Frequently asked questions

What is a CID/SRA?

A City Improvement District (CID) refers to a geographically defined area in which property owners contribute additional rates to fund top-up improved services for that specific area.

What is the difference between an SRA and CID?

Essentially, they are the same thing. The City declares a Special Rating Area in terms of Section 22 of the Municipal Property Rates Act which then operates as a City Improvement District to improve and upgrade the area.

What types of supplementary municipal services are provided in a CID?

Typically, these would be services dealing with urban management issues, such as additional public safety measures, cleansing services, maintenance of infrastructure, environmental initiatives, and social interventions.

What are the benefits for property owners in a CID area?

By pooling their resources in a CID, individual property owners can enjoy the collective benefits of a sustainable, well-managed area, a shared sense of communal pride, safety, and social responsibility, and access to joint initiatives such as waste recycling and energy-efficiency programs. Ultimately, these all contribute to economic growth and an inflow of capital investments.

Does the formation of a CID mean that the City can reduce the level and quality of its services?

No. The City must sustain existing service levels and provide essential services as per the Constitution. Each CID will engage with the various service departments regarding the level of services the City offers in their area. This enables the CID to deliver supplementary services besides what the City delivers.

Who manages the CID?

The CID is a non-profit company (NPC) managed by a board elected by property owners in the area and operated by a management team appointed by the board. Property owners must sign up for NPC membership to participate and vote in the CID`s affairs. The City is not involved in day-to-day operations. Still, it exercises oversight regarding administrative and fiscal governance and the services aligned with the City’s Integrated Development Plan to ensure legislative compliance.

Who monitors the finances?

A CID is governed by the Companies Act (71 of 2008), manages its finances, and appoints its auditors. The audited financial statements form part of the City’s consolidated accounts, which the Auditor-General reviews. Monthly financial reports are submitted to the City to monitor and to ensure that expenditure is incurred according to the budget. All CIDs must submit the Chairman’s report and audited financial statements to the relevant Sub-council within two months of their AGM. The CID Board is accountable to the community for how the budget is spent.

How is a CID funded?

A CID is funded from the additional rates paid by property owners within its boundary. It does not receive any grants or subsidies from the City but has the power to raise additional income.

Is the payment of additional rates mandatory for all properties within the CID?

Yes. Once the City has approved the CID, the participation of all property owners liable to pay the CID additional rates within its boundaries is mandatory. There are exceptions in terms of relief.

Who can be exempted from paying the additional CID rates?

The following categories of owners/properties will be 100% exempted per the SRA Policy: Indigent, Senior Citizens and Disabled Persons who meet the criteria for rates relief.
Properties registered in the name of and used primarily as a place of worship, Council-owned properties used predominantly for official municipal business, and other properties that qualify for rates relief/exemption as per the City’s Rates Policy.

Can my additional CID rates be spent anywhere in the City?

No, it is ring-fenced to be paid exclusively to the CID and is not shared with other communities, departments, or organisations.

Can any resident have a say in the CID?

Anyone in the community can participate, but only registered NPC members may vote on CID matters.

Can any property owner become a member?

Yes, eligible owners of property within the FCID area must apply to the CID Board to become members of the NPC. They cannot be denied membership, provided they are not exempt from paying the additional rates.

How much do CID directors earn?

Nothing. The SWN CID’s Memorandum of Incorporation (MOI) strictly prohibits its directors and board members from being paid for their services. In exceptional circumstances a director or board member may request reimbursement for personal expenses incurred while executing Somerset West North CID business. Apart from this, their services are offered on a purely voluntary basis.

So, who gets paid?

The CID’s employees and service providers are paid. The contracted security company is the most significant of its service providers.

Why must I register for CID membership if I am a resident?

A CID is merely a geographic area designated by the City to levy the additional rate, which funds improvements and upgrades in that area. Once the CID is determined by the Council, the City’s CID By-law & Policy require:

1. the establishment of a non-profit company (“NPC”) to carry out the proposed improvements and upgrades and
2. the registered owners of property who are liable to pay the additional rate be entitled to membership of the NPC (NPCs have members; not shareholders).

The NPC requirement essentially functions as an additional check and balance to ensure proper governance in spending what is essentially taxpayers’ money. Therefore, the procedural requirement that relevant property owners apply for membership is a requirement of the Companies Act.

When we receive your application, we verify your entitlement to membership against the property register obtained from the CoCT. No membership or application fees are payable, and members do not incur any liability for the obligations of the FCID NPC. Membership allows you to vote on how the management body (the FCID NPC) should implement and manage the FCID. Other interested and affected parties who are not eligible for membership (e.g. property owners who are exempt from paying the additional rate or tenants) are more than welcome to attend and participate in FCID NPC members’ meetings but are not entitled to vote on any resolutions.

Why should I pay more on top of my rates?

• A CID provides a clear, well-tested way to boost municipal services by channelling 100% of the additional money raised back into the neighbourhood.
• As much as we all want our rand to stretch further, the reality is that we already supplement existing government-provided infrastructure and services, such as private security, medical services, and schooling.
• Unless we work together as a community and introduce the CID, we won’t be able to implement the changes that we need effectively.

A City Improvement District (CID) refers to a geographically defined area in which property owners contribute additional rates to fund top-up improved services for that specific area.

How many CIDs are there in Cape Town?

There are currently 51 CIDs in the City of Cape Town. Many other communities have expressed interest in establishing a CID and are at various stages in the establishment process.

How does one establish a CID?

A CID is always initiated by a community, and not by the City. It usually starts with ‘champions’ within a community who feel the necessity to improve the environment within a defined area. Other like-minded property owners are then approached to form a representative “Steering Committee” to first meet with the CID Branch before officially starting the process. This ensures a better understanding of what a CID is and what is expected from the Steering Committee once the establishment process is started. The next step will be to define the boundary of the proposed CID and consult with the community on what the needs are for the area, and with the local Sub-Council in respect of current City services and level & frequency thereof, before compiling a business plan of how the needs will be addressed.

The draft business plan must then be presented to the community at a public meeting. After the meeting, the community will have 30 days to submit comments to the Steering Committee for consideration. A second public meeting must then be arranged to present the final business plan to the community. A further 30 days must be allowed following the second public meeting for additional comments on the final business plan. Should this lead to a material amendment to the final business plan a third public meeting will be required. Following the consultation process on the business plan the Steering Committee will need to obtain a majority percentage of property owners (over 50% for commercial areas, and at least 60% for areas classified as residential) to agree to the business plan and give written consent or object to the establishment. Each registered property has one available “vote”.

Once the required support has been obtained, the Steering Committee has to submit an application to the City by the 31st of October. After the City has confirmed that the application is valid, the community is notified of the lodging of the application and where the application can be inspected. The application, which includes all the comments and objections, is then submitted to Council for consideration.

What happens after the CID is approved?

After Council has approved the application, a Non-Profit Company (NPC) with members is set up by the Steering Committee who becomes the founding directors of the NPC. Within 6 months of setting up the NPC the first Members` Meeting is held to elect a board of directors. The NPC has to register for VAT, open a bank account and register as a supplier with the City and on the National Treasury Central Supplier Database (CSD). A Finance Agreement must then be concluded between the City and the NPC, which sets out the terms on which payments to the CID is made. This must all be in place before the City makes any payment to the CID. In the first year of operation, the NPC must submit an application to SARS for tax exemption.

What happens when the 5-year term expires?

In the year prior to the term expiry, the CID is required to make application to Council for a further term by submitting a new community supported Business Plan.

How does the CID set its budget?

The CID sets its own budget according to input from its members as per the approved five-year Business Plan. Each year, the CID board has to submit a detailed budget to the City by 31 January. The proposed budget may not deviate materially from the approved business plan and must have been approved by the members at the last AGM. If there is a material deviation, an application in terms of Section 26 of the CID By-Law is required. The City evaluates the proposed budget for affordability and sustainability.

How are the CID additional rates collected?

The City collects the additional rates in the same manner as other property rates imposed by Council. The additional rate appears as a separate item (improvement district) on the monthly municipal account of each property owner liable to pay the CID additional rates within the CID.