Time to End Tax Exemption for Developers Building Parking, Councillors Say

About 8 percent of funding for infrastructure projects in the city in the coming three years is expected to come from what are known as development levies.

Those are once-off charges paid by developers of commercial and housing schemes in the city, the idea being that they’ll benefit from public infrastructure, like roads or community spaces, and so should help cover the costs of creating them.

At Monday’s monthly meeting of Dublin City Council, Green Party councillors said they wanted to charge those levies on a couple of types of schemes, or parts of them, that are currently exempt: commercial car parking and residential parking spaces.

(The levy is likely to be set next year at either €113.82 or €118.60 per square metre depending on the kind of development.)

There are good exemptions to the levy, said Green Party Councillor Michael Pidgeon at the meeting. Like those that mean developers don’t pay the levies for the parks, playgrounds and not-for-profit creches that they build.

“But bizarrely, we have given an exemption for car-parking spaces which is a very odd system I think,” Pidgeon said.

Residential parking should be subject to the levy too, albeit at a lower rate of 25 percent, said Pidgeon. “So it doesn’t add a big cost. But it just means you’re not getting to install car parking entirely tax free.”

Councillors on the whole spoke favourably of the idea of striking out the exemption for commercial parking, but were cool on the idea for applying the levy for residential parking spaces.

In the end, they agreed that those proposals should go out to public consultation, along with a larger council report on how it plans to charge development levies in the future, to get fuller feedback before a final decision.

Meanwhile, Labour Councillor Dermot Lacey used the opportunity to push a larger discussion around how the money from development levies gets spent, and whether any of it should be ringfenced for neighbourhoods affected by the particular developments levied.

Some Pushback

Most councillors who spoke on the issue at their December monthly meeting welcomed the idea of charging development levies for commercial car parking. Charging for residential parking spaces was less warmly received.

Independent Councillor Damian O’Farrell said he appreciated the intention. But that’ll just end up adding to house prices, he said.

The cost will be passed through the chain to the end user, he said, whether that be a homeowner, or the council itself buying from the private market for social homes. “This is just another increase.”

Fine Gael’s James Geoghegan said that any proposed increase in cost for residential housing needed to come with a serious health warning.

“At a time when, regrettably, housing completions are down,” and the biggest challenge facing the construction of homes is costs, he said.

Geoghegan asked, as did others, whether Pidgeon would get rid of the bit about parking spaces for homes, and just run with the commercial car parking spaces.

At one point, the council’s chief executive, Owen Keegan, jumped in to say that all councillors were deciding at this stage was what to send out to the public for feedback.

So, officials would prefer it if both proposals were left in so they can hear what people think of them both, Keegan said. A final decision could be made later, he said.

That’s what councillors voted to do.

Where Should the Money Be Spent?

Running alongside the discussion around what should be levied was a broader one about where levies should be spent.

Lacey, the Labour councillor – who spoke in favour of the Green Party proposals – said more should be ringfenced to spend in the immediate areas around where people are seeing the disruption from particular developments.

Members of the council’s finance committee have been debating this, he said.

“One of the unfair elements of it is that the areas impacted by a development, in which the development levies are collected, don’t directly benefit,” he said, even if “they may indirectly benefit as part of an overall scheme”.

Lacey said he wasn’t talking about handing over all of the development levies for a site to the immediate area. “Perhaps 5 or 10 percent of it.”

Geoghegan, the Fine Gael councillor, said he too thinks that there is an absence of ties between major developments and the communities they are in.

“I think it would do an awful lot to allay some of the Nimbyism that does take place in the construction of developments, if we reformed how those contributions were made and where they went to,” he said.

“And particularly if they went further towards local community investment,” he said.

People Before Profit’s Hazel de Nortúin – who said she didn’t have any major issues with the proposed changes to charged levies – asked whether any of the extra money could be used to incentivise public transport.

“Because bringing stuff like this forward without any practical long-term use of putting into public transport isn’t going to be effective,” she said.

At the moment, public transport isn’t living up to the standard that was promised, she said. In her constituency in Ballyfermot, locals have been struggling with delayed and cancelled buses.

Máire Igoe, an acting executive manager at the council, warned of possible side effects if funding were ringfenced.

“You’d be introducing uncertainty into the scheme, and also you could be delaying infrastructure for areas that are needing it,” she said.

It could disadvantage areas that councillors may be most wanting to help, she said, if particular areas are able to generate more development in levies than others.

Lacey said he was only talking about a sliver of the development levies. Communities that suffer should see a bit of benefit, he said. “That’s not unreasonable.”

That question of ringfencing is something the finance committee, headed by Sinn Fein’s Séamas McGrattan, has been looking at, said Kathy Quinn, the council’s head of finance. They expect to bring a briefing on the idea to the finance committee in January.

But the idea of development contributions is that new developments – whether commercial or residential – bring a need for public infrastructure, she said.

The idea with the funding is to look at where the deficits in public assets are, Quinn said. “Rather than where is the location of the development.”