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PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG OCTOBER 2007

PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG OCTOBER 2007. INTRODUCTION THE MUNICIPAL PROPERTY RATES ACT (ACT 6 OF 2004) REQUIRES EACH MUNICIPALITY TO DRAW UP A RATES POLICY . ( Chapter 2 , part 1 , 3. (1) to (6) )

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PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG OCTOBER 2007

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  1. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG OCTOBER 2007 • INTRODUCTION • THE MUNICIPAL PROPERTY RATES ACT (ACT 6 OF 2004) • REQUIRES EACH MUNICIPALITY TO DRAW UP A RATES • POLICY . ( Chapter 2 , part 1 , 3. (1) to (6) ) • “THE COUNCIL OF A MUNICIPALITY MUST ADOPT A POLICY • CONSISTENT WITH THIS ACT ON THE LEVYING OF RATES ON • RATEABLE PROPERTY IN THE MUNICIPALITY” . • THE POLICY TAKES EFFECT ON THE EFFECTIVE DATE OF THE • FIRST VALUATION ROLL PREPARED IN TERMS OF THE ACT • THE EFFECTIVE DATE FOR JOBURG HAS BEEN • DETERMINED AS 1ST JULY , 2008

  2. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG • THE RATES POLICY FOR JOBURG WAS APPROVED FOR • RELEASE FOR PUBLIC COMMENT IN JUNE , 2007 . • THE CLOSING DATE FOR PUBLIC PARTICIPATION AND • COMMENT ON THE RATES POLICY IS THE 31ST OCTOBER , 2007 • THE RATES POLICY WILL BE SUBMITTED TO COUNCIL FOR • APPROVAL AND FORMAL ADOPTION IN JANUARY , 2008 • THE INPUTS RESULTING FROM PUBLIC PATICIPATION WILL • BE CONSIDERED AND INCORPORATED WHERE RELEVANT • THE RATES POLICY MUST BE REVISED ANNUALLY AND • CONSIDERED WITH THE DRAFT BUDGET EACH YEAR

  3. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG • JOBURG’S RATES POLICY • THE INTENTION OF THE RATES POLICY IS TO : • BE READ IN CONJUNCTION WITH THE ACT • SHOW THE WAY IN WHICH COUNCIL IS INTENT ON • IMPLEMENTING THE ACT AND LEVYING RATES • BE A LEGAL DOCUMENT TO BE USED IN LITIGATION • BE SUPPORTED BY BY-LAWS WHICH ARE THE • ENFORCEMENT TOOLS FOR RATES LEVIED IN TERMS OF • THE ACT AFTER 1ST JULY, 2008

  4. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG • OBJECTIVES OF RATES POLICY • THE POLICY DESCRIBES AND PROVIDES : • CRITERIA FOR CATEGORIES OF PROPERTY • CATEGORIES OF OWNERS • MANNER OF DEALING WITH MULTIPLE USE PROPERTIES • CRITERIA FOR DETERMINATION OF REBATES ON VARIOUS • CATEGORIES OF PROPERTY • DETERMINATION OF IMPACT OF REBATES ON • OVERALL RATES REVENUE

  5. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG • PRINCIPLES INFORMING RATES POLICY • RATES PROPERTY ON MAXIMUM POTENTIAL RIGHTS • ENCOURAGES DEVELOPMENT OF VACANT LAND • BENEFITS RESIDENTIAL LAND OWNERS WHERE VALUE • BELOW THRESHOLD AT WHICH RATES COMMENCE • ADDITIONALLY BENEFITS RESIDENTIAL OWNERS WITH • VALUE BELOW THRESHOLD THAT HAVE CONSENT USE • PROVIDES RATES BURDEN FOR AGRICULTURAL HOLDINGS • EXCEEDING 10 000 SQ. M. – SLIDING SCALE REMOVED

  6. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG • CREATES BURDEN FOR TRUSTEES OF PRIVATE SCHOOLS • AND CLUBS • ENCOURAGES MIXED USE DEVELOPMENTS IN SPECIFIED • AREAS • SUPPORTS LAND DEVELOPMENT OBJECTIVES OF CITY • PROMOTES DENSIFICATION OF RESIDENTIAL • ACCOMMODATION THROUGH REBATES FOR CERTAIN TYPES • OF ACCOMMODATION • PROVIDES STRATEGIES FOR PHASING IN OF RATES ON NEWLY • RATED PROPERTIES AND RATES INCREASES ABOVE • PREDETERMINED LEVEL

  7. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG 6. ANNUAL OPERATING BUDGET : (2) RATES INCREASE MUST BE USED FOR FINANCING INCREASE IN OPERATING COSTS OF SERVICES AND FACILITIES (3) IN DETERMINING INCREASE IN RATES CRITERIA TO BE APPLIED (DA PROPOSES INSERT : MAY) INCLUDE : a) INFLATION RATE - CPIX b) FINANCING OF INCREASED OPERATING EXPENDITURE c) FINANCING OF INCREASED MAINTENANCE EXPENDITURE d) FINANCING INCREASED DEPRECIATION CHARGES e) ADDITIONAL COST OF SERVICING DEBT f) AUGMENTATION OF ANY REVENUE SHORTFALL g) FINANCING OF ANY EXPENDITURE RELATED TO ANY ACTIVITY COUNCIL CAN LAWFULLY UNDERTAKE

  8. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG h) NATIONAL TREASURY DETERMINED MEDIUM TERM BUDGET GROWTH FACTORS (4)(a) DIFFERENTIAL RATES : MAY BE LEVIED ACCORDING TO PERMITTED (ZONING) OR ACTUAL USE OF PROPERTY (MAY BE ILLEGAL USE) (b) CRITERIA TO BE CONSIDERED IN DETERMINING IF DIFFERENTIAL RATES TO BE APPLIED : i) NEED TO PROMOTE ECONOMIC DEVELOPMENT ii) ANY ADMINISTRATIVE ADVANTAGE iii) NEED TO ALLEVIATE RATES BURDEN ON OWNERS OF ANY PARTICULAR CATEGORY OF PROPERTY

  9. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG (5) RATES AND VALUATION RATES LEVIED AS AN AMOUNT IN THE RAND BASED ON THE MARKET VALUE OF ALL RATEABLE PROPERTIES REFLECTED IN VALUATION ROLL ( SECTIONAL TITLE UNITS RATED INDIVIDUALLY) 7. CATEGORIES OF PROPERTY FOR LEVYING DIFFERENTIAL RATES : a) BUSINESS , COMMERCIAL AND INDUSTRIAL b) RESIDENTIAL PROPERTY c) RESIDENTIAL PROPERTY WITH CONSENT USE d) MUNICIPAL PROPERTY NOT RATEABLE e) MUNICIPAL PROPERTY RATEABLE f) STATE OWNED PROPERTY g) FARMING LAND USED FOR BONA FIDE FARMING

  10. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG h) PUBLIC SERVICE INFRASTRUCTURE i) PROPERTY FOR MULTI PURPOSE USE j) AGRICULTURAL HOLDINGS USED FOR AGRICULTURAL PURPOSES k) VACANT LAND – IRRESPECTIVE OF ZONING l) MINING PROPERTY ANY PROPERTY NOT FALLING INTO ONE OF THE CATEGORIES LISTED ABOVE WILL BE DEEMED TO BE BUSINESS , COMMERCIAL AND INDUSTRIAL FOR THE LEVYING OF RATES NB : PROPERTY USED IN CONFLICT WITH ZONING WILL BE RATED AT TARIFF APPLICABLE TO BUSINESS , COMMERCE AND INDUSTRIAL

  11. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG 9.CATEGORIES OF OWNERSHIP FOR EXEMPTIONS , REDUCTIONS AND REBATES IF DIFFERENTIAL RATING APPLIED (AND PROPOSED REBATES) : a) NATURAL PERSONS WHO OWN AND OCCUPY RESIDENTIAL PROPERTY WHO HAVE LIMITED INCOME – NOT PENSIONERS – BUT CAN PROVE ANNUAL INCOME BELOW LIMIT DETERMINED BY COUNCIL FROM TIME TO TIME MAX PROPOSED REBATE 75% OF CURRENT RATES b) NATURAL PERSONS WHO OWN AND OCCUPY RESIDENTIAL PROPERTY WHO DEPEND ON STATE SOCIAL GRANT i .t.o. SOCIAL ASSISTANCE ACT (NO.59 – 1992) - HOUSEHOLD INCOME MUST NOT EXCEED 2X STATE GRANT PLUS R1 MAX PROPOSED REBATE 100% OF CURRENT RATES c) PENSIONERS WHO OWN AND OCCUPY RESIDENTIAL PROPERTY WITH INCOME NOT EXCEEDING LEVEL PREDETERMINED BY COUNCIL – MUST BE 60 YEARS+ MAX PROPOSED REBATE 75% 0F CURRENT RATES

  12. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG • NB - CONDITIONS APPLICABLE TO RESIDENTIAL PROPERTIES: • VALUE OF PROPERTIES REFERED TO IN a),b) AND c) ABOVE MUST NOT EXCEED A LIMIT DETERMINED BY COUNCIL AT THE INCEPTION OF THE VALUATION ROLL - APPLICABLE FOR DURATION OF ROLL (NO FIGURE PROPOSED – DA R1M) • OWNERS MUST APPLY FOR REBATE ON PRESCRIBED FORM ACCOMPANIED BY COPY OF SOCIAL SECURITY CARD, TAX ASSESSMENT OR ACCEPTABLE PROOF OF INCOME • REBATE GRANTED FOR MAXIMUM PERIOD OF 2 YEARS PROVIDED STATUS OF BENEFICIARY DOES NOT CHANGE – RE-APPLY AFTER 2 YEARS • NO RETROSPECTIVE REBATES WILL BE GRANTED - APPLICATIONS MUST BE SUMITTED BY 1 SEPTEMBER 2008

  13. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG d) ORGANISATIONS WHICH CARE FOR AGED AND OWN PROPERTY USED FOR THIS PURPOSE MAX PROPOSED REBATE 100% 0F CURRENT RATES e) INSTITUTIONS WHICH OWN PROPERTY AND PROVIDE EDUCATION AND/OR STUDENT ACCOMMODATION AT : i) PUBLIC SCHOOLS PROPOSED 50% - (DA 80%) ii) PRIVATE SCHOOLS PROPOSED 50% - (DA 80%) iii) UNIVERSITIES PROPOSED 20% - (DA 75%) iv) TECHNICAL AND OTHER COLLEGES PROPOSED 20% - (DA 75%) f) PUBLIC BENEFIT ORGANISATIONS (i.e. sect. 30 INCOME TAX ACT 1962) WHICH OWN PROPERTY MAX PROPOSED REBATE 100% g) PRIVATE SPORTS CLUBS WHICH OWN PROPERTY USED SOLEY FOR SPORTS ( DA PROPOSES : AND/OR RECREATIONAL AND/OR CULTURAL) PURPOSES MAX PROPOSED REBATE 20% - (DA 75%)

  14. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG h) OWNERS OF PROPERTY IN INNER CITY WHICH WAS RE- ZONED FOR RESIDENTIAL PURPOSES AFTER 1ST JULY , 2001 PROPOSED REBATE 40% i) RELIGIOUS COMMUNITIES IN WHOSE NAME PROPERTY IS REGISTERED AND USED PRIMARILY AS A PLACE OF PUBLIC WORSHIP PROPOSED REBATE 100% j) OWNERS OF HERITAGE SITES PROPOSED REBATE 20% (DA 50%) k) STATE OR ORGAN OF STATE OWNING PROPERTY PROPOSED REBATE 20% l) OWNERS OF PROPERTY USED FOR BONA FIDE FARMING CONDITIONAL - PROPOSED REBATE 55% (DA – 75%) m) OWNERS OF RESIDENTIAL PROPERTY WITH MARKET VALUE BELOW THRESHOLD PROPOSED REBATE 100%

  15. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG n) PROPERTY OWNED BY MUNICIPALITY – NO PROPOSAL (SPECIFIED AS RATEABLE OR NON-RATEABLE) o) PROPERTY REGISTERED IN NAME OF INSTITUTION OR ORGANISATION WITH EXCLUSIVE OBJECTIVE OF PROTECTION OF ANIMALS NO PROPOSAL – (DA 75%) p) PROPERTY FOR ACCOMMODATION OF MORE THAN SPECIFIED NUMBER OF DWELLING UNITS PER ERF AS CONTEMPLATED IN TOWN PLANNING SCHEME PROPOSED REBATE 25% NB : THE ABOVE MAXIMUM REBATE PROPOSALS APPLY TO CATEGORIES OF OWNERS WHEN DIFFERENTIAL RATES ARE LEVIED FOR DIFFERENT CATEGORIES OF PROPERTY

  16. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG • NB : CERTIFICATE OF OCCUPANCY : • 11 . TO QUALIFY FOR THE RESIDENTIAL RATE OR REBATE A • RESIDENTIAL PROPERTY MUST HAVE BEEN INSPECTED • BY COUNCIL AND BE ISSUED A CERTIFICATE OF • OCCUPANCY. PROPERTIES RATED AS RESIDENTIAL • PRIOR TO 30TH JUNE 2008 ARE EXCEMPTED . • REBATES IF UNIFORM RATE LEVIED • ONE WOULD EXPECT THAT THE COUNCIL WOULD HAVE • MADE SPECIFIC PROPOSALS FOR REBATES FOR • RESIDENTIAL PROPERTIES IN THE SITUATION WHERE A • UNIFORM RATE IS LEVIED . INSTEAD COUNCIL STATES • THAT THE REBATES FOR RESIDENTIAL PROPERTIES • WOULD BE A : “PERCENTAGE OF CURRENT MONTHLY • RATES TO BE DETERMINED BY THE COUNCIL” – (NOT • ACCEPTABLE TO DA)

  17. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG • THE PROPOSED REBATES FOR OTHER CATEGORIESOF OWNERS REMAINS THE SAME AS IN THE CASE WHERE DIFFERENTIAL RATES ARE LEVIED – DA PROPOSALS AS ABOVE • 13. COSTS AND BENEFITS : • COSTS AND BENEFITS OF PHASING-IN , REBATES , • REMISSIONS AND EXCLUSIONS TO COMMUNITY MUST BE • REPORTED IN THE ANNUAL OPERATING ESTIMATES OF • COUNCIL • 14. ILLEGAL USE OF PROPERTY : • UPON THE ISSUE OF A COURT ORDER PERTAINING TO THE • ILLEGAL USE OF A RESIDENTIAL PROPERTY ANY REBATE • IS FORFEITED . APPLICATION CAN BE LODGED FOR RE- • INSTATEMENT .

  18. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG • PHASING IN OF RATES : • COUNCIL MAY CONSIDER THE PHASING IN OF NEWLY • LEVIED RATES OR RATES INCREASES ABOVE A • PRESCRIBED AMOUNT (DA PROPOSES 25%) • RATES CURRENTLY PAID VIA THE LEVY IN SECTIONAL • TITLE DEVELOPMENTS ARE DEEMED TO HAVE BEEN PAID • PRO-RATA BY OWNERS (THEREFORE OWNERS WILL NOT • BE DEEMED TO BE NEWLY RATED ) – DOES APPROVED • SCHEME NOT ALLOCATE RATES ON SPECIFIED BASIS?) • 16. LIABILITY FOR RATES : (NO QUID PRO QUO) • OWNER OF PROPERTY LIABLE FOR PAYMENT OF RATES • RATES ONLY PRESCRIBE AFTER 30YEARS • JOINT OWNERS JOINTLY AND SEVERALLY LIABLE • RATES CAN BE RECOVERED FROM AGENT/TENNANT OF • RATEPAYER/OWNER

  19. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG • 18. VALUATION ROLL – INSPECTION / OBJECTION : • COUNCIL MUST GIVE NOTICE THAT ROLL OPEN FOR • INSPECTION . • ANY PERSON MAY LODGE OBJECTION WITH CITY • MANAGER WITHIN PRESCRIBED TIME • OBJECTIONS MUST BE SPECIFIC TO A PROPERTY • LODGING OF OBJECTION DOES NOT DEFER LIABILITY FOR • PAYMENT OF RATES • SUMMARY : • THE DA BELIEVES THAT THE RATIO OF REVENUE CURRENTLY RECEIVED FROM RESIDENTIAL PROPERTIES COMPARED TO TOTAL INCOME FROM ALL RATES SHOULD BE RETAINED UNDER NEW ACT FOR AT LEAST 4 YEARS

  20. PRESENTATION ON DA PROPOSALS FOR RATES POLICY - JOHANNESBURG THE DA PROPOSES THAT THE PRESCRIBED LEVEL (VALUATION) AT WHICH RATES SHOULD COMMENCE SHOULD BE SUBSTANTIALLY INCREASED FROM THE CURRENT LEVEL OF R20 001 (POSSIBLY BY FACTOR OF 6 TO 8) TO R120 000 T0 R160 000 THE DA PROPOSES THAT THE INITIAL R15 000 OF VALUE OF RESIDENTIAL PROPERTIES THAT IS NOT RATED BE INCREASED TO 50% OF THE COMMENCEMENT VALUE FOR RATING (AS PROPOSED ABOVE) THE PROPOSALS ON REBATES , ETC. DETAILED IN THE PRESENTATION WILL BE INCLUDED IN THE DA PROPOSALS ON THE RATES POLICY TO BE SUBMITTED TO THE CITY MANAGER’S OFFICE THANK YOU !

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