As a property developer in Victoria you will likely be required to navigate the process of Development Contributions. To help you navigate this system, it is essential to have an understanding of what Development Contributions are, how they work, and how and when they will apply to you.
What are Development Contributions?
The term ‘Development Contributions’ refers to a system of levies that are applied by local and state governments to fund developments and improvements to community infrastructure. These levies contribute to the upgrade and maintenance of public facilities such as roads, water, and electrical supply.
The Planning and Environment Act outlines that Development Contributions are obtained via the processes of planning scheme amendments, planning permits and/or building permits.
The Act states that the principal objective of Development Contributions is to ‘protect public utilities and other assets and enable orderly provision and coordination of public utilities and other facilities for the benefit of the community.’
Development Contributions and the plans for their implementation are generally managed entirely by councils. These plans aim to provide a strategy for the development and maintenance of public infrastructure and resources.
Development Contributions are particularly important in cities, where upgrades to infrastructure are required more often due to the pace of urban development.
How do they work?
To achieve the stated goals of Development Contributions, councils apply levies to a development project, by attaching a Development Contributions Plan (DCP) to a planning scheme.
Planning authorities are responsible for creating DCPs. These authorities can either be a designated council or private agencies with permission from the Minister for Planning. Typically, the Minister of Planning is responsible for approving the DCP through an application for a planning scheme amendment.
Generally, DCPs will outline what infrastructure is required and will identify the area that the infrastructure will be required to serve.
In 2018, the Development Contribution process was amended to make it more streamlined and flexible. The amendments included the removal of fixed levy amounts for certain development projects, to limit the frequency where the amount of the Development Contribution levied exceeded the costs of providing the infrastructure required under the DCP.
The amended system also introduced a land contribution model that facilitates the acquisition of private land for public use and development. With this change, landowners are able to contribute parcels of land toward their required Development Contributions.
When do they apply?
DCPs are usually applied to areas that are likely to experience high levels of land development in the near future. The amount of the levies to be imposed under the DCP will differ depending on the area being developed.
Generally, a Development Contribution will only be imposed on a new development. However, Development Contributions cannot be levied on certain types of new development.
The types of developments that are exempt from Development Contributions include, but are not limited to:
- developments on Commonwealth land;
- developments being conducted by the Commonwealth government;
- developments relating to the expansion of infrastructure relating to the Ministries of Conservation, Forests, Lands, or Health and Education; and
- public and government-owned facilities such as schools and hospitals.
Additionally, some developments may also be considered for exemption from a DCP on the grounds that they provide a community service. Examples can include churches, private hospitals and schools, and community facilities run by non-profit groups.
Councils also have the power to exempt a developer from a Development Contribution if that developer can show that they are experiencing difficulties.
All property developers should be aware of Developments Contributions, how they work, and when they need to be paid.
Freya Southwell is a property lawyer who assists clients with property development.
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