There are many questions surrounding infrastructure charges. Most commonly – what are they. This article will briefly summarise what infrastructure charges are, when they apply, and when do they need to be paid?
What are infrastructure charges?
Infrastructure charges are a fee that is levied (charged) by an infrastructure provided to recoup costs associated with an increased demand on the infrastructure network.
When we talk about “network” we refer broadly to sewer, stormwater, water, parks, and roads. These are all services that are provided by local governments and local providers including Unity water, Logan Water, Queensland Urban Utilities etc. Schools and hospitals are services provided by higher levels of government.
A simple explanation is given using an example of a subdivision. If you were subdividing one lot to create two lots, there is extra demand on the network. The reason there is an extra demand is because that extra lot could later contain a house. The residents of that house would require urban services. They will need water, connection to sewer, infrastructure to support appropriate redirection of stormwater, and a road network to get to and from the house. All these services are part of a larger network. While one house may not require a major upgrade of a road network, or new sewerage facilities, the introduction of one house on 50 lots in that local area may trigger requirements for upgrades. Therefore, to ensure that there is sufficient money to cater for these large infrastructure upgrades, a portion is allocated for the new lot.
When Council’s carry out their infrastructure planning they account for an anticipated growth or density. This flows down through the planning schemes to minimum lot sizes or maximum densities per hectare. It is how forward planning of upgrades can occur to ensure that the services can keep up.
Not all development will occur when it is expected to and this is the complexity of planning. There are mechanisms in place for required works to occur when they are required.
How much are infrastructure charges?
At the moment, that portion is about $28,000 per additional lot. Or, in the case of units or townhouses, it is calculated per additional unit. This means that even though your 1 into 2 lot subdivision results in 2 lots in total, you only need to pay infrastructure charges on the extra lot you create. The amount is usually split between the utility provider and Council based on the agreed percentages for services provided.
The infrastructure charge is in addition to the costs you or the developer may need to pay to connect each lot to required services (i.e. water or sewer connection). You need to account for this cost in your feasibility.
In some cases when major development occurs the developer will enter into an infrastructure agreement with the local government to construct the infrastructure required at the time an estate is developed. An infrastructure agreement is a legal document. It will outline the required services including pipe diameters, park and road sizes and the associated standards that need to be met as well as the costs associated with providing what is called “trunk” infrastructure. Trunk infrastructure is infrastructure that services the needs of a broader community, not just a particular development. In the case of major developments there can be some disagreement between the developer and Council on what is trunk, and what is just for that particular development.
When are infrastructure charges applicable?
Infrastructure charges are charged when a development increases the density on the site.
This means that if you are extending your house, you won’t have council issue a notice for infrastructure charges because the “demand” has not increased.
When do infrastructure charges need to be paid?
Infrastructure charges need to be paid when the subdivision is sealed, or in the case of units or townhouses, before the use commences. In some instances the infrastructure charge will be paid earlier, the reason for this is because the charges can increase each financial year.
How is the infrastructure charge set?
To ensure consistency across many different local government areas the State planning legislation sets a maximum rate allowed to be charged for infrastructure. Council’s can choose a lesser rate, however most impose the full amount in urban areas.