A GROUP of local residents has raised concerns about the financial risks of Gawler Council’s newly proposed separate rate, labelling it a “naive approach” to help cover future infrastructure costs in the Gawler East development area.
Resident Graeme Williamson, on behalf of a handful of landowners, expressed his concerns about the new funding model, which would serve as a “secondary security mechanism” if developers fail to enter into a funding deed to help contribute towards $80.1 million worth of expenses.
The rate, which is calculated by dividing the cost of the infrastructure across the total developable acreage in Gawler East, will apply to Gawler East developers or landowners, and charged per allotment.
It will only be triggered when land development occurs, and if a developer fails to make “required contributions” as part of a deed agreement.
In a submission to council, Mr Williamson identified several risks with the proposed scheme, including the prospect of the State Government wanting a greater contribution for the Gawler East link road.
“The Gawler East link road is being funded by the government and currently expects the $9.5 million developer part to be paid back as development occurs,” he said.
“The big risk here is that the government will change its mind at some point because of economic circumstances and demand the remaining money at that point, or demand interest.
“This could mean that the council will have to pay interest on borrowed money, or the interest on behalf of developers.”
Mr Williamson said land may not be developed in a timely manner, while some landholders may choose not to develop their land, potentially shifting costs onto other ratepayers.
“There will be some landholders who do not change their land use, and thus development money is not raised from these properties, and this may extend for some 30 or more years,” he said.
“Not all land will be developed in a timely manner, yet those that have paid their share and been promised community facilities and traffic interventions will expect these items to be delivered in a timely manner.”
In a recent report, council’s finance and corporate services manager, Paul Horwood, said council had signed a funding deed with the Transport and Infrastructure Minister Stephen Mullighan, limiting its contribution to $8.2 million – $5.3 million of which is only payable in line with the rate of new allotment contributions received from developers.
“It is envisaged that the construction of various community infrastructure and identified traffic interventions will only occur as actual development demands, and in many instances this will only occur upon full receipt of associated developer contributions,” he said.
“Consequently, if the rate of development that occurs is less than expected, then it is to be similarly expected that the time frame for various community infrastructure and traffic interventions will be commensurately deferred.”