Calculating the development contribution step by step

The first step is the documentary exercise, and every parameter has its own source. No source can substitute for another.

Symbol	Parameter	Source
Su	The extent assessed, typically area or volume	The design, measured under the definitions of the municipal building regulation
Tp	Unit rate for primary infrastructure charges	Municipal council resolution, based on regional parametric tables
Ts	Unit rate for secondary infrastructure charges	Municipal council resolution, based on regional parametric tables
k	Correction coefficients for use, zone or type of works	Municipal council resolution
Cr	Unit construction cost	Regional determination in force
a	Rate applied to the construction cost	Municipal council resolution
r	Applicable reductions or exemptions	Article 17 of the code and any municipal resolutions

Two cautions on this table.

The first concerns Su. It is the parameter on which errors concentrate, because the definitions of net floor area, gross floor area and volume may be refined by the municipal building regulation in ways differing from common practice. Measurement must follow the local definition rather than the habitual one.

The second concerns k. Correction coefficients do not exist in every municipality and, where they do, their structure varies. Identifying them requires reading the resolution in full rather than the rate table alone.

The calculation runs through three quantities, and the order matters because reductions apply downstream rather than upstream. Reversing the order produces a different amount.

First step, the infrastructure charges.

OU = Su × (Tp + Ts) × k

The primary and secondary components are added because they form a single portion of the contribution, but they should be kept distinct in the calculation because offsetting through works concerns primary infrastructure only. They remain determined at distinct rates.

Second step, the construction cost component.

CC = Su × Cr × a

Here Cr is the notional figure determined by the region and not the actual cost of the works resulting from the bill of quantities. The two quantities bear no relationship of derivation.

Third step, the contribution.

C = (OU + CC) − r

Reductions and exemptions apply at the end, and their application is not uniform: some operate on the whole contribution, others on the construction cost component alone, others reduce the base. Reading the situation invoked determines the point of application.

Before communicating the result it is worth running back through the calculation with four checks. The checks cost minutes and prevent the commonest objections.

Check	Question
Extent	Has Su been measured under the definition in the municipal building regulation
Use	Do the rates and the rate applied correspond to the functional use of the project
Currency	Are the municipal resolution and the regional determination used those in force at the expected date of issue
Point of application of reductions	Does the reduction invoked operate on the contribution, on a component or on the base

The third row is the one most easily overlooked and it produces the largest divergence. Municipal rate resolutions are updated periodically, and a calculation carried out on a superseded resolution is arithmetically correct and substantively wrong.

Two situations alter the result and do not appear in the general formula. They must be checked case by case.

The balancing payment for a change of use arises where the project involves moving to a functional category with a higher incidence. In that case the difference is due, calculated by applying to the same extent the rates and rate of the destination category and subtracting those of the category of origin.

The additional charge linked to an increase in value arises where the project benefits from planning variations, derogations or changes of use. The code provides for it and its determination is left to the municipal resolution, which should be checked.

The calculation returns an amount, but a budget needs two amounts placed in time, and that is the final translation of the exercise. The two components follow different payment timings.

OU is paid on issue of the permesso di costruire, with the possibility of instalments at the applicant's request on the terms and against the security set by the municipality.

CC is paid during construction, on the terms and against the security set by the municipality, and no later than sixty days from completion of the building.

Presenting C as a single outlay on issue overstates the funding requirement at start up, which is the stage at which the project is most exposed. Placing the two components correctly in time is therefore part of the result and not a matter of presentation.

Finally, the offsetting scenario should be considered, substituting in whole or in part the outlay relating to OU with an obligation to deliver the primary infrastructure works. It is not a reduction of the contribution but a different way of discharging it, and its actual cost must be estimated separately.