Dr Erin Castellas (PhD) is on a mission to ensure the community benefits from new developments. It’s part of her role as chief impact officer at Impact Investment Group (IIG), which invests in projects it judges to have positive environmental and social impact*.
Castellas has a big job. Many communities are disappointed by the quality of the developments around them, for good reason. But Castellas is well qualified. In addition to a long history working in the social impact sector, she also spent a year working as a financial advisor at the global finance group, Morgan Stanley.
To achieve a greater social impact, Castellas is using a lever that is already in the Victorian planning system. It is a clause (10.02 of the VPP, The State Planning Policy Framework) that calls on developers to explain the “net community benefit” of their proposals.
But the net community benefit clause is misunderstood and poorly used, Castellas says.
Other experts agree. According to Marcus Spiller, principal and partner at consulting firm SGS Economics and Planning, developers frequently mix up an economic impact with an economic benefit. In a report for Stonnington Council (2015), Spiller writes:
By way of illustration, a $10 million construction contract to dig a long trench then fill it up again would generate the same economic impact (i.e. multiplier) as a $10 million contract using the same equipment and workers to undertake earthworks for the improvement of a parkland. The economic benefit from the latter is clearly superior to the former.
If the clause exists, why so many poor developments?
One might accuse planners of ignoring this clause in their approvals, given the number of horrible buildings that go up. Not so. Like most planning rules, planners must make a judgement call. And given that the clause is vague and does not provide examples to guide developers, challenging the planners or the developers on their judgements would be difficult.
As long as there is no agreed measure of community benefit, the clause is not much use, or not as much use as it could be.
A new way to measure community benefit
That is where Castellas can help.
Working Darren Brusnahan, who head of IIG’s real estate fund, Castellas created a way to measure community benefit that IIG will share with any developer who wants it.
Castellas will use new net community benefit measure herself this month when IIG publishes a report evaluating its high-profile development at the Younghusband building in Kensington. At the behest of an active resident action group, the Younghusbands development included low-rent artist studios as a trade-off for buildings apartments.
Castellas’ developed the methodology using the UNHabitat City Prosperity Initiative, which proposes to measure average achievements in cities across six dimensions:
- Productivity: Create and share wealth, or contribute to economic growth and development, generate income, and provide decent jobs and equal opportunities for all.
- Infrastructure Development: Provide infrastructure for clean water, sanitation, good roads, and information and communication technology that improve living standards and enhance productivity, mobility and connectivity.
- Quality of Life: Ensure the general wellbeing and satisfaction of the citizens.
- Equity and Social Inclusion: Ensure equitable (re)distribution of the benefits of prosperity, reduce poverty and slums, protect the rights of minority and vulnerable groups, enhance gender equality, and ensure equal participation in the social, economic, political and cultural spheres.
- Environmental Sustainability: Protect the urban environment and its natural assets, while simultaneously ensuring growth, pursuing energy efficiency, reducing pressure on surrounding land and natural resources and reducing environmental losses through creative and environment-enhancing solutions.
- Urban Governance and Legislation: Demonstrate the role of good urban governance in catalysing local action towards prosperity, including the capacity to regulate the urbanization process.
Castellas explains how the dimensions may be applied to developments: “With productivity, we consider GDP per capita. We then get public data around the median income for a particular demographic. With sustainability, we examine pollution statistics and look at proximity to open space, access to public transport. We can measure community benefit based on the data that exists today.”
Holding developers to account
Castellas plans to share the measure with other developers. “We think it is important to catalyze more support in this space,” she says.
But do developers care? Castellas says they can see the value proposition. “I think people’s eyes light up. It’s not a trade-off conversation; it’s a win-win proposition, and I think people like that.”
Developers, for example, may overcome resistance to new developments, receive faster approval for projects, or be allowed variations on restrictions such as height limits, which means that proving NCB has a financial benefit for them.
Resident actions groups will benefit too. They can use a clear measure of net community benefit to hold developers to their proposals and get them into negotiations.
* IIG is owned by Danny Almagor and Berry Liberman who have devoted some of the Liberman family’s estimated $2.45 billion fortune to help make a “more socially equitable and environmentally sustainable world.”
The Net Community Benefit Clause
As set out in Clause 10.02 of the VPP, The State Planning Policy Framework seeks to ensure that the objectives of planning in Victoria (as set out in Section 4 of the Planning and Environment Act 1987) are fostered through appropriate land use and development planning policies and practices which integrate relevant environmental, social and economic factors in the interests of net community benefit and sustainable development.