Presentation by: Alwyn Laubscher Pr. Eng. Pr. CPM

REPORT TO MUNICIPAL WORKSHOP 31

OCTOBER 2013

PURPOSE OF THE PRESENTATION

• To explain the process previously followed at Swartland Municipality

• To highlight the lessons learnt through applying the system

CONTENTS• Introduction

• Process to determine DC’s

• Growth Model

• Bulk Services

• Implementation

• Lessons Learnt

• Questions

INTRODUCTION• It is the responsibility of Local

Government to pro-actively plan for growth and development of their town.

• First it should determine the potential for growth, and then the required bulk services to serve such growth.

• And to establish sources of funding for such services.

PROCESS TO DETERMINE DC’S

Need for Local Government to stimulate economic development

Need to pro-actively plan for growth and development

of City/Town

Development of a long term Growth Model for the Area

Compilation of master plans for bulk services to serve

Growth Model

Calculate the cost of each of the bulk services

Determine the contribution from each development opportunityto pay for bulk infrastructure

Negotiate with Developer to provide bulk services in lieu of

DC’s, where applicable

Pay DC’s into a dedicated account (per service) to be used

in future for the provision of bulk infrastructure

PROCESS TO DETERMINE DC’S

• Plan for estimated growth for different scenario’s (5; 10; 20 years)

• Assumed zoning; land use; and densities

• Brown Fields (densification) and Green Fields (new developments)

• Compile Excel Model for easy manipulation of What If questions

GROWTH MODEL

GROWTH MODEL - MALMESBURY 20 JAAR

GROWTH MODEL - 20 YEAR

BULK ROAD NETWORK

BULK ROAD NETWORK

WATER NETWORK

NETWERK

SEWERAGE NETWORK

BULK WATER & SEWERAGE PLANNING

STORMWATER NETWORK

STORMWATEROndersoek(Aanvaarding R30 000 per 500m lengte van

rivier)

R 1,020,000

Vloedlynstudie(Aanvaarding R15 000 per 100m rivier)

R 1,500,000

EIA(Aanvaarding R500 000)

R 500,000

Opgradering/Rehabilitering(Aanvaarding gebaseer op vorige projekte)

R50,000,000

Sub totaal R53,020,000

Onvoorsiene Uitgawes R 5,302,000

BTW (14%) R 8,165,080

Totaal R66,487,080

ELECTRICITY

DESCRIPTION

DENSITY OR

COVER-AGE

ADMD kVA AT 132/11 kVSUBSTATION

LEVEL

RATE PER kVA FOR 132/11 kV

SUB-STATION

“GREEN-FIELDS”CONTRI-BUTION

ADD “BROWN-FIELDS”

PRIMARY AND SECONDARY

11 KvINFRA-

STRUCTURE

TOTAL RATE FOR BULK

ELECTRICITYCONTRIBUTIONS(VAT EXCLUDED)

Low Density 4 u/ha 4 kVA per unit R1 405-00 R5 620-00 R2 526-32 per unit R8 146-32 per unit

Single Residential

15 u/ha 3 kVA per unit R1 405-00 R4 215-00 R2 526-32 per unit R6 741-32 per unit

Medium Density Residential

20–25 u/ha2.5 kVA per

unitR1 405-00 R3 512-50 R2 526-32 per unit R6 038-82 per unit

High Density Residential

30–60 u/ha2.5 kVA per

unitR1 405-00 R3 512-50 R2 526-32 per unit R6 038-82 per unit

Affordable Housing

30–40 u/ha1.5 kVA per

unitR1 405-00 R2 107-50 R1 263-16 per unit R3 370-66 per unit

Subsidised 30–40 u/ha1.0 kVA per

unitR1 405-00 R1 405-00 R0-00 per unit R1 405-00 per unit

Industrial and Commercial

Varies On Application R351-25 R1 405-00 R157-90 per kVA

R509-15 per kVA ofApplied for

MaximumDemand

Co-incidence factor of 25% used between Non-Residential and Residential peak loadsDirect connection costs such as mini-substations, metering, 11 kV secondary cables etc., excludedCredit will be given for 11 kV secondary cables installed on Municipality’s behalf and in accordance with the Electricity Master Plan

WASTE WATER TREATMENT WORKSLand Use UWD* USF*

m³/unit/day m³/ha/day % of UWD***

m³/unit/day m³/ha/day

Res Low Density 1.0 55 0.55

Res Single 0.7 60 0.42

Res Medium Density 0.6 60 0.36

Res High Density 0.5 65 0.325

Res Subsidy Housing 0.3 70 0.21

Industrial 20.0 60 12

Commercial Retail 20.0 60 12

Commercial Offices 15.0 60 9

WWTW = R94m for 10 000m³/day (10/12/2007)

Upgrade adds 4 600m³/day

Total Capital for refurbishment of existing WWTW = R30m

Total Cost for 4 600m³/day = R94m – R30m = R64m

Unit Cost = R64m/4 600m³/day = R13 894.57/m³/day

UWD*= Unit Water Demand/ USF**-Unit Sewer Flow/% of UWD***-UH + 5% (infiltration)

Principles:

• Responsible Planning

• Everybody must contribute

• Based on land value

SOCIAL INFRASTRUCTURE

TIMPLEMENTATION

• Liaise with Developers

• Approve as Council Policy

• Advertise with Tariffs

• Training of officials

• Guideline document (internal and external)

• Implementation across the board

QUESTIONS

Presentation by

Alwyn Laubscher Pr. Eng. Pr. CPM

REPORT TO MUNICIPAL WORKSHOP

31 OCTOBER 2013

PURPOSE OF THE PRESENTATION

• To share the considered key elements of such a policy

• To highlight the alignment between SDF; IDP; MTREF; and DC’s

LESSONS LEARNT - LEGISLATION

• LUPO provides for charging DC’s but is not very clear in its definitions

…include conditions in relation to the cession of land or the payment of money which is directly related to the requirements resulting from the said authorisation, exemption, application or appeal in respect of the provision of necessary services or amenities to the land concerned.

• This lead to court cases around the quantum charged

• Electricity has less of a problem - legislation allows them to charge DC’s as a tariff

• It is therefore important how LUPA will deal with DC’s

LESSONS LEARNT - FINANCIAL

• Plan for growth of Town and see DC’s as an additional source of revenue

• This is not just another tax - it is a planning exercise

• Do not hand it over to Treasury

• Quantum and When it is payable must be known upfront by Developers - certainty

• Follow proper process of collecting DC’s – big numbers at stake

LESSONS LEARNT - ECONOMY

• Be aware not to scare investors away - you are in the business of selling your town and draw investors

• Approach DC’s as a partnership with Private Sector

• Mitigate impact on job creation through subsidies – DC’s on Commercial and Industrial developments are high.

• LUPO requires regard to the various rates and levies paid in the past or to be paid in the future by the owner of the land concerned - WWTW

KEY ELEMENTS OF DC POLICY

• Must find a balance between need to stimulate economy and job creation; and funding the growth of the town

• Private Sector is running huge risks with low margins - need support and certainty (look at number of entities that left development)

• Beware of line departments treating DC’s as a cash cow – delivery of service for which money was collected must take place

• Proper system and policy is required for administration - big amounts at stake

ALIGNMENT BETWEEN SDF; IDP; MTREF; & DC’S• Planning for the future is responsible management

• In terms of the IDP it is a legal requirement

• In terms of MFMA a Medium Term Revenue and Expenditure Framework (MTREF) is a requirement

• Determination of your Spatial Development Framework is the starting point for compiling a Growth Model

• Engineers need to plan ahead for all bulk services (part of IDP): they can only do so if they have a Growth Model

• Planning by the Engineers must be budgeted for – back to MTREF

• MTREF relies on various sources of income - i.e. DC’s

QUESTIONS