Development charges; collection

The development of building areas by providing infrastructure on site is a task of the municipalities. Development facilities, for which the residents must regularly pay proportionately due to special benefits, are typically the piped facilities (water supply, drainage, district heating) on the one hand and the access roads (possibly also parking spaces, green areas and noise protection facilities) on the other. The municipalities have a wide discretionary scope when it comes to the specific design of the road or pipeline route.

An obligation to pay may arise from contracts. For example, if a building contractor accepts the development at its own expense on the basis of a development contract with the municipality and then passes this on to the resident (purchaser) in the property purchase contract via the purchase price. Municipalities often also acquire the building land themselves, plan and develop it and then refinance themselves in the real estate purchase contract via the purchase price from the adjoining owner (purchaser).

If there is no contractual refinancing, the municipalities are regularly obliged to cover their development costs via so-called development contributions. It is important to note that it is not possible to charge for "the infrastructure as a whole", but that contributions are levied separately for each facility, e.g. separate contribution notices for each individual street, for the water supply and for the sewerage system.

In any case, the collection requires an effective local contribution statute, which can vary from municipality to municipality, so that global statements can only be made to a limited extent. An assessment of contribution notices always requires knowledge of the relevant local law, which can be inspected at the municipality.

Contributions for the initial construction of roads, parking lots, green spaces and noise protection systems are referred to in the narrower sense as "development contributions". They are levied on the basis of Art. 5a of the Bavarian Municipal Tax Act (KAG) in conjunction with the corresponding development contribution statutes. The obligation to contribute arises automatically for the developed properties on the basis of the statutes if the legal requirements - in particular the technical construction of the facility, the existence of all invoices and the development effect - are met.
The municipalities are legally obliged to levy corresponding contributions and must not bear more than 10% of the development costs. Since 01.04.2014, development contributions may only be levied within a maximum period of 20 years after the benefit situation has occurred. The benefit situation is given when the development facility is "ready for operation overall", i.e. has been finally completed technically. In addition, since 01.04.2021, Art. 5a para. 7 sentence 2 KAG applies, according to which development charges may no longer be levied 25 years after the start of the initial technical construction of a development facility.

Contributions can also be demanded for the other development facilities, in particular piped facilities (water supply, drainage), on the basis of the Bavarian Municipal Tax Act. To do this, the municipality must issue two sets of bylaws: a master bylaw that regulates the use of the facility (e.g. a water supply bylaw for the water supply or a drainage bylaw for the sewerage system), as well as a corresponding fee bylaw (usually referred to as a "contribution and fee bylaw"). In contrast to development contributions, the municipality has a choice here: it can finance its investment costs via contributions or include them in the calculation of the fees to be charged on an ongoing basis and thus refinance them in many small steps over a longer period of time. It is also possible to combine both options and pass on the investment costs to citizens partly via contributions and partly via charges. The decision for one of these options is made by the municipality in the local contribution and fee statutes by providing for correspondingly calculated contribution or fee rates.

Contributions for development facilities can reach a considerable amount.

If the collection leads to particular hardship for the person liable to pay the contribution, it is at the discretion of the municipalities to mitigate this in a socially acceptable manner by means of equitable measures, such as payment in installments, annuity, deferral or remission. The person liable to pay the contribution can submit an application to their local authority.

If you do not agree with a contribution notice, please ensure that you comply with the deadlines specified in the respective legal notice. Once these deadlines have expired, the decision becomes final.