BUSINESSES FACE 80% HIKE
Entrepreneurs in BCM fear rate increase may force them to close shop
Scores of jobs and 30 businesses are on the line in a bustling small business centre in Buffalo City after landowner Transnet and BCM agreed to an astounding 35% rates hike.
In a bizarre turn of events, the first deal agreed to – apparently without consultation with the the tenants of Arcadia Industrial Park – was a scorching 80% increase.
In an ominous note to BCM ratepayers, Transnet’s hired property managers wrote to tenants: “This [35%] was based on information received on what the average rates increase was in East London.”
The proposed 80% increase came after Transnet apparently agreed to a new property valuation of the run-down but prime central city property from R29m to R52m in the 2017 valuation.
Some buildings in the park are said to be 120 years old and crumbling.
Les Holbrook, Border-Kei Chamber of Business director, said such huge increases in rates would put businesses under pressure and eventually drive people out of business.
Transnet did not reply to questions sent to them.
BCM spokesperson Samkelo Ngwenya confirmed the land belonged to Transnet.
He said of the valuation: “Transnet had the opportunity to object to this as per procedure. No objection to this property has been lodged.”
Tenant Richard Field, a managing member of Lifestyle Flooring & Décor, said that the increase was a harsh blow to the 30 small businesses in the park.
In a letter seen by the Dispatch, Field told Transnet it should have raised a formal objection to the increased valuation.
“First and foremost it is my opinion that [the park property managers] should have insisted that Transnet raised a formal objection to the increase. This process is relatively simple and involves filling in a form and paying the princely sum of R55. At no stage were the tenants consulted about the increase or how the new values were calculated. The new rates were simply passed on by Transnet to the property managers, who then dumped it onto us, the tenants.
“For Transnet to argue that they have no problem with an 80% rates increase in rates can, for me, only be due to the fact that they are able to pass the increase on. If they were actually going to have to pay the increase they would in my opinion have a very different outlook on this, as I am convinced the property managers would have had as well – should they have been paying,” wrote Field.
He said majority of buildings in the park were “antiquated and close to derelict. The building we are renting was built in 1897, and has had very little work done on it in the past 121 years. The building does not even have a damp course in it and is subject to rising damp and a number of ills too numerous to mention here.
“It is common knowledge that Arcadia Park is a ‘site in limbo’ waiting to be demolished and developed, and that is also one of the reasons that it is in such a state of decay,” he said in the letter.
The property owners sent a letter to its tenants stating that, for now, business owners would only have to pay 35% more as from October 1.
“We are currently in discussions with Transnet with respect to the rates increases at Arcadia Park. Our management have been in discussion on the matter and have decided to provide interim relief on the rates increase. Hence there will be a 35% increase on the existing rates charges with effect from 1st October 2018 ... Kindly note that the above is subject to change, depending on the outcome of our discussions,” read the letter.
In a prior letter from the property managers to the tenants, dated August 27, it was claimed that the original rates hike of 80.23% would have to be paid as a Transnet valuer supposedly found the new valuation to be “fair and reasonable, and in line with the market value”.
Field said: “While 35% is much better than 80% it is still problematic. To increase the rates by 35% would imply an increase in the valuation of the property of 35%.
“It is not our place to make this argument but Transnet and their property managers should be engaging the municipality on this issue. They do not want to admit that the buildings at Arcadia Park are in disrepair as they are only interested in extracting as much revenue as possible from the tenants.”
The business park is remarkably close to the city’s infamous sleeper site.
Ngwenya said it was “highly unlikely” that the park was part of the sleeper site although they had not “had the chance to look into records yet”.
Holbrook said that the sleeper site land was originally given to Transnet, which had promised to develop into a bus and train hub.
He said the development of this sleeper site would be a “fantastic” boost for East London with the only limiting factor being the time and money required for the development.
At no stage were the tenants consulted about the increase or new rates
We are currently in discussions with Transnet with respect to the rates