Financing Local Infrastructure and Services

To finance the shared infrastructure needed to support new development, planning systems typically include arrangements for funding infrastructure such as roads, electricity, water services and often public spaces and community facilities. In many nations (including the UK and in many parts of the USA), contributions towards affordable housing or other socially beneficial development might also be sought, as discussed later in this book. There are a range of different ways for determining the amount of contribution to be required by each development, the means of collecting funds and for legitimising different forms of contribution (Evans-Cowley and Lawhon 2003; Saxer 2000). For instance, contributions towards infrastructure could be justified on the basis of the additional impact on local services created by the development, or on the basis of the additional land value (or benefit) associated with planning approval.

It is also argued that development contributions (often called ‘impact fees’ in the USA, and ‘planning gain’ in the UK) can promote more efficient forms of development (Ennis et al. 2002; Kirwan 1989). For instance, if developers are required to contribute towards the cost of providing local roads to service their project, they are likely to design the project so as to minimise road distances, through subdivision layouts which conserve land. Ensuring that development contributions support strategic objectives depends on the way in which contributions are designed and imposed (Burge et al. 2007; Gurran et al. 2009). There is a large literature on the potential effects of development contributions and charges on housing supply and affordability (for a review see Evans- Cowley and Lawhon 2003).We discuss this issue further in Chap. 4.

Funds are also collected for administering the planning system, usually through development application or permit fees. Arrangements for collecting these charges are set out in planning legislation.

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