Sapoa needs to see development policy benefits

The City of Johannesburg has won a landmark legal victory against a powerful lobby group that wanted to stop it from charging developers for the impact their projects have on the city’s engineering infrastructure. The SA Property Owners Association (Sapoa) had sought to interdict the city from applying its development contribution policy, which imposes fees on land developers for the provision of access to existing or future bulk infrastructure, such as water, electricity, roads and sewerage.

Sapoa argued that the policy is unlawful, irrational and unreasonable, and that it violates the Spatial Planning and Land Use Management Act of 2013, which regulates land development in the country. Sapoa also claimed the policy anticipates the enactment of the Fiscal Powers Bill, which will give municipalities the power to levy taxes and surcharges on land development.

The court dismissed Sapoa’s application, finding that the policy is lawful, rational and reasonable, and that it serves the objects and principles of the act. It also found that the policy relies on the existing authority of the city to impose development contributions under the act and the bylaw governing development charges in Johannesburg.

The court’s judgment is a welcome affirmation of the city’s right to fund its infrastructure growth in a fair and proportional manner. The development contribution is not a tax or a surcharge, but compensation for the provision of access to the bulk infrastructure, which is essential for the viability and sustainability of any new development. The contribution is based on the impact of the new development on the overall capacity of the city’s infrastructure, and not on the actual infrastructure.

The policy also creates uniformity and legal certainty in levying development contributions, which were previously determined on an ad hoc basis. It provides a clear and transparent method of calculating the contribution, using a development contribution calculator that takes into account factors such as the type, size and location of the development, the availability and adequacy of the infrastructure, and the cost of providing or upgrading the infrastructure.

The policy also allows for exemptions, reductions and deferments of the contribution in certain circumstances, such as when the development is in line with the city’s spatial development framework, or when the developer undertakes to provide or upgrade the infrastructure themselves.

That said, the policy is not without risk for the city. It has the potential to dampen investment and growth in the property sector. It could increase development costs and reduce profitability for developers. The policy could also create legal uncertainty and administrative complexity for both the city and the developers, as it is likely to face further challenges and appeals.

However, these arguments are outweighed by the fact that policy is not only legal but necessary and beneficial for the city and its residents. The city faces a huge infrastructure backlog, which hampers its ability to deliver basic services and accommodate the growing demand for housing, business and social amenities. Joburg cannot rely solely on its own revenue or on national government grants to fund its infrastructure expansion.

The development contribution is a legitimate and equitable way of sharing the costs of infrastructure provision between the developers who benefit from it, and the city that bears responsibility for it. The policy also promotes the objectives and principles of the act, which include ensuring that everyone has a fair chance to use and benefit from the land, protects the environment, and makes the land more resilient to shocks such as disasters, climate change and social conflicts.

The policy helps the city achieve these goals by guiding the developers to choose locations that already have good infrastructure, such as roads, water, electricity and so on, or where the city plans to provide or improve them soon. The policy also supports the vision of the city, which is to create a place where people can live, work and play, and access opportunities, services and amenities such as jobs, education, health and recreation. It helps make the city more compact, integrated and inclusive, and reduces the barriers between different areas and groups of people.

Sapoa should recognise that the development contribution policy is in the long-term interest of its members, as it will enhance the value and viability of their properties. Sapoa should not appeal against the court’s judgment, but rather work with the city to find constructive and mutually beneficial solutions for the infrastructure challenges facing Johannesburg.

SAPOA SHOULD NOT APPEAL AGAINST THE COURT JUDGMENT, BUT RATHER WORK WITH JOBURG