In mid-February this year, the City of Tshwane caused a big stir with their highly-publicised #TshwaneYaTima campaign, which was rolled out via Twitter. This contentious, yet very effective, initiative named and shamed big entities – such as PRASA, SuperSpar, and ODI – whose service payments were, in some cases, up to R55 million in arrears.
Tshwane Mayor Randall Williams was escorted by members of the Tshwane Metro Police Department when he led plumbers and electricians to the offices of the properties in question to disconnect the meters at these facilities. This also included an affluent estate in Pretoria North, which owed the city R25 million.
The City of Tshwane says it has managed to recoup more than R700 million since they embarked on their large-scale revenue collection imitative last month and took the serious step of cutting services for major defaulters.
This was necessary to address the almost R180 billion revenue shortfall that had resulted due to non-payment of services by residents, businesses, as well as government entities.
City of Tshwane acting chief of staff Jordan Griffiths was this week quoted as saying that the campaign had so far exceeded their expectations by garnering over R700 million in outstanding revenue. This is going a long way to bolstering the coffers of the city, which was facing dire financial problems when the coalition-led government took over.
So, what does this means for section title schemes?
“The fact that the #TshwaneYaTima campaign not only affected large businesses and government organisation, but also various Sectional Title schemes, has highlighted the need for trustees and scheme executives to receive proper training to aid them in running their schemes in a financially responsible way,” says Pearl Scheltema, CEO of Fitzanne Estates.
Here are three key takeaways in this regard:
Body corporates need to vote for knowledgeable trustees
“For a sectional title scheme to become and remain financially healthy, body corporates need to vote for knowledgeable trustees who can steer the ship responsibly,” says Scheltema. “Well, that, and pay their levies.”
Place a firm focus on levy collections
The payment of levies has been a major problem for the past two years. Many buildings were in big trouble due to non-payment or slow payments of levies. According to Scheltema, many owners are still citing COVID-19 as a reason not to pay, and the arrears are not looking great at the moment either. As such, many people in the industry are working on emergency contingency plans.
“They loan money to get things done on the buildings, which just places them in a more precarious financial position. Alternatively, they take radical, illegal steps like cutting power, which is not permitted by law, to get owners to comply. Then suddenly, a repayment might be placed on the table.
“As such, a re-education drive may be necessary to get landlords to realise that by not paying their levies, or paying it in drips and drabs, they are putting other scheme owners at a disadvantage when they don’t meet their financial responsibilities.”
Engage a reputable managing agent
If levy collections are a problem, it helps to work with a knowledgeable Managing Agent. If trustees are not educated in financial matters, the Managing Agent can support them with their own experience and knowledge. They can also arrange for proper trustee training.
There you have it – three important things SA’s Sectional Title Scheme Executives should glean from the recent #TshwaneYaTima Campaign.
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