Infrastructure contribution

An infrastructure contribution is a financial payment that property owners or developers must make to the municipality or other public infrastructure providers when their property benefits from newly created or expanded public infrastructure. Infrastructure contributions can be levied as development contributions (for the development of roads, sewers, and lighting), as sewer connection or water connection contributions, or as part of urban development contracts. They are a significant cost factor for property owners and buyers of new development areas, one that is often underestimated in financial planning.

Development Contributions under the BauGB

The classic infrastructure contribution in German building law is the development contribution pursuant to Sections 127-135 of the BauGB. If a municipality builds a new road or expands an existing one, thereby providing access to adjacent properties for the first time or improving existing access, up to 90% of the eligible development costs may be apportioned to the adjacent property owners. The municipality bears its own costs; the remainder is distributed among the adjacent properties based on lot area and floor area ratio.

In Bavaria, the municipalities’ development contribution statutes govern the exact calculation. Eligible development costs include the roadway, sidewalk, lighting, street drainage, and, in some statutes, green spaces along the street. For buyers of properties in new development areas, development contributions can range from several thousand to tens of thousands of euros, depending on the property’s size and location-an amount that often exceeds 5% of the property’s value.

Infrastructure Contributions in Urban Development Contracts

Urban development contracts (Section 11 of the German Building Code, BauGB) enable municipalities to require developers and investors to contribute to the costs of the infrastructure required by their project. Typical subjects of such agreements in the Nuremberg metropolitan region include: the construction of children’s playgrounds, the financing of daycare spots in the neighborhood, the construction of sidewalks and bike paths, the financing of soundproofing measures for adjacent residential buildings, as well as contributions toward green spaces and infiltration systems.

These contributions are not levied under the law governing contributions but are agreed upon voluntarily through a contract-though in practice, this is often a prerequisite for obtaining a building permit or adopting a zoning plan in favor of the project. Developers factor these contributions into the land costs; thus, they ultimately affect the final sales price of the apartments.

Sewer Connection and Water Supply Fees

In addition to development fees, property owners must pay corresponding connection fees (also known as construction fees) when connecting to the public sewer system and water supply for the first time. These are levied by municipal utility and wastewater companies or special-purpose associations based on municipal statutes. In the Nuremberg metropolitan region, the relevant contacts are Stadtwerke Nürnberg, the wastewater association, and the local municipal utilities and community utilities in the surrounding municipalities.

The amount of the fees varies considerably depending on the municipality: In some surrounding municipalities, sewer construction fees can amount to several thousand euros per connected property. Anyone purchasing a property that is not yet fully developed should explicitly include these costs in the due diligence review.

Obligation to Pay Fees When Purchasing Property

An important aspect of real estate transactions: development fees and connection fees may still be assessed after the purchase contract is signed if the development infrastructure was not yet completed and settled at the time of purchase. The new owner then becomes liable for the fees, not the seller-unless the purchase contract provides for a different arrangement. We recommend inquiring with the municipality’s civil engineering office about the status of development and any pending contribution proceedings before making a purchase.

Practical Tip for Property Owners in Nuremberg and Franconia

Anyone building or purchasing property in a newly developed area in Nuremberg or the metropolitan region should factor in any outstanding or anticipated infrastructure contributions into the purchase price and financial planning. When purchasing an undeveloped property, these costs are often not included in the purchase price. We recommend inquiring about the development status and applicable fees with the relevant building authority or civil engineering office before purchasing. We assist our clients in realistically estimating the total costs of a real estate investment-including all one-time ancillary and development costs.

Frequently Asked Questions

When are development fees due?

Development fees become due as soon as the development infrastructure is completed and invoiced. The notice is sent to the property owner on the due date. For property purchases made before the development is completed, any outstanding contributions may be transferred to the buyer, unless otherwise agreed upon in the contract.

Can I deduct development contributions for tax purposes?

For owner-occupied properties, development contributions are generally not directly deductible but do increase the acquisition cost of the property. For rental properties, they are included in the acquisition or construction costs and reduce taxes through depreciation. A tax advisor can determine whether immediate deductibility as a maintenance expense is possible in individual cases.

Are there caps on infrastructure fees?

Yes, the law governing these contributions sets upper limits: For development contributions, a maximum of 90% of the costs may be allocated to the residents. The calculation must comply with the principle of equivalence-the contribution must not exceed the benefit that the development brings to the property. Excessive contribution notices can be challenged through an appeal and an action for annulment before the administrative court.

Can infrastructure contributions be paid in installments?

In many municipalities, a deferral or installment plan for development contributions is possible upon request. The exact terms depend on the municipal bylaws. For larger development projects, it may be advisable to initiate discussions with the municipal administration early on to clarify the payment terms.

Infrastructure Contributions in Financial Planning

For builders and property buyers in the Nuremberg metropolitan region, it is important to factor infrastructure contributions into the overall financing plan from the very beginning. Banks will only take these costs into account when granting a loan if they are explicitly identified and documented by the borrower. Purchasing a property in a new development area-such as the expansion zones of Wendelstein, Schwarzenbruck, or Neumarkt i.d.OPf.-can incur development and connection fees totaling between 8,000 and 20,000 euros, which are only assessed after the infrastructure is completed.

Anyone who fails to include this amount in their loan planning risks a funding shortfall at a time when the loan has already been fully drawn down. The my-home.de editorial team recommends including a clause in the purchase contract during the notary appointment that clarifies who is responsible for outstanding or not yet notified development fees. If the status of development is unclear, written information regarding contributions already paid and those still outstanding can be requested from the relevant civil engineering office-this step usually takes one to two weeks and can prevent costly surprises after the purchase.

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