infrastructure-agreements-dont-miss-the-key-points

Key Points when Negotiating Infrastructure Agreements

By Brent Thomas

A well-constructed Infrastructure Agreement (IA) provides certainty for the developer and Authority regarding the delivery of various trunk infrastructure items. A good IA will clearly set out the obligations of each party, the funding and extent of infrastructure to be provided, identify any offsets and mechanisms for refunds, specify trigger points and reference the relevant design and construction standards.

We previously wrote about how to negotiate the right deal in an IA (click here). With IA’s becoming more common and more important in unlocking projects we thought a follow up article that lists the key points of any IA template would be of value.

We are currently working with several developers and Authorities negotiating IA’s. Each Authority IA is a little different so we have compared a few of them, collated our comments and have listed out a few key points that should be considered when negotiating an IA. These are listed below:

Issue/Key Point Recommendation
Actual Cost of Construction v Agreed Amounts There should be the option of choosing either actual construction costs or an agreed amount for the work contribution being provided. We would almost always recommend the ‘actual cost of construction’ method to lower the risk of cost overruns. An ‘agreed amount’ should be used when sufficient work has been undertaken to determine the cost and understand the delivery risk of the infrastructure item. Never accept the ‘lesser’ of the two as contemplated in many IA’s.
Changes to design and construction standards Months or years may pass from the date an IA is agreed to when the infrastructure item is delivered. Design standards may change and this may impact the value of the work contribution envisaged. A mechanism for dealing with changes to design and construction standards should be included to limit cost risk.
Don’t give away your rights to conversion applications Not all trunk infrastructure may have been envisaged when the IA is executed. Some IA’s seek to restrict the developers right to lodge conversion applications in the future (conversion of non-trunk infrastructure to trunk infrastructure). Retain the right to lodge conversion applications in the future.
Allow for cross crediting across the various infrastructure networks Some IA’s seek to restrict offsets from being ‘cross credited’ across different Authority networks e.g. a work contribution for roads is unable to ‘cross credited’ against parks or drainage. Ensure the ‘cross crediting’ provision remains in place.
Refunds and Access to refunds If you provide a work contribution that exceeds the value of the financial contribution you are required to make, then you are entitled to a refund. This could include a cash refund paid at on-maintenance or paid progressively over a fixed time period. Alternatively, the refund could be converted to offset entitlements transferred to other projects in the LGA.
‘Pass through’ provision to collect charges faster Taking years to realise the accrued infrastructure offset is not that good for IRR or project cashflows. Consider inserting a ‘pass through’ clause in an IA that requires Authorities to ‘pass through’ (within 21 days) the infrastructure charge monies collected from other developers in the catchment.
Land acquisition Authorities have a number of avenues available to them with respect to land acquisition and securing downstream owners consent for critical infrastructure e.g. Acquisition of Land Act 1967 (QLD). Be sure to include a provision that requires an Authority to implement their powers should it be required at some point in the future.
Termination and Sunset Date Include an appropriate termination clause in the IA. Many IA’s are left open ended and run indefinitely. The reasons and process to effect termination should be listed out and an avenue for the agreement to come to end included.
Access to Authority Land For Infrastructure Include a clause that acknowledges the right of the developer to use the Authority land for the provision of trunk infrastructure. This should avoid delays arising due to one Authority department not being able to agree with the other in relation to future access rights.
Security Many IA’s are seeking performance bonds of up to 150% to secure the infrastructure contribution from the developer. Bond after bond after bond places unnecessary financial burden on the developers’ business. An IA is a legal, contractual obligation and should be sufficient. In the event a bond is required, request an insurance bond rather than a bank guarantee as insurance bonds do not affect the balance sheet.
IA Schedules and Nodal Plans The IA schedules is where it all happens and the obligations, timing and offsets are all specified. A considerable amount of time should be spent ensuring these are correct, clear and concise. Triple check it for ease of reading and removal of ambiguity. Nodal plans that show schematically the intent of what is listed in the schedules should also form part of the IA.
A picture is worth a thousand words Use sketch plans and drawings to illustrate key concepts. For instance, rather than describe how a riparian buffer or development interface works in words, show it in a sketch. Show where water quality basins or batter extents are located to avoid confusion. Provide road cross sections showing kerb to kerb and footpath widths and highlight any parking lanes or cycleways. Use ‘pictures’ to explain the outcome.

IA’s will play an increasingly important role in unlocking land and providing certainty for both developers and Authorities in the delivery of trunk infrastructure. The above is not intended to be a comprehensive list of every single important IA point, but rather a list of practical and useful points that if covered off in the agreement, sets up the project for successful delivery.

We would be keen to hear of any others views or opinions on important IA clauses.

Tips for Developing Steep and Sloping Land

By Troy Schultz (Principal Engineer) & Kerry Saron (Senior Urban Designer) It’s hard to believe that there was once a time in SEQ when developers could readily buy flat and serviceable land. Now we see that development sites tend to be steeper and harder to service. Despite these sites being more challenging, with some careful … Continue reading Tips for Developing Steep and Sloping Land

Plan Sealing – Tips and Tricks

By Ryan Ashworth The Federal Government’s Homebuilder stimulus package has really ramped up projects with many due for completion late this year or early next year.  This means a heap more plan sealing requests over the coming months, placing enormous pressure on Authorities and plan sealing timeframes. In a previous article, we looked at how … Continue reading Plan Sealing – Tips and Tricks

Different Sites Require Different Stormwater Solutions

By Kelly McKendry, Director – Water & Environment, PEAKURBAN It is par for the course that when preparing a Development Application in Queensland a Stormwater Management Plan (SMP or SWMP) is generally required. However, a SWMP shouldn’t give you the same solution for every site. For instance, stormwater detention may not be required for all … Continue reading Different Sites Require Different Stormwater Solutions

Where are the next Masterplanned Community projects going to be?

By Troy Schultz, Principal Engineer, PEAKURBAN In recent years I’ve noticed an increasing trend of developer’s seeking acquisition sites with minimal planning risk (inside urban footprint, appropriately zoned and preferably with an approval in place). Who could blame them given the political and regulatory minefield they are facing these days. More and more clients tell … Continue reading Where are the next Masterplanned Community projects going to be?

Managing Costs and Value in the “New World”

By Andrew Ngo, Principal Engineer, PEAKURBAN There is little doubt that cost control is a hot topic now. While it has always been important to manage costs regardless of the market cycle, the question though is whether the necessary spending was more than it should have been in the first place. We previously wrote an … Continue reading Managing Costs and Value in the “New World”

Key Points when Negotiating Infrastructure Agreements

By Brent Thomas A well-constructed Infrastructure Agreement (IA) provides certainty for the developer and Authority regarding the delivery of various trunk infrastructure items. A good IA will clearly set out the obligations of each party, the funding and extent of infrastructure to be provided, identify any offsets and mechanisms for refunds, specify trigger points and … Continue reading Key Points when Negotiating Infrastructure Agreements

PEAKURBAN welcomes Brendon Bolt to the Water & Environment Team.

Brendon has over 18 years’ experience practicing in the field of environment and water resources. His vast experience in local and regional scale projects includes water balance modelling, hydrologic modelling, 1D/2D hydraulic modelling, flood mapping in GIS, conceptual / detailed design, environmental management and permitting, erosion and sediment control, water quality modelling, drainage assessment and … Continue reading PEAKURBAN welcomes Brendon Bolt to the Water & Environment Team.

PEAKURBAN expands into Water and Environment!

We are delighted to announce that Kelly McKendry has joined PEAKURBAN as Director of our newly created Water and Environment Team! Kelly has over 18 years’ experience in stormwater quality and quantity management as well as flood modelling. Notably, Kelly recently managed her own consultancy and is highly regarded in the industry having completed many … Continue reading PEAKURBAN expands into Water and Environment!

Getting Those Credits You’re Entitled to: Converting Non-Trunk Infrastructure to Trunk Infrastructure

By Andrew Ngo We previously wrote about the conversion application process and how to obtain the infrastructure credits that you are entitled to on your projects. Our previous article can be found in the link below. https://www.peakurban.com.au/conversion-applications-get-the-credits-you-are-entitled-to/ To recap, a conversion application is an application that developers can make under the Planning Act 2016 (Section … Continue reading Getting Those Credits You’re Entitled to: Converting Non-Trunk Infrastructure to Trunk Infrastructure

Unlocking Land and Delivering Affordability

By Brent Thomas (Published in UDIA Qld Establish Magazine #112 – Spring 2019) In all growth corridors across South East Queensland (SEQ), it is widely known that there are major land holdings in the urban footprint (UF) that have been identified as suitable for urban development, but have been locked up due to any range … Continue reading Unlocking Land and Delivering Affordability

What’s the cost per lot across SEQ Growth Corridors

By Troy Schultz We know that developers need to act quickly to secure development sites. Quite often a quick, informed assessment of a site using typical revenue and cost data is sufficient to enable a site value to be ascertained and a high level offer put in front of the vendor. To assist our clients, … Continue reading What’s the cost per lot across SEQ Growth Corridors

Updated EDQ Road Standards – What’s the impact on your project?

EDQ have released a new version of their ‘Street and Movement Network’ guideline. The new guideline can be accessed here. There are some significant changes included in the latest revision which may adversely affect development yield and cost. Some more notable changes include: Road reserve widths and pavement widths have changed for all road types, … Continue reading Updated EDQ Road Standards – What’s the impact on your project?

Launching PEAK Ai – Improving Project Design, Planning and Execution

The engineering and construction industry is at the cusp of a new era, with new applications and tools that change how companies design, plan and execute projects. At PEAKURBAN we are always trying to maximise the value and improve the level of service we offer to our clients. Quite often this involves developing smarter infrastructure … Continue reading Launching PEAK Ai – Improving Project Design, Planning and Execution

Changes to the Security of Payment Act

By Troy Schultz, Principal Engineer, PEAKURBAN At PEAKURAN, we aim to stay on top of key changes so that we are equipped to continue protecting our client’s interests. You may be aware that the Building Industry Fairness Act 2017 (Qld) (BIFA) commenced on 17 December 2018. This replaces the Building and Construction Industry Payment Act … Continue reading Changes to the Security of Payment Act

Managing Costs and Value in a Slower Market

By Andrew Ngo, Principal Engineer, PEAKURBAN There’s a lot of media articles about slower sales and a tighter credit market across the country, especially in Sydney and Melbourne. Having been through a couple of ‘challenging’ times previously, this inevitably affects market confidence with developers attentions more sharply focused on finding cost reductions and optimising value … Continue reading Managing Costs and Value in a Slower Market

PEAKURBAN Turns 2

It’s hard to believe that it’s been 2 years since we opened the doors at PEAKURBAN. You never really know how things will turn out but the journey thus far has been both exciting and fulfilling. We started PEAKURBAN believing that the old way of doing business (at least in engineering circles) was fast disappearing … Continue reading PEAKURBAN Turns 2

PEAKURBAN Planning and Survey

We are delighted to welcome Tim Connolly (Director – Planning) and Nathan Wilson (Principal Planner) to the PEAKURBAN Planning and Survey team. Tim has over 30 years’ experience in statutory and strategic planning and has worked on many large and complex projects including Warner Lakes, Riverbank, Riverparks, Park Vista, Capestone, Brentwood, The Meadows and Ridgeview. … Continue reading PEAKURBAN Planning and Survey

How to Get Your Survey Plans Sealed Earlier

A key milestone for any urban development project is plan sealing, that critical event that facilitates registration of titles and settlements, and the trigger for project revenue to be realised. In talking with several developers, they describe an increasingly arduous and frustrating process of back and forward, multiple inspections, delays and inefficiencies. Whilst there’s always … Continue reading How to Get Your Survey Plans Sealed Earlier

Can’t get stormwater discharge consent? You may not need it.

Whether or not a Legal Point of Discharge (LPOD) exists has been for a long time, a very grey and murky area. The consequences of this ambiguity have meant stalled projects, refusal of development applications, cost over-runs and quarantined development sites. We have heard of some developers even needing to store or pump out stormwater! … Continue reading Can’t get stormwater discharge consent? You may not need it.

Conversion Applications – Get the credits you are entitled to.

In talking with several developers recently, it seems that the issues around trunk and non-trunk infrastructure and what’s creditable v. non creditable is alive and well. A few developers that we’ve spoken with are quite frustrated in having received development approvals imposing conditions that require them to deliver (without credits) what they believe to be … Continue reading Conversion Applications – Get the credits you are entitled to.

Infrastructure Agreements: Negotiating the Right Deal.

Negotiating the right deal in an Infrastructure Agreement (IA) is critical in ensuring the commercial viability of a project. On too many occasions we have seen IA’s that are one sided, impose excessive infrastructure standards and as a consequence result in works or financial contributions that stall projects for long periods of time. The last … Continue reading Infrastructure Agreements: Negotiating the Right Deal.

Is Poor Contract Administration Costing You Money?

By Ryan Ashworth, Civil Engineer at PEAKURBAN Poor contract administration can lead to lower development profits, protracted disputes, missed settlements and sub-standard infrastructure. Whether it’s a lack of site experience, a poorly constructed contract or just a lack of understanding of what’s required, it seems to be a common problem we hear throughout the development … Continue reading Is Poor Contract Administration Costing You Money?

Engineering value in a tough market – the site acquisition challenge

By Andrew Ngo, Principal Engineer at PEAKURBAN 2017 so far has been an intensely competitive year when it comes to buying development sites. Despite this, over the last couple of months we’ve helped four clients successfully acquire new projects – three residential development sites (1,830 lots) and one retirement project (145 sites). So, what have … Continue reading Engineering value in a tough market – the site acquisition challenge

Giving up too much land?

A number of clients have come to us recently raising concerns about losing too much developable land, due to easements and wider infrastructure corridors being imposed by Authorities.  The reason, they advise, is for future maintenance requirements.  What many clients may not be aware of is the maintenance method of “pipe bursting” which in many cases, means the … Continue reading Giving up too much land?