Delays over Melbourne Creek Decision Frustrates City

Developers may miss the chance to reduce development contribution levy costs in the Macaulay Precinct as a planning scheme amendment delay frustrates the City of Melbourne.

At the Future Melbourne Committee meeting this month the council noted that Melbourne Water abandoning a funding mechanism and the Victorian Department of Transport and Planning’s delay on Melbourne Planning Scheme Amendment C417 submitted in 2022 had caused issues.

One is the problem of funding community infrastructure along the Moonee Ponds Creek corridor (which includes the Macaulay Precinct) and acquiring the land needed.

In the interim, developers have been charged under a Development Contributions Plan (DCP) for the Macaulay Precinct set up in 2017 that has cost them more than if the amendment had been approved sooner.

The interim DCP, in place since 2017, collects $21,559 per home (as per figures for 2024-25) but the permanent DCP in the amendment proposes a $12,929 development infrastructure levy and a $1450 community infrastructure levy per new home (per 2024-25 figures).

That drops costs for developers by $7180 per new home in the Macaulay Precinct once the Amendment C417 is approved.

The council is now faced with finding alternative funding mechanisms to replace the one abandoned by Melbourne Water or changing Amendment C417 to increase the levy costs so that there is enough funding for necessary infrastructure development.

The latter would mean developers would not get the cost reduction benefit of the amendment.

The council received 34 submissions for their motion from residents and businesses, including developer Assemble.

The Moonee Ponds Creek is a 25km waterway that begins at Woodlands near Melbourne Airport and joins up to Yuroke Creek before running through the Jacana Wetlands and moving through the Macaulay Precinct to the Docklands area and thence to the Port of Melbourne and Port Phillip Bay.

Rehabilitation of the creek is necessary because it flows through areas formerly used for heavy industry. However, other considerations, such as planning for open space along its banks, flood management and planning for potential freight rail crossings near the Port of Melbourne have also been raised.

“The Moonee Ponds Creek is one of the most neglected and abused waterways in Victoria, and it could be one of the most beautiful green corridors, providing beautiful space and respite for people who live in this area as a city, one of the most dense, fastest-growing areas in our municipality,” Melbourne Lord Mayor Nicholas Reece said.

That, along with the escalating need and drive for housing, prompted the Future Melbourne Committee to act.

▲ A section of Moonee Ponds Creek, in the City of Moreland, where a concrete channel was created.

The planning delay

On June 14, 2022, the Future Melbourne Committee endorsed Amendment C417 to set out planning controls and development contributions in a permanent Development Contributions Plan Overlay (DCPO) and Development Contributions Plan (DCP) for the Macaulay Urban Renewal Precinct.

However, the Victorian Department of Transport and Planning did not exhibit the amendment for two years.

Instead, the Interim DCP that was applied to Macaulay in 2017 was used, as developers started to file their planning applications.

The planning department has only authorised exhibiting the amendment subject to conditions over this and next month on May 30, 2024.

During the past two years, the scheme originally identified to help fund rehabilitation of the waterway particularly within the Macaulay and Arden precincts, the Urban Renewal Cost Recovery Scheme (URCRS), was abandoned by Melbourne Water.

Future Melbourne Committee chair Cr Rohan Leppert said a “new problem that has emerged is that the Department of Transport and Planning took so long to authorise the exhibition of the Macaulay Planning Scheme Amendment that two things have happened in those two years”.

“First, high-density infield development on the Kensington site has far exceeded the expected pace of change, and thousands of new residents are moving in right now, literally today.

“And second, the funding mechanism that Melbourne Water had proposed to pay for further flood mitigation infrastructure in the Moonee Ponds Creek corridor has fallen over, but the public open space for all of these future residents was to be one and the same as the flood mitigation land to be controlled by Melbourne Water.”

There are currently 728 new homes completed in the Macaulay Precinct.

▲ Assemble Communities’ mixed-use build-to-rent project at 402-432 and 434-444 Macaulay Road.

Originally, Melbourne Water was meant to acquire a section of land in the precinct along the waterway from VicTrack with the DCP in Amendment C417 outlining this transfer and designating the City of Melbourne as the collecting agency for DCP contributions and the development agency for DCP projects.

The sole exception to this in the amendment was Melbourne Water taking over developing this site abutting the creek for drainage and flood management purposes.

Melbourne Water and the City of Melbourne were to jointly work on the drainage land to create public open space.

City of Melbourne councillors have long been frustrated by the delays with Leppert noting at the May 22 meeting that the council had not received a response from the planning minister or the department.

“We asked the Minister for Planning, can we have some insight into why you’ve sat on the authorisation of the Macaulay Planning Scheme Amendment, which is vital to purchase contract land that will unlock open space for all these new apartment buildings that she’s very willingly approving as often as she can,” Leppert said.

“No response.”

▲ Cr Rohan Leppert: Frustrated by the department’s delays.

The latest motion

The Future Melbourne Committee in its latest motion noted the delays and concerns, and asserted it was essential the land along the creek be acquired and managed, and that orderly planning for the precinct was necessary.

It then directed staff to inform the public alongside the amendment exhibition when it did occur of the concerns and the assertions.

A report to the committee on possible solutions for the problem was requested with staff asked to submit it at the same time as submissions after the amendment’s exhibition period.

Any potential changes to the amendment to resolve the issues that would not delay its approval further were also requested as were potential alternative means of addressing it.

The committee also asked for a report to be provided that outlined options for the government, possibly through Melbourne Water, acquiring the land prior to the approval of C417 and an account of all development contributions collected from Kensington since 2012.

The council also voted to keep seeking full reimbursement from Melbourne Water for the $4-million cost of upgrading the Stubbs Street number 2 pump station.

It had decided to take on the project in June 2023 on the understanding that it would be reimbursed through the URCRS before Melbourne Water abandoned it in late 2023, stating it needed a different mechanism.

The motion was carried unanimously.

Council documents outline that either an alternative funding mechanism to the URCRS or increasing the levy costs in Amendment C417 is needed to ensure government bodies such as the council or Melbourne Water have enough funding for necessary infrastructure. 

Melbourne Water is engaged in rehabilitation work on other parts of the creek within other municipalities, removing the concrete channel from the creek between Strathmore and Flemington Road.