Cape Town - While a group of tenants in Bromwell Street await their fate, which will likely be decided by the Western Cape High Court next month, a National Treasury incentive to revitalise inner cities is having unintended consequences and could leave them homeless.
Cape Town’s urban development zone stretches through its CBD into parts of Woodstock, Maitland and Bellville.
According to the City, urban development zone allowance is applicable for the:
* Erection, extension or improvement of or addition to an entire building.
* Erection, extension, improvement or addition of part of a building representing a floor area of at least 1 000m².
* Erection, extension, improvement or addition to low-cost housing.
* Purchase of such a building or part of a building directly from a developer on or after November 8, 2005, provided that certain requirements are met.
Mayco member for Spatial Planning Johan van der Merwe said last year that 18 new buildings, collectively valued at R639 111 147, benefited from the tax incentives, while 171 were improved at a cost of R271 million.
In 2016, 14 new buildings benefited from the scheme valued at R493m, while 184 buildings were improved at a cost of R314m.
Development economist Jodi Allemeier said it had yet to be shown whether the Urban Development Zone incentive was promoting inclusive urban regeneration.
She said if the incentive could not be shown to have promoted gap or social housing “then incentive is merely subsidising profits/subsidising a market that does not require subsidisation”.
Allemeier said the tax incentive was a limited tool to advance inclusive urban development.
“It requires the pooling or overlaying of additional tools to direct investment - such as inclusionary zoning which would require a tolerable threshold of social and or gap housing to be supplied as part of the development.”
Many areas benefiting from the Urban Development Zone tax incentives were also Special Rating Areas or city improvement district.
“This combination of tax incentive and quality urban management does seem to be attracting capital disproportionately and these capital flows should be leveraged to contribute to broader objectives of social and economic inclusion, and spatial justice.”
Opposition leader Xolani Sotashe (ANC) said instead of promoting affordable accommodation near the city centre through gap and social housing, the City was instead “taking us back to the forced removals”.
“By raising (property) rates there’s a serious contradiction in the City of Cape Town. (Mayor Patricia) De Lille says she wants to bring people closer to the CBD.
“That money they’re getting from Sars should be bringing people closer to the city, but instead the opposite is happening.”
Cape Town mayoral committee member for Human Settlements Benedicta van Minnen said the City had already identified certain sites in Woodstock for either gap or social housing and that an announcement would be made in the next few months.