Mangaung Urban Settlements Development Grant; Free State Human Settlements Annual Performance Plan

Meeting report

The Chairperson welcomed all in attendance. Mangaung Metro had been called, not because they were doing too badly, but because they could do better. There were minor changes in the Committee. Ms V Bam-Mugwanya (ANC) had been moved to another portfolio. She had been replaced by Ms B Mabe (ANC) while Mr M Zwane (ANC) had joined the Committee as an alternate Member.

Free State Department of Human Settlements Annual Performance Plan, Strategic Plan and Budget for 2018/19

The Head of Department of the Free State Department of a Human Settlements, Mr Nthimotse Mokhesi, introduced himself and the two ladies from his Department who were to make the presentation, Ms Nozipho Molikoe, Chief Financial Officer, and Ms Carol Tlali, Chief Director: Planning. He indicated that he would account when questions were put to the Department.  The Chairperson expressed her pleasure at two women doing the presentation, and also at the readiness of the HoD to account.

Ms Nozipho Molikoe, Chief Financial Officer (CFO), gave a detailed PowerPoint presentation. In terms of performance, the Department had spent R 947.64 million or 79% as at 28 February 2018 against the allocated budget of R 1.19 billion. Poor performance was evident in an expenditure of only 59% on rural housing and 25% on the provincial specific programmes.

For a period of six months, between May and September 2017, the Department could not spend its allocation which had been transferred by the National Department of Human Settlements (DHS). There were three spikes in expenditure - in the months of August 2017, December 2017, and February 2018 - where the Department had spent above the R 100 million mark.  As of 16 March 2018, the Department had an available budget of R 210.30 million, including the last tranche of R 82 million from the national Department, against the allocation of R 1.19 billion.

Planned expenditure/commitments of the Department of R 210.30 million would be on the reprioritisation of R 38 million to the Housing Development Agency (HDA) to the identified catalytic projects in Baken Park Extension six and seven, Sasolburg properties, and Estoire, as approved by DHS. There had been a huge expenditure under the title deeds programme. The Department could not spend the R 71 million allocated budget. The provincial Department had also requested approval from DHS for the surplus of R 58 million to be reprioritised for HDA.

There was an under expenditure on the Finance Linked Individual Subsidy Programme (FLISP) project for which an amount of R11 million had been ring-fenced. The Department was in the process of transferring an amount of R 3.07 million which would benefit 79 beneficiaries in the programme. The Department expected to receive invoices from infrastructure programmes to the tune of R 47.73 million. Some of the invoices had been received by the Department, and others were still outstanding. There had been confirmation, however, from contractors and consultants that they would be submitting the required invoices. The Department anticipated the invoices of the Breaking New Grounds (BNGs) would amount to a total of R 63.49 million for the completion of 660 units. All in all, the Department did not anticipate either a surplus or deficit. The Department would break even.

Ms Carol Tlali, Chief Director: Planning, said she would be talking to the Non-Financial Performance of the Department. In the business plan of 2017/18, the Department had planned to deliver 6 848 sites but had only delivered 4466 sites to date. The target for units in 2017/18 was 5 594.  3 020 were complete with an addition of 660 units, as well as the 79 flat subsides, would show over 50% in terms of the achievement for the year. Outstanding title deeds for pre-1994 and post 1994 was 36 919.  The Department had finalized 3 374 but had found the matter of issuing title deeds to be extremely challenging.

Ms Tlali addressed the revitalised mining town programmes.  The Department had committed itself to delivering 1300 sites in the mining area of Matjhabeng, completing 324 units, and issuing 2497 title deeds. The budget allocation for mining towns was R 173.73 million. In the informal settlements upgrading programme in the mining area, the Department had targeted 1 401 sites and units. However, only 119 sites and units were delivered.

178 individual housing units were targeted, but the Department did not deliver any. With regards to CRU, there was no expenditure on the programme.  The Department had delivered 686 out of the 1 579 targeted title deeds and 906 title deeds from the post-1994 backlog out of the planned 4 692 title deeds.

The Department had embarked on additional interventions with the HDA on the mining towns. HDA had assisted the Department to develop the spatial transformation plan, infrastructure technical assessment, 21 household enumeration/settlement profiles, 15 resettlement plans, a strategy on illegal land occupation, and settlement level plans.

Regarding the military veterans programme, the Department had a target of 199 units to construct throughout the financial year. There were various challenges with the programme. Most of problems in the area related to disputes between the main contractor and the sub-contractors. In other areas like Theunissen, Parys, and Kroonstad units were completed already but could not be reported as yet because they had not been handed over to the Department because of the disputes between the contractor and sub-contractor. In Matjhabeng the Department had targeted the building of 62 units but had only completed 10 foundations to date. The biggest challenge was that there were only 28 approved beneficiaries and the Department would try to complete the 28 units for those beneficiaries. In Mangaung, the bulk of the work had started with 50 units being built in Hillside View. 44 foundations had been cast to date. Construction of the wall plates had been halted because there was no electricity in the area.

The Department had agreed to assist the Mangaung Metropolitan Municipality with the identified catalytic projects as well as the township establishment process. The Department would be assisting the Metro with the Sasolburg properties, as well as the Baken Park properties. HDA was implementing the projects. The planning phase of those projects was being fast-tracked to maximise delivery in 2018/19.

On informal settlements intervention, all of the 20 municipalities were receiving support for the National Upgrading Support Programme (NUSP). Of the recorded 143 informal settlements, five had been upgraded. The Department had started with the installation of basic engineering services in 14 informal settlements in the province. The project was ongoing.

The Medium-Term Expenditure Framework (MTEF) target was for 63 252 title deeds, pre- and post-1994, to be handed over. The Department had commissioned LexusNexus South Africa, a technology firm, to check on the current title deeds and discovered that 7 869 title deeds were registered in approved beneficiaries’ names. The target for 2017/18 was the registration of 15 835 title deeds. To date, the Department had delivered 22 710 title deeds, leaving a deficit of 40 462 title deeds to be registered.  A total of R 64.07 million would be spent on dispute resolution and applications for lost title deed copies. Additional measures included a workload allocation to conveyancers, appointment of dedicated project managers, and replacement of poor performing conveyancers.  Reconstruction and Development Programme (RDP) houses would be registered within five days from the date of lodgement. New conveyancers had been added to the conveyancer panel.

For the 2018/19 financial year, the overall budget for the province was R 1.11 billion. The Department was planning to deliver 12 834 sites; 4 605 units; 2 950 current title deeds; and 15 835 backlog title deeds.

Discussion

Mr C Walmarans (ANC) welcomed the presentation.  He asked about the nature of disputes between the contractor and subcontractor, and whether they had had an impact on the delivery of the total package to the recipient.  On slide 21, the Department conceded that there had been challenges, but when looking at the targets, they seemed ambitious, and he was not comfortable with the figures given on the performance in previous years. He asked for the percentage and number of conveyancers dealing with the transformation agenda in terms of previously disadvantaged individuals.

Mr L Khoarai (ANC) asked for an explanation of the money that was being transferred to the Housing Development Agency (HDA), and whether it was dumping, or a saving for the Department.  Could the money not go back to the national DHS?  He was not personally satisfied with the performance in relation to the mining towns. There was no report on the performance of Moqaka mining town. In the past there had been a report. He also sought clarity on Matjhabeng.  What strategy would be used to deliver houses? Who was at fault for losing the title deeds mentioned on slide 37?  Mr Khoarai asked what the plan was for the CRU in Matjhabeng.

Ms M Nkadimeng (ANC) said that the province was trying its level best, although it was clear that when the Department had presented, it had areas where it was not doing very well. She asked where the money was going when the province was exhausting the monies being allocated, but it was not meeting the targets. Why was R58 million transferred to HDA?

Mr M Bara (DA) raised his concerns about the R210 million that needed to be spent before the end of the financial year. It seemed that all attention was being focused on ensuring that money was spent before then.  What were the challenges in terms of the Finance Linked Individual Subsidy Programme (FLISP)?  He was not sure that the Department should be held to ransom by contractors in terms of service delivery.  What was the Department doing to deal with the dispute?  Mr Bara said that the need to provide title deeds to properties could not be overemphasized. Much more effort should be put into the matter.

The Chairperson asked for clarification on the specific project where the province had only spent 25%. Could the Department unpack details of spending?  She knew that the underspending on FLISP was a national problem, and DHS had said it was looking at managing that programme at a national level.  When the Committee had gone on its oversight visit to Free State, in Matjhabeng particularly, the Committee had observed that there were problems.  What would the province be doing to address the problems?  The Chairperson asked how the province had arrived at the figure of 60 houses to be built for military veterans when they did not have enough beneficiaries. She asked how that problem would be mitigated.

Responses

Mr Mokhesi, Head of Department, said that the problem with the title deeds was that it was not only a conveyancing problem. The type of problems that had manifested in the backlog of title deeds included estates that had not been raised up, and disputes amongst family members which required interventions by an attorney. In the backlogs, there were title deeds which had been registered, but the beneficiaries did not have them. The Department had tried to address the issues by distributing a circular to members of the Law Society asking for people in possession of specific title deeds to come forward. Amongst the backlogs were those in rural areas who had PTOs (Permission to Occupy). There were 140 townships in the province. The national Department had deployed a task team to the provinces. One member of the task team was still working with the Free State Department. The problems highlighted needed to be resolved first as that would put the Department in a position to accelerate and deliver more title deeds.

Mr Mokhesi said the beneficiary list for veterans had been obtained from the Department of Defence and Military Veterans.  There was a challenge since it had been found that some veterans had properties elsewhere or exceeded the income bracket of over R125 000 per annum.  The Department was intervening in the disputes between the contractor and the subcontractor. Issues were more around payments between contractor and subcontractor. If the matter remained unresolved, then the Department would have no option but to terminate the contract.

The procurement of houses in the mining towns was almost done. By mid-April 2018 the contractor would be on site. In terms of the CRUs, the Department had over-achieved and over-invested, and that was part of the reason it had not achieved in other programmes. Unit costs were quite high. In respect of conveyancers, at least 80% were black conveyancers. The Department had opened up to those who were not on the database since there had been a lot of interest.

Slide nine provided an outline of what the Department was going to do with the R210 million. The biggest problem had been with the title deeds issue. The Department had reprioritised from projects that were not performing, as they were supposed to, and was investing in catalytic projects.

The business plan of the Municipal Infrastructure Grant (MIG) addressed the bulk of the issues relating to Moqaka. The Department of Cooperative Governance and Traditional Affairs (COGTA) had assisted the municipality with the issue and the only thing the Department was not happy with was the pace of the programme. Furthermore, the Department was supporting six municipalities with their accreditations while the 25% specific projects were farm projects.

The Chairperson wanted the Director-General to register her discomfort about the R58 million being transferred to HDA.

Mr Mbulelo Tshangana, Director-General, Department of Human Settlements, said that the Department would have to, at some point, present the work process flow on title deeds so that the Committee could understand the nature of work entailed in respect of title deeds. The transferring of title deeds was a small part of the work. A great deal of work preceded the lodging of title deeds.  In respect of the funds to HDA, it was not dumping of money as long as there was a contractual agreement between the conveyancing companies and HDA. The money would be tracked, and there would be a monthly exercise by the HOD and CFO to monitor the money. The other option was to transfer the money to lawyers, but this did not rest comfortably with government as public funds should not be paid to private companies until completion of a job.

Mr Tshangana said the military veteran specification was an area of concern because DHS had to satisfy itself that the 100m2 had not been fully funded by the national DHS as building had to be supplemented by the provincial Department.  He stated that the policy allowed municipalities to use 2% of the Development Grant, specifically those municipalities that did not receive a lot of funding. However, the municipality needed to receive approval from the CFO at DHS.  He noted that the only way the Department could get FLISP to perform was to start by perfecting the government employment scheme and work with government employees. FLISP on its own was not going to help the Department to achieve the volumes it wanted to achieve.

Mangaung Metropolitan Municipality

The Chairperson asked if Mangaung Metropolitan Municipality was only dealing with the pre-1994 housing and not RDP.  Mr Mokhesi confirmed that that was the case.

Adv Tankiso Mea, City Manager, Mangaung Metropolitan Municipality said the City was appreciative of the grant and was working closely with Mr Mokhesi.                                                       

Adv Jupiter Phaladi, HOD: Human Settlements, Mangaung Metropolitan Municipality, said the Metro had a budget of R1.25 billion for housing. The biggest sponsor came from the Urban Settlements Development Grant (USDG). USDG made up 66% of the overall budget. Expenditure in Quarter one was R114.43 million; Quarter two was R208.26 million. And the Metro was expecting to spend R42.50 million in Quarter three.

The Human Settlements Directorate supported 16 projects and focused on connectivity and water services. Most of the projects were either in the design stage or contractors were already on site. Tenders would go out for Sonderwater and Bloemside on 1 July 2018.  All informal settlements in Mangaung had been identified and a resettlement plan had been drawn up.

In the Engineering and Services Directorate, all contractors and consultants were on site, and focused on installation of bulk water. With regard to roads and storm water, contractors were back on site after protracted community unrest. Contractors had submitted their revised project schedules to catch up on time lost due to protests. In Soutpan and Naledi, consultants and contractors were on site for construction of paved roads, refurbishment of water supply systems, and sewer refurbishment. At Nallis View Cemetery, contractors were on site to do fencing, internal roads, and ablution facilities. The metro was engaging SANRAL with regards to the access road on N6 leading to the cemetery. Contractors were to be appointed by the end of March 2018 for the development of parks at Dewetsdorp and Wepener at R1 million each. Those projects were expected to be completed by the end of June 2018.

Remedial action to be taken included expediting the invoice payment period for all USDG funded projects. Project managers would continuously monitor progress of consultants and contractors on site.  Funds would be re-allocated from projects that were at the planning stage and/or performing slowly to projects showing accelerated cash-flow movement.  The Human Settlements HOD would coordinate a multi stakeholder team to ensure that project performance was tracked, monitored, and possible risks mitigated; the task team was to meet monthly, and when necessary; and USDG item was to be on the Executive Management Team agenda.

Discussion

Mr Khoarai noted that the City Manager was confident that by the end of the financial year he would use all the funds, but he wanted reassurance on the matter.

Mr Bara asked if there was a quantification of the work done on title deeds to date.  Had any measures been taken to ensure that community unrest was resolved?

The Chairperson said it was very rare that the Committee gave credit to the metros but Mangaung was one of the metros doing well.

Responses

Mr Tshangana said there was nothing that the Metro and the province could not do together. They could do a cost sharing arrangement for the title deeds. It was all in making sure that both the metro and province plan worked together. The Deputy Director-General, Mr Mashabane, had started a similar process in Gauteng. There was a built-environment development plan in the province and metros were participating in that arrangement.

Ms Funani Matlatsi CFO, DHS said the Metro was not responsible for building RDPs, but in a metro like Ekurhuleni there was cost sharing.

Ms Mulalo Muthife, Chief Director: Monitoring and Evaluation, DHS, said that looking at the overall expenditure of the Metro, it looked bad, but looking at the individual programme level, the Metro was careful and did not invest a lot of money when a project was still at design level. The performance in terms of MTSF targets was good compared to other metros. That, coupled with the engineering services, painted a very good picture compared to other metros.

Ms Matlatsi was glad that Mangaung was committed to spending 100% of its budget as was required by Treasury. What the Department would do, would be to monitor that the metro was spending the money responsibly.

Mr Mokhesi said that the provincial Department was working with the Metro on township settlements that it had highlighted in its presentation.

Adv Mea said it was not uncommon that communities, for one reason or another, would want to disrupt the project. In terms of that particular project, there were issues between the two wards, and the Executive Mayor had intervened to solve the conflict and had assigned the Deputy Executive Mayor to oversee the project.

The Chairperson appreciated the presentation and said there was absolutely no room for Mangaung to drop its performance. There was only room for the Metro to improve their performance. The Committee had invited the Metro, not because it was at the bottom of the log, but rather because it was in the middle and the Committee wanted it to improve.

Minutes of 13 March 2018

Ms Nkadimeng proposed the adoption of the minutes.  Mr Walmarans seconded the proposal.

The Acting Chairperson indicated that the policy workshop had been moved from the following Tuesday to the Wednesday as the House would be sitting on the Tuesday.  All Committee Members were expected to attend.

The Meeting was adjourned