1. Special Rating Areas Financial Roles and Responsibilities January 2014

2. SRA Budget 5 Year budget reviewed annually – 2014/budget due on 31 January 2014 Must be aligned with the Business Plan and Implementation Pan Must be sustainable, viable and affordable for property owners INCOME SRA budget is mainly funded from additional property rates SRA can generate additional income for specific projects or programs. - Donations - Sponsorships - Interest received - Refund from Bad Debt Reserve - Other Initiatives Additional Income does not appear on the budget, except when it is guaranteed before the budget is presented at the AGM for approval.

3. SRA Budget EXPENDITURE 10 Main Categories 1. Employee Related : Cost for staff receiving an IRP5 from ATHCID 2. Core Business: Security, Cleansing, Environment and Social 3. Depreciation: All assets depreciate 4. Repairs and Maintenance – of assets or in terms of contract 5. Service Accounts ex CCT: Payment of Municipal Services 6. Interest Paid: On external loans 7. General Expenses: Also Included in the category is the budget for a Management and Administration contract 8. Capital Expenditure: Assets and Capital Projects 9. Future Provision: Saving for a future event 10. 3% Bad Debt Provision

4. SRA Budget UTILISATION OF ACCUMULATED SURPLUS Built up from Savings and Additional Income For Specific Projects / Programs / Assets Aligned with the principles in the Business Plan Presented at the AGM for Approval Not Sustainable in the long run No impact on the Additional Rate (Cent-in-Rand) ATHCID committed the accumulated surplus to subsidise the budget over the 5 year term

5. Budget Adjustment During a Fin Year Why budget adjustment: Circumstances / needs change or unforeseen events occur Budget quantum is set for the year Cannot recalculate the additional rate during a financial year Review expenditure patterns Can move money between budget categories ATHCID Board must approve all budget adjustments City would require minutes of the meeting stipulating the exact adjustments to avoid possible audit queries City will adjust the Monthly Income and Expenditure report accordingly to ensure accurate reporting

6. 5 YEAR BUDGET AS PER BUSINESS PLAN 2013/142014/152015/162016/172017/18 EXPENDITURE Employee Related 247 800 265 146 283 706 303 565 324 815 Core Business 288 000 311 040 335 923 362 797 391 821 Depreciation 5 000 Repairs and Maintenance - - - - - Services Accounts ex CCT 3 600 3 816 4 045 4 288 4 545 Interest Paid - - - - - General Expenditure 184 601 197 236 209 987 223 987 240 739 Capital Expenditure - 12 500 - - - Future Provision - - - - - Bad Debt Provision 3% 19 299 21 394 23 618 26 061 28 668 TOTAL EXPENDITURE 748 300 816 132 862 279 925 698 995 588 INCOME Revenue - SRA Levy -643 300 -713 132 -787 279 -868 698 -955 588 Contribution from Surplus Funds -105 000 -103 000 -75 000 -57 000 -40 000 TOTAL INCOME -748 300 -816 132 -862 279 -925 698 -995 588 (SURPLUS) / SHORTFALL - - - - -

7. Accumulated Surplus

8. Budget Scenarios for 2014/15 Scenario 1 - Proposal at AGM to fund 80% of budget from accumulated surplus – not possible as reserves are not enough Scenario 2 – Increase the accumulated reserve funding of the budget over the remaining 4 years without changing the approved budget quantum  Impact on 2014/15: -3.57%  Impact on 2015/16: 13.61%  Impact on 2016/17: 14.48%  Impact on 2017/18: 15.11%

9. Budget Scenarios for 2014/15 Scenario 3 – Proposed budget remain at the same level as in 2013/14 and the funding of the budget from accumulated reserves are increased over the remaining 4 years  Impact on 2014/15: -8.87%  Impact on 2015/16: 11.62%  Impact on 2016/17: 12.91%  Impact on 2017/18: 13.53%  Scenario 4 – Budget for 2014/15 as was approved with the Business Plan is accepted

10. Finance Agreement ANNUAL FINANCIAL STATEMENTS Signed Audited AFS must be handed to the City by 31 August annually ATHCID has not made this deadline in 2011 / 2012 / 2013 At the AGM it was decided that the Board will appoint new Auditors Progress on this matter required MONTHLY INCOME AND EXPENDITURE REPORT Monthly by the 15 th the previous months income and expenditure report must be submitted to the City for over site ATHCID is complying – All reports up to date City provides the ATHCID monthly with a financial update and arrears schedule showing SRA arrears

11. Finance Agreement MONTHLY PAYMENT FROM THE CITY City pay monthly 1/12 th of the ATHCID budget, less the 3% bad debt provision, to the ATHCID by the 27 th = R52 000 + R7 280 (VAT) = R59 280 Payment can be withheld in the following instances: Failure or late submitting of monthly financial reports, AFS, annual tax clearance certificate or annual budget July 2012 to October 2012 payments were withheld – expired TCC TAX CLEARANCE CERTIFICATE Has expired on the 2 nd of November 2013 Failure to provide the City with a new TCC will result in the monthly payments being withheld What is the status with regard to this matter? URGENTLY

12. Spending of the 2013/14 Budget Budget for the 2013/14 financial year (excluding 3% Retention) = R 729 001 Total expenditure as at 31 Dec 2013 = R245 048 or 33.6% Ubuntu - Payment needs to be split ito Management and Administration and Security Competitive process must be followed when service providers are appointed Expenditure done outside of what it was intended for or in excess of what was allocated, is seen as unauthorised expenditure Expenditure incurred not in accordance with supply chain or policy requirements is seen as irregular Fruitless and wasteful expenditure – reported to Council Accounting Officer held liable - must ensure money is recovered

13. Eddie Scott eddie.scott@capetown.gov.za eddie.scott@capetown.gov.za 021 400 1872 Joepie Joubert joepie.joubert@capetown.gov.za joepie.joubert@capetown.gov.za 021 400 5138 Runan Rossouw runan.rossouw@capetown.gov.za runan.rossouw@capetown.gov.za 021 400 5148 Let us work together for a better city