Concordia centre canned?
The highly anticipated R40-million shopping centre development in Concordia in Knysna is hanging in the balance. This comes after Knysna Municipality approved the development of the centre subject to a service agreement that does not sit well with the developer, Variflex Trading.
The municipality has refused to waive the development charges (augmentation fee) for bulk services or the first three years’ rates and taxes as promised by the previous administration.
Council compromises
At its meeting on Thursday 29 March, Knysna council compromised in as much that they would allow the development charges to be paid in instalments over 24 months and agreed to rebates on rates and services over the first three years: 100% rebate in year one, 75% in year two and 50% in the third. After this full rates would be payable.
The matter has been dragging on for years following agreements with the previous administration at Knysna Municipality, who at the time approved no augmentation fees and “free” services for a period of three years. But CFO Mbulelo Memani made it clear that the agreement with the previous administration is invalid.
“The municipal manager at the time [Grant Easton] had no authority to make such agreements. Only council can decide, and in any case, it is this municipality’s policy to request augmentation fees and charge rates for services,” he said.
‘Bureaucracy too costly’
But, according to John Rimbault, a director of Variflex Trading, the development is no longer financially viable and they are looking at selling the land. “The charges will eat away at the already meagre profit we stand to make. Any development has substantial financial risks, however, in the case of Concordia, these risks are exaggerated. As it is a lowincome area, we can only achieve limited rental levels in the shopping centre. We have written to the manager of Integrated Human Settlements, Mawethu Penxa, and offered the land to the municipality. Apparently they are in dire need of land for housing. The centre negotiations have taken years, but it seems that bureaucracy is just too costly for economic growth.”
Centre ‘will do wonders’
Variflex CEO Ian Raubenheimer is more positive, however. “We are still keen to go ahead with the development and would love to meet with the officials and all the role players to discuss our options. We have not received formal written confirmation following the council decision. I am sure we can come to some form of mutually beneficial agreement. This development will do wonders for the community of Concordia and surrounds.”
Concordia ward councillor Velile Waxa said the benefits of a shopping centre for the community of Concordia and Greater Knysna area will be immense, as it will generate hundreds of jobs in the coming years and boost the local economy. It would also save struggling residents the taxi fare of going to shop in the Knysna CBD.
Shoprite had already committed to be the key tenant at the centre that was due to open in November.
Waiving fees ‘not policy’
At the council meeting all parties there unanimously agreed that no fees could be waived as this was not policy. “Augmentation fees are usually paid upfront, but this municipality wants to be lenient to encourage and support development. It is for this reason that we have suggested that augmentation fees be paid in instalments over a period of 24 months,” mayor Eleanore Bouw-Spies said.
ANC councillor Aubrey Tswenga agreed, saying, “We need this development for our community. The developers must pay augmentation fees and hit the ground running.”
Financial implications for muni
It was stated in the council agenda that “it should be noted that the Knysna Municipality: Standard Municipal Land Use Planning By-Law provides in Chapter VIII, that an applicant must pay development charges (augmentation and connection fees) to the municipality in respect of the provision and installation of external engineering services.”
Councillors were also advised that there would be financial implications for the municipality should the augmentation fees be completely waived.
The civil augmentation fees amount to around R980 000. This would increase annually as council approves new tariffs, and would also increase with the inclusion of electricity.
The developers were to meet on Wednesday 4 April, to come to a final decision about the development.