Special Rating Areas - A Multitude of Benefits

Private Property South Africa
Anna-Marie Smith

Property owners in a number of Cape Town suburbs have gained from the additional services made possible as a result of Special Rating Areas.

The city of Cape Town Special Rating Areas (SRAs) is the municipal facility of an additional rate levied on property, payable by owners in a defined area, to raise funds for the improvement or upgrading of such an area. It is a vehicle created to serve the purposes of upliftment, rejuvenation and sustainability when a collective of real estate owners are in agreement of such needs. SRA’s provide a formal structure through which to finance additional services, such as crime prevention in residential areas where contributions that were previously optional, result in non payments, and lapsing of services as a result.

The product of SRA’s (previously known as Central Improvement Districts, CID’s) forms part of the City’s Integrated Development Plan, which in itself is obligated to fulfill the guidelines of its Rates Policy. The city has confirmed the benefits of long-term SRA’s to include increased property values and enhanced standards of living, and in 2010 was administering a total of 22 SRA’s. The SRA policy statement implemented by the city on 1 July 2011 states that the model is based on international best practice, aiming to prevent degeneration of cities and towns and the onset of urban decay.

The policy facilitates economic growth and sustainable development of areas to enhance and supplement municipal services already provided by the City. It is also aimed at further investment into areas where, through co-operation between the city and private business municipal services could serve to uplift degenerated areas and uplift distressed business and mixed-used areas that could slow residential property investment.

SRA’s have to submit five year business plan within the framework of Section 21 companies to be approved by the city, as well as annual budgets in terms of the SRA By-Law. Additional costs payable by property owners is usually where difficulties arise in obtaining agreement from a majority of residents in an area. The city requires written proof of a majority vote of 60% of the residential special rating area owners in approval of the application.

While most applications are successful, some do not succeed as was recently seen in the Far South residential suburb of Capri, where the required majority was not obtained due to the unaffordability of additional costs to be levied over and above existing monthly rates.

Individual SRA’s are unique in nature due to geographical settings, population density, zonings and property values. ‘Top up’ services provided by SRA’s have produced phenomenal improvements as seen throughout the city including Cape Town Central, Sea Point, Green Point, Claremont, Athlone, Muizenberg, and Fishhoek. Other areas where property owners have benefited from the implementation of detailed five year SRA business plans are Swaanzwyk, Groote Schuur, Maitland and Zeekoevlei. A current SRA application under review by the city is for the Kommetjie geographical area located along the Atlantic Ocean Coast towards Cape Point.

The city says it remains obligated to sustain existing service levels after the establishment of an SRA, and by working closely with city officials additional services are determined.

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