St Francis SRA Questions and Answers:

St Francis Today erred somewhat in not listing all the SRA questions and answers in a single post preferring to publish them over a period of three days. Our reasoning at the time was that the post would be too long and would not be read in its entirety but this has rather caused more comments on what SFPO had already responded to but had not yet been published by SFT. To those readers who we frustrated by this error in judgement we apologise.  Below are all the SRA Questions and answers we have received from the SFPO committee and further Q&A’s will be added as and when we receive them and will be added with the latest first.

Question: A Whatsapp Link “Save St Francis” states St Francis Links homeowner pay same randage rates but get a 20% discount…why is this?…Surely Links owners should pay the same SRA levy i.e. 50% of their rates bill before the discount deduction?

Answer: The Private Estates all have different arrangements with the Municipality. The Links get a 20% discount off the residential rates applicable to them because they manage all of the Municipal services themselves i.e. they get bulk electricity from Eskom and not KM (Kouga Municipality) and distribute it themselves to all of the erven. The same for water, sewerage, streets and rubbish collection. Other private Estates like to River Estates are actually charged agricultural rates i.e. 0.15% (which is one quarter of the residential rate 0.61% of property value). We don’t want to levy these estates 50% of 0.15%, but negotiate a more equitable amount separately contributed to the SRA fund. These estates provide for most of their own services like The Links. The Links and the River Private Estates should not be levied for our Sewerage, Street and possibly Security portions of the SRA levy as they will be double paying. However they do use our Arterial roads when they shop in the village, and the River, Spit and Beach belongs to the whole of St Francis and they should share in the restoration of these infrastructure elements. The Port Private Estates and others around the town also have overlaps in their levies and our SRA levy that differ from Estate to Estate that we need to take into account.

Question: I am confused about estates like the Links…my understanding is that they are not currently part of the SRA

Answer: We want all private estates to participate in the SRA. We have a majority vote from 5 so far.

Question: Presumably any Links votes already submitted are being kept aside from the votes received from the current “approved” SRArea ratepayers …if the Links are eventually included the total number of ratepayers then in the “approved” SRA area will increase by say 578 and consequently the threshold for a 50% +1 vote will also increase by 500.

Answer: Each private estate needs to bring its own 50%+1 because they all have their own rate payers bodies, and so cannot dilute our Sfb voting, but only strengthen it. Once a private estate is in we can add their yes votes to the Sfb votes to achieve an overall 50%+1 majority. If a private estate votes No then that estate is excluded from the demarcated area.

Question: I would be happy to agree to pay the additional levy once I build my house and start to use the property. Is there a mechanism that will allow this to happen?

Answer: We tried to avoid the SRA levy by spending the whole of last year (2016) appealing for donations to restore our infrastructure. We raised R4.5m which represents about 1.2% of what we need. We said that if we did not raise the money through donations then our only options were to :

  1. Wait for the Municipality to do this themselves, which is not going to happen at least in the next 5 years, if at all. Their capital budget is R60m for this financial year for the whole of Kouga. There are 9 towns and at least the same number of underprivileged townships.
  2. Use the SRA legislation to raise the additional money, but being legislated to receive it back from the Municipality within 30 days minus a small administration charge (some 3%).
Question: Is there a time frame before a body could request a revote and would it again be based on a 50%+1 vote?

Answer: Yes – The termination of this arrangement is covered by the SRA By-Law. Cape Town’s SRA By-Law says :

CHAPTER 4 – DISSOLUTION OF A SPECIAL RATING AREA

  1. DISSOLUTION

(1) The Council may dissolve a special rating area ±

(a) upon written application signed by the majority of owners within the boundaries of the special rating area who are liable for paying the additional rate; or

(b) after prior consultation by the CFO with the management body or the community, for any good cause, whereupon he or she may cause the management body to be wound up.(2) Upon the winding up of a management body, the entire net value of the management body, including its net assets remaining after the satisfaction of all its liabilities, shall be disposed of in terms of the relevant provisions of the Companies Act and the memorandum of incorporation of the management body.

Question: If the residents approved the SRA but subsequently became dissatisfied as to how it was operating/being implemented, what are is the process to remove the SRA?

Answer: The dissolution of the SRA is specified in the SRA By-Law. The real protection lies in the fact that the NPC Board are all property owners and volunteers and would also paying the levy so why would their interests and all other property owners not be aligned? The NPC has to submit budgets on an annual basis justifying the levy and at the end of the proposed 10 year term the SRA can be dissolved, extended or revised in terms of its scope (e.g. infrastructure restored but security and continuous river dredging and spit and beach nourishment continued).

Question: Property Owners currently pay a fixed monthly charge for sewerage …what is this for and will this charge be removed at some stage with the conversion to a waterborne sewerage system?

Answer: St Francis Bay pay a fixed monthly levy of R189 per month. This is because 25% of properties have water borne sewerage and the balance have conservancy tanks or soak aways.  All properties are charged the same waterborne sewerage levy.   Cape St Francis property owners pay somewhere between R650 – R960 per honey sucker visit.

Question: Assuming yes vote carried and NPC gets going…does the NPC operate like a normal company i.e. has Directors, M of A, Articles of Association, AGM  etc.

Answer: The SFPO NPC already exists with 5 appointed Directors (W Furphy, C Gray, P Pezarro, G Vorster, P Mountford). We set this up for the MOA we have signed for the Phase 1 Spit and Beach repairs authorised by DEDEAT on June 1, 2016.

Question: If after say 1 year the spit gets completely washed away.. what would the Directors of the NPC be obligated to do in terms of getting a new mandate going forward which would perhaps include the re allocation of funding in whole or in part originally approved for spit, river, beach..or perhaps even cancelling that project and moving to reduce the levy in place…this is for my own interest..no one has asked these questions.
Answer: We have submitted a comprehensive maintenance management plan for the Spit to DEDEAT, to be operated by the Riparians to maintain the Spit. They have emergency plans in place.

Question: What happens if the DA loses an election in the future and the ANC gets back in, will the ANC use that opportunity to use 100% of the rates (excl. SRA levy) in their own interests … i.e. basically leave those with the SRA obligations to look after themselves out of the SRA?

Answer: This is exactly what the ANC has done to us over the past 10 years. Neither the ANC nor the DA csn touch the SRA levy. The key is to make sure we give the DA all the support we can to ensure they spend our rates in the underprivileged areas to win their vote by an even bigger margin in 5 years’ time.

Comment: Introduction of the SRA and higher rates many people will sell that there will be a glut of houses on the market and prices will plummet!

Response:The majority of properties are owned by holiday home owners. An additional levy of 0.3% each year or 3% over 10 years is great deal less than they are currently losing on the stagnancy/decreasing value of their properties in St Francis today.

Comment: The money won’t be forthcoming  and none of the projects will actually happen!

Response: The SRA levy will be compulsory for all property owners as it is enforced through legislation in the same way as all municipal rates and levies, including the Riparian levy.  The Riparians are performing an SRA function and have been doing so successfully for 10 years.

Comment: In my opinion this whole idea of extracting R 200m out of a few already financially stretched households to make some unnecessary and cosmetic “improvements ” ( CCTV cameras that will rust away/get stolen; water borne sewage that can’t work when the town is empty for 48 weeks of the year!)  to what is essentially a holiday town just doesn’t make sense  and is pie in the sky !

Response: There are many property owners who do not share this view. We are not stupid enough to waste our own money on cosmetic improvements! We are not spending Valerio’s money, we are all spending our own money including the R4,5m of donations contributed so far my many of Valerio’s neighbours. From a technical point of view Valerio is welcomed to speak Craig Northwood (CEO UWP Consulting Engineers) and Deon Pienaar (Consulting Engineer working as an independent consultant). They are both deeply experienced in urban infrastructure development, have properties in St Francis and believe what we are doing is the only way to save this town and its property values. Both Craig and Deon sit on the SFPO NPC Technical Committee that has oversight of all of our current and future projects. Valerio should not under estimate the amount of work and analysis that has gone into the SRA proposal and infrastructure cost estimates.

Question: Can the legitimacy of the voting process will be challenged and if challenged and how will those who are not members of the Residents Association be informed?

Answer: People incorrectly see the voting as an election process. Nobody is being elected. The Kouga Municipality simply requires, as per the SRA legislation, proof of consent of the majority of property owners, 50%+1, that they approve of the SRA levy, and as such allow the Municipality to add it to their monthly Municipal bill. The consent forms are required in hardcopy format and can be inspected by anyone who chooses to do so. It cannot be a secret ballot. We have used the term vote on the consent form to avoid confusion as to a yes or no to the consent requested by us.

Question: Before I can vote on supporting the special levy I would like to know how the amount was decided?

Answer: The levy was calculated based on detailed cost estimates we have collected over the past year for each piece of our infrastructure that  we need to restore. The road costs came from the work a group of  consulting engineers we hired – EAS PE. These costs are based on a survey completed by them. The sewerage costs were given to us by  Aurecon, who have the complete set of drawings for the roll out of water borne sewerage to the remaining 75% of properties who are on conservancy tanks and soak aways. The River, Spit and Beach costs have  been based on the work done by Worley Parson in 2014, and subsequent  work by the Riparians, and our own team. The security camera estimates were extracted from information provided by two separate Security  camera equipment companies that service a lot of private estates and cities around South Africa.

Question: What if the municipal rates spiral?

Answer: The Municipality cannot increase its rates over and above inflation without a specific application to National Treasury (this is specifically to protect property owners from being exploited). The Municipality relies on an annual inflation adjustment and the re-valuing of properties every 5 years

Question: Will there be written agreement between the SRA and Local Authority as to who does what, in the absence of such, efforts will naturally default to the SRA doing everything (the slippery slope).

A: This is spelt out in the SRA Business Plan. In our draft Business Plan it is very clear that we are not a surrogate municipality.

Question: The issue of ownership of infrastructure; If the SFPO is building and maintaining infrastructure should it not be the owner of, or at least have lien over same?

A: If we wanted to turn the whole of St Francis into a private estate then we should take ownership of the land and infrastructure, including Sea Vista. This also means all infrastructure including electricity, water, refuse removal, etc. We do not have a mandate from the property owners to do this as this would require a lot more money than we can raise through this levy. We want the Municipality to get back on its feet and serve us going forward, but it simply does not have the resources to do so in an acceptable timeframe, which is why we are proposing the SRA levy.

Question: Has anyone tried to analyize why properties in St Francis Bay have dropped more than 30% in the past 8 years. Second to Plett it is one of our premier coastal holiday destinations. We can’t blame potholes in the roads or the beach erosion for this.

Answer: This has been caused by the declining state of our infrastructure, both environmental and roads etc. Many people have considered selling up and getting out of St Francis because of the state of our infrastructure, and the absolute resistance to change by some of our retired community. The possibility of the SRA solution has held back a lot of these disenchanted property investors, but it leaves us with a depressed market

Question: How much revenue is collected each year from the current rates, and how are these funds allocated? Sewerage, water and electricity are charged separately and homeowners are charged for these services whether their homes are occupied or not, or whether plots are developed or not. I expect the new DA mayor to provide the reasons why there is no money available for repair of infrastructure.
I am all in favour of repairing and improving the beach facilities and would be willing to make a monthly contribution but feel 50% of current rates to be unaffordable.

Answer: The Municipality were asked to give a full set of figures for St Francis and private estates in early December but they said they could not do so until January. We couldn’t request this information until the DA Councillors had agreed to support our SRA proposal, and were only given this decision late November. Our research has told us that St Francis Bay’s 2,150 properties (which excludes the private estates, Cape St Francis, and Sea Vista township) contribute about R37m a year in rates. The private estates probably add another R15m, bearing in mind that some the River Estates pay Agricultural rates (25% of the residential rates). So we think about R50m pa is paid by St Francis excluding Cape St Francis and Sea Vista.

We are not privy as to how these rates are allocated by the Municipality but would think they first of all are used to pay salaries and overheads (buildings, equipment, etc.). What we were told by Ben Rheeder and Elza van Lingen at the AGM was that they are obligated to spend 60% of all available funds to underprivileged areas. The Municipality has budgeted to collect R680m from all of its services in the 2016/2017 year. The capital budget is R60m, which is hopelessly inadequate for what is required to be done. Our Waste Treatment plant alone requires R10m to upgrade it because it is running at full capacity or more.

Water and electricity is charged based on consumption. You can look at your own account to see whether an availability fee is also charged. Sewerage is a levy of somewhere around R189 per month, which is consistent with a water borne sewerage service. We are not charged for the honey sucker to empty our conservancy tank in St Francis Bay. Cape St Francis (CSF) on the other hand has no water borne sewerage at all and have to pay between R650 and R960 per honey sucker service. If you require two services a month (as I do for my conservancy tank), then you will pay R1,300 – R1,920 per month. The average property value in St Francis is R3m with monthly rates of R1,650 and The sewerage service in CSF will cost you between 80 – 110% of you monthly rates!  Our honey sucker services appear to be heavily subsidised in St Francis Bay.

You have every right to ask the DA whatever you choose. Unlike the ANC previously you will get an answer.  From my point of view the DA are working very hard to turn around a severely damaged Municipality. The Municipality has a lawsuit currently in progress for R750m for their part in failing to deal with the fires a few years ago. Their vehicle fleet of some 220 vehicles had less than 10% left on the road when the DA took over in August. PE Metro are claiming an underpayment of R43m on the water account as PE supplies Kouga Municipality with its water. There are a number of corruption charges they are dealing with to clean up the Municipality. They have to reinvigorate their staff….among many other challenges.

 We are proposing 50% to fix the infrastructure backbone of our town. We have had professional engineers estimate the R373m to do this. 36% of this total value is fixing the results of man-made interventions in our environment. Santareme was built on the sand dunes that fed sand onto our beach, and has caused the loss of our beach. The diverting of the Sand river from where it entered the sea near Aldabara to the Kromme river, has resulting in depositing all its sand in the river rather than on the beach where it fed the Spit.

As regards the cost of restoring our infrastructure, we can extend the period beyond 10 years and pay less, but the cost of fixing all of this is just going to climb the longer we leave it. The 50% levy will adjust our rates to 0.92, still below PE’s rates of 0.97, but we control through the SFPO NPC (Not For Profit Company) all of this additional levy (with the exception of a small administrative fee deducted by the Municipality). We know that we are stuck between a rock and hard place, but for the 10 years
that I have been living full-time in St Francis I have not seen or heard of any solutions to our problems. The last serious proposal (beach, spit and river only) was in 2006, and that was rejected. Look where that got us.

Where this levy is unaffordable we are in the process of setting up a system whereby people can apply for partial or full relief.

Question: Please advise the names of your committee and their “fit for purpose credentials”  

Answer: The St Francis Property Owners Committees consist of the following

  1. Committee:
    1.1   Wayne Furphy : Chairman of the SFPO and ex-CEO of Accenture South Africa, 27 year career with Accenture and 7 years as CEO 2000-2006. Currently – Business investments in a variety of ventures both local and international.
    1.2   Chris Gray – ex-CEO and owner of Dekon Construction. Currently – Commercial and Industrial property investment interests in SA.
    1.3  Paul Pezarro – Treasurer
    1.4   Jacky Green – Administrator.
    1.5   Nigel Aitken – past Chairman of SFBRA. Owner of Inspect-a-Home for past 20 years in Johannesburg and St Francis
    1.6   Louis van der Merwe – CEO of Truffle Asset Management (Joburg). Ex RMB.
    1.7   David Truter – CEO and Owner of Trek Plastics (PE).
    1.8   Simon Picton-Turbevill – ex-owner of a car seat/upholstery business in Pretoria. Chairman of the St Francis Bay Canal Homeowners Association (Riparians).
    1.9   Norman Dyer – owner of a number of Midas franchises in the Eastern Cape among other business interests. Chairman of the Joint River Committee. Member of The Links Board.
  1. SFPO NPC (through which donations are, and the levy will be, received and spent) controlled by a Board of 5 directors including Wayne Furphy (Chairman), Chris Gray, Paul Pezarro, Peter Mountford (CA and CEO of Super Group), and Gert Vorster (CA and Group Financial Director of Paytm).
  2. SFPO NPC Technical Committee – this committee was set up to oversee the procurement process for all monies spent by the NPC, including Chris Gray (Chairman), Craig Northwood (CEO of UWP Consulting Engineers – Joburg), Deon Pienaar ( a self-practising Consulting Engineer with both local and international experience. Jef Forrer and Harry Milson both contributed to the early set up of this committee. We asked Jef Forrer to step down from this committee to rather use his time and skills to assist us with completing the St Francis Vision 2030 document, and setting up the St Francis Vision 2030 Forum.
Question: There seems to be no provision for ratepayers that own sectional title units in a complex?

ANSWER: Each sectional title unit is a separate rate payer and has its own municipal account. It is treated as a separate erf and therefore is entitled to one vote (requires the completion of one consent form).

Question: Will there be any differentiation of contributions?

Answer: Differentiation of contributions : The SRA legislation doesn’t allow for this. It is a standard levy based on a % of rates. However, this issue is raised by every community including some 40 private estates. The Canal owners do maintain the canals (and where allowed by DEDEAT (Dept. of Environmental Affairs)) the Spit through the Riparian levy (R212 per month). The Spit is actually a Municipal erf. It does protect the canals but it is also a part of the beach that stretches from the river mouth to Granny’s Pool. The loss of the beach has been caused by the loss of the sand dunes on which Santareme is built. The loss of the spit is caused by (a) the loss of the sand on the beach fed by the Santareme sand dunes (the sea current flows from west to east, and the prevailing wind also blows in the same direction) and (b) the diverting of the Sand River from entering the sea at Aldabara to the Kromme River. The Kromme River has also been affected by the dam that was built upstream. These are all man-made problems caused by development of all parts of the town. The River communities are all private estates with agricultural rates (0.15%) which are one quarter of residential and industrial rates (0.61%), who say that they take care of their own sewerage and streets and security, but they would be happy to contribute to the river project. It doesn’t make sense to me to try to apportion blame or responsibility. We have adopted the philosophy of asking everyone to share this responsibility and fix these problems.

Question: Is Santareme not being asked to pay too much?

Answer: There are 2,150 properties outside of the private estates and Cape St Francis, The Canals have 550 properties, the Village similar and Santareme also similar. Santareme also has more vacant plots which are valued a lot less than developed properties. The Links 672, the Port private Estates 329, Air Park 70, other private estates and the river estates increase the number of properties to some 3,500 in total. This excludes Sea Vista and Cape St Francis. We have asked the Municipality for the rates paid by each area and private estates. They couldn’t give this to us before the Christmas break, but once we have them it will help us understand who contributes what. We certainly want to be able to justify to all property owners what we are spending where and ensure there is transparency and equitability.

Santareme and the Village have greater security and crime problems than elsewhere in town because of their proximity to the township, hence security is a much higher priority. This is not a priority in the Port, canals or the river estates due to their distance away from the township. Why isn’t anyone complaining about the R400+ per month Armed Response fee we all pay? This represents 40% of the rates of a R2m valued property, because our Police force has failed to protect us from criminals. The 50% levy is delivering a preventative security system (Cameras with 24/7 monitoring) plus a restored infrastructure. The Security companies’ don’t differentiate (to my knowledge) monthly charges by area in St Francis due to a greater or lesser security threat.

Santareme’s roads are probably in the worst condition of any area in St Francis and are clearly a priority.

The threat of flooding from the dunes behind Santareme is also a high priority, and is in the process of being addressed. We met with the Consulting Engineers managing this project in November, and they advised us that the tender to build a flood water solution will be awarded in early 2017 and work started in a March/April timeframe. Santareme’s sewerage is not only contaminating the sea but is also contaminating the underground water system.

 These are all the issues we deal with. If we don’t resolve these issues then all of our property values suffer. We cannot put in place a variety of different levies for different areas, less try to justify them. When faced with this level of complexity, sometimes simplicity is better. I have been told by angry Santareme residents that the wealthy canal home owners should pay. They are paying because they are also paying 50% of much higher property values. One R10m property pays the equivalent of five R2m properties. On the other hand the canal property owners believe that they are bankrolling the town….we tell them that they are paying more but then they will benefit from a greater return on their higher value properties. We are putting in place an Exemption Board to assess whether an individual property owner should be partially or fully exempted from the levy due to an inability to pay the levy.

Question: Is there a summary of AGM SRA presentation relating to the need for an SRA etc? (A summary because a lot of people don’t/won’t read long documents).  I think it would be good to include some more info on SRAs that have already been established and are already operating well.

Answer: With regard SRA’s and more info, SRA ‘s (Special Rating Areas) are common both in SA and overseas. The first one was downtown Johannesburg in 1993. There are 39 of these in Cape Town, a couple in PE, and quite a few in Durban and Johannesburg. Most of these deal with security, public open space management (beaches, etc.) and rubbish removal. SRAs are also called CIDs (City Improvement Districts) and you find these in both the US and Canada.  The Joburg team visited New York and Chicago in the 1990’s to understand how to set this up. Cape Town is probably the most progressive. Llandudno was set in 2014 and is focussed entirely on residential property.  Muizenburg was also set up in 2014 and focusses on both residential and commercial properties.  Muizenburg have also introduced what they call a “resilient economy” to drive up employment and successful local business. A summary is was published yesterday on St Francis Today – READ – SFPO Vote for the SRA Levy

Question: If I cannot afford the levy will I be able to apply for an exemption?

Answer: We have proposed that we agree a set of exemption criteria that will be used to assess the applications from those people who say that they cannot afford the SRA levy. We have proposed that an applicant choose a financial planner themselves, who is accredited with the FSB (Financial Services Board), that will assess the applicant’s position in confidence. The financial planner will make a recommendation to the SFPO NPC Board, who will make the final decision. We will need to have an independent audit done on a random set of applications from time to time to make sure that the exemptions are not being abused.