Development contributions allow local authorities to recoup some of the costs to public funds of servicing land for private development. Without them, this servicing could not proceed or the full cost would have to be borne by the taxpayer. They are also a way of recouping some of the "betterment", which local authorities add to the value of land when it is serviced.
Under the Planning Acts, the money is ring fenced to pay for facilities servicing new development, for example, roads, water and sewerage services and other amenities including community facilities, landscaping and public transport infrastructure provided by or on behalf of a planning authority.
Development contributions are imposed on all types of new development that relies on the services mentioned in particular, housing. Development contributions are attached as a condition of planning permission, and are therefore paid by the person carrying out the development in advance of construction starting.
Affordable homes attract development contributions, as such homes are private homes, but sold at a discount to the market value and subject to a claw back on re-sale. The claw back provision is in place to protect the State's interest in the house and to ensure that there is no short-term profit taking on the resale of an affordable house. It is not proposed to exempt such houses from the requirement of development contributions.