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Article written by Antoinette Slabbert on Moneyweb.
The council of the Mangaung Metropolitan Municipality in Bloemfontein is standing firm on its non-residential refuse removal tariff which, from 1 July, is now linked to the value of a property.
This is despite an April ruling by a full bench of the Western Cape High Court declaring a similar link between the City of Cape Town’s fixed water and sanitation tariffs and property values unlawful and setting it aside.
As a result, the City of Cape Town had to revise its budget shortly before it took effect on 1 July to comply with the judgment.
Even after that ruling, Mangaung proceeded to amend the non-residential refuse removal tariff that had applied until the end of June by introducing a property value-based structure in its new budget that now requires owners of more valuable properties to pay more.
This means owners of properties valued at up to R2 million pay a fixed tariff of only R422.27 per month, while those whose properties are valued at up to R20 million must pay R633.41.
The metro has created eight property value bands, with tariffs ranging from R422.27 to R3 378.16 for properties in the highest valuation band.
Sapoa’s objection ignored
The South African Property Owners Association (Sapoa), the first organisation to take the City of Cape Town to court over the issue, objected to Mangaung’s approach even before the metro adopted its final budget.
However, the metro council ignored the objection and approved the tariff unchanged on 28 May as part of its budget for the current financial year. It is therefore already in force.
Sapoa chief executive Neil Gopal says the organisation has been trying to engage the metro council about the tariff since the draft budget was published.
“We contacted the municipality no fewer than six times in an effort to discuss and resolve our concerns. Unfortunately, the municipality did not respond to our attempts.”
Gopal says Sapoa believes, based on legal advice and the Cape Town judgment, that the new tariff is unlawful because it is inconsistent with municipal legislation.
Off to court
Sapoa has now approached the court for relief, with the matter enrolled for hearing on 17 September.
Mangaung has indicated that it intends to oppose the application, but has not yet filed its court papers setting out its arguments.
Sapoa is asking the court to declare the non-residential waste management tariff unconstitutional and invalid and set it aside.
It further asks that the order be suspended for two months to give the metro the opportunity to correct the tariff and allow it to amend any other component of the budget to do so.
That is presumably to prevent a situation where the metro will be out of pocket and some elements of the budget rendered unfunded.
The association is also asking the court to declare that the metro has no power to use property value to determine any tariffs apart from property rates, which should be done in accordance with the Local Government Municipal Property Rates Act, and for a cost order against the metro.
‘Irrational’
In the Cape Town case, the court found there is no rational connection between property values and the cost of providing the relevant service.
Two households receiving exactly the same service at the same cost could pay vastly different tariffs simply because their properties have different market values.
The court pointed out that property rates are regulated by different legislation from charges for municipal services.
Service charges are intended to recover the cost of providing the service.
By linking service tariffs to property values, the metro has conflated the two.
According to the court, this was inconsistent with the metro’s own tariff policy and amounted to an unconstitutional exercise of municipal powers.
Frans Bothma, the DA’s finance spokesperson in the Mangaung council, says his party’s position is that municipalities should comply with the Cape Town judgment. Mangaung should therefore abandon the practice of linking its fixed refuse removal tariff to the value of a property.
Click here to read the article written by Antoinette Slabbert on Moneyweb.