N2 Gateway, Zanemvula and Khutsong Priority Projects: Department of Human Settlements briefing

NCOP Public Services

26 October 2009
Chairperson: Mr R Tau (ANC, Northern Cape)
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Meeting Summary

The National Department of Human Settlement briefed the Committee on its three priority projects of the N2 Gateway, Zanemvula and Khutsong priority projects. The background and purpose of each was explained, and the Department outlined how a project would be assessed as a priority and what would be done, including the planning, processing and ringfencing of funds. The N2 Gateway project aimed to address poverty and vulnerability of residents living along the N2 between the airport and the City of Cape Town. The purpose of the Zanemvula project in the Nelson Mandela Bay Metropolitan Municipality was to address the housing and development needs of the communities, and to relocate people who had moved into informal settlements below the flood lines. The Khutsong Project aimed to address the safety issues resulting from dolomite, which was causing sinkholes and destruction of roads and houses in the areas presently occupied. The Committee was informed of the progress of the projects, including tables of the progress to date, and details on challenges that the projects were encountering.

Members asked a number of questions, beginning with the suggestion that the Constitution may have to be amended to allow for expropriation or other ways to address the shortage of land. Members asked questions about the lack of land for businesses or schools in the projects, the tender process, the stability of the new ground where the new Khutsong was being built, what was being done to address corruption by some officials, whether there had been feasibility tests done, and why the Department had not address urbanisation in the presentation. Members also asked whether the Millennium Development Goals would be met, the policy for relocating people from shacks to houses, what the Department was doing about people moving into houses and then building shacks and renting or selling the houses. Further questions addressed the Nelson Mandela Bay municipality’s refusal to allow temporary residence during building, the racial mix of the priority projects, progress in Lerato Park, what was to be done about the defective houses that were built, how contractors were chosen, and how long it would take to find sub-contractors for the Khutsong project. Members commended the progress made and it was agreed that they should work together. There were several issues that members should take up in their own constituencies. It was agreed that they needed to study the Auditor-General’s report on the N2 Gateway project and hold further discussions.

Meeting report

Priority projects: National Department of Human Settlements (NDOHS) briefing
The Acting Chairperson noted that the Chairperson, Mr M Sibande, was in Mozambique, as an observer to the elections, and that he was acting in his stead.

He noted that only five of the nine provinces were present. After a brief discussion Members decided that the meeting should proceed nonetheless. He noted that the Department of Human Settlements (NDOHS) would be outlining the progress of the three projects, Zanemvula, Khutsong and the N2 Gateway, but he requested that they also give an update of other projects.

Mr Martin Maphisa, Deputy Director General, Department of Human Settlements, introduced Ms Julia Bayat, Chief Director, NDOHS, who was the project manager for the projects, and would undertake the presentations.

Ms Julia Bayat first informed the Committee how NDOHS determined and categorised priority projects, before moving to her briefing on the three specific projects.

She noted that the N2 Gateway was prioritised in 2005 by MinMEC. In 2006, Zanemvula and Khutsong were named priority projects. There were several ways in which priority projects were determined. There could be a pronouncement by the State President, Cabinet or the Minister of Human Settlements, or the priority would be decided by a decision of MinMEC, or the Director General of Human Settlements. There was a list of further prerequisites that a project had to fulfil for it to be classified as a priority project (see attached document).

Ms Bayat noted that the projects would be categorized in recognition of the fact that they might fall into different categories. They would be categorized in terms of their ranking and the project outcome in the national apex of priorities, as well as making a decision on which level of insight and management input would be provided by the NDOHS. The manner in which the project was funded also contributed to how the project would be categorised. The project's state of readiness to deliver was also taken into account. All the correct procedures must have been followed and all the correct documentation must have been handed in before the project could be considered and categorised as a priority project.

The priority projects would be categorized as A1, A2 or A3. There were three priority projects: namely, the N2 Gateway project in Cape Town, Western Cape, the Zanemvula project in the Nelson Mandela Metro Municipality, Eastern Cape, and the Khutsong project in Merafong City, Gauteng. There was the fullest facilitation and management input, oversight and monitoring by the NDOHS for A1 projects. These were  managed by three spheres of government, in a cooperative management model, and funding for A1 priority projects was ring fenced.

A2 priority projects were managed at a more strategic level and were not ring fenced. The newest category was the A3 priority projects. Provinces were asked to give projects that they would like to be prioritised. As time progressed and as these projects became more sustainable they could then become A1 or A2 priority projects. This category was especially important as NDOHS did not want to be in a situation where it did not do its groundwork.

The N2 Gateway Project in Cape Town was conceptualised to address poverty and vulnerability of residents living along the N2 between the airport and the city. The number of units planned was around 22 000 units. Ms Bayat emphasised that overall layout plans included not just housing, but also socio-economic facilities like schools and health facilities. The presentation included comprehensive layouts, maps, progress reports and descriptions of the various different projects in the N2 Gateway project.

The project had encountered various challenges, such as the shifting dynamics within the province since 2004, inadequate appropriate land and community issues. Additionally there were issues over cost, non payment of rentals by tenants, the handover from Thubelisha Homes to the Housing Development Agency (HDA), institutional arrangements, implementation of the Constitutional Court decision, and lack of planning and under funding.

There were lessons that were learned from the initial phase and NDOHS would like to implement best practice. Even though there were initially problems, there was some significant progress and over 6 000 houses had been delivered.

The Zanemvula project was located in the Nelson Mandela Bay Metropolitan Municipality (NMBMM) and the project was given prominence by the then-President’s Imbizo. The intent of the project was to address the housing and development needs of the households in the area. Particular concerns for this project included the fact that there was a need to relocate people who were living in informal settlements by the Chatty and Little Swartkops rivers, which were below the 100-year flood line. The project planned to upgrade informal settlements that were above the 100-year flood line and also had to address the issue of households who lived in back yard shacks within the formal areas of Soweto-on-Sea and Veeplaas. The project also had to deal with densities and to rectify dilapidated houses in Soweto-on-Sea and Veeplaas.

The reason that Zanemvula had to be looked at as a priority project was because of the heavy rains in August 2006. People living in the flood plains of the Chatty and Swartkops River were, as a result of floods in this area, living in dreadful conditions. Ms Bayat gave a detailed briefing on the processes, budget and on the progress of the project.

The Chairperson interjected to ask about the flora and fauna in the areas.

Ms Bayat noted that the Department would try not to cause adverse effects to the environment, which was the reason for moving the tortoises to try to maintain a balance between helping people and not harming the environment. The Department of Environmental Affairs had also assisted.

There were many challenges encountered in this project. The Department had initially used emerging contractors, but that failed as they lacked expertise. To counter this problem the Department would now use large contractors who must work with emerging contractors. The emerging contractors had to go for training and there was a clear improvement. Escalation of costs of building materials, projects running over financial years, fixed cost contracts and contractors with poor administrative and financial management skills had caused challenges. The Department had also found it difficult to coordinate projects, the roads in the area were in a bad state, beneficiary management had fallen behind construction, the NMBMM had prohibited the building of Transitional Residential Areas (TRA) and there had been a request for a higher level of service. Another large challenge was the late payments of contractors and service providers. However, hopefully the  move from Thubelisha to HDA would correct this.

Ms Bayat noted that the Khutsong project was a very difficult one, because for a long time safety had been an issue there. For 50 years the sub-surface dolomite geographical conditions in the area had worried residents, as the dolomite caused unpredictable ground movement and sinkholes. The unstable ground also damaged houses and roads, as illustrated in slides 83-94.

There were 25 085 units that were to be planned, and development had been divided into three phases. Land had been identified for 14 852 sites. Environmental Impact Assessments (EIAs) for 14 852 sites had been obtained and Record of Decisions (RoD) obtained. The layouts for township extensions had been completed and the identification of land for the balance of 10 233 sites was in progress. The estimated project cost was R3.49 billion, and expenditure to date was R126.27 million.

The challenges of this project pertained to land, funding and Record of Decisions. There was a delay in transfer of land that was donated by one of the agencies and there was a problem with private owners who refused to sell their portion of land. There were urgent sub-projects within the project, worth R318.7 million that lacked funding, and there was no funding to relocate 3 600 families who lived in houses that were located in the dangerous areas. Finally, some issues pertaining to the Record of Decisions needed to be finalised.

Ms Bayat subsequently went through maps on slides 101 to 113, that graphically illustrated the project in Khutsong.

The Chairperson thanked Ms Bayat for her presentation. He wanted to know how the Committee, particularly those members from COPE and the DA, would respond to the challenge of land availability, as this was an issue not only in Khutsong but also in the Western Cape. He suggested that in order for the Committee to deal with the issue aggressively there was a need to amend the Constitution, but obviously for this there would need to be full consensus.

Mr H Groenewald (DA, North West) remarked that these three areas showed a lot of houses, but there was no land for schools or business centres. If this was provided for, then he asked that he be shown on the map where it was located. He thought it was important to have such facilities close to residents so that they did not have to resort to finding transport, which would open up many more problems. He wanted to know how many project managers there were in the three projects. He asked what kind of rentals Ms Bayat was talking about as he had assumed that the houses were free.

Mr Groenewald also asked who the main controller of funds was, whether the municipality or the national or provincial government. He remarked that there was a problem with the tender process, most markedly in Khutsong, as it was not run in the right way. He asked if the Department had any influence in the process. He asked who was responsible for guiding the people in Soweto-on-Sea and Veeplaas to the area below the flood line in the first place.

Mr Groenewald said government must identify specific areas where houses could be built and developed and that the Department must help municipalities. He remarked that the situation with the dolomite in Khutsong was because of mining activities in the area. He referred to Slide 101, and stated that the land that the new Khutsong was built on surely had dolomite too as it was between the original problematic site and the land near the reservoir (which was also affected by dolomite). He reckoned that because of this there would be problems in the future.

Mr Groenewald said that if land was needed, then it must be made available for people to live on. Lastly he said that an investigation should start in regard to some corrupt officials who were getting involved in buying land and then selling it back at exorbitant prices to the government.

The Chairperson asked if Mr Groenewald would agree with his proposal for the amendment of the Constitution, to empower government to expropriate land, when necessary.

Mr Groenewald replied that he would not be averse to expropriation when it might be necessary.

Mr D Feldman (ANC, Gauteng) said he would not comment on that issue. He asked if there was a feasibility study. He remarked that the 21st century was one of urbanization, yet he did not hear the NDOHS talk about urbanisation. He said that the Department should learn from the past, as commitments were not fulfilled and different municipalities and provinces did not talk to each other. He concluded that the land issue should be brought onto the table so that everyone could discuss it.

Ms L Mabija (ANC, Limpopo) said that houses were built and then occupied, but people then would build shacks next to their new houses. NDOHS spent money constructing this houses but it was clear that the occupants of the new houses were not mentally prepared to take them over. She believed that NDOHS should be running programmes to educate the community on the importance of good housing.

Ms M Themba (ANC, Mpumulanga) also thanked Ms Bayat on the informative and clear presentation. She said that in the Auditor-General's report on the N2 Gateway, the MEC admitted that some houses were in bad condition and had to be demolished. She asked if the rebuilding of these houses had yet started, and wondered what would happen to the residents whilst their houses were demolished and rebuilt.

Ms Themba asked when schools would be built in the areas where people had been relocated in the Zanemvula project. She also asked what was happening to the development of business in these areas. She suggested that the Committee should visit these sites so that Members could make informed decisions.

Mr Z Mlenzana (COPE, Eastern Cape) said that, without particularly addressing the three projects, he wanted to ask NDOHS if it thought it would meet the Millennium Development Goals(MDG) by 2014. He remarked that some people refused to move out of their shacks whilst others were selling their given houses, and were continuing to stay in shacks. In that case, he asked whether NDOHS had a policy for relocating people from shacks to houses.

Mr Mlenzana commented that the NDOHS was dealing with a federal approach. He asked why NMBMM refused to approve the TRA. He asked how long the NDOHS would continue to donate houses, as there was no longer a pro-poor political party. He concluded by stating that he did not want to rush into a decision to change the Constitution, as detailed considerations had to be made.

The Chairperson said that that was why he qualified his suggestion by saying “only when necessary”. There was land but people were withholding it from the government. In some instances this land was not even being used at present. Government was paralysed because it had no legal recourse. The debate was started at the Nelson Mandela Summit in 2007, but was then dropped. Some time last year the debate was again reintroduced by the Minister of Public Works, but had again been overridden. There were autocratic organisations that undermined the government.

Mr M Jacobs (ANC, Western Cape) stated, in response to Mr Mlenzana, that the ANC would continue to donate houses until the majority of people in the country shared in the wealth of the country. He said that the issue of the shortage of houses would always be present, since the children of those living in shacks would themselves be caught in the poverty trap. He wondered why the issue of houses was not taken to municipalities, whom he believed should become developers. During the apartheid years, municipalities were responsible for housing. He now wondered why the NDOHS did not follow this model. He believed it would speed up many things and reduce corruption.

The Acting Chairperson noted that the Members were raising very important issues, but in most instances were merely passing the buck to the Department. None had made a clear programme of educating people about the concept of human settlement, or about appreciating their houses. He asked what was being done to ensure that people did not build shacks next to their houses. He believed that not enough was being done and that Members should be working on these points in their constituencies.

The Acting Chairperson commented that the N2 Gateway project was the platform to introduce a deracialised society. The Department was building not only houses with the N2 Gateway project, but a community. The project was supposed to ensure that there were sports facilities, clinics and everything the community would need. The main intention of the project was to reintroduce the concept of a South African society. He referred to Sophiatown in the 1960s as a model of a multiracial society.

The Acting Chairperson felt that the Select Committee must take its oversight role seriously, and read the Auditor-General's (AG) report, in order to oversee all the matters to which the Department had referred. He had traveled to Port Elizabeth in 2007, and saw that the houses there were built on wetlands. He said the good that was being done must not be defeated by something else to which insufficient attention had been paid.

The Acting Chairperson agreed with Ms Themba that the Committee should visit at least one of the projects by next year at the latest. He appreciated the photos that were included in the presentation, as these had helped the Committee to understand the full extent of the problem. He hoped that the pictures were not edited, and reflected correctly what the Committee was likely to see in its site visits.

The Acting Chairperson noted that the presentation said that the funding for A2 projects was not ring fenced. However, progress in Lerato Park, which was in his constituency, had not yet begun, although the residents had been waiting for quite a while. He asked whether it was a national or provincial prerogative, as the MPs played little role in telling the provinces how to spend their money. Other than that, he had been happy with the report.

Ms Mabija asked how it was possible for the developers to build defective houses, and made the point that this should have been noticed by the building inspectors.

Ms Themba asked how long it would take for contractors to find sub-contractors. While the Department was  searching, there were homeless people who were waiting for their houses. She suggested that the Committee should be invited to the hand-over, and suggested that more could be done if the Committee and the Department were to work together.

The Acting Chairperson asked to be excused and asked Ms Themba to stand-in for him.

Ms Bayat firstly responded to the question around land for schools and business. She noted that the layout was so large that not everything could be shown. There were sites that have been allocated for schools, businesses and health facilities.

Ms Bayat explained that was not one person running each project but each main project has several sub projects that were administered by project managers. The main project has an Implementation Manager.

Ms Bayat noted that Joe Slovo 1 was the only project that had the problem of non payment of rentals as the rest of the houses were fully subsidised. Funds were allocated to provinces, and the municipality was then to employ an Implementation Manager. The Implementation Manager hired the contractor. Once the house was built the contractor would send an invoice to the Implementation Manager who then forwarded it to the province. In some cases, the province simply gave the Implementation Manager the funds to pay the contractor. It was ensured that the tender process was followed at all times and it was impossible for the NDOHS to influence the tender process.

Ms Bayat explained, in regard to Eastern Cape, that as a result of migration and the need to be close to socio-economic amenities, people just moved into the area that was below the flood line, which was at that time simply an empty space.

Ms Bayat then turned to the questions around the dolomite in Gauteng. She noted that in regard to the sinkholes, extensive tests had been done in the area by qualified technical people. Potentially dangerous places had been rectified to make sure that the land was stabilised. The Department was guided by geoscience and geotechnical experts, who said that the land was now suitable for occupation. There was no way that housing developments could be done if no feasibility studies were done. The need for housing was driven by the needs of people who lived in informal areas and those who required houses.

She admitted that in some cases the residents would occupy the houses, and then build shacks on the site.  She agreed that the NDOHS needed to share information with beneficiaries. She said that they would amend the programme, by including Ms Mabija's recommendation. Ms Bayat also admitted that the issue of people selling their houses was a big problem. There was a policy that stated that a house could not be sold for eight years, and there was currently a request to bring it down to five years. The NDOHS was aware that there were illegal sales occurring, but this also had to do with educating the people and teaching them to appreciate the value of their houses.

Ms Bayat was unsure about the mention of the houses to be demolished in the N2 Gateway project, and suggested that perhaps this related to another project. In regard to the defective houses, Ms Bayat noted that the Department had indeed found houses in poor state, and was presently rectifying the houses. She estimated that by 2011/2012,  the projects would have been sorted out.

Ms Bayat noted that Ms Themba had expressed concerns about children being bussed to other schools in NMBMM. She noted that the NDOHS continued to consult with other departments. However, these departments had their own funding and their own priorities. If they were to build schools, they would not be able to pay teachers to work in them.

Although NDOHS had originally thought that the projects would be able to involve the large food chains and business groups, for example, the problem was that these big groups complained that they needed roles. The NDOHS needed to get more assistance from municipalities so that together they could make these areas more attractive and make them look like viable business areas.

She confirmed that the NDOHS would invite the Committee on the next occasion of a handover.

Ms Bayat said that there was a policy called the Informal Settlement Upgrading Programme, which was utilised for moving people from shack to house. This system was for the upgrading of informal settlement and relocation of people to a formal settlement.

Ms Bayat noted that the Department was very unhappy about NMBMM's refusal to allow TRA. NMBMM based its recommendation on a visit, possibly to the N2 Gateway. NMBMM had asserted that they did not want 'ghettos', but the Department was of the belief that there would not be ghettos, as, even if they were not particularly nice-looking, they were quite safe, and there were no shacks. Perhaps this issue needed to be taken up at another level.

In regard to the question by Mr Jacobs about why municipalities did not themselves build houses, Ms Bayat said that there was a process called the “Accreditation of Municipalities”. Under this, municipalities were accredited, depending on the capability of the municipality, in levels one, two or three. Some municipalities had already started to get level one and two accreditation. This accreditation would inform how funds would be issued to municipalities. This was a matter still in progress. It would eventually determine whether municipalities were permitted to start building houses.

Ms Bayat confirmed that an integrated society was vital to the whole comprehensive plan. The NDOHS looked at socio-economic and racial components, and tried to achieve a mix of economic and racial groups. Unfortunately there was a backlog of informal settlements and some had a small integrated mix, but not all.

Ms Bayat confirmed that she would bring the AG's report to the Standing Committee on Public Accounts (SCOPA) to Parliament for the Members.

Responding to the Chairperson's question about houses being built on wet land, Ms Bayat said that the NDOHS would try to ensure that development was above the 100 year flood line. Geotechnical tests were done and NDOHS would thereby attempt to ensure that land was safe for habitation.

Ms Bayat noted that, in order to clear the backlog, additional funding was allocated to help projects such as Lerato Park in the Northern Cape. The Lerato Park project was under way, but construction of the first 500 units that was supposed to have started was stopped as the initial designs, now being redesigned, had been inefficient and would have been expensive to build. She asserted that it was a special project even though it was an A2 project.

Ms Bayat assured the Committee that the photos put forward had not been altered. She agreed that the building inspectors should have seen that the houses were defective, but the Department was  currently doing damage control on badly built houses. She said she would enquire as to how long the contractors in Khutsong would take to find sub-contractors, as she felt it was an important matter.

Mr Maphisa then confirmed that the Housing Development Agency had a special mandate to procure land.

Mr Maphisa noted that, after a ten-year review, the Department had built Reconstruction and Development Programme (RDP) houses up to 2004. The National Homebuilders Registration Council (NHBRC) was formed to reassure good practice. From 2005 a better quality of houses had been built, under the Breaking New Ground (BNG) model.

Mr Maphisa confirmed that the NDOHS had invited the Special Investigation Unit to investigate corrupt officials. Many had been prosecuted and some money had been recovered.

Mr Maphisa also confirmed that in the last three years, the NDOHS had elevated planning. Planning used to be, but was no longer, part of the project management, as the planning unit had been elevated to the Presidency. The purpose of this was to align planning, funding and expertise and to allow the implementation and roll out of projects. NDOHS was part of the planning process, and was involved in meetings with the Presidency, premiers of provinces and national departments. In future it would be addressing issues of planning and urbanisation. It was possible that, as a result of cuts in the budget, the NDOHS might not meet the MDGs.

The Acting Chairperson thanked the Department and noted that it was important for the Committee to examine the AG’s report on the N2 Gateway phase 1, for details on the houses. She also thanked Ms Bayat for noting the questions on screen so that everyone could match the answers to the questions.

The meeting was adjourned.

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