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NORFED latest news letter PDF Print E-mail

SHOCK SHEET           25 JANUARY 2011

  Revenue collection in the City has deteriorated significantly over the last and present financial year as systemic collapse takes hold.  Norfed members spent some time recently going through the City of Johananesburg’s first quarter financial report (July – September 2010) The report details the results of a risk analysis commissioned by the City of Johannesburg, the top four risks are; ·         1. Billing·         2. Fraud and corruption·         3. Lack of skills and knowledge·         4. Information management (incomplete data base) These risks illustrate the reasons for the reducing revenue collection and chaotic billing system which has left the City without sufficient funds to operate. The City have loans of R12-billion with another R2-billion in the pipeline. Their rating has now plummeted to BBB- from AAA- a couple of years ago and the liquidity problems are so severe that in November 2010 bonds had to be sold to pay for bulk water and electricity. The City’s reserves have dropped from R5-billion to R1-billion City Power are, to a large extent, responsible for the enormous drop in electricity revenue collection when in late 2009 they awarded a tender for a metering system for large power users to a company that allegedly did not meet tender conditions. They declined to renew the metering contract for a company with world class technology which had saved the city millions of rands. City Power’s revenue dropped 20% in the first 3 months of the new company taking over.  Electricity which was previously remotely read, automatically billed and data published on a dedicated web site subsequently needed to be estimated.  We cannot confirm that that situation is ongoing but do know that as of the middle of 2010 billing was still based on estimated use (often grossly inflated). The City's financial report notes a 40% loss of electricity from July to September 2010 (this refers to supplied electricity for which no revenue is received -predominately a result of non payment, illegal connections and billing problems). This is against a budgeted figure of 12.5%. Norfed was informed by a City official that water loss now stands at 48%. Incomplete data base. The extent of unrecorded properties on the city’s data base is unknown but is acknowledged to be a significant number and listed as number 4 risk to the City. When the city had to rebuild its data base to accommodate the Property Rates Act the management of recording and entering individual sectional title units onto the data base was a disaster. With an estimated 450 000 units Norfed has been reliably informed that probably only 10% of them are receiving rates accounts. System failure makes it incredibly difficult for new home owners to register for municipal accounts and corruption is seen to be a contributory factor in missing data. In December 2010 it was reported that Soweto residents were not billed for that month because (according to the City) not all of them had been recorded on the new system.  Many ratepayers throughout the city have been without bills, some areas from as long ago as May 2010. However ratepayers must be warned that the onus is on them to pay amounts based on previous consumption and also when necessary to lodge a dispute with the City.  In view of the City’s inability to collect sufficient revenue it is not surprising that law abiding ratepayers are being intimidated and are often being forced to pay incorrect accounts. The Johannesburg Advocacy Group point out that council is acting illegally in terms of Section 33 of the Bill of Rights, contained in the Constitution of the Republic of South Africa, which states All citizens have the right to just administrative action, and the onus is on the state to ensure that the administration of all state functions is effective.  The City is also acting illegally in terms of the common law. Further, the City is contravening the National Debtors Act by not following procedures which stipulate the process to be followed before disconnections can be effected.  Should the people who disconnect electricity not be licenced wiremen the City would be in breach of the National Occupation and Safety Act. There have been reports of live wires left hanging which could – and probably would - be lethal on contact.  Interestingly Number 9 on the risk analysis points to the violation of legislation by the City and the possibility of litigation by citizens.  Electricity and water losses probably give a better indication of collection levels but the variable factors are widespread gross overcharging for estimations, stepped tariffs and the recent steep electricity increases as well as additional network and service charges which have appeared on our accounts. The average ratepayers accounts have, according to economist Mike Schussler, increased by 72.2% on average in the third quarter of last year when compared to the same period two years previously. Most likely - but many of us would put that at 100% plus in the last year! Operating expenditure.  Since 2005 the City has employed an additional 13000 people bringing the total to date to 27000 employees.  This, we understand, has resulted in gross over employment and a drop in productivity. However there is a serious shortage of people with skills and knowledge.  The Provincial Gazette lists Johannesburg City employee related costs in the 2009/10 financial year at R8.5-billion and anyone venturing into the parking lot at the city's head office in Braamfontein will find the latest and most expensive selection of motor vehicles filling the car park.  Overseas trips and large performance bonuses are seemingly not affected by the financial crisis. According to the published figures the City only spent 6% of its budget for roads, paving and storm water in the 2009/10 financial year, it is then hardly surprising our roads are in the state they are. When Norfed questioned this figure we were informed that the money was spent on the World Cup. The DA caucus leader, Victor Penning, sent out a press release in March 2010 reporting that the City of Johannesburg was almost bankrupt with only R350-million in its cash reserves. The City was unable to pay its bills or deal with infrastructural problems. That the city had overspent by R923-million on the World Cup Stadiums and by R2-billion on the Rea Vaya Rapid Bus Transit system. Penning pointed out that the DA had been warning the council for the past 18 months regarding a developing financial crisis yet the ANC leadership repeatedly denied there were any problems. Penning questioned the claims by council that revenue collection was in excess of 95% of the previous month's billing claiming the figure was between 50 and 60% each month. The Provincial Gazette shows R8.5-billion on the City’s debtors book at the end of the 2009/10 financial year, with most of this amount sitting in over 90 days and this does not include the R2.8-billion written off in that financial year.  Pick It Up had to be bailed out to the tune of R300-million as a result of gross mismanagement.  Miss World cost the ratepayers in excess of R100 million and Project Phakama (billing system), originally budgeted at R270-million, has cost around R800-million. How much more will the system cost and how effective can a billing system be when the data base is incomplete and contains large amounts of incorrect and inaccurate data, moreover, an administration which does not have the technology to produce accurate and reliable measurement of electricity consumption? Senior City officials continually blame IT systems for the problem but of course it is the shocking level of incompetence and in particular the absence of efficient management that has lead to the system’s failure. Legal assistance for individual ratepayersJust as we employ private security to protect us from being robbed we must now consider legal insurance to protect ourselves from local government.  This is being investigated by the Johannesburg Advocacy Group ( This email address is being protected from spam bots, you need Javascript enabled to view it )  The law abiding face ever more regulation however government structures are not complying with their own legislation and unless we insist and force compliance nothing will improve. There is sufficient regulation and Nersa's licensing conditions for distributors of electricity are very clear, however, there is no enforcement...and no consequences for non compliance.  Our water resources are being corrupted, health and environmental legislation is being ignored, illegal land invasions are continuing, but again there is no effective enforcement ....and no consequences for non compliance. Ratepayers can complain to the public prosecutors office regarding problems experienced with the Johannesburg City Council.  Contact This email address is being protected from spam bots, you need Javascript enabled to view it or This email address is being protected from spam bots, you need Javascript enabled to view it .  Centralisation has been a disaster, it is time to put the local back into local government and re-introduce accountability.   
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LONEHILL CENTRE UNDER AUCTION PDF Print E-mail
 Liquidated malls to be auctionedJan 24 2011 11:27 Two Gauteng shopping malls valued at about R700m, which were part of a record liquidation, will soon go under the hammer. The SA Institute of Race Relations says its research shows more black people live in homes which are fully paid for compared to other race groups. Johannesburg - Two major Johannesburg shopping malls, previously valued at R700m, will fall under the auctioneer's gavel following the high-profile liquidation of various entities controlled by property moguls the Theodosiou brothers. "The brothers Tony, Dimitri and Sedrick achieved notoriety for building shopping malls without the required council permission," said Auction Alliance on Monday. In April 2007, the City of Johannesburg was granted two court orders, which the brothers ignored, to stop extensions of the Lonehill Shopping Mall without council permission.  In a landmark decision, Judge Ivor Schwartzmann handed the brothers a three-month suspended sentence and R20 000 in fines. He warned them they would be jailed if they did not "immediately cease" with the unapproved construction of the Lonehill Mall.  "At the time, irate Lonehill residents and the Johannesburg City Council hailed the court order as a victory to stop unlawful commercial property development in prime residential suburbs," said Auction Alliance.  The Johannesburg-born brothers, who traded under the name Universal Property Professionals, were involved in retail and commercial property development for more than three decades, but incurred massive debt when they developed and renovated two regional shopping malls and other developments around the country. In October 2008, Absa Bank brought an application to liquidate Immobili Retail Investments, which owns the 30 000m² Lonehill Shopping Centre, and also applied to liquidate Bel Air Mall, which owns a 20 000m² mall on Malibongwe Drive in North Riding.  According to Auction Alliance, the bank, which was owed more than R900m and accruing interest at R11m per month, brought a 4 000-page liquidation application in the Pretoria High Court.  A lengthy two-year legal spat between the bank and the developers ensued after the provisional liquidation order was granted. The brothers then brought an application to have Absa's applications set aside. With outstanding debt at more than R1bn, the liquidation of the group of companies is among the largest liquidations in South African corporate history. It is matched only by the R900m Macmed liquidation in 1999, the R1bn collapse of the Retail Apparel Group in 2002 and the LeisureNet liquidation with debts of R1bn, Auction Alliance said. "In terms of failed property developments, it is the largest outstanding debt owed to a single bank and is larger than Philken Commercial Property Developments, which owed banks more than R700m."  The auctioneers said there has been significant interest in the two cash-generating centres, and since the liquidation application the centres have appreciated in value due, in part, to lower interest rates and the liquidators, who have taken control of tenants and rental income.  "The Bel Air Mall which was constructed for more than R300m lost tenants, particularly on its upper floor, but it is a modern and attractive centre on a busy corner intersection and is anchored by a large Superspar, a Clicks and other national tenants," said Auction Alliance director Shaie Zindel. The auction will take place on March 30 at the Hilton Hotel.  
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BILLING CRISIS PDF Print E-mail
Crisis meeting – Jhb billing shambles24 Jan 2011   The billing crisis in Johannesburg has prompted the Co-operative Governance Minister, Sicelo Shiceka to summon the City of Joburg’s MEC to a meeting this week to discuss the city’s inability to provide residents with accurate accounts.  Democratic Alliance councillor Dave Dewes has initiated a class action lawsuit against the city manager, Mavela Dlamini, who is being sued for failing to perform his duties. So far about 40 people have joined but a further R25 000 is needed to secure the services of a senior advocate.Shiceka says that he is considering introducing special legislation that would give the South African Revenue Services control of billing, collection of rates and service levies for all municipalities. He says that billing and revenue collection is a national issue and should be the responsibility of agencies such as the SARS. Shiceka says that when he lived in Johannesburg he also received incorrect accounts and this made him as angry as those tens of thousands of Johannesburg citizens are right now. Johannesburg’s council is currently owed about R28-billion and, countrywide, municipalities are owed about R70-billion in unpaid bills because of tardy revenue collection procedures. The high-level crisis meeting follows the city’s disconnection of services to 41 000 households and many of them claim that they are victims of incorrect bills and have been charged patently incorrect amounts. The council says the failure of Project Phakama, a R580-million accounting system that was supposed to streamline accounting procedures caused the problems. The city estimates that it will take another six to 12 months to get the billing system working properly. There are numerous reports of people having services suspended even though they use a pre-paid water and electricity metering system. Democratic Alliance councillor Dave Dewes has initiated a class action lawsuit against the city manager, Mavela Dlamini, who is being sued for failing to perform his duties. So far about 40 people have joined the class action and they have already contributed about R35 000 that will be used for legal costs to bring an urgent application to the courts. Dewes says that a further R25 000 is needed to secure the services of a senior advocate.
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CRAIGAVON COMMUNITY NEWS No 2 of 2011 PDF Print E-mail
CRAIGAVON COMMUNITY NEWSLETTER ~ No 2 of 2011  POTHOLES .................... help is possible if you act NOW !!! 

We all complain about potholes. But rather than just complain, insurance company Dial Direct have come up with a 12-week initiative to help solve the problem, and have enlisted Trafficare to help out. So if you see construction workers in bright orange suits going to work with various strange-looking machines, rest assured that they are getting rid of potholes, one by one, using innovative 'Jetpatcher' technology.

If you have a pothole you hate, you can follow these instructions and report it! They will even email you a pic of your fixed hole?

·       Cellphone: Dial *120*1551# and follow the onscreen instructions (Std USSD rates apply).

·       Website: Visit www.potholebrigade.co.za.

  FROM CSI on the CLEAR VIEW FENCE for bottom of Craigavon Hi All,I have been in discussions with Cochrane today Re: Installation of the fence. As advised yesterday, because of the inclement weather over the past few days, it would have been detrimental to have the concrete bases installed whilst the ground conditions were so wet.Also, had we proceeded and the heavens opened, the concrete bases would have washed away due to the gradient being so steep.I have arranged that their installation team commences on Monday, 24th January 11 and will be completed by Thursday, 27th January 11, with the obvious snagging on the fence to take place.RgdsBFor further information contact Raz on This email address is being protected from spam bots, you need Javascript enabled to view it   TELKOM LINE NEEDED IN YOUR HOME???

Tracey-Lee who campaigned to have the cell mast removed is now in discussions with Telkom for supply of new needed lines in the area ~

“I need to know the following :·         How many people run home businesses and need telephone and ADSL lines·         How many residents need landlines with ADSL.With the drive to keep Craigavon free of towers, we are working with Telkom to try and provide hardwired, safer options for our families.Thank youTracey-Lee Dorny. This email address is being protected from spam bots, you need Javascript enabled to view it 011 467 1408”Please respond directly to Tracey-Lee. ARE YOU REGISTERED TO VOTE  ?How to make sure you are registered:·    Toll-free call centre 0800-11-8000.·    SMS ID number to 32810 to receive confirmation of registration details.·    Go online www.elections.org.za   
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WORTH THE READ PDF Print E-mail

http://www.property24.com/articles/city-of-joburg-billing-fiasco/12998

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