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 • Employee Related : Cost for staff receiving an IRP5 from ATHCID • Core Business: Security, Cleansing, Environment and Social • Depreciation: All assets depreciate • Repairs and Maintenance – of assets or in terms of contract • Service Accounts ex CCT: Payment of Municipal Services • Interest Paid: On external loans • General Expenses: Also Included in the category is the budget for a Management and Administration contract • Capital Expenditure: Assets and Capital Projects • Future Provision: Saving for a future event • 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

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 15th 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 1/12thof the ATHCID budget, less the 3% bad debt provision, to the ATHCID by the 27th= 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 2nd 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. Let us work togetherfor a better city Eddie Scott eddie.scott@capetown.gov.za 021 400 1872 Joepie Joubert joepie.joubert@capetown.gov.za 021 400 5138 Runan Rossouw runan.rossouw@capetown.gov.za 021 400 5148