Johannesburg property owners to pay for city's mistake

About 5 000 Johannesburg smallholding property owners are reeling after being slapped with R43 million in backdated rates bills.

They are being charged two years of backdated rates after their properties were re-rated from agricultural holdings to residential properties in 2010.

The new rates were charged only from May this year along with the arrears.

The City of Johannesburg is demanding immediate payment from residents and cut-off notices are being issued if the bills are not settled.

This, together with additional annual increases and revaluation of properties, meant that some owners' municipal bills increased by more than 1 000 percent.

The smallholdings, mainly in the northern areas, are being back-billed from July 2010 to April this year.
This action is likely to bring in an additional R43m to the council's coffers, according to a response from the city to a DA question in the council.

In the response, member of the mayoral committee for finance Geoff Makhubo said 4 839 properties had been billed as residential properties from July 2008 to June 2010.

From 2010 they were billed (lower) residential tariff while the matter was raised with the national Department of Co-operative Governance and Traditional Affairs, he said.

"Once clarity was obtained, the rating was adjusted and backdated to comply and be equitable and fair," he said. "The gross amount debited for all the affected properties from 1 July 2010 is R43 049 672.12."
The DA is taking this up with the public protector.

"The city suddenly realised that it had not been rating all agricultural holdings at the correct level and had been undercharging.

"In May this year, without any advance warning, they billed the 5 000 affected owners with the correct, and increased, rates backdated by two years.

"These accounts fell due for payment in the same month that they were rendered," DA councillor John Mendelsohn said.

The council has also been delivering cut-off notices to these owners, before the due date, for payment of these inflated accounts.

About 500 letters protesting against this were delivered to the municipal manager's office in June, but were ignored.

"We believe that to change the rating category without proper advance notice to the owner, and to levy backdated rates, is contrary to the provisions of the Promotion of Administrative Justice Act," Mendelsohn said.

Terry Wiggill, a Northriding agricultural holdings resident, said this was a "crazy situation".

In May he realised his rating category had changed to residential for rates purposes only.

"According to the council we are still agricultural, but must pay residential rates if we can't prove that we earn more than our income from agricultural activities.

"As a community we can't possibly earn income from our land mainly due to various restrictions, but the facts remain: we do not have the services of normal residential areas," he said.

They had no roads, no street lights and no sewage systems, so paid for regular cleaning of their own septic tank systems, and electricity was intermittent, he said.

His rates increased fourfold from R233 to R933 a month, with arrears charged at R9 870.

In August there was a "new unrealistic valuation" of the property from R2.1 million to R5.34m, resulting in a rates increase to R2 480. In September, new sewage removal charges of R477 were added.

This makes the increase in the monthly payment since mid-2010 about 1 170 percent.
The council subsequently said it would reverse these charges.

The Joburg Advocacy Group (JAG) said it noted the changes "with some alarm".

JAG chairwoman Lee Cahill said the classification of an agricultural holding in the council's new rates policy was not the same as it was in the draft released for comment, and the council's policy did not allow for the intermediate "smallholding" classification in the Municipal Property Rates Act (2004).

"The net effect that some property owners have received rates bills that represent an increase of up to 300 percent on their previous bills, and these charges have been backdated in line with a provision that allows for this to be done if a property is re-classified," she said.

There was much debate about what constituted an agricultural holding, she said, but the fact was that many peri-urban properties were smallholdings rather than residential, with reduced municipal services, and their rates should be based on that.

The council said the new policy stated that agricultural holdings would be rated residential unless the owner could prove that they were a bona fide farmer.

In terms of agricultural holdings legislation, an agricultural holding is defined as being at least 1 hectare (10 000m)
If it is smaller, it is considered residential and rated as such.

The council said: "If it comes to the attention of the council that the property is being used in a manner other than declared, the tariff applicable to business, commercial and industrial will be applied retrospective to the date from which a lower tariff was charged or July 1, 2011, whichever is the later."

(The Star)

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