METRO RATES RIFT HARDENS
Commercial property sector believes court may be only route left
Buffalo City Metro has blasted its property owners forum for accusing city bosses of deliberately prolonging an impasse over rates gouging.
Hitting back with its own accusation, the city says its big property owners and investors are trying to rush the due legal process of property valuations.
When rates escalated by as much as 270% last year, the Buffalo City Property Owners Forum (BCPOF) hit the roof, accusing the metro of making an opportunistic mistake in its calculations, and of failure to smooth in the increase over five years, which has to come in below the Consumer Price Index.
The forum has threatened legal action, but some BCPOF members believe BCM would enjoy a court confrontation, as this would buy the metro time and allow it to continue raking in massive earnings from artificially inflated rates.
BCM spokesperson Samkelo Ngwenya said the metro was still working on changes which would be effective in 2019-20 when the forum went public with its criticisms. He said commercial owners were wrong on all counts and vehemently denied the metro was being deliberately intransigent to stall a decision. “The BCPOF did not give us the opportunity to complete this process and report back to them.”
The forum claims the metro overcharged them by R500m in the 2018-19 financial year and refused to meet with them, and that BCM is clueless on how to calculate commercial rates.
The forum claims the overpay will hit R1bn by June.
In a detailed response to Dispatch questions, Ngwenya said BCM had followed all due and legal processes for both the property valuation and subsequent rates increase.
“There was an open and transparent process,” he said.
The metro remained sensitive to the impact of the new valuations and rates on the property market and new investors. “We value the contribution that property investors make to the city and we are committed to work with stakeholders to find a solution that is viable and sustainable.”
A BCM finance department insider said mayor Xola Pakati and city manager Andile Sihlahla were aware of BCPOF’s accusations but both were in support of the department’s calculations and billing method.
BCM had also consulted national Treasury and the Eastern Cape department of co-operative governance & traditional affairs, which both endorsed the metro’s methods, said the source.
Reacting to the city’s statement, BCPOF spokesperson Graham Hardy said they were “extremely disappointed”.
“BCPOF have attempted to engage BCM officials on several occasions since July and were [unsuccessful until] November.
“These representatives undertook to revert to us with some alternative solutions by early February. They have not done so and have refused all further contact or interaction with us. It appears that they now wish to reconsider their position only for the new financial year. Our view is that this is yet another delaying tactic in the hope that rates revenue earned this year will remain unchallenged.
“This situation that BCM has created is untenable and unacceptable. They have fundamentally affected the viability of property investment in the metro and BCPOF have probably now no alternative but to seek legal redress. BCM’s actions have already halted further development investment.”
Ngwenya said BCM had met with various property owners, and investigated the matter extensively.
BCPOF member Andreas Efstratiou, a director of Novate, which has one of East London’s largest property portfolios, said several written requests for meetings were ignored.
“Our only conclusion is that BCM is stalling, and that probably means the legal route. Every month the basket of unlawful rates gets fuller, and is now well over R500m.”
Morne Reinders, a spokesman for Rebosis, which owns Hemingways Mall, East London’s largest commercial property, said: “We are very concerned over the impact of these exorbitant rate increases on our tenants and the future investment attractiveness of the city. We have successfully lodged objections. However the revised rates remain unsustainable.”
There was an open and transparent process
They have fundamentally affected the viability of property investment in the metro