Developer Contributions

The media has been full of ‘development contributions’ recently. Some people (mainly it seems to me developers and other people in the property industry) blame them for the high price of land. So I thought I might tell you about the contributions
First what are they? Councils provide services like roads, parks, libraries, community halls, sporting facilities. All of these cost money. All of them are used by the people within the council area. Mostly the council does not charge a fee for using them (indeed in some cases such as libraries the state government prohibits councils from doing so –though not for using add on services like the canteens at sports grounds and the photocopiers in the libraries). The council has two ways of paying for the services it provides (Apart from the fee for service). IT can increase our rates (assuming the state government will let councils do so- for it generally ‘pegs’ rate increases to no more then the rise in inflation). Or where an area is growing and people are moving into it and so increasing the demand it can in some way charge the people who are moving in a once off fee. And that second way is the ‘development contributions."
They are not new. Although councils had been levying charges on a piecemeal basis with varying degrees of success (Developers used to take action against councils ) the power of councils to charge was first legislated by Neville Wran’s government when it brought in the present Environmental planning laws in 1980(the Act was passed in 1979 but came into force in September 1980-giving everyone a chance to become familiar with it. I think it would be excellent if governments gave us all a similar chance to get used to new schemes before they were introduced- the Federal government did so with GST).The Act also allowed developers to provide their own services or to dedicate land for parks and so on instead of paying some of the contributions (You can see how this has worked by looking at Somerset Park or the Landcom developments at Metford where many of the parks and cycleways were developed by the subdivider.)
In 1992 Nick Grieners coalition government made some major changes –particularly to make councils have a publicly available ‘plan’ setting out the rates that council will charge for particular developments and there have been other changes allowing developers and councils to enter into planning agreements (this is mainly for large scale developments and allow the council and the developer to set some ground rules). And now the state government and bodies like Hunter Water can charge contributions as well.
Developers could –and did – appeal to the Land and Environment Court against the contributions.
Mostly the scheme seemed to work without much criticism for many years- though sometimes it could be a little unfair. I remember when I was in Cooma the local radio station was building extensions and was levied for car parking. But the nearest public car park was almost a mile away near the court house and the council officers drove from the court house to the radio station building when the court case was on. They were able to park in the street without any problems.
So why the fuss now? I really don’t know, the charges are not all that much- Maitland City Councils general charge per block (there are different and slightly higher ones for specific new areas like Gillieston Heights) is $11397 which is perhaps 6% of the total price of a block of land in a new subdivision ( blocks in the Lake View development at Bolwarra Heights were selling for $195,000 at the beginning of the year) and Hunter Water’s fee is $2617.
The developers push to do away with these means that we –the existing residents will have to pay more in our rates and charges for services which will be used not by us but by new residents.. And if the Tilligery dam ruckus is any guide we will be paying a lot more.
For years now the state government has been trying to make councils charge on a user pays basis (so for example rates are supposed to be broken into amounts for garbage collection and so on). But the developers in complaining about these development charges are trying to shift costs to the general public.


Further Reading and references
MCC contribution rates http://www.maitland.nsw.gov.au/PlanningDevel/S94Plans/S94ContributionRates

Hunter Water rates (note there are two -headworks and an individual locality charge) http://www.hunterwater.com.au/2367.aspx

The state government site (and note the government wants more changes as listed on the site)
http://www.planning.nsw.gov.au/planning_reforms/developmentcontributions.asp