Weekend Argus (Saturday Edition)
Winelands property rent shock
Golf club lease called into question
THE wealthy have been using underhanded tactics to avoid paying market-related rent for land in Stellenbosch, say local opposition councillors.
Officials and councillors said this was because the municipality has not carried out a valuation process on farming land and golf courses since 2011.
The Weekend Argus is in possession of a list of 50-year lease deals pre-dating 1994, among other documentation. The list suggests the municipality has been giving preferential treatment to some of the 85 farms and properties in Stellenbosch for decades, said EFF councillor Derrick Hendrickse and Franklin Adams of the Democratic New Civic Association.
Rent for the smallest farm at 0.31 hectares was R345 per year, while the rent for a 35ha farm stood at R38 000 annually.
Rent for the golf course, at 70.4ha, was R1000 per year in 2011.
However, after the last valuation, the annual rent for the golf course stood at just over R135 000 per year. After the 2011 farming land valuation, the Stellenbosch golf course refused to pay the new lease deal, branding the process as “flawed”. The owners defaulted on payments and the debt has now accumulated to R2.3 million.
Frank Dorey, director for the Cape Law Society, confirmed receiving a request from the two parties for an appointment of an arbitrator, who will look into the matter. Dorey said they were looking to set a date.
Chris van der Merwe, Stellenbosch golf course general manager, acknowledged the debt, but said the valuation process had been flawed. He admitted that the golf course had an annual turnover of more than R20m for the last five years.
“The land was never subject to rates. The valuation on the land was incorrectly done. Therefore we challenge the matter. In terms of our revenue, you’re correct, but our expenses (cover) just over 100 people that work here,” Van der Merwe said.
“Our net revenue is not remotely (close)... note that we’re an NPO, we make no profit. The net revenue goes back into the capital expenditure and the golf course. The net revenue is zero.”
Van der Merwe added: “The golf club leases the land on which the golf course and club facilities are erected from the Stellenbosch muni- cipality in terms of a long-term notarial lease. The total extent of the properties is 73.4ha.
He said the “disputed amount” is approximately R2.3m, which was raised by the municipality as property rates, penalties and interest for the period 2012-13 to 2016-17.
“The lease agreement between the municipality and the golf club originally provided for a nominal lease amount of R100 per annum (before 1994), with a provision for escalation. In 2011, the parties mutually agreed to amend the nomnal amount to a market-related rental, which the club has paid every year since then.“We have no difficulty with the valuation process, but the valuation amount for the said properties (were) incorrectly appraised as it erroneously considered the land to be zoned ‘business’ where in fact it is zoned as ‘private open space’and is burdened with a long-term lease to a nonprofit organisation. The valuation was rectified in 2017 and the club has since paid the rates charged for 2017-18 financial year based on the new valuation.”
He said the club is a non-profit organisation, managed on a “break even” budget. “Any trade surplus is
Municipality spokesperson Stuart Grobbelaar said market-related rates applied to all companies.
He said the council had recently approved a progressive new policy aimed at managing municipal agricultural land in an inclusive way.
“Lease amounts were determined on the agricultural value of the land by independent valuers and are adjusted in line with inflation annually.
“All contracts are market-related apart from one contract that has been divided into 10 small contracts for upcoming farmers who each pay 20% of the market value, as approved by council.”
Asked how much farms and property owners owed the municipality, Grobbelaar said the municipality was reviewing all contracts to ensure compliance with the terms of the agreements.
EFF councillor Derrick Hendrickse said he would submit a motion at next month’s council to terminate the lease with the golf course and request that the municipality sell it for R10 million a hectare.