Cathy Law
22 August 2022, 1:18 AM
Property development in the Kiama LGA is about to get more expensive.
“We have found we have been significantly undercharging on our development contribution fees for a very long time,” says Kiama Council’s Jane Stroud.
The need for a review of developer contribution fees (Section 7.11 Contribution Plans) was identified in the State of the Organisation report and included in the Strategic Improvement Plan, after being asked for by councillors for a number of years.
The recently completed review has found that a wrong figure was being used in the calculation.
Rather than the actual rate for the Implicit Price Deflator (the predecessor of CPI) being used, only the rate of change has been put in the formula.
This means that since the calculation was first applied in 1993, developers of new estates, units, medium density, dual occupancy, secondary dwellings and tourist developments have been charged just a fraction of what they should have been per lot or new dwelling.
The capped maximum fee is now $20,000 and many recent contribution fees that should have been at that level have been charged at around $7,000/dwelling or lot.
An increase in fees was implemented immediately on discovery of the error, but it is not possible to get back the undercharged amount from past developments.
“It is very frustrating as councillors, including Andrew Sloan and I, have been querying whether it was high enough for a long time,” says Mayor Neil Reilly of the operational matter.
“When questions were asked we were told we were aligned with other councils.
“I don’t think the amount that has been foregone will ever be known, but it must be significant over close to 30 years.”
Ms Stroud says improved governance will mean that policy frameworks like these will be reviewed every year as a matter of course. The Municipal wide s7.11 plan was adopted in 1993, and was first amended in 2022.
The Plan is now being updated to bring it up to best practice, including bringing the CPI and updated population into the calculation as it is 22 years outside of its expected lifespan when was created in 1993.
Developer contributions are used to fund community infrastructure.