Local Government: Municipal Property Rates Act 6 of 2004 MPRA

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Local Government Municipal Property Rates Act 6
of 2004 (MPRA)
Presented by George D van Schalkwyk Director
Inter-Services Liaison City of Cape
Town Vice-President IMFO Date Tuesday 11
September 2007
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This is not a legal opinion nor a handbook on
the MPRAIt is an overview of the
implementation in Cape TownandSome of the
findings and lessons learnt
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EXPERIENCE IS SOMETHINGYOU DONT GETUNTIL
JUSTAFTER YOU NEED IT
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IMFO Western Cape Northern Cape Branches will
present a Workshop on the implementation of the
MPRA

• Goudini near Worcester - 19 20 November 2007
• Each process analyzed based on experiences
• Panel of presenters
• City of Cape Town
• West Coast District Municipality
• Sol Plaatjies

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Implementation Date

• These Councils implemented on 1 July 2007
• City of Cape Town
• West Coast District Municipality
• Sol Plaatjies (Kimberley)
• Transitional Arrangements Lapses on 2 July 2009
• MPRA will happen!

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Detail planning Requirement

• Date of Valuation
• Implementation within 12 months
• Remains valid for 4 (5) years
• Data collection for valuation purposes
• Data collection challenges
• Sectional Title Units Postal addresses
• All newly rated properties Postal addresses
• Never test the depth of the water with both feet

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Budget Process

• March Draft Budget must include
• Rates Policy
• Definition of residential properties very
  important
• Rates By-Law
• Public Participation Process
• Budget, Policy and By-Law may be amended
• Budget, Policy and By-Law must be adopted in May

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Communication

• Between Officials and Responsible Political
  Leaders
• Inform all Councillors
• Interact with resident groups
• During Public Participation period
• After implementation
• After posting invoices

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Impermissible Rates

• New concept
• Has captured categories previously included in
  Ordinances
• Determines the first R15 000 for residential
  properties
• The first 30 of valuation of Public Service
  Infrastructure

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Rate levies General

• Only one rate to be levied on a property
• Cannot use valuation to determine service charges
• Rates may be levied on municipal property
• Trading vs. rate funded
• Determine categories of properties or usage for
  rebates
• Include the loss in the budget
• No free lunch
• Rate on residential properties the marker, others
  a variation thereon
• 1 2

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Impact of new General Valuation

• Determine the current split in rates paid by
  categories
• Determine the shift in valuation between
  categories
• Determine whether the valuation shift should be
  corrected
• Correction via different rates for different
  categories
• Calculate the increases for individual properties

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Impact on individual properties

• Cape Town looked at the Total Municipal Account
  (TMA)
• Used 406 000 residential properties (66 sample)
• Low valued houses projected huge increases in TMA
• Huge water consumptions
• Fixing leaks Flow regulator
• Higher valued properties with high TMA increases
• Valuation in previous roll too low

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Effect on Indigent Households (1)

• The sales of properties determine the valuations
• Demand for properties may cause property prices
  to soar
• Valuation may cause a rates account for the first
  time
• Good as it creates ownership at a low cost
• Bad as some may not be able to pay even low
  amounts
• New administrative tasks for billing smaller
  amounts
• New challenges for
• Receipting and debt management for low amounts

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Effect on Indigent Households (2)

• Ability to pay may be restricted
• May need higher indigent exemptions package
• Indigence not restricted to low valuations
• For rates
• For Refuse Removal
• For water and sanitation charges

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Revenue related functions

• Must render accounts, rather call it invoices
• Liability not affected by lack of an invoice
• Please do not use this weak excuse!
• May collect arrear rates from tenants or occupier
• Systems Act May consolidate accounts
• Allocation of payments received
• Exclude disputed amounts
• May recover arrear rates from agents

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Supplementary Valuation Roll (SV)

• Takes effect following the public inspection
  period
• Properties Incorrectly omitted from the valuation
  roll
• Incorrectly valued during last GV
• Exceptional reasons
• Council should object to backdate to effective GV
  date
• IF NOT RATES HOLIDAYS!
• Takes effect from prior dates
• Date (Deeds Office) of subdivision after last GV
• New inclusions after last GV
• Date of substantially change to market value
  after last GV

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REGULATIONS

• The Minister may make regulations regarding a
  number of issues addressed in the MPRA
• Some are administrative
• Some may affect the revenue generated by rates
• Public Service Infrastructure properties
• Some may cause expenditure

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We thank you for the opportunity to share some
of our experiencesCape Townagain leading the
way

• Let us work togetherfor a better city