Report on the proceedings of the Well-governed Cities Seminar on the Urban Development Zone tax incentive at Durban International Convention Centre.

Introduction

THE displacement of capital from inner cities to other urban centres or the suburbs remains a feature in all of South Africa’s cities, and undermines local government urbanisation strategies. The Urban Development Zone (UDZ) tax incentive1 has become an increasingly important tool in a Municipality’s portfolio of incentives to attract private investment in inner cities.

The SACN and eThekwini municipality hosted a seminar on the UDZ tax incentive on 25 January 2008 at the Durban International Convention Centre. Dr Michael Sutcliffe, City Manager of eThekwini Municipality, welcomed participants and explained that the introduction of the UDZ tax incentive was a welcome, if unexpected, innovation by National Government. It has taken a few years for the municipalities to understand the potential impact of the scheme and optimise take-up by private investors. Despite disappointing numbers of applications in the first few years, most cities are now seeing accelerating numbers of applications. There are also indications that the larger property owners, financiers and investors are more aware of the scheme and are beginning to plan large-scale property developments and refurbishments that will take advantage of the depreciation allowance.

Three objectives were outlined for the seminar:

• To share lessons and experience about inner city development.
• To develop a collective voice on the impact and future of the UDZ scheme for municipalities.
• To develop networks of support between municipalities to help them tackle the massive urban development challenges that they face in the run up to 2010. In particular, municipalities need to develop a better collective understanding of sustainable growth (through adding value and reducing the costs of the social wage) and the role of the UDZ areas in supporting that growth.

The following report documents are available in PDF format:

• Report documents

  • Report [PDF, 122kb]
  • Silimela Development Services presentation [PDF, 264kb]
  • eThekwini presentation [PDF, 1.6Mb]
  • City of Johannesburg’s comments: Lebo Ramoreboli [PDF, 117kb]
  • Polokwane presentation [PDF, 1.7Mb]
  • Buffalo City presentation [PDF, 445kb]
  • Old Mutual presentation [PDF, 494kb]