City of Newcastle's affordable housing levy scheme is a step closer to fruition after its planning proposal received gateway determination.
Newcastle council is proposing to introduce a levy on new developments, which would be pooled to fund affordable housing through an approved provider.
Councillors voted in December 2023 to progress the proposal to the Department of Planning, Housing and Infrastructure for gateway determination.
The department has agreed to progress the proposal towards public exhibition with several conditions.
The Affordable Housing Contribution Scheme Planning Proposal would subject larger developments in Stockton, two areas of Broadmeadow and the western corridor (Minmi, Fletcher and Maryland) to a contribution rate of 3.3 to 5 per cent based on their size.
A 1 per cent contribution rate would also apply to all residential and mixed-use developments that result in an extra dwelling and more than 200 square metres of residential gross floor area in all other areas in the LGA.
Newcastle lord mayor Nuatali Nelmes said the council was taking "strong action" to ensure vulnerable members of the community had access to housing.
"Our city has set an aspirational target of 15 per cent of all housing to be affordable across the LGA," she said.
"This target will be achieved through a range of planning mechanisms. The Affordable Housing Contribution Scheme is one of the planning tools available to supply affordable housing."
Cr Nelmes said the scheme was developed in consultation with community experts including registered affordable housing providers, developers, architects, the University of Newcastle, and tenant representatives.
The conditions the council is required to satisfy include clarifying that the affordable housing contribution remains accurate with current values and has accurately reflected all additional costs and residual land value.
City of Newcastle will have to provide information on the approach used to establish the contribution rates and clarify whether any sensitivity testing was carried out to ensure the proposed rates remain viable under different economic conditions.
The department has also asked for feasibility details to justify the proposed LGA-wide 1 per cent zoning contribution rate and whether scaling over time will be necessary.
Cr Nelmes said the council would undertake a further feasibility assessment to inform the final scheme.
Newcastle Liberal councillor Callum Pull has been critical of the proposal, describing it as a "big new housing tax".
He said the department seeking clarification around a number of different elements demonstrated it was "ill-considered and riddled with problems".
"One of the requests made by the department demands that the council must clarify whether or not any sensitivity testing was carried out on the feasibility to ensure that the proposed rates will remain viable under different economic conditions," he said.
"The council needs to answer that question immediately and come clean with residents on whether or not they considered the implications this big new tax.
"A much better and more effective way of boosting the supply of affordable housing in Newcastle is by reducing fees, levies and taxes, and rewarding builders who provide affordable housing by offering things like FSR (floor square ratio) bonuses."
Labor councillor Elizabeth Adamczyk, who chairs the council's affordable housing working party, said the scheme was initiated after the former Liberal state government called on local governments to develop proposals to increase affordable housing in cities experiencing a housing crisis.
"These schemes have been in place in many LGAs across NSW, some for decades," she said.
"City of Newcastle has taken care in placing important limitations around the application of the contributions to development to ensure developments in Newcastle contribute to necessary social infrastructure such as housing and also to ensure families, workers, migrants, retirees and young people who might be doing an upgrade won't be captured in this scheme and be out of pocket with an expense they can't afford."
