Collection of land rates despite ban irregular

The insistence by the City Council of Nairobi to continue collecting rates on public land whose leases have expired, despite a Cabinet ban on lease renewals, amounts to courting litigation.

To the extent that the Cabinet has banned issuance of new leases or any transactions involving public assets, City Hall has no legal basis to levy the charges in as much as its actions are commercially sensible.

Land rates fund up to a quarter of the council’s budget and it is near impossible to find an alternative revenue stream in the short term that would plug this hole.

That said, there is something patently irregular in City Hall collecting money for expired leases without giving certainty to rate payers that their businesses are assured of continued operation on the premises.

There will be very little to stop a rate payer from seeking redress if the lease is not renewed when the Kenya National Land Commission is operationalised after the next general election.

More disputes could arise in such cases when payers seek refunds for payments that were not supported by existing government policy.

That leaves City Hall in a Catch-22 situation where it has to strike a balance between its revenue needs and protecting itself from costly litigation in terms of time, legal fees and foregone revenue.

The first option of creating an escrow account where the lease fees are paid but not utilised until the renewals are confirmed may not be available for the cash-strapped authority.

The other is to issue temporary lease contracts, which would fly in the face of the Cabinet decision that was intended to protect public assets from politically-motivated transactions that have over the years come to be associated with the run-up to general elections.

This conundrum would not have arisen had the Cabinet, through the relevant ministry, consulted all stakeholders on how best to protect public assets without issuing a blanket order that is insensitive to the budget needs of the implementing agencies.

Luckily it is not too late for the government to call a stakeholders’ roundtable where these sticking issues would be addressed, leading to continued rate payments and lease renewals without exposing the collecting agencies to litigation or financial distress.

If explored, short term lease extensions for a period enough to allow the National Land Commission settle and take over the mandate would remove the hiccups that are bound to beset public property transactions across the country.