Johnny’s always running around, trying to find certainty. The above words form the introductory lyric to the Robert Palmer song Johnny and Mary, which many will remember. We raise them because we thought it might be interesting to consider local government charges in relation to development to provide, if not certainty, at least some clarity about the process.
The words seem relevant because, for developers, clarity provides a handle on the costs for a proposed development and, therefore, whether it is viable in the prevailing market conditions. In other words: Some degree of certainty about what is or is not possible.
Councils have formulas for ascertaining infrastructure charges. The documentation generally runs to many pages and setting them out in detail in a blog such as this is not possible.
What this blog endeavours to do is provide an overview of the charges that apply and the reasons why they can vary greatly within any particular local government area. Also, it must be borne in mind that, while formulas are in place, nothing is set in concrete. Infrastructure charges tend to change in response to market conditions.
Why Infrastructure Charges change
A classic example of how things can change is the reduction of the housing infrastructure charge introduced by Gold Coast City Council following the advent of the global financial crisis. It was slashed by 50% from $28,000 to $14,000.
Infrastructure Charges to be aware of
The housing infrastructure charge mentioned above has long since been raised and, a short while ago, was returned from $27,000 to $28,000, the maximum fee per dwelling allowed by the State Government.The fee per dwelling is not the sole charge levied on housing developments.
There is a per-lot subdivision fee payable on lodgement of application, a charge for sealing the subdivision plan, and various others, some of which can be flat fees, payable at time of application for operational works, such as civil works, site-clearing, tree-clearing, adding landfill, and landscaping, etc.
Charges for trunk infrastructure – water, sewerage, stormwater and movement network systems – will depend on whether land earmarked for development is in an area:
- Where such networks are in place;
- Where such networks are planned;
- Where there is no plan to provide such network;
- And distance from treatment and storage facilities, or existing infrastructure to which new infrastructure can be connected.
Thus, per-home water supply charges set by the Logan council can range from $1,355 to $6,798, depending on the type of accommodation, whether or not such a network is earmarked for the area where a developer plans to undertake a project, and distance from storage facilities or an infrastructure reticulation system.
Sewerage network charges for residential projects can step from $4,804 to $14,403 per home. For a hotel, the per-suite cost can rise as high as $16,177. Stormwater network costs per dwelling can range from $1,012 to $8,014. Community facility fees can run from $566 to $7,465. Movement network charges can jump from $2,010 to $21,946. A movement network encompasses roads, footpaths or sidewalks, cycle paths and public transport routes.
Generally, in the case of residential projects, more than 50% of the cost is council charges.
How infrastructure charges vary across South East Queensland
And, developers say, there is generally little difference in costs applied across south-east Queensland’s major growth areas of Brisbane, Logan, Ipswich, Gold Coast, Sunshine Coast and Scenic Rim.
Charges are regulated by the state government. Councils have the option of charging less, but not more than the maximum fees set by the government, and few choose to apply fees substantially below the permissible maximum.
In relation to commercial and industrial development, council charges constitute a significantly lower percentage of total cost and many fees are based on square-metre rates.
Again, using Logan council as an example, trunk infrastructure charges for reconfiguring a lot in a non-residential zone range from $21.75 to $30 per square metre of the lot. The applicable trunk infrastructure figure embraces water, sewerage, stormwater and movement network costs. Community facility charges do not apply.
Trunk infrastructure charges for non-residential development run from $59.85/sq m to $200/sq m. Fees for commercial and industrial buildings may take account of height and usage, as well as the two-dimensional square-metre area.
Clearly, in setting fees, local authorities must have regard to the infrastructure either in place or absent from the area for which a development is proposed.
Formulas are an important tool to enable developers to assess a project’s viability and Logan council is leading the way in making early assessment simple. It has developed an online app that provides an inquirer with a prompt response by answering a few questions. It is to be hoped that such an app will swiftly become more widely available.
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