The South African Property Owners Association (Sapoa) has launched a High Court application against the City of Joburg (CoJ) to interdict it from implementing the 2021 Development Contributions Policy (DCP).

The DCP, as published, would permit the city to cross-subsidise services in other areas through a development contributions regime imposed on specific development applications, the association says.

The application also seeks to declare, among other things, that the city may not impose any condition on the granting of a land development application that requires the applicant to pay a development charge or contribution relating to services and/or infrastructure other than required by the development to which the application relates.

Sapoa says the city wrongly interprets the provisions of the Spatial Planning and Land Use Management Act (Spluma) as empowering the city to impose such charges irrespective of whether adequate services for that service already exist and have been paid for from alternative revenue sources.

“Our application relates to the fact that the city, as with all municipalities, can only exercise the powers they have been given under the Constitution and national laws. Spluma does not permit the scheme that the policy envisages. Land developers already carry an enormous financial risk and requiring them to fund infrastructure in other parts of the city is not only unlawful, but unfair,” says Sapoa CEO Neil Gopal.

“They accept the responsibility to provide capacity in external infrastructure impacted by their developments, not in unrelated infrastructure. Municipalities have other lawful funding mechanisms for that purpose,” he adds.

“Leaving aside the issue of legality, there is a matter of economic principle. The policy will be disastrous for the prospects of city development, adding a financial burden that is unsustainable in the present economic climate. As a consequence, the policy will defeat its explicit purpose, which is the stimulation of development across the city,” says Gopal.

The CoJ released the DCP on October 8, 2021. This policy introduces, according to the municipality, “a one-off charge levied by municipalities on the landowner, as a condition for approving a land development application to cover the capital costs incurred by the municipality when installing new infrastructure or the upgrade of existing infrastructure”.

Sapoa says it submitted extensive comments on the draft policy, “none of which were addressed”. In addition, in an attempt to avoid litigation, Sapoa says it made it abundantly clear to the City that key elements of the policy were unlawful.

“Despite that, the city gave notice that the policy would be implemented as approved,” the association notes.

Further, the calculation of the development contributions would be a unit development charge imposed on all development applications processed by the city under Spluma and the city’s planning bylaws, regardless of actual external infrastructure impacts, Sapoa says.