Sandton City disputes claims that it owes City of Joburg R158m

Says it is engaged in talks with the city to clear up discrepancies around how much the centre actually owes.
Sandton City owes R158m in rates and taxes, claims CoJ. Image: Shutterstock.

Management at one of SA’s largest super-regional malls, Sandton City, has refuted the City of Joburg’s (CoJ) claims that the centre owes the city R158 million in unpaid rates and taxes, saying that its accounts are all up to date.

This comes after the centre, which is jointly owned by insurance giant Liberty Holdings, listed property counter Liberty Two Degrees and private property group Pareto, was served with a ‘pre-termination notice’ of services from CoJ on the weekend.

Sandton City’s management, however, noted in a statement to Moneyweb that it has a dispute regarding its property rates valuation with the city.

“The owners of Sandton City are aware of the social media comments relating to the drive embarked on by the City of Johannesburg to terminate services to properties that are in any arrears,” the statement reads.

“Sandton City’s municipal accounts are all up to date except that there is currently a dispute with the City of Johannesburg regarding the rates and taxes for the centre,” it adds.

The shopping mall which hosts luxury stores such as Cartier, Louis Vuitton and Versace, says that it is currently engaged in talks with CoJ to determine the correct value of the centre’s rates.

“Sandton City and the City of Johannesburg have agreed to holdover legal proceedings instituted by the City of Johannesburg in respect of outstanding rates and taxes pending the finalisation of the Valuation Appeal Board hearing to determine the correct valuation of Sandton City for rates purposes,” centre management points out in the statement.

According to CoJ, of the R38 billion in unpaid municipal rates, taxes and levies owed to it by residents, businesses and government departments, Sandton City’s municipal bill represents the largest amount.

CoJ mayoral spokesperson Mabine Seabe confirmed to Moneyweb that the city issued the centre with a pre-termination notice on Saturday (February 12), which allows Sandton City two weeks to dispute its debt or alternatively, make payment arrangements.

Read:
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“Last week Saturday they [Sandton City] would have received a pre-termination notice and the pre-termination notice has a period of 14 days and within that 14 days [Sandton City] has an opportunity to dispute the amount that the city is requesting or make a payment arrangement,” he explained.

Seabe also confirmed that the city has begun engagements with the centre to resolve the dispute.

CoJ’s operation #BuyaMthetho

The CoJ announced its debt collection campaign called ‘Operation Buya Mthetho’ (which loosely translated means restoring the rule of law) on Friday February 4, 2022.

The operation according to the city is focused on “aggressively collecting monies owed to the city by government at all levels, residents, and businesses.”

On Wednesday, the city tackled delinquent ratepayers in Sandton and its surrounding areas.

According to CoJ, poor payment behaviour by its ratepayers is partly to blame for some of the city’s service delivery issues. The decision to embark on this ‘name and shame’ campaign was thus fuelled by the city’s need for funding to effectively, fix its ‘broken’ parts.

“The City of Johannesburg makes no apologies for wanting to build a city that is among other things well-run, safe, and business-friendly,” executive mayor Mpho Phalatse said in statement.

“But the reality is that doing so costs money, even if the best people are elected or appointed to do so.”

Phalatse added that CoJ’s agencies like Joburg Water, City Power and Pikitup need more money, adding that to fix service delivery issues like potholes, it needs its ratepayers to pay up.

Read: Why Joburg’s roads are in such a state

“To put this in context, residents, business, and government owe the city around R38 billion in unpaid municipal rates, taxes, and levies, which is just over half of the 2021/22 budget that comes in at over R73 billion,” Phalatse said.

“So, when I ask you to imagine a city that delivers, works, is safe and offers great opportunities, I am asking you to imagine what is judiciously possible.”

CoJ says it still remains unclear how much of the outstanding debt has been settled by ratepayers post Wednesday’s debt collection drive.

“I’m unable at this point to [indicate] how much of that [debt] has been settled since yesterday. This is an ongoing operation and of course, as time goes, only then will we be able to reconcile our accounts and be able to give an update as to how much has been settled,” Seabe told Moneyweb.

Read: Gautrain resolves its water and electricity dispute with the City of Tshwane

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The uncomfortable moment of truth has arrived for local governments across the nation who are living in this fool’s paradise of redistributive taxation.

You don’t need a financial calculator to understand that the process of redistribution is finite. It must come to an end when the stuff has been redistributed. On what basis do they levy the property tax? The market value of the JSE Listed Property Index has crashed by 50% since 2018. Did the municipality cut its overheads and fire employees to compensate for the lower property valuations? Of course not. The workers and ward councilors demanded wage increases, and the cost of electricity went through the roof.

The redistributive rates and taxes regime, that includes the cost of inefficiencies of the Eskom monopoly, the inefficiencies of Cosatu municipal workers who enjoy a monopoly on employment opportunities, the preferential treatment of BEE loaded tenders, the cost of the incompetence and criminality of ANC ward councilors, and the free services in townships, destroys the capital value of properties within the municipality. The system destroys the tax base, the property values, and the cash flow that determines the sustainability of the system. This creates a negative feedback loop at the heart of the municipality that swallows property values and cash flow. This illustrates the unsustainability of socialism.

This is how a socialist system implodes when it runs out of other people’s money.

An upward explosion in debt levels, like in COJ, is the beginning of the end for all socialist government structures. The beginning of the end looks like Sandton City. The end of the end looks like Lagos.

End of comments.

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