Assessing the Fiscal Impacts of Development

The way that South African cities are being planned and built is changing. The Spatial Planning and Land Use Management Act was passed in 2014, providing municipalities with far greater powers over spatial planning decisions. In addition, the review of local government infrastructure grants undertaken by National Treasury, DCoG, the Financial and Fiscal Commission (FFC), SALGA, and the Department of Performance Monitoring and Evaluation (DPME) is recommending greater fiscal decentralisation and autonomy for metros. Despite the increased planning powers and control over resources, metros are still faced with severe housing backlogs and pressure to deliver housing solutions at scale. These dynamics provide a strong motivation for rational and evidence-based spatial planning decisions. The South African
Cities Network and the National Treasury’s City Support Programme commissioned this study to investigate the development of a tool to assist metros with this task.

This report presents the findings of the study into tools to assess the fiscal impacts of developments. The Terms of Reference for the study required:
1. The review of existing models and tools available to the municipalities to calculate and assess fiscal impact of land and residential developments;
2. An assessment of the whether these tools are adequate to determine costs to government, households and the environment with a key focus on costs to government, and whether they inform planning and development decisions, and therefore the need for the development of a new tool;
3. Engagement with a metro to unpack the development process and identify potential gaps and opportunities that a new tool could address;
4. Proposing recommendations for changes or enhancements to a metro tool; and
5. Developing a demonstration model in partnership with the selected metros that could be used by other metros.