Nelson Mandela Bay and Buffalo City metros on 2012/13 Urban Settlements Development Grant expenditure

Meeting report

Opening remarks

The Chairperson voiced displeasure with the mayors of Nelson Mandela Bay Metro (NMBM) and Buffalo City Metro (BCM) for not showing up at parliamentary meetings. The politicians were tasked with service delivery in their respective constituencies. Gauteng mayors had accompanied officials to Parliament, but this had never happened with the Eastern Cape (EC). Members should seek to instil the culture of appearing before Parliament by local government senior executive leaders. It was ideal that mayors, as decision makers, should come and account to Parliament. However, she accepted the apology from NMBM Mayor (Alderman Ben Fihla). The meeting would receive briefings from the NMBM and BCM on their expenditure of the Urban Settlements Development Grant (USDG) for the year ended in July.

Deputy Mayor of Nelson Mandela Bay Metro comments  

Councillor Alderman Thando Ngcolomba, Deputy Mayor NMBM, apologised on behalf of the mayor and said he had been held up in another programme. The metro took the Committee seriously. Members would have noted during the introductions there were a number of positions in an acting capacity in the metro. This was because the metro was engaged in organisational restructuring.   The filling of positions in the new structure was informed by the structure as provided in the Integrated Development Plan (IDP). The process should be completed soon.

Alderman Ngcolomba said the metro always appreciated feedback from the Committee, and had thus attained valuable lessons from the June meeting. The Committee had raised a number of issues for consideration, among which was whether the Urban Settlements Development Grant (USDG) had been used on what it was intended for, as well as the monitoring by politicians at the municipal level. The metro took the view of the Committee positively, and also viewed the USDG seriously. The metro relied on the grant to deliver services, and therefore should be able to account for it.

A concern was the apparent lapse between the three spheres of government. The matter had been addressed; interactions among the three spheres were now happening, and much of the challenges had been dealt with. Progress would be evident in the presentation. For the past two years, 100% of the USDG had been spent, and there was no change in the current financial year.

The metro had noted the Committee’s comments on bucket eradication, and was equally concerned. The matter had been raised in a meeting with Deputy President Motlanthe and Mr Lechesa Tsenoli, Minister of Cooperative Governance and Traditional Affairs (Cogta), two days previously. A number of steps and programmes had been taken to try and address the challenge. The metro was still committed to eradicating the bucket system and informal settlements, but it was doubtful if that would be achieved by the 2014 deadline. The eradication of both the bucket system and informal settlements had posed challenges. Nevertheless, the fact that the metro had done well in housing provision could not be disputed.

The bucket system could not be allowed to continue any longer. Further resources needed to be committed and sourced from somewhere if the challenge were to be dealt with adequately and speedily.

Nelson Mandela Bay Metro Presentation

Mr Barry Martin, NMBM Director: Water and Sanitation, said the metro covered a relatively big surface area, with over 277 000 households – 44% of whom were indigent and reliant on some form of government grant. This was a challenge on its own.  The unemployment level sat at about 27%. The metro hosted 79 informal settlements, most of which had been connected to basic services, but there were also about 49 000 registered backyard shacks. Most of people in these areas had access to basic services.

The metro did not suffer as a result of rural-urban migration, but that situation was foreseeable when Coega (a development project north of Port Elizabeth) took off. There could potentially be some immigration. The strategic objectives for the metro included ensuring access to basic services in line with the Constitution. Sustainable human settlements were also crucial; the metro would like to change the face of informal settlements by creating integrated settlements. Through integrated settlements, the metro hoped to deal with issues such as unemployment, poverty and social inequalities.

The metro had to be positioned as a destination of choice for both investors and tourists. Tourists did not spend enough time in the metro, and often opted for game reserves or farms on the outskirts. An integrated approach to service delivery was required in order to deliver integrated human settlements. The culture of public participation should be encouraged, including the use of social media platforms. The metro ought to be accountable to the people.

The spatial development framework (SDF) indicated the pockets of land that were available for development, and the “no-go areas” for development in the metro. The SDF ensured comprehensive human settlement development areas, where even business opportunities were taken care of. Eradication of the bucket system was top of the priorities for the metro.

Backlogs related to the informal settlements.  In order to deal with informal settlements, there were three elements that needed to be considered – top structure, civil engineering and electrical engineering services. About R8 billion was required to eradicate informal settlements, and to eradicate the top structures would take about 21 years. Within the next seven years, the metro would be able to provide people with underground infrastructure. The time lapse between the laying of infrastructure and constructing the top structures was critical, as that contributed to the cost.

In trying to rectify the spatial imbalances of the past, the metro had identified key areas for re-development. Areas within the city that had become a “ghost town” at night had been identified for rejuvenation. The metro was not looking at developing only low cost housing -- public servants should be allowed to build their own houses closer to where they worked.

A development planning matrix was used to highlight challenges. The bucket eradication plan was key to what the metro was trying to achieve. As a mechanism to address bucket eradication, the metro looked at the concept of integrated human settlements. During the planning of projects, sites for schools had been identified. The metro tried to ensure that facilities were within walking distance.

Storm water drainage was a challenge for city infrastructure, as one could not do a master plan for the whole metro. There were just too many drainage areas, and had to be dealt with in a more localised manner.  Initiatives had also been considered in such areas as waste removal. The metro had even developed a website that sought to encourage recycling. The website had not taken off, but it was the concept of recycling that was being looked at. Another challenge with waste was illegal dumping. It had since appeared that a lengthier period before collection contributed to illegal dumping. Waste collection had since been done on a weekly basis.

The metro looked to develop a long-term sustainability plan over a 20-year period. This would address how infrastructure would be funded in future. Development levies would be considered -- this was critical, because the metro wanted to avoid a situation where it created a levy that would chase investors away. There were policies and by-laws that had been introduced and were reviewed regularly to ascertain relevance and whether they supported operational sustainability. The metro tried to improve its revenue base by luring investors into the metro. People benefited from that because it created jobs, and fewer people depended on grants.

The metro had a capital budget of about R1 billion and an operating budget of about R7.5 billion. The money was tariff based; it was derived largely from service charges and the equitable share.  80% of the budget spoke directly to service delivery to the communities.  Although spending had been too slow in the first two quarters, the metro had managed to spend all of its funding. It seemed the “hockey-stick” effect on expenditure was a general trend among all municipalities.

Five informal settlements had been upgraded, and well over 2 000 houses had been built. Failure to deliver more was as a result of delays in approvals from the National Home Builders Registration Council (NHBRC). Alternative sanitation had been provided to communities in informal dwellings during this period. About of 18km of gravel roads had been tarred, and about a kilometre of storm water infrastructure had been constructed. The intention was to phase out gravel roads. When one built tarred roads, it created an ability to deal with storm water. The tarring of gravel roads was critical, as that led to increased economic activity in areas where people resided. Private businesses were not hesitant to come and trade and invest in the townships. In that regard, the metro had undertaken a pro-poor approach, meaning the capital budget expenditure was split 80/20 in favour of the historically disadvantaged communities.

There were a number of problem projects, but once they had been identified, the money was to those projects that advanced faster. This approach allowed the metro to expedite expenditure while it resolved possible planning constraints.  It was critical to classify projects during the planning stage into two baskets, where about 40% of the budget would be spent on the planning element and 60% would be on implementation. This allowed for delivery as the year progressed

For the 2013/14 financial year, the metro hoped to eradicate four informal settlements; adequately provide bulk water and sanitation pipelines for the above; roll out the interim sanitation measures in these informal settlements; and construct well over 2 000 top structures.  However, all of this was dependent on the allocation of funding. The metro had the capacity to deliver more. Procurement plans were guided by the development matrix.

The metro had started with a pilot project on eradication of the bucket system and was hoping to go out to tender by the end of August. Prioritisation of the informal settlements that would be eradicated first would be determined by the housing programme.

Mr Martin said the metro had hoped to relocate the Fitch’s Corner residents to St Albans, but could not, due to environmental considerations. The Department of Environmental Affairs (DEA) had also made an indication that some of the areas that the people were to be relocated to, were “no-go areas.”  It was hoped that the community of Fitch’s Corner would form part of those who would be relocated to Witteklip, where about 256 sites had been prepared.  The planning layout was in place for Witteklip, the interim services had been approved and in the next nine months the metro hoped to finalise bulk services. It was also hoped that construction of the top structures would commence in 2014. The communities would have access to water and interim chemical toilets, but only if the DEA agreed.

The Grogro community was a challenge, as it was located on private land outside the urban territory. This piece of land was behind other houses, and there was a railway line nearby. This was very difficult for the metro to develop.  It had also been discovered that the area was a stretch of land that was environmentally sensitive. The intention was to relocate the community to another piece of land where various housing typologies could be provided. This piece of land was municipality-owned, and feasibility studies had been completed. The community would have access to water, but sanitation would remain a challenge.  Chemical toilets would be rolled out in the meantime.

Malabar Extension 6 had some areas of concern regarding the consultation process. Progress had been made, and the community had been made aware of this.  A financial allocation had been made available for this development in the current financial year. Chemical toilets had already been rolled out and would also form part of the interim sanitation programme. The area would generally be developed in-situ.

Discussion

Ms L Dunjwa (ANC Constituency MP) complimented the presentation for being informative, but it appeared that the metro had not approached the Department of Science and Technology (DST), with regard to the use of chemicals for the purpose of sanitation. Science and technology cut across all sectors. The Council for Scientific and Industrial Research (CSIR) was located in the metro, yet the metro had not seen fit to consult with the institution.

Mr Martin replied that the chemical toilets had been procured by service providers. This was not a new product that was being investigated -- it was a standard product procured through the normal tender.

The Chairperson interjected and asked if the official could personally use the chemical toilet.

Mr Martin replied “yes”.

Ms Dunjwa said the report did not address the matter of low cost housing, which could assist the metro in a lot of other services provision areas -- like bulk infrastructure and tarring roads. Also, the report was silent on the rectification programme. The metro had a number of houses that needed to be rectified.

Alderman Ngcolomba said rectification was a serious challenge to the integrity of government. After the cash crisis in the metro, a call had been made to the Deputy President to get involved.  With the kind of funding the metro had, it could not deal with the challenge on its own. The IDP informed what had to be budgeted for and the metro had complied, but there was a disjuncture between what was budgeted for and the needs of the communities. It was for this reason that the matter had been elevated to the Deputy President, and he had since engaged Ministers. The Ministers who had attended the meeting had committed to playing their part in terms of addressing the backlogs that existed in the metro.

Mr Calvin Brummer, NMBM Director: Development and Support, said the issue of rectification should have been included in the presentation. In the next presentation, rectification details would be included on both the Human Settlements Development Grant (HSDG) and what had been delivered. Currently there were 21 projects on rectification -- 12 had been approved, and 2 885 houses had been delivered.

Mr J Matshoba (ANC) asked if a whopping R10 million had been budgeted for. If that were the case, would that not render the NHBRC’s involvement useless? Apart from that, the metro should have its own construction inspectors.

Mr Martin said the relationship between low-cost housing and the tarring of roads was the approach the metro had adopted. But the other housing typologies in terms of the Financed Linked Individual Housing Subsidy Programme (FLISP) would also form part of the approach around integrated development that the metro tried to achieve.

Mr Martin said rectification was two-fold.  It related firstly to houses that had been constructed even before 1994, but other rectification concerned the newly-constructed houses during the past 20 years.

Mr Brummer clarified that the rectification referred to, concerned houses built prior to 2003, because all those constructed after that were covered by the NHBRC warranty, and the metro’s building, and drainage inspectors.  The metro was currently a level two accredited municipality.  Negotiations were ongoing with the Department to ensure that the metro was upgraded.

Ms Dunjwa asked if there had been a concerted effort to verify the work done by contractors according to the specifications set prior to actual construction. The EC metros should go to Gauteng to see what a community house should look like. Municipalities worked in silos and failed to copy good practices from others.  The NMBM did not have decent low-cost housing and yet the nearby Cacadu Municipality was the best model. She asked that the report on rectifications be very detailed so as to include the names of projects, exact locations and the number of houses that had been rectified. A detailed report about the Seaview development was also requested.

Mr Martin said there were building inspectors from the NHBRC who inspected houses prior to delivery. Human Settlements had drafted the specifications for the houses, and had to conduct inspections according to them.

The Chairperson commented that the point about learning best practices was crucial. She recommended that the metros visit the Joe Gqabi district, to see how human settlement projects should be run. She asked the Deputy Mayor to lead a delegation to the Joe Gqabi project.

Ms Dunjwa asked if there had been a concerted effort to consult with communities at Witteklip and Fitch’s Corner. Public representatives should avoid a situation where projects were blocked on account of a lack of consultation.  This became even more important where there were planned relocations.

Mr Martin replied that the metro engaged communities whenever there were pending relocations. There was a dedicated unit that dealt with informal settlements and ensured they were involved. This was the approach with regard to Malabar Extension 6.  Engagements would also be entered into with the ward councillors.

Ms Dunjwa commented that reference had been made to “no-go areas.”  It was disturbing that there were programmes of Government that could not be implemented because areas were designated as no go areas during the Environmental Impact Assessment (EIA) process. There was legislation that was meant to guide the process of EIAs, and she did not get a sense that the municipalities argued their cases vigorously on EIAs.  This had been a continuous stumbling block for the administration in ensuring that it met its mandate. She also cited another area – Seaview – where the EIA process had stalled development.

Mr Martin replied that a different typology for housing at Seaview  was being considered, together with the CSIR. There had been quite an extensive engagement, looking at cohabitable units within communities. It had become apparent that there had been a greater need for crèches and day cares in that community.

Mr S Mokgalapa (DA) concurred that there had been a gradual improvement from the last presentation by the metro. A number of plans had been put forward. Was there capacity at the metro, especially since it had been accredited? It appeared that the metro was not living up to the standard of accreditation. No reference had been made to accreditation. It was a fundamental mandate of the metro to see to it that it was able to deliver, once it had been accredited. There were a lot of officials in acting capacities, and that created challenges for delivery.

Mr Mokgalapa sought clarity on the targets. The presentation simply indicated the number of sites that had been serviced without indicating whether targets had been met. The metro was not vigorous enough on the eradication of informal settlements. He contended that eradication was never achievable and the focus ought rather to be on upgrading, especially given the rate at which informal settlements were being built. This was also the reason Outcome 8 had made mention of the upgrading of informal settlements, as opposed to eradication.

Mr Martin said the upgrading of informal settlements was related to relocations, the reason being that some of the areas were located below the flood line, and were in stressful areas. The plan would always be to develop a virgin piece of land in a greenfield environment, where all basic services were provided. Then the communities would be relocated. Where communities were located in areas where they could be upgraded, like Kwazakhele and Zwide, in-situ upgrading then became the preferred model.

Mr Mokgalapa said the 23 000 figure for people using the bucket system was quite a serious issue for the Committee. Members would prefer it if the metro were to put more emphasis on eradicating the bucket system. The system in 2013 was a shame -- the Committee did not want to see it. The metro had good plans, but it did not prioritise.  Most communities would rather have a decent toilet than have a sports field. Members were not impressed by the planned sports fields.

Alderman Ngcolomba said bucket eradication was another matter that dealt with the dignity of communities. The metro could not go to celebrations of 20 years of democracy with the bucket system in place. The metro had budgeted R10 million for the eradication of the bucket system, but it had also been agreed to that there had to be technical assistance from national Government. This would ensure delivery happened.  It would be highly appreciated if the Committee also came to the assistance of the metro on the matter.

Mr Martin said bucket eradication was a top priority for the metro. A comprehensive audit on the bucket system would be done, because the 23 000 being reported had been done in 2010. The metro was currently verifying the tenders that would be issued around the matter. Over the next three years, the tender would have been awarded to deal with the bucket system.

Mr Mokgalapa said the saving declared by the metro was a concern. This money should rather have been used for actual delivery on the ground. The Committee was concerned about under spending.  It was unacceptable that the metro should declare a saving amounting to over R200 million, while the metro struggled to provide basic services.

The Chairperson agreed, and said the saving ought to have been used for the infrastructure backlogs. She requested that the province comment on the matter.

Ms M Borman (ANC) also concurred there had been improvement in the presentation. She pointed out that the acting positions were a challenge when it came to delivery, and asked when the positions would be filled.

Ms P Duncan (DA) asked if the Chief Finance Officer (CFO) was still acting. The matter of the CFO had been raised in February, and yet it was still in an acting capacity. During the introductions, two different officials had introduced themselves as “city manager” and “acting city manager.” Could that be clarified?

Ms J Sosibo (ANC) repeated the point about positions in acting capacities. She asked how long the vacancies had been open, and why it took so long – up to four years – to fill them?

Alderman Ngcolomba replied that the position of CFO was critical if one wanted funding from the national and provincial governments. The vacancies ought to be understood in the context that the metro struggled to fill in the municipal manager (MM) position. The MM had to play a leading role in the process of filling vacancies. Filling vacancies had also been delayed because the metro was still reviewing its organisational structure. The process had been dealt with, but there were political challenges.  The new structure had been difficult to align with the political structure, and that had resulted in doubt as to whether the metro should go ahead and fill the vacancies. The metro had been assisted by the MEC for Local Government (Mr Mlibo Qoboshiyane) in the province, particularly in the micro structure. A new structure would always be a challenge to any organisation. The new structure contained four Section 56 employees, and there were nine portfolio chairpersons. Accountability became a challenge in this situation.  The issue had been raised with NT and Cogta in the province. It did not help to have the four officials at the helm if the macro structure had not been finalised. The mayoral committee had resolved to council that the process was not as short as it had initially been thought. It was crucial that the structure was finalised soon, given that the administration had only about two years to go. This was also crucial in stabilising the metro leadership.  The CFO position would be filled by 6 September. The metro had presented a process plan for the process of filling that position. The position had been vacant for four years, but that was history, as the political challenges had been addressed.

Alderman Ngcolomba said the permanent City Manager had resigned, citing political interference. The metro had disputed that claim, as there were processes and legislation to follow once employed. The metro had since requested the intervention of the MEC to second a person to the position. An acting City Manager had been appointed, but the metro hoped to fill the position in three months time. The acting City Manager had started with the process, and the metro was satisfied with progress.

Mr Mokgalapa said the comments of the Deputy Mayor on the filling of vacant posts, was less than convincing. There could never be stability in the metro, as the whole structure was affected. The Committee should get a commitment on timeframes regarding the filling of positions. When would the metro fill the position of CFO, as this was a crucial position for a municipality?

The Chairperson said the metro should be given three months, and a positive report was expected by November 2013 on the CFO matter. The Committee would closely monitor the metro. The metro previously had not cooperated with Parliament, but improvements were evident.

Ms Borman said the point about a potential immigration into the metro as a result of Coega needed to be dealt with timeously. If the metro failed to do forward planning, it would end up with a situation like some areas in the Northern Cape, where there had been a huge influx into mining towns and yet development had not happened. The metro should, in its planning, address the issue of a possible rise in population figures.

Ms Dawn McCarthy. Director: Land Planning & Management, NMBM, said Project Mthombo was a big issue around forward planning, regarding a potential influx of immigrants as a result of Coega developments. The metro was working with the business chamber and others on the planning side to ensure the metro was ready for any eventuality.

Ms Borman said the metro should put emphasis on integrated cities. It appeared not much had been done in this regard, and the metro should consider doing that. The 100% expenditure of the USDG by year end was worrisome, given spending in first two quarters. Officials needed to guard against fiscal dumping occurring. Some of the programmes were just not spending as they were required to.

Mr Martin said the comment on fiscal dumping was real and concerning. This was an issue that would be looked into, going into the future. Planning became critical in this situation so as to ensure that spending did not pick up only in the fourth quarter. There had been some delays in approvals mid-way through the financial year which had contributed to the skewed expenditure pattern.

Ms Duncan said the metro had failed to provide the Committee with a report on the outstanding title deeds from NMBM, as promised at the February meeting. She asked if the by-laws regulating dumping of waste were enforceable, and whether they were enforced.

Alderman Ngcolomba said illegal dumping was critical. The metro had done its best to clean the communities, but they insisted on dumping. It therefore became critical for the metro to educate people on this aspect, but also to consider recycling, particularly with a view of showing communities how to make money out of waste. The metro was establishing cooperatives at ward level to support this programme. The challenge was the ineffectiveness of enforcing by-laws. The speedy establishment of a metro police was critical. By-laws, with no capacity to enforce them, would always render the by-laws useless.

Ms McCarthy said the report on outstanding title deeds would be submitted, and would also detail the discount benefit scheme. There was a comprehensive report of what had been done in this regard.

Mr R Bhoola (MF) commended the metro’s good plans, but said there appeared to be a glaring absence in terms of e alignment to the budget.  More focus for the metro should have been on upgrading informal settlements and the eradication of the bucket system. He asked if there had ever been an analysis to evaluate the plans with a view to ascertain whether they addressed these two issues. What were the main plans in terms of the budget alignment?

Mr Martin replied that an Inter-Governmental Relations (IGR) approach was needed to start with the developmental matrix. The metro had received money from the provincial Department of Education to address the issue of school ablution services.  About 40% of the schools’ ablution facilities were non-existent.

Mr Bhoola asked if the metro had concluded agreements with other departments with regard to the plans. If there was no buy-in from other departments, it might just be words on paper.

Ms McCarthy replied that the metro had an integrated development matrix, where amenities’ location was identified within the housing developments. The metro had been fairly successful with special development projects like Zanemvula, where departments worked well together. The sector departments’ collaborative approach to development should be continued and sustained in all projects. This was not in place yet, although it was recognised as being complex because it involved budgeting. There were attempts nevertheless, and the development matrix model was very good.

Mr J Matshoba (ANC) requested that the officials commit to timeframes with regard to bucket eradication. Throwing figures around would not assist the Committee in its oversight work.  It was puzzling to see the filthiness in the townships, while the suburbs were spotless. Was there no capacity to clean the townships?  He sought clarity on the Finance-Linked Individual Subsidy Programme (FLISP).

The Chairperson commented that the metro appeared to be perturbed by biodiversity issues. Could the metro give an indication of how destructive this was to the environment? The presentation was contradictory around environmental issues. While the presentation indicated Fitch’s Corner was an environmentally sensitive area, the metro appeared less keen in intervening in the environmental degradation activities resulting from people in the area. She asked if the officials were empowered to intellectually engage environmental consultants. EIA’s had previously been raised with the DEA Minister (Ms Edna Molewa), and she had indicated that officials had been using EIAs as an excuse for inactivity. There could be creative ways to protect environmentally sensitive areas from the impact of development. Officials ought to think about this, and how the National Environmental Management Act legislation could address the challenges.

The Chairperson said senior officials should be adequately trained on such processes as EIA. The tendency by senior officials of remaining at offices should be done away with, and officials should be on the look out for training opportunities.

Ms McCarthy said the Spatial Development Frameworks (SDFs) identified large “no go areas.” This was the feedback from environmental studies that had been commissioned.  She disputed the comment that officials seemed to just accept what environmental consultants advised on EIAs. This was always a challenge when the metro was faced with negative EIAs, while the existing situation on the ground was such that human settlement had to be a priority. This was a national challenge, but it was hoped that the Spatial Planning and Land Use Management (SPLUM) Act would deal with contentious issues between human settlements, spatial planning and NEMA.

The Metro had a Corporate Environmental Task Team that met regularly with provincial officials. With Seaview, the metro was particularly anxious about the stand that had been taken. The metro had tried to negotiate for better solutions than a “straight no” from environmentalists. The task team had tried to resolve the environmental issues. On 6 September there would be an EIA workshop with councillors.

The Chairperson said the Committee had previously requested that the metro provide a land audit report. This would facilitate the oversight function, especially as land was one of the key outputs of Outcome 8. Reporting by the metros should be clear, and aligned to Outcome 8 achievement. The reports should also stipulate the key five priority areas of Government, like job creation.

Ms McCarthy said there were two FLISP projects – Walmer Links and another one that would soon commence in Fairview. Details on both these would be included in future presentations. The Outcome 8 and the land issue would be reported on in the next meeting.

The Chairperson said FLISP was a non-negotiable.  Funding for the human settlements portfolio was much skewed, because in creating viable human settlements, sector departments had not availed money for the delivery aspects that pertained to them. This challenge required collaboration among the government spheres, and Parliament. The funding situation necessitated that municipalities be efficient with money so as to maximise the impact. The national department should engage National Treasury during the grant framework review, and ensure proposals were brought early to Parliament.

The Chairperson commended the metro on water waste treatment, but said it still needed to improve. The metro was demonstrating a progressive effort on water waste treatment. Access to basic services was crucial, and that implied that treatment plants and reservoirs were up to the required standard.

Buffalo City Metro Presentation

Ms Nomiki Mgezi, Member of the BCM Mayoral Committee, said the institution was relatively stable. In terms of expenditure, the critical issue was the filling of vacant posts. The metro had finally adopted the macro-structure, and was moving from a small municipality to a metro. This posed challenges of its own. The metro had given itself an ultimatum that the micro structure should be adopted by the end of September.

Refuse collection posed a challenge to the metro, and people had been replaced due to poor performance on this aspect. Another issue was community involvement in the building of houses. The council had adopted a programme of establishing steering committees where there was involvement by the community. If funding was sufficient, efforts would be made to equip and empower steering committee members to carry out basic construction.

The metro had capacity challenges, but was in the process of filling vacancies. The metro would like to perform better than it had done. The metro was still a level one metro, and this was a hindrance. Although BCM had been building houses for some time now, capacity was still required if the metro were to achieve more.

Mr Andile Fani, BCM City Manager, said the performance of the metro had not been satisfactory. Currently, the metro’s expenditure stood at 70%, 23 % had been committed, and 7% would be unspent. This picture was not as gloomy as in previous years. The critical challenge that the metro faced was the EIAs. Approvals would be granted, but at the time of implementation it would be indicated that junior officials had signed the EIA letters.  Contractors had often moved off sites and some had invoked rescue clauses, particularly in the Thembelihle and Manyano projects. Another aspect that had impacted on the spending by the metro was the issue of garnishee orders, where companies would indicate they lacked cash to run projects.  The metro had been able to reduce money spent on litigation. There was a litigation matter involving R32 million in the King William’s Town area for bulk water and sanitation.

Land was critical, and recently the metro had released 20 hectares from Transnet. The mandate was to just make sites available. The metro was currently busy with feasibility studies on what could be done on the sites that had been made available. There was a protocol agreement with the Housing Development Agency (HAD) that had been approved by council. A lot had been reported around land availability, but the metro did not want to be involved in such matters.

Litigation resulted when there had been a failure to heed the advice of consulting engineers on projects. In situations where the advice was disregarded, a project would be blocked. The metro would then engage the Institute of Engineers to investigate concerns around possible collusion between consultants and contractors.

Ms Riana Pretorius, BCM Director: Evaluation Programme Monitoring Unit (EPMU), said the metro had been faced with rapid urbanisation, resulting in the mushrooming of informal settlements over the past ten years. This had led to an increased demand for housing in the metro. The bulk infrastructure had not been able to keep up with the rate of urbanisation. Also businesses coming to the city wanted to have assurances in terms of electricity and water supplies. The bulk infrastructure ought to be improved because of the economic opportunities it brought.  The city had also been faced with spatial fragmentation challenges. All of this was largely due to the political history of the country.

There was a systematic approach to sorting out land ownership in the city. BCM did not own large parcels of land. The metro was targeting strategic land parcels that it wanted to use for human settlements in the city. The city should meet the demand for housing, and manage urbanisation. There should be serviced sites that stood ready in the peri-urban and rural areas. The metro had a huge hinterland of rural communities. The city should look to grow the economy, as that would result in increased levels of employment, and people could therefore afford to live in it. The city should improve its skills level in terms of service delivery.

BCM had a fairly young population, and that required strategic thinking on what recreational facilities the city provided.  About 70% of the population lived close to the metro, while 25% lived in rural areas. The metro was challenged for terrain -- it had a number of rivers and steep terrain, and topography that was very expensive to develop. But it was also a coastal city, and environmentally sensitive. A number of nature reserves were located within the metro, as well as six state forests and two marine environments that had to be considered when doing development. Feasibility studies became crucial when one wanted to implement projects. The metro was in the process of reviewing the SDF, and the report was ready to go to council.

A comprehensive analysis of all informal settlements had been conducted and it had been found that 41 settlements would require full relocation on account of their physical condition, the land ownership, zoning, topography and access to services. The metro was in the process of identifying land for the relocations -- communities could not stay where they were owing to the sea terrain, or being under power lines or within flood lines.  58 settlements had been identified for partial relocation and partial in-situ upgrading, while 39 had been identified for full in-situ upgrading.

In this regard the metro was privileged to be part of the National Upgrading Support Programme (NUSP) of the Department of Human Settlements (DHS).  The DHS was carrying out tender evaluations, and 30 settlements within the city would be supported for the in-situ upgrading. About 6 000 households would benefit from the programme in all the regions within the metro. Public transport facilities were being planned, along the model of the Bus Rapid Transit (BRT) system, with feeder bus systems. There was an intention to pedestrianise Oxford Street, and link it to the BRT system.

Although not largely the responsibility of the metro, it had to look at the accessibility of such amenities as community halls, libraries, police stations, clinics and pay points.  It was important to note the location of housing projects relative to infrastructure. In King William’s Town (KWT) there had been severe challenges with water, which had had a direct impact on housing provision, but that was being addressed.

With sanitation and waste water disposal, the city targeted the area around Duncan Village and KWT. Electricity provision was a challenge mainly in rural areas, where Eskom was responsible for provision. An overview of the challenges indicated much of the capital budget ought to be spent around the KWT area. Backlogs in the area of bulk infrastructure would cost billions of rands.

Mr Thabo Matiwane, BCM Acting Chief Operations Officer (COO), said the metro had had to absorb R267 million as rollover on the USDG allocation. The rollover had been approved in October 2012, but there were conditions attached for it to be appropriated into the metro’s budget. The council could meet the conditions only in March, and that meant the metro budget had ballooned in the third quarter. The metro had fallen just short of its targets for the quarter, as there were contracts that had had to be terminated.

A report was submitted on how the metro hoped to address the challenge of title deeds. There were challenges in some projects but the metro was committed to issuing title deeds. In some residential areas, conveyancers had been appointed.  He took the Committee through the outstanding title deeds, by area, and said there was another challenge with the illegal occupation of houses. Council had approved how illegal occupation could be dealt with, only in the last quarter of the past financial year.  Mdantsane had been the area of focus for USDG projects in the last financial year.

The issue of expenditure had since been addressed.  With the support of the DHS, the metro had established an enterprise management services office that would oversee project governance, pipelining, planning and reporting.  Part of the challenge the metro had to grapple with was the non-filling of positions at a senior level. There had to be capacity in order to support the projects pipeline in the future. In terms of recovery plans for the USDG, the composition of the bid committee had since been reviewed. This was an area where the Auditor General had qualified the metro, saying bid committees were being led by officials who were not permanently employed.

The metro had introduced a project tracker, so that it could track and follow up on projects. The metro would be able to see when departments did not perform, and could make a determination as to whether interventions were necessary. There had also been a change in how the metro budgeted for projects. Previously, substantial amounts of money were appropriated over a financial year for projects, and often the money would not be entirely spent. That had since changed -- all the projects had been better pipelined than before.

Of the R766 million USDG money, R538 million had been spent and there had been a variance of R228 million.  The bulk of the budget would be spent in the KWT region to provide bulk infrastructure and sanitation. Another significant portion would be used to unlock blocked housing projects. While challenges in coastal areas related to housing, in rural areas they were related to electricity and roads. The required budget to address some of the projects considered by the metro was in the region of billions of rands. A lot more money was needed to unlock projects.

There was an asset replacement plan in place, and increased funding was required. Funding would be split between expansions and the replacement of assets. The metro had also undertaken a modelling exercise during the planning stage of the plan in order to determine what additional impact it would have, prior to the project being undertaken. This was a long term strategy -- the metro did not seek an immediate quick-fix solution.

Discussion

Ms Sosibo sought clarity on the steering committees and asked whether community members were accommodated in such structures. She also asked if title deeds had already been prepared for houses that would be handed to beneficiaries next year.

Cllr Mgezi said the metro would improve on what was currently happening. The steering committee was made up of community members who were beneficiaries only. The observation on the beneficiary list management was correct, but the metro managed the list well. Management of the beneficiary list started as early as the planning phase of a project. The list would then be submitted to council during the planning phase. The metro was very careful not to tamper with names on the beneficiary list.

Mr Kevin Mileham (DA Constituency MP) wanted to know what beneficiary management processes were there to ensure rightful owners got their houses. He was aware of challenges with the housing waiting list in the metro. The presentation did not cite a single programme to address the housing backlogs. What was being done to address this? What was the target for next year, and how many houses would be delivered next year?   The metro had a backlog of about 30 000 houses that still needed to be upgraded.

Mr Mileham commented that he was concerned about the management of land invasion in the Fort Grey/Bhongweni area, where people had built formal housing on land owned by the state. How was the metro addressing that challenge?  What plans were there to address the issue of landfill management, given the increase in urbanisation?

Mr Fani replied that the land invasion at Bhongweni concerned a piece of land owned by the Department of Public Works (DPW). A request for that piece of land had been made in 2004, but there had never been a response from the DPW. In the meantime, communities had demanded services from the metro, and the metro had continually refused to provide those services because the area was privately owned. Analysis also indicated that the area was not meant for human settlement. The forest in that particular area had been damaged, and the Airports Company of South Africa (ACSA) had earmarked that land for expansion. A meeting had been arranged with the DPW, and the Department had indicated that it was donating the farm -- with all its challenges. The metro had refused the donation, because that meant the metro would have had to deal with the illegal invasion. The Department had been requested to find an alternative land for the relocation of that community.

Mr Fani said refuse was a challenge for the metro, so it had collaborated with the DEA and the Green Scorpions. The matter would never be successfully addressed.  A common trend had been for people to use their private properties as businesses without the required permission. Quantities of waste from a business were different to that coming from a private house. People ran away from paying for refuse collection as a business entity.  People could talk about the landfill sites, but without addressing the source of the waste, the challenge would not be overcome.

Ms Borman commented that it had been difficult to follow the presentation. She said she could not tie up the USDG grant what had been spent per area of spending. The presentation lacked target dates. The money was not linked to any performance targets and there were no deadlines. The presentation was badly arranged.

Mr Mokgalapa concurred, and said the presentation had been confusing   There had been a challenge with the targets as pertaining to the budget. It had been difficult to follow where the money had been spent. There seemed to be no alignment on how targets had been set, and how the budget had been implemented to achieve the set targets.

Mr Fani said the metro did not wish to confuse the Committee, but a few slides had been cut from the presentation. An annexure would be made available to the Committee so that it could follow where the money had been spent. The information was available.

Mr Mokgalapa said equally concerning was the fact that the presenter had glossed over sanitation, which was such an important area of delivery for the Committee.  The presentation had not mentioned a thing about the bucket system. What were timeframes for eradicating the bucket system?

Mr Mokgalapa sought clarity on the readiness of the metro to upgrade its accreditation to level two. He requested that the backlog on title deeds be explained. The metro also had a lot of blocked and abandoned projects. Why had this happened? The plans were good but sadly did not translate into actual delivery on the ground. The projects to which reference had been made were budgeted for, and the plans were there, but they were just not taking off. This was very much a desktop presentation and did not represent the actual delivery on the ground. This was the problem.

Cllr Mgezi said there would be engagement between the province and national government on accreditation before the matter of being upgraded into a level two municipality was resolved.

The Chairperson said the Committee would want to be kept informed of such engagements before any metro was upgraded on its accreditation. The challenge was that municipalities were upgraded, only to regress in a short period of time as a result of their inability to live up to delivery expectations. This called into question how municipalities were awarded their status. The Committee wished the metro could be accredited, but based on its capacity, this would not be easy.

Mr Fani said accreditation created problems for many municipalities.  There were political issues that administrators did not want to entertain. The metro had done all that was required, except for budget approval. When the time came to pay, it had had to run to the province and wait for considerable periods of time. This had led to contractors panicking for not being paid, and as a result stop-gap mechanisms had had to be devised.

Mr Matshoba sought clarity on the vacancies and when would they be filled, as per the opening commentary by Cllr Mgezi. He said he found it strange that shacks appeared to be blossoming in Mdantsane while there was a Prevention of Illegal Evictions and Unlawful Occupation of Land (PIE) Act, which was intended to fight that phenomenon. The matter of sanitation was concerning, especially in areas south west of KWT, where people constructed houses wherever they chose. In the Mdingi area, holes had been dug, and yet there were no top structures -- what was happening?

Cllr Mgezi replied that advertisements would go out soon for the filling of vacancies in the macro structure. Regarding the micro structure, there was still a process of consultation with councillors, but the metro had resolved that the micro structure needed to be adopted by the end of September.

Mr Fani said the metro hoped to fill the vacancies by October, but Buffalo City was not relatively attractive to skilled managers. Sometimes interference in the work of administrators became a challenge. This was the reason a policy had been crafted regarding the beneficiary registration process. The policy had been taken to council on 12 November 2012, and council would still have to be work-shopped on the policy.

Mr Fani replied that demolishing and guarding against the erection of shacks was costly. The process was usually prolonged, and some communities were aware of their rights. Capacity was required to deal with land invasion.

Mr Matiwane said the council had agreed that an alternative land parcel be found to relocate those people of Mdantsane who were encroaching on a historical cemetery. A team had been set up to find a piece of land and they would report to council on what land had been found to relocate that community.

The Chairperson said she would prefer it if the metro never again reported on money from the USDG being allocated to community facilities and cemeteries. There were departments who should be augmenting service delivery commitments around the provision of community halls. She welcomed the metro’s commitment on waste water management.

Cllr Mgezi replied that the comment on community facilities needed to be addressed at a different level. The understanding of the metro was that viable human settlements would encompass building such facilities as community halls. If the facilities were not in existence, communities always complained.

The Chairperson interjected and clarified that the observation was correct, but the point she was trying to make was that the facilities should not be built with money taken from the USDG. The grant funding was not meant for that purpose, but rather to be used for backlogs on infrastructure and bulk services. The background to the grant was that the Department was unable to fast track delivery of top structures because of backlogs in infrastructure. Spending of the USDG on issues other than infrastructure made it difficult for Parliament to motivate for increased funding of the grant.

The Chairperson said the metro should augment the budget from other departments, and this meant the delivery agreements would have to relate to provincial and national departments. The EC province had adopted a resolution that during the Integrated Development Plan (IDP) process, all sector departments should ensure officials were deployed to various municipalities. The Committee’s main concern was the credibility of the IDPs.  There needed to be an assurance that the resolution of the province was complied with.

Mr Fani said the when it came to the IDP process, government departments did not take it seriously. Junior staff were sent to sit at those meetings. He had had to send executive secretaries away from meetings last year. When issues were raised with government departments, there would be no response. The inter-governmental relations (IGR) component was a challenge to the entire local sphere of government.

The Chairperson said she failed to understand how the EC had such a massive backlog in title deeds. The metro should use such an office to the full advantage. The metro could even warn the deeds office way in advanced, before houses were constructed. This required a proactive approach during the planning phase. She said something was not clear about the targets, and it was particularly worrying that for a programme like sanitation in Mdantsane, nothing had been achieved throughout the budget period.

Mr Fani said some of the challenges relating to targets being missed were the result of non-performing contractors. There was now strict monitoring, and most contractors did not take kindly to this. It had been established that consultants connived with contractors, and this was the reason the Institute of Engineers had been called in. Some of the glaring failures on the targets related to a company called Khulanathi, who had failed twice to deliver and had just walked away from site. In another instance, a contractor in Mdantsane had invoked rescue clause.  In both instances the metro had terminated the contracts, and that had had a tremendous impact on targets being met. The capacity of contractors was also a challenge -- due diligence would be done on companies and yet they would fail. The metro had as a result appointed engineers who would follow project managers. But also it had been agreed that during the tender process, two companies would be appointed, especially if they were within the bracket of the budget. If company A failed, company B would be brought in without the metro having to go to tender and advertising again.

Mr Fani said title deeds processing was happening at a slow pace, but pressure was being put on the deeds office.

Eastern Cape Human Settlements input

Dr Sjekula Mbanga, Chief Operations Officer, DHS, said the province was comfortable with the proceedings, and had noted the issues raised around the use of the USDG and the Human Settlements Development Grant (HSDG). This had been a concern for the province, and it would therefore work with the metros to improve the situation. The province now worked on a longer planning pipeline.  The intention would be to line up all the projects and ascertain the state of readiness.  The province had already established its provincial programme monitoring unit (PMU). The province also wanted to track funding for all the sectors. The projects came from the IDP.  Sector departments would be engaged in the Medium-Term Expenditure Framework (MTEF), and in the annual performance plans (APPs).

The province supported accreditation as a policy and a national process, but the accounting officer would have to be satisfied that there was capacity before a function was handed over. There had to be a technical basis for motivation at the point where the MEC signed off accreditation. Officials should be able to advise the executive authority that there was adequate capacity to handle the functions, and that there was a plan to beef that up in future. Housing remained a competence of provinces and national government.

The IGR protocols were lacking. Often there had been situations where a municipality would agree it would provide a service, and planning would be done accordingly. But when priorities changed at that municipality, there was a failure in not alerting the province. Commitments needed to be translated into delivery agreements -- this would allow for work to be carried out as agreed during a specified period of time.

Department of Human Settlements input

Mr Mbulelo Tshangana, DHS, Deputy Director General (DDG): Programme Management Unit (PMU), said the presentations were packaged jointly by all three spheres of government. There had been significant improvement in both metros, and t they were “hands on.” There was credibility in the projects, as outlined in the business plans for the two metros.  In this financial year, 65% of the projects to be carried out at BCM had already been awarded contracts.  This was a clear indication that they had invested in the project pipeline.

From the beginning accreditation, was about capacity building -- it was never meant to be a box ticking exercise. There were a number of issues to consider, including whether the housing subsidy system was in place. There was also the beneficiary administration process, which was very tedious, and the question of assets, liabilities, human resources, and projects, all of which would be transferred to the would-be accredited municipality.  The Department needed to be satisfied all of these functions would be carried out at the municipal level. There also was a rule in public finance which stipulated that once ae function had been moved, funding for the function should also be moved. Accreditation was not a simple exercise, as huge sums of money became involved.  He cited Gauteng, accounting for over R4 billion, and said when that budget had been moved a decision had hadto be made on the assets in Tshwane, Ekurhuleni and Johannesburg. What then became of the staff in the regional offices, as well as the assets and the liabilities?  These were all issues that needed to be pondered before accreditation was granted. The accreditation panel was busy with all of those issues, and had promised that they would come and present to Parliament.

Closing remarks

The Chairperson said the Committee supported the accreditation policy, but it should not happen just for the sake of doing it. The metro should give an assurance that it had the capacity, and then it could sit with the national Department and discuss what was required for it to be accredited. The Department should assist the metro and also make available the report on what was required for accreditation. Public representatives needed to plan an active role in the process of relocating people, as there seemed to be mistrust between communities and officials. The beneficiary management list was dangerous, especially if not addressed appropriately.

The meeting was adjourned.