Special Rating Areas – Background
Since 1994, central government and local authorities have adjusted the utilization of capital and revenue by appropriately prioritizing the provision of basic services to poor and disadvantaged communities. A consequence of this has been that in most towns and cities a lower proportion of available municipal rates revenue has been utilized for the provision of services to developed areas, than was previously the case.
In the late 1990’s the City of Cape Town took a proactive approach to urban decay in the central city area. Their global search for urban management best practice led to a model for urban renewal that had originated in Canada and was being used widely in the USA with excellent results.
In Cape Town the model was adapted for local conditions, and in early 2000 the urban renewal programme was introduced into the central city area. The ‘City Improvement District’ or CID was established as a public-private partnership between the City of Cape Town and the property owners within the chosen area. The Central City Improvement District (CCID) as it was named, was hugely successful. Other areas quickly followed suit, with the Green Point, Sea Point and Claremont CIDs and the Muizenberg Improvement District (MID) and Fish Hoek CID being formed. Through the revenue made available to the CCID, the central city has been totally transformed into the vibrant urban metropol that we enjoy today. This was achieved by the agreement of property owners within the CID to pay an additional rate known as the CID levy.
During the course of the next decade a further 15 CIDs were established across the City of Cape Town, mainly in commercial and industrial districts. In 2010 the City of Cape Town reviewed the model which had proved to be a successful mechanism for transforming CBDs and Industrial Districts. In 2011 the newly revised Special Rating Area By-Law was promulgated which allowed for the adaptation of the ‘old’ CID model to extend the public-private partnership programme on community development beyond industrial and commercial districts and into residential areas. Consequently, between 2011 and 2013 five new SRAs have been formed in predominantly residential areas.
The SRA By-Law provides for an additional rate to be levied on property owners within a Special Rates Area in respect of a predominantly residential area if a majority of at least 60% of property owners in the intended SRA have consented to the establishment of an SRA for their area. Unlike the revenue collected from traditional rates and taxes, the SRA levy is ring-fenced specifically for improving services exclusively within the Special Rates Area in which the SRA levy is paid. The SRA levy (previously known as the CID levy) is collected by the City of Cape Town and disbursed to a non-profit company which manages the SRA with a mandate to enhance and supplement the provision of municipal and other public services in accordance with a business plan and budget approved by property owners and the City of Cape Town. The non-profit SRA Company is subject to audit and the City of Cape Town retains oversight of its affairs to ensure that it fulfills its approved mandate. Property owners in the SRA are eligible to be shareholders in the SRA Company and are entitled to vote at shareholder meetings.