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Monday Jan 21, 2013

City of Joburg still intent on charging illegal property rates

The City of Joburg wants to continue charging illegal property rates to owners of blocks of flats in the inner city of Joburg.

The Valuation Appeal Board found that these buildings, called Park Mews in Hillbrow, should be paying 80 percent residential rates and 20 percent business rates.

In June last year, the Johannesburg High Court ruled that the city was illegally applying commercial rates to residential buildings that have only a few shops on the ground floor, but the council is now appealing against this.

Commercial rates are three times higher than residential ones, resulting in owners having to pay 300 percent more.

Costs were granted against the council, and the judge refused the council the right of review, saying "the interpretation, which appears to be unpalatable to the applicant, does not give the right to review proceedings".

The city brought the case against Connaught Properties, which owns several buildings in the inner city, and the Valuations Appeal Board, which had found in favour of property owners. Now, however, the city has decided to launch an application to the Supreme Court of Appeal to overturn the ruling.

The Property Owners' and Managers' Association (Poma) said it would again defend the matter.

Poma chairman Renney Plit said: "Being charged three times more for rates has been a burden which we have had to pass on to our tenants. It is an unfair charge because, in some instances, there are 500 flats and only four shops downstairs, but everyone was being forced to pay the higher rates."

Plit said the cost reduction would have been passed on to the tenants if the city had adhered to the court ruling.

"We have been arguing this case with the council for years as there are many buildings in the CBD which are affected, but our pleas have fallen on deaf ears. The sad part of all this is that the council is using ratepayers' money once again to fight against them," he said.

Judge Moroa Tsoka, in a ruling against the city last year, said such buildings should be categorised as "multiple purpose". Such a categorisation, the court found, meant that the rates applicable should be apportioned accordingly.

The Valuation Appeal Board found that the buildings, called Park Mews, in Catherine Street, Hillbrow, should be paying 80 percent residential rates and 20 percent business rates.

According to the city's own valuations, the residential component's value in one building under dispute is R156 300, with the business section valued at R13 700, while in the second building, the value is R259 000 for shops and R2.9 million for the residential sector. Yet the council is levying business rates equally for both components.

It argued that although 80 percent of the building was residential, this should be ignored.

Judge Tsoka found that section 9 of the Local Government: Municipal Property Rates Act states that "a rate levied on a property used for multiple purposes must be determined by applying the rates applicable to the categories determined by the municipalities used for those purposes to the different market value apportionments".

The Star

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