Services

HG Alert: Important information for landowners in disaster-affected areas: Queensland Reconstruction Authority Bill 2011 - 18 Feb 2011

On Thursday 17 February 2011, just two days after first being tabled, the Queensland Parliament passed the Queensland Reconstruction Authority Bill 2011. We anticipate that the Bill will receive Royal Assent within the next 10 days. Once this happens, the ripple effects that follow may have a profound impact on landholdings, land value and future developments in disaster-affected areas.

The Bill establishes an independent statutory authority, the Queensland Reconstruction Authority, led by Graeme Newton, to manage and coordinate the State Government's program of infrastructure reconstruction and recovery following the recent disaster events in Queensland. An important and well-publicised function of this Authority will be to help reconstruct communities and to facilitate flood mitigation, which necessarily involves taking active steps in flood-affected areas to reduce the physical and financial impact of future flood events.

Importantly for landholders in reconstruction areas, the Minister's declaration may designate land as 'acquisition land', which means it cannot be disposed of by the owner unless it is to the Authority or the local government.

Key points to note

  • Particular lots in disaster-affected areas will be designated as 'acquisition land'.
  • Affected landowners need not vacate or dispose of acquisition land straight away. However, if the landowner does decide to dispose of the land, it cannot be transferred to anybody but the Authority or local government.
  • Compensation will be paid to the landowner in accordance with the processes in the Acquisition of Land Act 1967.
  • Buyers of property in disaster-affected areas must be cautious when entering into contracts. It is essential to conduct title searches first.
  • Owners of acquisition land should be aware that the Bill does not offer deferred payment of rates or land tax, which is a factor to consider when deciding whether to dispose of land now or in the future.
  • Owners of land in the vicinity of acquisition land may be affected by this legislation, because neither the Bill nor any accompanying material explains what the Authority or local government will do with the land it acquires. Under the Bill, the land can be leased, sold, improved by development and construction, or simply retained. The ultimate use may affect surrounding landowners due to loss of amenity or value.

Reconstructing communities

Queensland Premier Anna Bligh made it clear that the Queensland Reconstruction Authority's powers will be broad-reaching by saying that the Authority has been established "to cut through red tape and any other barriers that would stand in the way of swift recovery and rebuilding".

In areas that have been affected by a disaster event, the Authority has the jurisdiction to fast-track administrative processes and reduce the lengthy decision-making timeframes normally associated with major infrastructure and community projects. In the Bill, 'disaster event' is defined to mean:

  • the floods caused by heavy rains in December 2010 and January 2011;
  • severe tropical cyclone Yasi; and
  • another disaster, within the meaning of the Disaster Management Act 2003.

In these disaster-affected areas, the Minister may declare particular projects as 'declared projects' and whole areas as 'reconstruction areas', where completion of infrastructure, community projects and flood mitigation activities will be prioritised.

In relation to these declared projects and reconstruction areas, the Authority will have the ability to:

  • implement a development scheme;
  • require the relevant decision-making entity (eg local and State government departments) to prioritise and fast-track the administrative processes necessary to obtain approvals and undertake works; and
  • require decision-makers to make a decision within a prescribed period, provided at least 20 business days is given to make the decision.

Ultimately, if decision-makers do not comply with the requirements of the Authority, the Authority may issue a 'step-in notice', which allows it to act as the decision-maker for the prescribed decision or process.

Restrictions on the disposal of land

Importantly for landholders in reconstruction areas, the Minister's declaration may designate land as 'acquisition land'. Designated acquisition land cannot be disposed of by the owner unless it is to the Authority or the local government (as stated in the regulation). While the ultimate goal for acquisition land has not been well publicised, we believe the intention is that properties substantially inundated by flood waters will ultimately be utilised for other purposes (for example, parkland or low density industrial land) to ensure that the physical and financial damage suffered by landowners is limited in any future flooding events.

Designation of acquisition land

Once the Minister releases the regulation that will specifically identify acquisition land, the Authority will give each owner of acquisition land a notice that:

  • states that the land is subject to section 100 regarding the taking of land;
  • identifies the entity that may be required to take the land (either the Authority or the local government); and
  • includes information about how the owner can deal with the land.

The Authority will also notify the Registrar of Titles, who must record a note on the title alerting the general public that the land is acquisition land.

It is imperative that anybody looking to acquire land in disaster-affected areas obtains a title search before signing any contract.

Penalties for disposing of acquisition land

If an owner disposes of land in contravention of the Bill, he or she may be liable for financial penalties to a maximum of $16,500. That disposal is not, however, invalid or void. The buyer or transferee of the land will be treated as having received notice that the land is acquisition land, and will be restricted in his or her disposal of the land in the future (that is, only to the Authority or the local government). The first owner will still face the financial penalties for the contravention.

Interestingly, the Bill does not define the term 'dispose'. Although one may presume that dispose means 'sale' by auction or private treaty, there are other circumstances where an owner may part with possession or ownership of land. For example:

  • as a consequence of a relationship breakdown where a Court Order requires the land to be transferred; or
  • by transmission pursuant to the terms of a Will.

In these circumstances, the parties should seek legal advice about their rights and obligations in dealing with designated acquisition land.

When will we know which land parcels are designated 'acquisition land'?

The Minister's regulations may initially identify which land in Queensland will be 'acquisition land' under the Bill, or subsequent amendment to the regulations may reveal this. Regulations under the Bill are yet to be released. However, when they are, Queenslanders affected by disaster events will know if their properties fall within this category and can consider their best option in going forward. While in normal circumstances the words 'compulsory acquisition' can make any landowner feel nervous, it may be that this legislation and the acquisition provisions under it will limit speculative purchasing at below market prices and the flow on effect to market value, while allowing owners to stay on their land for as long as they consider necessary.

The Authority's other powers in relation to land

In addition to the power to take acquisition land, the Authority also has the power to take land for the following purposes under section 99 of the Bill:

  • to carry out authorised works;
  • to implement a development scheme for a declared project or a reconstruction area; or
  • to carry out the Authority's reconstruction function.

The Authority can generally do everything with the land that a landowner can do, including to lease it, sell it and grant easements over it.

Compensation for taking land

Compensation is payable where land is taken under sections 99 and 100 of the legislation, as outlined above. The process for payment of compensation is the same process that is prescribed under the Acquisition of Land Act 1967.

Expiry

The legislation will expire two years after it commences. After expiration, the land held by the Authority is taken to have been divested from the Authority and vested in the Coordinator-General.

We will continue to provide updates and commentary as new information comes to hand. The legislation, once enacted, will have significant planning implications. We will issue further information shortly detailing the town planning implications for disaster-affected areas.

For more information about the Queensland Reconstruction Authority legislation, or for advice about how you may be affected, please contact HopgoodGanim's Commercial Property team.