Building levy rates vary up to 20 times

LOCAL authorities have been criticised for charging developers building levies at rates that vary by as much as 20 times depending on location.

Surprisingly, the most expensive place to build in the country is not Dublin but Limerick, which costs a developer a full 21.25 times more in levies than if they built the same premises in Donegal.

Between the extremes, rates can vary even within individual towns, with councils using a whole range of different calculations to decide what to charge for connections to public water supplies and sewage systems, provision of street lighting and car parking spaces and other services.

A leading property finance firm has called on the Department of the Environment to intervene with guidelines for local authorities to make sense of the charges, which they warn could put developers off investing in Ireland.

Jones Lang LaSalle, which carried out the levy survey, pointed out that developers paid €670 million in levies to local authorities in 2006 and, based on recent trends, would be contributing €2.1 billion over the next five years.

Its report warns: “If the charges are deemed excessive by developers seeking to construct a commercial building it may have a negative impact on Ireland’s competitiveness.”

Margaret Fleming, the firm’s European director, said the survey was an attempt to bring transparency into the charging system.

“Clearly, different levels of local authority services are provided in different locations and the large urban centres have more extensive needs but what is needed is a greater level of uniformity in charges and more consistency in the way that local authorities implement development contribution schemes and deliver the services paid for.”

The comparisons are based on the levies charged in the 39 local authorities for an average-sized commercial office of 200 sq m but the survey also found that while some local authorities build in the cost of providing lighting, green space and car parking, others charge separately.

The most expensive place in the country to provide car parking is Longford, where the county council charges up to €9,680 per space, followed by Carlow county, which charges up to €8,198, while the cheapest is Wexford county where charges start at €1,000.

The Department of the Environment does not set out how local authorities should calculate developer levies.

This is despite the opinion expressed by the Department of Finance to an inter-departmental committee which examined the issue last year and said the “rationale behind development contributions could be better explained”.

However, the City and County Managers’ Association told the same committee that criticism of development levies for their lack of uniformity was “unreasonable”.