Untitled Document
 

St Francis Bay SRA Motivation and Business Plan

1.     Introduction

St Francis Bay has experienced an extended period of neglect from the Kouga Municipality, resulting in the loss of its beach and spit, silting up of its river system and estuary, disintegrating road surface on most of our roads, unmaintained and overgrown stormwater drains which function inadequately, and a sewerage system that saw the progressive replacement of soakaways and conservancy tanks with waterborne sewerage abandoned from 2004 onwards. The conservancy tanks/soakaways pose a significant health and environmental threat to parts of the town as their contents leak into the canals, river, sea and underground water. The emptying of these tanks are expensive and the service at times problematic with vehicles breaking down. The Sewerage/Waste Water treatment plant is running at full capacity outside the holiday season and overflows during the holiday season. We understand that the Kouga Municipality has the funds to upgrade this plant, and the work has been initiated to upgrade the plant. The conversion of the conservancy tank system to water borne sewerage is registered on the IDP system. The storm water drainage has largely been cleared over the past year through the cooperation of SFPO and Municipal resources. This SRA application focuses on:

    • restoration of the river, spit and beach – priority 1
    • upgrading our roads – priority 2
    • implementing CCTV camera surveillance – priority 3

The Demarcated area includes all properties in the Canals and Village areas, bound by the Kromme River in the East, the Beach in the South, Harbour Road in the West and the R330 provincial Road in the North. This means that the following areas are excluded from this SRA application: agricultural erven in the St Francis Bay area, The Links, the Kromme River private estates, Santareme, St Francis-on-Sea, the Port, Otters Landing, the Industrial Sites, Sea Vista township, the Air Park and Cape St Francis. These areas are welcome to apply to join the Canals/Village SRA in the future provided the area can deliver the required majority vote from the property owners in that area. Alternatively, an area can apply for its own SRA with the Municipality and focus its levy revenue on its own priorities.

The River has silted up posing serious risks to boats and their occupants. The Spit has lost some 90% of its dune width, thus posing a severe risk to the canal system and the 550 properties lining the canals. The beach has eroded away to such an extent that it is only the revetments that prevent the beach front properties from being washed away by the sea (as happened to the Anne Avenue ablutions a few years ago). We have been repeatedly told by the Municipality that it does not have the funds to restore this infrastructure. The situation has reached the point where we, as property owners, need to intervene to save our infrastructure. We have embarked on a multi-stream fund raising campaign focussing on:

    • appealing for donations from existing St Francis Property Owners
    • establishing an SRA to raise a levy (25% of rates) from all St Francis Property Owners in the demarcated area
    • partnering with other associations, the St Francis Bay Canal Home Owners Association (which will focus on financing the restoration of the Spit) and the Kromme Joint River Committee (which will focus on financing the restoration of the river) to combine our financial resources and focus them on restoring the river, spit and beach. Both these organisations have levy and boat licence revenue paid to their NPCs to maintain the Canals and River
    • the Municipality contributing to the EMF (Environmental) levy it collects from the St Francis Bay area to the SRA projects in cash or kind

The purpose of this application is to raise funding from an SRA levy that is collected from the Rate Payers by the Municipality and paid over to the St Francis Property Owners Not-For Profit Company (SFPO NPC). This company was established in 2016 to collect and manage donations, and to manage Phase 1 of the Spit and Beach repair projects. It currently has an MOA to this effect with the Municipality. The MOI of this company will change its membership from those that donated money to the SFPO NPC, to all property owners who pay the SRA levy.

Our research has shown us that the Kouga rates are one of the lowest in the country. In St Francis in the 2015/16 year our rates were 0.6128% (of property value for residential property and 0.6254% for Business/Commercial property). Port Elizabeth’s rates for the same year were 0.9737% of property value for residential, 1.3759% for Business/Commercial and 2.4343% for Industrial properties. Approximately 10% of St Francis Bay properties are occupied all year around, leaving 90% unoccupied for at least 10 months of the year. These properties do not consume water and electricity which typically make up some 60% of a monthly Municipal bill. The bottom line is that St Francis Bay is a typical seaside holiday destination that is underfunded by approximately 50% of what you could expect from a normal town with most of its residents living permanently on their properties.

The SRA levy will allow the St Francis Bay property owners to increase their contribution to the cost of running the town’s infrastructure, but at the same time ensuring that this additional payment is not diverted to other Municipal spend and continue to neglect the St Francis Bay infrastructure. We recognise that the Kouga region is characterised by a lot of poverty. However, a healthy, well serviced and vibrant St Francis Bay will bring a great deal of tourism revenue, property development, additional rates and employment to the region. If it is going to fulfil its role as a key economic driver of growth and employment in the Kouga region then it has to have a presentable infrastructure. The Rivers should be navigable and safe, the Spit must protect the 7.6 kilometres of Canals (a unique feature), the Beach needs to be restored to achieve blue flag status and the revetments converted to sandy dunes, and the roads need to be restored/maintained. The increasing crime in St Francis needs to be addressed using the technology that is available to us today, and that will require the installation of security cameras throughout the area with 24/7 monitoring of all cameras in a Control Centre.

The SRA will in no way set up the SFPO NPC as a surrogate Municipality. This is not its intention. It will work closely with the Municipality in assisting with financing and managing projects in cooperation with the Municipality. We know that the leadership of the Municipality has a daunting task to deliver services to all of the citizens of the Kouga region. We understand the political and economic pressure they face. We do not think that we can achieve real progress if we adopt a threatening role, but instead a cooperative role. It is this spirit of cooperation that underpins this SRA application.

We also believe that the various SRA projects and services will create significant employment opportunities for our Sea Vista residents and assist with the upliftment of the poor in this area. The restoration of our beach and river will also benefit our Sea Vista residents as users of these facilities.

2.     Vision

The vision for St Francis Bay is to establish a world class lifestyle destination. A prerequisite for the achievement of this vision is to restore our environmental assets (rivers and beaches), upgrade our roads and improve our security.

3.     Mission

Our mission is to restore our infrastructure to a standard required to support a world class life style destination.

4.     Goal

Our goal is to achieve our mission over a period of 10-15 years.

5.     Demarcated Area for the SRA

The diagram below shows the boundaries of the St Francis Bay area included in the demarcated area that will be subject to the SRA levy.

St Francis Bay SRA 2018 Demarcated area

6.     Proposed Management Structure

The St Francis Property Owners Association represents the rate payers in the St Francis Bay area. As such it has motivated to the property owners the set up of a Special Rating Area to raise the additional funding required by both the SFPO and the Municipality to restore our infrastructure. The SRA levy will be paid to the SFPO NPC. The SFPO NPC is a Not For Profit Company that has already been set up and is operational. The SFPO NPC consists of a Board of Directors which includes 5 Directors: Wayne Furphy (Chairman), Christopher Gray, Paul Pezarro, Gert Vorster (Group Financial Director of PAYTM), and Peter Mountford (CEO Super Group). The Company’s employees consist of Gregory Miller (full-time employee responsible for managing all projects), and Paul Pezarro (part-time contractor responsible for financial management). The office support is provided by the SFPO Association. The Company has a Technical Committee consisting of property owners who have volunteered their time to oversee the procurement and projects undertaken by the company. This committee consists of: Christopher Gray (Chairman), Craig Northwood (recently retired CEO of UWP Consulting Engineers), and Deon Pienaar (Consulting Engineer, GJP International). The SFPO NPC is currently funded by donations from our property owners. We have collected R4.5m to-date.

7.     Services

The SFPO NPC will provide both project management services and ongoing service delivery. The project management services will drive the infrastructure restoration projects ie the road restoration, both arterial and streets, and security camera monitoring. The ongoing maintenance of the roads, storm water drains and sewerage system would remain with the Kouga Municipality.

8.     Financial Impact

8.1.      Levy Rate Calculation

The rate of the levy is proposed to be 25% of the existing property rates. The justification for this is:

      • St Francis is significantly underfunded for the quality of infrastructure the property owners demand
      • The infrastructure is so badly neglected that it will take a significant investment to restore it. This is not a maintenance programme, it is a re-capitalisation of the infrastructure
      • The restoration needs to happen in a 10-15 year timeframe

8.2.      Exemption Criteria

There are no exemptions included in this application, other than any exemptions applied for directly to the Municipality by a property owner.

9.     List of all Rateable Properties

The list of rate payers has been compiled from the Kouga Municipality database & valuation role. Please see the complete Rateable Properties list attached.

10.     Proof of Consent from Rate Payers

10.1.     Proof of Consent

An electronic file and a hardcopy file containing all the proof of consent documents will be submitted once we have collected the consent forms agreeing to the levy from the majority of property owners.

10.2.      Public Consultation

An important part of the SRA (Special Rating Area) application process is the requirement for consultation with the local community who are affected by the SRA. The St Francis Bay community have been consulted on an ongoing basis since September 2015, together with a first round of voting which convinced the Municipality that the SRA application carries significant support from St Francis Bay rate payers. However, given the recent update in Municipal legislation (SRA By-Law and Policy), this process needs to start afresh. The SFPO Association is leading this SRA application process. We are targeting the start-up of the SRA as at 01 July, 2018

  • Public meetings

    • Public Meeting: The SRA Policy requires us to hold one public meeting, and this meeting is scheduled for 11 January 2018 at The Links.
    • Additional Public Meetings were held on 20 December 2017 and 03 January 2018, at The Links, specifically catering for those property owners who do not live in St Francis Bay, but are here for the Christmas holidays, and otherwise would not have the opportunity to attend a local public meeting. The owners of some 80% or more of properties in the demarcated area do not permanently reside in their St Francis Bay properties, so it is important to give them the opportunity to attend one of the SRA proposal presentations.
  • Electronic Media

    • Websites:
      • the SFPO Association’s website serving all members of the association: stfrancispropertyowners.co.za
      • the SFPO NPC’s website serving all property owners, residents and business owners in St Francis Bay to keep current with our infrastructure upgrade projects which are ongoing: npc.stfrancispropertyowners.co.za
    • Facebook: We launched a Facebook campaign to encourage debate and questions and answers.
    • WhatsApp: Individual property owners set up a couple of WhatsApp groups to track the progress of the voting.
    • Emails: Emails have been used extensively to communicate with property owners. These include:
      • Monthly SFPO Association Newsletter
      • One on one emails answering questions from individuals by Committee members
      • A number of property owners and residents have assisted with reaching out to property owners and encouraging them to submit their consent forms. Some have written their own emails, compiled voting statistics, etc.
      • Communication through the St Francis Bay Canal Home Owners Association’s and the Kromme Joint River Committee’s email database
  • Telephone

The SFPO Association recruited several volunteers to call property owners.

  • Print

The monthly newsletters have also been printed in three local media: Info Ads (a free monthly publication), St Francis Chronicle (a free monthly newspaper), and St Francis Today (a daily internet based newspaper).

  • Monthly Municipal Rates Account

We have advertised on the Kouga Municipality monthly account sent to all rate payers, encouraging all property owners to submit their consent forms, starting March 2017.

  • Face to Face Meetings

All Committee members have held many face to face meetings with property owners, individually and in small groups, explaining the SRA proposal.

  • Post

We have not gone to the expense of using the postal system to reach the property owners, other than via the monthly municipal account for those accounts that are still posted.

  • Posters

We have used posters extensively to encourage property owners to submit their voting forms. This is obviously limited to residents and visitors to the town. These posters have been placed in various business premises around the town.

  • St Francis Vision 2030

We initiated and completed a project in which we used the combined brain power of some 40 residents and business owners in St Francis to formulate a Vision for we collectively wanted St Francis to develop into in the next 10-15 years. It was clear from this Vision that if we wanted to realise the potential we had unearthed that we will need to restore our infrastructure.

11. Proof of Notice of Public Meetings

12.     Minutes of Public Meetings

The Minutes of each of the three public meetings are attached below:

  • Preliminary Meeting 20th December 2017
Minutes of SRA Meeting
  • Preliminary Meeting 3rd January 2018 – yet to be completed
  • Official Meeting 11th January 2018 – yet to be completed

13.     Business Plan

This Business Plan supports the St Francis Bay application to the Kouga Municipality for a Special Rating Area.  The Business Plan covers a period of 10 years, with a year end of June 30 of each year. The Business Plan includes:

  • List and description of Services
  • Budget
  • Description of how the proposed services will upgrade the SRA
  • Implementation Plan
  • Stipulation of the aggregate SRA Rates proposed to be levied by the Municipality

13.1.      SRA Services

 The scope of services covered by the SRA levy includes:

  • The restoration and maintenance of the River, Spit and Beach
  • The upgrade of the arterial roads
    • Phase 1: Upgrade of specific intersections, parking facilities and pathways in our CBD. A pathway catering for pedestrians and cyclists will extend from Sunset Drive end of St Francis Drive to Harbour Road
    • Phase 2: Funds permitting the upgrade of our arterial roads including Lyme Road North and South, and St Francis Drive from Lyme Road North to Assisi Drive intersection
  • The implementation of a CCTV infrastructure and a 24/7 monitoring service

13.2.      Budget

The budget for the SRA has been compiled for a 10-year term. We have chosen 10 years as this is the period over which we expect to collect sufficient revenue to complete our priority projects. The scope of this SRA consists of both projects (capital expenditure) and services (operating expenditure). The capital expenditure includes the restoration of the River, Spit and Beach, and the upgrade of the Arterial Roads. The operating expenditure includes the ongoing maintenance of the River, Spit and Beach, and the implementation and operation of the CCTV infrastructure.

The Arterial Road cost estimates are based on the Preliminary Design report provided by EASPE, and is available on the SFPO website. The Road Upgrade costs were researched by the SFPO NPC technical team.

The Spit and Beach restoration and maintenance cost estimates are being provided to us by Advisian. Advisian were awarded a contract to design the engineering solution for the restoration of the Spit and Beach. We have received preliminary estimates from Advisian for the purpose of this Business Plan. The SFPO NPC technical team has conducted its own research own on estimating other costs, outside the scope of the Advisian project, for the dredging of the river, sourcing sand and compiling the EIA. Advisian will finalise their recommendations and costs by the end of February 2018 on completion of their project, which we will use to update these budgets.

The CCTV costs are estimates based on the RFP responses we received from three suppliers. We still need to select the preferred bidder, and complete the RFP process. This will be done during January and February 2018, and will provide a more accurate cost forecast for this budget.

All work done to-date on estimating these costs has been funded by the donations received by the SFPO NPC. Without these donations we would not have been in a position to present this budget. This budget by its very nature will become more accurate once decisions are made with respect to the River, Spit and Beach (eg what engineering solution is recommended for the Spit and Beach, where we source the sand from, how we transport the sand to the Spit and Beach, and what environmental instructions we will need to comply with), and the finalisation of the CCTV RFP.

The Revenue is being derived from a number of sources other than the SRA levy alone. The levy will fund about half of what the SRA projects and services require. Each of these sources of revenue will need to be committed to by the various organisations we are partnering with, so we can in turn commit to the capital project spend as when we have accumulated sufficient funds to do so. We expect to phase a lot of the work to allow us to fund this work from our revenue stream.

The budget is as follows:

13.2.1.      Revenue & Cost Summary

13.2.1.1.      St Francis Bay SRA – Cost Breakdown Summary

SRA Cost Breakdown

13.2.1.2      St Francis Bay SRA –  Revenue Breakdown Summary

SRA Revenue Breakdown

13.2.3.      St Francis Bay SRA –  10 Year Forecast

SRA 10 year forecast

Comment:

We will be looking for ways of front-end loading our spend in the first two to three years to complete the capital nourishment of the beach, and build the groyne and pier. This will avoid substantial re-mobilisation costs (Advisian estimates this to be 21% of our total river, spit and beach restoration costs). These savings, together with the surplus shown in years 9 and 10 (R6.8m – reflected in Cash Flow), will help fund the possible raising of capital to speed up the Spit and Beach restoration. We would anticipate using part of the SRA levy as security.

    Notes:
      1.  Year 0 = 2017/2018 Municipal Year (ie. the current year), Year 1 = 2018/2019 and so forth.
      2. R6.7m is the SRA Levy that equates to 25% of current rates in 2017/2018 value. Municipalities re-value properties every 5-years, the next valuation period is effective 1st July 2018. Thus a 5% escalation in property values has been assumed at Year 1, and 15% in Year 6. This does not include any inflation escalation that the municipality does each year, as they are yet to confirm these escalation figures for Year 1.
      3. New Builds create an increase in rates revenue for the municipality and in turn the SRA levy. We have assumed that new builds will represent 1% of total rates collected per annum.
        (ie. currently there are 1622 properties in the demarcated area, the 1% estimate assumes 16 new houses will be built per annum)
      4.  Kromme Joint River Committee (KJRC) collects the boat licence fees for the River and has committed R750k per annum. The remainder of the contribution aim to be collected directly from the River estates. These commitments are currently being finalised
      5. This is recognition of current maintenance dredging done by the Riparian’s. This provides the NPC with 30,000 to 60,000 cubic meters of sand for the spit
      6. This is recognition of current maintenance dredging done by the Port. This provides the NPC with 60,000 to 80,000 cubic meters of sand for the beach
      7. We estimate to have this amount remaining from donations to date at the start of Year 1.
      8. This will be committed in cash or in kind depending on the requirements of the projects
      9. This is a bad debt provision typical of many SRA agreements
      10. River, Spit & Beach

River Spit Beach expenditure11. Roads

Road project breakdown
12. CCTV

CCTV Cost Estimates13. Overheads

13.2.4.      St Francis Bay SRA –  Year 1 Budget

SRA Year 1 Budget

13.3.      Description of how proposed services will upgrade the SRA

St Francis Bay has experienced a long-term decline in its infrastructure due to insufficient resources from the Municipality being applied to this infrastructure. As a result property values in St Francis Bay have stagnated over the past 10 years. The key elements of the infrastructure that require upgrading include:

  • De-silting the Kromme River (SRA scope)
  • Restoring the Beach and Spit (SRA scope)
  • Upgrading the arterial roads (SRA scope)
  • Upgrading streets (property owners/street committees and KM)
  • Maintaining storm water drains (KM)
  • Converting conservancy tanks and soakaway sewerage to water born sewerage (KM)
  • Security CCTV camera infrastructure and 24/7 monitoring (SRA scope)

The beaches in St Francis Bay are losing on average approximately 1 metre of sand each year. We are now at the point where the dune on the Spit has been reduced from 30 metres width in 2006 to 3 metres in width today. The beach itself along its entire 2.7 kilometre length has all but disappeared. The low tides crash into the revetments, where there are revetments. Where there are no revetments, like the dune on the Spit, the dunes have receded some 20-30 metres onto private and POS property eg the beach area abutting the Golf Course and George Road. The Kromme River has become silted up and difficult and dangerous to navigate. The effect on St Francis Bay is the loss of tourists and property investors. The restoration of the river, spit and beach is the SRA’s highest priority. It is expected to have a positive impact on both property investment and tourism in St Francis Bay. It is also expected to lift the value of our properties significantly as demand these properties increase.

The state of the roads in St Francis Bay is poor. The cost of re-building these roads is prohibitive. Instead the SRA will focus on upgrading the arterial roads, and provide pedestrian and parking facilities mostly in the CBD area. This is our second highest priority.

The security of St Francis Bay has become an increasing problem over the past year as a result of the escalating crime in the area. The SFPO NPC and Association have conducted a CCTV planning, RFI and RFP process. The cost of these cameras and the required 24/7 monitoring service will be borne by the SRA. This is, however, the third highest priority for the SRA and will only be implemented by the NPC if sufficient funds are collected through the SRA levy.

13.4.                        Implementation Plan

The Implementation Plan consists of two phases: pre-operational and operational phases.

13.4.1.      Pre-Operational Phase

13.4.2.      Operational Phase

  • Phase 2A River/Spit/Beach Engineering Solution selection
  • Phase 2B River/Spit/Beach Implementation
  • Roads Upgrades
  • Security Camera Implementation

13.5.     Stipulation of Aggregate SRA Rates proposed to be levied by Municipality

The proposed levy is 25% of a property’s rates. This will not be enough to complete the proposed infrastructure work. However, several organisations have agreed to combine financial resources to pay for the proposed restoration work. The top priority will be the restoration of the river, spit and beach. If there is sufficient funding then attention will be given to the roads and the CCTV camera infrastructure. This levy will raise the following revenue based on the list of properties and their values as at 20/12/2017.

  • Canals: 805 erven; total annual rates R16,696,789; 25% levy over 10 years R41,741,972
  • Village: 817 erven; total annual rates R10,389,100; 25% levy over 10 years R25,972,750

Total:   1,622 erven; total annual rates R27,085,889; 25% levy over 10 years R67,714,722

14.      Other Relevant Documents

14.1.      Kouga Municipality Draft Finance Agreement for SRA

14.2.      EASPE Preliminary Road Design Report

14.3.      Advisian Spit & Beach Engineering Solution Report

      • Preliminary Design Report

Not yet available

      • Final Design Report

Not yet available

14.4.     CCTV Solutions

      • Request for Proposal