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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 storm water 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 NPC and Municipal resources.

This SRA application focuses on:

  • restoration of the river, spit and beach – priority
  • 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.

The scope of the proposed projects and services are consistent with the Municipality’s Integrated Development Plan. This includes the upgrade of roads and streets in S Francis Bay, the rehabilitation of the River, Spit and Beach, reversing environmental degradation, and the improvement of safety and security for residents and visitors. These key interventions will also contribute to an increase in tourism, and local property development given the large proportion of undeveloped residential properties in St Francis Bay.

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.

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 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
    The Pre-Operational Phase covers the period of preparation for the SRA up to 30/06/2018.
    a) Prepare SRA proposal
     Decide on Demarcated area
     Source property owner database for demarcated area from KM
     Estimate costs and revenues based on current information
     Prepare the SRA Business Plan, Motivation Report and Budget
    b) Hold the first mandatory public meeting
    c) Hold additional public meetings if beneficial to property owners
    d) Place all SRA documentation on the SFPO Association and NPC websites
    e) Conduct Voting by Property Owners
    f) Set up SFPO NPC Completed 06/2016
     Set up Board and Directors Completed 04/2016
     Hire Project Manager Completed 07/2016
    g) Amend NPC’s MOI to include levy payers as members Voting deadline: 04/2018
    h) Establish Cost of Infrastructure Restoration
     Phase 1 Spit and Beach Completed 12/2017
     Phase 2 River, Spit and Beach Complete by 02/2018
     Roads Completed 09/2017
     Security Cameras Complete by 02/2018
    i) Engage with KM re SRA application
     Amendments to KM’s SRA By-Law and Policy
     Received legal opinions Completed 19/10/2017
     Drafted by attorneys Completed 15/12/2017
     Adopted by Council Completed 15/11/2017
     Approved by Council Completed 19/12/2017
     Gazetted Completed 29/12/2017
     Included SRA on 2018/19 IDP Completed 11/2017
     Received from KM
     Demarcation map Completed 12/2017
     Property Rates database from KM Completed 12/2017
     Calculate proposed levy as % of Rates Completed 12/2017
     Receive Draft MOA from KM Completed 12/2017
     SRA Application process
     Prepared SRA application Completed 20/12/2017
     SRA Public Meetings
     Preliminary Meeting #1 Completed 20/12/2017
     Preliminary Meeting #2 Completed 03/01/2018
     Official Meeting Complete by 11/01/2018
     SRA application documentation available on SFPO website and in SFPO office Completed 03/01/2018
     Start Voting Complete by 03/01/2018
     Close Voting Complete by 25/02/2018
     Voting Extension window 30 days (if required)
     Lodge SRA Application Complete by 25/02/2018
     Issue Notice for objections Complete by 25/02/2018
     Close objections period (35 days) Complete by 01/04/2018
     Approve SRA Application by KM Council Complete by 31/05/2018
     KM sets up SRA levy on Rates system Complete by 30/06/2018

13.4.2.      Operational Phase

1) Phase 2A River/Spit/Beach Engineering Solution selection
2) Phase 2B River/Spit/Beach Implementation
3) Roads Upgrades
4) Security Camera Implementation
PROJECT COMPLETED BY
 RIVER, SPIT & BEACH
o Environmental Authorisation 19/12/31
o Groynes 26/06/30
o Beach nourishment 28/06/30
o Armoured Protection of Spit Dune 23/06/30
 ROADS
o Road Upgrades
 Upgrade entrance to St Francis Bay including intersection at
Lyme Road North and South 19/06/30
 Upgrade intersection between Lyme Road North / St Francis Drive /
Peter Road 19/06/30
 Repairs to sunken section of road between Lyme Road North /
St Francis Drive intersection and municipal yard 20/06/30
 Create off street parking to eastern side of St Francis Drive at
Village Shopping Centre 20/06/30
 Create off street parking: Brewery to bottle store 21/06/30
 Upgrade intersection between Lyme Road South / St Francis Drive 21/06/30
 Upgrade intersection at St Francis Drive / Assisi Road [Filling station] 21/06/30
 Upgrade George Road carpark 22/06/30
 Re seal Anne Ave carpark 23/06/30
 Walkway / cycle track: St Francis Drive: Sea Glades to Guinevere 24/06/30
 Walkway / cycle track: St Francis Drive: Assisi Road to Harbour Road 24/06/30
o Arterial Section 27/07/01
 CCTV N/A
The implementation schedule for the above projects is shown in the chart below. The overall responsibility for the implementation of these projects lies with the SFPO NPC, who will in turn contract out specific project responsibilities to chosen contractors. Responsibilities assigned to date include:
 Environmental Impact Assessment – Eco Route Consulting
 Coastal Engineering – Advisian
 Arterial Roads – Engineering Advice Services PE

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

Not yet available

      • Final Design Report

Not yet available

14.4.     CCTV Solutions

      • Request for Proposal