a big boost this week when SA's first urban development zones (UDZs), in Cape Town and Johannesburg, were approved and gazetted.

There are substantial incentives in securing approval for UDZs, both in new projects and in refurbishments. But commentators are concerned that only four cities have applied for UDZs, and just two of them successfully, when a total of 15 municipalities across the country qualified for the zones in the original legislation.

The four cities that applied were Tshwane (Pretoria), Johannesburg, eThekweni (Durban) and Cape Town.

"The original applications from eThekweni and Tshwane were good but did not fully comply with the legal requirements, hence the delay in their being announced at this time," explains the t reasury's chief director for local government, T V Pillay.

He says the two cities have been asked to revise their submissions so the evaluation team can make a recommendation to the minister in the next few weeks.

"We are optimistic that their applications will be approved in the next round," he says.

But 11 other municipalities, among them Buffalo City, Ekurhuleni and Polokwane, have simply not applied .

"The development zone applications are far more complex for some areas than for others," says Ismail Momoniat, the t reasury's deputy director-general of inter governmental relations .

He says a municipality like Ekurhuleni has multiple urban cores that could be designated as UDZs. "Choosing which ones to apply for is extremely complicated," he says. Momoniat says several other municipalities have submitted informal applications for initial discussion with the t reasury.

"We could have waited for the different municipalities to submit, but we didn't want to hold up the process of designation," he says.

One reason for concern, say analysts, is that latecomers may miss the boat to receive incentives. Though there is no official cap on the incentive scheme, urban researchers are concerned that there could be a time and value limit on what cities can qualify for.

The 2003 budget made provision for R1,3bn of tax revenue to be forgone within four years, after which the programme would terminate.

This could mean that there is no incentive left for municipalities that make late applications. "We don't want municipalities to wait and miss the incentive opportunities," concludes Momoniat.

Meanwhile, developers in Johannesburg and Cape Town can get cracking. The Johannesburg development zone embraces the entire inner city and covers more than twice the legislated permissible area.

"We argued that the size of the inner city reflected Johannesburg's position as the country's economic powerhouse," says Li Pernegger of the city's economic development unit.

"And the minister has supported our application by approving it." Pernegger says the incentive will apply to all owners who are prepared to develop or refurbish their properties.

"As long as the owner doesn't occupy the building, as long as it is an investment property, the owner can claim the tax depreciation allowance," she says.

There are two UDZs in Cape Town.

The first is the Bellville central business district in the vicinity of Voortrekker Road.

The second is made up of parts of the Cape Town CBD and Salt River, Woodstock and Athlone, among others.

Urban development zones carry a substantial incentive. For new projects, developers get a tax deduction of 20% in the first year plus an annual depreciation of 5% for the next 16 years.

For refurbishments, there is an accelerated straight-line depreciation allowance of 20%/year.

Urban consultant Steve Topham says that in the short term the incentives could bring marginal developments into play and provide a real boost for the revitalisation of the inner city.