Developers commonly seek to satisfy local development contribution obligations through voluntary planning agreements (VPAs) or works in kind agreements (WIKAs). Although both mechanisms can be used to facilitate the delivery of public infrastructure, they operate differently in their statutory basis, procedural requirements, flexibility and the value attributed to works or land.
This article explains the key differences between VPAs and WIKAs, identifies advantages of each and highlights risks that arise under each pathway.
Bottom line
VPAs are generally preferred where value, flexibility and legal certainty are critical, particularly for projects involving land dedication, material cost changes or the delivery of works not contemplated by a contributions plan.
WIKAs can offer procedural simplicity and speed, but they are constrained by the relevant contributions plan and usually provide more limited scope for commercial negotiation.
WIKAs are best suited to standard infrastructure that aligns with a contributions plan, where the developer accepts the value attributed to the works under that plan.
By contrast, VPAs offer a more sophisticated and flexible mechanism capable of addressing:
- Complex infrastructure delivery;
- Land dedication; and
- Strategic value capture through credits and negotiated outcomes.
However, that flexibility relies on council cooperation and pursuing a VPA can result in longer negotiation and drafting timeframes. VPA offers should therefore be made early in the planning process.
Practical implications
- Timing is critical. WIKA arrangements are contingent on the imposition of a s 7.11 condition and subsequent agreement with the consent authority. Developers seeking certainty should therefore engage early and pursue a VPA prior to consent.
- Proponents should carefully assess whether proposed infrastructure falls within the scope of the applicable contributions plan. If works depart from contributions plan‑identified items, a VPA will likely be required to secure recognition of those contributions.
- Where there is a material difference between contributions plan values and actual delivery costs, a VPA will usually provide the more appropriate pathway to seek recognition of higher costs or to structure offset arrangements. WIKAs, by contrast, may expose developers to the risk that actual delivery costs are not fully recognised in the offset against the s 7.11 obligation.
- Projects involving land dedication generally are delivered through a VPA unless the relevant contributions plan expressly contemplates such dedication.
- Where multiple developments are contemplated within a local government area, VPAs may enable the strategic allocation of credits (subject to agreement), whereas WIK arrangements are typically confined to a single development.
- WIKAs may be appropriate for straightforward, contributions plan aligned infrastructure delivery, while VPAs remain preferable for complex infrastructure packages, land transfers or material changes to the value of works contemplated by a contributions plan.
Statutory framework
VPAs are authorised under s 7.4 of the EP&A Act, which permits a planning authority and a developer to enter into an agreement in connection with a development application, modification, or planning proposal.
A VPA can provide for:
- Monetary contributions;
- Dedication of land; and/or
- Provision of material public benefits (including works),
either in satisfaction of, addition to, or in contribution to, development contributions or levies under ss 7.11 or 7.12.
Importantly, VPAs are subject to public notification and exhibition requirements under the EP&A Regulation, including the preparation of an explanatory note, requiring a higher level of public participation and transparency.
WIKAs are generally contractual or administrative mechanisms used to allow a developer to carry out works, or in some cases dedicate land, to satisfy or offset a monetary contribution condition imposed under s 7.11, where that outcome is supported by the relevant contributions plan and condition of consent.
Unlike VPAs, WIKAs do not operate as a separate statutory planning agreement under s 7.4. Their utility depends on the existence and terms of the applicable contributions plan, the relevant condition of consent and the consent authority’s willingness to enter into the arrangement.
WIKAs are not required to be publicly exhibited in the same way as VPAs, although they may be addressed through council contributions reporting and internal approval processes.
Advantages of VPAs
1. Flexibility in structuring contributions
VPAs enable developers to propose bespoke contribution packages combining land dedication, works and monetary payments, including where those contributions are not confined to items identified in a contributions plan.
2. Ability to negotiate value
Developers may seek recognition of the actual cost of works, rather than the value assigned in a contributions plan, subject to agreement.
3. Potential for credits and future offsetting
Where the value of works exceeds contribution obligations, VPAs may allow credits to be applied to future developments or enable a cash credit where supported by policy.
4. Lawful pathway for land dedication outside a contributions plan
A VPA provides a mechanism to dedicate land that is not identified in a contributions plan and can consolidate land, works and funding obligations within a single agreement.
Advantages of WIKAs
1. Simplicity and speed
WIK agreements typically follow standardised templates and are not subject to public exhibition requirements, resulting in faster execution.
2. Reduced upfront negotiation burden
There is generally limited scope for negotiation because the scope of the material public benefit and its value are usually derived from the relevant contributions plan. That can streamline the approval process where timing is critical.
Key constraints and risks of WIKAs
1. Dependence on contributions plan
A critical limitation of WIKAs is that the material public benefit must align with an adopted contributions plan. If works fall outside the plan, they may not be capable of being recognised as contributions under s 7.11 or delivered via a WIKA.
2. Limited or no ability to negotiate value
Under most council policies, WIK works are valued at the amount specified in the contributions plan, or a limited agreed value for partial works, with minimal scope for negotiation. This can expose developers to cost overruns where actual delivery costs materially exceed plan values.
3. Constraints on land dedication
WIKAs are not generally the appropriate mechanism for securing land dedication unless the dedication is expressly contemplated by the relevant contributions plan and condition of consent.
Land can only be required to be dedicated by a condition of consent where that requirement is authorised by a contributions plan under s 7.11. Otherwise, dedication should generally be secured through a VPA.
The decision in L & G Management Pty Ltd v Council of the City of Sydney [2021] NSWLEC 1084 confirms that a condition requiring dedication of land may be invalid unless supported by a contributions plan or a planning agreement.
4. Post-consent timing risk
WIKAs are typically entered into after a development consent imposing a s 7.11 contribution has been granted. This requires:
- A condition of consent to be imposed; and
- Council agreement.
This creates the risk that council may decline to enter into a WIKA, particularly where works can be characterised as development-specific rather than public infrastructure.
To discuss if a VPA or WIKA is right for your infrastructure project please contact a member of Addisons’ Environmental & Planning team.