Cogta breaks silence, slams Joburg mayor’s blame game on school rates debacle

In a statement released late on Thursday night the Department of Cooperative Governance and Traditional Affairs (Cogta) came out strongly against Joburg mayor Mpho Phalatse who put the blame on it for an increase in property rates for schools that could have crippled the education sector in the city.

Read: City of Joburg does a U-turn on school property rates

Moneyweb earlier reported that the city removed the special rates category for educational institutions and provided for public schools to be taxed as ‘public service’ property and private schools as ‘business/commercial’ property .

That meant an increase of six times in the rates bills for public schools and 10 times for private schools from 1 July.

The city offered a 25% rebate for private schools, but no relief for public schools. It would also apply to early childhood development centres and higher education institutions.

Impact

Christo Bokhorst, a director at Rates Watch, said at the time a private school valued at about R70.5 million that had been paying just over R12 000 per month in the previous financial year, would have to pay more than R126 000 per month when classified as a business. Even if it qualified for the 25% rebate the city offered, it would still be liable for almost R95 000 per month in property rates.

The rates bill of a public school with the same valuation would increase from the R12 000 per month to almost R76 000 per month, according to Bokhorst’s calculations.

Civil rights group AfriForum tried to engage the city on the matter, but eventually approached the High Court with an urgent application to have the city’s decision reviewed and set aside.

Listed education groups ADvTech and Curro launched similar applications.

Read: City of Joburg misunderstands Property Rates Act – ADvTech

The city gave notice that it would oppose the applications, and an agreement was reached between the parties that the matter would be postponed until November. In the meantime the city would refrain from any credit control actions in respect of the affected schools.

On Monday Phalatse issued a statement under the heading: “City of Joburg takes active steps to correct National CoGTA rates and tariffs for affected educational institutions.”

She put the blame squarely on Cogta with reference to an earlier legislative change and the failure of the minister to approve the retention of the special category for educational institutions.

“In the last month, the City of Johannesburg has been dealing with queries, complaints and court cases by stakeholders about the Section 8(2) amendments by National CoGTA. In this time the mayoral committee and city, particularly the MMC for Finance and the Revenue Department as well as the Department of Legal and Contracts, have been working around the clock to find a workable solution that does not unduly penalise ratepayers or place the city on the wrong side of the law or Auditor-General,” Phalatse said.

“My management team and I are insistent about being a caring city that is business-friendly. While we have had no choice but to comply with the amendments, we have been working hard to find a solution that creates a win-win for all in the short term while we address a long-term strategy, and we are confident that we have found a solution.”

Phalatse announced that the mayoral committee would table a report in council to recommend that the increase for the affected educational institutions be limited to 5% and that it would apply from 1 July.

“The process and finer details are being worked on to ensure that the changes are executed seamlessly,” she said.

Member of the mayoral committee for finance Julie Suddaby has since told Moneyweb that the municipal bills of the affected properties will be credited automatically, without any need for them to first apply for the relief.

Phalatse further stated that the city has requested a meeting with the parties that brought the court applications “to put the proposal on the table for their clients to consider”.

Cogta in its statement throws the ball right back into the court of the city.

“It is important to note that Minister of CoGTA is not authorised to determine the cent in the rand rate a municipality may levy on categories of rateable properties. Moreover, the minister has never interfered with the functions of the City of Johannesburg on what rebate (discount) if any, it should give to independent schools as this is a prerogative solely reserved for council.

“The issue of setting rates is not based on the category of the property (in terms of section 8 of the Municipal Property Rates Act) in question, but also on the actual rate tariff a municipal council determines (in terms of section 14 of the Act) and whether a municipality deems it appropriate to grant relief measures in terms of section 15 of the Act.”

“Reading sections 8, 14 and 15 of the Municipal Property Rates Act together makes it clear that the authority to set municipal property rates is not with the Minister of CoGTA but it is with a municipal council,” according to the Cogta statement.

“The minister does not set the municipal property rates tariffs nor does the minister determine whether a specific category of owners of properties are worthy of being granted a rebate (discount) or reduction in the rates payable in respect of their properties.

“These powers are vested in the council of a municipality, and in this regard, the City of Johannesburg has, in its own right, determined that the schools in question which do not fall within the category of “properties owned by public benefit organisations and used for specified public benefit activities” must only be granted only 25% rebate.”