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CoCT drought charge letter-15 Jan 2018

Dear Sirs,


The Constantia Ratepayers’ and Residents’ Association (the CRRA) is a community based organization and ratepayers body registered as such with the City of Cape Town and thus represents residents and property owners/ratepayers in Constantia who have a compelling interest in the critical water situation in the Western Cape. The Executive Committee of the CRRA mandated a task team to compile and submit a response to the City on their proposed drought charge.

This task team submit the following:
It is matter of course that National Government must fund water resources and that the City must engage with Government in this regard. The responsibility for funding cannot be transferred to the residents of Cape Town.

It is submitted that the City of Cape Town have failed to address the water crisis which has been looming for many years (which the City were well aware of) and that politics and not rainfall are at the heart of the problem. Please refer Annexures 1 & 2 for background to this statement.

The current lack of funds is a direct result of mismanagement by the City. Denial, poor budgeting and increasingly poor debt management are three of the contributing factors which lead to this crisis.
– The City knew 10 years ago that additional water resource(s) would be required by 2017 1
– The projected budget to provide additional water resources was not used to provide additional water resources. 2
– The City has been aware of the cost of water desalination reclamation but did not budget for this until Financial Year 2018/2019 provisionally (and then only 0.6% of the cost which if constant would take 162 years to fund!)
– Unrecovered costs for water supply is increasing due to poor management by the city – from 12% in 2015, 19% in 2016 and 30% in 2017 4

The City is failing its legal responsibility to provide water to the residents of Cape Town. To consider asking residents to bail the City out of the predicament that it has manoeuvred itself into is another example of poor management by the City.

Some questions this task team asks are:
 Why did the City start reacting so late when many experts had for a long time warned of the need to implement additional water supply/storage projects
 We fully understand that the supply/storage of water is a National Government responsibility and that the Department have been less than co-operative (for example not giving the go-ahead for the extension of Voelvlei dam). However, why has the City not vigorously challenged them in the courts to force them to fulfil their Constitutional obligations
 The Mayco portfolio for Water Services also includes Informal Settlements and Waste services and Energy – surely this critical situation warrants a Mayco member dedicated to the water crisis alone. It is contended that a portfolio this important and in this crisis situation requires a Mayco member with an engineering/business/financial background. With due respect, is Councillor Limberg the right person for the portfolio with a background in Politics and Public Policy?
We realize that criticizing the City for past failures will not put water in the taps come ‘day zero’ and we will provide some ideas that we have in due course. We acknowledge that the situation that the City finds itself in requires a substantial increase in funding.

Regarding the City’ proposed drought charge, we do not agree with the approach in principle.
The use of underground water by individuals: Whereas the City has been caught sleeping, some residents have been pro-active and started to use underground water at no expense to the City. In fact, they are freeing their quota of potable water and are giving it back to the City to be used by others. The City does not only save this quota, they get paid for the underground water usage through the cost of electricity to pump the water (from underground to tank and again from tank to house). The City also gets paid for the use of some treatment plants that consume electricity.
Any money paid to the City for additional water resources must be seen as an interest bearing loan for a fixed period and repayable over a fixed period.
By all accounts, domestic water supply will remain restricted for some time to come. The quota of domestic water distributed to any household is dependent on the water availability and size of household and not on the property valuation. Ideally all households should use the same amount of water, also into the future. If the drought tax or levy is imposed more severely on certain water consumers, then water tariffs can also be applied more severely on certain water consumers. The only logic in this could be if this increased tariff is based on increased water consumption. Should, for some reason, individual households be forced to pay for the mismanagement by the City of water resources, then this must be based on water consumption and not on property values.
Surely the equitable and rational approach is to increase the consumption charge per litre on a sliding scale. This has the following benefits:
 It will discourage excessive usage by penalizing high users
 It will overcome the (questionable) problem of reduced revenue as a result of reduced demand due to more compliance
 It will not double penalise owners who have gone off the water grid
There is an optimization model which can be used to determine what the balance is between price and demand to ensure that total revenue for operating costs and new capital projects is achieved. Please refer Annexure 3 for our analysis of ‘reduced revenue’.

A crisis situation requires a Crisis Project Team to be established headed up by a Project Manager with a civil engineering/hydrology and business/financial background. In fact a ‘war room’ needs to be set up and the following actions taken:
 Consult with other drought prone countries/cities around the world (Israel, Australia, China USA/California etc.) to find out how they deal with drought situations
 In light of the above, review the water supply/storage projects that have already been given the green light
o Are these the best solutions
o Have they been correctly prioritized
o Are they being properly project managed – the latest CoCT water dashboard indicates that all projects are behind schedule (and probably over budget)
 Investigate alternative means of funding
o Public/private partnerships
o DBSA, New Development Bank (formerly Brics Bank)
o National Government have a legal obligation to provide water for all citizens – take them to the Constitutional Court to provide funding
o Recover the R1billion debt and don’t allow any more write- offs
 Install consumption control devices on all properties prioritizing the highest users – only 54% of households are using less than the stipulated 87litres/day. Appoint private contractors to do the installations to expedite matters
 Seriously improve the debt collection process – either by training/motivating existing staff or outsourcing the function.

The City has known for at least 10 years that additional storage would be necessary by 2017. Additional water storage was identified as a critical challenge that constituted risk to the City at the time, however nothing was done to provide additional water storage, worse still, nothing was done to plan for the implementation thereof. The closest that the City came to any action was to estimate the cost of desalination reclamation and then to propose minimal budget allowances for this in budget years beyond the period when additional capacity would be required. Please refer Annexure 4 for background to these claims.
Residents cannot be held responsible for the failure of the City to act on an acknowledged fact that there would be a shortfall in water supply by 2017. Nor can residents be held liable for a municipal tax as a result of inefficiency between Local and National Government for funds that should be forthcoming from National Government. It is immoral to charge residents who pay their water bills to make up a shortfall of revenue because of increasingly inefficient debt collection by the City.