Urban Settlement Development Grant 2011/2012 Expenditure: Department, Cities of Tshwane, Ekurhuleni, and Johannesburg reports

Meeting report

Urban Settlement Development Grant 2011/2012 Expenditure Reports
City of Johannesburg presentation
Mr Herman Pienaar, Director: Development Planning and Urban Management, City of Johannesburg, provided some demographic background for the City’s expenditure report on the Urban Settlement Development Grant (USDG).

He noted that the number of backyard-shack units in the city (320 000) was more than double the number of informal-settlement units (156 000). Certain areas of the city had been earmarked by the Department for investment and development, based on their levels of deprivation, growth potential and/or marginalisation. USDG-funded projects had been systematically localised in these targeted areas.
Acquisition of land was critical to the implementation of USDG-related plans and new land parcels were currently being sourced throughout the city.

Mr Walter Melato, Executive Director: Department of Housing, City of Johannesburg, outlined the expenditure of USDG funds during the 2011/2012 financial year. R969 000 000 had been spent on the upgrading of 2 542 informal-settlement households, the provision of bulk infrastructure to 132 530 households and the construction or repair of other facilities such as roads, streetlights, clinics and cemeteries. Although the planning for USDG expenditure had begun early in the year, the bulk of its implementation had taken place towards the end of the year, which explained why 26% and 52% of funds had been spent in the third and fourth quarter of the year respectively.

A total of R76 439 000 had not been spent in 2011/2012 and had been rolled over to 2012/2013.

Details of work done in the Nancefield Station Precinct, distributed to the Committee in a separate document, were an example of the Department’s model for mixed integration development.

R1.2 billion of USDG funds were available for 2012/2013, and specific target delivery numbers had been devised for each project (see attached document for further details). In line with outcomes 8 and 9 of the Grant’s framework, half of the USDG funds were allocated to housing programmes. Geographically- marginalised areas such as Soweto and Orange Farm deliberately received the majority of USDG funds, as distinct from the City’s total budget, of which 50% was allocated to inner-city Johannesburg. Land-release programmes had been designed to bring people closer to where basic services were actually available.

Discussion
Mr S Mokgalapa (DA) noted the densification plans and asked about the challenges involved in releasing well-located public land, and about the role of the Department of Public Works (DPW) in this process. He asked how many of the 155 000 informal-settlement units and 320 000 backyard-shack units the City had managed to upgrade and to offer basic services. He also asked why the rolled-over funds had not been used to upgrade these units. He pointed to what he regarded as “fiscal dumping”, or spending for the sake of reporting, that had occurred towards the end of 2011/2012, and urged that there should be a prioritisation of services. He felt it was incorrect to be preoccupied with the building of clinics and public parks when there was still no access to toilets or water in an area.

Mr Mongezi Mnyani, Head of Provincial Department of Local Government and Housing, Gauteng, replied that the Province was in fact releasing state-owned land to municipalities. The major challenge lay in the turn-around time. It could take two years to acquire a Section 28 certificate, followed by the request having to pass through the Deeds Office, and only after that could the Province transfer the land to its municipalities. He had a report detailing how much land had already been transferred to the City of Johannesburg’s Department of Human Settlements (DHS), which he would make available to the Committee.

Mr SJ Njikelana (ANC, Chairperson: Portfolio Committee on Energy), reported on his recent visit to his constituency in Orange Farm, where he noted a lack of tarred roads, street lights and basic sanitation. Given this observation, he asked which areas had in fact been covered by the ostensible provision of bulk infrastructure in 2011/2012. He asked why there was underspending and why rollovers had to be requested. He noted that gravel-road construction at the end of the financial year had been only 90% complete, and conversion of open to covered drains only 80% complete. He also wondered to what extent community input was being taken into account during development.

Ms D Dlakude (ANC) asked how many of the projects outlined for this financial year would be completed, and in which areas. She commented on a recent television feature that had revealed an area of Johannesburg with sewage flowing through it. She asked if cemeteries were being upgraded, and pointed out that the failure to provide basic services was causing more people to die.

Ms J Sosibo (ANC) asked how exactly the City was planning to use the rolled-over funds. She had similar concerns to Ms Dlakude about the cemetery upgrades.

Mr Pienaar replied that the need for proper cemetery facilities consistently came high on the agenda when communities were consulted. Community input was indeed important to the Department, and all points raised by residents were presented to the Council before any decisions were made.

Mr Njikelana said that getting community input was not enough, and reminded the Department that its public representatives needed to relay information back to these communities once decisions had been made.

The Chairperson said that the Committee did not dispute the importance of cemetery facilities, but queried why USDG funds allocated to the provision of bulk infrastructure had to be spent on cemeteries. She asked how, before the introduction of this grant, cemeteries were funded and how public revenue was being managed.

Ms M Borman (ANC) raised further concerns about how the USDG was being spent. About R22 billion  had been allocated to the National Department of Human Settlements for developing urban settlements. However, if the resources of other associated departments were included, the figure was raised to R120 billion. There was funding, elsewhere, for items like community halls and cemeteries, and the burden of covering everything did not have to fall on the USDG.

The Chairperson stressed that, to prevent USDG funds being misallocated, an “integrated services” approach, combined with proper leadership, from the National Department was needed. She said that observations raised by the Committee about bulk infrastructure in its oversight report had not been adequately addressed.

Mr Pienaar replied that the City understood these points and acknowledged the need to work on them.

Mr Mnyani added that the Province had stepped up supervision of USDG projects and was helping municipalities identify which of these projects were core, and which were peripheral.

Mr K Sithole (IFP) raised concerns about the unliveable conditions in Alexandra, Mahala and the George Goch Hostel. He also asked what was being done about the illegally occupied houses in Diepsloot.

Mr Melato replied that about 86 persons had illegally occupied houses in Diepsloot ten years ago. The City had tried to evict these illegal occupants on five occasions, but had been met with protests. The City was now in the process of identifying and legalising those who did qualify to live in these houses, and was relocating those who were not.

Mr Mnyani added that seven contractors had been appointed to work on the George Gogh cluster but that people from the adjacent informal settlement were continuously encroaching on these hostels’ resources and interrupting provision of services. The central issues were overcrowding and an influx of people. The Province had pleaded with the relevant parties to get these problems resolved. A plan was also being implemented in Alexandra.

Ms Dlakude asked whether the Department had a working relationship with the Housing Development Agency (HDA), to facilitate the identification and acquisition of state land for human settlement.

Mr Pienaar replied that the Department had a good relationship with the HDA and had held a number of workshop meetings. The HDA had developed a model for land viability that it had shared with the Department. The Department was currently using this model to earmark areas for acquisition.

The Chairperson reminded the Committee that the HDA was legislated for that very purpose. Municipalities tend to buy private land without prioritising public or state land.

Mr R Bhoola (MF) pointed out a lack of synchronisation between the three levels of government, and lack of consistency between targets and policies. He asked about any negative impediments that may have caused the roll-over, such as problems with contractors or contracted companies going into liquidation.

Mr Melato replied that the roll-over had indeed been triggered by problems with contractors and by the late dates on which contracts were signed. Funds were rolled over so that certain unfinished projects could be completed in the following financial year. He reminded Members that many contracts were based not on financial years, but on project completion, and were thus still active for several years.

Mr Mnyani told the committee that water treatment was a major problem in Gauteng. His team had already gone to the Department of Water Affairs with an analysis of all the current plants in the Province. Until a new plant was built, many of the issues raised here simply could not be addressed. Approximately R4 billion was needed to build the new plant.

The Chairperson said that there was money available for this project.

Mr Njikelana added that the Department of Water Affairs had reportedly set aside R5 billion.

Mr Mnyani replied that Treasury controlled the purse and that the Province was busy trying to source these funds.

Mr Neville Chainee, Chief Operations Officer: National Department of Human Settlements, told the Committee that there seemed to be competition between various government entities over control of funds. There were also issues surrounding prioritisation. Priorities, once decided upon, had to be strictly followed. Over the whole implementation of the USDG, the Department had battled to get the right administrative issues on the table. It was imperative to have the right senior management for the successful implementation of the Grant’s objectives.

Mr Njikelana reported that, in his constituency, the decision had been reached to eschew protests in favour of holding a Housing Indaba. All three spheres of government would be invited to the Indaba and a copy of its outcomes would be sent to the President. This was an example of a positive and progressive community response.

Ms Dlakude referred to the Committee’s recent visit to the City of Johannesburg, and asked whether steps had been taken to relocate the people who had been living in tin shacks built by the Municipality.

Mr Melato replied that the Protea settlement in question had been a transit-housing area and had since been removed. He also suggested, as did Mr Pienaar, that a detailed project list should be submitted to the Committee, to supplement the presentation delivered.

City of Tshwane presentation
Mr Amos Mboweni, Acting Strategic Executive Director, City of Tshwane, noted that the City of Tshwane’s Grant had, in the 2011/2012 financial year, spent about 99% of the R891.08 million allocated, and that R10 million was rolled over to the current financial year. There had been a spike in spending in the fourth quarter, following calls by the Province and National departments to step up activity. As soon as approval had been given, the small roll-over amount would be used to pay contractors, who were already on-site.

The reason for the spending on cemeteries within the Agriculture allocation was that the USDG had replaced other sources of funding, such as the Cities Grant, and certain outstanding projects needed to be completed. Over time, the source of funding for cemeteries would shift to the City itself.

He tabled a project list, with a more detailed explanation of the spending. He noted that the budget and expenditure were distributed to Ward communities to facilitate transparency.

Overall, approximately 10 000 households had been upgraded last year, just short of target. 13 076 households had been granted access to basic services, as targeted. Four land sites, or 450 hectares, had been acquired, which was above the target of two land sites. All of the 3 008 job opportunities proposed had been created.

He noted that people who had been allocated houses in 2000 were still not paying rates or taxes, because the area in which they were living had not been proclaimed. The lack of proclamation and the associated lack of title deeds for residents also caused major problems for how residents could conduct their affairs. For instance, in Soshanguve, the lack of roads had made it impossible for residents to move freely during storms, and made it impossible for the City to collect rates. Roads had now been built and the area proclaimed. Twelve projects of this nature had been implemented, benefitting about 9 000 households, or over 30 000 people. Within each project, a job-creation profile had also been included.

There had been three significant challenges for USDG programme managers, once the grant money had arrived. Firstly, the appointment of contractors had taken seven months. Secondly, the final service designs had only been approved in February 2012. Thirdly, the appointment of community liaison officers and local labourers had been contested heavily among the various communities. Most of these issues had now been resolved.

The target outputs for 2012/2013 were the upgrading of 15 000 informal-settlement households, the provision of basic services to 15 000 households and the creation of 5 876 new jobs through USDG-funded projects. The precise number of hectares targeted for acquisition was difficult to determine. However, most of the properties being considered had already passed through the audit stage.

The USDG constituted 27.86% of the total capital budget of the City, second only to council funding at 62%. 90% of the USDG allocation went to poorer areas, and was used particularly for sewerage works and bulk infrastructure, like water and sanitation, in these areas.

The City had allocated specific portions of the 2012/2013 Grant money to its various departments (see attached document for breakdown). The DPW allocation included a R5.1 million sub-allocation to electricity works. Electricity was not funded by the Department of Energy because the original Cities Grant funding for it had been cut. R33 million had been allocated to the Department of Sport and Recreation.

Discussion
Mr Mokgalapa asked about the status of certain hostels, including Kingsloo, Schubert Park, Kruger Park and Mamelodi, where there was both a lack of basic services and illegal occupation. He noted that only the target figures had been given for informal settlement units, and asked for the current actual figures.

Mr J Ngonyama, Member of the Mayoral Committee: Housing and Human Settlement: City of Tshwane, replied that a particular hostels demonstrated a new hostel model, complete with recreation and business facilities. This model would be implemented with provincial funding. Cases of nepotism had been uncovered at the Kingsloo Hostel, and were being investigated. At the Schubert Park and Kruger Park Hostels, people had been evacuated and a large number of students still needed to be resettled. The Mamelodi Hostels had been started in 2001, as a pilot project, with over R80 million spent by the Province and the City of Tshwane. However, these units were still not ready for occupation owing to underhand dealings between the contractors and a certain official. The City was investigating the matter before attempting to negotiate a settlement and it was also trying to have the contractors blacklisted.

Mr Mokgalapa asked why R33 million was being spent on maintaining the local stadium, since this was clearly the sole reason for the massive allocation to the Sport and Recreation budget.

Mr Ngonyama replied that work was in progress to downscale the stadium and to erect pavilions. The stadium served Soshanguve, which was the largest settlement in the City, and which had no alternate sporting facilities. The money spent on the stadium was thus justified.

Mr Mokgalapa asked about the 100 concrete slabs that had been installed in Soshanguve, for construction purposes, only to be neglected later because of a change in contractor.

Mr Ngonyama replied that the Province had started the project using local contractors, to empower them, but they had turned out to have inadequate capacity. The Province then had to go in and fix the problem itself.

Mr Mnyani noted that there was R34 million set aside at the provincial level for the rectification of such problems and that Soshanguve was a hotspot for problems.

Mr Mokgalapa asked about the situation with the North-West Housing Corporation.

Mr Ngonyama replied that certain properties had been resold to people over six times, often by officials working for this Corporation. The Province was involved with an audit into the situation.

Ms Borman queried the increase in spending in the fourth quarter, and asked whether this was due to an increase in capacity, and therefore in delivery, in this quarter, and wondered if the quality was being compromised. The seven-month lag before the appointment of contractors was unacceptable. The process had to be accelerated, but not at the expense of quality.

Ms Dlakude raised concerns about sanitation, specifically about whether the bucket system was still in place anywhere.

Another ANC member echoed this concern about the bucket system. She also asked what was being done about land not being proclaimed, and residents not paying rates.

Mr Njikelana also asked about the presence of self-made toilets. He applauded the City for proactively researching energy efficiency, something very few other Municipalities had started doing.

Mr Ngonyama told the Committee that chemical toilets, as well as plastic bags for refuse removal, had been provided widely. There were no bucket systems still in use in the City. If residents of an area were found to be using the bucket system, money would be moved to address this.

Mr Bhoola commended the City for its 90% expenditure on townships but asked about the challenges surrounding titles and land proclamation, and asked if there was a timeframe for their resolution.

Mr Ngonyama replied that administration at the national level was very slow, which hampered development at the municipal level. There were also problems with local chiefs, who had certain rights in terms of land affairs, allocating stands independent of the City’s own allocation process.

Mr Bhoola asked about the delays in contractor appointment and design approval, and asked what needed to be done to remedy this situation.

Mr Ngonyama replied that the Development Facilitation Act, which used to assist with these sorts of processes, had recently been declared unconstitutional, and was no longer functional. Furthermore, the City had discovered that a Chief Financial Officer within its administration had been meddling with contract business. That Officer had been dismissed immediately.

The Chairperson stressed the need to set land-acquisition targets, even if it was only possible to make an approximation of the hectares. Without targets, it became difficult to do performance reviews. She also commented that the 19.6% allocated to water and sanitation in last year’s budget should have been revised in this year’s budget.

Mr Ngonyama replied that land audits had been done, and that the City knew which parcel it wanted to acquire. It did not distribute these details widely, in order to prevent market speculation and pricing increases. However, the information would soon be provided to Parliament. The amount allocated to land acquisition had increased from R32 million last year to R38 million this year.

The Chairperson suggested that the City of Tshwane should engage with the Eastern Cape Department of Human Settlement, which was developing a policy on emerging contractors that might be helpful to the City.

Ekurhuleni Metropolitan Municipality
Mr Oupa Nkoane, Head of Department: City Planning: City of Ekurhuleni, reported on how the USDG had been spent in 2011/2012. He noted that there were 119 informal settlements in Ekurhuleni. The City was trying to develop new human settlements in places where there were opportunities. Leeuwpoort and Chief Albert Luthuli were two of the City’s flagship projects. Germiston was one of its urban renewal projects.

7 801 informal settlement units had been targeted for upgrade last year and 6 069 upgrades had been delivered. All other targets had been either met or exceeded, with previously disadvantaged areas receiving the primary focus.

46% of the City’s Capital Expenditure in 2011/2012 had been from the USDG. The biggest consumers of USDG funding had been water and sanitation services, at 36% of expenditure, and roads and storm-water services, at 19%. 57% of the City’s Grant expenditure had been allocated to informal settlement upgrades, basic-service provision and land release.

A significant challenge faced by the City was that 60% of its land was dolomitic and thus unsuitable for development, and another large portion of the land was already being used for mining. Increasing land invasions, increasing backlogs and an ageing infrastructure were some of the other obstacles that the City faced. A strong partnership with HDA had been a helpful mitigating factor, as had the development of a new capital investment framework.

For 2012/2013, R460 million had been assigned to informal-settlement upgrades, R43.9 million to basic-service provision, and about R125 million had been assigned to acquiring 786.9 hectares of land.

Discussion
Mr Njikelana asked why there were 119 informal settlements this year, when there were only 112 in the last year. He also asked about the state of certain hostels in the area.

Ms Fikile Ndlovo, Director, Department of Housing, City of Ekurhuleni, replied that business plans had been completed for upgrading the City’s hostels, with six to seven hostels prioritised for construction. Details could be found in the presentation.

Ms Ndlovu added that informal settlements unfortunately remained the cheapest accommodation option for newcomers to the city, and that these settlements quickly became extremely dense and overcrowded.

Ms Borman asked what plans the City had in place to prevent this trend.

Ms Ndlovu said that this influx had taken place over the past twelve years and that the numbers were starting to stabilise. New settlements were being monitored and measured carefully, and many of the old settlements had already reached peak capacity. It happened that wherever there were large tracts of dolomitic land or land that was not suitable for development, it would be invaded, and once a shack had been erected, the City had to go through a lengthy eviction process to remove these people.

The Chairperson requested a beneficiary list from the City.

Mr Myani said that units that were ready had to be occupied immediately. Engineers, together with governmental and local leadership, had to work together to determine who would benefit from the first phase, who would quality for RDP houses and who would be moved to other projects. He was of the view that beneficiaries should have to pay a certain minimum amount for houses.

Mr Mokgalapa suggested a follow-up session with the three municipalities present, dealing particularly with the impact of the Prevention of Illegal Eviction (PIE) Act.

The Chairperson agreed that this was a good idea.

Mr Chainee gave closing remarks of the Department of Human Settlements, saying that there was still much improvement needed in the alignment of the grant objectives, targets and outputs. Gauteng Province was clearly committed to addressing the issues. A particular observation during the meeting was the need for more coordination between the Human Settlements Development Grant (HSDG) and the USDG. The Grant frameworks should be re-read by all parties. He suggested that it would be useful to get a report from the national and provincial Departments of Human Settlements, to complement the municipal reports heard today, and suggested that another meeting be scheduled, at the end of this year or at the beginning of next year, for this purpose.

Ms Borman added a request that municipal plans for 2012/2013 be quantified and kept on record, so that delivery could be tracked and reviewed efficiently, notably in regard to backlogs.

The meeting was adjourned.