Accelerated rentalsocial housing delivery

1
Accelerated rental/social housing delivery

• Land release and packaging
• key issues and bottlenecks, conclusions and
  recommendations
• June 2008

2
Main processes in the social housing project life
cycle

• Included in this presentation
• Land identification, allocation and release
• Land packaging (obtaining planning approvals, and
  servicing)
• Not included in this presentation
• Design and construction of units
• Unit take on (External by SHI from contractor,
  Internal by property management from development)
• Ongoing property management

3
Phase 1 - Land identification, allocation and
release
4
Most critical phase, with potential for long
delays due mainly to

• Politics of competing/vested interests, and
  soft issues (personalities and power plays)
• Inadequate understanding of social housing among
  politicians, and
• insufficient political will to support social
  housing
• Problems of capacity and interdepartmental
  co-ordination within municipalities to screen
  land registers and pre-assess land parcels w.r.t.
  suitability for social housing
• Long disposal process due to little understanding
  of MFMA compliant ways available to
  municipalities for disposal of land other than at
  market value through open tender

5
Existing land identification, allocation and
release process

• Existing process as appears to be practiced in
  most municipalities (with some local differences)
  
• PRZs are demarcated in line with IDPs/SDFs
• Municipality identifies areas (and possibly some
  specific land parcels) for housing development
  within PRZ
• Specific parcels for social housing (SH) are
  identified through a screening or pre-assessment
  process that is carried out either internally (by
  technical departments), or by procuring
  professional consultants to do the job
• Council takes a decision that the land is surplus
  to municipal service delivery requirements and
  can be disposed of for SH purposes
• Disposal procedure through open tender/proposal
  call in line with municipalitys procurement
  policies and procedures (usually open tender)

6
Main problems with existing process (1)

• Land registers/data bases do exist, but status
  and condition of information could be
  incomplete/suspect/out of date
• Social housing not high priority and competing
  for land with RDP housing, banks and private
  developers little pressure to prioritise land
  for social housing
• No social housing champions in municipality to
  drive process
• Non-existent and/or understaffed capacity to
  screen land registers for suitable parcels of
  land and do pre-assessments on identified pieces
  of land with potential

7
Main problems with existing process (2)

• In many cases land disposal is managed by estates
  (property management) departments or even
  separate municipal entities whose (real and
  perceived) mandate is to maximise financial
  returns from land disposal, resulting in a bias
  towards commercial development, and a mind-set
  focused on obtaining market value
• In addition land disposal policies and procedures
  in municipalities informed and guided mainly by
  legal and treasury departments ? narrow
  interpretation of MFMA and treasury regulations
  which limits it to open tender and evaluation of
  bids on price basis
• Above usually results in land being unaffordable
  to SHIs

8
Main problems with existing process (3)

• Land identified and taken through municipal
  evaluation and decision-making processes on
  ad-hoc rather than planned basis wasteful and
  time-consuming replication of bureaucratic
  procedures in each case
• The above is exacerbated by the absence of
• Clear provisions within the municipalitys supply
  chain management policy for disposal of land via
  private treaty (direct sale) to SHIs as
  catered for in MFMA/treasury regulations
• Coherence between housing plan and land disposal
  framework in the above policy
• Co-ordination between infrastructure budgets
  (including MIG) and housing
• Main reason for some problems above no coherent
  municipal rental/social housing policy and/or
  delivery framework

9
Suggested general principles for land release
(1)

• Land for social housing should preferably be made
  available through the Provincial Steering
  Committee (PSC) process, ensuring provincial and
  local government and the delivery agencies (SHIs
  developers) are all in the loop
• Land should be targeted by ownership in the
  following order of preference
• Municipal
• Provincial
• National and parastatal
• Private

10
Suggested general principles for land release
(2)

• Focus initially should be on municipal land -
  process for devolution and acquisition from other
  levels of government and parastatals complicated
  in short term
• General consensus that municipalities unlikely to
  procure additional land (at a cost) and then
  release it to delivery agencies (SHIs, etc)
  without recovering costs
• Private treaty/direct sale (or leasehold)
  approach should be favoured above currently
  common disposal method of open tender/proposal
  call which adds months to process
• Nothing precludes SHIs from identifying parcels
  of land on their own and approaching
  municipalities with unsolicited bids, but then
  municipal policies should be clear on how to deal
  with these within MFMA, etc

11
Suggested general principles for land release
(3)

• There should be strategies for land release in
  both the
• Short term (ready for project funding in next
  financial year), and
• A medium term pipeline (1-3 years)
• Remain within social housing policy context i.e.
• Land should be within Provisional Restructuring
  Zones (short term), but dont exclude looking at
  land
• with potential i.t.o. criteria to be included in
  possible future expanded PRZs (medium term)

12
Suggested process for land identification,
allocation and release (1)

• Municipalities put in place a champion with the
  necessary support structure to drive the process
  (with technical support as required)
• Municipalities develop comprehensive
  rental/social housing delivery frame works,
  inclusive of policies, strategies and procedures,
  which deal with
• Identification of, and equitable land
  distribution agreements with delivery partners
  (SHIs, etc)
• Up to date and pre-assessed land data bases
• Land disposal frame works in line with housing
  plans, spatial planning frame works and supply
  chain management policies

13
Suggested process for land identification,
allocation and release (1)

• Municipalities are appraised of the fact that
  land can be released to SHIs directly by private
  treaty (direct sale) at nominal value within
  the MFMA/treasury regulations framework with the
  motivation that
• It alleviates the plight of the poor
• It is in the public interest
• The land is surplus to own strategic service
  delivery requirements
• Municipalities are provided with technical
  support where required to ensure they have in
  place
• Rental social housing delivery frame works
• the necessary and correct land data bases,
• housing plans,
• supply chain management policies (with land
  disposal frameworks), guidelines,
  templates/standard documents suitable for the
  direct sale approach (with protective conditions
  and claw-back clauses)

14
Suggested process for land identification,
allocation and release (2)

• Municipality sets up internal liaison/co-ordinatin
  g structure (interdepartmental steering
  committee) driven by appointed champion with
  necessary status to ensure social housing is
  prioritised at the right level
• Process is monitored (and assisted) through PSC
  process, with technical and other support as and
  when required from PSS/TS teams
• Municipality develops and implements
  comprehensive rental/social housing delivery
  frame work, including policy, strategy and
  procedures
• In terms of framework above, municipality
  identifies preferred delivery agencies (SHIs),
  and works out an equitable land distribution
  agreement with them

15
Suggested process for land identification,
allocation and release (3)

• Municipality decides on preferred disposal
  medium
• Outright sale
• Outright sale with conditions (registered in
  title deed)
• Long term leasehold with suspensive conditions
• Social housing champion drives process to obtain
  council decisions that
• Land is surplus to municipal requirements
• Land can be allocated for SH and disposed of for
  that purpose, subject to positive outcome of
  pre-assessment
• Potential parcels pre-assessed internally
  technical evaluation by departments (with
  external technical support where required)

16
Suggested process for land identification,
allocation and release (3)

• Intentions advertised to allow for public
  participation and transparency (say 30 days)
  experience and opinion indicate that no major
  objections can be expected if all prior processes
  followed properly
• Enter into private treaty (direct sale) or
  leasehold agreement with preferred agency(ies)
  must include suspensive conditions and claw-back
  clauses to ensure
• Land is used for the intended purpose only
• Land is kept out of speculative for profit
  market, and remains in service of low income
  people over some generations
• Delivery partner performs as intended

17
Suggested process for land identification,
allocation and release (4)

• Pre-assessment of land (desk-top internal, with
  technical support where required) should include
  at least
• Ownership check (land register and/or deeds
  search)
• Title and cadastral check for servitudes, long
  leases and other legal encumbrances
• Availability of bulk services
• Confirmation that it is within PRZ
• Current zoning, and formal town planning/EIA
  procedures required for further packaging (check
  especially for agricultural zoning which
  complicates sub-division, environmental
  approvals, etc)
• If possible with existing information in
  municipal and other data bases - preliminary
  assessment of slopes, geotechnical conditions,
  flood lines, etc

18
Suggested process for land identification,
allocation and release (4)

• Full feasibility assessment by delivery agent
  (SHI) - involve external professionals such as
  town planners, environmental assessment
  professionals, engineers, conveyancers, etc., and
  should include at least
• Formal title deed and cadastral checks
• Formal geotechnical survey
• More in-depth bulk services investigation and
  engineering services requirements
• Formal report on town planning and environmental
  assessment procedures required
• Cost estimates and initial financial viability
  studies incorporating all the above
• The possibility of making available to SHIs
  financial assistance for the above should be
  urgently considered
• The possibility of establishing a bridging fund
  for bulk services where municipalities are
  waiting for other funding (MIG, DBSA, etc) to be
  investigated

19
Recommendations for assistance to municipalities
from Public Sector Support and Technical Support
teams (1)

• Collate legal opinions (from e.g. Treasury,
  SALGA, certain municipalities), document
  case-studies and existing practices that have
  been successfully used in some municipalities
  (i.e. find precedent) in support of the direct
  sale approach (a study is currently underway)
• Investigate Status quo and evaluate in the
  selected municipalities the following (PSS team
  facilitates entry and co-ordinates through the
  PSC process)
• Land data bases
• Housing plans in IDP/SDF
• Reliability (how realistic) of capital budgets
  for bulk services aligned to proposed release of
  land for SH in IDPs/MTEFs

20
Recommendations for assistance to municipalities
from Public Sector Support and Technical Support
teams (2)

• Investigate Status quo and evaluate in the
  selected municipalities the following (PSS team
  facilitates entry and co-ordinates through the
  PSC process) (continued)
• Social housing policies if any (including for
  instance policy on waiver of or discounts on bulk
  contributions)
• Supply chain management policies and land
  disposal frameworks
• Existing procedures for identification,
  allocation and disposal of land for social
  housing
• Structuring of, and co-ordination between
  divisions that are involved in making social
  housing happen

21
Recommendations for assistance to municipalities
from Public Sector Support and Technical Support
teams (3)

• Provide guidelines and assist with formulation of
  comprehensive rental social housing strategy and
  delivery framework (NMBM pilot underway)
• Draw up guidelines for the streamlining of
  procedures, and alignment of the above (data
  bases, housing plans, SH and supply chain
  management policies, etc)
• Assist where required, with screening of land
  data bases, and pre-assessment of potential land
  parcels
• Collate, and where required prepare
  templates/standard documents for use by
  municipalities in the direct sale approach e.g.
  Land Availability or Sale Agreements with the
  necessary protective conditions and claw-back
  clauses
• Assist with the dissemination of all the above
  information within municipalities to promote
  streamlined liaison and co-ordination (via PSC
  and direct one on one contact)

22
Land identification and release conclusion (1)

• In practice the above means that by the time a
  parcel of land comes through the PSC gate and
  is given to the SHI/developer for further
  packaging, it should be as clean as possible,
  and sail through the EA/township
  establishment/re-zoning process relatively
  smoothly
• In addition this prior process should remove all
  obstacles to the release of the land, and result
  in an irrevocable commitment to alienate the land
  to the SHI/developer (Council/provincial
  resolution and acceptable legal agreement in line
  with PFMA/MFMA, supply chain management policy
  and land disposal framework).
• LAs in some cases probably need guidance and
  technical support in this regard to provide the
  with the mechanisms and comfort to allocate and
  alienate land for social housing without having
  to put it out to tender and obtain market value
  (i.e. release it free of charge or at nominal
  prices where no prior expenses have been incurred
  in for instance partial or full establishment and
  servicing)

23
Land identification and release conclusion (2)

• Although it was agreed that preference be given
  to municipal land (simplest process and
  affordability), some municipalities may already
  have a shortage of, or run out of suitable land
  in the near future
• Strategies to deal with the above may have to
  include more consideration of
• Land banking (problems with this acknowledged)
• Devolution of more provincial/state land to
  municipalities (problems with holding costs and
  loss of rates revenues acknowledged)
• Bad/better buildings programmes i.e.
  redevelopment of existing buildings
• Acquisition (and expropriation) of private land
  possibly time-consuming and costly
• Incentives for private developers to include more
  social housing in proposed mixed-income
  developments

24
Land identification and release conclusion (3)

• The following were considered to be key issues in
  shortening both this pre-packaging process, (and
  also the subsequent packaging itself)
• Good strategic thinking/planning by LAs resulting
  in solid planning and policy frameworks (IDPs
  especially with regard to infrastructure and
  housing plans, SDFs, SEAs)
• LA housing policy must be in place, and
  supportive of social housing
• Co-ordination and communication between technical
  departments in LAs
• Alignment of funding from different sources
  (MIG, LA capital budget, provincial subsidy,
  Capital Re-structuring grant, loan funding, etc)
  with cash-flow requirements of the process
  (certain steps are often long delayed while
  funding is awaited). This also means alignment of
  approvals and agreements by different authorities
  and other parties, e.g. integrating technical
  approvals and financial closure requirements for
  provincial subsidies and Capital Re-structuring
  Grants
• Finally, Public Private Partnerships (PPPs) in
  formal form were to be avoided due to the
  complexity of treasury requirements, etc

25
Phase 2 - Land packaging

• Town planning and environmental approvals, and
  land servicing

26
Land packaging process (PHASE 2 in the flow
charts below)

• Consensus is that the actual application for
  approvals should be run by the SHI/developer, as
  their interest in fast approval would expedite
  the process better than were the disinterested
  LA to drive the process. Clear agreements would
  be needed as to division and overlapping of
  responsibilities for actions, financial
  obligations where costs were involved (and how
  these would be funded), and legal implications
  for instance with regard to warranties implied or
  otherwise. Infrastructure maintenance planning
  and provision should be an integral part of all
  processes.
• Once the land has been identified, allocated and
  released to the SHI/developer through the PSC
  gateway, the SHI/developer becomes the
  applicant in the township establishment
  process. This process involves the following
  main steps to be undertaken by the applicant with
  the help of a professional team

27
Township establishment main steps (1)

• SHI appoints and briefs the planning, design and
  environmental professionals
• Town planning and design professionals gather the
  information and prepare the planning report
  (basic layout, motivation, preliminary
  engineering services design) in a consultative
  and iterative process for submission to LA
  (provincial ordinance route) or province (DFA
  route)
• Environmental assessment practitioner (EAP)
  advises on development alternatives and type of
  EA required, and uses information from planning
  report to prepare submission for environmental
  approval
• Urban designer/architect and planner work
  together on Urban Design Framework and
  development concept. QS prepares initial
  viability studies.
• Town planner submits application to LA
  (ordinance) or province (DFA) forms and fees

28
Township establishment main steps (2)

• From here the ordinance and DFA routes
  respectively diverge (municipal process for
  ordinance, provincial tribunal for DFA)
• Advertisement to invite public participation. If
  no objections, LA departments carry out technical
  evaluation, involving provincial or national
  departments or parastatals if required. If there
  are objections, hearings are held and rulings
  given. Rulings can be taken to higher
  authorities on appeal, with potentially serious
  delays.
• In meantime EAP drives and obtains environmental
  approval/Record of Decision (RoD) this can also
  take quite long!
• Once objections/appeals are settled, and RoD has
  been obtained, departments within LA continue
  with technical evaluation and issues comments
• Professionals attend to comments
• LA admin section places item on council agenda
  for approval (this can be a black hole of
  administrative delay, and needs constant
  attention from professionals walking the
  documents
• Council approves the plan or refers it back to
  technical for amendment (repeat previous 3 steps
  delay!)

29
Township establishment main steps (3)

• If DFA route was followed, all of steps in
  municipal process above, would be dealt with
  within the sittings of the DFA Tribunal where all
  affected parties are given a hearing, and LAs are
  given prescriptive time-frames for evaluations
  and responses.
• DFA Tribunal approves plan
• From here the ordinance and DFA processes
  converge again for steps below
• Approval to proceed with implementation of TSE,
  subject to conditions of establishment is
  gazetted
• Engineer prepares detail services design, obtains
  approval from LA (design services agreement),
  calls tenders and supervises installation of
  services, obtains final LA approval (services
  certificate)

30
Township establishment main steps (4)

• SHI appoints land surveyor who calculates
  co-ordinates, and prepares survey diagram of
  outside figure for Surveyor General (SG)
  approval, followed by General Plan approval
• Once SG approval obtained, conveyancer forwards
  approved General plan to Deeds Office, and
  prepares opening of Township Register (includes
  complying with conditions of establishment,
  obtaining LA rates clearance, etc)
• Opening of Township Register and issueing of
  services certificate conclude the process

31
(No Transcript)
32
(No Transcript)
33
(No Transcript)
34
(No Transcript)
35
Overall conclusions and recommendations(1)

• Most critical and problematic phase is land
  identification, allocation and release for social
  housing by municipalities streamlining and
  alignment of land registers, plans, policies,
  procedures, co-ordination and land disposal
  process management structures (with PSS/PSC
  facilitation and technical support where
  required) needed
• Phase 2, land packaging should be run by delivery
  agents (SHIs) as they have direct interest in its
  speedy conclusion. Technical competence exists,
  but financial support/bridging finance to carry
  out early assessments, planning applications and
  land servicing required.
• The bottlenecks caused by misalignment between
  planning and EA processes, housing planning and
  infrastructure budgeting, have been identified,
  and could be alleviated through some directed
  technical support to municipalities to ensure
  proper pre-planning

36
Overall conclusions and recommendations(2)

• NDoH/SHF need to sit down and work out/clarify
  the roles of e.g. Public Sector Support Team,
  Technical Support Team, ISHP and ME t avoid
  duplication and complication in the process
• TS teams should be established on regional basis
  with small team at national level to co-ordinate
  and oversee
• Assessment tools and process must be reviewed and
  streamlined where required e.g. project status
  assessments for inclusion in the PSC pipeline,
  Quickscans for ISHP funding evaluations, etc
• Suggested that PSS and TS teams work together and
  are involved in assessments from the start (PSC
  pipeline) through to final ISHP funding
  assessments
• PSS/TS teams to carry out immediate status
  quo/needs analysis within the targeted
  municipalities (land registers, land disposal
  mechanisms, etc)