South Africa is looking to introduce new development laws – what you need to know

Finance minister Tito Mboweni has published the Municipal Fiscal Powers Amendment Bill for public comment.

The Amendment Bill has several important provisions which municipalities, landowners and property developers will need to be aware of, says Adriano Esterhuizen and Staci Jacobs of law firm Webber Wentzel.

“The purpose of the Amendment Bill, amongst other things, is to uniformly regulate the power of municipalities to levy development charges on landowners, to provide for policies and by-laws that will give effect to policies on the development charges, to establish an entitlement on the part of municipalities to withhold other approvals or clearance due to non-payment of development charges, and to provide for engineering services agreements.” Webber Wentzel said.

Below Webber Wentzel outlined the key features of the amendment bill of importance to municipalities, landowners and property developers.

Development charges 

The wording of the bill suggests that development charges are not mandatory, but are at the discretion of municipalities.

In circumstances where a municipality chooses to impose a development charge, a resolution to do so must be adopted by the municipal council whereafter the municipality must comply with the Amendment Bill, Webber Wentzel said.

Charge will vary

The development charge will vary from application to application as it must be calculated to being proportional to the extent of the demand that the land development is projected to create for existing or planned bulk engineering services.

It must also be calculated based on a reasonable assessment of the costs of providing existing or planned bulk engineering services.

“The decision to impose development charges also requires the municipality to adopt a policy on the levying of development charges which must be preceded by a process of community participation in terms of chapter 4 of the Municipal Systems Act (MSA),” Webber Wentzel said.

“The policy, among other things, must outline the methodology for the calculation of a unit cost per municipal engineering service, specify any municipal engineering service zones and can provide that a municipality may allow for payment to be done in tranches for identified categories of land development.

Services agreement

The Amendment Bill also provides that an engineering services agreement must be entered into where it sets out who, between the municipality and the landowner, will be responsible for installing the internal or external engineering services.

Webber Wentzel said that the agreement must at the minimum outline the nature and extent of the internal or external engineering services to be installed by either party, the commencement and completion of the installation and the engineering standards in which the installations must conform to.

“In cases where a municipality is responsible for the installation of bulk engineering services and fails to do so within a prescribed period; the municipality will have to reimburse the landowner for the portion of the development charge which is attributable to the failure.”

Withhold clearance 

The Amendment Bill provides that a municipality may withhold any approval or clearance, including a rates clearance certificate if a development charge owed or payable has not been paid or the landowner has failed to install external engineering services in accordance with the conditions of approval or an engineering services agreement.

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South Africa is looking to introduce new development laws – what you need to know