City Hall attaches buildings over rates

City Hall on Monday made good its threat to attach property whose owners have defaulted on land rate repayments by taking over five buildings in the city centre.

Nairobi’s inspectorate department descended on City Printing Works, Leo Investment Limited, P&L Investment Limited and Princely House Limited (who own premises along Moi Avenue) and Brighton Investment Limited that sits on Tom Mboya Street.

Nairobi is targeting Sh200 million from 150 properties within the central business district over the next month as rate defaults in the city hit Sh12 billion.

The building owners protested that the clampdown happened without court orders as City Hall maintained that the Rating Act empowers it to take properties in defaults.

This marks the second takeover of buildings after the defunct City Council of Nairobi attached a number of properties in 2012.

“The campaign will be taken outside the CBD next year starting January 2015,” said Gregory Mwakanongo, county executive for Finance.

READ: Nairobi City Council seizes two prime CBD properties

“We will conduct this exercise until we collect the last penny owed to us. Last year we gave property owners up to 90per cent waivers on their accrued interest where we collected Sh780 million.”

Mr Mwakanongo added that City Hall is targeting those who refused to take advantage of the waiver. More buildings will be attached on Thursday.

The tenants of the buildings will now have to pay rents to Nairobi County until it recovers its debt according to the Ratings Act.

The directive could spark conflict between tenants – mostly stall owners – and landlords with whom they have signed occupation contracts.
The county will also impose a three per cent interest on the defaulted amounts.

This comes even as a report on revenue and expenditure for the first quarter of 2014 cast doubt on whether the county will meet its income estimates.

City Hall collected Sh158 million from rates between July and September against a targeted Sh3.7 billion for the whole financial year.

Mr Mwakanongo said the county expected to raise most of its revenue from rates in December when businesses renew permits.

Nairobi is faced with cash crunch that has seen it seek Sh4 billion from banks to ease cash flow problems that have seen it delay workers’ pay.

It wants to borrow a Sh1.5 billion bank overdraft to help it make timely salary payments and Sh2.5 billion for capital projects in the year to June.

Nairobi has mounting debts including Sh2.9 billion KCB loan, Kenya Revenue Authority (Sh1.4 billion), Laptrust (Sh2.9 billion), suppliers of goods and services (Sh2.3 billion) and payroll arrears of Sh2.4 billion.