VALUATION ROLL DEVELOPMENT

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VALUATION ROLL DEVELOPMENT
Municipal Valuation and Rating eThekwini
Municipality Keith Matthias 5th National Annual
Local Government Conference LOCAL GOVERNMENT
FINANCING AND DEVELOPMENT IN SOUTH AFRICA
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A. BACKGROUND

• White Paper on Local Government
• Recognised that rates are a major revenue source
• However there was a need for a simpler, uniform
  rating system
• That there were variations of rating approach
• Needed to provide relief to the very poor
• Accommodate local circumstances

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South African Rating legislation at that time

• Property tax foundation under Provincial
  Ordinances
• Diversity of valuation approach
• Land
• Land Buildings
• Market value and replacement cost
• Site and improvements as separate objects

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eThekwini Municipality Applicable Legislation

• Local Authorities Ordinance No 25 of 1974
• Durban Extended Powers Ordinance 18 of 1976

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Valuation Methodology in terms of Ordinance

• Land market value as if vacant
• Buildings replacement cost less depreciation

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B. STRATEGIC VISION

• Single valuation roll based on market value, to
  be achieved by -
• Consolidation of former Operational Entities
• Data Audit and Cleanup
• Software Development
• Implementation of Municipal Property Rates Act

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Consolidation of former Operational Entities

• Business Drivers for common platform and
  effective date
• Merging of local authorities to create eThekwini
  Municipality
• Disparate valuation rolls
• Different effective dates of valuation
• Incorporation of previously unrated areas

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Consolidation of former Operational Entities

• VLR RTS CONS Project was established with
  following objectives
• Create a consolidated valuation roll
• Create a consolidated rates ledger
• Perform rates budgeting from a consolidated base.

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Data Cleanup Project

• Implemented three way check between Deeds
  Office, Survey and consolidated Valuation Roll
• Resolved gaps, missing entries, etc.
• Generated R15 million in surplus revenue
• Started work on sectional title register
• Created a solid base for the implementation of
  the Municipal Property Rates Act (MPRA)

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Software Development

• Consolidation of former OEs provided catalyst to
  interrogate IT systems
• Package versus bespoke development?
• Decided to develop Value Assist with built in
  workflow
• Streamlined and automated business processes
• Product developed locally at the Smart Xchange

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L_at_W Laywers Access Web
IRCAM Interim Rates Calculation Module
RCM Rates Calculation Module
Value Assist
WinDeed Deeds Office Transfers
COINS Billing System
AMS Appeals Management System
Property Change
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Value Assist User Interface
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C. IMPLEMENTATION OF MUNICIPAL PROPERTY RATES ACT

• Broad program includes
• Pilot Study
• General Valuation Project
• Value Assist Rewrite
• Business Process Re - engineering project

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Pilot Study and Outcomes

• OBJECTIVES
• Assess the citys readiness to implement the MPRA
• Data audit identify gaps and new data
  requirements
• Recommend valuation methodologies
• Define IT requirements
• Broad impact scenarios

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GENERAL VALUATION (GV2008) PROJECT

• Project Planning
• Key Dates/ Property Universe
• Data Collection
• Valuation Process
• Financial Management
• Communications
• IT Systems

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PROJECT PLANNING AND PREPARATION

• Appointment of eThekwini Project Team
• Preparation of tender document
• Adjudication of tender
• Award of Contract

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KEY DATES

• Date of Valuation 1 July 2007
• Handover of Valuation Roll 02 January 2008
• Implementation Date 01 July 2008

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PROPERTY UNIVERSE

• Dwellings 321 000
• Sectional title units 100 000
• Vacant land parcels 60 000
• Non residential 14 000

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VALUATION METHODOLOGY

• Single Residential CAMA
• Sectional Title CAMA
• Vacant Land CAMA
• Non Residential Individual valuation

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A SIMPLE CAMA MODEL
Estimated_Market_Value Location Building
Land EMV Location multiplier Bldg_Rate
Building_Size Land_Rate Land_Size
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DATA COLLECTION

• Detailed QA Methodology
• Total Living Area
• QA Process Implementation

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TOTAL LIVING AREA (TLA)

• Existing data vs measuring from scratch
• Digitised building footprints
• Verify against plans and records
• Create separate payment stream

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VALUATION GUIDELINES

• Inclusion/ exclusion rules
• Agriculture
• PSI
• Valuation practice directives

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RESIDENTIAL VALUATION CHECK

• Reasonableness Check
• Sales
• For sale

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NON RESIDENTIAL VALUATION SYSTEMS

• Data collection forms
• Software system
• Market report

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COMMUNICATIONS

• Branded campaign run by the City
• Presentation to councillors
• Regular features in Ezasegagasini and local
  newspapers
• Attachments to utility bills
• English and Zulu video
• Radio interviews
• Presentations to various bodies

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IT SYSTEMS

• DCF Manager data collection software
• Digital Pen technology
• GIS route mapping
• SPSS Interfaced with Value Assist
• Business analysis for Value Assist version 3.0

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VALUE ASSIST REWRITE (V3.0)

• Separate project to the GV, will include
• Automated valuation models
• Multiple approaches to valuation
• Exemption and Appeals management modules
• New workflow procedures
• Phasing in of Rates

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D. BUDGETS, RATING POLICY ROLLS
Budget Needs
Valuation Roll
Policy
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RATING POLICY

• The guide to how the required monies are raised
  from the Valuation Roll
• Choice of treating all property types or property
  owners equally single rates randage, or
• Differentiating between property types and owners

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KEY ELEMENTS OF RATING POLICY

• Properties are valued in use
• Property categories-
• Residential
• Agriculture
• Vacant land
• Industrial
• Business Commercial
• PSI
• State Trust

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KEY ELEMENTS OF RATING POLICY

• Owner categories-
• Residential
• Pensioners
• Disability grantees / medically boarded
• Child Headed Households
• Sporting bodies
• Public benefit organisations

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QUESTIONS