The development contribution

Article 16 of Presidential Decree 380 of 2001 provides that issue of the permesso di costruire entails payment of a contribution commensurate with the incidence of infrastructure charges and with the construction cost. The contribution has two distinct components.

The two components follow different logics and should not be conflated. They differ in their source of determination and in their timing.

The oneri di urbanizzazione, infrastructure charges, compensate for the impact of the project on infrastructure and services, and are divided into primary and secondary. They answer the question: how much does this project weigh on the city.

The costo di costruzione is commensurate with the value of the works. It answers a different question: what is being built worth.

Component	Basis	Who sets it
Infrastructure charges	Impact on infrastructure and services, primary and secondary	Municipal council resolution based on regional parametric tables
Construction cost levy	Value of the works	Regional determination, with municipal rates

This is the point that makes any national reference table impossible, and it is worth being explicit about. Determination is municipal and not national.

The incidence of primary and secondary infrastructure charges is set by resolution of the municipal council, based on parametric tables the region defines by class of municipality. The construction cost is determined periodically by the regions, with municipal rates applied.

It follows that two identical projects in two different municipalities can attract appreciably different contributions, and that no figure read elsewhere is usable for the municipality in which you are working. The municipal resolution in force and the regional tables are the only sources, and consulting them is an obligatory step in the estimate.

The moment of payment is not the same for the two components. The difference bears on the cash flow.

The construction cost portion, determined when the consent is issued, is paid during construction on the terms and against the security set by the municipality, and no later than sixty days from completion. The outlay therefore does not coincide with issue.

Infrastructure charges follow the arrangements set by the municipality, normally with the possibility of instalments secured by a guarantee. Payment by instalments is normally possible.

The distinction bears directly on the cash flow profile of the operation, and should be carried into the budget with its correct timing rather than as a single sum at the outset. It belongs in the budget with its timing.

The code allows the holder of the consent to carry out directly the primary infrastructure works serving the project, offsetting their value against the contribution due, within the limits and on the conditions laid down. Direct delivery operates as an offset against the amount due.

It is a significant mechanism on operations of any scale, because it converts a monetary cost into works delivered. Assessing whether it is worthwhile requires comparing the offsettable amount with the actual cost of delivering the works, and is therefore an exercise in construction economics rather than in procedure.

Article 17 governs reductions and exemptions. Among the situations provided for are subsidised residential development, where the contribution is reduced to the infrastructure charges alone in return for an agreement with the municipality, and a series of cases in which no contribution is due, including work in agricultural areas serving the running of the holding by a full time farmer and infrastructure works carried out in implementation of planning instruments.

One interpretative principle should be known before building an exemption case: administrative case law treats the provisions exempting from the contribution as subject to restrictive interpretation, as derogations from the principle that consent is onerous. Exemptions therefore operate only in the cases expressly listed.

Since no national figure is usable, the estimate runs through a documentary exercise with the competent municipality, and it is worth starting it at the beginning of the operation rather than at the end. The documents to obtain are few but none is dispensable.

Four documents are needed. The municipal council resolution in force on infrastructure charges, with its tables and the date they were updated. The regional parametric tables the resolution refers to. The regional determination in force on the construction cost and the rates applied by the municipality. Any municipal resolutions on reductions and reliefs, which some municipalities provide for the reuse of existing building stock.

To these should be added a check that avoids the most common error: the definition of the calculation parameters adopted locally. Net floor area, gross floor area, volume and functional use may be defined by the municipal building regulation differently from what the professional assumes by habit, and applying the wrong definition produces a divergence that does not surface until the municipality issues its determination.

The development contribution does not belong to the cost of the works and does not appear in the bill of quantities. It belongs to the other elements of the operation, alongside professional fees, connections and taxes.

In public works this placement has a formal home, the quadro economico, in the section covering the sums at the contracting authority's disposal. In private work the home has to be built, and its absence is the most frequent cause of divergence between the estimate presented to the client and the actual spend on the operation.

One point worth noting at preliminary estimate stage: a change of use towards a more onerous functional category triggers payment of the difference in contribution. It is an item that conversion projects tend to discover late.