There is a wide variety of one-time development charges that can be placed upon private sector companies and individuals that are developing land. One example is tap/ linkage fees (connection fees – also possible as developer exactions), paid by the developer or beneficiary for linking up to an infrastructure network (e.g. electricity line). Another example is impact fees imposed on developers for the negative effects of their development (e.g., noise and air pollution) on the environment, people, or the infrastructure system. In that sense, development charges function to collect fees to pay for related infrastructure or other scale-up or improvement measures.

Instrument category

Municipal own source revenue (OSR) and policy steering instruments

Implementation status

Moderate - tried and tested

Enabling conditions and success factors
  • A well-developed development control system must be in place to apply development charges. This includes a system to guide and enforce land use, assess development proposals and grant permission or request improvements.
Instrument benefits
  • Development changes can offer an important opportunity to steer urban development towards more environmentally and socially sustainable objectives.
Challenges and risks to implementation
  • Lack of trust and transparency between local governments and developers can be a major obstacle.

Want to share new instruments?

The Alliance is actively seeking updates to the financial instruments library. Please complete the form to suggest additional instruments.

Fill out the form