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

EHLANZENI DISTRICT MUNICIPALITY (DC 32) LOCATED WITHIN MPUMALANGA PART OF FORMER TRANSVAAL LOCAL AUTHORITIES RATING ORDINANCE 11 OF 1977 STILL APPLICABLE

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)

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

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.

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.

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. (Hard Copies handed out)

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.

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.

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.

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

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 (DMA’s)

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

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. Subject 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:

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.

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.

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.

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;

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-

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

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.