KNYSNA NEWS - The highly anticipated R40-million shopping centre development in Concordia in Knysna is hanging in the balance. This comes after Knysna Municipality approved the development of the centre subject to a service agreement that does not sit well with the developer, Variflex Trading.

The municipality has refused to waive the development charges (augmentation fees) for bulk services or the first three years' rates and taxes as promised by the previous administration.

At its meeting on Thursday 29 March, Knysna council has compromised in as much that they will allow the development charges to be paid in installments over 24 months and have agreed to rebates on rates and services over the first three years: 100% rebate in year one, 75% in year two and 50% in the third. After this full rates will be payable.

The matter has been dragging on for years following agreements with the previous administration at Knysna Municipality, who at the time approved no augmentation fees and 'free' services for a period of three years. But the Chief Financial Officer (CFO), Mbulelo Memani, made it clear that the agreement with the previous administration is invalid.

"The municipal manager at the time [Grant Easton] had no authority to make such agreements. Only Council can decide, and in any case, it is this municipality's policy to request augmentation fees and charge rates for services," he said.

Housing or shopping
But, according to John Rimbault, a director of Variflex Trading, the development is no longer financially viable and they are looking at selling the land. "The charges will eat away at the already meagre profit we stand to make. Any development has substantial financial risks. However, in the case of Concordia, these risks are exaggerated. As it is a low income area, we can only achieve limited rental levels in the shopping centre. We have written to the manager of Integrated Human Settlements, Mawethu Penxa, and offered the land to the municipality. Apparently they are in dire need of land for housing. The centre negotiations have taken years, but it seems that bureaucracy is just too costly for economic growth."

Ian Raubenheimer, CEO of Variflex, is more positive. "We are still keen to go ahead with the development and would love to meet with the officials and all the role players to discuss our options. We have not received formal written confirmation following the council decision. I am sure we can come to some form of mutually beneficial agreement. This development will do wonders for the community of Concordia and surrounds."

Concordia Ward Councillor Velile Waxa said the benefits of a shopping centre for the community of Concordia and the greater Knysna area will be immense, as it will generate hundreds of jobs in the coming years and boost the local economy. It would also save struggling residents the taxi fare of going to shop in the Knysna CBD.

Shoprite had already committed to be the key tenant at the centre that is due to open in November.

Policy
At the council meeting all parties unanimously agreed that no fees can be waived as this was not the policy of the municipality. "Augmentation fees are usually paid upfront, but this municipality wants to be lenient to encourage and support development. It is for this reason that we have suggested that augmentation fees be paid in instalments over a period of 24 months," Mayor Eleanore Bouw-Spies told Council.

ANC Councillor Aubrey Tswenga agreed, saying, "We need this development for our community. The developers must pay augmentation fees and hit the ground running".

It was stated in the council agenda that "it should be noted that the Knysna Municipality: Standard Municipal Land Use Planning By-Law provides in Chapter VIII, that an applicant must pay development charges (augmentation and connection fees) to the municipality in respect of the provision and installation of external engineering services."

Councillors were also advised that there would be financial implications for the municipality should the augmentation fees be completely waived.

The civil augmentation fees amount to around R980 000. This will increase annually as Council considers new tariffs, and will also increase with the inclusion of electricity.

The developers were to meet again yesterday, Wednesday 4 April, to come to a final decision about the development.

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