600mm, and
Semi mountable kerb, no channel.
Underground
Semi mountable kerb (300mm), no channel, + underground drainage, Inspection opening to house
and standard house drain.
As shown, the items listed above relate to quite localised infrastructure. However, significant
development can trigger upstream infrastructure upgrades. These items have not been included in the
model due to the complexity of catchment areas and existing infrastructure and its capacity.
Open space
Open space can range from preserved natural environments to highly cultivated, landscaped gardens.
Two types of open space have been used as defaults:
Landscaped parks/gardens (including clearing of site and planting), and
Retention of a natural reserve.
Community infrastructure
A range of community infrastructure is provided by local government. In growth area planning, ratios are
often used to determine likely community infrastructure needs. These ratios are usually linked to the
projected population of an area and the characteristics of that population, such as its age and needs
profile. However, providing community infrastructure in rural locations is more complex, particularly in
locations which are established and see incremental levels of growth.
Financial costs of settlement patterns in rural Victoria 20
In more established locations, a community infrastructure needs assessment is usually undertaken which
will include an audit of infrastructure and take into consideration prevailing provision of infrastructure,
infrastructure which may be accessible in nearby locations outside of the municipality, and the capacity
for infrastructure to be repurposed to suit current and future needs.
For this reason, whilst a list of typically provided community infrastructure items is included in the model,
users are required to select items individually for consideration. The items which are included are:
Childcare Centre
Youth Centre
Senior Citizen Centre
Civic Centre
Multipurpose Centre
Community and Neighbourhood Centre
Performing Arts/Exhibition/Convention Centre
Main Library
Branch Library
Sport field (local active open space)
District Parks and Facilities
Aquatic Centre, and
Playground.
Further to this, councils are required to check the cost assumptions around each community
infrastructure asset. The costs of these assets is highly variable, due to a detailed design process and
variables such as overall size, quality of materials used, location attributes, the re-use of existing
materials, etc. Where possible, councils are recommended to use known cost estimates if including
community infrastructure in the model.
Environmental management
Environmental management includes rubbish collection and recycling. A review of council budgets in
rural Victoria identified that approximately six to 10 per cent of rates go towards environmental
management. The 2012 Rates Survey (MAV) identified typical rates charged across Victoria. Based on
this, the average charge for recycling and landfill was approximately $122 per dwelling per /year.
3.3
Default infrastructure items for settlement types
To understand the costs of different settlement patterns, a series of assumptions was required around
the types of infrastructure typical to each settlement pattern, and the quantity of infrastructure required.
Within the electronic tool, all assumptions can be varied by councils. This is important as the default
assumptions are high level and may not be suited to all locations. Through this project we have attempted
to define typical requirements and costs to enable conclusions to be drawn but it is important that these
assumptions be reviewed by councils prior to use for their local area.
Dispersed development
Dispersed development can be a concern to councils due to its incremental nature, loss of agricultural
land, incompatibility with agricultural uses and distance from existing infrastructure networks. However,
dispersed development usually requires limited, if any, new infrastructure provision on behalf of council.
This is because connections from the property to street-based infrastructure are the onus of the owner.
Financial costs of settlement patterns in rural Victoria 21
The following table summarises the infrastructure items typically used in dispersed development.
TA B L E 9 .
D I S P E R S E D D E V E LO P M E N T D E FA U LT A S S U M PT I O N S
Infrastructure Type
Roads
Paths
New infrastructure provision
Ongoing maintenance
requirements
Assume no new roads are provided, with Assume additional maintenance
subdivisions taking place off existing
equivalent to the length of road
roads and any private roadways which
typically associated with each
connect to existing roads being at the
hectare of development.
owners cost.
Assume the existing road is a Rural
Assume council responsible for renewal. Living Access Road (Asphalt)
Assume no path provided. In most rural Not applicable.
locations, there is no footpath along the
side of a road.
Assume council responsible for renewal
Drainage
The developer of a new dwelling will
Council may incur additional
incur costs to connect drainage from the maintenance costs associated with
dwelling to the street. Council does not increased infrastructure utilisation.
provide drainage infrastructure.
Assume the dispersed development
Assume council responsible for renewal would induce additional
maintenance requirements
equivalent to drainage associated
with the area of development.
Open Space
Assume no new open space provision.
Environmental
Management
No infrastructure required. Significant
Assume recycling and rubbish
population increases may trigger the
collection for each new dwelling.
need for upgrades to landfill and recycling
sites and transfer centres.
Assume no open space provision.
Source: S GS Economics and P lanning, 2013
As shown in the above table, councils typically face quite low upfront costs for dispersed development.
This is because it often takes place in the form of subdivision of existing lots with a dwelling, and existing
infrastructure such as roads and street-based drainage are already in place. Developers typically face
costs of connecting the new dwelling to existing infrastructure.
The challenge for councils is in managing the total amount of dispersed development. As it often takes
place on an incremental basis, it is at times difficult to track. Large amounts of dispersed development
can necessitate infrastructure upgrades downstream, or convert existing infrastructure into types that
are more suitable for heavy usage (for example, an asphalt road from a gravel road).
Identifying where upgrades might be required involves detailed examination of the capacity of existing
infrastructure. If this knowledge is within councils, then the model can easily be updated to inc lude
these items. It is difficult to apply a generalised assumption around the need for infrastructure upgrades.
Financial costs of settlement patterns in rural Victoria 22
Greenfield development
Greenfield development typically requires all infrastructure be supplied ‘from scratch’. However, as it is
developer-driven, council typically does not pay for upfront infrastructure requirements. In some cases,
councils are able to have the developer contribute towards upgrades that are required upstream as a
result of the greenfield development.
The following table highlights assumptions made around greenfield development.
TA B L E 10 . G R E E N F I E L D D E V E L O PM E N T D E FA U LT A S S U M PT I O N S
Infrastructure Type
New infrastructure provision
Roads
Assume this is provided for by the
developer.
Assume council responsible for
renewal.
Ongoing maintenance
requirements
Assume additional maintenance
equivalent to the length of road
typically associated with each
hectare of development.
Assume the existing road is a Low
Density Residential Access Road
(Asphalt).
Paths
Drainage
Open Space
Assume concrete footpath provided Council face costs of repairs,
to both sides of all roads and is
ongoing maintenance and
provided by the developer.
replacement.
Assume council responsible for
renewal.
Assume the path is a concrete path
on both sides of road (1.5m in
width).
Assume standard house drains and
property junction pits, inspection
openings and new stormwater
drainage pipes are provided by the
developer.
Councils responsible for
maintenance and repair of drainage
infrastructure network, excluding
from the legal point of discharge to
the property.
Assume council responsible for
renewal.
Assume the greenfield development
would induce additional
maintenance requirements
equivalent to drainage associated
with the area of development.
Assume open space to be provided Council faces ongoing maintenance
by the developer, therefore no
requirements for open space.
assumptions are made around land
acquisition and property purchase
requirements.
It is assumed that around half of the
open space will be natural reserve,
the rest will be landscaped (for
playgrounds, etc).
Environmental
management
No infrastructure required.
Assume recycling and rubbish
Significant population increases may collection for each new dwelling.
Financial costs of settlement patterns in rural Victoria 23
Infrastructure Type
New infrastructure provision
Ongoing maintenance
requirements
trigger the need for upgrades to
landfill and recycling sites and
transfer centres.
Source: S GS Economics and P lanning, 2013
Infill development
In rural settings infill development typically takes place on vacant lots within town centres. It is not
common for large scale, high density infill development to take place in rural locations.
Infill development is able to utilise existing infrastructure networks and the owner has the onus of
paying for connections to street-based infrastructure.
TA B L E 11 . I N F I L L D E V E LO PM E N T D E FA U LT A S S U M PT I O N S
Infrastructure Type
Roads
Infrastructure requirements
No additional roads required.
Maintenance requirements
No additional maintenance required.
Assume council responsible for
renewal.
Paths
No additional paths required.
Assume council responsible for
renewal.
Council face costs of repairs, ongoing
maintenance and replacement.
Assume the infill development would
induce additional maintenance
requirements equivalent to a concrete path
on one side of the road (1.5m in width).
Drainage
Assume drainage only required from Some additional maintenance required.
legal point of discharge to property
which is paid for by the owner.
Assume the infill development would
induce additional maintenance
Assume council responsible for
requirements equivalent to drainage
renewal.
associated with the area of development.
Open Space
No new open space required.
Environmental
management
No infrastructure required.
Assume recycling and rubbish collection for
Significant population increases may each new dwelling.
trigger the need for upgrades to
landfill and recycling sites and
transfer centres.
Source: S GS Economics and P lanning, 2013
Financial costs of settlement patterns in rural Victoria 24
Not applicable.
3.4
Default infrastructure quantities for settlement types
Approach
GIS analysis of rural dispersed and greenfield settlements was undertaken to understand the typical
quantities of infrastructure provided for set areas. Three case studies of greenfield and dispersed
development were respectively studied. These were the greenfield locations of Trafalgar (Baw Baw),
Woodend (Macedon Ranges) and Winchelsea (Surf Coast), as well as rural parcels of land in those three
councils.
The approach involved tracing over roads to determine typical rates of provision of roads, paths and
street-based drainage infrastructure. The following series of maps highlight the GIS analysis and tracing
method used.
F I G U R E 3 . R U R A L A N D G R E E N F I E L D / E S TA B L I S H E D A E R I A L P HO TO G R A P H Y A N A LY S I S
Baw Baw Shire – Greenfield/Established Town
Baw Baw Shire – Rural/Dispersed
Macedon Ranges – Greenfield/Established Town
Macedon Ranges – Rural/Dispersed
Financial costs of settlement patterns in rural Victoria 25
Surf Coast Shire – Greenfield/Established Town
Surf Coast Shire – Rural/Dispersed
TA B L E 12 . G I S A N A LY S I S F I N D I N G S
Study area
(Ha)
Dwellings
Average lot size Total length
(approximate)
(Ha)
of road (km)
km of road
per Ha
km of road
per dwelling
Rural/Dispersed
Baw Baw Shire
5578
64
87
36
0.006
0.565
Macedon Ranges Shire
5560
43
129
33
0.006
0.774
Surf Coast Shire
5560
24
232
26
0.005
1.082
Average
0.006
0.807
Greenfield/Established
Towns
Baw Baw Shire Trafalgar
Macedon Ranges Shire Woodend
Surf Coast Shire Winchelsea
308
1361
0.226
28
0.092
0.021
309
818
0.377
26
0.083
0.031
366
621
0.589
27
0.073
0.043
Average
0.083
0.032
Financial costs of settlement patterns in rural Victoria 26
TA B L E 13 . D E FA U LT Q U A N T I T Y O F I N F R A S T R U C T U R E
Roads
Paths
Drainage
Open Space
Dispersed
No roads provided by council.
Greenfield
No roads provided by council.
Infill
No new roads provided by council, assuming existing.
For maintenance purposes, assume a Rural Living
Access Road is being maintained, with each Ha of
development equivalent to 0.6km of road.
For maintenance purposes, assume a Low Density
For maintenance purposes, assume a Low Density
Residential Access Road, with each dwelling equivalent Residential Collector Road, with each dwelling
to 0.033km of road.
equivalent to 0.021km of road, reflecting the lower
band of provision of roads per dwelling (see Table 12).
Assume renewal every 30 years.
Assume renewal every 30 years.
Assume renewal every 30 years.
No paths associated with dispersed development.
No paths provided by council.
No new paths provided, assume path already exists.
Maintenance not applicable.
For maintenance purposes, assume a concrete path
For maintenance purposes, assume a concrete path
1.5m wide is provided to both sides of road, with each 1.5m wide is provided to one side of the road with each
dwelling equivalent to 0.066km of road.
dwelling equivalent to 0.021km of road.
Assume renewal every 60 years.
Assume renewal every 60 years.
Assume renewal every 60 years.
No drainage provided by council.
No drainage provided by council.
No drainage provided by council.
For maintenance purposes, assume earthen open
drains exist with each hectare equivalent to 1.2km of
drainage.
For maintenance purposes, assume underground
drainage equivalent to 0.066km per dwelling, with an
inspection opening and standard house drain also
provided per dwelling.
For maintenance purposes, assume underground
drainage equivalent to 0.033km per dwelling, with an
inspection opening and standard house drain also
provided per dwelling.
Assume renewal every 50 years.
Assume renewal every 50 years.
Assume renewal every 50 years.
None provided.
No open space provided by council.
No new open space provided by council.
For maintenance purposes, assume around 50 square
metres of open space per dwelling, half of which is
landscaped, half natural reserve.
Environ’l Mgt
Assume standard rubbish and recycling collection.
Note: Renewal of infrastructure assumed to be at same rate as provision.
Financial costs of settlement patterns in rural Victoria 27
Assume standard rubbish and recycling collection.
Assume standard rubbish and recycling collection.
Community infrastructure
In estimating needs for community infrastructure, standard rates of provision per population cannot be
used in rural locations. Consultation suggested that there opposing forces at play. Firstly, the full
provision of community infrastructure, which is aligned to the population (say at rates of provision
similar to metropolitan growth area rates) is unlikely to be financially feasible. In these instances,
councils may explore regional provision of infrastructure or shared facilities. Secondly, some types of
infrastructure may be provided at higher rates to counteract significant distance.
For this reason, no assumptions have been made around the need for any community infrastructure
associated with settlement types. Users are able to add in community infrastructure items and related
costs in the electronic tool.
3.5
Findings
As part of this project, an electronic tool was developed (See Appendix A for the user manual). This
section provides the results of two scenarios tested in the model.
Scenario 1: 10 additional dwellings over 30 years
This scenario looked to compare the cost difference between settlement types in delivering 10 dwellings
over varying timeframes and land areas (see Table 14). The average rates charged per household across
all of Victoria for 2012 was used.
TA B L E 14 . S C E N A R I O 1 I N P U T S
USER INPUT S
Dispersed
Greenfield
Infill
Number of dwellings
10
10
10
Area (Hectares)
20
1
0.5
0.5
10
20
Start year of development
1
1
1
End year of development
5
5
5
Resultant average gross density
Timeframe of analysis>>
30 YEARS
Source: Financial Costs of Settlement Patterns in Rural Victoria (2013)
The following chart highlights the impacts of:
- Cyclical maintenance schedules
- Shorter development timeframes allowing quicker revenues (from rates)
Financial costs of settlement patterns in rural Victoria 28
F I G U R E 4 . S C E N A R I O 1 T OTA L C O S T S A N D R E V E N U E S C O M PA R I S O N
Total Costs and Revenues Comparison
$20,000
$0
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
-$20,000
-$40,000
-$60,000
-$80,000
-$100,000
DISPERSED
GREENFIELD
INFILL
The following table displays the results of Scenario 1. Over a 30 year timeframe, it is expected that
dispersed development would result in the highest costs for council, followed by Greenfield, whilst Infill
would result in a positive net position. However, this scenario excludes:
- Renewal of assets which occur at 30+ year cycles
- Community infrastructure assets and services.
The table overleaf delves into the results on a per dwelling and per hectare basis.
Financial costs of settlement patterns in rural Victoria 29
TA B L E 15 . S C E N A R I O 1 R E S U LT S
SUMMARY RESULTS
Results (over timeframe)
Dispersed
Greenfield
Infill
Total costs
$
2,335,640
$
582,334
$
387,380
Total revenues
$
427,305
$
427,305
$
427,305
1,908,335 -$
155,029
$
39,925
Net position
-$
Results (per dw elling)
Dispersed
Greenfield
Infill
Total costs
$
233,564
$
58,233
$
38,738
Total revenues
$
42,730
$
42,730
$
42,730
190,834 -$
15,503
$
3,992
Net position
-$
Results (per hectare)
Dispersed
Greenfield
Infill
Total costs
$
116,782
$
582,334
$
774,760
Total revenues
$
21,365
$
427,305
$
854,609
95,417 -$
155,029
$
79,850
Net position
-$
Financial costs of settlement patterns in rural Victoria 30
Scenario 2: 20 additional dwellings over 50 years
This scenario compares the costs of 20 additional dwellings over a 50 year period. The average rates
charged per household across all of Victoria for 2012 were used again. See Table 16.
TA B L E 16 . S C E N A R I O 2 I N P U T S
USER INPUT S
Dispersed
Greenfield
Infill
Number of dwellings
20
20
20
Area (Hectares)
20
4
1
1
5
20
Start year of development
1
1
1
End year of development
5
5
5
Resultant average gross density
Timeframe of analysis>>
50 YEARS
The following chart highlights that over a long timeframe, cyclical maintenance costs is one of the larger
costs councils face. The peaks of expenditure are not counteracted by rate revenue alone, with a deficit
shown in each year after maintenance and operation of infrastructure kicks in.
F I G U R E 5 . S C E N A R I O 2 R E S U LT S ( E X C L U D I N G R E N E W A L )
Total Costs and Revenues Comparison
$20,000
$10,000
$0
1
3
5
7
9
11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49
-$10,000
-$20,000
-$30,000
-$40,000
-$50,000
DISPERSED
GREENFIELD
INFILL
The following figure also includes asset renewal. As shown, this is a significant cost.
Financial costs of settlement patterns in rural Victoria 31
F I G UR E 6 .
S C E N A R I O 2 R E S U LT S ( I N C L U D I N G R E N E W A L )
Total Costs and Revenues Comparison
$200,000
$0
1
3
5
7
9
11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49
-$200,000
-$400,000
-$600,000
-$800,000
-$1,000,000
-$1,200,000
-$1,400,000
DISPERSED
GREENFIELD
INFILL
The following table shows that over 50 years, the costs generated by dispersed and greenfield
development are considerable when asset renewal is taken into consideration. Over a 50 year period, it is
estimated that a net loss of $2M would arise for council for dispersed development, with this reduced to
-$512,000 for Greenfield development. Infill development results in a positive net position of
$292,000.
Financial costs of settlement patterns in rural Victoria 32
TA B L E 17 . S C E N A R I O 2 R E S U LT S ( I N C L U D I N G R E N E W A L )
SUMMARY RESULTS
Results (over timeframe)
Dispersed
Greenfield
Infill
Total costs
$
6,507,200
$
1,977,939
$
1,172,526
Total revenues
$
1,465,045
$
1,465,045
$
1,465,045
5,042,155 -$
512,895
$
292,518
Net position
-$
Results (per dw elling)
Dispersed
Greenfield
Infill
Total costs
$
325,360
$
98,897
$
58,626
Total revenues
$
73,252
$
73,252
$
73,252
252,108 -$
25,645
$
14,626
Net position
-$
Results (per hectare)
Dispersed
Greenfield
Infill
Total costs
$
325,360
$
494,485
$
1,172,526
Total revenues
$
73,252
$
366,261
$
1,465,045
252,108 -$
128,224
$
292,518
Net position
-$
Financial costs of settlement patterns in rural Victoria 33
3.6
Concluding remarks
This study attempted to correlate certain infrastructure items and quantities to hypothetical settlement
patterns. The purpose of this was to demonstrate the impact of rural form on council budgets and
confirm (or otherwise) a growing belief of a widening gap between infrastructure costs and revenues.
Based on the assumptions detailed in this report, it is evident that councils do face a substantial gap
between costs and rates revenue. This work has made no assumption around other potential sources of
revenue for council, or the fact that rates revenue is unlikely to be solely dedicated to the maintenance
and operation of infrastructure and services.
The key conclusion from this work, and based on the high level assumptions which are applied, is that
settlement patterns do indeed generate different costs over time. Even if councils are not providing new
infrastructure to service growth, maintenance and operational costs over time vary significantly between
settlement patterns. The vast infrastructure network required for dispersed development (despite its
more basic standard) generates considerable cost to local government. In contrast, infill development,
that is development which takes place on vacant parcels of land within existing infrastructure networks,
generates considerably less cost to local government.
Most interestingly, greenfield development and its high level of infrastructure provisioning (typically paid
for by developers) lumps councils with exorbitant ongoing costs. This is significant given the growing
emergence of greenfield development in rural locations.
Comparing the costs at a high level over time indicates that over varying time periods, dispersed
development tends to be the most expensive to councils.
The findings suggest that councils should consider financial implications in setting settlement policy.
Whilst proximity to infrastructure networks is often highlighted within rural planning schemes, the effects
of incremental dispersed development over time can be quite detrimental to council budgets, particularly
in councils where there is limited growth otherwise. This highlights the need for proximity to
infrastructure to possibly be a stronger objective in assessing planning applications.
It is acknowledged that the cost implications of development to councils is only one aspect, and other
criteria such as environmental impact, effects to agricultural and the ability to provide important
community services need to also be considered alongside financial criteria.
Financial costs of settlement patterns in rural Victoria 34
USER GUIDE
Welcome
The Welcome Sheet includes a disclaimer around the use of the model. It should be noted that the
spreadsheet-based tool has been developed for rural councils to enable high level scenario testing of the
costs of settlement patterns over time. The assumptions contained herein reflect high level analysis
undertaken by SGS Economics and Planning (2013) and should be altered to suit local conditions. Please
refer to the accompanying report and user manual for further information on how assumptions were
derived and on how to use the model. This model is not intended to replace advice from engine ers and
cost surveyors, and should be treated as an investigative tool only.
SGS and its associated consultants are not liable to any person or entity for any damage or loss that has
occurred, or may occur, in relation to that person or entity taking or not taking action in respect of any
representation, statement, opinion or advice referred to herein.
Menu
The Menu provides a one-stop directory to the sheets contained in the model. Users are only required to
enter data into two sheets: Data Input and Rates Assumptions. There are various other sheets where
users are able to vary assumptions as they see fit.
F I G U R E 7 . S C R E E N S HO T O F M E N U
Financial costs of settlement patterns in rural Victoria 35
Input Sheet
Users must enter data into the input sheet. This essential data includes the number of dwellings, area,
and start and end year of development across all three settlement patterns.
If a user does not wish to test a particular settlement type, zero dwellings and hectares can be inputted
into the table.
A timeframe of analysis must also be selected from the drop down menu. This varies the timeframe
across key metrics such as total costs over time and net position over time.
F I G U R E 8 . S C R E E N S HO T O F I N P U T S HE E T
Financial costs of settlement patterns in rural Victoria 36
Assumption sheet 1. Infrastructure items and quantities
This sheet enables users to:
- Select infrastructure items for each settlement type
- Distinguish between whether council is providing and maintaining/operating, or simply
maintaining/operating the infrastructure
- Enter in average provision ratios per hectare (for dispersed) or pre dwelling (for greenfield and
infill).
A button ‘reset defaults’ changes all values back to default assumptions outlined in this report.
F I G U R E 9 . S C R E E N S HO T O F A S S U M P T I O N S H E E T 1
Financial costs of settlement patterns in rural Victoria 37
Assumption Sheet 2: Infrastructure items (detailed)
Assumption Sheet 2 allows users to vary the types of infrastructure that have been included in the
model. The sheet clearly sets out which individual items are used (from Aurecon’s database of items),
and the estimated costs per unit.
It is recommended that users add new infrastructure items to the sheet named ‘Full detailed costs’ and
link the cells to that new data to ensure transparency.
F I G U R E 10 . S C R E E N S HO T O F A S S U M P T I O N S H E E T 2
Financial costs of settlement patterns in rural Victoria 38
Assumption Sheet 3: Maintenance and operation of infrastructure
Assumption Sheet 3 allows users to vary assumptions made around maintenance and operation. The
cells which list items are linked to Assumption Sheet 2 (so any changes in that sheet should flow
through).
The sheet includes high level maintenance benchmarks and also working out of maintenance costs over
time.
F I G U R E 11 . S C R E E N S HO T O F A S S U M P T I O N S H E E T 3
Financial costs of settlement patterns in rural Victoria 39
Assumption sheet 4: Rates Revenue
Assumption Sheet 4 allows users to select their council from a drop down menu to bring up average
rates revenue for 2012. The data is from MAV Rates Survey and is in some parts, incomplete. Users are
encouraged to update data as it becomes available.
F I G U R E 12 . S C R E E N S HO T O F A S S U M P T I O N S H E E T 4
Financial costs of settlement patterns in rural Victoria 40
Revenue streams
This sheet allows users to:
- Enter rates revenue in as an overall revenue stream
- Enter developer contributions
- Enter funding sources and other revenue items.
Users are required to fill out all cells across the timeframe they are analysing.
F I G U R E 13 . S C R E E N S HO T O F R E V E N U E S T R E A M S
Financial costs of settlement patterns in rural Victoria 41
Key results
This sheet displays key high level results, including a table and several charts.
F I G U R E 14 . S C R E E N S HO T O F K E Y R E S U LT S
Financial costs of settlement patterns in rural Victoria 42
Financial Impacts
This sheet provides more detailed results, including:
- Total cost/revenue over varying timeframes
- Net surplus/deficit
- Average annual costs, revenues and surplus/deficit
- Present value of costs, revenues and the net position.
Users are able to vary the discount rate as appropriate. Importantly, users can also elect to include or
exclude renewal costs through a drop down menu. These options are both highlighted in light green.
F I G U R E 15 . S C R E E N S HO T O F F I N A N C I A L I M PA C T S
Financial costs of settlement patterns in rural Victoria 43
REFERENCES
Department of Justice (2011) ‘Local Government and Emergency Management’ website accessed 3
November 2011, via:
http://www.justice.vic.gov.au/wps/wcm/connect/justlib/DOJ+Internet/Home/Safety+and+Emergency+
Management/Emergencies/Planning+for+Emergencies/JUSTICE++Local+Government+and+Emergency+Management
Halifax Regional Municipality (2005) Settlement Pattern and Form with Service Cost Analysis, Canada.
Lovell, R.A., (1996) The conversion of farmland to hobby farming: Regional environmental and economic
costs. Thesis for the degree of Master of Arts (Town Planning), Victoria University of Technology.
SGS Economics and Planning (2011) Where and How Should We Grow? Short and Long Term Impacts of
Different Settlement Patterns, prepared for the Municipal Association of Victoria.
Trubka, R. (2001) Future Perth – Costs of Urban Form. Working Paper 2. Prepared for the Western
Australian Planning Commission.
Trubka, R., Newman, P., and Bilsborough, D. (2006) Assessing the Costs of Alternative Development Paths
in Australian Cities. Report commissioned by Parsons Brinckerhoff Australia.
Smart Growth America (2013) Building Better Budgets: A National Examination of the Fis cal Benefits of
Smart Growth Development, Washington. Viewed at http://www.smartgrowthamerica.org/buildingbetter-budgets, May 2013.
Financial costs of settlement patterns in rural Victoria 44
Contact us
CANBERRA
Level 1, 55 Woolley Street
Dickson ACT 2602
+61 2 6262 7603
[email protected]
HOBART
Unit 2, 5 King Street
Bellerive TAS 7018
+61 (0)439 941 934
[email protected]
MELBOURNE
Level 5, 171 La Trobe Street
Melbourne VIC 3000
+61 3 8616 0331
[email protected]
SYDNEY
Suite 12, 50 Reservoir Street
Surry Hills NSW 2010
+61 2 8307 0121
[email protected]
Financial costs of settlement patterns in rural Victoria 45