Update on Housing Projects: Department briefing

HOUSING PORTFOLIO COMMITTEE
28 February 2007
UPDATE ON HOUSING PROJECTS: DEPARTMENT BRIEFING

Chairperson: Ms Z Kota (ANC)

Documents handed out:
N2 Gateway presentation to the Portfolio Committee
Presentation on the restructuring of informal settlements in the Eastern Cape

Audio Recording of the Meeting

SUMMARY
The Department of Housing presented two updates on housing delivery projects. The first gave an overview of pilot housing projects in North West province, the Free State and KwaZulu-Natal. It outlined the progress and challenges facing these projects, including delays in projected completion. Reasons for the latter included disputes with developers, slow tendering processes, escalation costs written into contracts and land acquisition.

The second presentation dealt with the N2 Gateway Project in Cape Town. It gave an overall profile of the project. The biggest challenge was land allocation. The report stated that there were delays in finalising this process as a result of a failure to sign contracts and memoranda of understanding between the national and local tiers of government on land acquisition, and legal advice had been sought. Budgets, expenditure and funding from the National Treasury and parastatal bodies were also highlighted.

Members questioned why the housing development programmes were only available in four provinces. They also asked how funding targets and building deadlines would be met in regard to the N2 Gateway Project.

MINUTES

Department of Housing (NdoH) presentations

Synopsis of Pilot Projects in various Province
Mr J Wallis (Chief Director: Service Delivery Support) in the North West province, where it had two projects, one had come to a complete standstill as a result of a problem with a contractor. The Premier had intervened, and was in the process of brokering a deal to ensure the project would move forward. The Department said it would report back on the process. In Rustenburg, the Department had a 5000 unit plan, but was dealing with the tendering process and an escalation clause on building costs in contracts, where developers said, at current rates, they could only build 35 square metre units as opposed to the agreed 44 square metres.

The Department said that its Grasslands project in the Free State was one of the most successful. It comprised three phases. The first encompassed middle-income brackets and was virtually complete with most units having been sold. The second phase was low-income, of which most had been allocated according to the criteria laid out by the Department. In terms of the third phase, the Department said very little had been done as it had to acquire small parcels of land. Some 95% of the land necessary for the development had been acquired. The remaining 5% was being worked on through negotiations with private land-owners.

Mount Moriah in KwaZulu-Natal was a Slum Clearance Project, established 15km from the Durban CBD, to incorporate various informal settlements that had sprung up around the city.

N2 Gateway Project
Mr P Chauke (Chief Director: Service Delivery) and Mr Ahmedi Vawda (former Deputy Directorr-General and current Department consultant) explained that it had to deal with delays caused by the City of Cape Town. This included a state legal adviser being asked to investigate whether the Department had a standing in regard to its contracts with the city. According to the Department, the municipality had ceded the land to it and it was thus the rightful owner. The Department planned to go ahead with the project, including putting developers on site.

Discussion
The Chair expressed the opinion that it was unacceptable that the Department had delayed reporting progress to the Committee as no official had been tasked with this duty.

Mr Itumeleng Kotsoane (Director General (DG), NdoH) agreed, saying that the Department had been restructured to provide regular report back to the Committee.

Mr A Steyn (DA) asked about the availability of funding and the targets that need to be met to provide housing for the N2 Gateway Project.

The DG replied that the funding had been negotiated with the National Treasury and other sources had provided more than adequate funds. Additional funding was expected from other stakeholders such as Eskom. But in terms of the N2 project, land availability was a problem as it had been negotiated with the City of Cape Town (CCT), but the contracts still had to be signed. The Department had taken the matter up with the State’s legal representatives and it appeared that the land allocated had been ceded to the project and the Department had, on advice, moved contractors onto the land to commence building. The Department did not foresee any problems.

Mr G Schneerman (ANC) asked, in the same regard, when the land issues would be resolved.

The DG stated that the City Manager was today meeting the Mayor of Cape Town to sign the papers ceding the land for the N2 development.

Ms B Dambuza (ANC) asked what deadlines had been set for funding the New Rest part of the Gateway development and why these had not been met. She asked what housing funding the city had provided.

Mr Vawda replied that the Department could not reply on behalf of the city, but the provincial housing budget had been fully utilised for the present financial year. In relation to New Rest, it was an in situ upgrade and the Department had to negotiate with residents to move from their present residences to allow building to commence.

Mr Steyn asked for clarity why the Breaking New Ground (BNG) Housing Development, which originally called for high-density housing had changed.

The DG replied that although the original plan was to supply a 70/30 split in favour of high density housing, in reality the situation had completely reversed as a result of availability of land, soil conditions and escalation costs.

Mr Steyn asked why there was a discrepancy between erven and allocation to beneficiaries.

Mr Vadwa said that although the erven had been developed, allocation was problematic, but preference was being given to the aged and disabled.

Mr S Masango (DA) asked when the 45-day deadline set by the Department to contractors to deliver 400 houses would start.

The DG said this commenced from 1 March 2007, and if the contractors did not deliver they would be penalised.

The Chair asked what the Department was doing about the termination of bulk services by the city to the development on 1 March 2007.

The DG replied that the Department had requested that some of its budget be allocated to bulk infrastructure for the development.

The meeting was adjourned.