AG management report on utilisation of consultants; briefing by Department of Human Settlements; Closure of Thubelisha, Servcon and National Housing Fund; Housing Development Agency Regulations: finalisation

Meeting report

Opening Remarks
The Chairperson started the meeting by expressing pride and congratulating the Committee on their debate from the day before, during which the rest of the Members of Parliament were excited for the legislation that they had produced. The Department had also done a lot for the Committee, both sides fought on a number of issues, but the good legislation was the outcome of such fights.

The Chairperson said the Department had requested not to deliver the briefing on the utilization of consultants as they were still working with the Auditor General (AG) on how to address it, as there was no comment from the AG on the matter. However, the Department would still come and present to the Committee on how they had used consultants and all the details. It was important for the Committee to understand this as in the last two years there had been reports on the expenditure for consultants.

Briefing by the Department of Human Settlements on the closure of National Housing Fund
Mr Nyameko Mbengo, Chief Director: Financial Management in the National Department of Human Settlements, briefed the Committee on the closure of the National Housing Fund. To give a background, the National Housing Fund was created in 1966 and subsidized housing projects from the Fund. Both provinces and municipalities applied for funding of housing projects which was granted as loans. In line with the provisions of Section 11(1) of the Housing Act of 1997 (Act No. 107, 1997), funds allocated for housing development were transferred from the national vote to the South African National Housing Fund. Funds which were not utilized remained in the fund and did not revert back to the fiscus.

The introduction of the Division of Revenue Act (DoRA) meant that funds were to be transferred from the national vote to the provincial vote via provincial treasury. This rendered the National Housing Fund dormant. As a result in August 2003, MinMec approved the disestablishment of the South African Housing Foundation (SAHF). On 18th November 2003 the SAHF was de-listed from Schedule 3A of the Public Finance Management Act (PFMA). The closure or the disestablishment of the SAHF could only be effected via the amendment of the Housing Act (Act 107 of 1997). Subsequent to the de-listing, action had been taken to amend the Housing Act in order to effect the disestablishment of the SAHF. This has led to the Housing Amendment Bill. The Housing Amendment Bill was however withdrawn as a result of the change of mandate of the Department.

The way forward from thereon was for the Department to embark on a process of developing a green paper. According to the Departments Medium Term Strategic Framework (2014 – 2019), it was anticipated that the current Housing Act would be amended in 2017, and in terms of moving forward, be known as the Human Settlements Act.

Discussion
Ms M Borman (ANC) had an issue with funds that were not utilised, remained in the Fund and did not revert back to the fiscus. What was the state of that fund? Was it in an interest baring account? What were the financial implications in this regard?

Mr Mbengo replied that the funds that were not utilized were invested by Treasury with the Reserve Bank. Though he did not know the exact amount he said it was about R25 million.

Ms Borman suggested that in the next meeting with the Department, the Committee could be provided with a detailed account of the funds as they were when the Fund was closed in 2003, the interests accrued and the status today on those funds.

Mr Mbengo said the Fund had been dormant; the interest was managed by Treasury and did not go to the Department. In the books of the Department it remained the same amount and the interest went to the fiscus.

Mr K Sithole (IFP) asked if the Housing Act that would be amended in 2017. Why were the amendments taking so long?

The Chairperson asked how long it took to produce a Green Paper. If the process started with the proclamation of the name change by now the Green Paper process would have been close to being concluded.  There were challenges presently and the amendments were expected in 2017, this meant there would be no delivery on the Housing Act because it would come in 2017 and in 2019 that administration’s term would be over. Three terms of administration would be dealing with amendments of one Act.

Mr S Mokgalapa (DA) said in 2013 when the Committee had a strategic workshop with the Department, provinces and municipalities, there were timeframes that were provided regarding the Green Paper. It should have been submitted in the last quarter of the previous year. Now the timeframe had changed to 2017 which was unacceptable.

Ms Sindisiwe Ngxongo, Chief Operations Officer of the National Department of Human Settlements, said there was no excuse and acknowledged that the Portfolio Committee had expected the process of the Green Paper to be fast tracked. She proposed that the Department come to the Committee and give a full progress report; so far the Department had gotten the Council of Science and Industrial Research (CSIR) to assist with the development of the Paper. The 2017 timeframe as indicated in the report had changed and the Department was looking at a period of 18 months.

Mr C Mathele (ANC) said the comment by Ms Ngxongo did not make sense, as the Department had prepared a report saying 2017 and now she was giving different information. In this instance, what was the Committee expected to believe, it was as though the Department in the preparation of the report did not expect the Committee to question this.

Mr Mbulelo Tshangana, Deputy Director General: Project Management Unit, said in the NTSF document prepared by the Department of the targets for the coming term the Department was caught in a number of deliverables of what they wanted to achieve - the amendment of the Housing Act was one of them. The housing Act was the mother of all the other pieces of legislation of the Department, there was a lot of research that needed to go into some of the proposed amendments.

The Chairperson said sometimes diplomacy was a hindrance. The issue at hand was that the Committee had raised the matter on many occasions, even before Mr Tshangana joined the Department. The message to the Department was that they had disappoint the Committee and denied the Committee an opportunity to work on the Act and be a product of the fourth Parliament. Bottom line was that the Department had not done justice to the citizens of South Africa.

Briefing by the Department of Human Settlements on the closure of Thubelisha
Mr Morris Mngomezulu, Chief Director: Strategic Management in the National Department of Human Settlements, set out the synopsis of the closure process for Thubelisha Homes as contained in the Close-Out Report dated 31 March 2012. The presentation was prepared by Learning Strategies on request from the National Department of Human Settlements. Learning Strategies responded to an invitation to tender for the closure of Thubelisha and Servcon and was selected by the then National Department of Housing (NDoH) to facilitate the closure of Thubelisha Homes.

The NDoH set about the establishment of the Housing Development Agency (HDA) in 2008 to acquire, develop and release suitable land for housing development. Some of these functions were previously performed by Thubelisha and Servcon. A decision was taken by the NDoH to close these entities and service providers were appointed to facilitate the closure process. Learning Strategies was appointed to assist with the Thubelisha Homes closure process as a voluntary liquidation of the company

The closure process had extended over a number of years due to practical and legal constraints, including delays and difficulties in reaching settlement with Provincial Departments and creditors, re-deployment of the staff of the company, alienation of land registered in the name of the company and numerous other constraints and decision delays. The company was placed in Voluntary Liquidation on 29 March 2012

Voluntary Closure  in Context
Any company could be closed voluntarily by its shareholders/directors or in terms of its Memorandum of Incorporation, this assumed that the company would settle all its liabilities in the process. If there was a shortfall between assets and liabilities then the company would face forced liquidation unless alternative funding was available.

The closure of Thubelisha was a voluntary winding up of the company which assumed either the company could settle all its liabilities or that Government would fund any shortfall. Voluntary closures could be accomplished by ceasing to trade/operate, disposal of assets, settling liabilities and terminating all commitments including obligations to staff. The company should be free of all assets and liabilities and could not be finally liquidated until assets and liabilities were disposed of. As a Non Profit Company, any surplus remaining after the closure of Thubelisha would need to be applied in terms of the companies Memorandum of Incorporation, normally for a similar purpose as that of the company before closure.

Overview of Progress to Date
2008 - Decision to close Thubelisha and Servcon;
March 2009 – Closure Plan accepted;
July 2009 – Operations of Thubelisha discontinued and voluntary severance packages offered;
Aug 2009 to March 2010 – Thubelisha Closure Team in place;
March 2010 – CEO resigned and Closure Team terminated;
March to June 2010 – Redeployment of remaining staff;
2010 – All contracts terminated and all moveable assets transferred;
2010 and 2011 – Reconciliation and settlement with all Provincial Departments;
2010 and 2011 – Legal matters defended and settlement with creditors;
29 March 2012 – Placed in Voluntary Liquidation ;
20 July 2012 – Liquidator appointed; and
2012 and 2013 – Remaining contractor dealing with land transfers.

Settlement with Provinces
All the projects were terminated by 31 March 2010 and detailed reconciliations were negotiated with all provinces. Settlements were agreed with certain contractors where liability could be proven. All funds remaining with Thubelisha were returned to provincial departments as part of the final settlement. There were no further or on-going responsibilities between Thubelisha and provincial departments.

Staff Matters
The closure process was accomplished without any forced retrenchments as per the Minister’s requirements, voluntary severance packages were paid in July 2009 and some staff had been redeployed to the HDA in July 2009. The balance of staff was eventually redeployed to provinces or the National Department between March and June 2010. All the redeployed staff initially received 1 weeks’ pay per year of service as a partial retrenchment and compensation for redeployment; this was paid in August 2009. In order to align the retrenchment packages between Servcon and Thubelisha, an additional week per year of service was paid in March 2010. There was currently no staff employed by Thubelisha,

Legal Matters
Various legal matters had been dealt with during the closure process; all have been settled or successfully defended as required. Some key matters included:
Verern Construction – Liability agreed and settled;
Stimela Developers – Claim by KZN Contractor for loss of profits – Defended as claimant could not prove the claim;
Sobambisana – Claim and counter claim agreed and settlement achieved with assistance of Western Cape Provincial Government;
Ibuyile – Claim and counter claim agreed and settlement achieved with assistance of Western Cape Provincial Government;
Dirkale – Liability agreed and settled;
Chatty 600 Emerging Contractors – Settlements agreed by negotiation;
Western Cape Provincial Government – no formal claim submitted. Detailed account of reconciliation provided; and
Metro Builders – Claim intimated by Metro but never submitted to Thubelisha. Thubelisha had never had a contractual relationship with Metro Builders.

Land Transfers
The land transfer issue was the single matter still delaying the final liquidation of Thubelisha. The company could not be liquidated until all land registered in its name was transferred. There were a total of some 700 stands originally identified and after the initial transfer, 323 problematic stands remained;
149 had been transferred; 37 more were ready for transfer; 102 stands in Doornkop, Gauteng, were held up pending the lifting of a moratorium on transfer due to stands being below the flood line. 54 stands in Khayelitsha, Western Cape, were held up by the City of Cape Town refusing to issue rates accounts or certificates. 4 vacant stands in Khayelitsha were actually roads and need to be dealt with by the City
12 more stands in Cape Town had to be sold and transferred.

Other Matters
All assets of the company (mainly furniture and computer equipment) had been recovered and distributed to schools, the HDA and Provincial Departments. All contractual relationships had been terminated with the exception of IT services and a printer rental which would be terminated once all land was transferred. The company no longer incurred any other monthly costs for facilities or offices and made use of an office at the service provider at no cost. Thubelisha overpaid PAYE in the final month before closure in the amount of R 1 074 665, SARS had acknowledged this liability but had not returned the funds.

Financial Position
The Financial position of Thubelisha at the time of closure was precarious with significant losses recorded and substantial liabilities anticipated. The closure process had successfully negotiated settlement of all liabilities and reached agreement with all provinces on the project reconciliations and return of remaining funds. The closure process also negotiated approval for implementers fees and project management fees amounting to R142 million.

The result was that Thubelisha had been able to cover all of its closure costs (except for specific closure grant funding of R 16.2 million) and convert an accumulated deficit of R 166 million into an accumulated surplus of R 46.4 million. The financial results and annual report had been audited on an annual basis during the closure process with no adverse audit findings.

Discussion
Mr Mokgalapa asked who took the final responsibility and liability for the properties that had been transferred, was it the owner or an entity where people could go and report their grievances to after the closure of Thubelisha. The same question went for the outstanding legal challenges. Who would have the responsibility of them after the closure of Thubelisha.

Mr Mngomezulu said some properties were in the name of Thubelisha and that was a question of registering title deeds and transferring the properties. There were also properties that were vacant stands that had been donated back to local authorities to build new homes since Thubelisha ceased to exist. Regarding the outstanding legal issues, Thubelisha would not be closed if there were still pending legal issues, it was anticipated that by the time things got to the Master of the Supreme Court there would be no outstanding legal matters, liability or assets.  

Ms Borman said it seemed that only Gauteng and the Western Cape still had stands to be transferred and it seemed minor things were causing the delays (such as rate certificates). What was also disturbing was the SARS issue, how hard had the Department tried and who had they spoken to to get the funds back. Furthermore, the Committee had to submit a legacy report the Department should not think some of the issues raised and said they would be dealt with in six months would fall off, they would be in the report and the current Members would follow up on them.

Mr Mngomezulu said the releasing rate certificates were a big problem; there was a permanent person from the Department who was working on that with the City of Cape Town to resolve the matter. There had been meeting at senior level and there had been promises that this would be fixed. Perhaps the Department needed to look into other Intergovernmental Relations (IGR) process in order to release the rate certificates. Without rate certificates properties could not be transferred as the Deeds Office needed rate clearance certificates.

Ms Funani Matlatsi, Chief Financial Officer of the National Department of Human Settlements, said there was a letter written by former Minister Tokyo Sexwale addressed to the Mayor of Cape Town and Commissioner regarding the matter.

Ms Borman asked if it was not possible to bring in the MEC of the province to crack the whip with the Mayor and if that failed then the matter needed to go to the Premier.

The Chairperson asked what other processes were there, in the IGR; the Department could not just wash its hand off the matter. The matter had been prolonged for far too long, there should have been timeframes and timelines. In both the Western Cape and Gauteng, the Department should have approached the respective Premiers by now; they were all in government and they had the same mandate. The government bought the land, the land had to be released to the people.

Ms J Sosibo (ANC) asked if the staff of Thubelisha were given an option to take the package or not to and stay for redeployment. Also, regarding the statement that Thubelisha never had a relationship with Metro Builders, who then did Metro Builders have a contractual relationship with.

Mr Mngobezulu said Section 189 of the Labour Relations Act says that should your work conditions change, you have to be given the option of either accepting voluntarily a severance package or be given a choice to occupy a new post with new condition. Since Thubelisha was closing it meant that the condition of employment of their employees Section 189 was applied.

Ms Matlatsi said Metro Builders came to the National Department, the Department took over investigating the matter and found that Thubelisha did not have a contract with Metro Builders but had a subcontract with Verern Construction. However, there was a settlement done with the Eastern Cape and an amount of R89 million was paid the province with conditions that any contractors still continuing with the work that Thubelisha had at that point be paid, and the Eastern Cape agreed to that condition. There would be a report to the Committee as to how Metro Builders would be assisted, as they did the work and needed to be paid. The question was; who would take responsibility for ensuring Metro Builders got their money.

The Chairperson said the presentation referred to the finalization of the closure process that was dependent on the co-operation of the City of Cape Town, the City of Johannesburg and the Gauteng Province. However the presentation also highlighted that there was a problem in this regard; this then meant that Thubelisha would never be closed. What did government do when one structure was not cooperating with another structure, where did the Ministers and provincial leadership stand? Government money was spent buying the land stands, now the stands were lingering and even saying it was difficult to locate them. There was still the question about land bought by Thubelisha in Fishers Corner for human settlement development, but the city decided not to build houses and opted for reallocation because of environmental issues. What was going to happen to the money spent on that land since no houses were being built?

The Chairperson asked what cooperative governance meant, what it said and was implemented, this was regarding the rates issue with the City of Cape Town. This was did not make sense and was unacceptable. The Committee also needed to see the signed agreements of the negotiated settlements.

Ms Matlatsi said they would provide a breakdown and documentation off the negotiations and settlements. Ms Matlatsi said the negotiation process came about to avoid comebacks, regarding the ownership of transferred properties the agreements state that both parties agreed to the terms of the document.

The Department was hesitant to write off the SARS debt and the matter had been taken to the highest level of SARS and written to the Commissioner of SARS. SARS at some point did acknowledge the money but had not yet transferred it back to Thubelisha. With the transfer of funds to KwaZulu Natal, the funds were retained as there was a claim from Stimela that was not certain and not clear if it would be settled; there was a positive balance of money to be transferred to KwaZulu Natal of which they would use for human settlement development.

Regarding land bought and declared unsuitable for human settlements Mr Mngomezulu said because Thubelisha was no longer in a position to do business the land was donated back to local authorities.

The Chairperson vehemently disagreed with this and said that the land could not be donated back for the local authorities to do anything with as that land was bought for human settlement by government. The Committee had been waiting for a report for over two years as to why the land in Nelson Mandela Metropolitan, to build houses for evicted farm workers, was declared unsuitable to be built on. The Committee had neither received a report nor a name of the consultant who had had that outcome. It was unacceptable that the land was donated back to the local authorities with no conditions. How would government react if someone had managed to build a business or build a private residence for themselves on that land?

Mr J Matshoba (ANC) said there needed to be a proper report on that piece of land as the Committee had dealt with problems in that land parcel for years, the Chairperson was asking the questions she was asking because there were other matters as to why that land could not be built on and those were from the community more than the land being declared unsuitable for human settlement.

Mr Mngomezulu acknowledged that they knew nothing about Fishers Corner, it may be one of the properties that were transferred but in the books of Thubelisha it may not be referred to as that. When the process of dismantling Thubelisha started, the Department had to go to their asset register and had to decide to dispose of the assets in two ways; transfer properties to beneficiaries by registering title deeds and donate the vacant properties. Some properties were given to the HDA and some were given to cities, the Department therefore needed to go back and investigate specifically what happened to Fishers Corner.

Ms J Sosibo (ANC) asked what the Department did regarding transport for the staff that was redeployed from Johannesburg to Pretoria. Transport between the cities was a lot of money.

Mr Mngomezulu said the state did not subsidies transport of an employee and that was why one was given a choice to either accept a package as it was or opt out of the system. Some did opt out as they felt Pretoria was too far from Johannesburg.

Briefing by the Department of Human Settlements on the closure of Servcon
Mr Mngomezulu began by giving a background of Servcon. The Servcon was established as a joint venture between the government and the banks. Both parties held an equal shareholding and the mandate period of the entity was set for 8 years from 1998 until 2006. In 2006, the company became wholly owned by government as the banks resolved to exit the arrangement. The previous Minister of Human Settlements had resolved to close the Servcon, as part of the rationalization of the public entities. The Minister approved the implementation of a closure plan in February 2009.

There were no permanent staff members currently remaining in the entity. The Servcon employed four staff members on a month to month contract until the closure was finalized. These staff members were the Chief Financial Officer, the manager of the original mandate, the IT administrator and the accountant

Cash Flow Challenge
The Servcon discontinued all new business operations following the approval of the closure plan. The Servcon had prioritized the collection of outstanding revenue and the settlement of the outstanding debts and liabilities since 2009. The Servcon only had portions of land and landed properties that could be sold to generate cash to settle the outstanding liabilities. The most significant remaining debt was the tax liability of R13 401 049.99 as at 1 April 2013.

The running costs consisted of salaries of the staff and other administrative costs such as the external audit fees, payroll administration and printing costs. The Department paid R1.5 million during the 2013/14 financial year on behalf of the Servcon for audit fees, payroll fees and the salaries of the remaining staff members.

Sale of Land Assets
The Servcon concluded a sale agreement on 26 February 2013 with the Housing Development Agency (HDA) for the sale of 5 properties for R27.7 million. The transfer of erf 2663 & 1826 in Queenstown, Portion 237 of 78 Farm Hartebeespoort No. 328 JR and erf 10509 in Philippi was finalized in August 2013. An amount of R 9 000 000 was transferred to the South African Revenue Service (SARS) on 8 August 2013 and a further amount of R3 080 000 was transferred on 20 August 2013. The tax liability was reduced to R1 694 729.04 at 1 September 2013, as a result.

The transfer documents for the transfer of EloffsPark No. 772 were lodged with the Deeds Office on 5 August 2013. The Deeds Office rejected the transfer citing an outstanding approval from the Department of Agriculture and the municipal consent. The transfer documents were lodged again with the Deeds Office on 12 December 2013. The transfer was again rejected. The transferring attorney was currently discussing the matter with the examiners and the Registrar of the Deeds Office. An error with the recorded extent of the Machiel Heyns property was detected by the Deeds Office. The matter was being investigated by the Deeds Office and the Surveyor General.

The tax liability is interest bearing. The tax liability is R2 219 652.42 as at 27 January 2014. The Servcon would be in a position to settle the outstanding tax liability once the transfer of the properties was finalized. Once the tax liability and the other outstanding operating expenditure of the Servcon were settled, the entity would be in a position to submit an application to the Master of the High Court for the appointment of a liquidator to liquidate the Servcon through a voluntary liquidation process.

Conclusion
The Servcon would continue to facilitate the transfer of the remaining two properties (EloffsPark No. 772 and Rem Farm 755/2 Machiel Heyns). Once the tax liability and the outstanding operating expenditure were settled, the entity will be able to make and application to the Master of the High Court to appoint a liquidator to finally wind-up the Servcon. The liquidation would involve the disposal of the remaining property portfolio of the Servcon. It was currently estimated that the Servcon would be finally wound-up by 31 March 2015.

Discussion
Mr Mokgalapa asked about the responsibility for properties. Going forward who would have responsibility of the private properties as well as the RDP properties that came to be under Servcon? In his constituency there was an area known as Block FF and Block GG which was a project build by Servcon, the properties were in an appalling condition and did not even have toilets. In such a case where would people go as Servcon was soon going to be closed?

Mr Mokgalapa asked for the reasons the banks withdrew from the relationship, because that was part of the problem. Most people took loans with the banks, and were now being turned away by banks and referred to Servcon. Ultimately people had nowhere to go, they could not go to the banks and they could not approach the Department either.

Mr Mngomezulu replied that in order to answer the questions raised by the Member there had to be a look back as to why Servcon and Thubelisha were established. Pre -1994 there were Rand and Bond boycotts, to stabilize the housing market former Minister Joe Slovo entered into a social contract with all role players in the housing value chain. There was then a Record of Understanding signed between the banks and the former Minister, this was for banks to resume landing in black townships.
Then came the subject of “rightsizing”, if someone was unable to pay their bond then they would vacate the bonded property and be given an RDP house. However, the process was very slow and MinMec in 2006 took a resolution for a revised version of “rightsizing”, which meant that the people were not removed from their property but pay the bank an amount equal to the value of a RDP house. There was an agreement that the banks would take a shortfall.
Thubelisha was an arm of Servcon that did the actual building, whereas Servcon entered into agreements with people. If there was no insurance or warranty it became very difficult to say who would foot the bill, there was no NHBRC at the time of the agreements. Mr Mngomezulu admitted it was difficult for him to say who should take responsibility for the properties delivered at the mentioned timeframes.

Mr Mokgalapa said the way the agreement seemed to have been structured; it would seem the people got a raw deal.

Ms Borman said from the presentation she understood that the debt with SARS was what was holding up the closure of the entity, it was also highlighted that the land sales would cover that debt. In fact with the last two properties to be sold, in Gauteng and Western Cape, Servcon would come out of the SARS debt with a surplus. She asked how far was the entity with the completion of the sales of the last two properties. If that was clear then the final closure of Servcon could also be dated.

Mr Mngomezulu said they had discovered technicalities that had led to the Deeds Office rejecting registration of the properties being lodged for transfer; however the transferring attorney was dealing with that. The tax liability was increasing because of interest, the Department was hopeful that the transfers would be completed very soon. The surplus belonged to the fiscus as per the PFMA and Treasury regulations.

The Chairperson said the tax issue needed to be considered seriously, if Servcon still had land then they should sell it to HDA and pay the tax liability. The Chairperson expressed that the tax was escalating and Servcon continued paying salaries, debt was increasing on one side and on the other side spending was also still going on.

Finalisation of Housing Development Agency Regulations
Mr Khwezi Ngwenya, Acting Chief Director: Legal Services in the National Department of Human Settlements, took the Committee through the Regulations clause by clause.

Ms Vuyo Ngcobozi, Parliamentary Legal Adviser, suggested that the Regulations use the same language that was used in the Act, because Regulations were interlinked with the Act and also to avoid any unintended consequences.

With regards to Regulation 23 that deals with offences and penalties, in respect of the principal Act the Minister did not have the authority to regulate on penalties and offences. Ms Ngcobozi proposed that that Regulation be deleted. The Regulation could cross reference to Section 37 the Act, the Section covered penalties and offences, this reference would be added under Regulation 26.

Mr Mokgalapa asked why the Regulations referred to participants as opposed to role players, what did the Principal Act say? Regarding the Integrated Development Plan was it not important to include the Special Development Framework (SDF) as well. He agreed with Ms Ngcobozi that with the IGR it should say “in consultation” as used in the Act and was also a more appropriate legal term.
Apart from the IGR, another problem that could lead to a collapse of these Regulations was funding. Since this was a priority development area, were the clauses in the Regulations anywhere suggesting that there would be funding that would be directed at implementation? Previously, municipalities were objecting to the Rental Housing Bill because of funding for the Rental Information Offices. The funds had to be ring-fenced, so that they would come from directly the national Department’s budget allocation. This needed to be made explicitly clear.

The Chairperson said everyone had to go back and remind themselves of the purpose of HDA, the purpose of HDA was established as a special purpose vehicle. If there were things that would inhibit the HDA to fulfill that mandate then there was no point for the Committee make legislation. If everyone kept that mandate in mind, the Regulations should lead to that.
On Section 21, regarding the monitoring of priority housing if the implementing agent is not the Agency then the Agency must monitor the implementation. But, where the Agency was the implementer then they could not also be entrusted with the monitoring. The Agency did need to be monitored as they were also often blamed for failures of other entities.

The Chairperson agreed with Ms Ngcobozi that there should be cross-referencing to the legislation so that those who did not cooperate could be held responsibility and accountable.


Mr Taffy Adler, CEO of the Housing Development Agency (HDA), said this was a very important set of Regulations for the entity and would allow it to take its work further. The Agency had worked very hard on the legal and the consultative processes to ensure that they had wide spread acceptance.

Ms Ngxongo said the Department was looking at a funding model because most of the work of the HDA was being frustrated by the non-capitalization of it. There were already discussions to allow the budget to come directly from the Department to the HDA for the purchase of land. What needed to be ensured was that the funding of the priority development areas also formed part of that process.

The Chairperson said the funding model, or anything that would outline a funding strategy, needed to be explicit in the Regulations. For oversight purpose it needed to be clear.

Mr Mokgalapa asked what would be the way forward, there had been consultations with the provinces and SALGA on the Regulations, what would happen moving forward to make sure the Regulations were implemented.

The Chairperson said the Committee would adopt the Regulations and then they would go to the National Council of Provinces (NCOP).

Mr Adler said there had been work with two big local authorities to see if the Regulations could not be implemented.

The Chairperson instructed the legal team to clean up the document and make the final amendments as proposed by the Committee and legal advisors so that the Committee could adopt it.

The meeting was adjourned.