Court intervenes to protect schools against Joburg rates shock

The Gauteng division of the High Court on 28 February put a stop to efforts by the City of Johannesburg to reclassify property used for education in its rates policy, which would have resulted in an astronomical increase in the amounts payable for rates.

It granted urgent applications brought by AfriForum, the Independent Institute for Education, AdvTech, and Curro Holdings. The city and other respondents were ordered to pay a large portion of the applicants’ costs.

The court not only set aside the council decisions relating to the matter applicable to the current financial year, but went further and ordered that the tariffs applicable to such property may increase by only 4.85% in 2023/24.

The court further declared that the city is permitted to retain a special category for property used for education in its rates policy, contrary to the contention of the Democratic Alliance-led multi-party coalition when it governed the city.

How shocking?

In 2022 Moneyweb reported on the change in the rates policy of the city, then led by the multi-party government.

It would have resulted in a public school with a valuation of R70 million, that had been paying about R12 000 per month for rates, facing a bill of about R75 000 per month. An independent school with the same valuation would have received a bill of R96 000, even after applying a 25% rebate it may have qualified for.

The dramatic change was not communicated to the affected property owners before the adoption of the rates policy.

It came to light only, and as a shock, when Rates Watch picked it up after the policy had been adopted.

The blame game

The city then argued that a change in legislation forced it to do away with the special category and blamed the national Department of Cooperative Governance and Traditional Affairs (Cogta) for the additional burden on schools.

The department denied this and pointed to several other choices the city could have made while complying with the law, without having the same devastating impact on schools.

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

The city however recategorised public schools and tertiary education institutions as ‘public service property’, with tariffs about six times more than before, and independent schools, universities and colleges as businesses, paying about 10 times more.

‘Not rational’

Morné Mostert, head of local government affairs at AfriForum, said at the time these institutions could not pay such increases. Their budgets for the year were finalised long before they knew about the decision of the council, and on the assumption that the increases in municipal rates and taxes would be reasonable.

He said it would have required schools to increase tuition fees to a level where parents couldn’t afford them.

Even where the state as owner of school property is responsible for the payment of rates, it would have placed an unfair burden on the relevant department and they would have had to use money earmarked for new schools or the improvement of infrastructure to pay the municipal bill.

Following the ruling, AfriForum head of cultural affairs Alana Bailey said: “AfriForum considers this ruling a great victory. Instead of targeting schools, the metro should work with schools instead. We also see that with this order…the court also protects schools for the next tax year.”

According to Mostert this is also a message to municipalities that they must consult with communities and institutions.

“The metro cannot enforce a decision if a proper process has not been followed. Educational institutions and community-based organisations should be given the opportunity to make suggestions, not only because this decision had a major impact on constitutional rights but also because the suggestions might have steered the decision towards a more rational way out.”