Nairobi City Council seizes two prime CBD properties
A city council of Nairobi signpost outside Princely House on Moi avenue after the City council seized the property over unpaid rates accumulating to over Sh2 million.
What you need to know:
It is understood that the Treasury has called for a reconciliation of accounts between City Hall and other government agencies with a view to offsetting the exposures.
Official documents indicate that City Hall owes other government departments Sh6.8 billion against a credit of Sh6.3 billion, meaning the council would be required to pay the Treasury Sh500 million.
The City Council of Nairobi on Wednesday made good its threat to attach property whose owners have defaulted on land rate repayments.
City Hall’s inspectorate department descended on Princely House on Moi Avenue and Ufanisi House on Haile Selassie Avenue without court orders despite a pledge that the council would follow due process.
“We are exploiting a provision of the Rating Act. We have not yet moved to court,” assistant town Clerk John Ntoiti told The Business Daily after being asked whether City Hall was not exposing itself to suits.
“They can be taken to task to prove if indeed they have provided the services as required to warrant the payment,” said Evans Monari, a partner at Daly and Figgis law firm.
Mr Monari said the move would result in multiple legal suits if challenged in court. The council is already experiencing financial difficulties.
Mr Toiti said the raid dubbed “Operation clamp down” would targeted 20 buildings in the Nairobi Central Business District (CBD) this week.
Following the attachment, tenants of Princely and Ufanisi Houses — which owe Sh3.6 million in land rates — are required to henceforth pay rent to the City Council until it recovers the outstanding amount.
The directive could spark conflict between tenants - mostly stall owners at Princely House and professional firms at Ufanisi house - and landlords with whom they have signed occupation contracts.
“In the matter of section 18 of Rating act and in the matter of attachment of this property…Notice is hereby given to tenants to pay rent to City Council of Nairobi henceforth until rate is fully paid,” signposts erected at the entrance of the attached buildings read.
The law allows local authorities to collect rents from tenants to offset rate payment arrears of property owners until the default is recovered in full. Other government agencies usually attach the bank accounts of defaulters to enforce payments.
Even as the council moved to take over the buildings, questions of legality of the move abound.
The Rating Act appears to run against Section 40 of the Constitution which bars Parliament from enacting laws that would arbitrarily deprive property owners any interest or right over their holdings.
“We have given notices as required under the Rating Act but if the court says we stop the takeover, we will obey,” said Mr Ntoiti.
On Wednesday, the council published a list of 113 rate defaulters who owe Sh382.2 million, saying due process would be followed before auctioning the properties. The action follows the lapse of a month-long waiver period during which the council collected Sh1.3 billion, less than half of its Sh3.5 billion target. The operation is expected to continue today under the command of Town Clerk Tom Odongo with three more buildings in the CBD targeted before the operation moves to peri-urban areas. Mr Odongo was away on official duties in Kisumu on Wednesday. The next building on the list is said to be owned by an influential businessman who owes Sh4.8 million.
The council said the owners of the two buildings already “clamped” had already promised to pay up.
Mr Ntoiti puts the annual rate for the Princely House which owes the council Sh2.5 million at Sh50,000. The amount includes the accrued penalties including an interest rate of three per cent per month provided under section 16 (3) of the Rating Act.
Some of the government corporations earlier reported to be among the major defaulters were not on the list published by the City council.
Among the list of defaulters that was made available before the start of the waiver period was Kenya Broadcasting Corporation, which owes Sh247 million, Kenya Cultural Centre (Sh275 million), Kenya Railways (Sh41 million) and the Kenya National Assembly with Sh26 million.
Offsetting exposure It is understood that the Treasury has called for a reconciliation of accounts between City Hall and other government agencies with a view to offsetting the exposures.
Official documents indicate that City Hall owes other government departments Sh6.8 billion against a credit of Sh6.3 billion, meaning the council would be required to pay the Treasury Sh500 million.
