Embarking on a building or housing development project involves navigating various regulations and financial considerations. Among these include Section 94 Contributions. This fee, charged by governments for all building developments over a certain budget, is used to help cover the cost of upgrading or building the public infrastructure required for the development. This levy helps enhance the public-private partnership required for the regulated development of property.
Purpose of Section 94 Contributions:
Section 94 Contributions serve a dual purpose in the realm of development projects. Firstly, they contribute to the enhancement of local infrastructure, facilitating the growth and improvement of communities. Secondly, these contributions play a pivotal role in funding essential amenities and services, such as parks, roads, and community facilities that are usually funded by taxpayers – but will inevitably require maintenance and updating as more people use them. Developers’ financial contributions are instrumental in nurturing the social and physical aspects of the areas they are developing.
Determining Section 94 Contributions:
Understanding how Section 94 Contributions are calculated is crucial for developers. Different local councils may employ various methods and formulas to determine the contribution amount.
If the development costs $0-100,000, then there is no Section 94 levy payable. However, this increases to a 0.5% levy from $100-200,000 and a 1% levy on projects with a development cost greater than $200,000. This means addition to an existing property such as a granny flat will likely not require contributions, but a multi-unit dwelling will.
If the development costs are greater than $500,000, the developer may need to provide the local council with a cost report that has been completed by a registered quantity surveyor. By liaising with a cost-estimating expert, the council will be able to verify the accuracy of the report.
Infill Developments:
Infill projects, which repurpose existing urban spaces, often benefit from reduced infrastructure costs compared to greenfield developments. Existing utility connections can mitigate some expenses, although upgrades may be necessary. Transportation networks are already in place, lowering the need for entirely new roads. However, costs may arise for enhancing existing infrastructure. Environmental considerations, especially in brownfield sites, may lead to additional expenses for remediation. While land acquisition costs can be high due to the purchase of multiple smaller parcels, Section 94 contributions from developers and, in some cases, taxpayers, contribute to funding necessary upgrades and amenities in the existing urban fabric.
Greenfield Developments:
Greenfield developments, requiring entirely new infrastructure, incur substantial upfront costs. These include land preparation, grading, and clearing. Utility extensions are often necessary, involving the creation of water, sewage, and energy systems. Transportation planning is comprehensive, encompassing new roads and public transit systems. Environmental impact studies and mitigation measures add to initial expenses. While greenfield sites may offer larger parcels, the acquisition of undeveloped land is a significant upfront cost. Contributions from developers, and potentially taxpayers, play a vital role in funding the essential infrastructure required for these new developments.
Section 94 Contributions and Taxpayer Funds:
In infill projects, Section 94 contributions help cover the costs of upgrading existing infrastructure and adapting urban spaces. For greenfield developments, these contributions are crucial in funding the creation of entirely new infrastructure, from roads to utilities, which is considerably more expensive. Public/ taxpayer funds are usually allocated to support the initial costs of infrastructure development in greenfield areas. Therefore, Section 94 contributions create a public/private partnership in the funding of new developments and ensure the taxpayer doesn’t end up footing the bill entirely for expensive new infrastructure.
Developments exempt from paying Section 94 contributions
Some developments are exempt from being required to pay contributions – (if they have development costs greater than $100,000)
These can include developments:
- ‘ for the sole purpose of affordable housing’
- ‘for the purpose of disabled access’ (the costs associated with adding ramps and other accessibility infrastructure)
- ‘for the purpose of reducing the consumption of mains supplied potable water or reducing the energy consumption of a building.)
Quantity Surveyors and Section 94 Reports
While Section 94 contributions have benefits to the community, there is no point in letting them lead to withheld development due to tedious or incorrectly detailed Section 94 reports. Speak to an expert today to ensure correct and appropriate Section 94 contributions occur for any new projects in a timely manner. At Section 94, our team of highly qualified quantity surveyors can help organise all the required and recommended quantity surveyor reports for your development.
With over a decade of industry experience, our qualified building quantity surveyors are AIQS certified with a fast turnaround time and clear communication. Give us a call today at 0413 953 869 or email us at info@section94.com.au to discuss our quality budget services for residential and commercial builds.