Key question: Does your municipality leverage the most revenue possible from property rates?
- Data issues in the municipal register of properties, the financial system and the valuation roll and the prescribed seamless integration between systems of internal control, Municipal Standard Chart of Accounts, hereafter mSCOA;
- Updating the municipal register of properties and preparing ‘real-time’ supplementary valuations required for valuation roll maintenance, section 78, Local Government: Municipal Property Rates Act, hereafter MPRA, annual publication of Part B of the municipal register (income forgone);
- Rates policy issues: Prescribed property categories (effective 1 July 2021), criteria for categories of property and categories of owners and pro-poor strategies for extending discretionary rates relief.
Let’s start with the property register
It is important to platform the preparation of your municipality’s general valuation roll off a spatial register with full coverage. The appointed municipal valuer should have a complete and accurate property register at the inception of the project to prepare a general valuation roll. The valuer’s delegations are to determine the market value and the property category for each property within the property register in compliance with the provisions of section 48, MPRA. Complete coverage is an important objective from the onset.
A complete and maintained property register is required for the regional segment reporting (National Treasury Regulation 37577). Emerging best practice is for the property register to reside within the valuation roll management system and to integrate to the financial system and the Deeds and Surveyor General’s Offices. Ideally all municipal work flows around property data should use the property register as the single version of the truth.
Balancing the valuation roll with the financial system through seamless integration
National Treasury prescribes a process which identifies properties that are being billed incorrectly. The valuation roll is the source of all valuations and property category data. The financial system holds the tariffs or rating codes for each property category and must align the roll values to the relevant municipal accounts for billing purposes. Balancing aligns these data sets and flags discrepancies for remedial action. All discrepancies flag implications for municipal revenue.
Examples of discrepancies include:
- Mismatches between the valuation and property categorisation in both the financial system and the valuation roll;
- Omissions from either the valuation roll or the billing system or both;
- Incorrect allocation of tariff codes;
- Incorrect application of prescribed ratios, Regulation 9242, 12 March 2010;
- Incorrect application of discretionary rates relief.
The achievement of correct and complete billing includes the alignment of respective property data sets through rigorous data cleansing. The results are the maximisation of property rates revenue in line with Local Government: Municipal Property Rates Act, 6 of 2004 (MPRA).
Maintaining the property register and updating the valuation roll through the preparation of supplementary valuations as required
Despite property being immovable it is dynamic. It is bought, sold, sub divided, consolidated and re-zoned. New buildings are completed and old ones torn down and demolished. These changes are first captured within the property register. All of these trigger a change in the attributes the affected property. The custodian of the property register must instruct the municipal valuer to proceed with a supplementary valuation as these changes have implications for the value of the property/ies. The MPRA section 78 provides for the revaluation of properties within the valuation roll maintenance phase. The municipality must, whenever necessary, cause a supplementary valuation to be made in respect of rateable property, section 78(1). A municipality must also compile and publish an annual supplementary valuation roll at least annually and make it available for public inspection. All stakeholders, including the registered owner, have recourse to object against any information included in or omitted from the supplementary valuation roll. If they are is disagreement with the objection review decision presented by the municipal valuer they may appeal against this decision through an appeal application process, section 78(6), MPRA.
Author: Janet Channing - MetGovis Director