Principles of section 7.11 contributions
Local infrastructure contributions practice notes
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Section 7.11 contributions are one of the mechanisms available to councils to collect funding towards local infrastructure. These contributions are a charge on development that are set within a principles based approach. This approach underpins how councils can plan for, collect and spend contributions or deliver infrastructure. This module explains the principles that underpin section 7.11 contributions.
Legislative requirements
Section 7.11 contributions are based on a transparent relationship between the demand for and provision of infrastructure to support development. They are charged under section 7.11 of the Environmental Planning and Assessment Act 1979 (EP&A Act).
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Councils can require a contribution towards the cost of local infrastructure if they are satisfied that the development will create or increase a need for infrastructure. These contributions can be required as money, land or both. |
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Councils can also recoup the costs of infrastructure items already provided in preparation for or to facilitate the carrying out of development in an area, if the development will benefit from that infrastructure. For these contributions councils can only require a monetary contribution. They can accept dedication of land in full or part satisfaction of the monetary contributions but cannot require it. |
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The dedication or contribution required must be reasonable. |
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The Land and Environment Court can disallow a condition under section 7.11 if it is unreasonable, even if it is in accordance with an approved plan |
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The infrastructure must be provided in a reasonable time |
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Land dedicated to a public purpose must be made available in a reasonable time. |
Policy positions
Principles underpin section 7.11 contributions
Local infrastructure contributions must be reasonable
Infrastructure contributions must be reasonable. This means that the infrastructure costs and the assumptions the contributions plan is based on must be reasonable and that the infrastructure should be provided in a reasonable time.
The reasonableness of a contribution in a plan is demonstrated by showing nexus (the connection between development and demand created) and apportionment (the share of costs borne by development).
Section 7.11 contributions plans must demonstrate nexus and apportionment
Nexus is the relationship between the expected types of development in the area and the demonstrated need for infrastructure created by a development. Generally, infrastructure contributions are appropriate where there is likely to be an impact on the demand for infrastructure.
Apportionment is a tool to ensure that a charge only ever reflects the demands of development and no other demands. Apportionment is a process that seeks to isolate demands, to ensure that the contributing population only pays for its share of the total demand. For example, it would be unreasonable to apportion all costs for an indoor sports facility to the contributing population if there is clear demand by the existing population for such a facility.
Demonstrating nexus and apportioning costs is discussed in more detail in the Determining the demand and demonstrating nexus module.
Councils are accountable for the contributions they charge
Councils must also be accountable for the infrastructure contributions they collect and how these funds are managed and spent. This includes:
- following the legislative requirements relating to contributions
- being transparent about how the contribution rates were derived and the decision making processes involved
- delivering the infrastructure in a reasonable time and ensuring the facilities meet the needs of the development
- accurately reporting on how funds are collected, managed and spent and being open to public scrutiny.