State land opportunities for urban development parnerships. SA Cities Network Seminar March 2007

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1 State land opportunities for urban development parnerships SA Cities Network Seminar March 2007

2 State land holdings in cities Large percentage of urban land owned by state Public Works departments State Owned Enterprises Municipalities Of this, large percentage is no longer core to government Strategic urban land holdings Underutilised and degraded Strategic location and potential for urban expansion Major investment needed to unlock value Private sector cannot do it alone 2

3 SOE properties SOEs are in a process of focusing on core business, divesting themselves of assets and enterprises that are non core In 2005/06 the Department of Public Enterprises and the SOEs conducted an audit of all non-core properties, and examined optimal ways in which to dispose of these properties R2b worth of non-core properties identified Non-core property holdings have been classified into commercial and non-commercial properties, as follow: Property Portfolio Core Non-core Non- Commercail Commercail Disposal to Government Housing Sale Development 3

4 Non-Core Property Share by SOE Denel 20% Eskom 13% SAA 0% Transnet Denel Eskom SAA Transnet 67% 4

5 Spread of SOE Non-Core Properties Legend Number of Non-Core Properties per Location Beit Bridge Pretoria SA railway SA Provinces Eastern Cape Johannesburg Free State Gauteng KwaZulu-Natal Lesotho Mpumalanga Breyton North West Northern Cape Northern Province Western Cape Upington Vryheid Kimberley Bloemfontein Richards Bay De Aar Durban Saldanha De Doorns Touwsrivier East London Cape Town Mossel Bay PE Coega 5 30 March 2006

6 Major urban development opportunities Newtown North Precinct, Johannesburg Extension of cultural precinct and link with Braamfontein and Gautrain station OR Tambo Airport Development opportunities linked to major expansion of passenger and cargo terminals Kaserne / City Deep Inland Port Opportunity for logistics hub development with Eskom and Transnet land Durban Port and Non-port related sites Point, Victoria Embankment and NMR development projects being led by Ethekwini metro East London CBD Sleeper Site and Signal Hill offer opportunity to reconfigure CBD and waterfront Port Elizabeth Harbour Move of port activities to Coega will enable integration of city and port spaces Culemborg Black-River, Cape Town Transnet land acts as bottleneck on city, development could achieve greater urban efficiency and expansion of CBD 6

7 Newtown North precinct 7

8 OR TAMBO AIRPORT

9 Kaserne / City Deep Major Transnet and Eskom land holdings clustered around inland port in Kaserne / City Deep area 9

10 Bay Head land degraded and underutilised major opportunity for urban expansion Embankment development could further open up city / port interface Point development is leading urban regeneration linked to port 10

11 East London CBD Sleeper Site and Signal Hill in city centre are the key link areas between the city, the port and the sea, and offer the opportunity to reconfigure the orientation of the city 11

12 PORT ELIZABETH Managanese dump and tank farm are dirty port activities that logically belong in Coega 12

13 Transnet property in Cape Town V&AW NATIONAL PORTS AUTHORITY TRANSNET 13

14 Cape Town: Culemborg / Black River site 14

15 Developing non-core property Major SOE land holdings in cities are a significant opportunity for development SOE s do not have the capacity or mandate to develop these properties New partnerships needed to take this land into development process, with local authorities and development agencies developers and property funds consumers and residents Municipalities can play key role in unlocking land & initiating development processes 15

16 PROPERTY DEVELOPMENT PROCESS DEVELOPED PROPERTY TO END USER MARKETING SALES LEASING ADVERTISING Market research Construction of improvements Provision of infrastructure services Town Planning Context Precinct Plan Develop framework Viability study Acquisition of alternative land use rights development rights to support mixed alternative land use BRICKS MORTOR CONSTRUCTION Rezone Survey ELECTRIC SEWERAGE WATER ROADS STORM TELECOM PROFESSION FEES PROJECT MANAGE LAND ENABLE COSTS Property in current transport use zoning, improvements & infrastructure to support historic use PROPERTY HOLDING COST 16MANAGE FEE

17 Capital requirements All of the property developments identified require: Capital for holding costs; Capital for preparation costs; Large scale investment in infrastructure to realise value; Specialised capacity for creating maximum value To deliver these requirements most efficiently and optimise urban development impact, partnerships with urban developers, property funds and financial institutions needed 17

18 Options for local development Municipalities, government development agencies and private sector have key roles to play in each of these steps Options for the enablement of the land in key projects include Direct disposal to property developers & funds Joint ventures with developers Special purpose vehicles Municipal Development Agencies Direct development by property development vehicle under PIC 18

19 Partnerships for development? MFMA and PFMA, while strengthening sound fiscal management, have limited local initiative and creativity Relationships with private sector increasingly limited to clearly defined contractual relationships Designing and managing procurement processes is now the critical skills gap Partnerships not useful if limited capacity in Local Authority to engage in partnership but partnerships could focus on strengthening core municipal functions in relation to a development process 19

20 Partnerships for development? Tendency to focus on interesting new stuff (LED, IDPs, PPPs, partnerships) while neglecting the essentials Not a substitute for getting the basics of municipal service delivery in place Land use management system, with efficient processing of applications Bulk and reticulated services Public health, environment and waste management Most important municipal contribution to partnerships is leading a process for a shared and consensual vision for development 20

21 Conclusion Municipalities can play a key role in unlocking non-core state land for development Be realistic, focus on the basics first Partnerships not a solution in themselves, rather a means to an end Outcome based partnerships? Each party focuses on clear set of deliverables in pursuit of an agreed common set of outcomes 21