Property Rates Bill: deliberations

Meeting report

PROVINCIAL AND LOCAL GOVERNMENT PORTFOLIO COMMITTEE
26 November 2003
PROPERTY RATES BILL: DELIBERATIONS

Chairperson: Mr Y Carim (ANC)

Relevant Documents
Working draft of Local Government: Municipal Property Rates Bill (15 November version)
Summary of public submissions
Annual Committee Report 2003 (awaited)

SUMMARY
The Chair tabled the Committees' Annual Report for 2003. The Report notes that the year has been extremely difficult and challenging. There were major legislative and oversight responsibilities to be fulfilled. The highlight of the year was the successful study tour of 68 municipalities and the distribution of 700 copies of the report to a wide range of stakeholders. The Committee clearly requires greater support to effectively fulfil its legislative and oversight roles.

MINUTES
Committee Annual Report for 2003
The Chair tabled the Committee Annual Report for 2003. The Chair noted that this year has been extremely difficult and challenging. There were major legislative and oversight responsibilities to be fulfilled. The highlight of the year was the successful study tour of 68 municipalities and the distribution of 700 copies of the report to a wide range of stakeholders. The Committee clearly require more research and support to effectively fulfil its legislative and oversight role.

The Report was put to vote and members unanimously voted to adopt it.

Municipal Property Rates Bill: deliberations
Mr Lyle (ANC) asked the Chair to revisit Clause 21(1), which the Committee had earlier discussed noting that there was a query on whether it is appropriately drafted.

The Chair agreed with Mr Lyle and requested the Department to simplify the clause in the manner the Banking Council has proposed.

Adv Grove Grove (Department legal drafter) noted that the proposed change is of an academic nature. He nonetheless agreed to effect the alteration.

Mr Mzilikazi Manyike (Director: Municipal Finance Policy) agreed with the proposal but observed that it should be made clear what 'property rights' means and what area this provision would cover.

Clause 24: Accounts to be furnished
Mr Manyike undertook to change 'the basis of calculation of the amount' at 24(c) to bring it in line with the provisions of the Municipal Systems Act.

Mr Ben Dorfling (SALGA) agreed that the clause should change. It does not make sense at all even if the same provision is found in the Municipal Systems Act.

The Chair agreed but suggested that the clause should be flagged for the present. The 'basis of calculation' should be defined and clarified. The municipality must furnish the rate of the actual calculation.

Adv. Grove noted that the drafting team is working on a new definition regime to cover all terms used in the Bill.

The Chair asked the drafters to take out 'purpose' from 24(f).

The Chair noted that Clause 24(2) was much simpler and clearer but the drafters should address KZN and SALGA's concerns.

Clause 25: Recovery of rates in arrears from tenants and occupiers
Mr Lyle said the clause goes against the spirit of the Bill. The whole idea is for municipalities to collect rates from the owner not occupier or tenant.

Rev. Goosen (ANC) said that unless specified in the lease agreement to the contrary, the responsibility to pay rates rests with the tenant.

The Chair noted that in some cases it is proper to demand rates from the occupier but that these are exceptional situations.

Adv Grove explained that when read in isolation Clause 25(1) would appear inappropriate but that the entire clause supplies the necessary clarity.

The Chair agreed that indeed when taken as a whole Clause 25 makes sense but why was 25(3) necessary.

Mr Dorfing offered that the provision is intended to cover the occupier against the owner's liability for the rates.

The Chair proposed the use of the term ''set off' in place of ''recover'. The latter implies an adverse scenario.

Adv Grove explained that it is up to the tenant to decide whether he/she wants to set off the amount paid against the rental obligation.

The Chair insisted that it is manifestly unfair to the tenant to have to incur legal costs in recovery proceedings against the landlord to recover annual rates that were settled on his/her behalf.

Adv Grove reiterated that there was no other available remedy other than that of a set off against rental.

Mr Manyike agreed that indeed it is unfair that the tenant should shoulder such a sudden obligation for which he/she is not to blame.

Mr Sithole (ANC) cautioned members not to assume that the relationship between the landlord and tenant is always cordial. For the most part there is marked animosity between the two.

The Chair ruled that Clause 25(3) is unacceptable in its current form.

Mr Manyike proposed an amendment to 25(3) to make it obligatory by replacing 'may' with 'must' in order to clear any doubt that the tenant is entitled to a set-off.

The Chair wanted to know how the Council establishes that there is an agent involved in the lease processes.

Mr Manyike replied that provision is made for the Council to access the lease agreement in order to establish the basis of the tenancy relationship.

Mr Dorfing agreed that it is important for the Council to access the lease agreement in order to know the finer details of it.

Mr Manyike asked the Committee to flag 25(3) for the present.

The Chair at this juncture lamented the fact that senior officials from the Department have consistently failed to attend the meeting right since the 24^th and this despite repeated pleas by the Committee that they attend.

Clause 26: Absent owners
The Chair wanted to know what the Department implies when it refers to 'owner' at 26(1).

Adv Grove explained that the clause seeks to make it possible and convenient for the Council to collect rates from an agent where the owner cannot be traced.

Adv. Dorfling underscored the importance of giving the Council the convenience to recover outstanding rates from the agent. For the most part owners remain invisible in tenancy relationships.

Mr Manyike also expressed agreement with the provision that confers authority to the Council to recover outstanding rates from the agent.

Adv Grove made the point that the agent should not be allowed to hide behind the veil of confidentiality in the law of agency in order to avoid the obligation set out in the Bill.

The Chair was satisfied that the provision is strategic and should be left in.

The Chair wanted to know how the Insolvency Act applies to 26(3).

Adv Grove pointed out that the Insolvency Act applies in a sense that the Council is one of the preferential debtors where insolvency proceedings have been instituted against a property owner.

The Chair asked what happens where the agent fails to cooperate with the requirement of Clause 26(4).

Mr Manyike replied that there are appropriate sanctions at Clause 72(1(f) to deal with situations of non-compliance.

Afternoon Session
Chapter 4: General Valuation of Rateable Property
Clause 27: General valuation and preparation of valuation rolls
Adv Dorfing proposed that 27(1)(a) should be done away with altogether.

Adv Grove objected to SALGA's proposal as the provision makes perfect sense hence should be left to stay.

The Chair wanted to know what the Department proposes to do with the exclusions at 27(2).

Mr Manyike said that it is important to exclude certain properties from valuation whenever it is established that the cost factor far outweighs the expected revenue from the valuation exercise.

The Chair said that it would be useful to indicate the amount of revenue that would be foregone in the event of such exclusion.

Mr Manyike noted that there is no revenue where the amount spent on a valuation exercise is more than the revenue that would be generated in rates.

Clause 28: Date of Valuation
The Chair reported that several people have complained that the nine-month period provided at 28(1) is insufficient for a proper valuation to be carried out.

Mr Peter Vaz (Department legal adviser) said the Department has agreed to extend the period to twelve months instead of nine.

Clause 29: Commencement and period of validity of valuation roll
The Chair said 29(2) should be specific as to which sphere of government the provision applies.

Adv Grove said the provision applies to the provincial sphere and only in special circumstances.

Mr Vaz proposed that a new subclause should be added to state that the MEC's intervention is to protect the integrity of the process at the oversight level.

Part 2: Municipal Valuers
Clause 30: Designation of municipal valuers
The Chair wanted to know what 30(2) seeks to achieve.

Adv Grove replied that the provision is deliberately crafted to insulate the accounting officer against adverse claims that might arise from the negligent acts of the private valuer.

The Chair noted that 30(3) appear to be a heavy-handed measure.

Mr Vaz explained that it makes provision for general overall monitoring but that the provision would be moved to the end of the chapter.

The Chair said in that case 30(3) falls out since the same moves to the end of the chapter. The right authority should be the provincial executive not the MEC as an individual. This should be corrected.

Clause 31: Functions of municipal valuers
The Chair queried the utility of the term 'relevant' at 31(1)(a)

Adv Grove clarified that the term 'relevant' helps to pinpoint the particular municipality for which valuation is undertaken. The term could, however, be removed if the Committee desired.

The Chair wanted to know why there is a need for "the concurrence of the municipal valuer" at 31(3)(a).

Mr. Vaz noted the Chair's concern and agreed that the provision is inappropriate especially where the valuer is not a municipal employer.

Adv Grove said that all these concerns are covered at 31(4)

The Chair agreed but expressed dissatisfaction at the manner in which the Department was responding to the Committees' queries. It would appear the Department is not fully equipped to handle deliberations on the Bill. He called for a short adjournment to allow the Department to do some house cleaning.

The meeting had not reconvened by the time the monitor left at 5.30 pm.