Ekupumleni (Hazeldean) Project Deadlock-breaking Proposals and deliberations

Meeting report

HOUSING PORTFOLIO COMMITTEE
07 November 2007
EKUPUMLENI (HAZELDEAN) PROJECT DEADLOCK-BREAKING PROPOSALS AND DELIBERATIONS

Chairperson: Ms Z Kota-Fredericks (ANC)

Documents:
The Ekupumleni (Hazeldean) Fund Presentation
Relationships between the Department, Utshani Fund & Trust, FedUp & SDI Presentation
Utshani Fund Submission
Poor being exploited using Donor Funds, South African Homeless People’s Federation, Response for Press Release by Ted Bauman: Unnecessary delays of Utshani Fund for the completion of houses & Demand for Transfer of Assets [Part 1][Part 2]
Request for Minutes to be taken on 11 April 2006

Audio recording of meeting

SUMMARY
The Committee was briefed by various institutions on the deadlock that had arisen in the Ekupumleni (Hazeldean) project, as a result of the South African Homeless People’s Federation (SAHPF) break-up and split into other organisations from 2000 onwards. Utshani Fund, the Federation of the Urban Poor (FedUp) and SAHPF each gave a background and history of their organisations and their view of what the problems were. They had serious historical and current issues with each other and the deadlock had made it impossible to find a solution. In addition that deadlock had led in turn to problems with obtaining rates clearance and approval for services. Solutions were needed to resolve the impasse. It was established that Utshani Fund was the owner of the land, and that the City of Cape Town was working with it. However, there was a need for an audit on those units already built. There were allegations of fund mismanagement, and a need for a full reconciliation. It was suggested that the Auditor General undertake a full performance audit,
The Chairperson then proposed that the two federations must withdraw (one had already indicated its preparedness to do so), so that the City of Cape Town could appoint a third party to interact and take the process forward. This was adopted as the resolution of the Committee and the National and Provincial Departments were to report back to the Committee on progress early in the new year.
MINUTES
South African Homeless People’s Federation (SAHPF) Housing issues
The Chairperson noted that there were various questions that arose from a recent meeting at Victoria Mxenge, in Philippi, regarding the difficulties that arose from the split in 2005 of the South African Homeless People’s Federation (SAHPF), and the formation of new groups. The Administrator was unable to resolve many of the issues, and the Western Cape Province also had difficulty, and had said that the issues must c come before the NCOP, because this was originally where the funding aspects were considered. A meeting took place and some issues were resolved outside this forum. There had been a request that the time between the Forum and this meeting should be used to resolve further issues, and she would therefore ask Utshani Fund to brief the Committee.

Utshani Fund Briefing
Mr E (Ted) Baumann, Executive Director, Utshani Fund, said that he would speak primarily about the Ekupumleni (Hazeldean) Project.

Mr Baumann explained that the SAHPF was a nationwide federation of women’s savings schemes, initiated in 1991, which had split in 2005. The Federation of the Urban Poor was formed in 2005 by the majority of the former SAHPF regions. A breakaway group was founded by Cape Town Federation Leaders, based at Victoria Mxenge in Philippi. The Utshani Fund was formed as an NGO in 1995 to support SAHPF via housing finance, and it was now a partner to the Foundation of the Urban Poor (FedUp).

Mr Baumann set out that the principles of Utshani were to maximise the role of poorest women, through participation in regular savings. It had a grassroots driven approach to development, and would focus on positive partnerships with government and other stakeholders. It was a support organisation only. He ran briefly through the history of the developments, noting that problems had first started to surface in SAHPF in 2000. In 2004 the Cape Town federation leaders had secretly registered SAHPF as a Section 21 company and demanded that Utshani hand over all assets and funds. The bulk of the national federation decided in 2005 not to context the SAHPF name, but to re-form as the Foundation of the Urban Poor (FedUp). The People’s Dialogue closed down in 2005, and Utshani decided not to work with the SAHPF Section 21 company. Relations with SAHPF had deteriorated since then.

The Ekupumleni Project was intended for the benefit of the Hazeldean Housing Association. The land and buildings were still owned by Utshani. 106 houses had been built, but only the electricity and communal toilets were installed. Provincial officials had demanded that certain issues be resolved, and a political solution was needed to move the process forward. The Victoria Mxenge leaders (VMX) were demanding control of the development. Funds that had been paid by the Department of Land Affairs (DLA) had been paid and were being held in trust by Utshani’s attorneys pending transfer of the land.

The original intention had been to have Utshani Fund retain ownership of part of the land on which the resource centre was to be built in trust, awhile the residential portion would be owned by the Hazeldean Housing Association (HHA). Houses had been built “prematurely” to guard against shacks being built, although there were no services on site. There was now a dispute about use of the land, a dispute over the land transfer to HHA, threats against the Executive Committee of the HHA, and consequent delays. In 2005, to break the deadlock a new proposal was made, but the process had been stalled due to delays in getting a rates clearance certificate from City of Cape Town, and a VAT exemption from SARS. This resulted in ongoing interference by VMX.

This in turn had led to misunderstanding of the role of Utshani, and both provincial and local government were uncertain whether City of Cape Town should be developer of the services. There was illegal occupation of the land by SAHPF-S21 group, against the wishes of Utshani and HHA. There had been marches and threats of violence. It was submitted that VMX leaders were only interested in control of the resource centre. They had refused to be accountable. There were allegations that R1 million of Utshani and subsidy money had been misused, and there was corruption in the purchase and use of building materials. Savings belonging to federation schemes all over Cape Town remained under the control of VMX.

Mr Baumann noted that these problems of unfinished houses were not unique to Cape Town but FEDUP and Utshani were determined to resolve them in conjunction with the State. Utshani had no wish for conflict with the VMX leaders. The subsidy process must be fast-tracked for the Ekupumleni and the project should be handed over for management to a third party appointed by HHA, Utshani and government. It was suggested that VMX leadership must be investigating and accounts audited.

Ms Rose Molokoane, National Chairperson, FedUp , noted that FedUp had been started in 1991 and in 1992 a team from the community went to India to learn how to organise poor communities. In 1992 it was chosen to take over because of their structure. They had to restructure the organisation to have management and facilitating structures. Problems came with implementation when the leaders of the former SAHPF wanted to take control, instead of bearing in mind the agenda of the community. Some of the leaders’ decisions should have come from the “Team of Five”, but the process of election of that Team was too slow, and that was one of the reasons for the eventual split.

It had been agreed that the Utshani Fund would be registered as a trust to administer the finances of the SAHPF. SAHPF should have continued to be a community-based organisation. She gave an extensive background to the further misunderstanding around registration of the SAHPF, and it was eventually discovered that registration had been done without the knowledge of a substantial number of their members. The poor communities could not afford to challenge the matter in Court, and agreed to rather spend the money on building houses for the people and organise more communities to be self reliant. For this reason it was decided not to challenge the SAHPF but rather to form another group, to be called FedUp, that would continue to use the systems and principles originally intended.

She pointed out that it was a long time since the Portfolio Committee on Housing had asked for an explanation on what was happening amongst those parties. There was still a problem in the Western Cape. People had given SAHPF large amounts of money, but when they tried to get statements they were threatened and were afraid to approach the VMX leaders. Legal steps had been instituted against the land account being controlled by the leaders of Victoria Mxenge. The people of Mpumalanga and the Free State also had problems with their leader, who was a very strong leader of the original Federation, but in that province there was also better mobilisation of the community because decisions were taken at community level and not at leadership level.

FedUp tried to support Ekupumleni to continue with the development but they said they only wanted Utshani to support them to finish the development. FedUp then agreed to support Utshani to support the community project to get finished. Final decisions on who would administer would be taken at a later stage.

The Chairperson noted that she would not like Members to be diverted from the main reason for convening this meeting. The presentation on Hazeldean was given just to ensure that Members were aware of it. The main meeting was around the challenges in general facing the Peoples Housing Process (PHP) and Hazeldean must be seen as one of the works in progress, which clearly could not be resolved today. Solutions were needed to resolve the impasse, and get people on board. No judgments would be given on the issues.

SAHPF Section 21 briefing
Ms Patricia Matolengwe, National Chairperson, SAHPF Section 21, agreed this issue would not be solved today . She agreed with the broad historical background, and stated that SAHPF Section 21 was essentially the same organisation as in the beginning, save that it was agreed in 2000 to restructure because of the powers of themselves as leaders.

Ms Matolengwe noted that since the early 1990’s she, Ms Rose Molokoane and Mr Patrick Magebula believed in the organisation and in vesting their interests in that leadership. It was not about who did what. However, there had subsequently been problems between these three individuals. During restructuring in 2000 the NGOs who supported SAHPF took sides on the problems, and influenced them to personal and not regional nominations. That restructuring resulted in a breakaway by Gauteng, and restructuring was seen by some as the only solution. There had been some problems with audits being recommended, and in-fighting about funding.

In regard to the Western Cape, Victoria Mxenge was problematic, and now it was not even recognised as a township, as it was not approved by the City of Cape Town. Utshani had assisted in building, and had apparently agreed to take responsibility, but today some of the houses could collapse at any time and Utshani did no honour their promises.

Ms Matolengwe summarised the developments from 2001 to 2003, noting that in 2003 she, Rose and Patrick were absorbed by the NGOs, and Patrick moved to another sister organisation. It was clear that leadership was linked to a stipend, people had already been appointed to work in the offices, and it then became a question of money.

Discussion
Mr A Steyn (DA) said the Committee was not going to be able to resolve this conflict. It was looking at finding a solution to moving forward and getting the project off the ground again. One organisation against the other would not serve any purpose.

The Chairperson said she understood that the problems between the individuals arose from empowerment and it was very painful for the Committee to hear this situation. Without a solution the Committee could not do justice, but clearly because of the complex issues it would not be able to deal with it today. The Committee would have to decide how to move forward. It would look critically at the issue and try to find a mediating solution. It sought a win-win situation to harness the obvious strengths of all the personalities concerned. Members must find a solution because the Ekupumleni Project must have services.

Mr G Schneemann (ANC) was battling to follow the presentations without documentation. He wondered if there could be input from the Department. He commented that it was extremely sad that an organisation that started out so well was being paralysed. It was not only about looking at how to solve the problem in the Western Cape, but how to sort out the mess that had been created overall. He thought that part of the problem was access to resources.

City of Cape Town and Provincial Department of Housing responses
Mr Herman Steyn, Manager, New Housing: City of Cape Town (CCT), submitted that the installation of services in the Hazeldean Project was problematic. Technically the land belonged to the Utshani Fund and discussions had been held to try to come to some kind of agreement. It was felt that maybe Utshani as the owner of the land should stay as the developer and install the services themselves. His understanding was they would consider that option.

Mr Rob Smith, Director, Housing Project, Western Cape Provincial Government, noted that he was standing in for the Director, and had prepared a presentation on the broader issues but it seemed the focus was on this problem. He highlighted that problems could occur where organisations did their own servicing. If the services were not done to municipal standards, the municipality could refuse to take over those services because they would have to control and maintain them afterwards. The reason that was very important was they could only start doing transfer and giving title to the beneficiaries once the services were taken over by the local authority. It had been said that SAHPF was not working with Utshani. The precise problem was they did not know whether to deal with Utshani, and that was something the Committee was also stuck with. Although the two organisations were split today there was a historical link. There were major problems and endless complaints about beneficiaries, and to their credit Utshani in a lot of cases had paid back the subsidies where they had not been used. This still did not help the individual who had been waiting for six years, and who would then have to rely on someone else to make the commitment to provide a house.

Mr Smith was pleased that slowly things were being cleared up but there was a huge historical problem of accountability for the funding. It would be very nice to put that behind them and close the chapter, but unfortunately there was a history of irregularities on the project and until those were cleared up the Province would not be able to issue additional funding. The Province was seen as being obstructionists but they could not get away from the past history, unless there was a decision to clear the books and hold no one liable for what happened in the past.

Mr Smith noted that historically the funding came from different sources. All the money was paid up front to Utshani, who were given permission to get loans and subsidy applications and reconcile later. That administrative process did not work properly. The Province ended up with a mess, unable to match the funding given up front to the actual houses that were delivered, and there was also non-delivery. On some projects Utshani would recruit people and would ask the municipality for sites and funding, as had happened in Mossel Bay, Riversdale and Beaufort West. Groups that were working with Utshani administration did not build all the houses. The two organisations were inextricably linked as they were managing funding together, and they were working together. SAHPF did not have anyone to hold liable for that money. Mr Hofman, who at that time was with Utshani, had stated that they were responsible for the funding but not for the building. None of the committees involved would take responsibility. From a government point of view, there was uncertainty as to who should be liable. Clearly some money had gone missing. Province, under those circumstances, could not give out further funding, as they would be taken to task by their own auditors if they did so. This resulted in houses of perhaps eighty square meetings, that had no roof because there was no further money. The organisational and administrative problems must be resolved to move forward.

National Department of Housing (NDOH) Response
Ms Odette Crofton, Acting Chief Director, National Department of Housing, responded that the problems arose from the complexities, but she was confident that there could be a way forward.

She noted that the NDOH had met with the People’s Dialogue in Western Cape, and thereafter with the Province, and SAHPF, and had been to see the project. It was able to understand the difficulty of having houses built first, but without tenure or infrastructure and the frustrations and the realities that this caused in a PHP kind of process. She was pleased that CCT had spoken about the challenges relating to services and servicing of that property and had noted the comments on the rates clearance and other issues once the property was transferred. The allocations and figures, the rates clearances, transfer fees and other costs could not simply be written off.

The second issue had been raised by Province, and that was the challenge of the historical background relating to the Utshani Fund. The Committee could not ask the Department to bypass current policy as to whom Province should give the subsidies , what they should be used for, what were they offset against, and aligning and complying with quality.

There was definitely a problem in terms of relationships between the parties, and the question was how to resolve that. All the parties put their issues on the table in order to find a solution. It was quite clear that a third party would be needed to lead and direct and bring these parties together. The first issue to be resolved was around the land and the transfer of the land - possibly to a third party - and that would require quite a bit of negotiation. Province could presumable task a third party to be accountable and responsible for managing the administration, disbursements and conclusion of the project. The Department would need to oversee that process, but she warned that this would not be a quick solution.

However, there were other larger issues also. There were historical issues with the way that Utshani, People’s Dialogue and SHPF dealt with the money that was provided to them. None of the attempts to resolve these issues had been successful. The Department realised that there would be problems also in other provinces, arising from the history. She suggested that in regard to the 15 000 units built by Utshani, there must be an audit to reconcile the subsidies paid to Utshani with the work actually produced. This would address what was on the ground, whether the beneficiary qualified to be a beneficiary, whether there was title and the quality. The Department had approached the Auditor General (AG) as the service provider to conduct that performance audit and come up with a resolution. That process was under way.

The larger problem of the history of Utshani and the SAHPF was not going to be a very quick process.

Another difficulty on the Ekupumleni Project that would need to be resolved by a third party was what would happen with the commercial portion of the land as against the residential portion. Both Utshani and the Housing Association would have to start thinking about what they wanted to propose as a solution.

Discussion
Mr Steyn was relieved that there were finally some solutions on the table that all sounded workable. It was clear that these organisations were too close to the problem. At some point their donors should be approached to identify an administrator in order to move this forward.

Mr Steyn asked who eventually became the owner of the land, and wondered if the commercial portion of the land could ultimately be used to fund those services. That would have to be identified by the administrator.

The clear issues were that Utshani was the owner of the land, that SAHPF and FedUp violently disagreed with each other, and that the service providers were working very closely with Utshani Fund.

FedUp had stated openly they were willing to withdraw from this process to allow it to move forward. If a similar statement could be issued by SAHPF it would help, and Mr Steyn therefore asked SAHPF to consider that. He pointed out that there was already the Hazeldean Housing Association. He sensed they were the people who would ultimately take ownership. He noted that the Committee must see its role as government facilitators.

Mr Steyn liked the approach taken by the City and Utshani Fund and Province, and suggested that the three of them, having accepted accountability for each of their issues, should strike up an agreement with the Hazeldean Residents Association then come back to the Committee and report progress. He believed that would be really fast tracking the process.

Another Member commented that the Committee must get the commitment of the organisations to the closure of this Project. He wondered if the auditing of the houses would not better be done by the Province, as it seemed to have more capacity than the AG. He agreed with Mr Steyn that the organisations must take responsibility for sorting out the problems.

Mr D Mabena (ANC) found it strange that Utshani owned the land and buildings pending final legal transfer of the land, and also queried the services and electricity ownership.

The Chairperson noted that if Utshani did the development of services and the Municipality didn’t take responsibility for services then there would be a problem. Although it would be useful for Utshani to do the development, there could be problems if the quality was not up to standard. She asked Ms Matolengwe to comment on the proposals.

Ms Matolengwe was not sure would be able to answer fairly because it was agreed at a meeting last night that she could not take a decision for SAHPF, but the people of Ekupumleni must have the final say.

The Chairperson insisted the issues were clearly on the table. The two entities involved in the process were at loggerheads, and a solution had to be found. That required a larger discussion. The solution would not come from this Committee. The development could proceed if the City or the Province oversaw the project..

A representative of an organisation noted that government knew exactly what happened at Ekupumleni, and a top government official had made promises that were not fulfilled. Utshani was dividing the people, who did not know where they stood, and they battled to bring their problem to the attention of government. There were a number of conflicting organisations.

The Chairperson reminded him that the issue here was to provide services to the community. As long as there was a dispute there would not be services in that community.

Mr Schneemann said that the tone of discussions was not helpful. He supported the decision the Chair had put on the table – namely that the two federations must withdraw, which FedUp had indicated it was already prepared to do. SAHPF was asked to withdraw also so that CCT, Province and Utshani could interact and take this process forward. He recommended that be adopted as the position of the committee. He did not think anyone further should be permitted to speak as no value was being added to the discussion.

Ms Molokoane expressed her disappointment that more compassion was not shown for the people, who were suffering through the fight. FedUp did not wish to become the battlefield of the organisation. She pleaded that Utshani, as the landowner, be allowed to carry on with this development, and that space be given to the Hazeldean Housing Association to deal with their own development.

Mr Mabena supported the provincial department. The Committee could not allow an organisation that was irresponsible to handle funds. He supported Mr Schneemann that these organisations hold back and that local and provincial departments take over as administrators.

Mr Baumann responded that Ekupumleni was completely in support of the suggestion. There were reasons why the HHA had not been represented at this reason. Utshani was entirely prepared to see the development finalised by a third party and would support them as long as they could recover funds because those funds were critical to development. He had understood also that housing subsidies had been made available to FedUp, including a thousand housing subsidies in the Western Cape, and that FedUp was prepared to cede subsidies from those allocations to this development. Utshani had already commissioned design and services that would be up to City specifications, and had no intention of installing anything other than specified services.

Mr Baumann further appealed to the Committee to bear in mind that the statements made about Utshani’s behaviour were based on hearsay until they were investigated properly. Utshani denied having misused funds. They needed Province to set up a proper working relationship. Utshani had submitted a complete list of all subsidies received by them which they submitted to Province but had not yet had a response.

Ms Matolengwe agreed to let the Province and the City manage. They were aware that Utshani was the owner of the land but let government take full responsibility.

The Chairperson clarified that the resolution of this Committee was that both FedUp and the SAHPF must move back and let government find a solution to the impasse. Utshani’s land was still needed and the land issue had to be dealt with. If it meant they were at loggerheads because Utshani was involved with the project they had to find an amicable solution so that people would see services in the community.

Ms Molokoane clarified that although Utshani administered some of the funds for FedUp, professionals managed Utshani. When the Ekupumleni Project took place Utshani, as account administrator, had a role for social mobilisation.

Mr Patrick Magebula, President, FedUp, explained that it was only natural for poor people to be suspicious. He agreed that it was for Province, the City and National Government to find a way of interacting with Utshani that would not hamper the development.

The Chairperson expressed satisfaction at having reached this point. They should start with a clean slate and all be looking forward in terms of finding a solution. The Department, Province and the City should report to the committee early next year on what plans they had in place, and what had been done.

The meeting adjourned.