Shepparton East Drainage Scheme

Council has considered the intention to commence the process to implement a Special Charge Scheme to fund construction of a stormwater drainage disposal system in Shepparton East, from properties adjacent to the Midland Highway and Doyles Road in accordance with Council’s Special Rates and Charges Policy 2013 and the Local Government Act 1989.

What are Special Charge Schemes?

The Local Government Act 1989, and subsequent amendments, provides the authority for Council to raise funds from property owners that receive a special benefit from works. Special charge schemes can be implemented where the properties can be identified as benefiting directly from works or services and where the cost of the works or service can be determined.

Each benefiting property can be required to contribute to the cost of the works in proportion to the benefit it gains as against other benefiting properties or general community benefit.

Special charge schemes can be applied to any works or services in relation to the performance of a Council power or function, such as urban drainage. It is the equivalent of the development conditions imposed on new subdivisions where all internal roads, drainage and footpaths are required to be constructed, as well as upgrading the adjacent public infrastructure impacted by the development.

Why should Council use special charge schemes?

Council has identified there is a range of new infrastructure required to service the developing Shepparton community.

Council has developed asset management plans for its various infrastructure assets. These have identified there is a need to explore alternative/additional funding sources to deliver new infrastructure, due to demand outstripping resources.

Council has adopted a Special Rates and Special Charge Policy that acknowledges “A primary focus of the Council is in maintaining existing infrastructure and providing services required by the law. The Council is not always in a position to fund new works or services”.

If it is clear that properties will benefit from the new works, Council will use the Special Charge Scheme process to provide some or all of the necessary funds. This will be determined by the level of special benefit received by the properties from the works.

Special Rate or Charge Scheme projects help to fill the gap between existing infrastructure, often provided as part of the original land development, and current community needs.

This process provides Council the ability to recover reasonable contributions from people who will derive special benefits from particular works, therefore the cost of those special benefits do not need to be met in full by general ratepayers.

Why a special charge scheme?

Special charge schemes have been used by local government for in excess of 50 years. The State government recently upgraded the provisions of the Local Government Act 1989, and in 2004 created the concept of “special beneficiary” of works, to better define the properties which benefit from and contribute to works and the amount that Council is entitled to levy against benefiting properties.

Special Charge Schemes provide a means to install new works into existing and developed areas, on much the same basis as is required of new developments and subdivisions. In the past Councils may not have imposed all of the standards of construction as is now expected within development areas. A scheme ensures the cost of retrofitting works such as roads, footpaths and drainage to developed areas are borne by the properties using them, in the same way as in new developments.

A scheme enables Council to bring forward a greater amount of capital works than would otherwise be possible. New works such as road sealing, footpaths and drainage and where benefiting properties can be identified would now generally be done as part of private development, or consideration be had to require a contribution from the properties benefiting from the works.

Drainage works such as proposed in this project do not attract state or federal government funding as they are a localised benefit only.

What do the rates I pay go towards?

Council's budget is committed mainly to providing services such as waste collection, community facilities, community services, parks and reserves, library services, roads and expenditure on capital works. A large percentage of the capital works budget is allocated to maintaining existing assets.

Council does not have the capacity to meet the demand for these services and fully fund new works from rates collected. Government funds are not available to support new works such as urban drainage. Therefore to gain the best use of funds, major improvement works can require abutting landowners to contribute through a Special Charge Scheme.

Why does the drainage need to be upgraded?

The proposed scheme area was initially rural irrigation properties that discharged drainage into an open channel system. As the properties were developed increasingly to residential, commercial or industrial, the amount of runoff potential from the properties significantly increased.

The existing open drains and sections of pipeline do not have the capacity to carry the potential drainage from the developing area.

The drainage from the area still relies on access to the Goulburn Murray Water rural drainage system. That system is based on a restricted flow into it of 1.2 litres/ha/sec. This requires either retardation systems to be built on every property or a common discharge and retardation system provided as proposed to allow the full development of each of the properties.

How does Council decide if the proposal will go ahead?

Initially, information meeting(s) are held and a questionnaire is sent to all affected landowners. To ensure that substantial support exists for a proposal, we seek a high level of response to the questionnaire.

An Advisory Panel will be formed if requested from the affected landowners to provide comment on the drainage concepts and details.

From this input and the survey response and meeting feedback, Council will determine if to proceed further with a scheme.

How is benefit defined in relation to this Special Charge scheme?

A property is regarded as receiving a ‘special benefit’ from the works if it gains an additional benefit in comparison to other properties. In this scheme, the additional benefit is a ‘special benefit’ to all of the properties within the scheme area in comparison to the properties outside the scheme area. Only those properties can connect to the scheme works and gain drainage and treatment of their stormwater.

Can I object to the proposal?

The process of identifying support is only the first stage of initiating a special charge scheme. The formal statutory process of the Local Government Act 1989 provides opportunity for landowners to make a submission/objection where a landowner has issues with the proposal.

Formal notices are provided at the beginning of the process and landowners may make a written submission to Council at this time. Those making a submission may appear before Council to be heard in support of their submission.

If you do not respond to the notice of intention, Council will assume that you do not object to the proposed scheme.

Following consideration of any submissions received, Council will then determine whether to proceed with the scheme. All landowners are further notified of the decision. If Council resolves to proceed a person may then apply to the Victorian Civil and Administrative Tribunal (VCAT) for review of the decision. At the time of implementing a special charge detailed information is provided to landowners of their rights to object and who to lodge their objection with.

What is Council contributing to the cost?

Council has contributed $707,585 (ex GST) towards the cost of the scheme to date. This amount includes the pre-purchase of pipes. Council has committed to contributing an additional $732,020 (ex GST) to the Scheme. Other contributions include Vic Roads $750,000 (ex GST) and Goulburn Murray Water $20,000 (ex GST), therefore assisting the identified landowners contribution.

It will also pay the portion of cost owed by public lands, such as the road reserves. These portions will be regarded as general community benefit, as the roads are for the general community use.

What is the landowner cost based on?

A drainage scheme is based principally on the contributing land area as the design and cost of the works is based on the volume and flow rate of the stormwater to be discharged and treated. That is a function of the overall area of the catchment draining through the scheme works. The design capacity of the drain also depends on the rate of flow off the properties. There can be differing rates of discharge from varying property development types, such as commercial as against residential. That will be taken into account in the apportionment of costs between properties.

Do I have to pay if I already have drainage from the property?

This is a new urban standard drainage system. The previous system was based on a rural standard and does not have the capacity to take the drainage likely from the ultimate development of the properties. Council has taken over as drainage authority for the area from Goulburn Murray Water in recognition of the predominant development being more intensive commercial or industrial and the planning zoning control now providing for future business and commercial development.

What happens to the existing drainage system in my property?

The existing drainage retardation systems can be decommissioned if wished. The internal drainage connections to the common drainage system will be realigned and reconnected to the new system.

What if I don’t intend to develop the property?

A scheme relates to the land. The benefit is to the land and is based on the potential development of the property, having regard to the planning controls and covenants. It does not have regard to the land ownership or the intentions of the owner. The scheme liability remains a cost on the land should ownership change.

Why do the new residential areas have to pay when the development was constructed to a water sensitive design?

The residential area discharges water from its immediate environment through a combination of open drains and pipelines that are going to be decommissioned and replaced with an underground pipe system.

Although retardation of the flow into the open drain is provided in the residential streets, the discharge contributes to the design capacity and the cost of the pipeline required to carry the drainage to the GMW rural drain outfall.

A discount will be applied for the treatment of the drainage in the residential streets if it diminishes the cost of works to treat the overall drainage.

What role does VCAT play in reviewing the scheme?

A tribunal considers all of the aspects of the scheme, including the distribution of costs. It can uphold Council’s decision, abandon the scheme or amend the scheme in relation to landowners who have made submissions.

How are the costs determined?

The costs are determined on land size and the drainage capacity required for each identified property.

A preliminary design and an indicative estimate of costs is first prepared for initial discussions with potential contributors. As this is an indicative estimate, there is a contingency of at least 15% built into the costs.

This estimate and property costs may vary as the design is discussed with landowners and confirmed as the scheme is formalised.

Section 163 of the Local Government Act 1989 states the limit is 10%. i.e. if the actual cost of the scheme is greater than the estimated cost then the additional costs passed on is limited to 10% above the estimate.

If the scheme proceeds, the works are sent out to tender and carried out under contract. The actual cost of the works is not known until the contract is completed. The landowners then pay their contribution based on the actual costs.

Following completion of works, actual costs are then calculated and become the final amount payable by landowners. If the actual cost is less than the estimated scheme cost, amount payable is reduced in proportion. Where instalments are being paid by a landowner, these will be appropriately adjusted.

What would be my estimated contribution for my property?

The following costs are estimations, the final cost would not be known until contracts have been sent out to tender. However if your residential property is 5,985 square metres the estimated average residential cost would be $1,119 ex GST. This can be paid quarterly over 10 years with a cost of $111.90 ex GST per year.

What are the payment terms for property owners?

Contributions will not be required until an account is sent out by Council. Payment can be made by one lump sum or by quarterly repayments of principle and interest over up to 10 years. The normal legislative time is four years and Council is happy for landowners to pay over a 10 year period.

The timing of the notice will be determined by Council on declaring the scheme. Notices may be at commencement of construction or at completion of the works and final costs known. If the account is sent out at commencement of works, refunds or additional invoices will be provided to those landowners that paid the account by lump sum.

Installment adjustments will be provided to those landowners paying by quarterly repayment. Repayments will incur an interest rate which will be set when the scheme is adopted by Council.

Are Special Charge Schemes affected by GST?

Special Charge Schemes do not attract GST  to the landowner. Any GST paid by the council is claimed back through the Australian Tax Office.


For further information about this scheme please contact council on 5832 9700.