Response to Information Request - Final

Page 2

 “Adamson Town Planning, specialising in providing higher order town planning advice”



1. Please provide further information addressing the impact of removing visitor
   accommodation from the visitor accommodation pool (existing and future) in the Visitor
   Mixed zone and the locality, particularly given the Noosa North Shore locality has limited
   visitor accommodation.

2. Please provide an economic report that addresses but is not limited to the economic impacts
   (risks/effects) associated with the conversion of visitor accommodation to permanent
   accommodation in this locality.

Economic Needs Assessment

A Needs Assessment report has been prepared by Foresight Partners Pty Ltd, a copy of which
is provided as Attachment 1. The report has considered the following key areas:
     Noosa Tourism and Accommodation:
        o Noosa Council Zoning;
        o Noosa and Sunshine Coast Tourism Market Overview;
        o Noosa Region Visitor Accommodation;
        o Occupancy Profile;
     Impact Analysis:
        o Noosa North Shore Accommodation Market Mix Implications;
        o Economic and Other Implications.

With respect to the first issue raised in the information request, it has been suggested that the
visitor accommodation component of the use is being removed from the 19 Holiday Homes
on the land, which is not correct. It is clearly intended by the development proposal to allow
for the existing development for visitor accommodation to continue in unison with the
proposed development for some permeant and semi-permanent living over the 19 Holiday
Homes.

Should the development proposal be approved, it is expected that a condition will be imposed
that confirms the current development approval for visitor accommodation will continue in
conjunction with the current proposal. This would have the effect of removing any doubt about
the intent for the ongoing use of the land for visitor accommodation, while also allowing for
some flexibility with 19 of the Holiday Homes able to be used for permanent and semi-
permanent residential living, subject to market demand.

The development proposal will allow for a mix of residential uses to occur on the land
conjointly. It is being suggested by the proposal that the highest and best use of the land
should ultimately be determined by market forces, rather than being controlled by conditions
of approval that seek to limit the use on the land.

At the time the application was made, it was advised that the existing 48 Holiday Homes were
being use as follows:
     22 of the Homes participate in a centrally administered, formal rental pool managed
        by a third party;
     6 of the Homes were being privately rented out by respective property owners; and



 15006 – Response to Information Request , November 2016

                                                                                        2|Page

Page 3

    “Adamson Town Planning, specialising in providing higher order town planning advice”



         20 of the Homes did not participate in a rental scheme and are used exclusively by
          property owners as private holiday homes.

It is noted that since the application was prepared and the economic assessment report
(Attachment 1) was completed, 7 rather than 6 of the Holiday Homes are being rented out
by property owners for short term accommodation. It is not known what the terms are for the
short term accommodation; however it would be extremely hard to regulate this aspect under
the approval in any event.

It is understood that of the 19 Holiday Homes that form the application:
      four of the homes are currently in the visitor rental pool;
      six of the homes are being privately let; and
      the remaining homes do not currently participate in any visitor or other rental scheme.

The advice provided from Foresight Partners has revealed … an average occupancy rate of
22.8% is quite low, particularly after several years of operation and, were the Beach Road Holiday
Homes purely a commercial venture, it would not be economically viable. However, as all 48
owners pay body corporate fees to maintain common properties and facilities regardless of
occupancy levels achieved (or even their participation in the centrally managed letting pool –
which most do not), the development is not dependent upon achieving a “breakeven” occupancy
level as might apply to other resorts, hotels and motels for survival.

The indicative low occupancy level does not reflect owner use for holidays or use by friends and
relatives under private arrangement, which would probably increase the overall occupancy of
the Holiday Homes, but not (necessarily) the revenue generated.1

The current occupancy rate for the existing dwellings is about 23%, which is slightly higher
than first thought. Despite this, Foresight Partners has advised that …the 19 houses (or even all
48 houses) are too small to have any material impact upon Noosa’s broader visitor
accommodation mix and markets.2

Further, Foresight Partners has advised that … allowing the option of permanent occupancy in
19 of the 48 Beach Road Holiday Homes could be seen as a potential dis-benefit for Noosa North
Shore’s collective pool of accommodation. However, in our opinion, this would be of a minor
nature with little or no risk to the area’s overall visitor appeal and marketability for a number of
reasons:

     Allowing the option of permanent occupancy does not necessarily remove the subject houses
      from the central letting pool or preclude private letting. The owners of five houses forming
      part of the application currently participate in the centralized letting pool and four let out
      their properties privately, and they may well continue to do so for all or part of the year.
      Similarly, some of the ten properties that currently are “private use only” could make their
      houses available in response to a better leasing environment (in response to a reduction in
      supply).

1
    Needs Analysis, Foresight Partners Pty Ltd, November 2016, page 12
2
    Needs Analysis, Foresight Partners Pty Ltd, November 2016, page 13


    15006 – Response to Information Request , November 2016

                                                                                           3|Page

Page 4

    “Adamson Town Planning, specialising in providing higher order town planning advice”




     The very low and uneconomic vacancy levels being achieved by properties available for
      letting, especially after several years of operation, suggest that the Beach Road Holiday
      Homes cater to a thin market in which supply significantly exceeds demand in all but a few
      weeks or months of the year. A reduction in supply is likely to benefit the majority of
      properties which remain available for short term letting, either in the centralised letting pool
      or private lettings, by boosting their occupancy levels (and returns).

     The option of permanent occupancy could allow some owners, particularly retirees, to split
      their time between homes, as occurs in several of Queensland’s coastal areas. That is, they
      may spend winter months or some other part of the year in Noosa North Shore and the rest
      of the time at their principal place of residence or traveling (or vice versa). The house may
      be still be available for letting, but for only part of the year or season. A limited number of
      Beach Road Holiday Homes owners may already be living under this arrangement, which
      could explain the absence of some properties from the rental pool.3

Given the above, it is suggested that if all of the 19 Holiday Homes were to be removed from
the letting pool, this would be of benefit to the remaining Holiday Homes in the letting pool
in terms of the demand for visitor accommodation and a reduced supply.

It should be noted that despite the current approval being purely for visitor accommodation
and operating for a number of years, only about half of the Holiday Homes are available for
holiday letting. Therefore, it is evident that despite the restriction placed on the current
approval to prevent permanent occupancy of the Holiday Homes, it would appear that only
about half of the Holiday Homes are being used for the intended purpose. Further, these
Holiday Homes have a vacancy rate of about 77%, which is significant.

The very low and uneconomic vacancy levels being achieved after several years of operation
suggests that the Holiday Homes cater for a very thin portion of the market. To that end, it is
evident that the development on the land has not worked as expected, with the market on the
North Shore being more suited to budget accommodation, such as cabins, camping and
caravans. The current Holiday Homes do not provide for budget accommodation and in fact
represent a use (Visitor Accommodation – Type 4 Conventional), which is not supported under
the current planning scheme.

With respect to the last dot point (above), it is highly likely that some of the current owners
have another place of residency and therefore could opt to spilt there time between the
Holiday Homes and their primary place of residence. Consequently, the restricted use of the
Holiday Homes for purely visitor accommodation is not achieving the outcome sought under
the planning scheme at this location. This is because of the nature and type of use that has
been constructed on land, not being for budget accommodation, and being removed from
the prime holiday locations of Noosa Heads and Noosaville and having restricted access.

Foresight Partners has also advised that … the Beach Road Holiday Homes cater to the higher
end of the market and, for the majority of Noosa North Shore’s holiday makers, are not an

3
    Needs Analysis, Foresight Partners Pty Ltd, November 2016, page 13


    15006 – Response to Information Request , November 2016

                                                                                           4|Page

Page 5

 “Adamson Town Planning, specialising in providing higher order town planning advice”



alternative for those seeking budget accommodation. The potential loss of 19 houses from year
round availability will have no discernable impact implications for Noosa North Shore’s overall
visitor market and its mix of accommodation.

In terms of the economic and other implications, Foresight Partners has provided the following
advice:

Noosa North Shore’s visitor accommodation, whether upscale or budget, services a niche market
by virtue of its geographical separation (ferry access only) from Noosa’s, and the Sunshine
Coast’s, major tourism precincts and shopping leisure/entertainment facilities. Limited retail
facilities serving the Noosa North Shore area, consisting of a pub which only trades limited
weekend hours and a very small general store, means that visitors must bring all or most of their
food, drink and other supplies with them.

Inconvenient access to Noosa’s shops and restaurants, and other leisure and entertainment
facilities and attractions, and the need to time the use of such activities with the ferry’s operating
hours, is probably a limiting factor in the appeal of Beach Road Holiday Homes (as evident by
its low occupancy rate). While this lack of local retail and leisure/entertainment spending
opportunities complements the budget and caravan/camping market, the upscale nature of the
Beach Road Holiday Homes development would likely need a certain level of retail and
hospitality facilities close by to boost its longer term viability.

As opportunities for visitors to spend on retail/entertainment in Noosa North Shore are very
limited, a potential reduction in Beach Road Holiday Homes available for short stay visitors is
unlikely to have any discernible impact on the viability of its retail and leisure/entertainment
facilities.

As expected, Foresight Partners has confirmed that accessibility to the Noosa North Shore and
the lack of local retail and leisure activities compliments the budget caravan and camping
market. Further, given the upscale nature of the Beach Road Holiday Homes, this development
would need a certain level of retail and hospitality facilities close by in order to boost its longer
term viability.

The retail and leisure activities mentioned above will not be allowed to occur on the Noosa
North Shore under the current and most likely any future planning scheme. Currently, the
Hotel opens for a limited number of days per week and there is a small general store. The
existing development itself does not provide for a restaurant, which would normally be
expected in a resort style of development. Consequently, the retail and leisure activities on the
Noosa North Shore are limited.

In terms of other benefits, Foresight Partners has suggested that …the potential addition of 19
permanent households will also benefit Noosa North Shore’s limited retail facilities, albeit
modestly, through more local spending.          The average Queensland household spends
approximately $33,400 per annum on retail goods and services. While only a very small fraction
of such an amount per household could be captured by the general store and pub, it may




 15006 – Response to Information Request , November 2016

                                                                                          5|Page

Page 6

    “Adamson Town Planning, specialising in providing higher order town planning advice”



nevertheless assist in expanding the range of food and other convenience goods carried to the
benefit of both Noosa North Shore’s residents and visitors.4

In summary, the Needs Assessment provided by Foresight Partners, has confirmed that the
intention to allow more flexibility on the site in terms of the types of residential uses allowed,
will have no discernable impact upon the Noosa North Shore’s overall visitor market and its
mix of accommodation. In fact, the ability to allow for a mix of uses has the potential to
improve viability of the existing hotel and general store and should improve the overall viability
of the Beach Road Holiday Homes development, thus making it more sustainable in the long
term, which is a desirable planning outcome.

Other Issues

Another issue raised in the information request is with respect existing visitor accommodation
located in the Noosa area, which is sought to be protected by the certain provisions under the
planning scheme. It is accepted that planning provisions can seek to provide certain town
planning outcomes with respect protecting particular sites for development, such as resort
developments and this is supported. However, if applied more broadly this can also have an
adverse affect by preventing market forces from determining the highest and best use of land.

The use of the Visitor Mixed Use Zone is generally supported, where the provisions allow for
a mix of uses. In most of the Visitor Mixed Use Zones in the Noosa area a mix of residential
uses is provided for, being for permanent and semi-permanent residential and visitor
accommodation, as well as other supporting uses.

The creation of a separate definition for Visitor accommodation – Type 4 Conventional, is a
use that provides purely for visitor accommodation. This has also meant that there was a need
to create a Multiple housing – Type 4 Conventional use, which provides purely for permanent
and semi-permanent residential living, but also precludes visitor accommodation.

Under former planning schemes for the Noosa area, the term Multiple Dwelling was used,
which was a residential use that allowed for both permanent or semi permanent living and
visitor accommodation. Consequently, since the commencement of the Noosa Plan 2006, any
development for Multiple housing – Type 4 Conventional, technically cannot be used for short
term visitor accommodation, which might be of concern.

It is suggested that the implication of this could be significant in terms of the availability of
visitor accommodation in the Noosa area in the long term. Consequently, by seeking to
regulate visitor accommodation broadly under the planning scheme, this has potentially
inadvertently prevented a number of multiple housing developments from being able to be
used for visitor accommodation, which is not desirable.

Should a unit owner make a complaint to the Council about a unit being used for visitor
accommodation in a Multiple housing development, the Council would have no option but to

4
    Needs Analysis, Foresight Partners Pty Ltd, November 2016, page 14



    15006 – Response to Information Request , November 2016

                                                                                           6|Page

Page 7

 “Adamson Town Planning, specialising in providing higher order town planning advice”



seek compliance with the approval granted under the current planning scheme. This would
prevent these types of units from being used for visitor accommodation, unless another
approval is obtained.

In this case, both of the above uses are not allowed on the subject land under the planning
scheme, which includes Visitor accommodation – Type 4 Conventional. This is despite the land
being included in the Visitor Mixed Use Zone. This is at odds with the existing development
and approval on the land and suggests that this type of development should not have been
constructed at this location.

It is agreed that the remaining land included in the Visitor Mixed Use Zone on the Noosa North
Shore should provide primarily for budget visitor accommodation. Importantly, this type of
development should be purpose built, making it not desirable or suitable for permanent
residential living. Under the current scenario, the existing development is comprised of a
number of dwellings, which do not provide for budget accommodation and are not suited to
the location, but are not able to be used for permanent or semi-permanent living, which is an
odd situation.

Conclusion

From a town planning perspective, the encouragement of budget and visitor accommodation
on the Noosa North Shore is supported. This is because of the nature of the existing
development on the North Shore being primarily budget accommodation for families and also
for school groups.

Limited facilities are provided and access is restricted by the operating hours of the ferry. This
inhibits access to services and facilities within the more urban tourist areas of Noosa.
Consequently, people holidaying on the Noosa North Shore are seeking budget
accommodation and come prepared for this type of holiday experience.

The economic needs analysis has confirmed that budget visitor accommodation is best suited
to the Noosa North Shore. However, the existing Beach Road Holiday Homes do not provide
for budget accommodation and are not economically viable and therefore potentially not
sustainable in the long term. The current vacancy rate for the existing 22 Holiday Homes in the
rental pool is about 77%, which is considerable.

It is understood that a recent purchaser of one of the Holiday Homes was rejected by a number
of funding institutions. It is understood that this was due to the low occupancy rate and
because the Holiday Homes are not able to be lived in on a permanent basis. Consequently,
the existing development has effectively become a ‘white elephant’.

The economic needs analysis has revealed that there is some benefit in allowing the
development proposal to provide for some permanent and semi-permanent living, in
conjunction with the existing visitor accommodation use. In effect, the existing development
is not being used to its full potential and therefore represents a wasted opportunity.




 15006 – Response to Information Request , November 2016

                                                                                        7|Page

Page 8

 “Adamson Town Planning, specialising in providing higher order town planning advice”



Currently, the cost of providing for infrastructure and servicing on the land is met by the
existing 48 Holiday Homes. Originally it was intended that another 48 Holiday Homes would
be provided on the adjoining land, under further stages of the preliminary approval, which has
lapsed. Consequently, it is uncertain what this will mean in terms of the cost of providing for
the maintenance of this infrastructure in the long term, given that the ultimate development
envisaged under the preliminary approval can now not be achieved.

This is particularly the case given the uses that are allowed for on the adjoining land under the
current planning scheme, those being for budget accommodation only. Further, the matter of
sharing the existing on site facilities located on common property and providing access for the
budget accommodation on the adjoining land is likely to be problematic for current property
owners. This is because the type of development that was expected to occur on the adjoining
land when most of the owners bought the Holiday Homes was for an additional 48 Holiday
Homes, and was not for more intensive budget accommodation.

Given the above, it is desirable from a town planning perspective to allow for a mix of
residential uses on the land with 19 of the Holiday Homes being able to be used for both
visitor accommodation and for permanent or semi-permanent residential living. This should
make the remaining Holiday Homes in the letting pool more viable, while maintaining the
opportunity for visitor accommodation to be provided over all of Holiday Homes, subject to
the market demand. Further, this should also improve the local economy on the Noosa North
and provide for improved security for the current development.

Pursuant to section 278 of the Sustainable Planning Act 2009, this completes the response to
the information request made. Could you please provide the adjoining owners details as soon
as possible so that public notification of the proposal can commence.

Should you have any questions with respect to the above, please do not hesitate to contact
me direct.

Yours faithfully




Shane Adamson (BEngTech, GDURP, MPIA)
Town Planning Specialist
Director of Adamson Town Planning Pty Ltd ATF




 15006 – Response to Information Request , November 2016

                                                                                        8|Page