PRESENTATION TO THE PORTFOLIO COMMITTEE FOR PROVINCIAL AND LOCAL GOVERNMENT

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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT

• PROGRESSING OF THE LOCAL GOVERNMENT PROPERTY
  RATES BILL 19 - 2003

BY J E BOSHOFF DIRECTOR AUXILIARY
SERVICES EHLANZENI DISTRICT MUNICIPALITY
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EHLANZENI DISTRICT MUNICIPALITY (DC 32)

• LOCATED WITHIN MPUMALANGA
• PART OF FORMER TRANSVAAL
• LOCAL AUTHORITIES RATING ORDINANCE 11 OF 1977
  STILL APPLICABLE

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EHLANZENI DISTRICT MUNICIPALITY (DC 32)
(Continues)

• 4. LOCAL MUNICIPALITIES WITHIN EHLANZENI
  DISTRICT
• - THABA CHWEU (Lydenburg, Sabie, Graskop,
  Leroro, Matibidi Moremela)
• - MBOMBELA (Nelspruit, Nsikazi,
• White River, Hazyview)
• - UMJINDI (Barberton)
• - NKOMAZI (Malelane, Hectorspruit, Komatipoort,
  Marlothpark, Nkomazi)

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EHLANZENI DISTRICT MUNICIPALITY DISTRICT
MANAGEMENT AREAS(MP DMA 32)

• Pilgrims Rest (The Farm Ponieskrans) - Thaba
  Chweu
• Mount Anderson (Farms Little Joker, Mount
  Prospect and Pormosa) - Thaba Chweu
• Mthethomusha (Former KaNgwane) Mbombela
• Barberton Nature Reserve (Portion of Weltevreden
  and portion of Brommers) - Umjindi
• Mahushe - Shongwe (Within Matsamo Tribal
  Authority) - Nkomazi

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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT
QUESTION 1 BASIS FOR EVALUATION AND
RATING SECTION 4 OF ORDINANCE 11 OF 1977 RATABLE
PROPERTY May levy a rate on the following
property (a) land, including land or any portion
of land which is the property of a local
authority and which is let by it (b) any right
in land and (c) Any improvements in, on or under
land or pertaining to any right in land.
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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT
QUESTION 2 Information recorded in Valuation
Roll SECTION 9 OF ORDINANCE 11 OF 1977 (a) the
registered or other description, as the case may
be (b) in the case of land or a right in land,
the extent of the land concerned (c) the
improved value (d) the site value (e) the value
of improvements, if any and (f) the name of the
owner.
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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT

• QUESTION 3 9
• Flat rate or composite rate?
• How dealing with exemptions and exclusions?

See the examples of levying of property rates by
Mbombela and Thaba Chweu Local Municipalities. (H
ard Copies handed out)
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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT
QUESTION 4 DISCERNIBLE IMPACT OF MOVING TO A FLAT
RATE BASED ON LAND AND IMPROVEMENT
1. Investment in Improvements will be less
attractive. 2. To save on Rates cheaper
Improvements will be done.
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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT
QUESTION 5 What will be the broader impact on the
citizenry? In Particular

• The effect on the poor and lower middle classes
• Property rates are fixed. Expenditure in this
  regard cannot be controlled by the individual.
• If a poor person receives a more expensive
  property as a grant in aid or inherit such
  property, the property rates on the improved
  value may be too expensive and the person will
  have sell the property.
• It can also be an obstacle for emerging
  entrepreneurs.

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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT
QUESTION 5 (continues)

• The effect on social mobility of people.
• The trend will be that improvements will become
  cheaper to avoid unnecessary high property rates.
  More economic structures will be constructed
  which will result into less attractive areas.
• The effect of desegregation of living areas
• It may discourage integration into present
  living areas. Normally the land value increases
  in areas where expensive and luxury houses are
  built. There is normally a relation between the
  value of the land and the value of the
  improvements.

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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT
QUESTION 6 Administrative feasibility Would be
administratively feasible. It can also be
effectively done. QUESTION 7 Shift in both high
and low end of the property market Property
rates normally does not effect the value of
property
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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT
QUESTION 8 Impact on rural areas In Mpumalanga
and especially in the Ehlanzeni District we have
basically three kinds or types of rural
areas 1. Villages (Former KaNgwane and Lebowa
which are Tribal Land) 2. Commercial
Farms 3. Nature Conservation Areas (DMAs)
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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT
QUESTION 8 (continues) Impact on rural
areas - State is owner of Tribal Land - Farmers
and private landlords are owners of Commercial
Farms (See reply to question 12) - Nature
Conservation areas - State owned -
Private owned
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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT
QUESTION 9 11 Ratable property exempt from the
payment of rates in certain circumstances 1. Subj
ect to the provisions of subsection (2), ratable
property shall be exempt from the payment of any
rate where such property or portion thereof is
land used exclusively for the purpose of and to
the extent that such property or portion thereof
is so used for
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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT
QUESTION 9 11 (continue) (i) public worship or
public worship and any social or religious
activity of the church concerned or public
worship and education (ii) a residence of a
minister of religion in the full time service
of a church where the land on which such
residence is situated is registered in the name
of such church.
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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT
QUESTION 9 11 (continue) Ratable property
exempt from the payment of rates in certain
circumstances 2. The provisions of subsection
(1) shall not apply where such property is let
for any continuous period of more than 10 days,
either alone or together with any period of
renewal.
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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT
QUESTION 10 PUBLIC SERVICE INFRASTRUCTURE VALUE
AND RATED?

• Section 9(4) to (6) of Ordinance 11 of 1977
  prescribe the evaluation of -
• - Railway Property
• - Power undertaking property
• (Hard copies handed out)
• Rated without rebate or discount.

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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT
QUESTION 12 Rating of Agricultural Land At
present only agriculture land (Agriculture
holdings) within proclaimed townships (excluding
R293 towns) is rated as follows (i) 100 per cent
of the pro rata site value of 1 hectare
thereof (ii) 25 per cent of the pro rata site
value not exceeding a further 3 hectares thereof
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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT
QUESTION 12 (continues) (iii) 10 per cent of the
pro rata site value not exceeding a further 16
hectares (iv) 1 per cent of the pro rata site
value of the remainder thereof in excess of 20
hectares Provided that the provisions of this
subsection in respect of the manner of applying
any general rate shall not apply to-
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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT
QUESTION 12 (continues) Provided that the
provisions of this subsection in respect of the
manner of applying any general rate shall not
apply to- a. land of which more than a half is
held or used for business purposes or of which
the portion which is not held or used for
business purposes, is smaller than 1 hectare
or
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PRESENTATION TO THE PORTFOLIO COMMITTEE FOR
PROVINCIAL AND LOCAL GOVERNMENT
QUESTION 12 (continues) b. that portion of the
land which is held or used for business purposes
as shown in the valuation roll or provisional
valuation roll, as the case may be.