PROPOSED ETHEKWINI MUNICIPALITY DEVELOPMENT CHARGES ON NEW DEVELOPMENTS

1.    Background

1.1. The Municipality propose to levy a new development charge. The reasons submitted by the Municipality relate to recovery of the cost of providing infrastructure for new developments and the necessary services required. The Municipality submits that this new development charge will serve as a means for the Municipality to recover fully the cost of the infrastructure or "asset cost" for bringing the services to the site.

2.    Development Charge

2.1. The Development charge is a fee that is to be levied for the provision of Municipal Infrastructure to provide services including lights, water, roads and sewage disposal.

2.2. The charge will be levied for both the construction of new infrastructure, as well as the use and/or upgrade of existing excess capacity.

2.3. The charge will be levied in respect of all external infrastructure provided by the Municipality to the site, with the developer responsible for the internal infrastructure on site.

2.4. The charge will be levied against all developments that require municipal approval in terms of any law, by law or scheme including a change of zoning, subdivision and change of use of an existing building, for residential, commercial and industrial development.

2.5. The charge is to be paid by the landowner.

3.    Charge

3.1.  The Charge will be calculated as follows:

• DC = (ARC - OL) /ANC
• DC =   Development Charge
• ARC = Asset Replacement Cost (not including infrastructure provided by developer on site)
• OL =    Outstanding Loans
• ANC = Average Network Capacity

3.2.  The Municipality has proposed a possible payment of 20% of the total charge on approval of the building plans, with the balance to be paid on beneficial occupation.

3.3.  There will be no charge levied against developments that are under R 500 000,00 in value in respect of each unit.

3.4.  The charge will replace any existing development surcharge that is currently levied.

3.5.  The money generated by the charge is to be ring-fenced for infrastructure development within the Municipality.

4.    The Municipality maintains that the principles behind the charge include equity and fairness for all the stakeholders involved, predictability of the charge as a source of income for the Municipality, to ensure spatial and economic neutrality and the timeous provision of infrastructure, as well as being administratively uniform and easy to calculate.

5.    The Municipality has proposed implementing the charge from the 1 July 2012. It is however currently in draft form and amendments to the proposed policy may be made prior to the implementation thereof. 

Patrick Forbes
Candidate Attorney
Garlicke & Bousfield
Direct line: (031) 570-5574