9th May 2007
Circular Letter PD 5/2007
Development Contributions
A chara,
I wish to refer to sections 48 and 49 of the Planning and Development
Act 2000. The 2000 Act comprehensively revised, streamlined and
consolidated the planning system in Ireland. Sections 48 and 49
specifically provided for a radical overhaul of the development
contributions scheme. The primary objectives of these revisions were to:



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Provide a mechanism by which developers and others can contribute
to the cost of providing public infrastructure and facilities that benefit
development in their area.
Increase flexibility for local authorities in relation to the range of
projects that could be funded from this source, by allowing
authorities to fund public infrastructure provision without necessarily
tying it to a specific development
Introduce greater transparency into the way in which development
contributions were levied and applied (so that developers would be
able to establish in advance what levy should apply to them)
Ensure that local authorities could manage and maintain growth by
providing key infrastructure to support local economies going forward
Sections 48 and 49 of the Act have now been in operation since 11
March 2002. These sections provide for three types of development
contributions that can be attached as conditions to planning permissions
granted under Section 34 of the 2000 Act. These are:
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general development contributions under section 48,
special development contributions under section 48(2)(c), and
supplementary development contributions under section 49.
Local authorities were required to prepare their first schemes under the
2000 provisions by 10 March 2004, setting out how general
development contributions would apply in their area. All planning
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authorities adopted schemes by the required date: in most cases these
first general schemes are liable for review over the coming 12-18
months.
1. Impacts of the Development Contribution Schemes
In the 5-year period since their introduction the schemes have had a
very significant impact on the delivery of key infrastructure across all
local authority areas. The operation of the schemes has coincided with
an era characterised by unprecedented levels of construction activity in
Ireland. The heightened levels of construction activity in turn give rise to
increased demand for supporting infrastructure. As a result of this
increasing demand, and the increased flexibility afforded to authorities
under sections 48 and 49, the amount collected in development
contributions has increased greatly in recent years.
This means that the development contribution mechanisms have come
to constitute a very significant income stream for planning authorities
over recent years, totalling approximately €519m in 2005 (for all local
authorities).
The table below sets out the development contributions collected during
the period 2000 to 2005:
Year
2000
2001
2002
2003
2004
2005
Development Contributions
€110m
€122m
€151m
€215m
€337m
€519m
This additional revenue has been used to fund a range of key public
infrastructure such as roads, sewers etc. that are necessary for all
housing and commercial construction to proceed and for purposes of
specific community benefit (such as recreational areas, parks etc.) as
well as for more general purposes supporting economic growth and
competitiveness (for example, Luas Green Line extension from
Sandyford to Cherrywood part funded by special section 49 scheme,
Navan to Dublin railway, Wicklow Port Access, as well as a number of
critical road projects).
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According to the National Development Plan it is estimated that €2.1
billion will be collected in development contributions during the lifetime
of the plan (2007-2013)1.
2. Review of Operation
The Department initiated a review of the operation of the updated
provisions in late 2005, by establishing an Interdepartmental Committee
on Development Contributions to evaluate the effectiveness of the
schemes to date, and to discuss operational issues of interest to a
number of Departments. The Committee was tasked with considering
whether policy guidance in relation to sections 48 and 49 of the 2000
Act needed to be updated.
This Committee comprised officials from:
 The Department of the Environment, Heritage
Government (Planning Section)
 The Department of Finance
 The Department of Transport
 The Department of Enterprise, Trade and Employment
 The Department of Justice, Equality and Law Reform
 The Department of Education and Science.
and
Local
The discussions of the Committee were informed by, and took place in
the context of, detailed consideration of a range of issues from sectoral
interests, including a position paper prepared for the Department on
behalf of the City and County Managers Association. The discussions
were also informed by reports on the issue from the Small Business
Forum Report and Chambers Ireland.
On the basis of the issues discussed and the concerns raised, the
Committee agreed that certain improvements to the operation of the
current development contribution mechanisms should be made. It was
further agreed the necessary adjustments could be most effectively and
immediately effected through the provision of revised guidance to local
authorities.
This circular sets out revised guidance agreed on foot of the
deliberations of the Interdepartmental Committee. It is intended to
supplement, not replace, circular letter PD 4/2003. It should be
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National Development Plan 2007-2013: TRANSFORMING IRELAND A Better of Quality of
Life for All
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noted that no legislative changes are proposed at this time, and the
general terms of sections 48 and 49 will therefore continue to
apply.
3. Specific Issues
A. Level of Contributions
The increased revenues generated by the current schemes have
enabled local authorities to set about addressing infrastructural deficits
in their operational areas on a more ambitious scale than was previously
possible. This, of course, has had a positive and direct impact on local
communities throughout the country. However, local authorities are
reminded that it is essential that this revenue growth be set in the proper
macro economic context.
While it is important that the right infrastructure be put in place to attract
and support investment in any authority’s functional area, it is essential
that development charges are not pitched at such a high level as to act
as a deterrent or disincentive for future prospective investment and
development, or as a penalty on, or barrier to, enterprise start-up.
Excessive charges can also affect the affordability of housing. The
amount collected in respect of a facility or public infrastructure project
should be no greater than the economic cost of providing that
infrastructure.
Securing future income streams from development contributions
depends on achieving the appropriate balance between the
necessary levels of funding now, and the need for local authority
areas to continue to represent an attractive location for future
inward investment. This must also require the involvement of all
stakeholders in consultation processes for the drawing up or
revision of contribution schemes (the importance of extensive
consultation is discussed at section D below).
B. Variations and linkages across Planning Authorities
While factors such as varying settlement patterns, levels of construction
activity, and quality of existing infrastructure are valid causes for
variation between local authority areas, concerns have been expressed
that in certain instances the degree of variation under the current
schemes was beyond a level that could be explained by these factors,
particularly between neighbouring authorities.
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While the Planning and Development Act 2000 has provided for
increased transparency and accountability, the provision of information
to stakeholders can provide a means by which concerns over levels of
variation across local authorities can be allayed, for example, concerns
that development contributions for industrial/commercial developments
differed considerably across local authorities.
It is essential that development contributions are not perceived by
stakeholders to be a means for authorities to source additional income
from development contributions to meet estimated internal expenditure
costs.
Consistency in terms of the quality and level of detail of the schemes
themselves should also be a central consideration for authorities in
drawing up future schemes. While each individual authority is best
placed to draw up their development contributions schemes based on
their particular needs, there is a requirement for a basic uniformity of
approach across all authorities, with specific details being informed by
particular local needs. Without a fundamentally similar methodology
there would be a risk that the overall system of applying development
contribution schemes could be viewed as arbitrary or even haphazard.
Authorities are reminded that one of the primary objectives in
introducing the current schemes was to bring greater transparency the
way in which development contributions are levied and applied. It is
essential therefore that all prospective developers can clearly identify
from a scheme the level of payment required in addition to the basis for
the levy in the first instance.
Transparency in the drawing up of schemes and in the application
of revenues collected are essential elements in achieving cross
community, and cross sectoral support. It is essential that all
stakeholders are provided with good quality information on the
levels of charges, and the means by which such charges are
calculated. It is equally important that clear linkages be
demonstrated between the charges levied and infrastructure
provided.
Authorities are further requested to carry out reviews of their
development schemes. This would require that as existing development
contribution schemes fall for review (as many do over the course of the
coming months) authorities would carry out an evaluation of the
operation of the schemes to date, taking account of, inter alia, the
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comments of stakeholders. This review would then be forwarded to the
relevant County Development Board for comment (CDB) as is proposed
for all draft schemes (see D below).
C. Double charging
The practice of “double charging” is inconsistent with both the primary
objective of levying development contributions and with the spirit of
capturing “planning gain” in an equitable manner. All local authorities
have been advised that any development contribution already levied and
paid should be deducted from the subsequent charge so as to reflect
that this development had already made a contribution.
Double charging can also potentially arise where development
contributions are supported by local area plans (LAP’s). This can occur
because development which is located in the area which is the subject
of an LAP, and levied under the LAP, can then be subject a second
development charge according to the county scheme. This type of
double charge is also at odds with the spirit of the provisions set out in
the 2000 Act.
Local authorities should ensure that the necessary monitoring and
control procedures are in place to prevent double charging.
D. Need for extensive consultation
Active engagement with all stakeholders is an essential element in
confidence building, demonstrating openness and transparency, and,
above all, in ensuring that the final adopted scheme is robust, objective
and equitable.
Under the 2000 Act local authorities are required to notify the general
public that the draft scheme is available for comment by publishing
details in a local newspaper. The advice issued in PD 4/2003 urged
local authorities to consider early consultation with relevant interest
groups on whom the scheme may impact.
However, it is important that authorities are proactive in disseminating
information on draft schemes. It is, after all, in the interests of the
authorities to have the maximum degree of support for their schemes,
and the fullest public consultation could facilitate this.
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The County Development Board (CDB) structure provides a key
platform for consultation on Development Contribution Schemes in
general. All sectors participate in this structure and share information on
plans and resources and give views and feedback as required. The CDB
structure also provides a means of ensuring that County Council /
Development Contribution scheme investment compliments and adds
value to spending programmes of CDB stakeholders – economic, social,
cultural – and that resources can be coordinated to ensure optimum
use, creation of synergies and to maximise added value.
Therefore, in addition to the consultation process for the adoption
of a development contribution scheme as provided for in section
48 (4)-(9) of
the Act authorities should furnish all draft
development contribution schemes to the relevant County
Development Board (CDB) for comment. The members of the CDB,
which include representatives from all sectoral interests, would
then have responsibility for ensuring that their constituent
members were given adequate notice in relation to draft schemes,
and that they were aware that submissions and observations could
be made to the local authority responsible. Authorities are also to
be encouraged to utilise a variety of media, such as local radio,
local authority website etc. to raise awareness regarding the
drawing up of schemes. A more widespread consultation process
would also assist authorities in addressing any particular
operational issues identified by stakeholders, when reviewing
existing schemes.
E. Transparency
Reporting structures should demonstrate a maximum of accountability
and openness, and clearly set out the role of development charges. The
enhanced reporting structures on development contributions in the
Annual Financial Statements of all authorities from 2005 onwards to the
level of detail new reporting arrangements mark a significant
improvement in the quality of information available on the collection of
development contributions
However, the issue of transparency is also important in relation to the
extent to which linkages between the revenues collected and the
infrastructure projects funded from those revenues are demonstrated.
Developers should reasonably expect to be able identify the
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infrastructural gain to which their contribution has been put. This is an
essential element not only in terms of transparency, but also in terms of
garnering support for the entire mechanism. One local authority has
already taken steps to brand key projects being funded by development
contributions.
This approach is welcome and other authorities are encouraged to
“brand” projects. This branding could, for example, follow a similar
approach to NRA\NDP projects.
F. Possibilities for waiving development contributions in respect of
certain types of development
The Inter Departmental Committee also discussed the issue of providing
for waivers from development contribution schemes for certain classes
of development as a means of supporting or promoting the delivery of
projects of these types to the communities where they were most
needed.
Authorities are encouraged to adopt a more flexible approach to waiver
options to support Government policies in relation to specific classes of
development. The following examples are included for illustrative
purposes – this does not purport to be an exhaustive list of
developments for which waivers are encouraged.
Government policy in relation to the provision of adequate childcare
facilities is set out in the Guidelines to Planning Authorities on Childcare
facilities. This states, “Government policy on childcare is to increase the
number of childcare places and facilities available and to improve the
quality of childcare services for the community”. The National Childcare
Investment Programme provides a funding mechanism primarily for
voluntary/not for profit childcare providers. Planning authorities are
therefore encouraged to give consideration to waiving development
contributions in respect of such development (as opposed to childcare
facilities operating on a for profit basis).
Government policy on the provision of drug services as set out in the
National Drugs Strategy launched in 2001 is to “significantly reduce the
harm caused to individuals and society by the misuse of drugs through a
concerted focus on supply reduction, education and prevention
measures, treatment, rehabilitation and research”. The Department of
Community, Rural & Gaeltacht Affairs provides funding through Local
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and Regional Drugs Task Forces to community-based projects, which
are mainly voluntary/not for profit organisations. Planning authorities are
encouraged to consider waiving development contributions in respect of
such not for profit community-based projects delivering drug treatment
and rehabilitation services and drug education/prevention services.
Similarly, in the area of social housing, the voluntary and cooperative
sector is making a valuable contribution to delivery. Government policy
in relation to housing provision by this sector, as set out in the recent
Statement on Housing Policy Delivering Homes: Sustaining
Communities, is “to further support the delivery over the coming years”
through new funding arrangements, provision of sites and lands, and
improved governance. This policy objective could also be supported
where planning authorities provide waivers from development
contributions schemes for voluntary and cooperative housing bodies.
At an individual household level, authorities may wish to consider
allowing for a reduced fee, or waived fee, for persons in receipt of a
disabled persons grant (DPG). As this grant provides funding for
adapting a dwelling house to cater for the needs of a disabled person it
may be proportionate to provide for a reduced fee.
In summary, authorities are also encouraged to apply such special
exemptions or waivers to voluntary housing schemes and other
community infrastructural projects provided by voluntary or notfor-profit
non-statutory
groups,
such
as
drug
treatment/rehabilitation facilities, supported accommodation for
homeless persons, sheltered housing schemes for vulnerable
groups such as the elderly, disabled, and persons with mental
health issues, etc. In addition, the proposed circumstances under
which a reduced (or no) fee should be included as part of the
published draft development schemes.
G. Flexible funding arrangements for public infrastructure and facilities.
High quality recreational and community facilities are vital for all sections
of the community. Community groups can work in partnership with
County Councils, in a County Development Board context to provide
essential infrastructure in a timely, ordered, and cost effective manner,
with County Councils providing a financial contribution subject to legal
agreement and within an agreed strategy framework. Development
Contribution Scheme funding is key to this approach going forward,
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providing essential capital funds to facilitate the implementation of
required projects, which might otherwise not be possible, or at best
implemented at a much slower pace with consequent disadvantages for
communities.
This mechanism for investment can help overcome capacity
related bottlenecks arising under direct provision by local
authorities provided water tight legal agreements / clawback
arrangements are in place to safeguard investment of funds
derived from development contributions. This approach is also
relevant in relation to essential community enterprise
infrastructure.
H. Evaluation of the Operation of Existing Development Contribution
Schemes
It is particularly important that each authority should carry out an
evaluation of its existing Development Contribution Scheme prior to
drawing up a new or updated scheme.
The evaluation or review would be expected to provide:
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Outcomes achieved against the objectives set,
Information on the total revenue collected and monies spent under
the scheme,
A List of key projects completed, and
Commentary on the consultation process etc.
The evaluation would provide a key input into the further development of
the scheme and should be made available to Planning Section of the
Department and to the relevant County Development Board for
comment.
Queries in relation to this circular should be addressed to Mr Philip
Nugent (01 888 2227: philip_nugent@environ.ie) or Mr. David Hanlon
(01 888 2810: david_hanlon@environ.ie).
Is mise le meas,
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______________
George Burke
Principal Officer
Planning Section
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