Salt River affordable social housing opportunities and best practices in terms of other social housing forums: City of Cape Town briefing

Meeting report

City of Cape Town on Salt River affordable social housing opportunities

Mr Rayan Rughubar, Chief Director: Housing Development, City of Cape Town, briefed the Committee on the Salt River affordable social housing opportunities.

He defined social housing as “a rental or co-operative housing option for low to medium income households at a level of scale and built form which requires institutionalised management provided by social housing institutions or other delivery agents in approved projects in designated restructuring zones, with the benefit of public funding as contemplated in the Social Housing Act (2008).”

The purpose of the social housing programme included:

• Providing good quality rental housing in well located parts of the City at rentals affordable to people on household incomes below R15 000 per month;
• Contributing to the economic, spatial and social integration of the City; and
• Supporting the strategic policies of densification, transit-orientated development (TOD), urban development zone (UDZs), regeneration and integration zones, etc.

Benefits of the social housing programme included:

• Effective response to gentrification (Woodstock, Salt River) or the revitalisation strategy (Parow);
• High rental collection -- average 85% rental collection vs. 20% collection rate for Community Residential Units (CRUs); and
• The provision of safe and secure living spaces (24 hour onsite security and access security).

Mr Rughubar referred to the map of social housing restructuring zones, and gave a breakdown of all the key role players, including the Social Housing Regulatory Authority (SHRA), the province, the municipality and social housing institutions.

Social Housing Funding Model

Describing the social housing funding model, he said a minimum of 30% of rental units must be allocated to households that earn R1 500 to R5 500 per month. The remainder of the units must consist of households that earn between R5 501 and R15 000 per month (up to a 70% maximum).

He gave examples of social housing, stressing that there were no restrictive development/technical specifications attached to the social housing grant, therefore it could take on multiple forms. Local and international precedents depicted a range of typologies starting from two storeys up to approximately 20 storeys high. In Cape Town, most projects had gone up to a maximum of four storeys.

After outlining the City’s social housing projects, especially the Woodstock and Salt River social housing sites, he addressed the allocated projects (656 units) and unallocated projects (1 850 units) in these two areas.

In conclusion, Mr Rughubar delved into the social housing development challenges and enablers, which included:

• Closing the gap between legislation and strategic objectives, such as land release for mixed market developments;
• The new Property Rates Act;
• A response to community unrest and expectations of housing ownership from tenants; and
• A strategic response to “Not In My Back Yard” (NIMBY) attitudes.

Discussion

Mr Tertius Simmers, Provincial Minister: Department of Human Settlements (WCPP), said there had been much discussion in the public sphere recently. There was real or factual information, and then there was information that did not speak truth to power which stemmed from an incorrect perception in various sections of the community. The City’s presentation had addressed the reality of the situation. Based on visits to other municipalities, the issue of their rental stock versus ownership of the rental stock was also becoming a bit of a headache. The disinformation there was in the public sphere, and more of the outer areas were actually hesitant when it came to the issue of rental stock and social housing stock. It was important for community leaders to be empowered with the right information.

A big concern was also the issue of “NIMBY-ism.” Irrespective of the sphere of government, they were trying to ensure cohesive, integrated communities. NIMBYism was going to be a challenge going forward. Inside the City’s projects, it was also a headache because in certain instances the City creates the opportunity, but the beneficiary does not want to move out of his or her community. In Bonteheuwel and Valhalla Park, this issue was very salient. It was a massive concern because there was only so much government could do. When it came to the social engineering about how communities perceived their community, this was an area where all three spheres of government had to work closely together. There needed to be responsible leaders within the communities to encourage integration.

The Chairperson said that this subject was mind-blowing and social housing was one of the areas that had been neglected by the Committee. It required an in-depth understanding to comprehend the challenges that were out there. From the perspective of the 5th Parliament, this was an easy issue to address.

Mr D America (DA) said the presentation had contextualised the scale of the problem. This was a problem not only for the City of Cape Town, but for many metros and municipalities in the country. What was the financial model upon which the Department constructs its social housing policy? Was it based purely on the subsidy received from provincial government or the state, or were there additional resources which the City could make available to make this particular initiative successful? One the challenges alluded to was that South Africa had numerous economic challenges, and this was an obstacle to poor households in paying the rent. How did the Department contend with this? It could lead to social resistance. Moreover, did the Department think that the subsidy it was being provided, which had not changed over the years, was ideal? What would the ideal subsidy to provide quality housing for the community be?

There was a lot of media hype around gentrification, particularly from people who occupy privately-owned dwellings in areas like Salt River and Woodstock, expressing their resistance against relocation. This was directed purely against the City, and not at the private providers from whom they had rented. It had been mentioned that, the City had started a process in respect of the Woodstock Hospital. Were these people going to get preference over those who had been on the waiting list for very long? If that was so, it legitimised the unlawful occupation of buildings in order to jump the queue.

Lastly, he asked about housing for students at Cape Town’s institutions of higher learning. In Belhar there was a component for student rental -- was there a similar initiative close to the Cape Peninsula University of Technology and the University of Cape Town (UCT) for National Student Financial Aid Scheme (NSFAS) students?   

Mr A van der Westhuizen (DA) said when the Department made use of institutions to manage its projects and property, the management of the contract and the agreement with those entities must be quite important. What did the City expect from the managers who manage these very complex issues and valuable properties? Regarding the identification of beneficiaries, how did the Department go about ensuring that people who benefited from a certain projects were really suited and that the project itself was suitable for those beneficiaries? The fear was that because of the desperate situation that many people find themselves in, they would jump at any opportunity to upgrade their living conditions. Perhaps not all projects or housing options were really the ideal ones.

Finally, once the Department handed over such a project to a management institution, what responsibility did the Department still have, and what did it retain as the City of Cape Town? What was expected of them to do on the City’s behalf? How often were these contracts reviewed?  Were there incentives for those institutions to give the citizens value for money? 

The Chairperson asked if items regarding background that had not been included in the presentation could rather be addressed on another day. 

Mr P Marran (ANC) asked for clarity on the onus for providing social housing. What did the policy concerning how people who were renting these houses for many decades would be helped? What were the real reasons why some people were occupy these sites? There would be some resistance from those who were occupying the land. People who had been relocated to Blikkiesdorp years ago were now there permanently. When one speak of the squatter camp in Salt River, where would the inhabitants be relocated to, and would it become another Blikkiesdorp?

Mr B Herron (GOOD) stressed that the issue which disturbed him the most was what was not being said. It was a bit disingenuous when the Department brought a matter to the Committee that had oversight, and information was left out. The Department had not painted the true picture. Regarding the Salt River market project, what were the valuations of that site and what impact did the valuations have on the number of units that were supposed to be delivered on that site? In 2012, that site had been valued by the City at R13 million. 

Defending the City, the Chairperson said that the City of Cape Town had been following her guidance when preparing for the presentation. The most important thing which the Committee wanted to find out from the Department was to check in which areas the Department was not delivering, specifically in terms of social housing. The Committee wanted to find out where the blockages were. The Committee also wanted to establish the shortcomings in the implementation of the new project. For now, the Committee wanted to help the Department to determine how to increase the amount of rental stock, for instance.

Most people who came to the City were not looking for a place to stay, but for a job. Where they had to stay could be resolved by the rental stock, rather than the land invasion of an informal settlement. The solution to land invasions had to be social housing. The Committee had to ask how to go about that. When the Committee looked at the annual report and the budgets, it could zoom in to the question as to the extent the City was prioritising social housing to ensure that they were delivering this programme to the community, especially in the Metro.

Mr Herron responded that he did not think it was correct for the Chairperson to manage how oversight ought to be conducted. The item on the agenda was social housing in Salt River. The City needed to point out to the Committee what the blockages were -- exactly as the Chairperson had indicated. The questions were relevant, and they were in response to the presentation.

The Chairperson replied that she was not managing Mr Herron’s questions. What the City had presented to the Committee had been requested by her.

Mr Herron continued by pointing out some of the blockages. The Salt River market site had been valued at R13 million in 2012 and according the City’s Property Management Department, had escalated to R18 million in 2014. In 2018, when it came to the disposal of the site to build this project, the City had suddenly escalated the valuation to R114 million. What was the impact of this valuation on the number of units that were delivered? When the matter was due to be before the Council in October 2018, the reports promised 293 social housing units (now was it 216), 342 marketing gap houses and 216 student units -- a total of 851 units.  The matter had been referred back because some people wanted to get more out of the project. Did the City get more or less? It seemed like it got a whole lot less when the matter went back to Council. Furthermore, the five projects that were mentioned in the presentation had cancelled by the City two weeks ago. Giving the reasons for the cancellation, the Mayor had said on radio that there was nothing wrong with the process that had been conducted in 2017. The new Mayoral Committee MAYCO member, Counsellor Malusi Booi, being interviewed on radio had said these five projects had been cancelled because they were all linked in terms of requests for proposals. They did not seem to be linked to each other. On Sunday, the Mayor had written an opinion piece in the paper and said that the reason why these projects were cancelled was because the sites did not have development rights, and one could not comply with the municipal asset transfer regulations unless there were development rights. What were the real reasons why the projects were cancelled? There were three reasons that had been put out to the public.

Regarding mixed use development, Mr Herron asked why the City was appointing consultants to undertake a rezoning for something that already allowed for the City to achieve what it needed to achieve? As for the Newmarket Street and Pickwick Street sites, why would the City expend money in appointing consultants to undertake rezoning when, in response to the request for proposals that had been issued in 2017, there were private developers who were willing to take on those sites as they were currently zoned, and go through the rezoning themselves? Now the City was going to start a process in February 2020, when construction could have started in February 2020. If a rezoning process was starting in February 2020, construction would take place in 2023 or 2024. The whole process had been set back by about five years.

Mr Herron referred to the relocation of the current occupiers of the Woodstock Hospital, saying there were 900 people living in the hospital now, of whom 300 were children -- from new born babies to 17 or 18 year olds. Where were 900 people going to be relocated to in a court eviction and how would the City manage this?

He agreed that political leaders needed to lead when it came to NIMBYism. It was their role to lead and to encourage integration. The best way to do this was to demonstrate what it meant. This meant building quickly instead of talking about it – building the projects so that people understood them and were not afraid of them being in their backyard. People were afraid. The best way to address NIMBYism was to demonstrate what the City meant. One could not have all these unnecessary delays and inconsistent reasons.

Finally, what had happened to Canterbury Street and the Green Point Bowling Club identified for social housing to be included in a mixed income, mixed use development? Consultants had said that the city had called them and told them to stop doing the work and send the invoice, because those projects were no longer happening. Could this be clarified?

After some deliberation, the Chairperson said that if after this meeting the Committee felt that it needed to have an in-depth discussion with the City on this matter, this could be put on the agenda.        

Department’s response

Mr Rughubar explained that the current subsidy was about R265 000 from the National Department of Human Settlements. The City’s contribution to social housing was generally through providing land at a discounted price. The City had approached the Council to release the land at 10% of the market value. The City does not put any cash into the development. It makes the land available to the social housing institution either by direct sale or by means of a long term lease. The social housing institution then becomes the administrator of the social housing development. In terms of the current subsidy and the cost of the actual development, the cost of the subsidy was about R265 000 per unit. The cost of construction was possibly in the region of R450 000 to R500 000, or even more as prices escalate. There was quite a shortfall on the cost of development which the social housing institution would have to borrow or invest their own capital towards. They had to recover that in some way to service loans that they had.

When it came to the affordability of tenants, when they lost their jobs or were presented with circumstances that prevented them from meeting their obligations, it was up to the social housing institution to either help them to downscale their unit, adjust their rent in relation of their income, or sometimes in unfortunate situations to ask them to leave the facility if they cannot contribute to the rent. Communicare would address how they managed their tenancy in such circumstances.

Concerning the current occupiers of the Woodstock Hospital, in January this year the assessment had been there were 700 people. Mr Herron says it now stands at 900. The City was currently busy with a survey at the hospital itself to determine who had been there in January, who the newcomers were, and what the increase was. The City was doing an actual recount at the hospital, and was looking at various options to deal with the people. One option was eviction, the other was accommodating those who may qualify for social housing. Another option was possibly designing the development to have an element of community residential units (CRUs), as well as social housing and market-related units. This was something that would come up in time when the City received proposals from the consultants. Currently, the City was looking into the eviction of all of the people who were in the Hospital.

There was no national subsidy from the Department of Human Settlements (DHS) for student housing. Any initiatives by private developers and social housing institutions would be fully funded from their own borrowed funding and capital which they would then need to recover in rent from the students. There had been discussions at the national level for introducing a subsidy for student housing.

Mr Rughubar said that in the management of agreements with institutions, social housing was very different from having an institution managing on behalf of the municipality. The social housing institution became the owner of the property. They then manage the actual property and the administration of the tenants. The monitoring of the actual social housing facility was done by the province and the City in respect of the makeup of the tenancy. When vacancies arise, there is consultation to some extent with the social housing institution and the municipality to find new tenants. Social housing institutions also had a waiting list of tenants that they could tap into. The City’s database of people waiting for rental opportunities was tapped into, however. These people were then screened for possible accommodation. There was no direct management agreement between the City and the social housing institution purely because the land had been released to the social housing institution. They were then the owners of the property by leasing the property or by paying for the property.

In terms of the responsibilities of the City in monitoring the social housing institution, the City did have regular engagements. The Provincial Department was also involved in those engagements with the institutions where what was looked into included management, financial viability and the performance of the institution.      

Mr Thabo Mashologu, General Manager: Communicare, clarified that there was a management agreement. The Social Housing Regulatory Authority (SHRA) provides for everything in respect of the tendering environment -- the beneficiaries, the audit on an annual basis, etc. There was definitely a framework agreement that was in place.

Mr Rughubar said issues concerning those people who may have been tenants for decades, may be related more to the CRU’s municipal-owned rental stock. Social housing had been around for only a short while. Tenants who were accessing social housing had been work-shopped before coming in to understand the nature of their relationship between them as tenants and the social housing institution. It would have been explained that this was not a city- or municipal-owned facility that would become available for ownership. The City or any municipality that had rental stock for tenants who made use of it for the long term was able, through the National Department, to transfer those units to the long term tenants. Currently, tenants of social housing did not have an opportunity to become owners of the units purely because the title deed restriction prevented them from selling off those units to tenants.

Concerning the relocation of people, areas like Lilliesdorp that had been temporary residential areas (TRAs) had not been the most suitable relocation sites. The City had developed sites as transitional housing opportunities, where sites that were to be developed were allocated to transitional housing, the idea being it would be a short term relocation, and that one would be able to move these people off to more permanent opportunities in the long term.

If there were 700 to 900 people in Woodstock Hospital, it was currently a transitional housing opportunity. If they were to be relocated, they would need to be moved to an emergency housing facility, as opposed to a housing facility which was as developed at Pickwick Street. Regarding the Salt River market site, the increase in the sale price of the site had had an effect on what the developer – Communicare -- could offer. Communicare could speak to the changes in their proposed development against the impact of the increased costs of the development. Over time, the plan for the Salt River market may have changed, as Communicare had reviewed the development cost, as well as other factors. Most definitely, it had impacted upon their ability to sustain the development over a period of time. Communicare would have changed the mix of products, with more market-related rental units in their development. 

Mr Pogiso Molapo, Manager: Social Housing and Land Restitution, responded that the City did not have to rezone the fruit and vegetable site. It may be able to fast-track it because it needed only to submit building plans. Newmarket Street, Pickwick Street and the others had to be rezoned in terms of the land use rights that were currently there. This had been confirmed. The City was working with a team of consultants to fast-track this. Parallel to the rezoning, what the City was doing was starting the land release process so that the City did not waste time on these two projects.

The Canterbury site had been a MAYCO decision, but for both that and the Greenpoint site, the City had raised its reservations. They had been reserved for social housing.  Regarding the stock, the City received two legal opinions. The first stated that the City cannot allocate before following the municipal asset transfer regulations (MATR) process. The second said that the City could still follow the MATR process. The safest way was to follow the MATR process and then follow the supply chain management (SCM) process afterwards. In line with the municipal asset transfer regulations, what the City was doing with Parow and Salt River was to start by advertising, going to Council and getting an in-principle approval. After this, the City would go on tender. In this instance, the City did not get an in-principle approval first from Council to dispose the properties on lease. The City did not follow proper procedure.    

Ms Nomzamo Mlungu, Programme Manager: Human Settlements Development and Delivery, referred to the MATR, and added that housing was exempted from the municipal approvals. The award was given to the winning bidder after the City had gone through a tendering process. This was the assumption that the City went on. However, because the sites were conceived as mixed use development, it was not just housing, but commercial and residential. This was where the complexity arose. For over a year, the City had been sitting with this without any clarity as to how to move forward. It had got to the point where the bids were so old that the financial viability was questionable, and the only way forward was to start the process afresh.   

Mr A Lili (ANC) said that he was very concerned and was always asking himself about the effectiveness of human settlements in the City of Cape Town and also in the Provincial Government. Sitting here, it was very frustrating. It was not clear whether the community was being failed by politicians or by the ineffectiveness of officials. This issue of funds going back to National Treasury was very concerning. Since 2005 until now, there had been what was called serviced sites – in Khayelitsha, for example. Currently, what one was seeing illegal occupations increasing on a daily basis. As a result, projects could not start. Were they being failed in Cape Town by the municipal officials dealing with land invasions? At times, while there had been a big fight between former Mayor, Patricia de Lille, and Councillor JP Smith, there had been a number of illegal land occupations. Not so long ago, many shacks had been built illegally in his area, in a place where there was supposed to be a housing development and had been approved three years ago. Was this due to the City officials or politicians, or was it a deliberate move by the governing party to ensure that the community had to suffer forever in respect of housing development? How did the City allow the 900 people who occupy Woodstock Hospitalto live there for such a very long time and later wants to evict them, without having a place to relocate them to? If the City had effective land invasion units, those people would not have occupied the hospital.

When it came to the land in the City, the municipality was quick to respond, but when it came to the land that was supposed to benefit poor people in areas outside of Cape Town, it took its time. It did not even bother to deal with evictions in time. In the end, the people on the ground were being failed. There was no movement in housing development in this province. It was a concern. Until the officials themselves could pinpoint the politicians who were actually frustrating the process, they should be held liable.     

The Chairperson explained that there was a legislation which made it very hard for the City to address land invasions, or occupations like the Woodstock Hospital.  Once occupied, the City had to go to court before it could remove them. It was important for the Committee to come up with something that would empower the Department and the officials. How much did the current legislation disempower the Department when something like this happened? The Committee could come up with a proposal.

Regarding the profiling of beneficiaries, it had been mentioned that most people who came to the City were looking for a job, not for a house. When the City initiated its projects, how was it responding to the demand out there among people who were saying that they did not have a place to stay, while they had a job, compared to those who were not earning enough and needed to be helped, such as backyard dwellers? Did the City have a system in place, and was it addressing this issue? Did it have the leeway to accommodate people who were living with disability? How were they prioritised? Did the City have a different data base to accommodate, for example, a 60-year-old to stay in social housing? Once having benefited from social housing, how was the beneficiary communicated to in order to ensure that communities understand the different programmes that were there for housing, so that they could make an informed decision?    

Mr Molapo said that the fact of the matter was that with regard to the rental demand in Cape Town, at least 40% of homeowners were renting in backyards or shacks. If those who were renting flats in were included, the percentage increased to about 60%. 

Ms Kamiela August, Director: Affordable Housing, Department of Human Settlements, said that  the Financial Services Commission was estimating that by 2030, 64% of South Africans would be renting.

Mr Molapo continued that the demand for rental was astronomical. Moreover, before the approval of any project, a requirement for project approval was market research or a demand study. This was part of the financial model that had to be submitted to the social housing regulatory authority for grant approval. The demand had to be verified, and also the areas that were to be targeted. The City had a database. This database did not contain people earning up to R15 000. 30% of any social housing project had to be people earning less than R5 500. For that category, the City used a database. It had an agreement with its social housing partners. When they were tenanting, they had to use the City’s database. These people had to be given priority. 

The Chairperson responded that the database which she was talking about was specifically for social housing. Were there different categories for the various programmes, or did the City use the database mentioned to secure the project and then add the beneficiaries to the project?

Mr Molapo explained that the City’s database was income-based. When people registered, they state their income. People earning more than R5 500 did not even bother to register. 

Mr Rughubar said that anyone could put their name on the City’s database. It was not the true indication of the need for social housing, or any other type of housing. The City had realised that it would need to further develop the database itself so that the Department could study it to understand the needs in the different areas and the different income categories. The City also needed to make it more current. It had started to clean it up by comparing it to the Department of Home Affairs’ list to know whether people on the list were still alive. It had started to clean up the data base in small segments. There was still much legal work that was required.

If someone moved into social housing, they were still eligible for “Breaking New Ground” (BNG) housing because they would indicate as tenants that they were ready for a BNG opportunity. In many rental estates, people had moved out to new housing developments, making those units available to new tenants. The opportunity was there for tenants to become home owners through BNG opportunities. 

Mr Herron asked whether the City had reserved Canterbury Street in Green Point and the bowling club for social housing.

Mr Molapo confirmed that it had.

The Chairperson said that the Committee members could attend the Standing Committee on Public Accounts (SCOPA) also to continue this discussion.

Mr Lili reiterated his question concerning the fate of the 900 people in Woodstock Hospital.

The Chairperson said that the City had mentioned that they still had to go back, do the survey and determine what would happen.

Mr Simmers stressed that there were three spheres of government. The biggest frustration was that there was red tape that was actually hindering the City from progressing more rapidly. While the intention was good, the implementation was a challenge.

Communicare Briefing

Ms Anthea Houston, Chief Operating Officer: Communicare, told the Committee that Communicare was a South African non-profit organisation focused on low-income housing and urban development. Her briefing would focus on the challenges associated with its programmes for the current financial year, the best practices in terms of other social housing forums, and its partnership with the City of Cape Town.

The challenges associated with its programmes for the current financial year included the delivery of more rentals, the effects of inflation, the construction sector decline and the impact of the construction “mafia,” ageing properties, resistance to Communicare’s restructuring, and the Rental Housing Tribunal (RHT).

She stressed that South Africa’s social housing programme could benefit from adopting best practices such as:

• Incorporating operating grants; or allowing mixed incomes to cross-subsidise;
• Allowing additional capital grants for higher densities – above 4/5 storeys;
• Periodically means testing occupants; and
• Utilities rebates to social housing partners.

Ms Houston described the partnership between Communicare and the City of Cape Town, emphasising that Communicare was one of a dozen social housing partners in Cape Town.

Discussion

Community raises issues

There was a question from the floor. Requesting the opportunity to give a presentation, Mr Neville Petersen -- a tenant of Communicare -- said the issue he had wanted to raise earlier had to do with the Salt River property. They had organised ourselves as committees to engage with Communicare. The presentation that had been delivered by Anthea Houston was incorrect. There was a report that they would like to hand out and place on record.  

The Chairperson asked for the document to be printed out and disseminated to the Committee Members. She asked if the Committee should allow Mr Petersen to proceed with the report.

Mr Lili pleaded that Mr Petersen be allowed to report to the Committee in the presence of Communicare. It was fit and proper that they got both sides of the story.

Mr America said that while he was eager to hear what Mr Petersen had to say, there was a process at the Housing Tribunal. It may not be fair to ventilate issues that required an adjudicating forum at a meeting like this. The proposal was that Mr Petersen provide the Chairperson with a copy of whatever he was going to say, and she should to use her discretion to decide whether or not she would like to make it available to Members. It was not proper for Mr Petersen to ventilate those issues at this point.

The Chairperson responded that the mere fact that Communicare had mentioned Mr Petersen in their presentation required some kind of response from him.

Mr Van der Westhuizen said that while this was unusual, any process that requires mediation or negotiation should be done through the Petitions Committee, an avenue that was provided for by the Western Cape Government for cases like this. While it was appreciated that the Committee should hear what people wanted to share, it may not be appropriate for the Committee to respond in any way, or to involve itself, especially in what seemed now to be a confrontational situation.

The Chairperson said she did not declare the Committee to be a closed Committee, and that it was necessary to receive the submission. The rule allowed a member to engage with the Committee unless otherwise stated from the beginning of the meeting. They would not interrogate the contribution. Both the presenter and Communicare must ensure that this matter did not escalate into a confrontation. Mr Petersen must not read the document. He must only state information that was additional to the information on the document that had been handed out.   

Mr Petersen said that Communicare in its current format was operating illegally and with a lot of corrupt activities. They had proof of that and had asked for several audits to be done on Communicare and their property stocks. What had happened was that they had inherited these properties from the apartheid government, but had never declared them to the new government. Communcare had established their own private company, an estate agency, of which Anthea Houston was the director. They were now in the process of selling off these properties inherited from the apartheid government and were transferring these properties into this company and selling them off at a profit. The property that was sold on the Foreshore was irregular, because it was never in the name of Communicare. This was the reason why they were questioning this.

The rental stock that they were talking about at the moment was neither the property of Communicare nor Good Find Properties. Last year, Communicare had come around and issued letters for rental increases. They had unilaterally wanted to transfer the lease agreements from Communicare over to the new company called Good Find Properties. That had involved increased rentals. There had been no consultations in this process. While the process was still before the Rental Tribunal at the moment and was unresolved, Communicare had issued another rental increase for this financial year. They had further stated that they were implementing a second lease agreement, which the tenants did not even know about. The Committee had been invited on a previous occasion to experience this for themselves.

Mr Petersen stressed that the community was not asking the Committee to be a judge or decide who was right or wrong, but through submissions to see for itself the stocks at Communicare and the conditions there. The Committee would understand then. There were more than 1 000 units in the Communicare housing stock at the moment. There were poor people looking for housing. It was sad to see that women in positions of power were not looking after women in need, like single mothers and children. People could not be squatting outside or living heaped up in accommodation while there were thousands of units available. The Committee should not be fooled by the beautiful words that had been used. It was important to understand the South African situation and find South African solutions.

Earlier, it had been heart-breaking to hear that people who occupied land were called gangsters or criminals by the City of Cape Town. There were laws that needed to be applied in these situations. There were instances where Communicare and community members had decided to occupy empty flats out of desperation.   While it was Eid, Communicare, under the supervision of the chief executive officer (CEO), had unleashed security guards in black who had broken down doors and attempted to evict these people. Was this a woman of passion who cared for the community?

These were the issues where community members’ rights had been violated. There were processes and means with which to deal with this situation. People were still parading on the properties with guns. Security guards tended to be foreigners with whom communication was very difficult. They also used their body language to intimidate. In terms of the Constitution, the community would like to own those houses and have title deeds. As tenants, they had dreams and aspirations to own their own properties. They would pursue whatever mechanism there was within the legal framework to seek an opportunity to buy those stocks. They were asking for title deeds. 

Members’ comments

Mr America thanked Mr Petersen for the submission. It was not possible to express an opinion because Members did not have the other side. If one looked at the presentation, Mr Petersen had coloured in some of the glaring gaps in it. One did not really get the sense that what was in the presentation was happening on the ground. How were rental increases managed? It had been mentioned that Communicare was trying to contain costs and, in that way, mitigate increases. It was also mentioned that it had no control over Council increases with regard to services. In many instances, there were cases where peoples’ rentals had been increased. Moreover, Communicare prided itself as a non-profit organisation (NPO), yet it operated as a company seeking to maximise profits in terms of its remuneration structure. The information provided was too little for the Committee to fairly interrogate what this organisation was all about. There were no financial statements. The Committee was expected to accept what had been said in good faith, yet the CEO earns over R1 million and the non-executive directors earn exorbitant directors fees. How did Communicare reconcile this situation with the idea of cost-containment? Lastly, what measures were in place to deal with the corruption that had been mentioned? There were over 400 cases at the Tribunal. What was the real situation there, and how many cases had been successfully mediated?     

Mr Van der Westhuizen asked whether Communicare was selling or renting out property that did not belong to it. Did Communicare have structures that engaged with its tenants so that tenants could appoint or elect on an annual basis people to represent them in talks with Communicare regarding issues such as viewing lease agreements, the required maintenance of buildings, and other aspects like the security of the tenants? There must be many issues affecting a building full of people which they would like addressed. It would be good for them to come together to address them. When Communicare puts in bids to the City of Cape Town for the management work that it does, how was it that it was able to perform work by agreement with the City? What was the relationship between Communicare and the local government?  

Mr Lili made an appeal to the Committee to do an oversight visit to these areas, particularly those where Communicare was in charge. He did not know these representatives from the community, but he did know others who were disturbed by the activities of Communicare. 

The Chairperson requested Mr Lili to ask questions, given the time constraints.

Mr Lili said he did not want to ask a question simply because he was on the ground. He had been elected by the people of the municipality and knew exactly what was happening, unlike those Committee members who were not aware. He proposed that rather than ask many questions to Communicare, the Committee should go and see for itself what the reality was. What the Communicare management was presenting was not true. If one were to visit Parow, for instance, the Committee would see that Communicare was not doing well when it came to the pensioners.

The Chairperson said that Mr Lili would have enough time, once the Committee was done with the questions, to see what the way forward by way of the resolutions was. It was unfair to the Committee members who had questions.

Mr Herron stressed that the process that had just unfolded was unfair to both Mr Petersen and to Communicare. Now the Committee was trying to adjudicate something where it was not even sure it was meant to be adjudicating. Once the Committee received the document, it could decide how to proceed. Ms Houston’s comment around mixed income was acknowledged. The Salt River market was an opportunity to address the NIMBYism because it could demonstrate what affordable housing meant. It had been agreed that these five projects were dead if they did not involve mixed income and mixed development. If they consisted only of social housing because the MATR said so, which was nonsense, the projects were dead. The City needed to go back and look at this. The City could not introduce 50 units on Roeland Street and think that it was going to be a viable project. It must have mixed income, mixed use development. It needs to figure out the MATR process if it got it wrong. As presented by the City, they were dead as social housing projects.  

The Chairperson asked whether Communicare was the only NPO which the City was dealing with, or if there was another NPO which the City was using for social housing. The complaints lodged with the Tribunal needed to be looked into. There had to be another engagement to get in depth information about what Communicare was doing. If 700 complaints had been lodged, social housing was failing somehow. It had also been mentioned that Communicare provided social rentals. Some social rentals were regulated. Those that were not regulated were those that had been managed for more than 20 years. Which were those that were not regulated by SHRA? It would be 25 October before this could be recalled on the Committee’s agenda. The Committee had requested the presence of Communicare numerous times, so it should not be made difficult for the Committee to engage with them. The Committee did not want to be a judge, but rather wanted to chart a way forward and find alternatives if necessary. 

Communicare’s response

Ms Houston responded that Communicare had always made itself available to meet the Committee, and said she had no knowledge of when it had declined to meet the Committee. They had met several times with Members of the Executive Council (MECs). When the Committee would like to meet with tenants, Communicare would participate. It did not want it reflected in any record that it had not respected the role played by the Committee. 

She said Communicare was not selling property that did not belong to it. There were other people who were renting property that belonged to Communicare and taking money from it without paying the money over to Communicare.

Regardinghow management was working with the City, Communicare was not doing any management work with the City or any other entity. When the City had explored this option with Communicare, it had declined. This City had bids only for development around property or land they might want to release or redevelop. When Communicare bids, it bids like any other social housing institution. Registered as a non-profit, it had to go through the same processes in order to comply with the Public Finance Management Act (PFMA) and the Municipal Finance Management Act (MFMA) etc.

Communicare did not have some kind of special access to land. It was 90 years old, so she could not say what the processes were long ago. In recent times, it had accessed property the way any other bidder would. All the same criteria which the City determined had to be met.

Concerning structures to engage tenants, Communicare had focus groups because the social housing regulations required such groups. They had had problems with the focus group at Drommedaris because there was a sentiment at the complex that the focus group was not representative of the tenants’ issues. The tenants had reorganised into a different tenant committee structure. It had approached Communicare, which had looked at the workings of the focus group. The focus group had been disbanded and since then Communicare had been talking to the committee structure that had been set up. Both the committee structure and Communicare wanted to formalise this back into the focus group at some point in the future. At other complexes, there were structures called area committees, where tenants would choose representatives and Communicare would meet with the area committees.

There was another scenario where the community members had felt the committees were not representative. Communicare’s approach was now to either meet all tenants in a complex where everyone was free to speak, or if they had representative structures, to meet with those. There were structures which do not want to meet with Communicare and whose interests were not aligned with those of Communicare. In those cases, it was still open to meet with those structures. Generally, the company dealt with tenants either as a group or individually.

Regarding how rent was set, while it had been expressed that rent should be set in relation to what a household could afford, the challenge with this was what someone could afford and what something costs, was not one and the same thing. Communicare was not setting rent on the affordability of households. In environments where there were operating grants, best practice affirmed that rents could be set in terms of what people could afford. Without those, the affordability of the tenant could not be the determinant because the property would not be looked after the way it ought to be.

Ms Houston emphasised that the rent was fundamentally driven by what it cost to keep the complex operating. Where this was adversely affecting the tenant, Communicare either sat down with a tenant to see what could be done with the tenant as an exception. There were also complexes where the rent was kept down, because they were regulated under the Social Housing Act and because there was a capital grant which came with those conditions. When a tenant could not afford, Communicare would look at finding a space for them in units where the rent was lower. There were also other units which were set aside for pensioners which were rented out at R600 to R700 per unit in particular complexes.

All rental housing, even social housing, was regulated by the Rental Housing Act. All tenants still enjoyed all the protections of the Act, and exercised their rights under the Act by coming to the Tribunal. Social housing was not necessarily failing. Of all the complaints at the Tribunal, it was a very small percentage that was coming out of the area of social housing. The bulk of the complaints were not coming out of the social housing complexes, for example, Drommedaris.

The request of the Committee member for more information on the financials was noted. Communicare had not been aware of the requirements, but had spoken to the three agenda items. It had also not been given any context to the presentation.        

Department’s comments

Mr Molapo said that the City had 19 social housing partners currently. Communicare was doing only one project. What happened was that every five years the City invites social housing partners nationally that had been accredited by the Social Housing Regulatory Authority. On this occasion, the City signs partnership agreements. 

Ms August commented that they worked with the same partners at the moment. They were accredited by the social housing institution. There were about seven or eight that were currently very active in this space. The rest were emerging social housing institutions. There was a need to capacitate emerging social housing institutions. Communicare was one of the most established social housing institutions. The Mother City institution was a conditionally accredited social housing institution as well. They were one of the 12 that were accredited within this country and province but had not yet delivered a project within this province.

She said Mr Molapo had described what social housing was, which was the most critical thing said at this meeting today. Only 10% of Communicare’s stock of 300 units was managed under the social housing programme. Everything else they did was outside of that ambit. There was a social housing regulatory report that could be issued for the stock that had been delivered under the guidance of the social housing programme. This could be made available to the Committee at some point. It spoke to aspects of the vacancy rate, the turnover, and if they were increasing rental in line with the consumer price index (CPI). 

The Chairperson, concerning the 300 units, asked how many the Province contributed a subsidy towards.

Ms August said that at Drommedaris, 338 were provided with subsidies. At the new project in Bothasig, phase two, the province contributed towards the subsidies for 380 units. 

The Chairperson said that the Committee would like to know whether the subsidy added value. If the subsidy went to the company to make a difference but, in the final analysis, the same numbers were coming back to the Department, then the Committee had to find a different way forward. If the policy was not working, the Committee Members had to determine how social housing could be attended to in a different way. Was the policy that was there really speaking to the demand that was there? How could the policy be changed to respond to the current social housing context?

Ms Jacqui Samson, Chief Director: Human Settlements Planning, DHS, said the Department would like the opportunity to brief the Committee in detail and also separate the different programmes. Some of the concerns raised at the meeting referred to other programmes, apart from the social housing programme.

The Chairperson stressed that the most important thing was to determine which programmes were working for the communities. When investigating which programmes were working and the problems, it was important to determine the priorities for the Western Cape and to focus on them. 

Consideration of minutes

The minutes of the meeting held on 14 August 2019 were adopted.

Resolutions/Actions

Mr Lili voiced his dissatisfaction with how the meeting was had been chaired, and said he had a responsibility to fearlessly represent the people of this country.

Mr America asked for an opportunity for the Committee to engage with stakeholders that had not yet been engaged.

Mr Herron said he felt the Committee needed to first understand what the complaint was and what the response was. It may not be within the mandate of the Committee the address this matter. Communicare should be asked to respond to Mr Petersen’s document. The Committee had two documents to consider, and could then decide whether it was something it could be a part of. At the moment, there were disgruntled tenants that were not in social housing, and the Committee did not have a mandate beyond public housing.

The Chairperson recommended that the Tribunal had to deal with the issue that was at hand, unless the issue had nothing to do with their rentals. The Committee could take it from there. For now, it was not clear what the issue was. The first resolution was that the Committee members could read the document, and make their recommendations by email. The Committee, however, needed to hear the outcome from the Tribunal. 

Mr Lili argued that the Chair was continuing to suppress. Why was it that the community members could not be afforded an opportunity like the one that had been afforded to Communicare, to present their case properly? The Committee must not shift its oversight role to the Tribunal. The roles must be separated. The Committee must also go on its own and get the facts to see for itself whether what had been presented by Communicare was true or not.

The Chairperson replied that it was not the responsibility of the Chair to say what the Committee’s mandate was. Let it check the shortcomings of social housing. What was the situation now, and was there a way in which legislation could serve as a remedy? Was the current policy being implemented correctly, or were there changes that could be made to the legislation that could address the issues and give joy to the tenants? They should listen to the Tribunal and then introduce a policy that would really address the problems that were there. This could be done individually. Without taking sides, they had to ask where the policy loopholes were.

Mr Herron said that it did become the Committee’s mandate when there was an allegation that Communicare was in breach of the Social Housing Act. At the moment, the Committee was not sure. Based on a reading of the document, there would be certain questions. Communicare should be given an opportunity to respond. The Committee could then see where its mandate was. No one was suppressing the tenants.

Mr Van der Westhuizen suggested that the Committee needed to decide what its mandate was. For example, was the legislation working for the public? Was the legislation serving the interests of the public and taking them forward, or were there much needed amendments? Was public money being spent in the most effective way? These were things which needed to be focussed on. It was concerning if the Committee got entangled in private quarrels. If the Committee started engaging with other issues, it might start neglecting its primary task. There was enough in terms of ensuring that public money was spent correctly and in the best interests of the public, and whether the legislation was of the best standard possible, to keep the Committee busy for the next five years. When should an issue be referred to the Petitions Committee, rather than the Standing Committee?   

The Chairperson responded that the Standing Rules expressed what the mandate of the Committee was. SCOPA could also be involved to go in depth into the financials. The annual reports would help the Committee to interrogate the areas where the Committee felt the Department was not giving enough information. Individual complaints, where the Committee could not provide answers, was one area where it could not go.

Based on Mr Petersen’s submission, the Committee must ask itself if it could assist in the issue of the tenants with the landlord. The problem was much bigger than an individual’s problem. The Committee must take a holistic approach.

The second resolution was that the Committee needed to engage with Communicare to gain an understanding. The Committee may as well add other companies that were also managing social housing.

After some deliberation, the meeting was adjourned.