The South African Property Owners Association (SAPOA) has launched a High Court application against the City of Joburg interdicting it from applying the 2021 Development Contributions Policy (DCP) and declaring amongst other things. that the City may not impose any condition on the granting of a land development application which requires the applicant to pay a development charge or contribution relating to services and/or infrastructure other than required by the development to which the application relates.
The application arises from the fact that the City wrongly interprets the provisions of the Spatial Planning and Land Use Management Act (SPLUMA) as empowering the City to impose such charges irrespective of whether adequate services for that service already exist and have been paid for from alternative revenue sources.
In effect the Policy as published would permit the City to cross-subsidize services in other areas via a Development Contributions regime imposed on specific development applications.
“Our application relates to the fact that the City, as with all municipalities, can only exercise the powers they have been given under the Constitution and national laws. SPLUMA does not permit the scheme that the Policy envisages. Land developers already carry an enormous financial risk and requiring them to fund infrastructure in other parts of the City is not only unlawful but unfair. They accept the responsibility to provide capacity in external infrastructure impacted by their developments, not in unrelated infrastructure. Municipalities have other lawful funding mechanisms for that purpose”, says SAPOA CEO, Neil Gopal.
As background, on the 8th of October 2021 the City of Johannesburg released a policy titled “Development Contributions”.
This Policy introduces, according to the Municipality, “a once off charge levied by municipalities on the landowner, as a condition for approving a land development application, to cover the capital costs incurred by the municipality when installing new infrastructure or the upgrade of existing infrastructure”.
1. SAPOA submitted extensive comments on the draft Policy, none of which were addressed.
2. In addition, in an attempt to avoid litigation, SAPOA made it abundantly clear to the City that key elements of the Policy were unlawful. Despite that, the City gave notice that the Policy would be implemented as approved.
3. The calculation of the development contributions would be a unit development charge imposed on all development applications processed by the City under SPLUMA and the City’s Planning Bylaws, regardless of actual external infrastructure impacts.
“Leaving aside the issue of legality, there is a matter of economic principle. The Policy will be disastrous for the prospects of City development, adding a financial burden that is unsustainable in the present economic climate. As a consequence, the Policy will defeat its explicit purpose, which is the stimulation of development across the City”, Gopal concludes.