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PROVINCIAL AND LOCAL GOVERNMENT PORTFOLIO COMMITTEE
27 May 2003
PROPERTY RATES BILL: DELIBERATIONS
Chairperson: Mr Y Carrim (ANC)
Documents handed out:
Local Government: Property Rates Bill (B19 - 2003)
Members raised comments on Chapters 4, 5, and 6 of the Property Rates Bill. Particularly with the basis of the valuation methodology in the light of South Africa's unstable Rand and interests rates. Concerns were also raised about Clause 35 (Right to inspect property), which grants powers to the municipal valuer to inspect any property for the purposes of valuation. This power needed to be balanced with the constitutional right of the owner to privacy.
The Chairperson requested the Department to lead the members through the Bill.
Mr P Vaz (Resident Law Advisor, DPLG) noted that the objectives of the Bill were aimed at bringing about greater uniformity through out the country. However the national framework as set out in Clause 3, (Adoption of Rates Policy) of the Bill still needed to be clarified.
Clause 28 Date of Valuation
Mr Vaz (DPLG) pointed out that Clause 28 was granting a municipality powers to fix a date for the purposes of a general valuation and to obtain the current value of a property. However, the period fixed by a municipality could not be more than nine months before the beginning of a financial year in which the roll was to be first implemented.
Mr Carrim (Chairperson) asked why that period was limited to a nine months. He also asked if Clause 28(2) was necessary.
Mr Smith (IFP) asked whether the date referred to the time at which a municipality had started with the valuation process or the date at which the municipality completed the valuation roll.
Mr Machlalan (ODA) replied that the general practice was that each time a municipality embarked on an valuation process, it had to choose a common date for which all valuation would be measured against. Hence, it was not the date at which the valuation roll was completed but an up-front decision by a municipality.
Mr Carrim asked if the people being evaluated were going to be disadvantaged, taking into account South Africa's unstable market with fluctuating interests rates and the Rand.
Ms Manche (DPLG) concurred with Mr Machlan that all properties would be evaluated on the basis of the date at which the valuation process started.
Mr Machlalan (ODA) pointed out that the valuation methodology had three stages:
- sales review, which refers to the period in which a municipality would try to gather what was happening on the market.
- the physical inspection of the property
- the final consolidation.
Mr Carrim conceded that there was a need to invite valuers to clarify some aspects in Clause 28.
Mr Vaz (DPLG) added that in respect of Clause 28 the date fixed by a municipality for valuation purposes should not be more than nine months before the beginning of the financial year, however the valuation process could start 18 months earlier.
Clause 29 Commencement and period of valuation rolls
Mr Vaz (DPLG) stated that in terms of Clause 29 as soon as the valuation roll became effective, it remained valid for that financial year or subsequent financial years as that municipality may decide, but in total it could not be more than four financial years. However, the maximum period of four years could be extended to a period of five years at the request of a municipality from the MEC.
Mr Louw (ANC) stated that the whole of process of valuation was a daunting exercise and an expensive one, hence the time frame set out in Clause 29(1)(b) was not sufficient.
Mr Carrim referred to Clause 29(1)(a), asking what would happen if the valuation process was completed two weeks after the end of the financial year. Secondly, under what circumstances could the MEC extend the valuation for a period of a year?
Mr Smith (IFP) asked whether the time period for the validity of the valuation roll took into account the changing terms of the members in a municipality.
Mr Vaz stated that the reason for Clause 29 was that municipalities had varying capacity in terms of implementation, but at the same time they had to caution against being too prescriptive. He added that in other ordinances the norm was for a period of four years.
With the valuation process had been completed just after the beginning of the financial year, Mr Vaz pointed out that it would be very difficult to craft a provision that would provide for a window period after the beginning of a financial year, because levies and rates could not be charged retrospectively. Moreover, the aim was to allow municipalities to complete their valuation process in advance and also comply with the MFM Bill.
Responding to Mr Smith's question, he stated that the valuation process was a different and independent process from rating policy, hence it could not be affected by the change of term.
Mr Smith asked whether Clause 28(1) was legally in conflict with Clause 29(1)(a).
Ms Manche (DPLG) was of the view that Clause 29(1) only provided that the valuation process could only come into effect at the beginning of the financial year and had nothing to do with the fixing of the date for the valuation. Hence there was no conflict between Clause 28 and 29.
Mr Manyike (DPLG) stated that the Department would revisit Clauses 28 and 29 and consider if there were any legal conflicts between the two.
Clause 30 Appointment of municipal valuers
Mr Vaz pointed out that Clause 30 was aimed at evaluating the appointment of municipal valuers before the valuation date. The appointment of a person who was not an official of a municipality had to be conducted in an open, competitive and transparent manner.
Mr Carrim asked if it was possible to redraft Clause 30(2) in much simpler language. He referred to Clause 30(3)(a), asking what that clause meant when it stated that the MEC had to monitor the appointment of municipal valuers.
Ms Manche (DPLG) pointed out that the MEC's role during the appointment of municipal valuer was to ensure that the process was open and transparent because the valuers had enormous responsibility in compiling the valuation roll. Hence, their legitimacy and integrity had to be maintained at all costs.
Mr Smith (IFP) asked what exactly Clause 30 meant by a " valuation date".
Mr Manyike (DPLG) pointed out that the issue of "valuation date" was not specified in the definitional section and they would defer their response.
Mr Machlalan (ODA) added that the valuation date was a political decision by a municipality to choose a date against which all valuation would benchmark.
Clause 31 Functions of municipal valuers
Mr Manyike (DPLG) noted that Clause 31 outlined the functions of the valuer.
Mr Carrim referred to Clause 31(2) and asked if a municipal manager could delegate his/her functions and powers to an assistant valuer or even to a valuer who was not a municipal official. He also needed clarity on 31(3).
He then asked the Department to redraft Clauses 31(2) and (3) into a simpler language. He also asked if the municipal manager could appoint an assistant valuer for an external valuer.
Mr Vaz stated that the intention of Clause 31 was to provide space for the appointment of assistant valuers. However, if the municipal manager intended to appoint an assistant valuer for an external valuer, s/he could do so in the form of an agreement between the municipality and that external valuer.
Clause 32 Municipal partnerships
Mr Manyike (DPLG) stated that Clause 32 provided for a municipality to enter into an agreement with one or more other municipalities to appoint a single municipal valuer in order to share the costs of preparing valuation rolls.
No questions were asked in respect of this clause.
Clause 33 Qualifications of municipal valuers
The department pointed out that Clause 33 dealt with the qualifications of the municipal valuers.
No questions were asked in respect of this clause.
Clause 34 Prescribed declaration
The department stated that Clause 34 required a municipal valuer to make the prescribed declaration before the commissioner of oaths regarding the performance of office.
No questions were asked
Clause 35 Right to inspect property
Mr Vaz (DPLG) pointed out that Clause 35 granted powers to a person authorised by the municipal valuer to inspect property between 07:30 and 5:00 p.m. and to make extracts from any document or information, which that valuer reasonably believes is necessary for the valuation. However, the inspection is subject to Section 14 of the Constitution, the right to privacy.
Mr Nobunga (ANC) asked why the Department restricted the times of inspection between 07:30 and 5:00 and he asked for clarity on the issue of extracts from documents.
Mr Smith (IFP) was of the view that a municipality had to make an arrangement with the owner before making inspections.
Mr Carrim asked what would happen if there was no co-operation in respect of Clause 35(2)(b).
Ms Manche (DPLG) pointed out that these questions had been raised several times before. Namely, how the Bill should make it possible for the municipality to access the properties while balancing that exercise with the constitutional right of the owners to privacy. However it would be too onerous to require the municipality to make an arrangement with each and every owner before an inspection. To tighten up the provision the Department would consider the route of allowing the municipalities to place notices in the newspaper.
She noted that the time frame of 7:30 to 5:00 was chosen because it was a reasonable time for the municipality to conduct the inspections. If there was no co-operation in respect of 35(b|) the valuer could rely on the information at their disposal, for example, information from estate agencies. On the issue of extracts from documents, she pointed out that an extract would include any information pertinent to that property.
Clause 36 Conduct of valuers
Mr Manyike (DPLG) pointed out Clause 36 was aimed at regulating the conduct of the valuer, and the valuer was required to disclose any conflict of interests and to adhere to the Code of Conduct as set out in Schedule 2 of the Municipal Systems Act. If there was a failure to disclose any conflict of interests, the valuer would be guilty of misconduct.
Mr Carrim asked if the Department could redraft 36(5) into much simpler language.
Mr Smith (IFP) was of the view that there was a need to broaden the scope of conflict of interest beyond what was contained in Clause 36(1).
Clause 37 Protection of confidential information
Mr Vaz (DPLG) pointed out that Clause 37 prohibited a municipal valuer from disclosing to any person any confidential information obtained in terms of the proposed Bill.
No questions were asked in respect of this clause
Clause 38 Valuation
Mr Vaz (DPLG) stated that Clause 38 allowed for comparative, analytical and other systems or techniques to be used, including aerial photography and computer-assisted mass appraisal systems, for the purposes of valuing a property. Techniques based on predetermined bands could be used if the available market-related data of any category of rateable property was not sufficient.
Mr Carrim asked how a municipality would arrive at a technique based on predetermined bands.
Ms Manche pointed out that subsection 3 clearly stated that the information might be insufficient but available.
Clause 39 General basis of valuation
Mr Vaz (DPLG) pointed out that Clause 39 provided for the basis for valuation. The improved value of property should be the amount the property would have realised if sold on the date of valuation in the open market by a seller to a buyer. Clause 39(2) also required the value of a property to reflect any licence or privilege relating to the property and any form of illegal improvement.
Mr Nobunga (ANC) asked if Clause 39(2) was constitutionally or legally sound.
Mr Smith (IFP) asked as to why zoning was not the basis for valuing a property.
Mr Carrim referred to Clause 39(1) and asked the Department to craft it in much simpler language. He also asked how the issue of improved value would apply to agricultural land.
Mr Manyike (DPLG) responded to the question of whether Clause 39(2)(b) was constitutionally sound. He pointed out that in terms of the Income Tax Act, when one was declaring their income they had to disclose income accruing out of illegal activities. Hence the same practice would be applicable to the proposed Bill. Responding to the issue of improved value on agricultural land, Mr Manyike pointed out that in terms of the Bill a municipality could only use the market value and not the use of the property to determine the value of the property. Therefore it was what a buyer was willing to pay to a willing seller on a particular day.
Ms Manche (DPLG) pointed out that in some instances, what agricultural land could potentially produce could affect its value.
Clause 40 Valuation of property in sectional title schemes
Mr Vaz (DPLG) stated that Clause 40 dealt with the valuation of property in sectional title schemes and the valuer was required to determine the value of each sectional title unit in the scheme in accordance with Clause 39.
No questions were asked
Clause 41 Contents of valuation rolls
Clause 41 dealt with the contents of the valuation roll.
No questions were asked
Clause 42 Public notice of valuation rolls
Mr Vaz said that Clause 42 required a municipal valuer to submit the valuation roll to a municipal manager and the municipal manager must within 21 days of receipt publish it in the Government Gazette.
Mr Smith (IFP) asked if there could be any internal forces within a municipality that could affect the amendment of the roll before it comes to the public.
Ms Manche (DPLG) pointed out that municipal officials could not effect any change on the valuation roll as it was an independent process.
Mr Smith (IFP) proposed that the Bill had to clearly specify that the municipal officials could not amend or influence the valuation roll.
Clause 43 Inspection of, and objections to, valuation rolls
Mr Vaz (DPLG) stated that Clause 43 allowed any person within the period that the valuation roll lies open for inspection, to inspect and make extracts from the roll during office hours and lodge an objection with the municipal manager against any matter appearing on or omitted from the roll. However the objection must be in relation to a specific individual property and not against the valuation roll as such.
Mr Nobunga (ANC) asked what would happen if 60% object on the basis that the valuation roll was completely skewed.
Ms Manche (DPLG) stated that if 60% of the people object to the valuation roll, the municipality would suffer the loss as it would have to amend the valuation roll to the extent that it was flawed and pay back the owners who had been affected by that roll.
Mr Smith (IFP) asked as to whether a person could object to a category of property as opposed to an individual property as required by the Bill.
Mr Carrim asked why a person could not object against the valuation roll.
Ms Manche pointed out that Clause 43(2) was only referring to individual property and hence a person could not object to a category of property. A person could not object against the valuation roll because the Department did not want to open the floodgates. Hence, when a person was objecting, s/he could not challenge the legitimacy of the valuation roll, but could only lodge an objection in respect of individual property.
The meeting was adjourned.
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