Industry organisation the South African Property Owners Association (Sapoa) is tackling the issue of high municipal rates and taxes, with research indicating that these have been rising steadily for a long time, to unsustainable, above-inflation levels.

Speaking during a media lunch on February 28, Sapoa CEO Neil Gopal said the rates issue had been a contentious one for the association over the past decade.

He explained that despite the high rates, a lack of proper municipal service delivery had given rise to the City Improvement Districts in the country, where members have had to assume the role of the municipality and sort issues out by themselves.

However, Gopal pointed out that property rates were still being paid for the same nonexistent services from the municipality – in essence, a “double whammy” for those in the industry.

He said it was important for the industry to understand why these increases were being implemented.

Gopal further noted that the industry had, post-Covid-19, decided to tackle the issue as a collective. In alignment with the Municipal Property Rates Act, Sapoa is presenting research to Finance Minister Enoch Godongwana and Cooperative Governance and Traditional Affairs Minister Dr Nkosazana Dlamini-Zuma, in the hopes of getting rates capped.

Gopal said Sapoa had appointed Oxford Economics to undertake research that would support it, as required by the Act when a complaint is made over rates and tax increases.

Gopal noted that Sapoa had been presented with the findings from the research and would now showcase this to the wider industry leadership, and to the two Ministers.

Should the Ministers not issue a directive based on the research to cap rates, Sapoa would have to resort to the courts.

Meanwhile, as part of its 'State of Infrastructure' report, Sapoa had undertaken research to assess the state of infrastructure in the 15 largest municipalities across the country and what effect it had on development.

The association’s view is that municipalities remained in breach of their constitutional mandates to provide services in a sustainable manner and to promote a safe and healthy environment for communities to thrive.

This is evidenced by successive Auditor-General reports into the state of municipalities, which showed that local government had broadly failed, and their sustainability was worsening.

The Sapoa report indicated that developers and private homeowners were carrying the costs of maintenance and upgrading of infrastructure in their cities which was effectively the mandate of local municipalities.

The report highlighted that municipalities were not fulfilling their mandate by maintaining aging infrastructure and that this was becoming a burden on citizens and the private sector.

Degrading and failing infrastructure were said to be negatively influencing the development potential and revenue streams of municipalities.

The report also identified a lack of skills within municipalities.

One of the main complaints highlighted by the respondents in the survey had been that developments were lagging, placed on hold or even cancelled owning to unviability or lack of infrastructure.

The research outcomes, therefore, indicated that the development pipeline was decreasing in the municipalities that formed part of the study owing to the state of infrastructure in the country.

OTHER ISSUES

Among other matters that were a priority for Sapoa was its August 2022 application seeking an interdict to restrain the City of Johannesburg (CoJ) from implementing its Development Contributions Policy 2021.

The policy introduces a new development contributions regime (sometimes referred to as “bulk services contributions”), which rescinds the current calculators and procedures used to determine these amounts owing to the CoJ, in cases where property developers apply to the CoJ in terms of the Spatial Planning and Land Use Management Act for rezoning and ancillary property development consents.

Sapoa’s founding papers in this matter were said to engage serious concerns about the legality of the policy. If implemented, it would effectively enable the CoJ to levy charges which would have the effect of compelling developers to cross-subsidise developments which were unrelated to their applications, the association averred.

The CoJ attorneys submitted their Heads of Argument on January 31. Both parties would now approach the Deputy Judge President of the High Court to arrange and agree on a date for the hearing,

Also, Sapoa had undertaken discussions with the Presidency and the Department of Mineral Resources and Energy about the increasing challenges faced by the industry as a result of loadshedding.

Sapoa had indicated that, where the industry had the capacity and resources, it wanted to be involved in the current structures to assist in solving the energy crisis.