A legal row over the City of Cape Town’s newly implemented tariffs has erupted. The South African Property Owners Association (SAPOA) has brought an urgent application in the Western Cape High Court to have three tariffs implemented by the City on 1 July reviewed and set aside.

SAPOA argues that the tariffs are unlawful and unaffordable, and will hurt small property owners and tenants.

The Association is challenging the City’s cleaning levy as well as fixed charges for water and sanitation, which are now linked to property value.

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Mayor Geordin Hill-Lewis has hit back, saying that linking fixed charges to property value is fairer and more sustainable, ensuring wealthier property owners contribute more to shared infrastructure costs.

“SAPOA represents the country’s wealthiest and largest property owners – mainly shopping mall owners – who have benefited significantly over the years from Cape Town’s functionality and success. However, they now argue that the City should charge the biggest property owners the same as individual low-income families.”

Hill-Lewis says the City cannot agree that wealthy property owners should be charged the same as lower-income or middle-class households, as this would be regressive, place a disproportionate burden on ordinary families, and would be patently unfair.

“The City’s budget protects homes under R2.5m and extends rates relief to many more middle-class homes, all while preserving the City’s critical infrastructure and service investments. In contrast, this court application by the richest of the rich property portfolio holders seeks to go back to a system of regressive taxation which hits ordinary families, and the poor, the hardest.”

He says after extensive engagements, SAPOA had offered no workable alternative means of distributing fixed infrastructure and service costs among ratepayers.

“The only alternative to fixed charges linked to property value, is for everyone to pay a flat charge regardless of whether you are low-income or affluent. This is not a sustainable nor fair way to fund infrastructure investment and the fixed costs of service delivery. If a flat charge of say R500 is billed, and one household earns R20 000 while the other earns R100 000 a month, this charge represents 2,5% and 0,5% of their monthly income respectively. This means the impact on the lower-income household is actually five times more than on the higher-income household, which is regressive and inequitable.”

SAPOA represents commercial retail property owners such as Growthpoint, Redefine, Old Mutual Properties, Hyprop Investments and Resilient Reit.

They own properties in the city, such as the V&A Waterfront, Canal Walk, Cape Gate, Table Bay Mall, Tyger Valley Shopping Centre and Cavendish Square, as well as portions of vacant land and residential developments.

However, SAPOA says it is not bringing the application only on behalf of its members, explaining that some smaller property owners affected by the three tariffs are vulnerable and will have to sell their properties, as they are simply unaffordable for them.