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Joburg's decision to increase the rate ratio for commercial properties in its budget has been accepted by the court, following a Sapoa application to set it aside.
THE City of Joburg has welcomed a South Gauteng High Court judgment rejecting the South African Property Owners Association’s application to set aside the 2009/10 Budget.

On 24 May, the court rejected Sapoa’s application that the City’s 2009/2010 budget be set aside because of alleged non-compliance with legislation and regulations, in what could be a landmark decision in favour of Joburg.

“The City of Johannesburg welcomes the clear judgment by the South Gauteng High Court … following an application made by Sapoa,” says Nthatisi Modingoane, Joburg’s deputy director for communication.

Sapoa’s application followed the City’s decision to increase the rate ratio for commercial properties from 1:3 to 1:3.5, which the association argued was done without regard to and without complying with procedures prescribed in legislation.

The association argued that the change in the rate ratio had resulted in a hefty increase of 18 percent in rates and taxes on commercial properties, over and above the general 10 percent increase in rates and taxes. It argued that this burdened commercial properties owners, and in many cases tenants, with an estimated annual over payment of R300-million.

The application was brought against the council of the City of Johannesburg Metropolitan Municipality, the executive mayor of the City of Johannesburg Metropolitan Municipality and the City of Johannesburg Metropolitan Municipality, as well as members of the executive council for finance and local government for the province of Gauteng.

Sapoa questioned whether the City of Joburg, when it increased the rate ratio, was required to comply with the legislative requirements relied upon and, if so, whether it in fact complied with the relevant legislative requirements.

“The judgment confirms that the City has followed the required process in the determination of its budget and properly consulted with stakeholders, including property owners, in the determination of rates,” Modingoane says.

The court ruled that there had been “plainly adequate publication and notification” relating to the raising of the rates in question.

“The City trusts that the judgment will provide legal certainty on this important issue. It confirms its commitment to involve the residents and stakeholders of Johannesburg in the making of decisions that affect them and to comply with the requirements of the Constitution and local government legislation,” Modingoane adds.

Sapoa is a section 21 company promoting and safeguarding the commercial interests and activities of its members, which consist primarily of commercial property owners and related enterprises. It represents 90 percent of all commercial property owners in South Africa. One of its goals is to ensure that businesses and commercial enterprises are dealt with fairly and justly by the government.

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