“We Don’t Need No Education”: COJ’s New Rates Policy 2022.2023

2022, Articles, Building Disputes, City of Johannesburg, COVID-19, Johannesburg Metropolitan Municipality, News

Article by Chantelle Gladwin-Wood (Partner) and Erin Gradidge (Candidate Attorney)
3 August 2022

INTRODUCTION

The City of Johannesburg (“COJ”) updated its Rates Policy (as it does annually) in late May 2022 and removed the “education” category, which has appeared in prior rates policies from 2008 to date. There is presently no “education” category in the current Rates Policy (which applies for the period 1 July 2022 to 30 June 2023).

This has resulted in many educational institutions that were previously categorised for rating purposes as “education”, receiving invoices showing rates charges that exceed what those institutions would have expected to have been billed. This is because the City is now putting some of these customers into the “business” category, which has the result of increasing their property rates. The “business” category is much more expensive than the “education” category.

The government pays the rates bills of some educational facilities as it is the property owner thereof, but some private schools pay the rates bill from school fees received. The collection of school fees can be an issue for some schools as school fee payers do not have the money to pay on time. It is reported that the increase in rates owed by these institutions will be nearly impossible to pay as there may not be any funds from which to pay it. This could result in municipal services being disconnected at schools due to non-payment or arrears on the municipal account.

EFFECT OF THE CHANGE OF CATEGORY FROM EDUCATION TO BUSINESS

How bad is the change, you might ask? Well, it has resulted in some customers getting bills on average ten times what they used to get before the change was implemented. This is because the amount for rates charged by the municipality based on the “education” category was based on a ratio of 0.25 (measured against 1, being the residential rate in the rand) whereas charges for the “business” category are calculated on the ratio of 2.5 (literally ten times 0.25).

BIG SURPRISE

Customers in the “education” category did not expect this change, because the City’s draft Rates Policy (which was published to the public) reportedly did not indicate that the “education” category was going to be removed, so when they received accounts showing that they had been recategorised as “business” and they queried why, they were shocked to find out that it is because the City unexpectedly and without public consultation or notice removed the “education” category from its Rates Policy.

WHAT IS BEING DONE ABOUT THIS?

Afriforum, Curro and ISSASA are reportedly litigating over the issue, seeking a court order declaring that the City’s unexpected change is unlawful because proper process (of public consultation) was not followed. In addition, they ask that the City’s decision to remove the “education” category be set aside in law as being wrong, based on the reasons given by the City for doing this.

It is reported that agreement was reached between the litigating parties to the effect that the City would not hold affected customers liable for the increased charges based on the “business” category until after the matter is heard in court in October this year, but the authors have not been able to establish whether this is indeed the City’s stance in the matter at this time. The authors’ question to the City on this score has not been answered as of yet.

IF THE CITY IS ALLOWED TO CHARGE SCHOOLS ON BUSINESS IS THERE ANY APPLICABLE REBATE?

If the court does not set aside the City’s decision to charge affected customers that used to be “education” as “business”, then the City’s Rates Policy, as it stands, will be enforceable. The Rates Policy provides for a rebate to be afforded to privately owned schools, colleges, and universities of up to 25% (which will be based on the business tariff). Note that this does not mean a flat rate of 25% – but at the rate approved by the City with a maximum of 25%.

If the COJ approves the rebate applied for, the rebate will only apply from the date of application. A specific application is required to more than one department, in order to have this rebate apply.

No rebate is offered by COJ for publicly owned educational institutions/properties.

IS THERE SOMETHING ELSE THAT CAN BE DONE TO REDUCE THESE RATES CHARGES?

It might be that the property value has been incorrectly fixed by the municipal valuer as being too high, in which case an objection can be filed to reduce this (although this objection process is quite long- winded, and frustrating).

CONCLUSION

All qualifying private educational institutions should apply for the rebate as soon as possible to decrease the rates amount payable for the period in which this new rates policy is implemented, being 1 July 2022 until 30 June 2023, by as much as possible. Educational institutions affected should also consider whether their property valuation is correct and object if it is inflated.

In the event that the court action is successful, there will be reversals passed on the invoices of affected customers to reverse the incorrect and inflated charges, but in the mean-time affected customers might need to seek assistance in “flagging” their accounts to ensure that they are not disconnected and that they have properly filed a dispute and a rebate application with the City in relation to the charges billed to them. Caveat: Where reference is made to a state of affairs which is reportedly so, the authors are relying on the reports of others on social media.

Erin Gradidge
CANDIDATE ATTORNEY
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