Editorial | Handle lease hikes in sensitive manner
For the last 10 years, at least, this newspaper has been reporting on the Nelson Mandela Bay municipality’s shambolic lease management system. At some point, the metro had no idea how many buildings it owned, who it had contracts with and how much rent they were paying.
It was a mess. Eventually, a company was hired to conduct an audit of all municipal leases – on land and buildings. About six years ago that firm reported that the city was losing more than R90m a year in potential revenue from expired land and building leases.
Finally, the municipality knew the extent of the problem and it could go about finding a solution – only that didn’t happen straight away.
There was a fight over intellectual property and ultimately the metro was forced to redo the audit.
This week, officials gave a report-back to councillors on the work completed thus far, saying the municipality was going after a number of rent defaulters and those who had been paying below-market rentals.
At long last we are seeing progress.
While it is an uncomfortable and possibly painful process – particularly for those who have been getting away with paying the bare minimum – it is a necessary process.
It means more revenue for the city which, in turn, could see the overburdened ratepayer given lower rates increases in the years ahead.
In trying to get more revenue for the city, the municipality must, however, be careful about how it handles its leases with non-profit organisations that provide a noble, necessary service for the city with no real returns – at least not in monetary terms.
It is the residents of the city who will suffer the most if organisations such as Lifesaving Nelson Mandela Bay, the Uitenhage Mental Health Society or SPCA are forced to close their doors because they cannot afford the high rentals proposed.
That is not what a caring government would do.