Icon Water wants to raise $100 million over 20 years through a new charge on development in Woden, the city and the inner north, Belconnen and Fyshwick.
The proposed charge is be levied from July on all new developments in those areas - from someone replacing a house with two townhouses, to office and shop buildings and major apartment buildings.
Icon Water will match the money, which it will use to fund what it expects will be $200 million of new infrastructure over 20 years.
Icon's general manager of finance, Sam Sachse, said the proposal was driven by the government's push for infill development. Infrastructure, mainly sewerage, was nearing capacity in many areas and could not cope with the expected population increases without upgrades.
The charge was designed only to increase capacity, and not for the ongoing replacement of ageing pipes, nor for water and sewerage infrastructure in new suburbs, which would continue to be paid for by developers.
Icon Water has devised four different charges, based on the expected population increases in each area and the amount expected to be spent on infrastructure to cope.
Woden will be hit hardest, with new development there attracting a charge of $3000 per extra person. A new 100-apartment development is assumed to house 200 people, so attracts a charge of $600,000.
In Belconnen, the same development would face a water and sewerage infrastructure levy of $280,000.
The levy is only charged on the extra people on a site, so if an apartment building replaces an existing building, then the number of people already on the site is deducted.
The proposed charges are:
- Belconnen: $1400 a person
- City and inner north, including Mitchell and parts of Harrison and Franklin: $1800 a person
- Fyshwick $1500 a person
- Woden $3000 a person
Tuggeranong, Weston Creek, the inner south, Hume and the new suburbs of the Molonglo Valley and Gungahlin are exempt because their infrastructure is expected to be able to cope with demand.
The charge is levied on new offices, restaurants and clubs, shops, industrial areas, schools and other developments, as well as on residential development. But for offices and the like, the amount is far lower. Each officer workers counts as about one-third of a person for the levy calculation; each restaurant seat as one-10th of a person.
Icon gives the example of a single home being replaced with three townhouses in the inner north. The existing house is judged to accommodate a standard 3.6 people. The new development is judged to accommodate 7.5 people. As a result, the developer pays the inner north levy of $1800 times by the extra 3.9 people, for a total of $7020.
Icon says the scheme brings the ACT into line with other states. Managing director John Knox said it would be fairer than the existing system in which entire upgrade cost could be landed on the developer whose project sparked the need for an upgrade, with others who came before paying nothing.
"Currently if a development in an established area triggers a capacity upgrade for water and sewerage infrastructure, the developer is asked to pay for the full cost of the upgrade. Developers who build before or after an upgrade do not contribute to this cost," he said.
Mr Sachse said while there had only been a handful of projects where this had happened, the costs to developers had been substantial.
While the big property groups in Canberra are open to the change, they will fight the timing.
Icon wants to charge the levy on developments approved after March 31 this year - which will capture people who have already bought land but are yet to lodge a development application, such as the big new Northbourne developments, and will also capture people whose development applications are in but not approved by March 31.
Master Builders ACT head Kirk Coningham said the impost on existing projects was not acceptable. While the industry accepted the need to spread water and sewerage costs more broadly, it should not apply to people who had already bought their land.
"Its very unfair if you're presented with potentially hundreds of thousands of extra dollars that weren't there when you signed up," he said. "Why the haste?"
ACT Property Council head Adina Cirson said there were advantages to Icon's proposal because the current system was "a bit of jackpot", with costs potentially falling to one developer. But she said it was crucial to ensure developers were not disadvantaged in the transition.
Icon says it is open to changing the transition plan. It has asked for feedback, and will then put a formal submission to the Independent Competition and Regulatory Commission, which must approve the plan. The commission is expected to hold its own round of consultation.