What are infrastructure charges and when do they apply?
23 May 2018
Infrastructure charges are fees that councils and water utility providers (distributor-retailers) collect as part of the development assessment process.
The easiest way to explain these charges are that a developer is offsetting its additional demands on public infrastructure against the cost to the public of expanding or replacing infrastructure once it reaches capacity. These charges make a contribution towards the capital works of expanding, maintaining or replacing infrastructure, although most council and water utility providers argue that they do not offset the full cost of those works.
Anyone who undertakes a development may be charged these fees and, depending on the work, different charges apply.
Usually infrastructure charges apply to the following:
- Subdivisions (reconfiguring a lot)
- Material change of use (intensification of a use or start of a new use)
- Carrying out building work that generates extra demand on trunk infrastructure (i.e. water, sewerage, stormwater, roads, pathways etc).
Developers add infrastructure charges into their feasibility as part of the cost of doing the development. The charges can be thousands, or hundreds of thousands, of dollars depending on the size of the project. There are also credits that may apply based on an approved subdivision or past lawful land use(s) of a premises.
Infrastructure charges can only be levied for “trunk” infrastructure for five different categories being transport (i.e. roads), stormwater, community purposes (i.e. parkland, bikeways etc), sewer and water. The type and size/scale of infrastructure that is trunk infrastructure is specified by Local Governments in their Local Government Infrastructure Plan [LGIP] (see the fact sheet) and by water utility providers in their Water Netserv Plan.
Generally each council and water utility provider set out their fees in annual charges resolution(s) or their Water Netserv Plan that they make publicly available on their website. The State Government sets the maximum amount that can be charged for a type of development and the total maximum allowable to be levied is currently prescribed by schedule 16 of the Planning Regulation 2017. The charges may be indexed annually by both councils and water utility providers and apply for a financial year. The breakdown of the charges applied to development between council and the water utility provider is regulated. Many councils and water utility providers charge the maximum, whilst others charge less. The charges collected are invested in the local government area by the council based on the LGIP and water utility providers based on the Water Netserv Plan.
Developers can also be asked to pay for and build other assets, for example a new sewer main or provide land for trunk infrastructure requirements. If those works or land requirements are identified as ‘trunk infrastructure’ an offset (discount) may be available for the value of those works/land against any infrastructure charges levied. If other infrastructure conditioned to be built does not fall under the definition of trunk infrastructure (i.e. road widening, minor sewer extension) the costs are borne by the developer and no offsets are payable. Where a developer contends that development infrastructure actually performs a trunk infrastructure purpose, a conversion application can be brought and is assessed against criteria set out in the council’s charges resolution.
A current recurring issue is that the Planning Act 2016 in section 119 states that infrastructure charges may be levied if a development approval has been given. In the case where uses of land are accepted development (exempt) or accepted development subject to compliance with identified requirements (formerly self-assessable) but where a Building Approval is required, the developer is exposed to infrastructure charges being levied. A Building Approval is a development approval in its own right and each council appears to take varying approaches to this. Some councils are very clear that infrastructure charges will be levied on these types of development, which require only a Building Approval from a Private Certifier whilst others do not mention their policy at all.
If you are considering a development and want to understand what infrastructure charges may apply to your project you can email us at email@example.com or call 1300 017 540.
Disclaimer: While every effort has been made to provide accurate information, Consult Planning does not guarantee that this blog article is free from errors or omissions or is suitable for your intended use.
Thanks to Ciaran Houston from McInnes Wilson Lawyers for peer reviewing this blog article.
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