This page covers basic information and Frequently Asked Questions related to Developer Contributions in NSW.
The information provided here is generic and does not cover the many nuances that exist within this field. For specific advice relevant to your situation, you reach us using the Contact page.
Q: What are development contributions ?
Development contributions are payments made by developers to local councils, or the state government, to help fund the cost of new infrastructure and services that are required as a result of new developments. This can include things like roads, footpaths, parks, community facilities, and drainage systems. The contributions are calculated based on the number of new people the development is expected to bring, or the total value of new development.
Q: How are development contributions calculated in New South Wales?
In New South Wales, developer contributions are calculated under Section 7.11 or Section 7.12 of the Environmental Planning and Assessment Act 1979. Section 7.11 contributions are calculated by dividing the total cost of new infrastructure and services that are required as a result of new developments by the number of new people the development is expected to bring. This is based on the principle of proportionate share (apportionment), which means that new developments should pay for the additional infrastructure and services required to support the additional population that the development brings.
Section 7.12 contributions are calculated as a percentage of the value of the new development. It's important to note that the regulations and procedures for the calculation, levy, and administration of developer contributions under Section 7.11 and Section 7.12 can vary from council to council and are subject to change, so it is always best to consult with the local council or a professional to obtain up-to-date and specific information.
Q: What types of infrastructure and services are typically funded by development contributions?
Development contributions are typically used to fund local infrastructure and services such as roads, footpaths, parks, community facilities, and drainage systems. However, developer contributions payable to the state government can also be used to fund regional infrastructure and services such as public transport, regional sports facilities, and regional open spaces.
Q: Are there any ways to offset development contributions?
Yes, there are ways to offset development contributions. Generally the monetary development contributions liability that is incurred by a development can only be offset if the developer can either build infrastructure item that the government is seeking to build, or provide another community benefit that is acceptable to the government. Some examples of applicable community benefits are development of affordable housing, public art installations, environmental or sustainability initiatives, provision of a higher level of infrastructure than that is planned by the government.
Q: What is a Voluntary Planning Agreement (VPA)?
A Voluntary Planning Agreement (VPA) is a legal agreement between a developer and a local council that can be used to offset the cost of developer contributions. It's a way for developers to provide infrastructure or services that are required as a result of new developments, but that may not be directly related to the development. This can include things like affordable housing, public art installations, environmental, provision of a higher level of infrastructure or sustainability initiatives, or heritage conservation. A VPA is voluntary, meaning that a developer can choose to enter into one or not, and is negotiated between the developer and the local council.
Q: What is a WIKA (Works in Kind Agreement)?
A Works in Kind Agreement (WIKA) is a legal agreement between a developer and a local council that allows the developer to provide infrastructure or services that are required as a result of a new development, in-kind rather than in cash. This means that instead of paying monetary contributions, the developer will provide and construct the infrastructure or services themselves. This can include things like roads, footpaths, parks, community facilities, and drainage systems. A WIKA is negotiated between the developer and the local council and it is subject to the council's approval.
Q: What are surplus credits?
Surplus credits refer to the situation where a developer has paid more in developer contributions than is required to fund the specific infrastructure or services that are associated with their development. This can happen when the cost of the infrastructure being provided in kind is more than the contributions obligation. In these cases, the local council may choose to offer the developer surplus credits, which can be used to offset future developer contributions that are required for other developments.
For example, if a developer pays $100,000 in developer contributions (in cash, or in kind) for a specific development, but the contributions obligations is only $80,000, the developer would be credited with $20,000 in surplus credits. The developer can then use these credits to offset future developer contributions that are required for other developments.
Surplus credits are an incentive for developers to contribute more than required and can be used as a mechanism to reduce developer contributions costs in the future. However, not all councils implement this system, so it's best to check with the local council if this type of mechanism is in place.
Q: What is the S7.11 contributions cap?
The S7.11 contributions cap is the maximum amount of developer contributions that can be levied by a local council under Section 7.11 of the Environmental Planning and Assessment Act 1979. In New South Wales, the cap is set by the state government and it is subject to change over time. The current S7.11 contributions cap is $30,000 per lot in greenfield areas and $20,000 per lot elsewhere. Contributions Plans can charge contributions higher than the cap if they are reviewed by IPART. The contributions cap is meant to provide certainty for developers and to ensure that the costs of development are reasonable. It's important to note that these caps are subject to change and it's always best to consult with the local council or a professional to obtain up-to-date and specific information.
Q: What is indexation of development contributions?
Indexation of development contributions is the process of adjusting the developer contributions to reflect changes in the cost of living over time. This is done to ensure that the contributions remain fair and reasonable, and that the council has sufficient funding to pay for the infrastructure and services that are required as a result of new developments. Indexation is typically based on an inflation index, such as the Consumer Price Index (CPI) or a Producer Price Index (PPI) published by the Australian Bureau of Statistics (ABS). This means that the developer contributions will be adjusted periodically to reflect changes in the cost of living.
Q: What is the role of IPART (Independent Pricing and Regulatory Tribunal) in relation to developer contributions in New South Wales?
The Independent Pricing and Regulatory Tribunal (IPART) plays a regulatory role in relation to developer contributions in New South Wales. IPART is an independent statutory body that provides advice and makes recommendations to the government on a wide range of economic and social regulation issues, including developer contributions. IPART is responsible for setting the contributions cap for Section 7.11 contributions, determining the essential infrastructure that can be funded by developer contributions, and reviewing and approving local council's contribution plans that charge S7.11 contributions over the contributions cap. IPART also conducts regular reviews of the developer contributions system to ensure that it is fair, efficient, and effective in meeting the infrastructure needs of the state. IPART's role is to ensure that the developer contributions system is transparent and fair for all stakeholders, including developers, local councils, and the community.
Q: Which items are considered essential infrastructure by IPART?
In New South Wales, IPART (Independent Pricing and Regulatory Tribunal) considers the following items as essential infrastructure that can be funded by developer contributions:
Development contributions are payments made by developers to local councils, or the state government, to help fund the cost of new infrastructure and services that are required as a result of new developments. This can include things like roads, footpaths, parks, community facilities, and drainage systems. The contributions are calculated based on the number of new people the development is expected to bring, or the total value of new development.
Q: How are development contributions calculated in New South Wales?
In New South Wales, developer contributions are calculated under Section 7.11 or Section 7.12 of the Environmental Planning and Assessment Act 1979. Section 7.11 contributions are calculated by dividing the total cost of new infrastructure and services that are required as a result of new developments by the number of new people the development is expected to bring. This is based on the principle of proportionate share (apportionment), which means that new developments should pay for the additional infrastructure and services required to support the additional population that the development brings.
Section 7.12 contributions are calculated as a percentage of the value of the new development. It's important to note that the regulations and procedures for the calculation, levy, and administration of developer contributions under Section 7.11 and Section 7.12 can vary from council to council and are subject to change, so it is always best to consult with the local council or a professional to obtain up-to-date and specific information.
Q: What types of infrastructure and services are typically funded by development contributions?
Development contributions are typically used to fund local infrastructure and services such as roads, footpaths, parks, community facilities, and drainage systems. However, developer contributions payable to the state government can also be used to fund regional infrastructure and services such as public transport, regional sports facilities, and regional open spaces.
Q: Are there any ways to offset development contributions?
Yes, there are ways to offset development contributions. Generally the monetary development contributions liability that is incurred by a development can only be offset if the developer can either build infrastructure item that the government is seeking to build, or provide another community benefit that is acceptable to the government. Some examples of applicable community benefits are development of affordable housing, public art installations, environmental or sustainability initiatives, provision of a higher level of infrastructure than that is planned by the government.
Q: What is a Voluntary Planning Agreement (VPA)?
A Voluntary Planning Agreement (VPA) is a legal agreement between a developer and a local council that can be used to offset the cost of developer contributions. It's a way for developers to provide infrastructure or services that are required as a result of new developments, but that may not be directly related to the development. This can include things like affordable housing, public art installations, environmental, provision of a higher level of infrastructure or sustainability initiatives, or heritage conservation. A VPA is voluntary, meaning that a developer can choose to enter into one or not, and is negotiated between the developer and the local council.
Q: What is a WIKA (Works in Kind Agreement)?
A Works in Kind Agreement (WIKA) is a legal agreement between a developer and a local council that allows the developer to provide infrastructure or services that are required as a result of a new development, in-kind rather than in cash. This means that instead of paying monetary contributions, the developer will provide and construct the infrastructure or services themselves. This can include things like roads, footpaths, parks, community facilities, and drainage systems. A WIKA is negotiated between the developer and the local council and it is subject to the council's approval.
Q: What are surplus credits?
Surplus credits refer to the situation where a developer has paid more in developer contributions than is required to fund the specific infrastructure or services that are associated with their development. This can happen when the cost of the infrastructure being provided in kind is more than the contributions obligation. In these cases, the local council may choose to offer the developer surplus credits, which can be used to offset future developer contributions that are required for other developments.
For example, if a developer pays $100,000 in developer contributions (in cash, or in kind) for a specific development, but the contributions obligations is only $80,000, the developer would be credited with $20,000 in surplus credits. The developer can then use these credits to offset future developer contributions that are required for other developments.
Surplus credits are an incentive for developers to contribute more than required and can be used as a mechanism to reduce developer contributions costs in the future. However, not all councils implement this system, so it's best to check with the local council if this type of mechanism is in place.
Q: What is the S7.11 contributions cap?
The S7.11 contributions cap is the maximum amount of developer contributions that can be levied by a local council under Section 7.11 of the Environmental Planning and Assessment Act 1979. In New South Wales, the cap is set by the state government and it is subject to change over time. The current S7.11 contributions cap is $30,000 per lot in greenfield areas and $20,000 per lot elsewhere. Contributions Plans can charge contributions higher than the cap if they are reviewed by IPART. The contributions cap is meant to provide certainty for developers and to ensure that the costs of development are reasonable. It's important to note that these caps are subject to change and it's always best to consult with the local council or a professional to obtain up-to-date and specific information.
Q: What is indexation of development contributions?
Indexation of development contributions is the process of adjusting the developer contributions to reflect changes in the cost of living over time. This is done to ensure that the contributions remain fair and reasonable, and that the council has sufficient funding to pay for the infrastructure and services that are required as a result of new developments. Indexation is typically based on an inflation index, such as the Consumer Price Index (CPI) or a Producer Price Index (PPI) published by the Australian Bureau of Statistics (ABS). This means that the developer contributions will be adjusted periodically to reflect changes in the cost of living.
Q: What is the role of IPART (Independent Pricing and Regulatory Tribunal) in relation to developer contributions in New South Wales?
The Independent Pricing and Regulatory Tribunal (IPART) plays a regulatory role in relation to developer contributions in New South Wales. IPART is an independent statutory body that provides advice and makes recommendations to the government on a wide range of economic and social regulation issues, including developer contributions. IPART is responsible for setting the contributions cap for Section 7.11 contributions, determining the essential infrastructure that can be funded by developer contributions, and reviewing and approving local council's contribution plans that charge S7.11 contributions over the contributions cap. IPART also conducts regular reviews of the developer contributions system to ensure that it is fair, efficient, and effective in meeting the infrastructure needs of the state. IPART's role is to ensure that the developer contributions system is transparent and fair for all stakeholders, including developers, local councils, and the community.
Q: Which items are considered essential infrastructure by IPART?
In New South Wales, IPART (Independent Pricing and Regulatory Tribunal) considers the following items as essential infrastructure that can be funded by developer contributions:
- land for community facilities, such as schools, libraries, parks
- base level embellishment of open spaces
- Traffic and Transport Infrastructure
- Stormwater drainage infrastructure
The information provided on this FAQ page is for general informational purposes only and should not be taken as specific advice for your project. The information provided here may not be up-to-date and may be subject to change over time. It's important to consult with the local council or NXS Planning to obtain the most accurate and up-to-date information regarding development contributions in New South Wales. NXS Planning cannot be held liable for any errors or omissions in the information provided on this FAQ page.