28 February 2024
Drakenstein Municipality stands by the property valuations that its independent Municipal Valuer conducted in 2020.
This is the gist of a report tabled at a Municipal Council meeting held earlier today (28 February 2024) in Paarl, following the investigation of an independent adjudicator into claims that the Municipality’s 2020 rural farming valuations were too low.
Drakenstein Municipality is of the opinion that these so-called lower valuations were fair, given the fact that they were conducted in the middle of the COVID-19 hard lockdown when little if any farming activity could take place. The Municipality stands by this point.
The Municipality further respects the independence of the Municipal Valuer and does not wish to interfere in this process. For this very reason the Municipality’s practice is to make use of an external valuer and not an internal team – to ensure the autonomy of the process and of the outcome.
As background, the municipal value of a property is the amount the property would have realised if sold in the open market by a willing seller to a willing buyer on the date of valuation. Property valuation is the process of obtaining an estimate for the value of a property, taking into consideration various factors. It is done by a Municipal Valuer, appointed through an approved Supply Chain Management (SCM) process that entails a competitive bidding process. Valuations are not an exact science and with any valuation roll there will be objections, appeals or queries depending on the interest of the person who raises it.
Claims are unsubstantiated
The claims and queries relating to the rural farming valuations came from Erik Marais, a director of a company that performs valuations for clients in the rural or agricultural space, who disputed the 2020 valuations of Drakenstein Municipality’s rural properties. He alleged that rural properties’ valuations in Drakenstein increased with 9% on average, while residential properties’ valuations increased with 18% on average. According to Mr Marais, this was “causing the Municipality to lose approximately R30 million per year” – a burden which he claimed residential property owners were now carrying.
The Municipality wants to point out that should the rural farming properties’ valuations have increased by 18% on average, instead of 9% on average, it would have increased rates owed to the Municipality by R1 558 056 – nothing close to the “potential revenue loss” of R30 million that Mr Marais claimed.
Another one of Mr Marais’s unsubstantiated claims is his allegation that residential property owners of Drakenstein are subsidising the rural sectors and are charged more. This is not only farfetched, but also factually incorrect. In terms of Section 82A (a) and (b) of the Municipal Property Rates Act (MPRA), the Minister for Provincial and Local Government, and in concurrence with the Minister of Finance as required through Section 19 of the MPRA, may determine that a rate levied by the Council on a category of non-residential property may not exceed the ratio to the rate on residential property.
When Mr Marais first raised his claims, the Municipality held numerous meetings with him in 2021 to try and ascertain whether his claims had any merit. Thereafter the Municipality arranged for a sit-down with Mr Marais and the Municipal Valuer to resolve his queries.
When Mr Marais and the Municipal Valuer had a difference of professional opinion and could not reach consensus on the matter, the Municipality went one step further and arranged for an independent adjudicator to investigate Mr Marais’s claims and review the property valuations. (There was no cost associated with the independent adjudicator’s appointment as he is an employee and a professional valuer from a neighbouring municipality.)
The findings of the independent adjudicator were then presented to the Municipal Valuer, and various interactions between the two followed - facilitated by the City Manager and Chief Financial Officer. Following these interactions first a preliminary and later a final report was drawn up. The final one was tabled today (28 February 2024).
According to this report, the Municipal Valuer and independent adjudicator agree on many points, but there is also some disagreement between the two based on professional judgement and professional scepticism.
Unethical behaviour
During this whole process it came under the Municipality’s attention that Mr Marais had tried to unduly influence the opinion of the independent adjudicator, as well as approach the Municipal Valuer directly without informing the Municipality. The Municipality regards such behaviour as highly unethical. It could clearly be seen that Mr Marais was acting mala fide and was not disclosing his interests.
The question also needs to be asked in which capacity Mr Marais has been acting by speaking on various forums. He serves on the Drakenstein Municipal Valuation Appeal Board and was previously (prior to 2016) the appointed Municipal Valuer for Drakenstein Municipality for numerous years. During the time that he was the Municipal Valuer, the Municipality received several queries relating to the rural community, as well as objections and appeals against his decisions or recommendations.
Going forward
Drakenstein Municipality now regards the matter around Mr Marais’s claims settled and closed as his allegations are unfounded.
The Municipality does not wish to re-evaluate the rural farming properties at this stage, especially considering that the property rates from farms (excluding residential properties) contribute only 3.8% or R17 311 735 to the Municipality’s total property rates revenue, and in terms of the MPRA, farmers are entitled to a 75% rebate.
A supplementary valuation of rural farming properties at this point would be both cumbersome and costly and not worth spending the ratepayer’s money on – especially considering that Drakenstein Municipality’s next round of obligated property valuations is scheduled to take place next year.
Drakenstein Municipality’s new valuation roll is coming into effect on 1 July 2025 and the Municipality has included in the specifications additional procedures relating to the valuation of rural properties and farms.
The new tender to appoint a municipal property valuer for the next round of valuations was adjudicated on 2 February 2024. It is currently being published for public comments in terms of Section 33 of the Municipal Finance Management Act (MFMA), for implementation 1 May 2024.
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Issued by: Communication and Marketing, Drakenstein Municipality
