Ethekwini Municipality: briefing

Meeting report

HOUSING PORTFOLIO COMMITTEE
9 April 2003
ETHEKWINI MUNICIPALITY: BRIEFING

Chairperson: Ms Z Kota (ANC)

Documents handed out:
Hostel Redevelopment Programme briefing (Appendix 1)
Motivation Municipality Accreditation (Appendix 2)
Housing Administration Operational Plan (Appendix 3)

SUMMARY
Representatives from the Ethekwini Municipality briefed the Portfolio Committee on their housing programmes. Members focussed on the hostel redevelopment programme, where the Municipality is faced with challenges of overcrowding, influx of rural people, and lack of administration. The capacity within the municipality to deliver on its functions and operational costs was identified as a major challenge. The Municipality has applied for Level 2 accreditation status in terms of the Housing Act. Such accreditation would enable the Municipality to have access to the appropriate professional in order to evaluate housing projects. It will also allow them enter into contracts with developers, manage the housing funds and evaluate the feasibility of projects and financial capacities of developers. Currently the Municipality is obliged to submit each individual project to the Provincial Housing Department for approval, for which they often have to wait for long periods.

MINUTES
Ethekwini Municipality presentation
The Ethekwini municipality was represented by Mr Couglan Pather, Head of Housing, who delivered the presentation, and Councillor S'bu Gumede, who addressed Members' questions.

The Chairperson explained that the Committee had expected the Executive Mayor, Mr Obed Mlaba, to address the Committee, and asked why the present team was in his place. Mr Gumede explained that the Unicity of Durban was attempting to have a working linkage with the National Government, and having received the invitation to present to Parliament, they accepted.

Hostel Redevelopment Programme
Mr Pather said that substantial work had already been done to the hostels at Umlazi T, Dwa-Dabeka, Klaarwater, and Thokoza, while emergency interventions were underway at the hostels in SJ Smith, and at Glebelands. Plans were being prepared for emergency interventions at Kwa-Mashu, while funding had been approved for the Jacobs' hostel. Business plans were in progress for upgrading to be undertaken at Dalton and Kwa-Makuta.

Challenges which the Municipality is faced with in reaching their objectives, are overcrowding, poor maintenance, low rental collections, the influx of rural people, and a lack of proper administration. Mr Pather reported that the hostels are running at a loss of R35 million per year. The subsidisation of this shortfall by the Province is not sustainable.

Although the Municipality has the capacity to administer additional hostels, the staff resources may prove inadequate, and the Municipality proposes to meet this need through the redeployment of staff from the Province to the Council, obtaining additional staff where necessary.

Capacity of Municipality to efficiently Deliver Housing
The Municipality's main objective is to provide affordable, efficient service, and to promote home ownership. The major obstacle to this is the extremely high operational costs, with deficits running into R28 000 per year. Should the necessary funding come from Government, the Municipality will be able to undertake the upgrading or resale of units.

Council has undertaken to provide substantial subsidies for new housing. In order to drive its five year housing programme, the Municipality has motivated for Level 2 accreditation, in terms of the Housing Act (Act 107 of 1997). Such accreditation would enable the Municipality to: have access to the appropriate professional in order to evaluate housing projects; enter into contracts with developers; manage the housing funds and evaluate the feasibility of projects and financial capacities of developers. In its current position, the Municipality is obliged to submit each individual project to the Provincial Housing Department for approval, for which they often have to wait for long periods.

Value for money
The Ethekwini Municipality manages a budget in excess of R10 billion per year, and has sufficient technical capacity to ensure value for money from public funds. There are stringent audit controls in place. Expert technical teams for architectural and building services, drainage and engineering, water and electricity controls, consultants, etc. help in keeping the Municipality functioning at optimum capacity, specifically in relation to its budgetary allocations. Mr Pather added that the Municipality is contributing in excess of R160 million per year from its own capital budget.

Discussion
The Chairperson requested clarity on the physical area of the presentation's focus.

Councillor Gumede explained that, the boundaries having been extended, the Municipality's area of jurisdiction now included some rural areas. There were projects underway in those rural areas. Everything within the confines of the boundaries must be serviced by the Municipality.

Ms J Semple (DA) inquired about Mr Pather's point that additional staff might be transferred from the Provincial to Council level, while at the same time, it was stated that the Province was under-capacitated.

Mr Gumede responded that when the Municipality had taken over the R29 entities, they would not make that staff redundant, but rather train and incorporate them into the Municipality. He added that 50 staff members had, in this manner, already been incorporated into the Unicity.

Ms Semple asked how the Municipality would ensure, especially in the light of the present huge shortfalls, that people would pay rental fees after the completion of upgrades to hostels. She also inquired how the Municipality would ensure that people did not invade the upgraded hostels.

Mr S Montsintsi (ANC) asked if the hostels would be upgraded to single or family units. He also inquired what percentage of administration funding was being used for either upgrading, or housing provision.

Mr Gumede said that these were some of the challenges the Municipality was faced with, and the situation was aggravated by the political conditions in the area. There was a perception that many of the hostels were only for the benefit of people belonging to a particular political party. As a result, the members of such houses are reluctant for those hostels to be turned into family units, making the Municipality's mandate to turn these hostels into family units very difficult. Every South African citizen has a right to shelter, and it is the Government's responsibility to ensure that people are housed. At the same time, Government does not want to revert to past measures of controlling influx. Mr Gumede informed the Committee that often, in election periods, people are bussed into hostel areas for purposes of voting.

Mr Gumede added that in the S. J. Smith area, people were very responsible in paying rental fees. He would like to see that attitude replicated in other hostels. However, he was aware that it also depended on the quality of service that was being offered in those hostels.

Mr Pather said that some hostels were upgraded into family units, while others were turned into individual units, which could be shared by between four and six people, with perhaps two people to a room. In terms of costs, hostels operate on an annual loss of R35 million per year. These losses mainly stem from non-payment of excessive use of water and electricity. He explained that most hostels experience a lack of maintenance. Burst water mains cause water to run continuously all day. People use electricity for business purposes such as welding. Stoves and other home appliances are switched on continuously. Experience has shown that by upgrading the electricity supply, up to 40% is saved on the electricity bill. The same savings can be made for water, when the systems are repaired and properly maintained. In terms of housing administration, the Municipality is running at a loss of R28 000 per year. He added that Council was considering a policy for indigent people in rental housing.

The Chairperson commented that the major problem which Municipality had to contend with, was magnitude. Conditions were extremely bad. Referring back to the Councillor's statement relating to party-dominated hostels, she made particular mention of the Thokoza hostel, adding that hostels should be for the benefit of all people.

Mr B Dhlamini (IFP) felt it was unacceptable for Councillor Gumede to assert that a particular party had bussed in people for the purpose of voting in a particular constituency. He felt the need to remove the perception that hostels were for the benefit of particular people only. The term "family units" should be replaced by 'self-contained units", because people infer from the first term that Government's intention is to destroy the homestead, and bring the family into the hostel.

Ms M Buthelezi-Oliphant reminded the Committee that a field trip had shown six to eight people living in one living unit. When upgrades have been completed, that implies that five people must vacate the unit. Will the Municipality have the capacity to house those five people? There had been a proposal that new blocks or RDP houses had to be built for the benefit of those people.

Councillor Gumede responded that, although his aim was not to discuss politics, he did have a great deal of practical experience in the delivery of hostel accommodations. Different motives were driving people into the city centre. While some were coming for financial reasons, others were coming for political reasons. Although there were many different political parties, they all had a common objective.

He informed the Committee that dealing with hostel accommodation was an extremely difficult experience. Although there were excellent ideas for solutions, funding constraints were enormous.

Mr W Skhosana (ANC) mentioned that the Municipality is challenged to provide suitable accommodation for both slum areas, and for hostel areas. He asked which option placed a greater demand on Municipal funds.

At this point, the Chairperson stated that she did not want the presentation to focus solely on hostels. She urged Committee Members to discuss other matters, as well. She mentioned that the Committee had been informed of a particular area in which housing had been constructed. Afterwards it was found that the land had not yet been transferred to the beneficiaries. This caused delays in the delivery of subsidies to those people. She asked how far deliberations around this matter had progressed. She also inquired to what extent the Municipality was assisting the people's housing process project (PHP) within the Unicity.

Councillor Gumede responded that the Ethekwini Municipality fully supports the PHP. In that regard, they had linked up with the Department of Labour.

Replying to Mr Skhosana's question, he responded that a combination of factors must be employed. Policies and standards are supplied by National Government, and the Municipality "goes the extra mile" to assist people on the ground, in their attempts to deliver shelter to people. In terms of budget, they do everything to ensure that everyone gets satisfaction from the budget.

Ms Semple commented it was apparent that many local government authorities were selling off housing stock, to concentrate more on hostels. Had that become Government policy?

The Chairperson asked how far the Ethekwini Municipality had come in developing an indigent policy.

Mr Mabena felt that HIV/AIDS orphans and child-headed households should be included in the indigent policy.

Mr Pather responded to Ms Semple that the rental housing stock that was being sold off, was stock that people had been renting for many years. Local municipalities were now being sold off at a discount. The Ethekwini Municipality has set up two housing companies that deal specifically with the selling of rental stock.

Councillor Gumede stated that the Municipality's approach towards the indigent and those who struggle to pay rental, is one of understanding. Where people cannot afford to pay for their housing, they make use of the rightsizing policy, so that people are not simply evicted onto the streets, but are offered cheaper housing alternatives, perhaps in subsidy houses.

The indigent policy was being implemented in the Ethekwini Municipality. In this regard, they had introduced the lifeline tariff, where people could pay R20 per month for rates and water. That tariff was being further extended, so that all those people who qualify for the lifeline tariff will not be charged at a fixed rate. The only problem experienced by the Municipality, was that those people who could afford the normal rates, were "climbing onto the bandwagon".

The Chairperson asked in how far the Municipality had managed to deliver on its functions to the rural areas within its ambit. She asked if the Municipality had enjoyed co-operation in the delivery of its functions, and she wanted an idea of the kind of challenges the Municipality was faced with.

Councillor Gumede responded that the challenges were insurmountable. An acceptable level of co-operation might be experienced once the political problems in the province were cleared up. As an example of co-operation problems, he informed the Committee of a particular hostel at which the Municipality had considered giving the Amakhosi an allowance, because of all the work they were doing, in terms of meetings attended, and so forth. Some people were not happy with the idea and threatened to ensure that this did not happen. The Councillor mentioned a host of projects that the Municipality had initiated, and were still working on. They had engaged the Huletts group to negotiate the sale of land for housing development in the north.

The Chairperson said that there were certain issues which she had hoped to raise with the Executive Mayor, Mr Mlaba, which would not be within the ambit of the present team to discuss.

Mr Dhlamini said that people in rural areas would often make a choice to use their housing subsidies to ensure better infrastructure or to improve living conditions, rather than for the construction of RDP housing.

Mr Gumede agreed that many people in rural areas did not prefer to have the houses built by the Municipality. They were being given some leeway to make their own choices.

Ms Semple asked whether the Municipality was required to do environmental impact assessments on land earmarked for housing.

Councillor Gumede responded that environmental issues were challenging and exciting. There were always many considerations surrounding the impact of housing and the construction of housing on the environment. He gave various examples of where such considerations had prevented the Municipality from implementing housing projects, in order to safeguard the preservation of rare species, and of certain trees in the environment. There were, however, those within the environmental process who maintain their own private agenda's, and thereby hampered the delivery of housing accommodation.

The Chairperson stated that the Committee had noted with dismay that councillors within the various parties were also involved in the housing delivery process as developers. This was highly unethical, as nobody should be an overseer and a developer in the same process.

The Chairperson thanked the presenters but noted that the Committee still hoped to address Mr Mlaba.

The meeting was adjourned.

Appendix 1:
HOSTEL REDEVELOPMENT PROGRAMMES - PROGRESS REPORT

STATUS:

The hostel upgrade projects within the municipality is in accordance with current

re-development programmes for hostels and is aimed at improving and upgrading the status of all hostels in the eThekwini municipality. Thus far many of the hostels are characterized by overcrowding, poor maintenance, rental collections, influx of rural people and lack of administration. In addition unhygienic living conditions and high rate of vandalism is being experienced. The environment is further compounded by high informal and formal commercial activity. The object of the redevelopment will aim to establish acceptable privacy levels, create humane hygienic and sustainable environments and maximize on employment opportunities.

The following hostels are part of the re-development programmes, some of which are being taken on an agency basis on behalf of the Department of Housing:

Name of Hostel Admin Authority

1) Kwa-Mashu Hostel Department of Housing

2) Umlazi T Department of Housing

3) Kwa-Makhuta Department of Housing

4) Kwa-Dabeka Department of Housing

5) S.J. Smith eThekwini Municipality

6) Dalton eThekwini Municipality

7) Jacobs eThekwini Municipality

8) Glebe lands eThekwini Municipality

9) Thokoza eThekwini Municipality

10) Klaarwater eThekwini Municipality

 

PROGRESS AND PROGRAMME:

See annexure 1

A) Substantial work has been done to the following hostels:

Umlazi T

Kwa-Dabeka

Klaarwater

Thokoza

B) Emergency Interventions are being to the following hostels:

S.J. Smith:Glebelands:

Construction work and rehabilitation of toilet facilities and abulution blocks are being carried out. Planning for the entire hostel is underway.

Kwa-Mashu:

Detail planning is underway for emergency interventions which is for construction of 7 no. 3 storey buildings made up of family type units. Concept planning is underway for redevelopment methodology's.

A detail business plan will have to be submitted to deal with Kwa-Mashu as a whole.

C) Funding approved: Jacobs: Implementation underway.D) Business plans for the following hostels are in progress:

 

Dalton Hostel Kwa-Makuta Business plans will be forwarded to Department of housing during the month April 2003

ANNEXURE 1

Funding Status	Available Funding	Spent	Progress
			Planning	Implemented
1. Kwa-Mashu	R 11,4 million	R 630,000	60%	0%
2. Umlazi T		R 34,6 million	100%	95%
3. Kwa-Makhuta 4.	R 2,5 million	-	5%	0%
4. Kwa-Dabeka	R 10 million R 20 million R 16,38 million	R 10 million R 20 million TBC	100% 100% 80%	100% 100% 10%
5. Klaarwater			Completed. Re-assessment to be done
6. S. J. Smith	R 15 million	R 4,1 million	40%	10% Phase 1
7. Dalton	-----	-----	20%	0%
8. Jacobs	R 5,7 million	-----	40%	0%
9. Glebelands	R 25 million	R 1,2 million	40%	20%
10. Thokoza	R 15 million	R 15 million	100%	100%

 

ANNEXURE 2

HOSTELS	RESIDENTS			FUNDING REQUIRED FOR UPGRADING
	Legal	Illegal	Total
1. Glebelands	11 104	+/- 9 000	+/- 20 000	R 125 million
2. S. J. Smith	4 357	1 000	5 357	R 0,5 million
3. Jacobs	1 099	500	1 599	R 34 million
4. Dalton Road	1 555	500	2 055	R 42 million
5. Thokoza	994		994	R 0,5 million
6. Umlazi T	8 974	N/A	8 974	R 0,5 million
7. Kwa-Mashu Isulabasha	17 440 1 432 18 872	+/- 15 000	33 872	R 377 million
8. Kwa-Makhutha	564	+/- 200	+/- 764	R 4,8 million
9. Kwa-Dabeka (K.K.)	10 427	N/A	10 427	R 0,5 million
10. Klaarwater	619	N/A	619	R 0,5 million
TOTAL				R 586 million

 

Appendix 2:

MOTIVATION FOR ACCREDITATION OF ETHEKWINI MUNICIPALITY IN TERMS OF THE HOUSING ACT (ACT 107 OF 1997)

1. PURPOSE

The purpose of this document is to motivate for the accreditation of eThekwini Municipality in terms of the Housing Act (Act 107 of 1997).

2. BACKGROUND

In October 2000 the erstwhile Durban Metropolitan Council (now referred to as the eThekwini Municipality) made application to the KwaZulu-Natal Provincial Department of Housing for "level 2 accreditation" in terms of the Housing Act. This application followed an exhaustive process in which the municipality investigated the implications and resourcing requirements. This assessment involved substantial consultations and collaboration with the Provincial Housing Department, whereafter the accreditation application was favorably received by officials of that department.

Subsequently, however, the Department of Housing deferred accrediting the municipality citing "lack of capacity" as the reason. This was incomprehensible to the municipality as its application had presented adequate proof of substantial housing administration capacity and expertise.

In the preparation of the accreditation application the municipality had carried out a "Due Diligence" exercise culminating in a comprehensive Accreditation Business Plan.

The eThekwini Municipality's housing capacity and initiatives have resulted in the Municipality being awarded the coveted SA Institute of Housing Regional Award for Housing Excellence on several occasions. In addition, the municipality has been awarded the prestigious platinum Impumelelo Innovations Award for its Informal Settlement Programme.

3. MOTIVATION FOR ACCREDITATION

3.1 The eThekwini Municipality complies with the definition of a municipality, as defined in Section 10B of the Local Government Transition Act, Act 209 of 1993, which is a requirement for accreditation.

3.2 The eThekwini Municipality has a dedicated Housing Unit with significant capacity to deal with new housing development, as well as existing rental housing stock implemented prior to 1994. The intention is to utilize current staff from eThekwini Housing to establish the Administrative Unit for accreditation. Additional resources will be redeployed from other departments within the municipality if required. The current human resource complement of eThekwini Housing is 500. The full spectrum of housing functions including delivery, management of rental and saleable stock, maintenance, allocation, project management, strategic planning, housing support and research, facilitation, contract management, financial management and conveyancing are carried out by the Unit. This indicates that sufficient capacity will be available to undertake accreditation functions. Professional and technical staff resources from the Development Planning and Management, Engineering, Information Technology, Legal Services and Real Estate Units from within the municipality will also be utilized as and when necessary.

3.3 The municipality has shown significant commitment to date through the aggressive delivery of low-income housing and the establishment of a dedicated Housing Unit (i.e. eThekwini Housing). Furthermore, dedicated housing funds have been committed to augment and enhance Provincial Housing initiatives within the municipality. The municipality's current contribution ranges from between R7 000,00 to R10 000,00 per site to meet the service requirements.

3.4 The municipality has formulated a Housing Plan and Programme which has been informed by a number of initiatives, namely the Informal Settlement Programme, the Vacant Land Audit and Housing Backlogs Analysis.

3.5 The eThekwini Municipality has juristic authority over the municipal area as required.

3.6 The municipality has a sophisticated financial management and accounting system designed by the firm J. D. Edwards. A separate banking account will be operated for the housing funds if so required.

3.7 The municipality promotes and practices integrated development. Integrated Development Plans (IDP's) have been approved and adopted. The IDP's were undertaken in accordance with the Local Government Transition Act of 1996 and have been reviewed and further developed to accord with the requirements of the Planning and Development Act of 1998.

3.8 The municipality has established a subcommittee of Council to deal specifically with housing matters. This subcommittee approves projects, the financing of projects and the allocations to projects, amongst other approvals.

3.9 The municipality has the financial controls to ensure that the housing funds received and disbursed will be properly accounted for.

3.10 The municipality has the proven capacity to undertake level two (2) accreditation in terms of the Housing Act which, inter alia, includes :-

The formulation of a Housing Development Plan.

Access to appropriate professionals in order to evaluate the housing projects (e.g. town planning, engineering design, housing specifications costs etc).

The capacity and competency to enter into contracts with developers.

The capacity to manage the housing funds and evaluate project feasibilities and financial capacities of developers.

3.11 There appears to be serious capacity constraints within the Provincial Department of Housing to fast track the project approval process.

3.12 The current process of having to submit individual project applications to the Provincial Department of Housing hinders the effective delivery of housing in an integrated and holistic manner as envisaged by the municipality's IDP. For instance, in-situ upgrade projects that require de-densification of families to greensfield projects need to be approved simultaneously.

3.13 A block sum subsidy allocation to the municipality will result in the more effective implementation of projects in accordance with the Housing Plan, greater efficiencies in terms of financial control, especially with budget forecasting given the substantial funding contribution by the municipality and the dovetailing of these two funding sources.

3.14 Accreditation will allow the municipality to drive its housing delivery programme more aggressively which in turn will enable the Council to meet its delivery targets as per the IDP.

3.15 The municipality has proven its ability to perform by successfully implementing its high priority Slums Clearance Project worth R200 million. This funding was made available by the Provincial Department of Housing. The project affects over 13 000 families from 70 informal settlements. To date a number of families from informal settlements have been relocated and houses in new greenfield projects have been constructed ahead of schedule.

3.16 If accredited, the municipality will be in a more favourable position to leverage additional funding from National and International sources.

4. FINANCIAL IMPLICATIONS

1. Subsidy Budget Allocation

In terms of the housing backlogs set down within the Provincial Housing Plan, the backlogs within the Municipality accounts for 51% of the provincial backlog. Therefore, the Municipality should be allocated 51% of the annual Provincial budget which is in line with the proportion of the housing backlog within the Municipality compared to the Provincial housing backlog.

4.2 Subsidy Administration Budget

In order for the municipality to administer the housing programmes, it is requesting the following annual subsidy administration budget from Province as set out in Table 1 below. These budgets have been derived from a resource analysis provided in Section 9 and Appendix G of the Application and Business Plan previously submitted. The budgets incorporate a 10% escalation.

 

TABLE 1 : SUBSIDY ADMINISTRATION BUDGET

YEAR	ADMIN COST
1	R5,046,234
2	R8,053,199
3	R9,143,523
4	R9,467,943
5	R9,816,189

 

5. RECOMMENDATIONS

It is recommended that eThekwini Municipality be

1. authorized with level two (2) accreditation in terms of the Housing Act (Act 107 of 1997);
2. allocated five (5) percent of the Annual Provincial Housing Budget; and
3. allocated an Annual Administration Budget as reflected in Table 1 hereunder :-

 

TABLE 1 : SUBSIDY ADMINISTRATION BUDGET

YEAR	ADMIN COST
1	R5,046,234
2	R8,053,199
3	R9,143,523
4	R9,467,943
5	R9,816,189

 

___________________

DR M O SUTCLIFFE

MUNICIPAL MANAGER

Appendix 3:
HOUSING ADMINISTRATION
OPERATIONAL PLAN

1. PURPOSE STATEMENT

- The Formal Housing Department strives to operate in a manner which is cost effective, efficient and participative in the administration and maintenance of existing Housing and Hostels Stock; and to gear its capacity to facilitate access to home ownership, by adopting an inclusive and participative management style to ensure a motivated and productive team of staff members that will involve the Communities and the private sector.

2. KEY PERFORMANCE AREAS

- Sales Administration.

- Rental Administration.

- Debt management.

- Poverty alleviation programs

3. STRATEGIC OBJECTIVES

- Promote Home Ownership through the Extended Discount Benefit Scheme.

- Provide cost effective and cost efficient landlord services to tenants.

- Improve maintenance of existing Rental Stock.

- Maintain affordable rentals.

- Encourage payment levels and reduce rental arrears.

4. GOALS (SHORT TERM / LONG TERM)

- Transfer of 500 selling units

- Sale of 1 120 of rental stock.

- Limit rental increases

- Reduce turnaround time for outstanding maintenance jobs.

- Encourage payment levels.

- Reduce operating deficit.

5. PROGRAMS TO ACHIEVE OBJECTIVES

- Marketing sale of stock via Sales Campaign.

- Identify funding sources to undertake major maintenance.

- CPM implementation to improve service delivery.

- Introduce Masakhane Campaign to encourage levels of payment.

6. CONSTRAINTS / PROBLEMS

- Limited tenure options in respect of sales campaign.

- Levels of affordability.

- Rental arrears and difficulty in enforcing final sanction for non payment.

- Implementation of economical rentals.

- Limited financial resources and inability to reduce operational costs.

- Historical poor quality construction of low cost housing.

7. OUTSOURCED SERVICES

- Registration and transfer of properties.

- Cleaning services for high rise flats.

- Emergency maintenance repairs and planned maintenance work.

8. MAJOR BACKLOGS

- Transfer of Bodies Corporate due to rental arrears and affordability.

- Outstanding maintenance repairs due to limited funding.

- Sanctions for non payment of rentals.

9. STATISTICAL INFORMATION

- Selling Stock : 6 464

- Rental Stock : 10 918

- Staff Establishment for Sales and Rental Administration : 284

- Instalment arrears : R13 000 000

- Rental arrears : R38 000 000