St Francis Bay’s SRA levy is “unlawful” – PE High Court

Edited by Bev Mortimer
The St Francis Bay Special Rates Area (SRA) levy has been declared “unlawful” and Kouga Municipality’s (KM’s) SRA Property Rates Policy is “unconstitutional”, the High Court in Gqeberha stated in its judgement.
St Francis Bay’s Concerned Residents’ Association (CRA) won its lengthy court case against Kouga Municipality last month, on 26 April when judgement was handed down in the case that arose following Kouga Council’s decision to establish the SRA.
All the relief sought by the CRA was granted, including payment of its legal costs in the court case, which was a legal challenge to the legitimacy of the St Francis Bay SRA levy by the CRA. The Judgment, in favour of the CRA, fully vindicated the challenge.
The three respondents in the action were the KM, the St Francis Property Owners Association (SFPO) and the St Francis Property Owners Non Profit Company (SFPO NPC).
Kouga Municipality, in its reply to a request for comment from St Francis Chronicle, said it fully intends appealing the judgement.
Asked, likewise to comment, the SFPO NPC says: “No comment at this stage until all Directors have been properly consulted.” A further comment is expected by this newspaper from the SFPO NPC, and will be added to this article, later today.
The CRA in a press release, sent to this newspaper and to social media, says National legislation provides for the establishment of an SRA (Special Rates Area), whereby residents in a demarcated area can, by majority vote, declare it an SRA; and then, more importantly, legally compel all residents in that area to pay an additional monthly property rate (an SRA Levy). “The SRA Levies are collected by the local municipality and used to improve/upgrade that area only. The local municipality’s SRA By-law and SRA Policy govern how the upgrades/improvement are to be implemented.”
The CRA recounts that after considerable controversy and dissent, and an aborted first attempt, the St Francis Bay SRA was finally implemented in 2018. “During the process, the community was split into ‘Yea Sayers’ and ‘Nay Sayers’ and a ‘War of Roses’ erupted on social media. It also created tension between KLM and the community members.
“The vote to implement the SRA barely achieved the required 50% +1 of the residents of the demarcated area. At the same time, KLM delegated the management of the SRA to SFPO NPC.”
The CRA says since 2018 the SRA has been collecting an additional 25% property rates (SRA Levy) from residents in only two areas of the town (Canals and Village). The Canals and Village, with some 1600 properties, comprise just less than half of the entire St Francis Bay area.
The other adjoining areas of St Francis Bay (Santareme, St Francis on Sea, Port St Francis, Otter’s Landing, Sea Vista and The Links) have not contributed to the SRA Levy.
“To date the SRA has collected around R20 million, with the intention to use the majority of these funds (collected to date and future) for the rehabilitation of the Beach, River and Spit (project cost R130+ million – groynes, sand importation, etc, etc.), plus lesser amounts for CCTV cameras and arterial roads,” the CRA says.
“While it is anticipated that KLM might well appeal the Judgment, the chances of success would need to be carefully evaluated by KLM before spending yet more Kouga ratepayer funds on such an appeal, as the Judgment is clear, concise and emphatic in its conclusions.
“KLM must notify the High Court by 26 May of its intentions in this regard. Should KLM decide to appeal, the application of the Judgment is suspended, and the collection of SRA Levies will continue until the case is heard in the Supreme Court of Appeal sometime in the future.
“The implications of applying the Judgment are considerable and far-reaching, with many complications still to become apparent. The principal issues would seem to be the repayment of all the SRA Levies that have been paid to date by SRA property owners, and the dismantling/disentanglement of the SRA management organisation and contracts set up by KLM and/or SFPO NPC,” the CRA says.
Further to its comment to St Francis Chronicle, that it will appeal, Kouga Municipality added: “On 26 April 2022 the High Court of South Africa – Eastern Cape Division Gqeberha- handed down a judgement in the matter between St Francis Bay (Ward 12) Concerned Residents Association and the Kouga Municipality & 2 others. In its judgement the Court found that the Applicant has made out a proper case and ordered in favour of the Applicant herein, and thereby declaring the Council’s Resolution dated 23 May 2019, for establishment of a Special Ratings Area, unlawful and set the resolution aside.
“Further to this the Court found that Section 23 of the Kouga Municipality’s Property Rates Policy, read with Part A thereof be declared unconstitutional and in conflict with Section 22 of the Local Government Municipal Property Rates Act.”