Human settlements' stakeholders & insititutions; Budget: Financial Fiscal Commission (FFC)

Meeting report

Presentation by the Financial Fiscal Commission (FFC)
Mr Bongani Khumalo, Deputy Chairperson, FFC, apologised for the Chairperson’s absence. The FFC welcomed the opportunity to brief the Committee as the FFC’s mandate was concerned with the division of revenue. The flow of resources for human settlements was important as it incorporated local, provincial and national funding. The FFC had identified certain issues since 2005, which needed to be brought to the Committee’s attention.

Mr Sabelo Mtantato, Senior Researcher, FFC, went through the presentation as per the attached document. The FFC recommended that the delivery of housing be done in an integrated and sustainable manner. Current RDP housing delivery was not viable as it neglected issues such as densification and the broader built environment in terms of housing development. Further recommendations included the accreditation of municipalities; the funding implications of further policy changes, housing delivery resulting in communities living in areas lacking in basic infrastructure and the closure of funding gaps, particularly in municipalities with weaker fiscal capacity. More flexibility on the eligibility of access to the Social Housing Restructuring Capital Grant (SHRCG) should allow funding to become available in areas where there was a demand. New housing subsidies should be linked to the Municipal Infrastructure Grant (MIG) and the Local Equitable Share (LES) formula to ensure that the LES allocation kept pace with the installation of new infrastructure in housing areas. The housing subsidy formula should use variables that took provincial nuances into account and the differential costs of meeting minimum housing standards across the provinces should be recognised. The qualifying income bands should be reviewed as it currently excluded those persons who needed social housing due to the increased cost of living and the marginal increases in income, which put them out of social housing bands.

Discussion
Mr A Steyn, DA, stated that the recommendations were worth considering, but added that there were certain recommendations where the FFC had not given enough thought to the impact. Concerning the integrated approach to housing delivery, the issue needed to be unpacked more and the FFC needed to provide additional information to this particular recommendation. He asked what the actual recommendation was with regard to the accreditation of municipalities, as this recommendation had been accepted by Government. More details of the relaxation of eligibility requirements for SHRCG were asked for.

Mr Khumalo stated that the issue of integration and unfunded mandates was applicable to most Government Departments. In order to avoid unfunded mandates there had to be a clear specification of functions, especially where different spheres of Government had concurrent functions. The funding provided needed to address the norms that were put in place and allow the specific functions to be carried out.

Mr Mtantato explained that currently only projects in zones demarcated for social housing benefited from the SHRCG and these zones needed to be expanded to include areas where there was a demand for housing.

Mr Morris Mngomezulu, Acting Chief Director, Department of Human Settlements (DHS), stated that the Department had adopted an integrated approach to planning and a cluster of ‘sister’ Departments had been formed. The restructuring of zones was being looked at from a policy perspective and it would seem that existing legislation needed to be amended in order to do so.

Mr J McGluwa, ID, asked how the FFC proposed addressing the issue of MIG funding.

Mr Khumalo replied that the MIG should be linked with the rollout of housing in terms of the location of houses. It was necessary to step back and look at where the MIG came from, as it represented a consolidation of all the diverse grants that were provided to municipalities as recommended by the FFC. In most cases this had been done, but there was no follow-up and the funds remained with the previous responsible Department of Provincial and Local Government (DPLG). In future, the funding should be transferred to the DHS.

Ms M Borman, ANC, stated that it was good to see that Government had accepted many of the FFC’s recommendations, but questioned if the capability to implement them was available. The reality was that there were a lot of poorly constructed houses and specific recommendations related to the proper use of MIG funding were needed.

Mr T Botha, COPE, asked if the FFC believed that the MIG grant was correctly located in the Department of Cooperative Governance and Traditional Affairs (DCGTA) as the Department of Human Settlement (DHS) was responsible for providing with infrastructure. There seemed to be little input on if certain municipalities were actually financially viable and he asked how the FFC suggested this issue was addressed.

Mr Khumalo agreed that not all municipalities had sufficient capacity and that there were municipalities which lacked the funds to carry out their responsibilities. This needed to be taken into account in order to identify the municipalities that could not deliver on providing the human settlements required. There was a need to look at the capacity of municipalities to provide good infrastructure. The location of the MIG funding was an issue that warranted further discussion.

Mr R Bhoola, MF, asked the FFC to elaborate on the fact that MinMEC had identified certain municipalities for accreditation but it would appear that nothing further had transpired.

The Chairperson was concerned about the accreditation of municipalities and asked for the reasons why the process had been so slow.

Mr Mtantato replied that certain municipalities were identified by MinMEC in 2005, but by the beginning of 2009 not a single municipality had been accredited. Progress had only been made during the second half of 2009. The slowness of the process was mainly due to a lack of capacity.

Mr Mngomezulu reported that there was some movement in terms of accreditation. Five municipalities have received level one accreditation and further assessments were being carried out. Once the level of capacity had been determined the municipality would achieve a higher level of accreditation.

Mr Steyn understood the recommendation concerning the relaxing of criteria on the provision of social housing in terms of zones of demand but wanted to know if the impact of changing the qualifying income bands had been determined.

Mr Mtantato replied that the FFC did understand that the expansion of the income bands would result in more beneficiaries, but suggested that the DHS should at least look at this issue because of the marginal increases in income.

The Chairperson asked that it was put on record that the FFC had stated that not even one level three accreditation of a municipality had occurred to due to inadequate capacity. She added that the achievement of a level one accreditation was not disputed but the process was not moving forward and the delay needed to be dealt with.

Presentation by Statistics South Africa (StatsSA)
The Chairperson advised that Statistics South Africa (StatsSA) had been asked by the Committee to provide an update on what had been achieved in the provision of housing to date. The information was important for the Committee in order to gauge the progress that had been made.

Mr Pali Lehohla, Statistician-General, StatsSA, advised that the presentation dealt with the number of housing units and the housing targets.  StatsSA did not have information on the demographics of contractors. The growth in the provision of housing in South Africa since 1996 was considered (see attached document).

In 1996 there were nine million households, increasing to 11 million households in 2001 and 12.5 million households in 2007. The current estimate was 13.5 million households. The rate of growth was most rapid in Gauteng. The ratio of the number of persons per household had increased. The growth of informal dwellings had stabilised at 1.8 million dwellings in line with the increase in the number of formal dwellings.

Inter-provincial migration had contributed to the change in demographics, with Gauteng, KwaZulu-Natal and the Western Cape experiencing an increase in the population. The Eastern Cape would lose an estimated total of 300,000 people between 2006 and 2011. The movement of people seemed to be geared towards Gauteng, where the highest influx of people was experienced. The proliferation of informal settlements was a major concern in Gauteng (25%) and the Western Cape (16%). These two provinces required the most attention.

Discussion
The Chairperson thanked Mr Lehohla for the information provided, which would inform the decisions of the Committee.

Mr McGluwa stated that the North-West province had experienced an increase in migrants and asked if service delivery to these people was taking place.

Mr Botha asked if the high loss of population from the Eastern Cape was the reason behind the growth in Gauteng and the Western Cape. He asked if the growth in population in Gauteng and the Western Cape included people migrating from neighbouring countries. He asked if the loss of population in other provinces would affect the allocation of funding.

Mr Lehohla replied that non-South African citizens were excluded from the analysis. If foreigners were included in the statistics for Gauteng the population would increase by one million. He assumed that the budget allocation to provinces would be affected but suggested that the question was directed to the FFC as StatsSA did not deal with funding.

Mr Mtantato confirmed that migration would affect the allocation of resources and that the formula took this aspect into account. As a province gained more people it would gain more funding, but this was only applicable to the provincial grant and not to other sources of funds.

Mr Botha remarked that if the FFC used the statistics from 2007 to determine the allocation of funding there would not be an equitable sharing as a result of the time lag.

Mr Steyn asked what the term ‘other housing’ referred to and if a population census was planned for the near future. The statistics gathered in 2007 resulted from a survey rather than a full census.

Mr Lehohla replied that the information provided to StatsSA came in intervals of five years, but actual change often took place at a more rapid pace. Some short term studies had been done and he confirmed that the data gathered in 2007 was from a survey. A full census would be done in 2011. The term ‘other housing’ referred to exceptions to the categories of informal, formal and traditional housing.

Mr B Dhlamini, IFP, asked if it was possible to obtain information on the socio-economic status of the migrants moving to Gauteng and the Western Cape.

Mr Lehohla replied that the census data would include socio-economic information.

Presentation by the Rural Housing Loan Fund (RHLF)
Mr Jabulani Fakazi, COO, RHLF, presented the mandate and vision of the RHLF. The focus of the Fund was facilitating housing credit to low-income rural households and supporting the implementation of the Integrated Sustainable Rural Development Programme (see attached document).

The presentation included an outline of incremental housing finance, which allowed low-income earners to access micro loans to finance the building of houses on a piece-by-piece basis. RHLF Intermediary Distribution Channels were used to provide access to funds. In terms of policy context, RHLF’s contribution to Breaking New Ground (BNG) housing included providing access to the financial services market for rural and incremental housing.

Mr H Potgieter, CFO, RHLF, outlined the RHLF’s strategic plan for 2010/11. The strategic plan took both internal and external factors affecting the business environment into account.  RHLF would receive funding of R49.5 million from the DHS in the 2010/11 fiscal year. The human resource component of the RHLF was small but the team was dedicated. The high level of job losses, the risk of inflation resulting from Eskom’s price hikes, the increase in the oil price, over-indebtedness of the general population and the liquidity crunch had a significant impact on lending. Despite these factors, there had been steady growth in lending from 2005, which amounted to R255 million.

Discussion
Mr A Figlan, DA, asked how much interest the RHLF charged on loans and what the earning amount was for an individual to be eligible for a loan. He asked if the lending criteria took into account people with disabilities who had a low earning potential.

Mr Bhoola asked what the timeframe was for filling the vacant post of Chief Executive Officer (CEO). He wanted to know if the RHLF had representatives in the offices of intermediaries who were well-versed in the policy and procedures of RHLF lending.

Mr Fakazi replied that the CEO post had been vacant since 2008 and the RHLF Board had started the process to fill the vacancy in May 2009. To date, no final decision had been made but the Chairperson of the Board was discussing the matter with the Ministry of Human Settlements. 

Mr Potgieter advised that the representatives in the intermediaries’ offices processed loan applications in accordance with the National Credit Act (NCA).

Mr McGluwa commended the RHLF on the Key Performance Areas (KPA’s) outlined in the presentation and noted that notable progress had been made in 2009.

Ms N Mnisi, ANC, asked about the monitoring of the recovery of money that had been lent.

Mr Steyn presumed that the value of a loan would be linked to the applicant’s income. He noted that there was a significant difference in the interest rate charged by the Fund to intermediaries and the rate charged by the intermediary to the end client. He asked how the RHLF assisted small, medium and micro enterprise (SMME) development and if the reduction in the number of loans granted was related to the economic recession.

Mr Potgieter replied that the RHLF charged intermediaries an interest rate of 14.5% and the intermediaries charged a rate of 35% to the end user. The risk of default was largely to the intermediary and they experienced an average of a 15% default rate. This became a problem for RHLF when the intermediaries’ bad debt resulted in an inability to service the debt to RHLF.

Mr Fakazi explained that SMME development was done by assisting intermediaries. A number of SMME’s had received financial support and client support services. In certain cases, the Fund was represented on the Boards of SMME’s in order to provide assistance.

Ms Borman understood that the RHLF was using the services of external legal consultants but she wanted to know why the staff costs had increased as well. She noted that the Fund projected an 82% increase in Director’s Fees.

Mr Potgieter replied that staff costs was expected to increase as a result of the filling of the vacant CEO’s post, the creation of two new positions and the hiring of an intern. The Director’s Fees remained the same, but the total amount was expected to increase due to the increased number of sittings and an anticipated 100% attendance rate.

Mr Steyn asked if there was a more cost-effective alternative to the increased reliance on external consultants in order to ensure that intermediaries were adhering to RHLF policy and procedures. He asked for further elaboration of the unexpected increase in income of R15 million due to sale of an asset. The Director’s Fee increase indicated that the Directors did not attend to their duties in the past and he wondered if the reason was that the Directors were sitting on too many Boards. He was very concerned over the high interest rate charged to the end clients as the RHLF was targeting the poorest of the poor.

Mr Potgieter replied that the budget for external consultants was based on the evaluation of each client, which was unlikely to take place. Consultants were used to conduct external validation as well. He explained that the sale of an 8% share in Bayport for approximately R20 million had resulted in the increased revenue. There had been fewer meetings of Directors during 2009, which was related to there being less demand for Credit Committee Meetings. He conceded that the Fund’ Board members were under strain in terms of attendance.

Mr M Mdakane (ANC) asked if it was possible to cut out intermediaries and to make use of other Government agencies to lend money to people. It would appear that the use of these middlemen increased the financial burden on the poor. The intention was to assist the poor, not to make it harder on them.

The Chairperson asked the DHS to review the grant voucher programme, as there was a specific MTEF grant provided to the RHLF.

Presentation by the National Home Builders Registration Council (NHBRC)
Mr Sipho Mashinini, CEO, NHBRC, advised that the NHBRC was formed with the purpose of protecting consumers and ensuring quality of construction by creating a sustainable warranty fund for home builders. The strategic objectives for 2010/11 included a commitment to the continuation of sustainable human settlements through the regulation of the home building industry. The NHBRC essentially provided a short term (five-year) insurance fund for structural defects.

Mr Courtney Thorp, Executive Director: Financial Services, NHBRC, provided a quarterly breakdown of Valuable Final products, focusing on registrations, renewals, enrolments, late enrolments and inspections of subsidy and non-subsidy houses (see the attached document).

Mr Mashinini explained that the subsidy project enrolment programme did not cover projects that were not enrolled with the NHBRC. The NHBRC did not take uninsured risks and were unable to accommodate requests for assistance by Departments that had failed to enrol projects with the Council.

Mr Thorp presented a high-level overview of the revenue assumptions made for the 2010/11 fiscal year. Registration fees, annual fees and manual fees were set at R750, R600 and R100 respectively. Income for non-subsidy housing was estimated at R463.7 million and income for subsidy housing was R143.3 million. Projected expenditure for non-subsidy and subsidy housing amounted to R414.7 million and R86.3 million respectively. Outsourced inspectors were used for subsidised housing and in-house inspectors were used for non-subsidised housing projects.

Discussion
The Chairperson asked for clarity on Mr Mashinini’s statement that Departments built houses without enrolling the projects and then called on the NHBRC when there were defects. In terms of the applicable legislation all housing projects had to be enrolled.

Mr Mashinini confirmed that this was the case. The NHBRC still found instances where the housing projects had not been enrolled. There were clear procedures concerning late enrolment and as a result of these late enrolments, the NHBRC was owed R123 million by the Departments concerned. Consequently, the NHBRC took the position that the warranties for all units not enrolled and paid for would be withdrawn.

Ms Borman asked which Departments owed the NHBRC R123 million.

Mr Mashinini replied that the amount was owed by the provincial Departments of Housing.

Ms Borman remarked that the NHBRC was therefore disassociating itself from the housing units involved and refused to repair any defects because of non-payment by the Departments concerned.

Mr Mashinini replied in the affirmative and said that the NHBRC had been pro-active in ensuring that all projects and housing units were enrolled but the corresponding payments from the Departments were not forthcoming. The NHBRC had attempted to hold discussions with the relevant authorities in an attempt to recover the outstanding payments but these attempts had been to no avail. As a result, the NHBRC had no option but to cancel the insurance cover on the housing units concerned. The NHBRC had to cover the insurance premiums and was not in a position to pay for the cover if the payments were not made by the various Departments. The NHBRC was receiving co-operation from the national DHS, but not from the provincial Departments.

Mr Steyn asked what role was played by the Chairperson of the NHBRC in terms of the corporate governance structure. He asked who carried out the technical inspection of houses as that was the responsibility of the developer. He asked if information technology systems were used for risk management and why the organisation had only looked at the integrity of data two years ago. He suggested that the enrolment fee should be linked to the value of the housing unit and specific risk factors. On-the-job training was not considered to be included in the role of the NHBRC and he felt that unskilled builders should not be registered with the Council.

Mr Mashinini explained that the Chairperson reported to the Council at the head of the organisation. Geotechnical investigation was done for subsidised houses by the NHBRC and non-subsidised houses were inspected by engineers appointed by the home owner. Currently the fees charged by the NHBRC were regulated in terms of the applicable legislation. Training was done to mitigate the risk but contractors were required to adhere to employment equity quotas and many of the persons employed were not adequately trained. The NHBRC had an obligation to offer training programmes.

Mr Thorp replied that the initiation of a data integrity project resulted from the forced migration of the NHBRC database to the Oracle system because the previous service provider had ceased to operate. The data became corrupted during the transfer of the database and reconciliation with the records was required to ensure data integrity. The process had been lengthy and difficult but Oracle had provided full co-operation and support.

Ms Borman noted that the presentation indicated that there was one inspector per 55 houses and asked if this meant that only one inspection per house was carried out. In KwaZulu-Natal, 48,000 houses were identified as requiring rectification, but the Minister had said that a total of approximately 40,000 houses needed to be repaired. She queried that all the houses requiring rectification were in KwaZulu-Natal.

Mr Mashinini replied that outsourced inspectors were trained and utilised by the NHBRC. He confirmed that there were 48,000 houses for rectification in KwaZulu-Natal. He had visited the province and had held discussions with the MEC’s concerned about enrolment. The discrepancy in the figures quoted by the Minister could be related to the difference between housing unit and housing project figures.

The Chairperson advised that the Committee required more time than was available to finalise all the issues. Further discussion would take place at a later stage.

Presentation by the National Housing Finance Corporation (NHFC)
Mr Samson Moraba, CEO, NHFC, advised that the presentation from the NHFC would be limited to the salient features (see attached document). The housing finance environment was considered in terms of recent indications of economic recovery and the challenges of affordability resulting from the high levels of indebtedness following the economic downturn.

The NHFC human settlement interventions included the mobilising of available sources of finance for human settlement on a sustainable basis; expanding housing finance activities; funding the acquisition of well-allocated and suitably located land parcels and leveraging and enhancing private sector contribution. The strategic plan included Key Performance Indicators (KPIs) and outlined strategic partnerships.

Ms Zonia Adams, CFO, NHFC, provided an overview of the budget for the 2010/11 fiscal year. Profit after tax was expected to increase by 11% to R60 million. Investment in the Cape Town Community Housing Company (CTCHC) was expected to show a profit in 2010/11 but the Housing Investment Partners (HIP) programme indicated a loss forecast for 2010/11 and was expected to become profitable only in 2011/12. External funding was raised from the European Investment Bank (EIB) and the Agence Française de Dévelopement (AFD), with the approval of the National Treasury and the Accounting Executive.

Discussion
Mr Botha asked if the NHFC would play the role of guarantor to commercial banks to encourage the banks to enter the subsidy housing market. It was not clear whether the NHFC was both a housing finance lending institution and a guarantor.

Mr Moraba replied that the NHFC was a wholesale provider of finance and that the entry into the retail market was an experiment.

Mr Steyn asked for clarity on the 10,000 applications for loans that were received, of which only 80 were approved. He asked if the NHFC had an intermediary arrangement similar to that of the RHLF. He asked how the NHFC compared to the private sector and asked what kind of impact the organisation had on the end user. He noted that proceeds from investments accounted for 60% of the profit made by the RHLF.

Mr Moraba replied that the guarantee mentioned in the presentation referred to a mortgage credit guarantee, by which the residual amount of the mortgage was guaranteed if the end user defaulted. The cost of borrowing to the end user was less if the NHFC provided the guarantee than would be applicable if the borrower had to apply privately for a bond or a loan for the deposit on a house. This mechanism was used to stimulate the private sector to enter the low-cost housing market. Compared to commercial banks, the intervention of the NHFC had changed since the inception of the organisation. The 10,000 loan applications were received as a result of a project were the NHFC wanted to use the infrastructure of the Post Office to provide loans. The project targeted Post Office employees but it was found that most of the applicants were highly over-indebted and did not qualify for the loans.

Ms Adams said that the NHFC had not borrowed money from anyone prior to the current year. The revenue from investments was expected to decrease as a result of the loans raised.

Mr Botha asked how the NHFC differed from the proposal made by the Banking Association of South Africa (BASA).

Mr Moraba replied that the difference was that the banks wanted the Government to take on a 100% of the risks associated with the low-cost housing market by setting up a State-owned company to which the commercial banks could sell the loans that they did not like.

The Chairperson was concerned over the amount of R1 billion that the Minister of Human Settlements planned to disburse at low rates of interest. This would not be justifiable if there were intermediaries involved in the disbursement process.

Mr Moraba replied that experience in the retail experiment had shown that if the middle man was eliminated, additional capacity would be required and the cost of providing the necessary in-house infrastructure would increase. The cost of providing the service would erode the funds made available for loans. As much as the NHFC would like to offer the service, the practical reality was that it would require significant resources.

Ms Borman asked what was meant by ‘housing education’ and if it had anything to do with education on housing finance. She requested more clarity on job creation and the raising of funds from external sources.

Ms Adams replied that the Ministers of Finance and Human Settlements had both approved the request for external funding from the EIB and AFD.

Mr Moraba explained that the NHFC was promoting borrower education and was willing to form a partnership with the DHS to continue the programme. Job creation related specifically to the NHFC’s funding business component.

Mr Mngomezulu advised that the DHS was aware of the external loans and were involved in the evaluation of the loans in order to assess the risk. The Asset and Liability Unit of the National Treasury had considered the external loan proposal and was satisfied. Concerning the amount of R1 billion to be made available by the DHS, the Ministry had not yet finalised how the money would be utilised. The Committee would be engaged on the matter as soon as the plans had been finalised. There were other elements within the human settlement sphere that had an interest in the funds in addition to the NHFC and it was premature to present plans on utilising the additional funding that would become available. The DHS was still debating if it would be more beneficial to stimulate the housing stock or the demand for housing.

Presentation by the National Urban and Reconstruction Agency (NURCHA)
Dr Morgan Pillay, Managing Director, NURCHA, presented the mandate of the Agency (see attached document). NURCHA ensured the availability of bridging finance to SMME’s and established contractors that were involved in social housing developments. During the 2010/11 fiscal year, NURCHA expected continuing international financial constraints, unfavourable local trading conditions, a lack of positive Government capitalisation and a high cost of funds. The volume of business was however showing positive growth.

A review of the subsidised housing environment had shown that there were opportunities in maintaining delivery. The subsidy budget over the MTEF period was expected to change. The challenges identified included on-going payment issues, cessions and tri-lateral arrangements with the suppliers of building materials. With regard to affordable housing, there were opportunities for partnerships, growth in delivery and the engagement of smaller contractors. Challenges included planning and administrative issues, escalating costs, funding constraints and the poor supply of products in the ‘gap market’. Infrastructure opportunities resulted from increasing investment in this sector and the engagement with public and private employers; although the latter was constrained by the lack of available funding.

The Key Strategic Objectives identified were portfolio growth and income, the increase in development outputs and impact and the improvement of client-customer relations.

Mr Sindisa Nxujani, CFO, NURCHA, outlined the financial statements for 2010/11 and compared the 2009/10 income and expenditure to the 2010/11 budget. Total assets amounted to R616.6 million compared to R652.2 million in the previous year. Total Equity and Liabilities remained unchanged. The provisional financial statement for 2009/10 reflected a deficit of R8 million, compared to a projected surplus of R2.3 million for 2010/11.

Discussion
Mr Steyn was concerned that that the projected losses for the current fiscal year could have been underestimated as the South African economy was still affected by he economic downturn.

Dr Pillay replied that NURCHA was aware of the potential for underestimations, but gave the assurance that the organisation had employed tight control mechanisms and each project had been carefully assessed.

Mr McGluwa asked about the location of NURCHA offices.

Dr Pillay replied that NURCHA currently had offices in six provinces and the volume of work in a particular region would determine the need to establish additional offices. Currently those provinces without dedicated offices were being serviced by the offices situated in other regions.

The Chairperson remarked that the programmes mentioned in the presentation omitted any mention of the technical and administrative assistance provided to contractors. She asked if NURCHA still provided these services. She asked if there had been any discussions with the DHS on the training of contractors and for further details of the e-Community facility that had been funded by NURCHA.

Dr Pillay replied that the provision of technical and administrative assistance was part of NURCHA’s core business. The organisation had high levels of technical competence that were based at projects to provide assistance to contractors. Generic contractor training was not done by NURCHA but training devoted to creating better entrepreneurial and financial skills was done. The provision of funding for community facilities had been a hallmark for NURCHA and the Agency planned to expand the programme by providing bridging finance for schools and hospitals.

Mr Mngomezulu advised that the capacity building department of the DHS had started to co-ordinate all the training programmes being offered in the sector by the various organisations.

The Chairperson thanked all the delegates for their participation and gave the assurance that further engagement with the Committee would be held.

The meeting was adjourned.