Scottish Government

Not a plan led system; often not specific; therefore much discretion in dc system; on appeal (available also to third parties) Board not bound by development plan; development can be refused if it materially contravenes the development plan but a procedure allows for a contravention where it is willing to facilitate development (advertisement/.public participation; .2/3 majority of Council resolution)

Planning conditions can be applied requiring developer contributions or applications can be refused due to lack of infrastructure or capacity in networks.. Therefore classic negotiating scenario.; no active land management by public sector. System reactive and discretionary
Under LG, P & Devt. Act 1963 LPAs could impose conditions requiring contributions; under new Plg. & Devt. Act 2000, Councils must finalise contributions schemes by 10 March 2004 after which the 1963 powers lapse. New regime allows 3 categories of charges :

• General , towards council infrastructure and charges ( DCs) ie. Total costs of providing services in a given area divided by the amount of land allocated for development to give a price per acre or floorspace ie. Reflective of the cost of servicing all development land irrespective of land use.
• Special charges specific to allow a particular development to go ahead ( SCs)
• Supplementary development contributions for infrastructure provided through PPPs ( SDCs)eg Dublin light rail system

Power to impose remains discretionary. LAs often chose to apply "offsets where a full contribution is not imposed taking into account the works to be actually undertaken by the developer . Where the developer is providing more than can be reasonably attributed to his particular development this can be offset against the applicable DC .rate in an individual case.

DCs & SDCs not refundable; Unspent SCs refundable if unspent after 5/7 years
Construction Industry Federation has failed in its High Court challenge of Dublin City Council's scheme on the grounds of lack of specificity.

Draft schemes must be subject of public consultation and Minister who can issue guidelines to the Council. But has no power to control levels set by Councils.

Appeals are not permitted against conditions on pps requiring contributions in accordance with scheme levels but can where it is considered that the terms of the scheme have not been properly applied.

Contributions can relate to public infrastructure or facilities in the area that benefit development in the area irrespective of the source of that funding

See example of Dunlin's scheme and Secs. 47 & 48 of the 2000 Act.

Historically land acquired by the municipality , serviced with infrastructure (financed by loans), added in costs relating to off site infrastructure, borrowing costs, plan making &supervisory costs. Income from sale of land for public and commercial services eg schools, doctors surgeries, shops. Remaining costs recouped from sqale of land for private and social housing ; on and off site public facilities costs would be passed on to the users ie the purchasers of the housing vie land pricing. Any deficit incurred in the land disposal process would be covered by local or central government subsidy.
Recently however commercial developers have bypassed this process and bought unserviced land intended for development direct, often at many times real value . Municipalities unable to use original mechanism to recoup costs of providing public facilities. Local land use planning binding ( bestemmingsplan) and provides no legal mechanism for negotiating contributions. A financial statement accompanies all land use plans but not explicitly required by legislation. However research into the financial feasibility of the plan must be attached as guidance notes but these are not legally binding. Used by central government in consideration of subsidies. Target isd to set out a balance sheet of income and expenditure to show a "balanced budget".

The situation now appears to be that market mechanisms take over and the costs of providing public infrastructure is argued out between the various "actors" in the market and reflected in surplus profits above normal profits and ultimately the cost of the original unserviced land. Therefore if a municipality wishes to acquire a slice of the surplus profits accruing to any of the actors at various stages in the development process it has to get in early to negotiate this because it cannot impose mandatory contributions at a later stage. What are the possibl4e remedies

• Create legal powers so that it is clear that one or more of the actors will have to contribute to the public facilities viz. intro. of obligatory impact fees with amounts to be paid known and shared at the outset;
• Not to make the land use plan legally binding before agreements with all parties have been signed;
• Convince all actors in the early stages that it is in their interests to work closely and openly with the municipality with objectives of increasing the quality of the development whilst keeping infrastructure costs to a minimum.

In a centralised policy making system TCPA 1967> 2 tier system : Structure Plan and Local Zoning Plan (Plan d'Occupation des Sol)

POS is strictly legally binding; therefore automatic impact on land values. Therefore preference for preset fiscal devices instead of negotiated fees. Local development tax ( TLE) introduced in 1967. Lump some paid by developer to the municipality equivalent to 1% of a lump sum value of the building(s) to be built. Known from the outset.

This applied till late 70's/80's.local government decentralised; deregulation> more flexibility in zoning regulations >joint negotiations and planning gain.; municipality can change the detail of a POS quickly; state found it difficult to control local practices. Sometimes corruption at the local level occurred. New legislation in 1993 intended to limit the scope of impact fees by requiring that the authority could not require the developer to pay more for infrastructure costs over and above the cost related to the benefit to be derived from the users of the building(s). i.e.rational nexus principle

4 different ways for infrastructure to be funded under the above arrangements :

1. Simple Building Permit : Local development tax (Tax Locale d'Equipement or TLE)payable by a developer for the provision of local infrastructure whenever a permit de construire is granted. Prescribed formula (for 9 building types) relates to new floor area; scales reassessed every year by national government in relation to index of national construction costs; 1% minimum national rate can be varied upwards to 5% by municipality; rate in any one municipality must remain unchanged for 3 years; funds gathered used to provide public facilities and not necessarily ones connected to the development concerned. Revenue however will only cover about 10-20% of actual required expenditure on public facilities. Consequently municipality required to pay proportionately more for facilities in rural areas.

Land Development Act 1985 introduce power to pass on to developers the real infrastructure costs needed by a development in a predetermined area as an alternative to the TLE. Costs levied cannot exceed 100% of real costs overall. Therefore municipality must calculate the nature of public facilities required in the designated area . Public's and developers' shares are calculated the latter related to the various building types. These exactions ( Programmes d'amanagement d'ensemble or PAE) can be in kind or monetary. If monetary and the authority does not carry out the works on schedule claims for reimbursement can be made. Time schedule for building facilities decided when PAE is approved. Therefore authorities forced to think ahead . This system most suited to major cities with a predictable rate of development pressure. Dependant on adoption of a comprehensive development planning arrangement and implemented within a reasonable timescale. TLE more appropriate for mall developments with a more limited impact or in rural areas.

2. Subdivision ( Lotissement) : Subdivision of land into parcels by developer, provides infrastructure, sells lots to purchasers who then obtain their building permits. The developer makes an advance payment to the municipality an amount equivalent to the TLE and recoups from sale to purchasers of the lots. Therefore no element of negotiation except where the POS requires modification as a result of the subdivision proposals which require approval.

3. Reallotment and Development Associations of Landowners or AFU (Associations Foncieres Urbanes) : Development of an entire area is initiated, planned, zoned, funded, managed and developed by the landowners themselves as an ad hoc body acting as a public agency. Usually happens where there are reluctant landowners with the association having powers of expropriation; costs apportioned among members; land when serviced can be developed by the landowners themselves or sold on to other developers; limited application because of problems with reluctant landowners and the reticence of the authorities to accepting "private planning arrangements" in areas where a local plan may not exist.

4. Zone d'Amenagement Concerte ( ZAC) : Comprehensive development scheme for major projects; mixed land uses; features of the development are negotiated between the developer and the public authority at the same time as the sharing of infrastructure costs is negotiated ; typically result from a major public sector initiative; LA designates the area and designates the developer which can be a public agency; 2 stages: the authorisation of the ZAC and then the negotiation of the development plan and the apportionment of infrastructure costs; replaces TLE in the designated area . Criticised for involving trade off between planning needs and the development rights won by developers in negotiation ie through process of rezoning and in relation to the facilities which the public authority wish to have provided and for under-assessing the infrastructure requirements Most popular in high growth high market situations when economy booming.

According to the Baugesetzbuch physical development of building land is the responsibility of the municipality. Individual developments cannot be begun until infrastructure has been provided. Mostly this has to happen in accordance with a secured Bebauungsplan (statutory local plan). Planning law generally removes from a development area that proportion given over to public spaces including streets. The proportion of payments for infrastructure is calculated on the basis of "appropriateness" and local circumstances. Maximum payment for infrastructure (Erschliessungsbeitrag or local fee for infrastructure development ) payable is calculated on the basis of "appropriateness and local circumstances. Normally a municipality will cover a minimum of 10%. The municipality can vary the % level of fees. Municipality determines which of 3 methods of calculation should apply :

a) by intensity of land use
b) size of plot
c) breadth of plot along the street

Payment is normally made after development complete but can happen once construction has started. Viewed as a kind of betterment levy or exaction. The recent amendment in the law has focussed attention on "town planning contracts" relating to public/private development partnerships. Based on this investors may agree to pay 100% of infrastructure costs and needed public facilities in accordance with the development. The calculation of the costs are made on the basis of "appropriateness" and local circumstances.

Development Impact Fees

• local authority draws up schedule of fees that developers must pay prior to getting zoning approval or building permits. (unit or floorspace based)
• developer has option of undertaking works or paying the fee
• principle accepted in Courts as reasonable extension of planning control

Rational nexus test operates in USA

• Courts need to be satisfied that there is a clear relationship between the facility and the development but degree varies from state to state eg Illinois "specifically and uniquely attributable" or California "reasonable relationship".
• There must be a proper development plan in place
• LA must have a definitive capital works plan to which contributions can relate
• There must be published standards of infrastructure provision.
• Must be applied rationally, reasonably and consistently
• It enables the developer to work out likely financial impacts at earliest possible stage viz. land price paid/house price asked for.

Delafons argues that UK system will have to move in the direction of the American system to become less arbitrary and more effective.

American system also allows for

a) negotiated agreements to a variance of a zoning map amendment

b) developers offering higher levels of contribution in exchange for permissions!

This has led to accusations of maladministration and to innovative thinking on issues of public scrutiny etc.

System of land use planning well established in Australia after the War; hybrid of UK and American systems. In NSW the Environmental Planning Assessment Act `1979 has been influential. Prescribed developer charges for minor infrastructure works.

Developer charges in NSW grew out of the pressure to release land from the Sydney Greenbelt in the 1960s when public demanded that developers pay for infrastructure costs. Now

• all on site works are designed, constructed and financed by developers
• amplification of physical infrastructure to the site is financed and often constructed by developers
• on site neighbourhood and social infrastructure (eg community facilities) are provided for or constructed by developers
• Developers make contributions to offsite facilities eg. Libraries
• water, habitat etc. issues addressed during construction
• affordable housing is included

In Aus. few states employ negotiated zoning or tradable development rights to obtain contributions.
A betterment levy was introduced during property boom of 70's but later removed.

EPA Act enabled local government to impose developer charges especially for affordable housing as powers already in place for obtaining contributions to off site roads upgrades. A nexus had to be established between the development and the charges imposed. Act specifically allowed for charges to be obtained for community facilities and open spaces. Charges can range from 35-55,000 Aus D. per residential plot ranging in size from 300-700 sq. metres.

Charges were often levied in advance and held "in trust" by the authority for later use. But councils often slow to use it > criticism. Interest on the banked charges could "leak out". Councils often did not impose high enough charges to offset anticipated outlays…because

a) actual nos. of plots smaller than originally anticipated;
b) infrastructure requirements could change over time;
c) infrastructure etc. costs could rise over time

Led to the Simpson Inquiry 1989. The Simpson Report

• confirmed the nexus principle
• argued against caps to charges
• suggested that other agencies could levy S.94 ( EPAA)
• social housing provision could be linked to density criterion

Consequently, legislation required Councils prepare plans for new release areas and for others that set a works programme for infrastructure for which Sec. 94 charges were applicable; Councils therefore had to estimate the rate of development in a subject area, the level of services required, the cost and timing of the delivery of services and from this develop a schedule of Sec. 94 income. Difficulties occurred with skills and the obtaining of accurate information. The nexus principle reinforced the prescriptive element of the developer charges. Court cases confirmed the principle that a Sec 94 charge could not be levied unless the service it was meant to fund was a direct outcome of the development and were not an unreasonable imposition on private property rights.

N.Z. local authorities are required to promote the sustainable development of their communities in a fiscally prudent and accountable manner. Justification for funding decisions is required on the basis of outcomes achieved and an appropriate distribution of costs and benefits. Developer contributions provisions contained in the Resource Management Act 1991 to supplement the provision of local infrastructure historically provided for by local rates. However rights of appeal (2) have limited effectiveness; Local Government Act 2002 provides local government's operational framework and provisions for contributions. Developer contributions can be obtained where the consequential effect of a development is to require capital expenditure for reserves, network or community infrastructure; can only be applied where there is a development contributions policy in a Long Term Council Community Plan; the policy and the schedules must contain sufficient information to identify the purpose, the amounts payable and an explanation/justification of the methodology used and the assumptions made in the calculations; the Act prescribes the maximum amounts which can be contributed; contributions cannot be used for maintenance; the community planning process imposes obligations on Councils for preparing an annual plan, funding impact statement and an annual obligations report; provisions are included relating to public participation, openness, accountability and transparency.

In parallel similar provisions are contained in the Resource management Act 1991, enabling legislation allowing Councils to obtain financial contributions from individual developments as a form of compensation payable to the community concerned so as to avoid, remedy, mitigate, and/or offset the environmental effects of a proposed activity (ie an extension of the polluter pays principle.) Subject to certain tests contributions are covered by conditions on Resource Consents.
The New Zealand provisions are quite complex and deserve further consideration than has been possible here.