Flawed and irrational.
That is how property developers in Nelson Mandela Bay have described the city’s property rates policy.
A host of property developers in the metro have submitted objections to the city’s existing rates policy – specifically in relation to vacant land.
They say the policy punishes developers and hinders economic development.
The developers are now demanding that a special category or incentive for developers of vacant land be put in place.
At present vacant land is rated at a ratio of 1:3, which means that an owner of vacant land will pay triple the rates of a residential property with the same value.
The rates policy is reviewed annually.
The 2018-2019 policy must still be tabled in council.
A bone of contention with the developers is that they pay millions to install services and infrastructure which increase the value of the land – and subsequently the rates.
In a lawyers’ letter, sent to council by Rob McWilliams Attorneys, the developers said: “Our clients have previously indicated to you that the current Property Rates Policy is flawed, causing serious damage and you have done nothing to remedy this.”
In a letter from Goldberg and De Villiers Inc to the municipality, property developers demanded that the city consider amending its definition of vacant land.
The developers represented were the New Horizon Development Trust, East Cape Game Properties, Bridget Claire, Fairview Suburban Estate Company and Aleco Properties.
Other input was submitted by the Rates Watch, appointed by the South African Property Owners Association, and local company Engineering Advice and Services.
One of the developers, who asked not to be named, said the policy ensured that nobody would hold on to vacant land.
“We pay R10-million to install services, you then pay new rates and taxes on a new value but it is impossible to sell 20, 50 or 100 stands in Port Elizabeth in a month or a year [and recoup the costs].
“It takes a very long time. What they then do is multiply the rates by three as a penalty,” the developer said.
“They [officials in the municipality] have confused the whole system in that they penalise you for developing land,” he said.
“Our rates [on a particular development] have gone from R5 000 a month to R50 000 in the last eight years.”
He said questions put to council went unanswered and called the public participation process which took place between April and May a waste of time.
“What was the purpose of having public participation if the comments aren’t taken into account? It [the public participation] is a waste of time,” he said.
“People often have an opinion that developers are wealthy people, the officials purposefully make it hard and that doesn’t help anything and we sit with a city that doesn’t develop,” he said.
“We can’t develop, we can’t put money in. Development is very risky and expensive.”