The rapidly shrinking ‘black hole’

February 1st, 2010

FCRC

MEDIA RELEASE

01 February 2010

 Infrastructure Charges

 The Fraser Coast Regional Council is not facing a financial crisis due to a lack of infrastructure charges collected from developers.

“If there had been anything untoward in the finances the State Government would have raised it,” Fraser Coast Regional Council Mayor Mick Kruger said.

“The Council received an unqualified report from the Auditor General for its 2008/2009 financial report.

“The Council receives a financial update each month, the latest last week, on how our budget is travelling and if there are any shortfalls and their implications.”

Infrastructure charges collected from developers are used to provide trunk infrastructure to a development whether it is a high-rise development on the Esplanade, an industrial estate or a residential subdivision, Cr Kruger said.

“If the development does not go ahead then the Council does not need to provide the trunk infrastructure in the same timeframes.

“The infrastructure charges are not used to fund parks or facilities in other areas, maintenance or improvement of existing facilities; that work is budgeted for as part of the Council’s $65 million capital works program which is funded from general rates, other fees and charges and grants.” 

The infrastructure funded by developers’ contributions includes trunk infrastructure – the main roads and large pipes that connect new developments to existing services.

“If a new subdivision is created the developer is asked to contribute towards improvements to existing trunk roads that connect it to the Council’s existing road network that will carry the extra vehicles generated by the subdivision. Whilst the developers contribute towards the costs of new trunk infrastructure, the remainder of funding is sourced from loans, grants and general rates. 

“Similar contributions are made towards trunk drainage, water and sewerage which may include the upgrading of pump stations, or as has just occurred, the building of a new $30 million waste water treatment facility by Wide Bay Water at Nikenbah.”

The slowdown being experienced locally by the development industry is not a result of increased infrastructure charges but caused by the Global Financial Crisis.

“A comparison of development activity in other Queensland councils shows that they are also experiencing a similar slowdown in development activity so it is not just a Fraser Coast phenomenon.

“The development slowdown has more to do with developers’ inability to gain financing from the banks due to the Global Economic Crisis.” 

Unlike other Councils, the Fraser Coast Regional Council has also offered developers a 30% discount on infrastructure charges if their development was approved before the new charges were implemented. That discount remains in force until June 30.

Developers who gain approval now and pay all of their fees before June 30 qualify for a 25% reduction in charges. 

The slowdown is affecting all Queensland centres as borne out in the drop in building and development applications across the state. 

“One thing this Council will not be doing is asking ratepayers to pay for services that developers should be providing,” Cr Kruger said. 

At the Council meeting last week (January 27) an update of the Council’s finances showed that while the reduction in developer contributions received this financial year would result in limited expenditure on any trunk infrastructure, conversely the demand for such trunk infrastructure due to development is significantly reduced. 

The Council separately accounts for the provision of trunk infrastructure and is continually reviewing the impact of development on its assets and the financial implications are reviewed and reported to Council on a monthly basis in the finance report. 

The net capital expenditure YTD totals $22.3 million or 48% of YTD budget projection of $47.8 million however an additional $11.8 million has been committed on capital projects bringing the total to 73% of YTD budget.  

These commitments include all of the expenditure recently allocated for the Main Street upgrade.

Projects underspent include:

  • $4.2 million in Information Technology projects – the majority of which are now being undertaken;
  • $12.5 million in Water and Sewerage Infrastructure – which will be reviewed and undertaken by Wide Bay Water;

 In addition the following major projects are in the planning stages, in progress or nearing completion:

 PCYC Third Court – $1.283 million

  • Animal Refuge – $0.72 million
  • CBD Beautification Project – $3.6 million
  • Pavement Resurfacing – $3.5 million
  • Strategic Land Use Plan – $1.5 million
  • Pedestrian Bridge Bruce Highway – $1.4 million

 ENDS

One Response to “The rapidly shrinking ‘black hole’”

  1. # Sadmanon 04 Feb 2010 at 9:19 am

    Hi Sue,

    Look I don’t doubt the council’s word, but this is not what it says in the Chronicle !!
    Did you check with Toni before you posted this article?
    How did you unearth this information? Are you in collusion with councillor O’Connell?

    These and many other questions need answers, My friend in the UDIA told me never
    trust any thing you read and he would know, wouldn’t he?

    Sadman

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