Property Development

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GUEST OBSERVER
To most within the development sector, the world of construction finance beyond the major banks is largely opaque, with no clear signage or yellow pages directory to guide developers in the right direction to find the best fit for their business and project needs. 
There are a multitude of sophisticated providers of private construction or site acquisition money available to be tapped into, however most do not have a front door as such and they certainly don’t have a team of business development executives who pound the pavement looking for deals to invest in. 
They rely on origination businesses like HoldenCAPITAL to source and present the opportunities to them, which is why we commit a lot of our time to engaging with them to gain a clear understanding of what they will and won’t invest in and the terms on which they will do so. 
A point we often make to clients is that you wouldn’t waste your time trying to negotiate an important town planning issue without input from an experience town planner in order to draw on their experience, relationships and understanding of current approval authority expectations. 
Similarly, we see ourselves in the same light, tapping into the knowledge gained from settling over $340 million in new development transactions over the past 12 months and our accreditation with over 100 lenders to ensure we secure the best possible financial outcome for our clients. 
In fact, our list of lenders and equity providers is growing at the rate of about one a week and of these, some 87 are currently active in one form or another with Investor Funds, Mezzanine Lenders and Private Lenders accounting for over 70 percent of them. 
<a href="/images/2016/08/30/Screen%20Shot%202016-08-30%20at%2012.50.54%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/08/30/Screen%20Shot%202016-08-30%20at%2012.50.54%20PM.png" alt="">
In particular, we are seeing a growing level of demand for and supply of, Stretch Senior funding options where lenders are prepared to provide up to 86% of the Total Development Cost, in return for a total interest cost in the order of 11 percent but with more relaxed terms and conditions. This is particularly evident in the area of pre-sale debt cover, where there is scope to reduce this figure to well below the 100 percent+ required by the banks. 
The demand supply equation for construction funds tends to react quickly as evidenced when the major and second tier banks started to withdraw from the market under regulatory pressure and we saw increased demand on those smaller funds and private lenders to fill the gap. After a flurry of activity many were tapped out and we found ourselves looking further afield to meet the demand. 
Following interstate visits and trips to Asia we now have a significant number of new sources and as a result, we are finding that the capital supply is meeting demand and with a steadily growing supply of mandated transactions these new lenders are stepping up to meet the demand. 
This article was written by Dan Holden of HoldenCAPITAL, who are a bespoke construction finance firm, they arranged over $300 million of construction finance in 2015 across 52 projects. To discuss your project finance requirement please call (07) 3171 4200 or visit <a href="https://www.holdencapital.com.au/" target="_blank">www.holdencapital.com.au</a>
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The world of construction finance without banks: HoldenCAPITAL

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GUEST OBSERVER
Slow food, slow dancing and a slow, long-term view are advantageous for property investors and not simply because of capital appreciation. 
As there are significant commercial benefits available for property that is built and held for five – ten years, which add up to a significant saving and retained equity. 
A dollar saved is a dollar earned, but surprisingly, this saving is not common knowledge except for those who have been through enough property cycles to know. 
The ‘Build and Hold’ model – is an approach favoured by investor developers who know the cost of development and where the real savings are to be had. 
There is a new emerging force in the market, a different style of investor developer, who does not flip over projects quickly but is content to wait. This is a model that he says is gaining momentum given the low yield environment. 
There is a term at Goldman Sachs which is long term greedy, these people have investment plans mapped out for the next 10, 20 and 30 years. 
These are astute individuals who can pay more for sites because they take a long-term view with their assets. As they know there are significant savings to be had aside from capital appreciation, which adds up to a significant increase of their asset’s value. The benefits are: 
<ul>
<li>Depreciation benefits 3% (including 2.5% straight line on buildings and 10% straight line on plant and equipment</li>
<li>Sales Commission Costs 5%</li>
<li>Advertising and marketing savings 2% </li>
<li>GST saving if retained for 5 years 9% </li>
</ul>
There is a saving on gross sales value on the margin scheme for GST if the property is held (and not marketed) for an excess of 5 years. Astute investors look at a 10-year cash flow and generally find that mixed used developments offer up the best results.
The Build and Hold model does require the individual to have other cash flow, which normally requires the capacity to hold his or her assets and a significant balance sheet. There is also a formula that needs to be adhered to, to ensure a successful resale if the need arises.
For those considering to build and hold, I would recommend buying within 10 kilometres of the city. Some suggested locations would be Armadale, South Yarra, Windsor, St Kilda, St Kilda East, Malvern, East Melbourne and North Melbourne. The key is any hotspot where the underlying land value will continue to go up over a 10 year horizon given the scarcity of supply in those specific areas. I currently have 8 projects with clients ranging from 2-89 apartments/townhouses that have bought into this strategy and are currently being rolled out. 
 
 Andrew Fawell is director of Beller and can be contacted <a href="https://beller.com.au" target="_blank">here</a>.  
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Build and hold: Beller's Andrew Fawell

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GUEST OBSERVER
Australia's hotel market, particularly in the global cities of Sydney and Melbourne, is experiencing an unprecedented alignment of positive fundamental indicators, representing some of the best conditions in the Asia Pacific region.
In the first nine months of 2016 there has been approximately $1.7 billion of hotel transactions, including the $700 million Zhengtang Group investment into the Ribbon development in Sydney.
High occupancy rates, a benign supply outlook and increased air capacity from new markets like China and India characterise a positive outlook.
In addition, the growth in white collar worker numbers within our CBDs is fuelling office growth and therefore strong corporate demand for hotels. 
International passenger movements to and from Australia in 2015 were at record levels reaching 34.9 million, up from 33.1 million in 2014. This trend has been playing out for some time, with consistent annual growth of over 5 percent in passenger movements on international airlines to and from Australia over the past 5 years.
While these market indicators clearly show why the sector has a spring in its step, policy and planning changes at a local level are also driving new opportunities and seeing the industry adapt.
One response we are witnessing is that developers, who have built their business on residential development, are now attracted to the cash flow hotels provide to enable them to trade through cycles.
The recently released Central Sydney Planning Strategy identifies 10 'key moves' to ensure the city can adapt to the projected growth over the next 20 years. The Strategy puts at its core a focus on mixed use developments which cater to the diverse demands of workers, residents and visitors.
Incorporating hotels as part of mixed use developments is an obvious answer. In this way developers can address issues like solar access and leverage greater FSR and height.
Together this means we are likely to see increased levels of hotel development in key markets over the short and medium term. The difference with this particular development cycle versus historic ones is that it is underpinned by strong fundamentals, backed by tourism-generating infrastructure like the International Convention Centre, and capped off by a strong appetite for hotel investment opportunities driven by on-shore and offshore investors.
When this is combined with mixed use offerings - retail, residential and commercial - it helps to ensure the viability and long term sustainability of hotel development projects. 
Gus Moors is head of hotels, Colliers International and can be contacted <a href="https://www.colliers.com.au" target="_blank">here</a>.
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Sydney, Melbourne hotel markets coming into line: Gus Moors

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GUEST OBSERVER
After a series of well publicised instances of developers exercising their rights of contract rescission under ‘sunset’ provisions – the NSW state government moved to tighten guidelines restricting the ‘out clauses’ and were duly reinforced by the NSW Supreme Court’s first common law ruling under the new legislation.
Sunset clauses are common place in off the plan contracts of sale – being the contract of the sale for as yet unregistered lots (mostly new strata apartments or land sub-divisions). Often off the plan sales are agreed prior to the commencement of construction of a new development project and may even form a pre-requisite for funding of the project.
The sunset provisions are included in the contract to essentially protect both vendor and buyer from being potentially locked into an agreement ad infinitum -  that is; should there be a substantial delay in the developer being able to deliver the completed product; a date is agreed in the terms of the contract as the ‘sunset date’ and thereafter either party is able to rescind the contract and walk away from the agreement rather than being contracted to sell or purchaser forever.
In principle, the notion of a sunset clause seems reasonable; however certain cases involving developers exercising their rights to rescind following delays in completion have received waves of negative press which then have been viewed cynically by the NSW Government – in particular Victor Dominello, Minister for Innovation and Better Regulation.
In particular there has been scrutiny of the Kaymet Corporation development in Wolli Creek and the Samadi Developments project in Surry Hills. In each instance, there were delays in completion and the developers each attested that rising costs had forced them to rescind their current contracts with a view to re-selling the same lots at higher prices. Their premise was that they could not afford to settle the off plan sales at the ‘old prices’ and needed to achieve the improved realisable values to cover their unforeseen inflated costs.
Whilst legal challenges were mounted by the off plan purchasers – the prevailing provisions relating to sunset clauses were deemed to be in favour of the developers. In the matter of Wang v Kaymet Corporation Pty Ltd [2015] NSWSC 1459 – 34 of the 94 off plan purchasers launched a major class action against the developers. The original sales were entered into between November 2009 and April 2010 with Kaymet issuing rescission notices March 2013.
The matter was heard in the NSW Supreme Court by Justice Stevenson and ruled upon October 2015. Estimates show that a Wolli Creek 2 bedroom unit was worth around $500,000 in 2009/10 and had appreciated to around $900,000 by late 2015. On this basis – Kaymet Corporation stood to increase its bottom line by some $13,000,000 by re-selling the apartments in 2015. Justice Stevenson found that the plaintiffs had failed to show Kaymet had been deficient in its duties. The net result was that Kaymet was allowed to rescind and the plaintiffs were burdened with around $1,000,000 in total legal costs. At the time of writing, Plaintiffs are ongoing with their class action against Samadi Developments.
To a large degree – the exposure to genuinely unforeseen costs or losses and extended delays were why the sunset clauses were originally created; however unhappy purchasers, and evidently Victor Dominello, view in certain instances the exercising of the sunset provisions as a grab for further profits by developers in a rising market. The suggestion is that off plan buyers have been exploited by some developers to get their projects ‘off the ground’ only to unceremoniously dump the sales when there is a big lift in profits available.
And so – what has occurred in response to Mr Dominello’s distaste for this scenario?
On November 17, 2015 the NSW Government passed the Conveyancing Amendment (Sunset Clauses) Act 2015 to provide further protections in favour of the purchasers in off the plan property contracts. The Act inserts Division 10 into the Conveyancing Act 1919 – “Off The Plan Contracts”. Whilst most property-informed parties are familiar with sections 66P to 66Y of the Act (dealing with definition of Residential Property and cooling-off provisions); Division 10 – 66ZL deals with the new rules for the exercising of a sunset clause by a Vendor and can be quickly outlined by reading subsection (3):
 A vendor may rescind an off the plan contract under a <a href="https://emarketing.multiarray.com/_r/c.cfm?l=45055&amp;c=59667&amp;m=23921&amp;b=42687">s</a>unset clause if the subject lot has not been created by the sunset date, but only if:
(a) each purchaser under the contract, at any time after being served with the notice under subsection (4), consents in writing to the rescission, or
(b) the vendor has obtained an order of the Supreme Court under this section permitting the vendor to rescind the contract under the sunset clause, or
(c) the regulations otherwise permit the vendor to rescind the contract under the sunset clause.
Subsection (4) outlines that the Vendor must provide notice of at least 28 days written notice to each Purchaser of their proposal for rescission and reasons why they need to rescind and what has created the delay in completion. Should an agreement be reached with a Purchaser – all is good. If the Purchaser declines to accept the request for rescission – the Vendor must apply to the Supreme Court to rule on the merits of its application. The Act outlines: 
(7) In determining whether it is just and equitable in all the circumstances the Court is to take the following into account:
(a) the terms of the off the plan contract,
(b) whether the vendor has acted unreasonably or in bad faith,
(c) the reason for the delay in creating the subject lot,
(d) the likely date on which the <a href="https://emarketing.multiarray.com/_r/c.cfm?l=45056&amp;c=59667&amp;m=23921&amp;b=42687">s</a>ubject lot will be created,
(e) whether the subject lot has increased in value,
(f) the effect of the rescission on each purchaser,
(g) any other matter that the Court considers to be relevant,
(h) any other matter prescribed by the regulations.
The Vendor may also be liable for any costs incurred by the Purchaser(s) attributable to the application to rescind.
These changes came into effect  and will apply to any off the plan contracts entered into on or after 2 November 2015. In addition any off the plan contracts that have not completed, but were entered into before 2 November 2015 will also be captured. 
Having addressed the essential drafting of the new legislation – focus then immediately turns to the common law/court interpretation and application of 66ZL(7). That is – how will the Supreme Court react to new applications for rescission?
The first test case has been Jobema Developments Pty Limited v Zhu &amp; Others[2016] NSWSC 3.
The facts in brief are that a Purchaser (one of the Plaintiffs) contracted in December 2013 to buy an apartment off the plan in a new Hurstville development of 72 units offered by developer, Xycom. The sunset date for the registration of the strata plan (which occurs following completion and the granting of the project’s Occupation Certificate) was 31 December 2015. The Vendor’s right to rescind was qualified by the requirement to ‘use all reasonable endeavours to have the Strata Plan registered by the sunset date’. The court heard that Xycom, despite having DA consent, carried out very little construction work after entering into the off plan contract(s).
In October 2014, Xycom on-sold the development site to Jobema Developments and this sale was settled in January 2015. The sale was subject to existing off plan sales – which were novated to Jobema. Some, but not all, of the off plan contracts had their sunset date extended. Jobema took an active approach to construction and by December 2015 the project was well progressed. 
A new estimate for completion was set for mid-2017. Prior to the 31 December 2015 (ie sunset date); Jobema approached the Plaintiffs offering to extend the sunset date in return for agreeing to new, higher prices (on the basis of escalated construction costs). The Plaintiffs rejected the offer and Jobema duly issued Notices of Intent to rescind (in accordance with the new 66ZL(4) of the Act).
The matter was presented to the Supreme Court’s Justice Black who ultimately found in favour of the Plaintiffs (the Purchasers). Probably the largest factor weighing against Jobema as developer was that despite their own best endeavours since acquiring the site – they were also burdened by Xycom’s apparent breach of the best endeavours covenant. Jobema had assumed all of Xycom’s obligations under the sales contracts. Justice Black was also concerned that only some Purchasers were offered an extended sunset date and others not. 
This practice brought doubt as to the legitimacy of the application. The court also responded to Jobema arguing that construction funding terms had deteriorated and that the new legislation had not been in effect when Jobema acquired the site by suggesting that each should be considered a “business risk”. 
BCE’s COMMENTS
My own view on this is that the statute has not been fully tested in Jobema v Zhu as the project was adopted by Jobema following Xycom’s extended lack of endeavour to progress the site. The specifics of this matter are not generally applicable. It will be interesting to witness the court’s view in instances of genuine endeavour incurring serious and reasonably unforeseen negative circumstances.
Further, the NSW Governments new legislation has gone some way to endorse sunset clauses. The opportunity existed for sunset clauses to be outlawed altogether; however the passing of the statute in itself conveys that there is deemed a legitimate place for Vendor rescission. We now await a judgement in favour of rescission to provide more clarity on the judicial application of the legislation. 
It will be interesting to see how the court views the Samadi matter given the heightened levels of negative publicity and new legislation. Whilst I remain impartial in any debate on ethics; it would seem to me that the ratio decidendi in both the Kaymet and Jobema decisions would suggest that Samadi had acted within the laws as they existed at the time. Kaymet reinforces this and Jobema’s application was denied partly on the basis that potential changes in legislation should be an assumed “business risk”. Surely this logic is a double-edged sword.
I will also be intrigued to watch whether clever legal minds devise some form of off plan ‘put and call’ style of agreement that operates outside of the Conveyancing Act and therefore may be drafted to essentially re-instate a form of sunset provision. Any such legal pact will also need to satisfy funders as being sufficiently binding.
Finally, whilst the new legislation will undoubtedly afford heightened protection for Purchasers and ideally elevate their confidence to commit to off the plan contracts – there may also become a subcutaneous penalty to Purchasers. Developers may simply factor in an additional margin of risk as insurance against unforeseen negative circumstances – that is that off the plan sale prices may simply become more expensive under the Sunset Clauses Law.
Brad Caldwell-Eyles is principal, 1st City and can be contacted <a href="https://www.1stcity.com.au" target="_blank">here</a>.
This piece first appeared in <a href="https://eliteagent.com.au" target="_blank">Elite Agent</a>.
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Has the sun set on a developers' window to rescind? Brad Caldwell-Eyles

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GUEST OBSERVER
The NSW Government has produced a number of plans for development along Parramatta Road over three years yet the community and developers are still uncertain about when statutory plans will be ready. 
Recent media reports that communities are uncertain about potential development seem to blame developers for looking at the sites the government has identified for development. 
Our developer members have followed the governments lead in looking at development on the very sites the government has nominated for urban renewal. 
The latest plan for the New Parramatta Road defines quite specific heights on individual sites (i.e. average 14 storeys – max 25). The Plan includes a Draft Parramatta Road Urban Design Guidelines that ‘provide a consistent urban design framework against which land use and development assessment decisions can be made.’ The guidelines include very specific diagrams of building envelopes with set-backs and heights including the areas of taller buildings above 4 storeys.
Rather than developers being the aggressor in the potential urban renewal of Parramatta Road the problem is that the governments planning strategies are so detailed that they are creating a change in the value of land and understandably owners are looking to capitalise on this.
The development industry is being given very precise indications by government as to which sites across metropolitan Sydney are available for redevelopment but it then seems to take years before final zoning is gazetted.
In the case of Parramatta Road the process has already taken three years and the latest planning document indicates that development applications will be from 2018 onwards. 
See below plan of a potential development site on Parramatta Road indicating the degree of detail the government’s plan includes: 
<a href="/images/2015/11/5/Screen%20Shot%202015-11-05%20at%2011.12.24%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/11/5/Screen%20Shot%202015-11-05%20at%2011.12.24%20AM.png" alt="" width="586" height="403">
 
Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted <a href="https://www.urbantaskforce.com.au/index.php?option=com_content&amp;view=article&amp;id=97&amp;Itemid=126#.Vdaart55dFI" target="_blank">here</a>.
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Parramatta Road plans leaving community, developers in limbo: Urban Taskforce

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If you pick up a newspaper these days, you had better have some Xanax handy. The headlines from China can be pretty scary.
But the truth is, the situation is more mixed than most fear-mongers would have you believe.
If you wear a miner's light on your hard hat when you go to work in the morning, then, sure, you have a right to worry that China's industrial economy could slow further.
But if you work or invest in real estate, or for that matter in the fields of education or tourism, you can rest easy.
You see, China has at least two different economies. The old industrial economy is slowing and being cleaned up. Even as the government moves to shut down polluting, outdated factories, consumer demand is booming, which means more buyers for Australian property, as well as for our tourism and education.
China doesn't rely solely on industry any more than Australia relies solely on mining. Industry only accounts for about 35% of GDP, but services account for more than half.
Credit Suisse sent me an interesting chart last week. It showed that China is importing about 20 percent less machinery and commodities like coal, but spending 80 percent more on international tourism. This is reflected in the fact that more than one million Chinese tourists came to spend their cash in Australia last year, the most ever.
Australia's educational sector is our number one export, after coal, iron ore and natural gas. Chinese outnumber all other foreign students in university, English-language, secondary and nonaward classes.
This is the same scenario we are seeing in real estate. With Chinese developers committed to billions of dollars of residential new construction in Australia, and Chinese buyers purchasing off-the-plan in large numbers, Australia finally has something it has been missing for decades: money to build.
Awe have spent years in a housing affordability crisis, but Chinese capital is finally making it possible to construct enough new homes to meet market demand.
In the past decade, China supported Australia's economy by funneling huge amounts of cash into our mining industry. In the coming decade, it looks like it will do so via real estate, education and tourism.
It's no coincidence that the famous Sydney Harbour Bridge Climb now offers a sky-high karaoke option for Chinese tourists.
Here's something that will make that shift sweeter: tourism, education and construction keep more than 2 million people working in this country, while mining just provides jobs for fewer than 200,000.
China's current expansion won't last forever, but experts like UBS global CEO Sergio Ermotti believe the rise of the Chinese consumer could last as long as did the commodities boom we just lived through.
Even at a pessimistic growth rate of 6.5 percent, China's economy will double in size by 2032.
Andrew Taylor is the founder and chief executive officer of sales and marketing at <a href="https://www.juwai.com/" target="_blank">Juwai.com</a>, the number-one Chinese real estate portal for property in Australia and around the world. Find out more about him <a href="https://list.juwai.com/" target="_blank">here</a>.
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The bad news from China is good for property: Juwai's Andrew Taylor

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The federal government’s recently released Smart Cities Plan is built on three pillars: smart investment, smart policy and smart technology. Yet, it also suggests that cities are first and foremost for people and if our cities are to continue to meet their residents’ needs, it is essential for people to engage and participate in planning and policy decisions that have an impact on their lives.
Despite this quintessential policymaking statement, the plan largely uses language that conveys a limited role for people in cities: they live, work and consume. The absence of a more thorough response is surprising considering the rich body of work calling for better human engagement in the smart city agenda.
South Korea’s early “U-city” (ubiquitous city) experiments, such as New Songdo, were engineered by the national chaebol such as Samsung and SK Telecom, and their deployment was assisted by top-down policy directives. Germaine Halegoua laments a missed opportunity to use the ubiquitous computing at the core of the U-city for community engagement and participation.
Eric Jaffe critiques Rio de Janeiro’s flawed smart city brain, the Integrated Centre of Command and Control, made by IBM. He <a href="">proposes four key lessons</a>, all of which point to the forgotten focus on people. In the same city, however, there is also hope.
<h2>People-first approach</h2>
Alessandra Orofino founded Meu Rio, Rio de Janeiro’s largest mobilisation network, which is now expanding to the rest of the world. In her TED talk, she suggests:
It’s our city. Let’s fix it.
What this simple statement entails is profound: the citizen’s right to the digital city. It is a cultural shift in thinking that people have to be at the core of any smart city agenda. And urban dwellers ought to be enabled not only to actively participate in city-making, but also to lead such initiatives.
There are more and more accounts reminding us that the city is more than just a space governed by investments, policies and technology. Martijn de Waal describes his notion of city as interface. Barbara Thornton considers the city as platform. And Ethan Zuckerman takes us back to when cities were appreciated for their function as serendipity engines that allow for the sagacious discovery of diversity.
<h2>Open and agile cities</h2>
What comes hand in hand with this renewed focus on people is a changing role of local governments away from roads, rates and rubbish, and towards enabler and facilitator, and towards cities being open and agile.
Open data is a pertinent example to illustrate this process. In the early days of Government 2.0, the focus was on identifying government-held datasets that could be made available in public repositories such as data.gov.au.
These days, the Open Data Institute Queensland, the Open &amp; Agile Smart Cities network and other entities are prompting governments to go further: to support new private-public partnerships that bridge the common triad of disconnect between technology and government, government and people, and people and technology. Nationally, a leader of such partnership models is Code for Australia.
Cat Matson is on a quest as the City of Brisbane’s chief digital officer to transform it into a truly smart, connected city. From her recent visit to Singapore, she brought back key lessons for Brisbane and other local governments:
<ul>
<li>Design a city (or a solution/system) that, when you’re no longer in government, you’ll be proud of.</li>
<li>Identify real problems, for industry, citizens or government, which could be solved with a digital solution.</li>
<li>Use design thinking to develop solutions to those problems.</li>
<li>Get as many stakeholders involved in that design-thinking process as possible.</li>
<li>Be smart about the role of government and industry in executing those solutions.</li>
</ul>
<h2>Spaces for urban and civic innovation</h2>
Cities have not only to focus on people first and be open and agile, they also have to provide space – digital and physical – for people to come together and collaborate on urban and civic innovations. The most successful examples demonstrate an appreciation for a diverse range of places that form a network or a local innovation ecosystem.
Such spaces are not limited to the typical business startup incubators. In fact, they are often skunkworks that are free, open and messy, because the process of creative imagination that leads to innovation is messy.
In London, the British government’s innovation program devoted to cities, the Future Cities Catapult, has paired up with 100 Resilient Citiesand Ordnance Survey’s Geovation Hub to create the Urban Innovation Centre.
In Vancouver, local universities and the City of Vancouver have partnered to create CityStudio Vancouver:
… an innovation hub inside City Hall where staff, university students and community members co-create, design and launch projects on the ground. The central mission of CityStudio is to innovate and experiment with the ways cities are co-created, while teaching students the skills needed to collaborate on real projects in Vancouver with City staff and community stakeholders. These projects improve our city and enrich our neighbourhoods, making the city more liveable, joyful and sustainable.
In Melbourne, Code for Australia has opened the first Civic Lab.
Considering Australia’s staggering level of urbanisation – close to 90 percent of the population – it will be paramount to think carefully about how best to invest in the future of our cities. Governments and policymakers have to recognise and enable people as active agents of change towards more habitable and sustainable cities.
Marcus Foth is professor, Urban Informatics, Queensland University of Technology and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/marcus-foth-199317" target="_blank">here</a>.
 
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Early experiments show a smart city plan should start with people first

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The New South Wales government has announced, through its development agency UrbanGrowth, that it will assume the role of master developer of the White Bay Power Station site in Sydney’s inner west.
The announcement on Thursday ended a lengthy request-for-proposals process to develop the site as a “tech hub”. Following a spectacular launch event on the site last year, 13 proposals were received from complex consortiums, which reportedly included Lend Lease with anchor tenant Google, and Mirvac with Ecoworld.
On Thursday, NSW Planning Minister Rob Stokes said:
"This will not be an exercise where government hands over large areas of public land and gives away control, without ensuring good outcomes for the community."
While the NSW opposition is crowing about Premier Mike Baird’s “completely bizarre” turnaround, it’s worth considering what UrbanGrowth NSW chairman John Brogden might have meant when he said:
"While some proposals were strong in certain areas, unfortunately there were no complying proposals that addressed the evaluation criteria to achieve the government’s plan for the site."
<h2>What are the grounds for non-compliance?</h2>
So what were these criteria? There are three general evaluation criteria for non-compliance: financial offer; quality of secured tenant; and design.
Across 13 schemes, failure of compliance could have happened in any number of ways. But let’s speculate based on information that is available in the public realm.
Lend Lease’s proposal involved a partnership with Google, one of the most sophisticated tech operators globally. One could assume, then, that compliance failure was not on the grounds of quality of tenant.
Given Lend Lease’s significant experience developing large projects in Australia and internationally, one might also assume that the financial offer, perhaps even in the form of high-density housing as the UrbanGrowth press release suggests, also could not be the grounds for non-compliance.
So by a process of deduction – as good a process as any other given the lack of transparency – we’re left with design as the grounds of non-compliance.
Anyone following the Planning Assessment Commission (PAC) hearings on the proposed casino at Barangaroo will know that this issue – or, rather, the creeping culture of non-compliance of aspects of the project – has dogged the Barangaroo development from the outset.
It is how we find ourselves in a position where the UNESCO-listed Sydney Opera House will now feature, when viewed from the water, the very big casino visible through its sails.
The state government’s taking charge of masterplanning of White Bay, via UrbanGrowth, has to be understood within this context.
And I say that a process of deduction to come to this conclusion is as good as any other process because an incredible lack of transparency characterises all of these projects in the city. A key condition of working with either UrbanGrowth, Lend Lease or the Barangaroo Delivery Authority is the signing of confidentiality clauses.
The sheer scale of these projects in the city right now means that a significant proportion of members of the architecture and planning professions in Sydney are bound to silence. Many of those with a professional responsibility to speak and act in the public interest have been taken out. Those who remain free to speak in the public realm are often ill-informed and, as a result, impotent.
<h2>Now to rebuild trust in public planning</h2>
As a consequence of an environment so poorly informed, the Sydney public is conflating several issues. This was evident in public protests several weeks ago.
The disparate issues include:
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rising concern about council amalgamations and a perception that democratic processes are being restricted;
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<li>
city transformations as a consequence of the lockout laws and their application; and
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<li>
the slow pace of public transport reform and extension, coupled with intensifying congestion in the city.
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Contributing to the sense of public frustration is the fact that, through the experience of Barangaroo, “there is a deep cynicism across Sydney that proper planning processes have been bypassed in favour of an agreement made behind closed doors", as leading planner John McInerney, the chairman of the local Residents Action Group, told the PAC’s public hearing last month.
“Casino Mike” and his government are right to be listening to their electorate with their change of position on White Bay.
What all of this starts to indicate, and what UrbanGrowth’s taking up of responsibility for the masterplanning of White Bay suggests, is that the private sector in NSW has lost its agency to deliver projects in the public interest. And the state government will be increasingly damaged by this perception.
Globally, many complex government agency delivery vehicles and public-private partnerships are producing very successful urban renewal projects. Examples include Orestad in Copenhagen and Roosevelt Island in New York. We have to be willing to allow government to take up risk again in the public interest, instead of outsourcing all risk to the private sector.
The fact that the state government has stepped in to take back control of the White Bay redevelopment in the face of design non-compliance is actually an amazing story. One would hope this is a process of learning at work.
Tarsha Finney is senior lecturer, School of Architecture, University of Technology Sydney an author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/tarsha-finney-1031" target="_blank">here.</a>
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White Bay rethink hinges on who looks out for the public interest in remaking Sydney

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GUEST OBSERVER
The members of the Greater Sydney Commission while ensuring representation of districts and the economy, environment and community must join together to drive Sydney’s evolution to an urban city. 
The announcement of the Greater Sydney Commission structure and role is a positive move towards a more holistic approach to planning Metropolitan Sydney. 
While Sydney’s six districts will be represented and specialist commissioners are proposed for the environment, the economy and the community the commission’s ultimate success will depend upon how these representatives work together to deliver outcomes.
The incorporation of the Sydney Joint Regional Planning Panels into the Commission Planning Panel will ensure a co-ordinated approach to decision making however the advice provided to this Planning Panel must not only come from Sydney’s 41 local councils. Strategic advice incorporating state and regional level objectives and priorities must inform and reinforce the decisions made by the Panel.
The ultimate success of the Greater Sydney Commission will depend on the people appointed to the Commissioner roles. The government must allocate appropriate salary levels to attract the best quality applicants to the important role of managing Sydney’s growth. 
The CEO and the Chair of the Greater Sydney Commission must be quality people who can take on strong advocacy roles to determine and communicate the trade-offs that Sydney’s growth will need to make in order to deliver strong economic growth, adequate housing supply and long term prosperity for the Sydney region.
The Urban Taskforce is keen to work with the Greater Sydney Commission in the development of the six Sydney district plans and in the identification and delivery of infrastructure. It is important that the Commission presents a realistic picture on how Sydney’s growth can be managed, which incorporates the trend towards apartment living in bustling urban precincts. To some extent the Commission’s task will be to lead Sydney’s evolution from a suburban city to an urban city.
Sydney’s future cannot become a political football so all political parties need to support the Greater Sydney Commission and particularly the legislation that will establish the organisation and its role.
Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted <a href="https://www.urbantaskforce.com.au/index.php?option=com_content&amp;view=article&amp;id=97&amp;Itemid=126#.Vdaart55dFI" target="_blank">here</a>.
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Greater Sydney Commission must lead Sydney’s evolution: Urban Taskforce

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Incoming Prime Minister Malcolm Turnbull should refocus the Federal Government onto the importance of Australia’s cities. 
With over 80% of Australian’s living in cities the Federal Government has a key role to play in how our cities develop. 
Malcolm Turnbull, as the new Prime Minister, has an opportunity to refocus how Federal Government expenditure on infrastructure projects can stimulate the growth of Australia’s cities. 
The Urban Taskforce believes that State Governments must have the major responsibility for managing cities but the Federal Government which collects most of the taxes needs to allocate funds to urban infrastructure projects. This must include public transport projects as well as major road projects.
Sydney is leading the way in urban density driven by preferences for apartment living in cosmopolitan environments and this higher density is ideal for new public transport projects. 
Across Australia all urban areas will be moving towards denser environments related to apartment living. The Federal Government can give incentives to State and Local Governments that support greater densities by funding key infrastructure projects. 
The current review of Federation and the relative roles of State and Federal Governments must have cities and their growth as a key issue.
Malcolm Turnbull has a good understanding of the importance of encouraging density in our cities, supported by infrastructure as outlined in a presentation in 2013. 
Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted <a href="https://www.urbantaskforce.com.au/index.php?option=com_content&amp;view=article&amp;id=97&amp;Itemid=126#.Vdaart55dFI" target="_blank">here</a>.
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