Realizing the Benefits of an Innovative Approach to Land Governance: The Cape Town, South Africa Story

"The Cape Town, South Africa Story” captures the successful story of Cape Town’s innovative approach to improved land governance and management through continuous investments. During the past decade, Cape Town has embraced a new set of valuation statutes, updated its technology and processes, and continued to make improvements on an annual basis. From its general valuations in 2000, 2006, and 2009 to recent systems upgrades, Cape Town has realized quantifiable returns on its investments and added value to improve efficiency and provide better outcomes for its citizens. The price of administering a very complex tax has continued to go down in cost while at the same time dramatic improvements have been achieved in overall levels of equity and increased customer satisfaction. Cape Town’s approach and the tools implemented are scalable and applicable to rapidly emerging economies around the world as they seek to establish and administer efficient and equitable property taxation systems that return taxes to communities through public investments like schools, hospitals, roads, water and electrical utilities. The establishment, assessment as well as collection of property tax is complex and vital to the financial health of local government. Professional Valuers are responsible for managing the valuation of property and the administration of property tax using their technical expertise. The primary task of these Valuers is to identify and value all property in their jurisdiction. The timely, accurate and efficient administration of property tax is critical to the financial health and cash flow of the city. As in many municipalities, Cape Town’s property tax is one of the largest revenue sources, accounting for 21% of the R23+ billion budget in FY2010-2011. To ensure accurate assessment and collection of property tax, the city conducted its first general valuation for 2000. The total cost of the full market value system was in excess of R100m, implemented over several years, and met with many challenges and detractors. The city transformed criticisms into opportunities to address public concerns. In addition to proactively seeking feedback from ratepayers, the city sought the assistance of an external, professional organization to perform an operational and procedural audit of the valuation practices. It used the audit results to establish a continuous improvement of its processes. For Cape Town’s second general valuation, which was implemented in 2007, the city was able to build upon the 2000 general valuation results and lessons learned to make improvements in its business processes and saw increases in ratepayer satisfaction. In addition, the city started to add spatial data source components to drive business practices. Cape Town made numerous valuation improvements in a very aggressive and active real estate market. Between 2000 and 2006 the city’s real estate market and supplementary valuations saw double and triple-digit increases in overall property values in line with national trends, putting more pressure on the valuation and taxation offices. For the 2009 general valuation, the city expanded its use of spatial data and also began to utilize oblique aerial imagery to review data from the office for many functions that were previously handled through field visits. The addition of a systems upgrade in 2009 and 2010 allowed the city to utilize technology to further drive down costs and significantly increase the quality of results. Cape Town also started to focus on departmental work processes. The city underwent a complete business process review. The evaluation of as-is and to-be business processes provided a clear direction for the efforts. New business processes and practices were outlined and then implemented using workflow tools which allowed for monitoring of the new efficiencies. The results are now tied to the city’s geographical information system, which is used to drive spatial analytics of the Cape Town property market. Cape Town has continued to update and implement technology to drive its ever-increasing return on investment.What Cape Town has accomplished is nothing less than inspiring considering its starting point a little over a decade ago. The process of implementing a complex tax and then striving for continuous process improvement shows that we are driven to doing our job in the best way possible. By continuing to focus not just on the requirements of the Municipal Property Rates Act, 2004 but also seeking more efficient ways of doing business will ensure that Cape Town becomes a trendsetter for the region in the next decade. The authors will show how Cape Town’s capacity building and knowledge transfer through investments in technology and business processes can lead to greater efficiencies and higher customer satisfaction in rapidly emerging economies around the world.