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What are City Improvement Districts?

A City Improvement District (CID) is a defined geographic area within which property owners agree to pay for supplementary and complimentary services set to enhance the physical and social environment of the area.

Base services provided in a CID are supplementary to those provided by the local authority, and typically include additional public safety and security, pavement cleaning, litter collection, as well as the upliftment and maintenance of public spaces where necessary. Base services provided in a CID are also complementary services, which are often taken on by the CID. These services include and are not limited to: place marketing, property owner communication via websites and e-newsletters; business attraction and retention; environmental upgrades in the public space; events management to attract additional economic development and growth to the CID area.

The CID is:

  • A management tool to enhance property values;
  • A system of co-operation and cost-sharing among private sector interests;
  • A way of sustaining funds applied to all benefiting properties and based on an assessment of those businesses;
  • Authorised by national, provincial or city law; Defines the roles and responsibilities of both the CID and local government;
  • Managed through a Section 21 company and directed through a board of elected business and property representatives from the area.

The Formation of a City Improvement District

In this instance, your property is situated in a voluntary City Improvement District (CID), the Rosebank Management District NPC (RMD), which is a registered Section 21 company.

The Benefits of a City Improvement District

The CID approach is holistic.

All issues that may be negatively impacting on the area are investigated and dealt with on an integrated basis by the property owners and stakeholders within the area.

Enhancement of the environment and strengthening of investor confidence.

Enhancing the safety, cleanliness and economic vitality of different urban nodes which include: residential, commercial, retail and/or industrial – strengthens the competitiveness and attractiveness of the area.

The CID supports investment.

The perception of crime, grime and general environmental disorder in most urban areas has a negative impact on residents, family life and the willingness of people to visit the area and thus sustain economic growth and development.

A CID creates a positive identity for the area.

The establishment of a CID provides a new and positive identity from which to launch a concerted effort to maintain and enhance the asset base in the area, thus attracting continued investment and development.

The CID offers private sector management and accountability.

Once the CID is set-up, a management body is established in the form of a Section 21 company. This company appoints a manager, through which the CID is managed. Annual activities and budgets are developed by the CID management company, which provides a full set of monthly management accounts overseen by the board. This ensures that the CID is directly accountable to those in the community who pay the levy.

The effectiveness of the CID is constantly measurable.

Through the utilisation of tools such as the urban monitoring system, urban environments are managed and monitored at street level on a regular and ongoing basis. Statistical information, reports and graphs are generated and enable the CID board and stakeholders to measure the success trends and developments over a period of time.

CIDs monitor any new major developments or interventions that impact on the area.

As the custodian of the area, the CID is aware of developments in the area, and is in a position to make collective comment to the authorities on such land use change in order to guide the management body.

CIDs form effective working relationships with appropriate bodies or associations.

These relationships could include the local authority, local tourism associations and community policing forums, to name a few.

The CID is able to put forward ideas for change to the local authority.

Due to its close relationship with the local authority, the CID is able to petition for new initiatives which will further improve the area, for example, traffic surveys.

Typical Services of a City Improvement District

The services offered within a CID do not replace the services of the City of Johannesburg, but rather complement and supplement those services.

  • Cleaning and Maintenance
  • Security (Crime Prevention and Urban Monitoring)
  • Placemaking, Branding and Marketing
  • Parking and Transportation
  • Social Services

CID / SRA Legislation

The Gauteng City Improvement Districts Act was established in 1997 in order to:

  • Provide procedures for the formation and independent management of city improvement districts to fund the provision of services, in addition to those which a municipality ordinarily provides, in order to facilitate investment in the city improvement district;
  • Halt further degeneration of cities; and
  • Promote economic growth and sustainable development in cities

On 30 September 2015 The Supreme Court of Appeal delivered a judgment in the case of Randburg Management District vs West Dunes Properties, dealing with the legality of levies imposed under the Gauteng City Improvement Districts Act 12 of 1997 (the CID Act), which provides for the imposition of levies on rateable immovable properties situated within a city improvement district.

The decision by The Supreme Court of Appeal bought into question the legal status of City Improvement Districts (CIDs) in South Africa.

The ruling inspired stakeholders to call for a re-evaluation of the South African legislative and regulatory context for Legislated Management Districts.

Currently, all managed areas in Gauteng operate as voluntary initiatives.

Voluntary establishment has no standing or legislative backing, and thus is reliant on the goodwill and consistency of its constituent property owners to remain viable. Thus, it has serious risks to sustainability.

COJ took the decision in June 2016 that Management Districts should be legislated under Section 22 of the Municipal Property Rates Act, 2004 (Special Rating Areas) and are therefore establishing a new Special Rating Area By-Law and Special Rating Area Policy.

Notice of request for public comments was sent out for comments on the Draft Special Rating Area By-Law and Special Rating Area Policy for the City of Johannesburg Metropolitan Municipality.

In terms of the provisions of Section 22 of the Local Government: Municipal Property Rates Act 6 of 2004, Municipality may by Resolution of its Council determine an area within that municipality a Special Rating area, and levy an additional rate on property in that area for the purpose of raising funds for improving or upgrading that area. In this regard, the City has adopted a draft Special Rating Area By-Law, and a draft Special Rating Area Policy on which public comment is being sought.

The by-law defines a Special Ratings to be for the following objectives:

  • Enhance and supplement the municipal services provided by the City;
  • Facilitate investment in the special rating area;
  • Facilitate a cooperative approach between the City and the private sector in the provision of municipal services;
  • Halt the degeneration and facilitate the upliftment of distressed business and mixed-use areas; and promote economic growth and sustainable development, and in this way assist the Council in the fulfilment of its objects and developmental duties as set out in its Integrated Development Plan (“IDP”).
  • Allow the City to fulfil its constitutional and statutory obligations to promote:
    • Social and economic development, and a safe and healthy environment in a way which balances the guiding principles underlying its Rates Policy.
    • Allow property owners within a geographical area to improve and upgrade their area by means of a property rate in addition to the standard property rate.

The Special Ratings Area route has a rigid municipal oversight component, given the establishment and/or renewal process (extension of term) is approved by Council. The additional rate is calculated by the City and approved by Council in many cases. Additional rates are included on the municipal account for collection by the City, and not by outside.

The additional rate is imposed by the Council, is a debt owing to the City and is payable and collected in the same manner as other property rates imposed by the Council. This places collection burden on city, both with positive and negative implications.

The model is reliant on the support and capacity of municipal infrastructure for the collection and timely disbursement of funds from public coffers to the management entities, which results in a direct correlation between municipal capacity and IP/MD effectiveness.