Resolution relating to Cape Town Rates Challenge; Committee Report on Study Tour to Spain

Meeting report

PROVINCIAL AND LOCAL GOVERNMENT PORTFOLIO COMMITTEE
19 June 2002
RESOLUTION RELATING TO CAPE TOWN RATES CHALLENGE; COMMITTEE REPORT ON STUDY TOUR TO SPAIN

Chairperson: Mr. Y I Carrim

Documents handed out:
Proposed Amendments To The Local Government: Municipal Structures Act, 117 of 1998 (Appendix 1)
Intergovernmental Relations Study Tour of Spain (Draft 4)

SUMMARY
The Cape Town Municipality asked the Committee to amend the Municipal Structures Act to provide legal certainty on the status of the Property Valuation Ordinance, 1993 (Cape). The municipality wants the amendments to be effected as soon possible.

The committee resolved that because the Department's lawyer was absent, the proposed amendments would be dealt with the following day upon consultation with the Eastern Cape, Northern Cape and Western Cape governments and the City of Cape Town Municipality. It also resolved that the proposed amendments to the Property Valuation Ordinance, 1993 (Cape) would be gazzeted so that it could be incorporated into the Local Government Laws Amendment Bill and passed before the end of August 2000.

MINUTES
The legal representative of Cape Town Municipality, Mr. Evans, read through the motivation for the proposed amendments to the Local Government Municipal Structures Act (1998) regarding the Property Valuation Ordinance, 1993 (Cape) .

The motivation for the amendment was that the Ratepayers Action Group identified some problems with the applicability of the Property Valuation Ordinance (PVO), 1993(Cape) as being applied in the Eastern Cape, Northern Cape and Western Cape.

The first problem was that in terms of Section 22 of the Interim Constitution, the PVO was not in force when it was enacted on 8 December 1993 and therefore its administration was not validly assigned by the President to the Eastern Cape, Northern Cape and Western Cape Provinces. This meant that the Ordinance did not exist for all intent and purposes.

The second problem was that the present definition of local authority by the PVO makes the PVO inapplicable to local authorities as established in terms of the Structures Act.

The aim of the Ratepayers Action Group was therefore to challenge the current valuations of property in the City of Cape Town as provided in the PVO and thereby take the issue to court. Mr. Evans did not read through all the proposed amendments because the Chairperson stopped him on the account of the absence of a state legal advisor who was suppose to have attended the meeting.

Discussion
The Chairperson interjected and explained that the committee had no legal background to comment on the legal and technical validity of the proposed amendments. He then asked the
Deputy Director General, Ms Manche to comment on the Department's opinion.

Ms Manche expressed the Department's understanding of the motivation for the proposed amendments by the City of Cape Town Municipality. She explained that the Department of Provincial and Local Government could not amend legislation as only Parliament could do so. She added that in terms of policy, the Department would like to protect the present valuation rolls for the next four years while municipalities were gradually moving to the new system.

One member felt that it was not wise for the committee to deal with the issue if the committee had no authority to amend legislation.

Mr. Smith wanted clarity on provincial assignments by the Presidents and wanted to know how the proposed Section 6(C) would provide for the assignments.

Mr Evans replied that the issue was not about assignments but to regularise the property valuation system.

Mr Uys (NNP) asked if the matter would not mean an amendment to the Constitution. He also wanted to know if the matter would not affect all other provinces.

Mr. Evans explained that the problem did not require constitutional amendments but to regularise what had happened eight years ago since the PVO was enacted. He also explained that the motivation for the amendments would affect only the three Cape Provinces and that they were not looking for a parallel system but a common national system.

The Chairperson interjected and urged the committee to find a way forward in dealing with the problem rather than it being taken it to court in August 2002. He reckoned that it was unfortunate that the Ratepayers Action Group made an unnecessary outcry out of a technical loophole in the legislation. He lashed out at the Group's motive as a way of evading fair property rates. He felt strongly that the Group was composed of privileged citizens who had unfairly benefited from the inequitable property rates for the past twenty years and were now trying to preserve the status quo ante. From his judgement he felt that it was urgent to attend to the matter even though he did not agree with the Group's motives. He suggested three ways to solve the problem. The first one was to amend the proposed Property Rates Bill. The second one was to make a separate piece of legislation. The last one was to amend the Local Government Laws Amendment Bill.

The first two proposal was deemed to be too time consuming by Ms Manche.

Mr. Smith suggested that the amendments should be incorporated into the PVO.

Resolution
After a discussion on the merits and demerits of different ways to make the amendments it was resolved that the amendments would be gazzeted and incorporated into the Local Government Laws Amendment Bill because of imminent processing of the Bill provided a window opportunity to address and incorporate the PVO amendments. It was also resolved that the governments of the three Cape Provinces, the committee and the City of Cape Town Municipality would agree on amendments and procedures thereof.

Committee Report: Spain Study Tour
The report was still in draft form and needed to be verified by committee members before adoption by the committee. The meeting was adjourned

Appendix 1
PROPOSED AMENDMENTS TO THE LOCAL GOVERNMENT:
MUNICIPAL STRUCTURES ACT, 117 OF 1998

(As amended on 11 June 2002.) Brief motivation

There are currently several problems with the Property Valuation Ordinance, 1993 (Cape) ("the PVO"), which is being applied in the Eastern Cape, Northern Cape and Western Cape Provinces, namely:

(a) the PVO was not continued in force upon the commencement of the interim Constitution on 27 April 1994, because, though enacted on 8 December 1993, it only came into operation on 1 July 1994, and therefore was not "in force" immediately before that commencement (s 229 of the interim Constitution);

(b) for the same reason:

i. the PVO's administration was not validly assigned by the President to the Eastern Cape, Northern Cape and Western Cape Provinces (s 235(6) and (8) of the interim Constitution);

ii. the PVO was not validly amended in the Western Cape;

iii. the PVO can only be retroactively validated and amended (to deal with the issue in (c) below) by the national Parliament;

(c) it is arguable that the PVO does not apply to local authorities established in terms of the Structures Act because:

i. in its original form, the PVO defines "local authority" with reference to pre-Local Government Transition Act, 209 of 1993 ("LCTA") local authorities; and

ii. as amended in the Western Cape, the PVO defines "local authority" with reference to municipalities established in terms of the LGTA - compare section 14(1) of the Structures Act which provides that the new municipalities are the successors in law of the old;2

(d) it is arguable that express provision must be made to permit municipalities to rely on valuations appearing on provisional valuation rolls when determining property rates.3


Proposed amendments

1. Section 14(1 )(b) of the Local Government: Municipal Structures Act,
1998 (Act 117 of 1998) ("the Structures Act"), is amended by the insertion, before the full stop, of the following:

", including, where necessary, notwithstanding the terms of any definition of municipality or local authority in existing legislation, any reference to a local authority or municipality in such legislation must be construed as a reference to the superseding municipality".

2. Section 93 of the Structures Act is hereby amended by the substitution in subsection (5) for paragraph (b) of the following paragraph:

"(b) section 10G of the Local Government Transition Act, 1993 (Act 209 of 1993), must be regarded as having been amended -

(i) by the deletion in paragraph (a) of subsection (3) of the expression "two-thirds"

(ii) by the insertion of the following subsections after subsection (6):

'(6A)(a) Despite anything to the contrary in any other law, a municipality must value property for purposes of imposing rates on property in accordance with generally recognised valuation practices, methods and standards.
(b) For purposes of paragraph (a)

(i) physical inspection of the property to be valued, is optional; and in lieu of valuation by a valuer, or in addition thereto, comparative, analytical and other Systems or techniques may be used, including
(aa) aerial photography;
(bb) information technology; computer applications and software; and
computer assisted mass appraisal systems or techniques.

(6B) When imposing property rates a municipality may use the valuations appearing on a provisional valuation roll.

(6C) Notwithstanding Proclamation 148 of 8 December 1993 (Province of the Cape of Good Hope Gazette 4833 of 22 December 1993) and section 38 of the Property Valuation Ordinance, 1993 (Cape), the said Ordinance shall be deemed to have come into force:
(a) for the purposes of the Constitution of the Republic of South Africa, 200 of 1993, immediately before the commencement of that Constitution; and
(b) for all other purposes, on 1 July 1994."'

-------------------------------------------------------

¹ The problems in (a) and (b) are addressed through the proposed new paragraph (6C) section 10G of the Local Government Transition Act, 209 of 1993, to be inserted via section 93(5) of the Local Government: Municipal Structures Act, 117 of 1998.

² This problem, which is addressed through the proposed amendment to section l4( l)(b) of the Local Government: Municipal Structures Act, 1998, applies to a wide range of legislation, namely that which defines local authorities with reference to section 84(l)(f) of the Provincial Government Act, 1961, old order provincial ordinances or the municipalities established in terms of the Local Government Transition Act, 1993.

³ This problem is addressed through the proposed new paragraph (6B) of section 10G of the Local Government Transition Act, 209 of 1993, to be inserted via section 93(5) of the Local Government: Municipal Structures Act, 117 of 1998.