Municipal Property Rates Act Provincial Steering Committee 18 th May 2007.

Municipal Property Rates Act

Provincial Steering Committee 18th May 2007

PEOPLE-CENTRED SUSTAINABLE LOCAL GOVERNANCE

UMnyango wezoHulumeni baseKhaya neziNdaba zoMdabu | Departement van Plaaslike en Tradisionele Regeringsake

Report back

• Report back on Provincial Programme from 13th April 2007.

• Emerging best practice and critical challenges



Property Information support

• Report back from the PIMS Working Group (Mervin Naik)



DPLG matters

• Growth parameters on the increase in annual budgets, National Treasury Circular 41 of 2007, 3-6%

• Ratios defining impermissible differentiation, s19

• Limits on the annual increase in rates, s20



DPLG response• dplg advised that the provisions of Section

19 and section 20 are not peremptory; and that in the absence of any limits set by national government, the affected parties can use section 16 to deal with impermissible rates;

• A study on the ratios and limits was being carried out but would only be implemented for the 2008 year;



DPLG matters: 20th April & 3rd May

• Respective roles of LGTA, Provincial and National Treasury

• Clarity that implementation of MPRA does not create a license for inflating annual municipal budgets

• Budget analysis process conducted by Provincial Treasury with follow up meetings with respective municipalities.

• Equitable share issues: Mmatter has been taken up with National Treasury.

The macro-economic factors that must be taken into consideration in developing a rates policy in line with section 229(2)(a) of the Constitution are the following:

Promotion of economic growth Effective coordination of economic policy across the 3 spheres of

government Consistency with macro-economic priorities of maintaining low

and stable inflation rates The need to increase competitiveness of exporting businesses

located within a municipality, to support small business development and foster rapid job creation

The need to attract and promote both national and foreign capital investment

Rates must be consistent with broad developmental priorities

Impermissible Rates

11

If a rate on a specific category of properties, or a rate on a specific category of properties above a specific amount in the Rand infringes upon section 229(2)(a) of the Constitution the Minister would limit such a rate, s16 application.

Any sector of the economy after engaging with the relevant municipality or municipalities and organized local government may approach the Minister regarding relief.

Impermissible Rates

11

A municipality must limit rates shocks to property owners due to increase in market value of property resulting from the following scenarios:

A municipality which is rating and valuing for the first time. All those properties will be treated as a newly rateable property and the phasing-in of rates in terms of section 21 of the Act is applicable.

Management of Rates Shocks

13

Management of Rates Shocks A municipality which is moving from land rating to that

of market value should grant a reduction by phasing-in the market value of a property over the valuation cycle and the Cent amount in the Rand must be reduced drastically.

A municipality which is already rating both land and buildings using market value and is revaluing properties should grant a reduction by phasing-in the market value of a property and reduce the Cent amount in a Rand.

The municipality should take into consideration the following for the purposes of increasing or decreasing rates:

Revenue needs of the municipality. A need for management of rates shocks. Affordability of rates to ratepayers. Priorities of the community reflected in its IDP. A need to promote local economic development. Compliance of section 16 of the Act

Rates Increases or Decreases

15

The municipality must follow a process of community participation in developing the rates policy and determining the Rates (Cent amount in a Rand) through the budget

The municipality must take all comments and representations received into account when considering the draft rates policy and draft budgets.

Community participation

16

Rates policy development and determination of rates in the budget involves making sound decisions that should contribute positively to the:

Management of rates shocks. Insuring of affordability of rates to ratepayers Revenue needs of the municipality Local economic development. Local social development. Service delivery, by meeting priorities of the

community as reflected in its IDP.

Conclusion by dplg

17



State & State Trust Land including Ingonyama Trust

• Recommendation for valuation & rating• Approved by the Board• Submission to Minister towards standardising and

achieving uniformity in approach to valuation and rating of State & State Trust land.

• Address remedial action through supplementaries should a different approach have been used in the GV.

• Property information: poor status – Commercial leases– Commercial & institutional PTO’s



Budgetary requirements: MPRA

• National legislation, municipalities are compelled to implement

• Possible funding options– Grants from LGTA– MSIG– Project Consolidate– CSP

• Municipalities must establish their funding gap and provide accordingly



Appointment of service providers

• Query to National Treasury regarding the appointment of service providers without cash reserves to back the appointment.

• Response from National Treasury.



Agricultural valuations• Various interpretations of the

Act by different service providers.

• Confusion regarding annual crop assessments which must be disregarded

• Water irrigation installation, to be included from the pump (pump, switch gear, mother lines/mains) to the ‘in field’ equipment

• Differing market assessments & inequity.



Way forward: equity

R 8000.00 per

hectare for cane

R 22 000.00 per hectare for cane

SAIV Practice notes towards a standard and

consistent interpretation of the Act.



Agricultural valuations

• Valuers accompanied KZN delegation to dplg for 18th April meeting with agricultural valuers.

• Drafting of practice notes for the profession.• Presentation to organised agric reps on 25th May

2007.• To be circulated to all registered valuers by 30th

June 2007 by SACPVP.



Valuation appeal boards

• Update on establishment

• Concerns from MEC re representivity

• Way forward: re-advertise calling for nominations



Councillor orientation workshops

• Umgungundlovu: 25th April (39)

• Zululand: 12th June

• uThungulu: 14th May (117)

• Mnambithi: postponed

Overview of the legislationCritical Council resolutions

Preparation of a Rates policy



Information sessions for the amakhosi

• HOD to meet with the House of Traditional Leaders regarding this request.

• Position of the Dept: This function lies with the municipalities to address this stakeholder group.



Regional workshop

• 22nd and 23rd May with Regional staff

• Focus on transfer of skills and the responsibilities of Regional staff in monitoring process

• Monitoring must proceed after the service providers leave in order that the MEC’s responsibilities towards compliance are executed.



Communication strategy

• Appointment of communication specialist pending, awaiting appointment

• Scope includes: – DVD– Implementation newsletters– Help line, 0800 toll free– Communication material to support municipalities, 6

interventions– Councillor kits

Increasingly URGENT



Communication strategy

• Allegations from ratepayers that public participation process has been inadequate.

• Towards a framework to monitor minimum requirements for public participation process.



MPRA Website

• Proposal for a more interactive web page

• Meeting with LG SITA scheduled for

21st May 2007.



Support material from SA Institute of Valuers

Posters in English & isiZuluBooklets



Draft standard rates by laws

• Final version incorporating comments to be distributed through Regions on CD.

• Ready for collection from support staff.



Data collection

• Procurement of data collectors, concurrence of MM, S36– Discussion towards submission to District

Co-ordinating Forums– Presentation by Mr Hauptfleisch, Newcastle,

towards emerging best practice.



Financial working group

• Proposal to re-establish the Financial working group to enable CFO’s to network re implementation challenges. (Msunduzi proposal)

• 31st May 2007, CFO Forum• Possible outputs:

– Management of rates shocks– Possible capping on rates increases per category– Tariff guidelines for various categories– Impermissible rates: whether these are income

foregone?– Body Corporates: Managing agents?



Steering Committee meetings

• Frequency of these meetings

• Discussion and resolution regarding the way forward

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Municipal Property Rates Act Provincial Steering Committee 18 th May 2007.

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