It has come to the attention of Development Planning that the South African Property Owners Association (SAPOA) intends to legally challenge the implementation of the City of Johannesburg Development Contributions Policy.
The Development Contributions Policy was intentionally crafted to simplify and integrate the development contribution processes and charges for roads and stormwater, water and sewerage, electricity, and public transport services across the City.
Development contributions (DCs) are, essentially, a once-off charge levied by municipalities on the landowner, as a condition for approving a land development application; to cover the capital costs incurred by the municipality when installing new infrastructure or the upgrade of existing infrastructure.
The fees are charged and collected in cases of township development and rezoning applications and land use consents, whereby the development concerned has an impact on the City’s external bulk infrastructure, arising from a change in land use, which increases the demand in the external bulk infrastructure of the City that the development needs to connect to.
The policy was approved by Council on 07 October 2021, and subsequent to the Council resolution, the City has gradually been phasing in systems to implement, monitor and review the execution of the policy. The City intends to implement the policy within this current financial year (2021/2022).
Member of the Mayoral Committee for Development Planning, Cllr Belinda Echeozonjoku, explains that the collection of external engineering service contributions plays a critical role in the development agenda of any city.
“We have noted, with concern, SAPOA’s intention to contend the implementation of the policy and would like to categorically state that the City cannot be out of pocket at the expense of rate payers, to make developments possible or viable. All developers must contribute what they are fairly supposed to contribute, based on the impact of their development to the Council infrastructure. If any developer does not contribute their fair portion, the City cannot be duty bound to approve that development or provide necessary clearance certificates.
“The notion that the policy is overall investor unfriendly, and thus, defeats its intended purpose, representing nothing less than extortion, is misleading and unjustified.
“On the contrary, the policy is meant to be transparent so that investors and developers in the City can have the comfort to know how they are charged; able to determine estimated development costs themselves for proper budgeting purposes; and importantly, everyone charged according to the impact their development has on basic municipal infrastructure,” explained Cllr Echeozonjoku.
The DCs Policy facilitates the improvement of infrastructure upgrade and planning of Johannesburg as a high performing metropolitan government. The principle is not a unique or new regime or practice. It has been in place for more than 50 years in terms of the older Transvaal Townships and Town Planning Ordinances of 1965 and 1986, and now is catered for in new order legislation. Over and above that, the policy seeks to give further effect to Section 47(2) of the Municipal Planning By-Law, 2016 by implementing a policy approved and adopted by the City for levying these charges.
An important point which is disregarded,” said Cllr Echeozonjoku, “is that municipalities across South Africa are empowered to impose municipal surcharges. other urban and metropolitan municipalities in SA do charge and have policies for DCs – it does not originate with CoJ. In the case of Johannesburg, the charges are inflation linked, considering the cost to recovery and effective planning in the provision of equal basic municipal infrastructure across the City.”
Development contributions in the City of Johannesburg are allocated within two legislative tools, the Spatial Planning and Land Use Management Act (SPLUMA), 2013 (Act 16 of 2013), and the City of Johannesburg Municipal Planning By-law 2016.
Through the policy, the City created an innovative calculator that the development industry and any member of the public may input numbers to the calculator, to have an estimate of their cost to bulk contribution. This will assist anyone with budget planning.
The DCs collected cannot be used for any other purpose except to fund new capital infrastructure and/or pay off loans taken to provide that infrastructure.
Cllr Echeozonjoku explained that the DCs are an important component of a sustainable municipal infrastructure financing model and more appropriate for any city and large urban municipalities to drive the urban transformation and economic agenda.
“It should be noted that the City does not necessarily ‘make money’ on new developments; rather, it recovers the cost incurred by the City in providing capital infrastructure assets, in order to stimulate, attract, and facilitate developments and investment in the City.
“The Multiparty Government is steadfast in its commitment to address the infrastructure demands that come with new developments and make it easy to do business with the City with clarity, which the policy seeks to address,” said Cllr Echeozonjoku.
Media enquiries
Poppy Louw
Chief Specialist: Communication and Stakeholder Liaison
Development Planning
poppyl@joburg.org.za / 081 235 4999
02/03/2022
