NSW councils: changes to developer donations will delay investment in public infrastructure

NSW Government changes to the rules around developer contributions to councils announced today could impact local communities, delaying essential local infrastructure needed for coping with increased demands from big new developments by up to two years.

Local Government NSW (LGNSW) President Linda Scott said while she was pleased Government had listened to councils before announcing today’s changes, new deferral of developer contribution payments puts councils under funding pressure and community infrastructure under threat.

“Developer contributions go towards critical infrastructure such as new footpaths, roads, parks and playgrounds that are needed when new developments bring additional people to live in local communities,” Cr Scott said.

“These new rules defer payment of developer contributions to much later in the development process. That means existing communities will potentially have to carry the burden of paying for the infrastructure costs to support new developments until the payments are made.

“In one local government area, these new rules will result in a delay of up to two years for around $13 million of anticipated developer contribution payments. This means a new park, sporting field or other essential community benefit for the public good is also delayed.”

Under the new rules, developers that previously paid contributions when seeking construction approvals could now delay their payments until years down the track when the occupation certificate is issued.

The NSW Government made the rule changes to support developments that could create employment in a COVID-19 impacted economy.

“Councils already have the power to be flexible about the timing of developer contribution payments, and they make these decisions locally, in the public interest, balancing the needs of economic investment in an area with wider public benefit for existing communities,” Cr Scott said.

“Local governments appreciate the Government’s efforts to ensure economic development in NSW in this time of crisis, and we have all worked closely with State Government in response to the pandemic.

“We also appreciate the NSW Government has listened to some of our concerns. The new rules around deferred payments are limited to large developments valued at $10 million or more.

“And importantly, the new rules ensure that a certificate of payment provided by council or State Government must be produced before building certifiers sign off on occupancy approvals.

“This is critical because it becomes much harder to get payment once people move into developments. Without this important requirement, there’s potential for local communities to miss out on hundreds of thousands of dollars owed by developers.

“This power should be extended to invalidate occupation certificates if contributions are not paid. NSW communities cannot afford to miss out on the public benefits associated with any development.”

Cr Scott said LGNSW also welcomed the State Government’s commitment to continue to work with LGNSW and councils on developer contributions and other planning issues to attain the best possible outcomes for NSW communities.

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