Proposed housing loan could send rates soaring
eThekwini Municipality hopes to get a loan for R1.1-billion, which might see a five per cent increase in rates, on top of the normal annual increase.
A R1-BILLION loan eThekwini Municipality is planning on borrowing will see a 12 per cent increase in rates if the application is not stopped, said Ward 10 councillor, Rick Crouch.
The eThekwini Municipality’s human settlements department is R3.9-billion in debt according to a report presented to the finance committee last week.
This report accused the KwaZulu-Natal Department of Human Settlements of not adjusting its grants with the city’s housing infrastructure programme.
According to Crouch a loan will be required to fund a R1-billion shortfall if the the city and the department don’t find a way to align the funding.
Crouch said he has been trying to get residents engaged in the fact that in the next financial year it is possible that residents’ rates may be increased by about 12 per cent because of this loan.
“That is an additional five per cent over the normal increase and this is because council wants to overspend the housing budget by R1.1 billion to build extra houses before 2016,” he said.
To do this, Crouch said the municipality would have to take a loan, and a request for that was tabled before the Finance and Procurement Committee on Thursday 23 October.
“For every billion we borrow, rates will increase by five per cent over the normal financial year increase. This will affect ratepayers and renters, because if rates go up, rent goes up,” he said.
Crouch said this increase will be unsustainable for the city, which is already the most expensive metro to live in: “There will be an exodus of residents from the city and they will take their businesses and jobs with them. The number of homeowners simply abandoning their properties will increase. For those left it will be a ghost town.”
He urged residents of eThekwini to contact the executive committee and city manager with their comments regarding the loan and the proposed increase of rates by five per cent over the normal increase.
“Both the request to advertise for the R1-billion loan, and the report on the R1.1-billion extra free houses they want to build before 2016 were tabled before the finance and procurement committee on Thursday 23 October.
eThekwini Municipality has not responded as yet.
