Construction of unmade laneways

Classification of laneways

Council recognises the importance of the laneway (or rights of way) network in complimenting the municipality's road network.

The Council Rights of Way Strategy (DOC 3Mb) provides a classification of Merri-bek's laneways based on their need and use. A summary of these classifications is:

Who contributes to the cost of constructing a laneway?

Council's contribution to costs

In all cases, Council contributes to the costs of constructing an unmade laneway.

Council has developed a framework for determining Council's minimum contribution towards the construction costs, and the laneway classification is the basis for this framework.

Broadly, Council contributes a higher proportion to constructing those laneways which are considered to have greater public use and benefit.

Council is required to contribute a higher proportion to the construction of an unmade laneway than these amounts, where it is determined that there is a greater benefit to the community.

See the full report in the 12 September 2018 Council meeting agenda (DOC 27Mb) where the framework was endorsed by Council.

Special Charge Scheme contribution

The construction of unmade laneways is often best achieved by implementing a Special Charge Scheme, where those properties that gain a benefit from the construction contribute to the cost of construction.

In circumstances where Council contributes less than a third of the cost of the works, Council cannot levy a Special Charge Scheme if more than half of the rateable property owners included within the Scheme object to it.

Why Special Charge Schemes are required

Prior to 1958, the Local Government Act did not give Council the powers to require developers to provide infrastructure improvements as part of new subdivisions. As a result, today we see examples of unconstructed laneways, lack of stormwater drainage, or missing footpath links.

Significant changes occurred to the Local Government Act in 1958 and since that time developers have been required to construct roads, footpaths and underground drainage in addition to providing utility services such as gas, electricity, water and street lighting. The costs of these infrastructure improvements are passed on to new property owners as they purchase the new allotments created through the subdivision.

As local infrastructure mostly benefits nearby properties, the most common and accepted method of funding new infrastructure, such as unmade laneways, is through a Special Charge Scheme defined in Section 163 of the Local Government Act 1989. In simple terms, this is where those properties that gain ‘special benefit’ from the works contribute to the cost of construction. Special benefit may be identifiable improvements in the physical or environmental amenity, improved access or safety, or economic benefits.

Calculating a Special Charge Scheme levy

In addition to the Local Government Act 1989, Ministerial Guidelines provide guidance on calculating the maximum amount that a Council may levy under a Special Charge Scheme.

The level of ‘community benefit’ is required to be calculated as part of developing a Special Charge Scheme. This then determines the ‘benefit ratio’, or the maximum proportion of costs that can be apportioned to property owners who are determined to receive ‘special benefit’ from the works. There is no fixed methodology when it comes to calculating community benefits, however the Ministerial Guidelines states that it should be 'reasonable and consistent in comparison to the estimates of special benefits'.

While the ‘benefit ratio’ identifies the maximum amount that Council may levy (or in other words, the minimum amount Council must contribute), the legislation does not prohibit Council from contributing more to offset the costs levied to property owners.

In adopting the above framework, Merri-bek Council has committed to a minimum contribution, regardless of the ‘community benefit’ that may be determined. 

The calculation of the actual apportionment of costs to each property is a separate process from the calculation of the maximum total levy. The apportionment of costs is generally determined in consultation with the property owners included within the Special Charge Scheme.

Voluntary contribution

In small laneways the administration cost to set up the Special Charge Scheme may cost more than the actual construction of the laneway. These situations may be best approached through a voluntary contribution.

How much does it cost to construct a laneway?

It is difficult to estimate a general cost for constructing an unmade laneway as it varies with each project, due to the need or complexity of drainage works and how close the laneway is to the existing stormwater drainage network.

As a general guide, a rate of $250 to $300 per square metre is typical, including an allowance for some stormwater drainage works. That is, a typical 3 metre wide laneway costs in the order of $7,500 to $9,000 to construct every 10 metres in length.

Construction works are always publicly tendered to ensure current competitive market rates.

Requesting the construction of an unmade laneway

If you are interested in having the laneway next to your property constructed, you can contact Council’s Asset Management Unit on 9240 1111 to discuss further.

To understand if there is enough interest from other property owners next to the laneway, Council typically requests that support for the change is demonstrated, usually through a petition, before beginning the process. 

This is due to the amount of resources required once a Special Charge Scheme is being developed, and is similar to how Council assesses requests for parking restrictions.