EDITORIAL: Robin Hood approach on rates needs revisiting
Allocating revenue to the poorer parts of town is commendable, but the wealthy areas contributing the bulk of the funds must also see benefits
Developers and owners of commercial property in Johannesburg’s growing business nodes such as Sandton and Rosebank are rightly losing patience with how the city is spending their rates and taxes.
These companies, which pay hundreds of millions each year, want to know where this money goes. Not enough roads are being fixed, extended or expanded, refuse isn’t collected timeously and water pipes regularly burst because of a lack of upkeep.
Just on Wednesday, a water pipe burst in Killarney, near Rosebank, cutting water supply for some of its residents and businesses, together with that of neighbouring suburbs such as Houghton.
Weak infrastructure and a lack of upgrades make it harder to support an investment case for these nodes for smaller investors. It also becomes tougher to get people to buy apartments that go for upwards of R2m when they can buy houses for similar prices in less busy and less dense suburbs.
Too often, private developers and commercial property owners have to fix the roads, gutters, stormwater drains and other basic infrastructure themselves. But sometimes, even this is not easy as they need permission from the city and are often scuppered by unyielding red tape.
The likes of Grapnel Property Group, Redefine Properties, Old Mutual and Growthpoint have tried to approach the city council as a group of ratepayers to voice their concerns about how drainage, sewerage systems, roads and other systems are insufficient in these growing commercial nodes.
One of the representatives from the group told Business Day they have been trying to get a meeting with the council for months. They are also concerned that the slew of new developments cannot be sustained because of the insufficient infrastructure. These include high-end offices, hotels and apartments.
Rosebank, best known for nightclubbing and entertainment in the early 2000s, is being transformed into a commercial hub at a rapid pace.
It is becoming one of the most popular new business addresses because it is better planned than Sandton and it is easier to get in and out of. City planners and developers are trying to maintain the pedestrianised aspects of Rosebank which Sandton lacks.
Many people want to live and work in Rosebank and this leaves the city in a quandary. The city has said it is low on money and that revenue collection falls far short of where it should be. When it does get the money, especially from large landlords, it has to spend it in ways which help as large a number of citizens as possible.
This is the dilemma it faces.
Is the city obligated to spend its money on less affluent and underserviced areas such as townships and semiurban areas? Should it be spending cash on the inner city, an area that is in dire need of rejuvenation, or should it put money into areas backed by commercial enterprises?
Arguably, spending more money in the Johannesburg CBD is riskier than spending it in nodes which are attracting large commercial tenants. Companies are competing for space in those nodes while Johannesburg mayor Herman Mashaba is doing his utmost to attract capital to the inner city.
Even if Sandton, Africa’s richest business node, sits with an overall office vacancy of more than 20%, it still houses international law firms and banks who aren’t leaving any time soon.
Mashaba says his legacy will rest partly on the success of his plans to create affordable housing in the inner city, which will in turn bring companies back. Johannesburg’s housing crisis makes affordable housing an attractive development and investment prospect on the surface. The mayor is gradually releasing 500 mothballed and dilapidated buildings to tender, which he wants to be redeveloped into housing and student accommodation over the next two years.
But this is not without hefty challenges for developers. One glaring issue is that many of these buildings are overoccupied and people need to be rehomed. Architect Heather Dodd, whose firm Savage+Dodd has been awarded work from Mashaba’s rollout, says it could take a decade or longer to convert the buildings.
While Masahaba’s vision is laudable, the city needs to do more for large landlords and developers who fuel its rates base and attract investment.