WRITTEN BY Alice Menyhart
A voluntary planning agreement (VPA) is a written agreement between a planning authority (such as a local council) and a developer environmental planning instrument (EPI) or who has made or proposes to make a development application (or who is associated with someone who has) in which the developer agrees to make contributions to the authority.
Although it is described as an agreement, a VPA usually takes the form of a deed, because the developer is making contributions but is not usually receiving any consideration in return.
A high degree of transparency is required throughout the VPA process to preserve the integrity of the development assessment process. The developer wants the consent authority to consider its offer to enter into a VPA when the Council evaluates a proposal to amend an EPI or considers the merits of a development application.1 It is therefore important that the public can see what additional benefits the developer is offering to provide, to reduce the risk of bias or of irrelevant matters being taken into account. Planning authorities should not place disproportionate weight on a VPA when considering the planning merits of a development application or a proposal to amend an EPI.2
Councils should be careful to ensure that, where the circumstances described above exist, they follow the prescribed process for the making of VPAs and do not enter into agreements that have a similar effect outside that regime. Considering such agreements in the development assessment process may result in a development consent being found to be invalid.3
A developer will often offer to make contributions as part of the process of seeking a change to an EPI or preparing a development application as a way to offset potential impacts of development on the broader community.
A broad range of contributions can be obtained by a planning authority under a VPA. Common forms of contributions that are provided under VPAs include (but are not limited to):
VPAs, therefore, provide a mechanism under which a willing developer can make contributions of a type or value which the planning authority could not require the developer to provide by other means. There does not need to be a strong connection between the proposed development and a monetary contribution or the works to be undertaken under a VPA, although the existence of some nexus between the two makes it less likely that the VPA might be seen as an attempt by the developer to ‘buy’ a development consent.4
The EPA Act requires that the following information be included in a VPA:5
A planning agreement cannot exclude the application of section 7.11 or 7.12 of the EPA Act unless the consent authority for the development or the Minister is a party to the agreement. A VPA cannot exclude the application of section 7.24 of the EPA Act without the approval of the Minister.6
A VPA must include a suitable mechanism for its enforcement. The “suitability” of a proposed enforcement mechanism should be assessed by reference to whether the means of enforcement is likely to eliminate or reduce, to a commercially acceptable level, the risk that the obligation created by the VPA will not be performed and that the planning authority or the community will not receive the intended benefits.
Common enforcement mechanisms include bonds and guarantees. A bond provides financial security by giving the planning authority access to money which it can use to fulfil a payment obligation or to complete works if a developer is unable or unwilling to do so. A deed of guarantee operates by requiring another entity to guarantee that it will fulfil the developer ’s obligations under the VPA if it is unable or unwilling to do so. Alternative types of security could include registering a caveat on the title to the land or a combination of security options such as providing a bond and registering a caveat or providing a bond and deed of guarantee from a related or parent company. An assessment as to what enforcement mechanism is ‘suitable’ should be made on a case by case basis.
In addition to calling on the enforcement provisions included in the VPA, a planning authority can enforce compliance with a VPA by:
There are a range of public resources on VPAs which Councils may find useful, including:
This guide provides general advice only. Please contact Alice Menyhart, Director in our Planning, Environment and Local Government Team for specific VPA advice or for assistance in drafting, reviewing, amending or enforcing a VPA.
The law in this Guide is current as at 13 January 2021.
1EPA Act, s.4.15(1)(a)(iii).
2See additional guidance on the fundamental principles which apply to the consideration of planning agreements in the Department of Infrastructure Planning and Natural Resources Development Contributions Practice Note, issued 19 July 2005. DPIE published an exhibition draft Planning agreements practice note in April 2020, although it has not yet been made.
3Gwandalan Summerland Point Action Group Inc v Minister for Planning  NSWLEC 140.
4See Tesco Stores v Secretary of State for the Environment & Ors.  1 WLR 759.
5EPA Act, s.7.4(3).
6Or a development corporation designated by the Minister to give approvals under subsection 7.3(5A).