Housing Development Agency land acquisition challenges: Department Human Settlements update

Meeting report

Challenges faced by Housing Development Agency in purchasing or obtaining release of land and buildings for sustainable human settlements: National Department of Human Settlements (NDHS) briefing
Before the National Department of Human Settlements (NDHS) commenced its presentation, Ms M Themba (ANC, Mpumalanga) noted that the documentation was entitled “Presentation to the Portfolio Committee”. This was the Select Committee.

The Chairperson requested that the headings be changed, and that correct documentation be provided, if it was available.

Ms Sindiswe Ngxongo, Chief Operations Officer, National Department of Human Settlements, apologised and said that this was a typographical error. She would attend to correction and re-printing of the first slide.

The Chairperson asked her to ensure that this did not happen again.

Ms Ngxongo mentioned that the purpose of the meeting was for the Housing Development Agency (the HDA), one of the NDHS’s entities, to apprise the Select Committee of the challenges that it faced in regard to purchase and acquisition of land and buildings for the purposes of sustainable human settlements. Land formed the critical cornerstone for the development of human settlements. She provided a brief summary of what the presentation would cover. She noted that the HDA contributed to the Outcome 8 targets. The HDA was required to reach a target of having 6 250 hectares (ha) of land released for human settlements. It had managed to exceed this target, and a statement on the status of the land release in both the public and private sector would be given.

She noted that some of the land that the HDA was targeting for release was owned by the public sector, and this land resided with various departments. The NDHS and HDA were holding consultations continuously with the aim of finalising the release of suitable land for human settlement. There was also land which belonged to private entities or enterprises, and there was another forum in which the release of this land would be discussed. Both NDHS and HDA had experienced challenges in identifying and obtaining suitable land.

Housing Development Agency update
Mr Terry Adler, Chief Executive Officer, Housing Development Agency, also apologised for the oversight in relation to the Committee’s name, and said that it was the fault of the HDA.

He wanted to report back, firstly, on some concerns that were raised when the HDA had last appeared before this Committee. The issue of gender representivity had been raised. He noted that the HDA was represented, on its board, by seven women, and of the five members of Exco, four were women. He introduced his colleague, Ms Odette Crofton, General Manager: Land and Release projects, HDA.

Mr Adler confirmed that the HDA contributed to Outcome 8 targets. The release of 6 250 ha of land was the specific mandate and responsibility of the HDA. The HDA was also required to contribute to providing upgrading for 400 000 households, providing 600 000 units in the Gap Market and Rental Housing of 100 000 Rental units. Other categories of land included communal and privately owned land.

HDA was established to address the land acquisition and assembly process, so as to accelerate housing delivery and human settlement development. The two main objectives of the HDA were thus to identify, acquire, hold, develop and release well–located land and buildings. It would also provide project management support and housing development services. For the purposes of this presentation, however, he would be focusing on the land issues.

Programme Support: Land Assembly (Land Assembly Pipeline)
Mr Adler focused on the four areas of activity in the Land Assembly Support Programme. HDA must identify suitable land, and do a spatial analysis. It would carry out site inspection, town planning studies and feasibility studies in order to situate and identify the land. In the second phase, the HDA would acquire the suitable and identified land in its own name, and then release it to another organ of state. He noted that the HDA would only work in relation to other organs of state, primarily in provincial and local authorities, when negotiating for the land and land price, which was part of the conveyancing activities. He noted that there were still several grey areas around rights and title. This was particularly so for the communal lands and it was also a major issue in settlement upgrades.

The third stage was the legal negotiations that was the culmination of the earlier processes. The relevant organs of state to whom land was transferred would have to hold such acquired land in accordance with the plans of provincial and local authorities over that land. The peripheral issues that also needed to be considered would include issues around security, maintenance, rates and taxes and Service Charges against the land. HDA would then start preparing the land for development and release. The range of activities involved would include development planning, rights or bankability, project packaging and investment plan. Together, all these elements were referred to as the “Land assembly pipeline”.

Mr Adler reiterated that the HDA was dealing with land in both the private and public sectors. Different legal processes were involved. At a national level, the three major custodians of public land were Department of Public Works (DPW), Department of Rural Development and Land Reform (DRDLR) and State Owned Companies (SOCs). SOCs were mentioned in particular because there was a difference between how HDA dealt with them and other government departments. He explained that an SOC’s land or buildings had to be acquired in a market-related transaction, therefore funding was required. At a provincial level, Housing Boards and various Provincial State Owned Entities also held land to be purchased. At the municipal level, there were Municipal–owned land, commonage, and assets of Municipal Entities such as the Johannesburg Property Association, where once again there was a requirement for market-related funding.

When dealing with the private sector, this might involve private individuals, trusts and private companies, and the range of options included outright purchase, possibilities of expropriation and the possibilities of donation. The HDA was presently dealing with a donation negotiation in respect of land being acquired from a mining company in the Rustenburg area.

Public Land
Mr Adler reiterated that the public land acquisition involved the DPW, DRDLR and SOCs, mostly Transnet and Denel. HDA identified 24 266 ha of land that was suitable for development in DPW, 16 068 ha of land which was suitable in DPDLR and 2 430 ha with SOCs, at an estimated cost of R341 million. Those were seen as the main sources for acquisition of state owned land. Mr Adler tabled a map showing where the land was situated, mostly in the central regions (see attached presentation). The land would be requested for release by either a provincial or local authority. However, the land identified and in respect of which requests for release were made or pending was a drop in the ocean compared to the identified need.

Mr Adler reiterated also that the HDA had managed so far to have 7 315 ha of land released, which was in excess of its target of 6 250 over a five-year period. He noted that once land and land acquisition fell into the public domain, the cost of land generally would rise dramatically. The HDA identified the potential yield of housing units. From the land it had acquired, there was the possibility of 32 183 units.

SOC-acquired land
Mr Adler showed another graph and table showing the SOC properties purchased, indicating where they were situated, by province and municipality, the extent, cost, funding and potential yield. The bulk of funding received was from provincial grants and HDA private funds. However, he made the point that the HDA did not have a capital grant and this funding had been acquired by savings accumulated over a three-year period, from the Treasury Committee.

He summarised that in the five years of its operation, HDA had spent R54 million acquiring land from SOCs. Here, the potential yield would be over 6 700 units.

Identified Private Land
Mr Adler moved on to the private land identification. Here, the HDA had identified over 12 000 ha of land for release and the indicative price of this land would be R1.412 billion. This, however, was merely an indicative price because there was  no funding. The deposits would be paid by the province or local authority. He would return to this issue later when specifying the challenges.

HDA Land holding
The HDA itself owned approximately 850 000 ha of land. Much of this land had come out of portfolios of the NDHS, which originated from Transnet by negotiation. It was also intended for release to the local authorities mentioned on the presentation.

Processes
Mr Adler noted that the HDA having identified and acquired land, would then do project-packaging of that land, for mixed or rental housing development, on request from provinces and in support of municipalities. HDA only worked on that basis, on request and would not take any independent actions of its own accord.

He noted that the Transnet acquisitions comprised buildings being released to the social rental housing sector for development and management, including those in the downtown Johannesburg area. He emphasised again that the release of land or development by HDA was dependent on the provinces or municipal specifically requesting HDA support for implementation of projects. Factors also taken into account included infrastructure availability, capacity to develop land or buildings locally, planning for land to land or project pipeline interface. Increasingly, it was recognised that land should not be acquired just for the sake of doing so, but there must be an end target in mind.

Release of Communal Land for Human Settlements
Mr Adler said that HDA had been predominantly involved in discussions towards the release of communal land for human settlements, particularly in the more rural provinces like Limpopo. Compensation was one f the major issues. Traditional Authorities tended to insist that the land could not simply be transferred but that monetary compensation was required. Other issues included whether bonds could be obtained for tradeability, in security or for obtaining finances or mortgages. HDA first tried to assess what land was occupied as state owned land or state land allocated to traditional authorities. For this, DRDLR was the nominal owner. Significant discussions were needed, to get community resolutions, and with authorities in control of or having access to that land. The various dynamics involved caused significant delay. In addition, Mr Adler stressed the need to bear in mind informal land rights such as grazing and agriculture. The community must agree to the envisaged development.

Conclusion
Mr Adler wanted to reiterate once again that HDA had reached and exceeded its target. From the land acquired, 32 000 potential housing opportunities from the land which had been released could be realised, and that could increase to 38 000 with lands owned by the SOC. At this point in time, the bulk of the released land emanated from DRDLR, but not from the other two public sources. There were some strategic land releases on the books. However, the major concerns of the SOCs related to compensation, because these SOCs had to justify their balance sheets and were not able to merely release land at nominal cost. The involvement of the provincial land departments needed attention. Only 17% of the land acquired had been released at provincial level, with the major focus to date at national level.

Challenges
Mr Adler tabled the challenges and some of the mitigatory actions taken to address them. Buying of private land remained a challenge, which could be addressed by capital being made available. HDA was working with the departments and the provinces on forward planning, which is the key to the nationally agreed strategy. There were two trusts – the first in the short term, to ensure that business plans of provinces were linked to a land pipeline and that funding was allocated from the current grant flow. The longer term plan would be to extend that over the next three to five year period so that funding was allocated specifically for private land acquisition.

The acquisition of public land posed challenges in relation to the turnaround time. The necessary steps to verify were time consuming. The HDA further faced competing claims from other state departments, such as education, justice and police sectors who might also be seeking land. Sometimes land acquisition could also be compromised by change in specific pieces of land, like changes in departments. The process whereby HDA put forward proposals and motivations was also time-consuming and have negative impacts. It was important, finally, to remember that the decision whether to release land rested with the owners, so the mandate of both NDHS and HDA was limited to identifying and then negotiating for release of the land; it could not simply release it itself.

It was important to remember and abide by the processes for land release, but it was also possible to try to speed this up. There was a Joint Co-ordinating Committee (JCC) which monitored and assisted with engagements between government departments, and there was monitoring of what land was requested or release. HDA would, wherever possible, try to discuss and negotiate with different departments where there were competing interests in the same land, but key approvals and sign-off should be expedited to ensure compliance with the state releasing land.

Mr Adler said that although the HDA did own some land itself, this was very small in comparison. Here, some of the problems related to infrastructure planning and availability. HDA could acquire land on which no infrastructure or planning was in place, or where links with projects had not been established, and there could be problems with the local authorities giving township approvals. To answer this challenge, planning was required, as well as getting support from the relevant government departments and setting up the approvals process, an the process of planning in the municipality. He commented that lack of planning was perhaps one of the biggest issues that the HDA faced. Ideally, release of land should be a planned activity stretching over many years, with a pipeline process, and proper allocation of funding. He stressed that HDA was not actually authorised, in terms of its founding legislation, nor empowered to force compliance. All the work that it did, with provinces and local authorities, was based on negotiation and agreement.

Way forward
Mr Adler hoped that he was not painting too gloomy a picture and said again that although HDA had challenges, it had exceeded its target. He also stressed that a National Land Strategy Settlement was being developed, as illustrated on the final slide. This placed emphasis on forward planning and set a basis for proper funding by the different spheres, interacting with the current grant structure. The HDA would have to position itself and align its own role in the medium term operational programme. He reiterated that the HDA was focused on achieving national priorities. He noted that the specific mining projects, infrastructure programme and informal settlement upgrades were all linked in to Government Outcome 8. HDA was aware that it should not miss out on any opportunities, in particular in the private land field.

Discussion
Mr H Groenewald (DA, North West) noted the mention of the Rustenburg area, specifically the mines’ donations and mining land, and wanted to know which mine was involved, and where the donations were. The Northern provinces tended to be very rural and this would be an important event.

Mr Groenewald also wanted more details on the areas where HDA was interacting with traditional leaders, and what successes had been achieved. When last the HDA interacted with this Committee, it seemed that its involvement was only limited to five or six provinces and he wanted to know if it had now extend its reach, and where its offices were. Although HDA had shown a map, it was difficult to see exactly where the land had been identified, and the extend of the land in each of the provinces. The details were needed.

Mr M Jacobs (ANC, Free State) asked if the NDHS had a master plan for the development of houses, particularly in the municipalities, so that the latter would be able to know exactly what areas it should be identifying, and create plans for housing development. If the HDA set targets without dealing with that specific aspect, he felt that the targets would be difficult to achieve. Municipalities would have to get prime land, which was very expensive, particularly if situated near areas of work, and he wanted to know how that particular problem of costs could be solved. He asked if the HDA had ever encountered the situation where an entity or department had actively refused to release land, and, if so, how this would be resolved.

Mr Jacobs noted that in Free State, there were numerous municipalities, and he wondered where specifically the HDA was dealing with land. At the last meeting, there was reference to his own area of Dihlabeng, where he had formerly been the Mayor. He asked who had provided funding there, whether it had been the HDA or the NDHS, and how repayment would happen.

Mr Jacobs said that during the last meeting he had specifically asked about the land audit, which was still awaited.

Ms Themba needed to get more details on release of public land, and sought more clarity on what HDA was doing, or whether it was involved, in provinces not shown on the map, such as Mpumalanga.

Ms Themba noted the summary of the identified land problems and said that although houses were mentioned in Gauteng, she needed to know exactly where they were, and the same applied to North West and Mpumalanga. Also, in relation to transfers of land from Denel and Transnet, she wanted to know which land, and where it was situated, had been acquired. It was necessary to be more specific when referring to challenges and mitigation measures. It was very important to set out the challenges, details on private land, capital, how HDA was working with DHS, linked to a nationally agreed strategy, and she pointed out that Members had only six months of their term left to hear about these issues. She sometimes felt that HDA was taking some of the problems too lightly, and was also, on the other hand, not confidently stating what exactly it had achieved.

Ms Themba noted the reference to other departments but asked which were being referred to, who was involved in the Coordinating Committee, and commented that full information was needed on that. Members had to be apprised of all the facts and be able to assess the situation for themselves. She did not feel that the presentation showed enough.

Mr Z Mlenzana (COPE, Eastern Cape) did not want to repeat what other Members had said. He had checked back to his notes from the meeting on 28 June 2011, hoping to see positive movement on the part of the HDA, but noted that the same challenges were named again, specifically the lack of preparation and planning. The NDHS and HDA should prove what positive actions had actually been achieved. The same comments applied to the challenges named in respect of acquiring private land; in June 2011 the same challenge of funding was raised, and the lack of alignment was also mentioned then. He, like Ms Themba, felt that the HDA had produced a list of challenges and mitigatory measures but no actual time frame was given to address the issues, and it seemed that the HDA was merely trying to impress Members with a presentation that essentially did not say anything new. He hoped that his impression that nothing had in fact been done could be challenged and proven wrong.  

Ms L Mabija (ANC, Limpopo) also expressed her disappointment, as she had done in the past. Once again, the NDHS appeared to have produced a “cut and paste”  from a previous presentation, and she was particularly concerned that departments did not accord the same respect to Select Committees as Portfolio Committees. The NCOP was an entirely different structure, with different needs, and all departments must discontinue this poor practice. She thought that either the Department did not have information, or was withholding it, and she thought it was the latter. Each month-end the officials received paycheques for the work that they were supposed to be doing. They had to provide value for money, and she was concerned that it was the people on the ground who most needed assistance that were not getting it.

Mr Mlezana wanted to know the difference between core housing and social housing and corporate housing. He noted that he was still awaiting an answer to this question, asked previously, from the NDHS.

Mr Jacobs wanted more clarity on the assertions around the land pipeline.

The Chairperson wanted to know if the NDHS had a system monitoring its staff, and said that the reason for asking this was the similarity with the 2011 presentation. He emphasised the importance of providing full details and numbers to the Committee. He noted, and it was also shown on the map, that the challenge was that the land acquired was a mere drop in the ocean in comparison to the needs, but it would be very difficult to really address this without the necessary provisions being in place. He would have preferred to hear which of the nine provinces was experiencing the major problems, and for the NDHS then to specifically target that. There were challenges, clearly, but it was not actually specified what exactly they were, and the entities had to be more open and state what they needed.  For example, if some of these challenges needed changes to the legislation, then the Department must inform the Committee of this.

The Chairperson, like other Members, had noted, when listening to the presentation, that the same issues were being raised, such as challenges in relation to infrastructure, planning, the project pipelining, and local capacity. He felt that local government was a challenge, but asked what exactly the NDHS was doing as it was supposed to be assisting in planning. He suggested that the Minister could be told of the problems and the need for departments to work together.

The Chairperson referred to Mr Jacobs’ questions around the audit and asked if the Department had met with the proper authorities to audit lands in the former homelands. There had been reference to “traditional land” but he wanted to know where exactly it was. The previous homelands never really had one piece of land, as there were several privately-owned areas. He stressed that the NDHS should do the research and the Members should thereafter assist in formulating proposals.

The Chairperson felt that there was general lack of planning, commenting that the Department had not looked to its own sector, and there was no evidence of how often, or indeed if at all, the NHDS had interacted with local government or other people. He asked who specifically was supposed to attend to acquiring the land. This problem had also been raised in June 2011.

Responses
Ms Ngxongo wanted to put matters in context. In 2010, the NDHS had gone through a turnaround strategy and a new Programme Management Unit (PMU) was formed, which was core to the Departments business. That branch was created to address the challenges that Members referred to. There were improvements, but perhaps the pace was slow. The Head of Department had joined the NDHS only in May 2013, and after this person joined, there was a different way of dealing with municipalities, the results of which would only be seen as the Department moved forward.

Ms Ngxongo referred to discussions around the Master Plan, and said that this too was moving forward, and part of the turnaround had involved an examination of how land issues fitted in to the overall plan. The NHDS had tightened up its engagements with provinces and municipalities.

In relation to the challenges of funding, Ms Ngxongo wanted to note that the Executive Management team met every Friday to deal with funding issues. Various proposals were made, business plans were development and presented to the National Treasury for the future funding of HDA. She conceded that instead of merely stating that matters were moving forward the NDHS could put a specific timeframe. There were various initiatives going on, but the details had not been provided in this presentation to avoid overloading it.

The Department was working on the National Land Assembly Strategy, and in the following two weeks the NDHS would be working on plans with municipalities and provinces, in recognition of the fact that unified planning was needed. There was a need to set the stage by when the Department should identify the land for human settlements an the planning for that land, so that would be fed into the pipeline. There was a need to start early, in order to work towards targets.

Ms Ngxongo confirmed that there was monitoring on the performance of entities, although this may not be at the optimal level, but it was being done on a quarterly basis. The municipalities and local governments were present with the purpose of getting a general agreement and avoiding one pointing fingers at another. She confirmed again that matters were moving forward. She agreed that the NDHS perhaps should not be so economical in providing information to the Select Committee and needed to show the Members where the Department was going.

Mr Adler added to the comments, and asked that Ms Crofton add to his comments to give more detail.

Mr Adler noted questions around what had changed from the time of the last presentation. HDA was given a target for land release of 6 250 ha. It had exceeded that by releasing over 7 300 ha for development. That was not something that could have been said in 2011. There had, therefore, been movement, and HDA had achieved its target.

In relation to mandates, he noted that HDA could work only with those departments and entities who actually had a mandate to give delivery. HDA was not set up for, nor funded for delivery of human settlements, and this function must be done by the partners who were actually responsible for the development. The Constitution mandated this function to the provincial and local authorities. HDA would ask those authorities to state how HDA could help them, but this had to be formalised by entering into agreements with those authorise.

Mr Adler said that HDA’s areas of activity were defined by where the formal agreements had been reached. The land activity represented on the maps was the result of specific requests from the local or provincial authority. Where nothing was shown, no request had been forthcoming from the specific authority. HDA only had agreements with seven of the nine provinces, because only there had it been requested to assist. In Mpumalanga, there was no agreement. Mr Adler reiterated that if HDA had not been specifically requested to assist, it could not do so, and it worked only in areas where it was requested to do so.

The HDA was established only in 2009, and it had spent some time in gearing itself up and hiring staff and resources were an issue, and in the initial phases, the idea of what HDA was to do changed from the idea of mere land verification, to land release and development. It may be thought that it was an easy exercise to identify public land, by checking the Deeds Registry, but this was not sufficient as HDA also had to ensure that the land that was available was incorporated in plans. Planning was not done in principle by HDA, and development of the pipeline process could take five years or more. He clarified that what the HDA had identified was, in comparison to the demand, very small, because the demand for housing ran to millions of units, but he firmly believed that HDA was making progress.

Ms Crofton answered the questions on the Rustenburg area, and said that HDA was working in the North West province and with the Rustenburg municipalities. Over the last month, there had been discussions around the donation of land. It was possible both to receive and request a donation, and that was what HDA was trying to put in place. Lonmin was the mining house that had offered a donation, but prior to that request, HDA had been called in by the province to look, specifically, at the Marikana area and how it could identify, acquire and facilitate the overall land process there. The donation deal was offered at the right time, and it would ensure that there was an overall view taken of Marikana, not a piecemeal development in only some areas. The process was being negotiated and HDA would also facilitate. Donations were not accepted automatically; HDA would first ensure that the land was suitable for proper human settlements, and then would advise and make recommendations to the provinces and municipalities on the donated land.

Ms Crofton noted the comments and questions around communal land and traditional lands. HDA had come across this issue in North West, Limpopo, KwaZulu Natal and Eastern Cape. She could not say that there was a particular formula that worked, but HDA had learned from the process and realised that every province was different. In Limpopo and North West at the moment, rural development was the main focus, but a different approach and strategy could apply elsewhere.

Ms Crofton amplified on other key changes in the HDA and its approach. When she joined HDA in 2009 there were three staff members, but this had risen, to date to over 100, with 105 planned. Most of the staff were in the provinces. There was a Project Office in Cape Town, which was dealing with the N2 Gateway Project and another in the Nelson Mandela Bay Metro which dealt with the Zangula project. There were also offices also in Limpopo, situated in the provincial Departments of Human Settlements in Limpopo, and Polokwane, and Free State, with another presently being set up within the provincial Department in Kimberley. In the next six months, HDA would expand further and by 2014 it should have a footprint in all provinces. Where there were provincial offices, HDA provided the entire provincial land assembly, especially dealing with public land. HDA also created a provincial committee which brought together the Departments of Rural Development and Public Works planning, to help with integrated planning around state land n a day-to-day basis. HDA was also looking into infrastructure and settlement upgrading work, and was collating all details in preparation for a more rapid assessment. When the HDA had a fully-fledged office in the provinces, all its services would become available. Ms Crofton also mentioned that HDA had an entire Geospatial service tailored for human settlements planning, which was also made available to the provinces. This was another substantial change between 2011 and now.

Ms Crofton noted the concerns around prime land. The starting point was to recognise the national priority and the national development plan, and clearly the HDA would not identify land that was not suitable for human settlements. However, it had to be guided by provinces and municipalities, looking at housing needs, context, what was currently planned, what was to be made available, and also undertake a detailed analysis into feasibility, in consultation with all local role players. Some municipalities had larger land areas available than others, and although the HDA was not necessarily looking for smaller properties, it could take what was offered. In urban areas, larger areas of land could be desirable but not possible to achieve. Most of the SOC land tended to be small areas that were formerly used for railways, but it was possible to transform them. However, she reiterated that HDA would not accept just anything as it was specifically looking for land suitable for its specific criteria. It also was not looking at land outside the urban boundaries, unless, as in Limpopo, specifically requested for lands in villages.

Ms Crofton expanded on the provincial spread, noting that a lack of indicators did not necessary mean that HDA was not working in the provinces. HDA would receive a detailed report, each month, from the work being done in the provinces, and many properties had been pre-audited and were in the pipeline for working on.

Ms Crofton said that the HDA did also have a register tracking private land acquisition, and she could provide details of any specific property if requested.

Mr Bheki Nkanyane, Director, NDHS, said that he had to conceded that the NDHS and HDA had not perhaps emphasised their achievements enough. Despite the challenges, they had made significant achievements, and he too emphasised that it would not simply acquire any land, but suitable land, and had to provide a guarantee that the land was suitable and compliant with the standards expected.

Chairperson’s concluding remarks
The Chairperson concluded that was encouraging to hear of a specific task forming part of a legacy. He reiterated that the committee needed specific information on the jurisdictions and areas where it was working.

Ms Themba suggested that if Ms Crofton had led the presentation it may not have been necessary to ask so many questions. She was satisfied with the responses.  

Ms Mabija agreed with Ms Themba that the presentation should have stressed its achievements at the outset.

Mr Jacobs wanted more details to be sent to the Committee about the land in the townships, not only Transnet. He was not quite satisfied since the NDHS had not in fact done what it was asked in a previous meeting. He was not impressed with the presentation but the responses to questions were better, although details of implementation were still lacking. He stressed again that it was necessary to show all information. He commented that instead of continuous reference to planning, there should be action shown.

The Chairperson asked the Department to consider the Committee’s input and to integrate its suggestions.

The meeting was adjourned.