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