Developer Contribution Scheme - Frequently Asked Questions
What are developer contribution arrangements?
In certain areas, local governments (City of Wanneroo) use developer contribution arrangements to collect money to pay for new infrastructure. The State Government provides the legal framework for the administration of these developer contribution arrangements, which enables local governments to manage the arrangements.
Developing landowners are responsible for the provision of basic infrastructure, including water supply, sewerage and drainage, roads and power; as well as community infrastructure such as parks and primary school sites which will be needed by future communities. For each lot that is created, a contribution is made by the developing landowner to the local government, which is placed in a reserve account and then used to buy land and build the infrastructure. When areas are fully developed, any excess funds that have been collected are returned to the developers who contributed.
State Government policies are very specific regarding how these developer contributions are administered and what the funds can be used for. In line with these requirements, contributions in the City of Wanneroo are collected only for the specific works listed in the City's planning scheme, ensuring charges are fair and that the funds are only used for the purposes they were collected for.
Which areas in the City are covered by developer contribution arrangements?
Developer contribution arrangements are in place for developing East Wanneroo areas (i.e. East Wanneroo 'Cells'), covering Wanneroo, Ashby, Tapping, Hocking, Pearsall, Landsdale, Darch, Madeley and Wangara. These relate mainly to physical infrastructure such as roads and parks.
Developer contribution arrangements are also applicable for developing areas in Alkimos, Eglinton, Yanchep and Two Rocks, and these relate to the provision of community infrastructure such as surf lifesaving clubs, community halls and sport facilities (not roads and parks). These arrangements are managed by a new State Government policy and the City is fully compliant in relation to these.
Why is it necessary to have developer contribution arrangements in place?
Developer contributions arrangements are usually required in areas where there are a significant number of landowners, where one landowner cannot build all the necessary infrastructure to support these new communities. Developer contributions are needed to facilitate the provision of infrastructure such as major roads and parks in developing areas that new communities need.
These arrangements are administered by the City on behalf of the landowners, to enable them to develop their land more easily, and to coordinate the provision of the infrastructure in a timely manner.
Has the City collected more funds in East Wanneroo Cell 1 than what is necessary, and if so why?
Yes. The City has collected additional funds in some of Cell 1, to ensure that there is sufficient money available to fund the necessary roads and parks. It also protects general ratepayers from having to pay for infrastructure associated with new development that they will not benefit from.
The formula in the City's planning scheme for the collection of contributions is relatively conservative. This formula was developed in consultation with the affected landowners and approved by the State Government when the arrangements were put in place, and the actual amount of funds collected depends on how many lots are created in a particular area.
Due to the development of smaller sized lots by the market and therefore more lots created than originally anticipated, as well as interest generated from the money collected, a greater amount of contributions has been received by the City over the years. Any surplus money from the arrangement will be returned to the contributing developers at the end of the development.
Has the City 'mismanaged' developer contribution funds?
No. The City's Planning Scheme sets out the specific infrastructure that developer contribution funds must be used for and the funds have been used for the specific types of infrastructure (e.g. major roads and public open space) as listed in the planning scheme.
All funds collected have been held in secure reserve accounts by the City, which have been externally audited on an annual basis as required by the Local Government Act 1995.
The City is not obligated to return any funds until a developing area (Cell) is fully developed.
Do developer contributions increase the cost of land?
No. The Public Accounts Committee of the Western Australian Parliament thoroughly investigated developer contributions in 2004 and found no evidence of costs being passed on to 'end' purchaser. Instead, the Committee found that:
- The assumption that developer contributions are automatically passed on to the end-purchaser of a developed lot is incorrect. Instead, increases in the development costs tend to reduce the value of undeveloped land.
- The retail price of land essentially depends on the ability and willingness of consumers to pay, indicating that market demand and supply are more important considerations than land development costs.
What is the City doing in relation to the additional funds collected?
The City is not obligated to return any funds until a Cell area is fully developed, however City staff are working with developers to consider partial early release of funds in Cell 1.
Will the return of excess funds to developers in DCP areas affect council Rates?
No. Contribution scheme funds are paid by developers to specifically complete infrastructure associated with the development and subdivision of their land. These funds are held by the City in a restricted reserve account and cannot be utilised for any other purpose (unless defined in the local planning scheme). Therefore DCPs do not affect Rates.
Has the City 'mismanaged' developer contribution funds?
No. The City's Planning Scheme specifies the infrastructure for which the developer contribution funds must be used (e.g. major roads and public open space).
Since being collected, all funds have been held in secure reserve accounts by the City, which have been externally audited on an annual basis as required by the Local Government Act 1995. The City is not obligated to return funds to developers until an area (Cell) has been fully developed.