Sapoa fails to block Joburg’s development contributions policy

The SA Property Owners Association (Sapoa) has been unsuccessful in its attempt to stop the City of Johannesburg (CoJ) from applying its Development Contributions (DC) Policy to any pending or future land development applications.

In a judgment handed down in the High Court in Johannesburg this week, Judge Ingrid Opperman dismissed with costs an application by Sapoa to interdict the CoJ from implementing the policy, which was approved in October 2021.

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The city and Sapoa previously agreed the DC Policy would not be implemented until this application was finalised.

Attempts to obtain comment from Sapoa on the judgment were unsuccessful.

Sapoa argued that the DC Policy reflects a firm indication on the part of the city of the approach it intends to adopt to land development applications once the policy is implemented.

The association said it therefore has a reasonable apprehension the city intends to deal with the land development applications in a way that would be unlawful and thus infringe upon the rights of Sapoa members for permission to develop land in Johannesburg.

Sapoa further argued the implementation of the policy will see a radical departure from the existing framework in which land development applications are considered by the city.

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Judge Opperman said the clear right alleged to be threatened lies in the introduction and implementation of the concept of ‘development contributions’ in the DC Policy, whereas land development applications at present are determined in terms of the Spatial Planning and Land Use Management Act (Spluma), which recognises the concept of a ‘development charge’.

Perspective

Opperman said the DC Policy will not introduce an entirely new approach to land development applications.

“There is no replacing of ‘development charges’ with ‘development contributions’.

“The City has levied development contributions in terms of Spluma from long before the adoption of the DC Policy,” she said.

Sapoa claimed the city will empower itself to require an applicant to pay a sum of money that is not aimed at compensating the city for the provision of external engineering services in respect of the particular development to which a land development application relates.

This could relate to an existing or future infrastructural work by the city entirely unrelated to that proposed development and application, and the implementation of the DC Policy would accordingly be unlawful as the Spluma does not authorise this, it alleged.

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But Judge Opperman said the narrow interpretation Sapoa gives to a development contribution is not supported by the provisions of Spluma.

Sapoa further alleged that the city has in essence jumped the gun and introduced the DC Policy as if the Municipal Fiscal Powers and Functions Amendment Bill was already in force and, absent the enactment of this bill, the implementation of the DC Policy is unlawful.

However, Opperman said the Spluma authorises the development contribution as used in the DC Policy.

Sapoa further alleged the implementation of the DC Policy would be unlawful because there is no empowering provision that permits the city to impose development contributions in the manner contemplated by the policy.

Impact

Opperman said the development contribution is required of developers under the DC Policy because of the impact their proposed new development will make upon the overall infrastructure capacity of the city.

She said even under circumstances where no new infrastructure has to be provided because sufficient infrastructure exists to support the development envisaged, the development contribution is still levied to compensate the city for the impact the new development will draw down from the city’s existing infrastructure.

Opperman said clearly all new developments will draw some water, some electricity or other engineering services from the city and these will be paid for as they are consumed.

However, she said the infrastructure that allows those consumables to arrive at the development are different from the consumables delivered via that infrastructure.

“The municipal bus passengers catching buses to and from a new development pay for their bus tickets, but they do not pay for the road, whether it is a new road developed specifically to service that development or whether it was a municipal road that already existed at the time of the development being developed,” said Opperman.

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“The fact that sufficient infrastructure may exist simply means that it was paid for before.

“In my view it would be irrational and unfair for a new developer under those circumstances to use the existing infrastructure free of charge when the development from which the developer intends profiting is using that infrastructure,” she said.

Apportioning costs between developers

“The proceeds of the development contribution paid by the developer for the new development can be used to provide infrastructure elsewhere in the City, as … the DC Policy provides.

“Sapoa’s suggestion that a development contribution should only be triggered by ‘extra’ physical engineering services is thus erroneous.”

Opperman added that the conclusion of Sapoa’s interpretation is that where a new land development simply connects to existing bulk infrastructure, the developer cannot be charged a development charge or development contribution and is allowed to ride on the back of whoever paid for the infrastructure, such as other developers or a municipality.

“The unfairness of this approach to the ratepayers is patent and in addition infringes on the very purpose and objects of Spluma.

“It is in my view a rational and fair method of apportioning the costs between developers.

“It is a user-pay methodology, and the user only pays for the capacity it applies for and receives.

“The cost in terms of the DC Policy is not based on the actual costs of the infrastructure needed for the land development in question but on the average cost per unit of impact across the infrastructure.”

Opperman said there was also nothing arbitrary about the development contribution in the DC Policy.

“The developer receives what it pays for, namely a right of use, a right to access a percentage of the overall.

“If sufficient infrastructure already exists, the City is entitled to use the money for the same type of development in a different area,” she said.

“That money will in any event not be used to subsidise a specific development as suggested by Sapoa but open up a whole new area for many new developments to which the DC Policy will apply equally.”

This article was republished from Moneyweb. Read the original here