The Municipal Fiscal Powers and Functions Amendment Bill has recently been promulgated by the government.

Posted On Thursday, 11 July 2024 07:16 Published by
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Though it is substantially the same as the previous versions, the Bill has some changes in the areas of definition, public participation in tariffs, and dispute resolution.

Essentially, it provides that as part of a development application a municipality may impose a development charge. Kindly note that the charge must be levied in accordance with an approved policy and a tariff of average charges (by zone) applied to the number of units in the particular application.
 
The tariff is applied whether or not there is existing additional capacity in the engineering service concerned: provided that if the municipality requires the developer to actually build external services as a condition of the approval. As per our previous submissions which raised the unfairness of this discretion, the cost of the external services may be set off against the development charges. Please note that if the external or link services are built at a cost greater than the applicable development charges, the overpayment must be refunded within a period of 12 months.
 
A services agreement must be concluded in respect of all required internal and external services, and it must have a dispute resolution mechanism. Should there be any dispute arising from a municipality’s institution of development charges, kindly note that has to go on appeal under s.62 of the Municipal Services Act i.e. to the full Council.
 
There are a number of changes to eliminate arbitrary charging, as the Act brings some uniformity. Rebates and reductions are permitted under defined circumstances, and charges greater than tariff are also allowed in certain circumstances. The bottom line however is that the issue of principle that SAPOA has always taken, namely that developers should only be required to pay for non-existing additional external infrastructure, has been overridden. Municipalities can now insist that developers pay for the right to use existing infrastructure that has additional capacity.
 
The above-mentioned principle was found by the Gauteng court to be consistent with the Constitution and the SPLUMA. The aim is to ensure that the manner in which the average charges are going to be, remain determined and applied.
 
We believe municipalities should offset the cost of external infrastructure that a developer installs from the development charges levied.

Last modified on Thursday, 11 July 2024 10:37

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