New bill to help municipalities charge owners developing property

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National Treasury has released a new draft law that will standardise the fees municipalities charge for new property developments.

The Municipal Fiscal Powers and Functions Amendment Bill was released for public comment on Wednesday afternoon, giving the public until the end of March to make submissions on the draft law.

The bill seeks to give local governments a fixed structure to collect revenue from property developers for the costs incurred by the municipality when installing new infrastructure or upgrading existing infrastructure. 

Revenue collection has been a major challenge for municipalities over the years as systems are not uniform and financial management systems remain weak. This is evidenced by the more than R130bn that municipalities around the country are owed for water, electricity and other services.

"The amendment bill establishes an unambiguous, fair and consistent basis for municipalities to recover development charges for all new land development projects that require statutory approvals through the municipal land use planning system," the statement said.

The statement said the bill sought to increase the amount and the predictability of development charge revenue. This would provide both municipalities and developers with more certainty and assurance that the costs of infrastructure are covered by its users, the statement said.

"The incidence of the payment is also immediately apparent as the land owner pays and, to the extent that the market permits, the land owner will pass on these costs to the purchaser of the property that is sold," the statement said.

To achieve its ends, the bill restricts the scope of engineering services to those already covered in the definition of engineering services provided in the Spatial Planning and Land Use Management Act.

The statement advised members of the public to make submission on the bill by 31 March. The bill can be found on the government gazette. 

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