Development levy awaits green light

The proposed development levy set to kick in from July has been put on ice at least until the national Treasury gives the eThekwini municipality the green light to implement the policy.

The city is also waiting for the national government to approve the specific by-laws for the municipality.

Municipal head of development planning, environment and management, Soobs Moonsamy, said she envisaged that this would be done by June 30, 2013.

Planners, architects, members of the construction industry, the Durban Chamber of Commerce and Industry and the SA Property Owners Association challenged the proposed development charge on the basis that it was a tax, which would have to be authorised by national legislation.

During public hearings on the proposal in November residents complained that ultimately the extra costs would be borne by consumers.

However, businesses complained that the costs would put them out of pocket, while some business owners threatened to move to smaller municipalities to avoid paying these costs.

The charge would apply to all residential, commercial and industrial developments. Development charges, which the national Treasury has encouraged municipalities to implement, would offset costs for public infrastructure – including roads, water pipes and electricity connections – required for new developments and upgrades. Moonsamy said the city was not in support of development where services were not available.

Subsidising

“Some costs are incurred by the council, which does relate to the general ratepayer subsidising bulk cost in areas not serviced. It is for this reason that the development charge is based on retrieving the full cost of the development from the developer,” she said.

Moonsamy said the city first raised the development surcharge two years ago following a study undertaken by the national Treasury on development charges that indicated that eThekwini then had the lowest charges in the country towards the recovery of bulk infrastructure costs.

According to Moonsamy, the development surcharge that was subsequently introduced across the city in June 2010 was not directly linked to any one of the particular services such as to water, sewerage, electricity and roads, but was general in nature.

“In the case of the proposed development charge as recommended by national Treasury, the intention is to create a development framework,” she said.

Moonsamy said this would also ensure better comparability between towns and cities across the country.

She said the municipality was still collecting the development surcharge on the submission of building and planning applications.

But the city will be re-introducing it on a phased basis for each of the services until the development charge as advocated by the national Treasury has the necessary legislative support in place.

“The council is currently in the process of preparing a specific development charge policy document which will be supported by a development charge by-law to be adopted by the council in due course,” she said. - The Mercury