There are three categories of municipal services (ie trading, rate and general and housing services) which are discussed as follows:
7.1 Trading services
These services are defined as services whereby the consumption of the service is measurable and can be accurately apportioned to an individual consumer. These services are hence managed like businesses. The tariffs for these services are budgeted for in such a way that at least a break-even situation for the municipality will be realised. Examples of these services include water and sanitation, electricity, and waste removal.
The primary purpose of a tariff structure is to recover the actual costs of the rendering of a particular service to avoid cross-subsidising of services.
In order to determine the tariffs which must be charged for the supply of the four major services, ie electricity, water, sanitation and waste removal, the Municipality shall identify all the costs of operation of the undertakings concerned, including specifically the following:
o Cost of bulk purchases in the case of water and electricity.
o Distribution costs.
o Distribution losses in the case of electricity and water. The Council’s pricing strategy for these services is to recover the full cost of rendering the service to the communities.
o Depreciation expenses.
o Maintenance of infrastructure and other fixed assets.
o Cost of approved indigent relief measures and cross-subsidising of low consumption.
o Administration and service costs, including:
service charges levied by other departments such as finance, human resources and legal services;
reasonable general overheads, such as the costs associated with the Office of the Municipal Manager;
adequate contributions to the provisions for bad debts and obsolescence of stock; and
all other ordinary operating expenses associated with the service concerned
including, in the case of the electricity service, the cost of providing street lighting
in the municipal area.
7 7.2 Rates
The municipality must in terms of section 3(3) of the Act, determine or provide criteria for the determination of categories of properties for the purpose of levying different rates and categories of owners of properties, or categories of properties, for the purpose of granting exemptions, rebates and reductions.
A municipal council must annually review, and if necessary, amend its rates policy, and any amendments to a rates policy must accompany the municipality’s annual budget when it is tabled in the council in terms of section 16(2) of the Municipal Finance Management Act.
7.2.1 Different categories of rateable properties
o Categories of rateable property for the purpose of levying different rates, are determined according to the following criteria:-
(a) Use of the property
(b) Permitted use of the property or (c) A combination of (a) and (b)
o The municipal valuer will be responsible for
(a) the categorising of rateable properties in accordance with this policy, and (b) the maintenance thereof,
provided that any change in the actual use of the property, may in the discretion of the said valuer, be changed to the appropriate category in accordance with the Policy.
o Categories of rateable property for purposes of levying differential rates as informed by the criteria are determined as follows:-
(a) residential properties;
(b) business and commercial properties;
(c) educational Institutions;
(d) eco-tourism & game farm (e) industrial properties;
(f) mining properties;
(g) municipal properties (not used by the Municipality);
(h) State-owned properties;
(i) agricultural properties;
(j) non-permitted use;
(k) vacant land;
(l) Public Benefit Organisation; and (m) Township Development
o Residential Properties
In addition to the impermissible rate on the first R15,000 of the market value of specific
categories of a property, a further R135 000, reduction on the market value of a
property will be applicable;
8 o Properties eligible to Rate Ratios
Agricultural Properties
The meaning of the phrase “agricultural property” in terms of interpreting this property category for the purpose of determining the ratios in addition, in terms of the Act is defined as follows:
“property that is used primarily for agricultural purposes but excludes any portion thereof that is used commercially for hospitality of quests, and excludes the use of property for purpose of ecotourism or for the trading in or hunting of game.”
Therefore any farm property that is used for anything other than agricultural activity, such as for industrial activity, residential purposes, business and commercial activity, trading in or hunting of game or eco-tourism among others is not covered by the ratio for agricultural property. The properties outside the meaning of “agricultural property” defined as outlined above and in the Regulation should be treated according to the municipality’s rates policy as far as it applies to those categories of property (e.g. residential, business, commercial, industrial etc.)
The rate applicable on agricultural property as contained in the definition of farm property, and as prescribed by the Municipal Property Rates Regulations which took effect from 1 July 2009:
The ratio in relation to residential property is:
Residential property 1:1 Agricultural property 1:0.25 o Public benefit organisation properties
The rate applicable on property registered as Public benefit organisation, as prescribed by the Municipal Property Rates Regulations published in Government Notice No. 33016 of 12 March 2010 that took effect on 1 July 2010, may not exceed the ratio to the rate on residential properties where:
The ratio in relation to residential property is:
Residential property 1:1 Public benefit organisation property 1:0.25 7.2.2 Property used for multiple purpose
o A property used for multiple purposes will, for rates purposes, be assigned to a category determined by the municipality for properties used for:-
(a) A property used for residential will be categorised as residential property (b) A property used for business will be categorised as non- residential
(commercial or business) property
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o A rate levied on a property assigned to a category of properties used for multiple purposes will be determined by:-
A market value of property used for multiple purpose will be apportioned as follows:
The large portion of the market value of such property will be apportioned to dominant use
The remaining market value will be apportioned to non-dominant use
Levying of rates on property used for multiple purpose will be levied to respective property as follows:
A property categorised as residential will pay property rates such that the residential rate is applied to the market value as apportioned for residential and will receive reduction and rebates
A property categorised as non-residential (commercial or business) will pay property rates such that the non-residential rate is applied to the market value as apportioned for portion and will not receive residential reduction and rebates 7.2.3 Levying rates on sectional title schemes
A rate on property which is subsect to a sectional title scheme will be levied in accordance with sections 10 and 92 of the Act, 2004, on the individual sectional title units in the scheme and not on the property as a whole.
7.2.4 Liability for rates
The levying of rates on a property will be effected in terms of the Municipality’s Rates Policy as amended from time to time.
The Municipality will, as part of each annual operating budget process, determine a rate in the rand to be levied on the market value of the property in every category of properties.
Rates will be recovered monthly.
o Recovery of rates due will be in accordance with the City of Tshwane Metropolitan Municipality’s Debt Collection Policy (credit and debt control).
7.2.5 Exemption of owners of properties:
A municipality may in terms of the criteria as set out in its rates policy:-
o exempt a specific category of owners of properties, or the owners of a specific category of properties, from payment of a rate levied on their property; or (b) grant to a specific category of owners of properties, or the owners of a specific category of properties, a rebate on or a reduction in the rates payable in respect of their properties.
10 Categories of owners of properties:
o Indigents;
o Pensioners, Disability grantees and/or Medical boarded persons;
o Owners temporarily without income;
o Owners of residential properties;
o Owners of properties in areas affected by disaster or serious adverse social or economic conditions
7.3 Economic services
Small and large businesses rely on the actions of local government in a number of ways and are also subject to a number of municipal regulations. A review and simplification of municipal procedures and regulations can have a significant impact on the local economy.
For example, procurement procedures can be revised to maximise the impact of municipal purchases on job creation and the local economy. Cost and quality must still be central criteria; however, support can be given to emerging contractors by breaking tenders down into smaller parts, providing targeted information and training, or allowing exemption from large securities.
Rezoning requests and applications for building permits by developers are frequently held up in cumbersome bureaucratic approval processes. In many cases, these can be simplified.
The establishment of a spatial framework which identifies land for residential, commercial and mixed development can help to speed up rezoning by establishing clear guidelines up- front.
Customer management and billing are often handled by several different municipal departments with offices in different locations. The establishment of user-friendly one-stop shops which can advise residents and deal with single accounts for all municipal services can increase the quality and efficiency of local services.
7.4 Subsidised services and community services
These are services for which tariffs are fixed in such a way that at least a portion of the cost of providing the service can be recovered. The consumption of these services can be determined reasonably accurately and can be apportioned to individuals and consumers.
However, if the tariffs for using this service were based on its real cost, nobody would be able to afford it. In most cases not only would the consumer benefit from using the service, but also other persons.
Therefore, user charge is payable for using the service, but the tariff is much lower than the real cost of providing the service. These services include firefighting, approval of building plans and the construction of buildings, leasing of municipal facilities, selling of burial sites and certain town planning functions.
Community services are those services for which the Council is unable to accurately
determine the consumption and hence apportion to individual consumers. These services
are typically financed through property rates. These services include the operation and
maintenance of parks and recreation facilities, provision and maintenance of roads and
storm-water drainage systems, the establishment, management and maintenance of
cemeteries and traffic regulation.
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In addition to the above services domestic refuse and sewage removal is also a community service provided directly to all the residents and for which costs form part of a balanced budget.
The Municipality also provides support services such as committee services, records and archives, financial management accounting and stores, occupational health and human resources management, which are financed through property rates.
7.5 Housing and hostel services
These are usually grouped into three categories, namely, letting schemes, selling schemes and hostels. All income and expenditure transactions in respect of such schemes fall into this category and the objective of the service is to be economical, ie the operating income should cover the operating expenditure.
In addition, these functions are being carried out on an agency basis as these are not deemed as Local Government functions.
7.6 User groups
o Users are traditionally divided into user groups as set out below:
