Municipal lease confusion

NDLAMBE Municipality makes some of its revenue by leasing out properties it owns, a practice true of municipalities around the country.

Rentals are mostly nominal, below market value, especially for sports clubs and organisations like the Moths and Round Table.

Income is rather derived from water and electricity use, and in cases where rates are payable by the lessee as if they are the owner.

There is also the long-term benefit for the municipality, in that it gets its properties back with improvements on termination of the lease.

Most municipal leases are between five and ten years, and we occasionally see renewal requests arise in ward committee and council agendas.

For years now though, the municipality seems to have lost track of some of its properties and lease agreements and there has been an ongoing probe into these municipal assets, even from when Thandeka Mali was corporate services director.

One case in question is the Kowie Swim and Play Centre, more colloquially known as the indoor pool centre.

It is one of the few 99-year leases that we know of, a holdover of the erstwhile Port Alfred Transitional Local Council. Understandably local authorities rarely hand out such leases as any other plans for the property have to be put on hold for more than a lifetime, and it is a very long time for a municipality to wait to receive back its asset, with any improvements.

There obviously had to be a very good motivation to enter into such a lease agreement. It may have had something to do with an obligation to replace the recreational facilities, including a tidal pool, which existed before the establishment of the Royal Alfred Marina.

The municipality leased the land to Anthony and Ilona Jackson for the specific purpose of building an indoor swimming pool and recreation/fitness centre. It could not be used for anything else, or sublet without the municipality’s permission.

There has been some controversy over the years about the way the property has been used since then, with the current lessee Hennie Nel challenging the municipality over a clause he says was dropped from the original lease – the right to use the property commercially as well.

When we were provided a copy of the original lease agreement, it was the first time it was brought to our attention that the lessee is also obligated to pay rates and taxes, something which Nel disputes. For its part, the municipality thinks it has been getting this money, but it cannot say how much!

– Jon Houzet

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