Community Amenities go down the drain

23 August 2007

Up to $51 million of community amenities may never be built because of risky investments made by local councils, according to Aaron Gadiel, Chief Executive of the NSW Urban Taskforce.

 Local councils have been investing in ˜collateralised debt obligations which have rapidly fallen in value, following the collapse of the American subprime mortgage market, Mr Gadiel said.


Its too early to know how many local councils are affected but it is clear that their number includes Manly, Woollahra and Gosford councils.


Up to $51 million in developer contributions, set aside by councils to pay for roads, playgrounds, parks, libraries and other local facilities may be at risk.


Developers normally pay a contribution to local councils to cover the cost of community amenities needed by residents of new housing developments.


Instead of being spent straight away on building new community facilities, councils have been trying to make money by buying into high risk, high return investments, Mr Gadiel said.


This shows that councils should have stuck to their core business and just built the community amenities as soon as they received money from developers.


The best thing they can do for their local communities is provide services not speculate on the money market.


Were calling for new rules to be introduced, requiring local councils to spend developer contributions on new amenities in a much more timely way.


Councils should be rigorously audited whenever they start accumulating war chests of unspent developer contributions. Maybe then councils wont be tempted to play with high risk investments.


The NSW Urban Taskforce is a property development industry group, representing NSWs most prominent and important developers, builders and property financiers. The NSW development industrys annual turnover is $35 billion and employs 180,000 people, accounting for six percent of the States total employment. It is the fifth largest contributor to the State economy.


Media Enquires:
Aaron Gadiel,
Chief Executive Officer,
Phone: 0417 477 904 or (02) 9238 3955

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