SA Affordable Housing March - April 2020 // ISSUE: 81 | Page 31

LEGAL MATTERS SPONSORED BY STBB new developments is paid by direct beneficiaries so that existing residents do not continue to subsidise new developments. The incidence of the payment is also immediately apparent as the landowner pays and, to the extent that the market permits, the landowner will pass these costs on to the purchaser of the property. the engineering standards in which the installations must conform to. Where the municipality is responsible for the installation of bulk engineering services and fails to do so within a prescribed period, it must reimburse the landowner for the relevant portion of the development charge. NOT MANDATORY: EXCLUSIONS: The wording of the Bill suggests that the imposition of development charges by municipalities on landowners is not mandatory and remains within the discretion of municipalities. Levies for certain categories of landowners and developments may be subsidised or exempted, provided they are in line with the approved municipal policy framework and by-law. Where an exemption is granted, the municipality must identify an alternative source of revenue for providing external engineering services. RESOLUTION, POLICY AND BY-LAWS: In circumstances where a municipality elects to impose a development charge, a resolution to do so must be adopted by the municipal council. The development charge must be imposed by the competent authority as defined in SPLUMA (the Municipal Planning Tribunal) as a condition for approving the land development application. Unless otherwise provided for in the conditions of approval, a landowner will have to pay the full amount of the projected development charge before exercising the rights as approved. The municipality must then prepare and adopt a policy for the raising of development charges in a fair and equitable way. The policy must outline the methodology for the calculation of a unit cost per municipal engineering service, specify any municipal engineering service zones and can provide that a municipality may allow for payment to be done in tranches for identified categories of land development. The policy may provide for the municipality, at its own instance or on request by a landowner, to increase or decrease the calculated impact of a land development on external engineering services to reflect the actual anticipated demand for one or more of the required external engineering services. In such an instance, the adjustment will be calculated at the expense of the landowner who must use the services of a registered professional engineer. Subsequent to the adoption of the policy on development charges, a municipality must adopt and publish by-laws in terms of sections 12 and 13 of the Municipal Systems Act to give effect to its implementation. ENGINEERING SERVICES AGREEMENT: Where an approved land development project requires the installation of internal or external engineering services, an engineering services agreement must be concluded between the developer and the municipality. This agreement must set out whether the municipality or the landowner will be responsible for installing the internal or external engineering services in respect of the approved development. Further details that the agreement must provide for, include: an outline of the nature and extent of the internal or external engineering services to be installed by either party; the commencement and completion of the installation; and www.saaffordablehousing.co.za ACCOUNTING: In terms of accounting, the development charges collected by municipalities are not to be regarded or recorded as a general source of revenue, but must be reflected as a liability in their financial statements. This is because the development charges collected must be used for purposes of funding or acquiring capital infrastructure assets. Once the charges have been utilised for that purpose, the charge may be recognised as revenue. Members of the public are invited to submit written comments on the Bill by 31 March 2020, via email to [email protected]. Enquiries may be directed to [email protected]. STBB offers a variety of legal services where our expertise and friendly approach allows us to deal with every legal matter in an effective and efficient manner ensuring a pleasant experience for our clients. In the property sector we cover: • Property law: We offer benchmark services for both retail and development property transactions. We are reputed for our teams of seasoned property law practitioners who share an extensive set of skills to smoothly address every aspect of property law and land development transactions. • Local Government, Planning, Development and Environmental law: Our Development Law Unit has nine specialists addressing development requirements in the fields of planning law, environmental law, construction law, renewable energy law and local government law. The Unit partners with land developers to function as a vital watchdog and one-stop-shop for all legal requirements of land development projects, including low cost housing projects. For more information related to the information published, please contact Gert Minnaar at [email protected] or visit our website www.stbb.co.za to view contact information for your nearest branch. MARCH - APRIL 2020 29