The City of Cape Town plans to write off debt of approximately R1.4 billion due to the continued severe impact of Covid-19 – a first for the municipality.
This is over and above the allocated rates and services relief of R3.4 billion in the new financial year.
On the 27th of May 2021, Council approved payment incentives and debt write off actions for qualifying debtors to begin immediately, over phases. Those who can pay and continue to do so, enables the City to provide relief to struggling residents, businesses, and organisations.
Through this initiative, the City hopes to improve the culture of payment with the incentives offered.
“This action, which involved an in-depth, legally vetted and well-deliberated process, is only possible because of the trust there is in the City and the resultant high payment ratio for rates and services, which is unparalleled in South Africa” comments the City’s Mayoral Committee Member for Finance, Alderman Ian Neilson.
“This is helping to keep the City sustainable and means we are in the position to assist qualifying debtors out of humanitarian considerations. It is hoped that these incentives and debt-write offs will create a stronger culture of payment, while at the same time helping our residents who have old City debt to sleep easier at night. This would make the City more resilient and sustainable going forward”.
“It is important to protect municipal income, for without it, the City will not be able to provide basic and essential services. One way of protecting income and making the City more sustainable is to provide incentives to encourage a culture of payment”.
“We cannot do this without our loyal residents and without the support of those who are able to pay and continue to do so. We are grateful to them. Importantly, there is also assistance available to those who have been paying but need help now due to the lingering impact of Covid-19 on their finances. These cases continue to be considered on application to the City, on a case-by-case basis via the Covid-19 relief initiatives. The City will continue to operate in a manner that is sustainable, that does not jeopardise service delivery and that sees to it that those who qualify for support are provided with relief” he concluded.
Qualifying debts to be written off:
Total debt write-off per category:
R1.36 billion
Outstanding interest on debtors’ accounts (residential and commercial) as at 31 May 2021. This includes all residential customers as well as commercial entities. This debt remission does not require customers to enter a payment arrangement.
Conditions:
None
R2 billion
Arrear debtors (property rates and services, including sundry charges) for debt older than three years as at 30 June 2021. The outstanding debts eligible for write-off include arrears for periods prior to and including 30 June 2018.
This benefit will also be extended to customers who currently have a valid payment arrangement with the City.
Conditions:
- Valid payment arrangement must be made for debts outstanding from 1 July 2018 to the date of the arrangement.
- Debts will be reinstated if a debtor defaults on the agreed payment arrangement and the City will continue with debt management actions.
R28,6 million
Debts on all residential properties with a zero-municipal valuation, which forms part of either the City’s rental stock, low cost housing initiatives or Breaking New Ground (BNG) projects. These properties are deemed as indigent, as the people staying in these properties are low income earning residents.
Conditions:
This will only apply to the City’s rental properties, low-cost housing initiatives and BNG project properties.
R76.8 million
Debts for the existing 20 550 pensioners who are currently registered with the City for Rates Rebates for Owners Dependent on Pension and Social Grants for their livelihood but are still struggling to settle their accounts in full. They will receive a once-off write-off.
Conditions:
Qualifiers must currently be registered as a pensioner, receiving a pensioner’s rates rebate for Owners Dependent on Pension and Social Grants for their livelihood.
R162,4 million
Write off on the accounts of religious organisations, cemeteries and crematoria, non-profit organisations, animal shelters, accommodation for the vulnerable, local community museums, old age homes, Public Benefit Organisations, social housing, youth development organisations and sports clubs as determined and registered by the City at 31 May 2021. The benefit will also be available for those entities who are in the process of being recognised as one of the mentioned entities and who will be successfully registered before or on 31 December 2021. These organisations provide a valuable service to the community, but are suffering under the current economic climate, with little assistance being received from the National Government.
Conditions:
- Registered entities as at 31 May 2021. ·
- Recognised entities who will be registered before or on 31 December 2021.
R421 million
Write off for debt older than three years linked to the City’s housing rental debtors. This benefit will also be extended to debtors with current instalment plans.
- Payment arrangement required.
- Debts will be reinstated if a debtor defaults on the agreed payment arrangement and the City will continue with debt management actions.
R57,5 million
Debt that is older than three years for City’s Property Management lease debtors. This benefit will also be extended to debtors with current installment plans.
- Payment arrangement required.
- Debts will be reinstated if a debtor defaults on the agreed payment arrangement and the City will continue with debt management actions.
Qualifying customers should contact the City. They will be informed whether they qualify when visiting the customer interaction centres or when contacting the respective call centres with account enquiries or when wanting to make a payment arrangement.
Covid-19 relief initiatives remain in place for those who have been paying but need immediate assistance.
