Municipal Property Rates Bill: deliberations

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Cooperative Governance and Traditional Affairs

12 February 2004
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PROVINCIAL AND LOCAL GOVERNMENT PORTFOLIO COMMITTEE

PROVINCIAL AND LOCAL GOVERNMENT PORTFOLIO COMMITTEE
13 February 2004
MUNICIPAL PROPERTY RATES BILL: DELIBERATIONS

Chairperson:
Mr Y Carim (ANC)

Relevant Documents
Additional amendments to the Municipal Property Rates Bill (6 February 2004)
Organisation Development Africa (ODA) submission (see Appendix 1)
Van Ryneveld submission (see Appendix 2)
City of Cape Town submission (see Appendix 3)
Transtel submission (awaited)

SUMMARY
The Committee reviewed the additional amendments ready for voting on 16 February 2004..

The Botanical Society urged the Committee to consider including environmental issues in the rates policy in order to strengthen the enforcement of environmental by-laws. The Society said that the introduction of punitive measures against those who denigrate the environment would go a long way to preserve the environment. The Department and SALGA expressed strong objection to the request by the Botanical Society. The two held the view that issues to do with environmental conservation were cross-cutting and hence onerous for municipalities to implement at the level of rates policy. The Committee will highlight this concern in its Committee Report to Parliament and propose that the Department should consider over time - when municipal structures are fully matured - incorporating environmental issues in the rate policy.

The Committee also considered the Organisation Development Africa (ODA), Van Ryneveld, City of Cape Town and Transtel submission but believed these concerns had been accommodated in the Bill.

MINUTES
The Chair informed members that the Committee would vote on the Bill on Monday 16 February. He reiterated his earlier remarks that the Bill has taken the longest time to conclude and that it has had the highest level of public participation. In spite of this preponderance of input the Committee would keep the door for consultation wide open until the last minute. He noted the presence of Mr Mark Botha from the Botanical Society and assured him that the Committee will grant him an audience during the meeting.

Discussion
The Chair noted that SALGA had agreed to retain Clause 14(2)(b) the way it is. SALGA had earlier expressed the need to make it clearer.

Dr Petra Bouwer (Department drafter) reminded the Committee that Clause 16 had been amended.

Mr Lyle (ANC) inquired whether military bases would be included in the valuation exercise.

Dr Bouwer clarified that some portions of military bases that have not been declared as protected areas would be included.

Dr Bouwer informed the Committee that all references would change to take care of past amendments. In answer to the Chair asking when the amended version would be ready, Dr Bouwer said that owing to time constraints the Committee would seek parliamentary approval to take a short cut in order to fast track the production of an "A" version of the Bill.

Mr Dorfling referred to Clause 3(2) and pointed out that the rating policy was already in place. He added that the necessary transitional measures were in Clause 75(a) and what was required is to change the date so as to read: 'before the effective date of the new valuation roll".

The Chair said "1 July 2006" at Clause 3 should be taken out since the same is already covered in Clause 75.

The Chair wanted to know whether "portions of property" at 7(2) would change.

Mr Dorfling clarified that "rateable property" excludes exclusions.

Mr Vaz said that exclusions cover the full and not part of the property. He added that what is to be excluded is defined in the Bill.

Ms Manche referred to 8(3)(d) and sought clarity whether "farm properties" is a separate category.

Mr Dorfling noted that the current Ordinance only refers to agricultural farms without making mention of "farm properties".


The Chair said this was a good observation only that it was coming very late in the day. He expressed worry at the possible numerous consequential amendments that would flow from altering the provision.

The Chair noted that the current Section 15A was very well crafted and commended the legal drafter for an excellent piece of work. He asked the drafters to revisit the numbering of provisions which needed to be cleaned up.

Botanical Society submission
Mr Mark Botha made the point that it is very important to take everybody on board when promulgating such a crucial piece of legislation. From the outset one needed to get all the fundamentals right to avoid a situation of crisis management at the time of implementation. There had been significant deliberations on the Bill, and that is how it should be. Environmental issues should not be located outside the rate policy. When included in the rate policy such issues would guide municipalities on how to implement environmental legislation for sustainable development. This would not necessarily cost municipalities anything. Those who failed to comply with environmental by-laws should be penalised.

Discussion
The Chair wanted to know the kind of legal systems municipalities should put in place to help conserve the environment.

Mr Botha pointed out that the Minister has set the environmental framework, which, in the main, called upon municipalities to take into account threatened eco-systems when designing their development policies. He gave the example of a certain mountain club that had reserved a piece of land as a nature conservation for people to take a walk through but when they were given a rates bill they decided to abandon this noble project.

Mr Ben Dorfling (SALGA representative) in response to Mr Botha's remarks said that it would present no problem were the "Botanical Society to be treated as a specific category". The real difficulty lay in the fact that councils would not manage influences on rates from different categories of ratepayers. Such influences are illogical and if permitted would render rating administration a nightmare. Councils have by-laws that would draw-in punitive measures to supplement statutory environmental provisions. This particular administrative remedy has nothing to do with the rating policy. It is incumbent on municipalities to vigorously enforce by-laws that penalise environmental pollution. Where there is a conservation area, there are specific provisions that cater for such land.

Dr Petra Bouwer (Department drafter) explained that the Bill has been crafted in such a manner that it makes provision for compartmentalisation of certain categories of interests. In the event that conservation issues do not fall under any of these listed categories, it would amount to discrimination to grant it a special dispensation under the law. This would be the potential danger in granting the request by environmentalists. These categories were created based on the rates policy.

Mr Botha disputed the argument on discrimination and noted that even though there are good laws on environmental protection, these have been rendered ineffectual due to the lack of a vigorous enforcement campaign by municipal authorities. He submitted that a good signal sent through the rates policy would help re-invigorate environmental protection activities.

Mr Peter Vaz (Department resident advisor) objected to the proposal that the rate policy should be used to remedy incompetent by-laws. He noted that there were other more direct interventions that could cure this lapse in enforcement measures. Good results could be achieved through the imposition of penalties.

Ms Jackie Manche (Department Deputy DG: Institutional Reform and Support) said she appreciates the concern raised by environmentalists but noted that environmental issues are cross-cutting which present municipalities with a huge administrative dilemma. It would be difficult to compartmentalise all these concerns in a rate policy without creating loopholes that would be subject to abuse. She clarified that rates policy in this dispensation only deals with situations where municipalities are required to do certain basic things and has nothing to do with the management of local environmental matters. The latter concern is adequately covered in the general law and reinforced by municipal by-laws. Special treatment would open a floodgate of petitions for the same relief.

The Chair said the Bill as it currently stands is not cast in stone. There would be instances, during the phasing-in of implementation, when it would become necessary to effect amendments to cater for some unforeseen situations. Environmental issues do not constitute a sector on its own hence the need for environmentalists to approach municipalities in their individual capacity for whatever exemptions they might require. He disagreed with the Department's argument that were the environmentalists to be given a special dispensation, it would create an impossible administrative burden and possibly open a floodgate of petitions for similar requests. He asked Mr Botha to cite examples of countries where the rate policy has been used to influence environmental management.

Mr Botha gave the example of Australia and Costa Rica where a regime of rebates has been created to encourage people to plant and nurture certain rare species.

The Chair said this scenario is already catered for in that 'protected areas' falls in the ambit of one of the exempted categories.

The Chair pointed out that the Committee is generally sympathetic to the concerns raised by the Botanical Society but SALGA and the Department are unmoved by this proposition.

Mr Botha expressed concern that, indeed, even private conservation efforts in the Western Cape region are still rated at full commercial scale. People in some cases received bills of over R200 000 for idle property that has been set aside for conservation purposes.

The Chair said the full principle of exclusion applies where a piece of property has been set aside for purely conservation purposes. Such property owners are better advised to apply to the relevant municipality for exclusion.

Mr Botha withdrew his earlier remark to the effect that applications for exclusion were burdensome to property owners after the Chair noted that the assertion only helps to weaken his case.

Mr Mbongeni (ANC) expressed the view that many municipalities are still too young and fragile to withstand the strain of environmental management to the proposed scale. It would be difficult to ensure compliance. It was however important to encourage every sector to engage local authorities. The Bill should not be expected to close all gaps and that there is a clear constitutional limitation on what the national government could prescribe to local authorities. Municipalities should be sensitive to environmental issues in view of the fact that such issues are to the benefit of all concerned.

Mr Lyle (ANC) agreed with the Chair's proposal that indeed environmental concerns are adequately covered by exclusions in the Bill.

The Chair said he was satisfied, after listening to all the views, that there was no need for a special dispensation to cater for environmental issues. He however asked the Department and SALGA to give an indication that this would be the way forward since the world is fast moving towards greater environmental protection under International Law. He added that the matter would be included in the Report to Parliament.

Mr Botha clarified that contrary to popular view the protection of the eco-system is not a relief meant to appease the rich but that it was an effort towards sound use of natural resources.

Mr Peter Vaz insisted that it would be too onerous to incorporate environmental issues in the rate policy. Numerous statutory provisions already cater for this particular concern. It would be unwise to duplicate such provisions.

The Chair proposed that the Department should note this concern and indicate that over time - when municipal structures are fully matured - it would consider incorporating environmental issues in the rate policy. For the present there were many immediate needs that municipalities are faced with. It would, therefore, be untimely to burden them with environmental issues at this point. He noted that the Department should bear in mind that some people might decide to go to court over this issue. He ruled that the subject should be flagged until 13 February to give parties time to consider its implications.

The Committee considered submissions by Organisation Development Africa (ODA), Mr Phillip Van Ryneveld, Transtel and the City of Cape Town. The Committee noted that all concerns that had been raised in these submissions were fully addressed in the Bill and that there was nothing substantially novel to warrant a change.

The PMG monitor departed at 5.00pm. The Committee was set to sit until 6.30 pm.


Appendix 1
Organisation Development Africa

My apologies for not making the 17:00 deadline on Thursday 12 Feb, trust that this will find you well

1. Definitions, now includes Data Collector and refers to 31 B. The draft that I looked at however has no 31B. It only refers to Valuer and Assistant Valuer. If no explicit reference is made to a data collector or person designated by a valuer the provision on alternative valuation methods (see clause 38) is nullified. Most alternative valuation processes rely heavily on non-conventional techniques, and the use of lower skilled people such as data collectors data capturerers and technicians

Definition of Public Service Infrastructure, I note a number of question marks in the definitions, not sure why?

2.Clause 3 Rates Policy: Are places of worship covered in the PBO definition?

3. Clause 8 (o) multiple use properties: The first option should be avoided as it refers to permitted use and regulation. The second option only refers to permitted use , which in any event (as in case of a departure) constitutes the legal use of the property. The term "regulated" brings in issues of land use regulation, which should best be kept out of the process of apportioning values to the different components of a muli-use property.

 

4. Impermissible Rates clause 15 A: I note a number of issues still flagged, difficult to comment not having been party to latest discussions on 229.

5. Special rating areas, clause 19(4): This insertion is very valuable

6.lnspection of property, clause 34(1) (a); Many Valuers may argue that the cut off of 17:00 is unreasonable and that this cut off may result in lack of access which in return may result in a high level of inaccuracies leading to objections.

This is possibly an issue on which the Bill should set a guideline, but on which the municipality after consultation with its constituency I citizens should decide.

7. Supplementary Valuations, clause 69(4): a Supplementary Roll is supplementary to the valuation roll that applies in a specific cycle. The logic should therefore be that the valuations emanating from a supplementary roll should apply from the effective date of the Valuation Roll that it supplements. Supplementary rolls do not have a life I cycle of their own, they relate to a general valuation roll.

I am out of Town on Friday 13 Feb, Monday 1 6& Tue 17 Feb, and will be available (if needed) for interaction with yourself or the Committee on Wed 18 Feb

I hope that this input does not confuse matters too much

Kind regards

Nico McLachlan

ODA


Appendix 2
Comments on Property Rates Bill Philip van Ryneveld

A number of my original responses were discussed in the meeting on 11th February in parliament, and I have not repeated these.

A few issues remain

s13.3 (a) 1.

What is meant by a satellite office? Somebody could argue that every office outside the head office is a satellite office. Perhaps you should say 'main satellite offices used by the public for making general enquiries'

Note that the provision to show rebates, exemptions etc on the budget will significantly increase the recorded 'income' and 'expenditure' of municipalities.

s16.

Is there clarity about the definition of a 'rate'. Does a rate refer to a cent in the rand, or the actual tax amount payable. The term logically refers to the cent in the rand, but in South African discourse is often used to refer to the actual amount payable. If the latter, then 16.1(a) could be a problem I would suggest you legal drafter check it.

s17

Section 17 is a bit dangerous. It could become subject to abuse by a populist national Minister - and once it is in the legislation it will be very difficult ever to remove. It represents a significant increase in national government's power. (But I realize this is now not up for debate.)

s19.4 What is meant by 'reinforce existing inequities'. If a qualification such as this is required I would prefer to use the phrase 'exacerbate inequity'.

 

I am aware that it is very late to be still discussing the exclusion issues around public sector infrastructure. Unfortunately, when the debate arose many public sector institutions jumped onto the bandwagon to unreasonably demand exclusion and this has complicated the debate.

I believe very strongly that major points such as airports, harbours etc should be taxed. They are often highly dependent upon the municipal infrastructure surrounding them for their operations and reason for being.

After the discussion yesterday, and after some reflection I would exclude (i.e. not tax at all) the major NETWORK infrastructure i.e. the infrastructure along which things are transported - but not exclude from taxation the end points.

Taking the definition of P511 would

Exclude (100%) those things contained under clause (a) of the current definition - i.e. national, provincial roads, etc.

Exclude (100%) those things contained under clause (b) of the current definition - i.e. water and sewerage pipes etc

Under clause (c) I would continue to tax power stations and substations, but would exclude power-lines.

Exclude (100%) those things contained under clause (d) of the current definition - i.e. gas pipelines going across municipal boundaries

Exclude (100%) those things contained under clause (e) of the current definition - ie railway lines

Exclude (100%) the waterways at harbours. I would continue to tax the harbours themselves.

The rest of the things I would tax - maybe at a 20% or 30% discount - maybe at no discount.

If we follow this approach, then we are largely holding constant what we currently tax or do not tax. This would make for maximum simplicity in implementation.

I know that these comments are probably not very helpful coming at this late stage, but I suspect this debate will continue.

Philip van Ryneveld



Appendix 3
CITY OF CAPE TOWN

Please find attached comments on the Municipal Property Rates Bill from Les Recontre and myself.

3. (2) A rates policy must-

(bA) determine, or provide criteria for the determination of

The municipality must determine the categories of properties if contained in 8. (2) but does not need to provide criteria. However, if a municipality wants to determine a category not reflected in 8. (2) it must determine and it must provide criteria. Also is criteria the correct terminology as the three criteria are given in 8.(1) (a)-(c).

14

(1A) When granting..., a municipality [may] must determine such categories in accordance with section 8 (2)....

14.

(1A)

(g) owners of agricultural properties who are bona fide farmers.

Why include farmers as a category of owners, when agricultural property is dealt with in detail as a category of property A bona fide farmer may own more than one farm, each of which may be a different category of property

15A.(2) (b} If the property of which the declaration is withdrawn is privately owned,...subsection (1) (e), would have been payable on the property [during the period,...are payable only] from the date of declaration of the property.

If the period is measured from the effective date of the current valuation roll, it would allow owners to withdraw one day after the effective date and not be liable for any rates. If the intention is ~ limit the rates payable, it would be better to prescribe the period for four years preceding the date of withdrawal. If the intention is to start with current rolls, it might be better to specify from the effective date of the valuation roll in place on the date of promulgation of this Act

15A.(4) (a)

(ii)

Not clear. The residence may not be associated with one place of worship. The exclusion on the residence should lapse if there is no public worship, irrespective if it remains an official residence.

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