The ruling Labour group have decided a pot of £1.1m funding will go towards the most deprived areas of the city, after a long row about how it should be spent.
The money comes from the Community Infrastructure Levy, which is a charge on all new developments, including housing, shops, commercial buildings and hotels.
It is used to provide infrastructure - such as play equipment or highway improvements - to support new developments and benefit residents.
Councillor Jack Scott, cabinet member for transport and development, said: “Given where we are in terms of Government cuts and our budget presently, we know this has had a disproportionate impact on some of our poorest communities. It is absolutely right that to mitigate some of the damage from austerity we take this approach, which is most in-line with our values and what we want to see.”
The council started charging CIL in 2015 and built up a pot of money.
About 80 percent is spent on major citywide projects such as Don Valley flood defences.
Traditionally, the remaining £1.1m ‘neighbourhood’ portion goes towards the area in which the development took place, but the Labour-run council said there was a ‘strong moral argument’ to give the money to the most deprived.
Following a report, which included a wide consultation, leading councillors unanimously approved to spend 90 percent on the most deprived areas, and the remaining 10 percent on wards where the development took place.
Coun Jim Steinke, cabinet member for neighbourhoods and community safety, said: “I welcome this and would hope ward councillors can now crack on with trying to identify some bold, imaginative projects to address some of the major issues in areas of highest deprivation but, also in those areas of less deprivation where we can work on schemes that are going to have a broader impact on the people.”
During the consultation period, opposition councillors and some residents were concerned the plans would take money away from areas where developments were built.
One resident said: “To spend the CIL in another ward is morally bankrupt. It is not a tax to be used for citywide schemes."
Another said: “The CIL should stay within the area that it was levied. Anything else is daylight robbery.”
But Coun Jackie Drayton, cabinet member for children and families, said despite there being a number of people against the plans, support was widespread.
“It’s right that we develop our city, and we have some fantastic things in the centre, by the river and leafy areas, but it’s right too that the money we get is used to improve the lives of people everywhere in the city,” she said.
“It’s a brilliant city and I’m so proud of living in a place that believes in fairness.”