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Wednesday Nov 16, 2011

Anger over new Durban property charges

Ninety percent of Durban developers will either be out of business or will relocate to friendlier municipalities if the city introduces its proposed new development charge, a meeting has heard.

Ed Peen, chairman of Amber Dawn Developments, said this last night at a public meeting at the city hall to discuss the new charge for all residential, commercial and industrial developments from next July.

"This is not the right proposal. It is going to cause a lot of trouble," Peen predicted.

The National Treasury has developed a framework that will set norms and standards to ensure that development charges facilitate new property developments.

The chief financial officers of the metros met a few weeks ago to discuss draft policy proposals on development charges and would meet again before the end of the year to finalise policy proposals.

Despite all municipalities being asked to implement development charges, developers still feel they can move to smaller municipalities to avoid paying these costs.

Another speaker, environmental and property law attorney, Norman Brauteseth, representing members of the South African Property Owners' Association, said that there "was a lot of anger" about the new charge and he felt that it was an "Alice In Wonderland" policy and "a mess" and needed more thought.

Another unnamed speaker said: "We are drowning in this economic climate and now you want to impose more charges."

However, city treasurer, Krish Kumar, stressed that the city did not want to stifle development, but to encourage it.

There was no right time to introduce it and it was not a cash cow initiative, he said.

The city would not be taking a "big bang" approach, particularly during recessionary times.

The proposed development charges will be applicable to all developments needing council approval and will relate to land use and subdivision applications, changes in zoning and in the use of an existing building.

It is for the provision of municipal infrastructure like new roads, water, sewage, electricity.

It will not be for additions of a couple of new rooms, Kumar said, because that would not put a strain on infrastructure.

Nor would it apply to lowcost housing.

The idea was to get bulk costs upfront to enable the city to provide a better service.

Infrastructure was expensive and if it came from the rates, it would take 50 to 60 years for the city to get a return on its investment, he said.

This made good sense for ratepayers.

Kumar was going to recommend that 20 percent of the cost be paid when the developer received planning approval, with the balance payable when "the lights were switched on".

There would be no duplication of charges.

There were no figures available yet because they had not been finalised. The tariffs would be advertised by March 31.

Lilian Develing, of the Combined Ratepayers' Association, said charges would be passed on to the public.

"Ultimately, the man in the street pays and he eats less. More and more people are leaving Durban and emigrating," she said.

And Peens said in an open letter to Mayor James Nxumalo - being distributed today - that the proposed development charge "is the most ill-informed piece of proposed legislation I have ever seen.

"By implementing your proposal, you will make ethekwini Municipality the most expensive and difficult place in the country to start a new businessÂ… Expecting private enterprise to pay for infrastructure, plus rates and taxes is not sound economics - it's misguided and short-sighted and I predict that it will backfire severely by destroying many private companies."

He pointed out that in 1993, 1 300 plans were processed in a month by the municipality.

This had now dropped to 205 a month and less than 10 were not residential. He called for the charge to be scrapped.

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