City of Joburg reaffirms intent to implement ‘development contribution’ policy

Despite commercial property body Sapoa threatening to challenge it in court and calling for investors to halt investment in the city.
‘Fair contribution’ says the city, ‘extortion’ says Sapoa. Image: Supplied

The City of Johannesburg (CoJ) says developers in the city need to come to the party and contribute fairly towards the impact of their respective developments, adding that failure to do so will not only affect the city’s purse but also place further strain on ratepayers.

These comments were made in a statement issued by the city on Wednesday, following the South African Property Owners Association (Sapoa) saying last week that it plans to take the city to court in relation to what it calls the illegal implementation of a new “development charges” policy for new developments in the city.

Moneyweb approached CoJ for comment after Sapoa’s outcry, but received no response. However, the city sent out a general statement on the issue to all media on Wednesday.

Read: Sapoa threatens court action against CoJ over development contributions policy

“[We] would like to categorically state that the City cannot be out of pocket at the expense of ratepayers, to make developments possible or viable,” mayoral committee member for development planning councillor Belinda Echeozonjoku says in the statement.

She adds that all developers are expected to make fair contributions towards their developments, in line with the impact these developments will have on 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,” she says.

Sapoa, meanwhile, argues that the Fiscal Powers Amendment Bill is yet to be enacted and therefore the city cannot implement its new Development Contributions Policy.

Policy ‘unfriendly to investors’

In its statement last week, Sapoa said it was of the view that the city’s Development Contributions Policy is generally unfriendly to investors.

The association, which represents the interests of the commercial property industry and counts several JSE-listed property companies as members, went further and described the policy to no more than extortion.

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Sapoa went as far as to caution investors and developers against pursuing further investment in the city, warning that continuing to invest could result in significant financial implications.

However, Echeozonjoku says the city finds Sapoa’s remarks that the policy is unfriendly to investors misleading and unjustified.

She stresses that the policy actually seeks to be transparent with developers and investors, and to shed light on exactly how they are charged.

“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,” says Echeozonjoku.

CoJ says it remains committed to implementing the policy as planned and that it looks to do so within the current financial year.

“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,” the city adds in its statement.

JSE-listed residential developer Balwin Properties was approached for comment on the issue, but is yet to respond.

Listen to Suren Naidoo’s interview with Sapoa CEO Neil Gopal on The Property Pod: 

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