THE Inner City Property Scheme (ICPS), which is replacing the Better Buildings Programme, is expected to continue to transform the inner city.
Over the past few years, Joburg’s inner city has gradually changed from a grimy, unsafe place filled with dilapidated buildings to one that is drawing business and residents back. These changes have credited largely to the implementation of the Better Buildings Programme, which has now been reviewed and replaced by the ICPS.
The new scheme was launched on 6 April by Executive Mayor Amos Masondo to investors, potential funders, members of the mayoral committee and ward councillors. The launch was followed by a visit to one of the 30 buildings that are ready to be taken over by the shortlisted investors for development. They were handed silver spades marking the official handover to start refurbishment.
The central focus of the ICPS is the attainment by investors and developers of dilapidated, abandoned and illegally occupied or hijacked buildings. This will be done on a case by case basis through abandonment agreements with the property owners, sales in execution and expropriations, and will include the transfer of dilapidated buildings owned by the City.
Once these buildings are acquired, they will be refurbished and brought in line with the building code of the City to become viable and productive economic assets.
Masondo said: “The ICPS is an important initiative by the City of Johannesburg, in partnership with the private sector, to address urban decay and accelerate the rejuvenation of the CBD.
“Across the world, in most of the big cities, the state and appearance of a CBD is an important barometer to determine the ability of a city to attract and retain investment. It is also a reflection of the extent of the advancement to commerce and overall economic development.”
He explained that during the Inner City Summit in 2007, there was a general consensus to stabilise the inner city, address urban decay and combat crime and grime. The summit adopted the Inner City Charter, which was established to provide a broad framework for future programmes.
Thereafter, specific strategies and programmes were added to enable the City to meet its objectives of a growing, vibrant, cleaner, greener and safer inner city. Examples of visible transformation are evident in the Brickfields Residential Development in Newtown, in the Constitutional Court precinct in Braamfontein and around Nelson Mandela Bridge between the two suburbs.
For a period, explained Masondo, the City responded to the deterioration of buildings through the Better Buildings Programme. “The objective was to focus on the so-called ‘bad building’, where the amount of arrears owed in rates exceeded the market value of the buildings, with the aim of turning them into ‘better’ buildings,” he said.
The City intervened and in some cases expropriated these buildings and offered them to investors who were willing to do the required refurbishment and pay the outstanding rates, mostly through auction.
“It has become apparent that the [Better Buildings Programme] only achieved moderate success and that it was hamstrung by a number of factors, such as the lengthy expropriation process, the screening of participants and the requirements to provide transitional housing to people who have been evicted,” said Masondo.
“The ICPS is a solution, developed by the department of economic development, to transfer expropriated properties into an Inner City Property Portfolio in the process of passing these on to a new company.”
It was expected that broad-based black economic empowerment (BBBEE) participants would hold the controlling shares in this “Newco”. The participating entities were selected through a Request for Proposal and were required to provide a minimum contribution of R5-million each.
Newco would also raise debt capital from lenders and other providers of debt. This would in turn make it one of the most far-reaching BBBEE transactions in the country. “One of the outcomes of this intervention will be significant job creation,” said Masondo.
The City would transfer properties that were dilapidated, abandoned, illegally occupied or hijacked, and even vacant land, into Newco through a developmental lease with an option to buy.
“It is important to note that the City retains ownership of properties until it is satisfied with the regeneration and rejuvenation of the properties,” Masondo said. These buildings were currently owned by the City through abandonment agreements with property owners, sales in execution and expropriations.
“Once transferred, these buildings will be refurbished and brought in line with the building code of the City to turn them into viable and productive economic assets. Down the line these refurbished assets will contribute positively to the City’s fiscus through the payment of rates and taxes.”
The City is also taking steps to provide transitional housing for occupants of the buildings that will be refurbished. A Transitional Housing Trust has been established to manage this.
Jason Ngobeni, the City’s executive director for economic development, said the ICPS was geared to rejuvenate and improve service delivery to the inner city. He was confident it would be very successful because it had thoroughly addressed all the shortcomings of the Better Buildings Programme and remained mindful of its successes as well.
“It is believed that through the ICPS, Joburg will be able to better fulfill its commitments made under the Inner City Regeneration Charter to turn itself into a world class African city,” said Ngobeni.
Already a service providers panel has been established; transitional housing trustees have been appointed; property portfolios have been identified; preferred investors have been short-listed; and preliminary discussions have been held with preferred investors and potential funders.
Key objectives of the ICPS comprise the restoration of legitimate tenancy and ownership of buildings in the inner city; delivery of social and transitional housing; eradication of slumlords; maintaining and encouraging investor confidence; maintaining law and order; and improving revenue streams.
“Cities are like human beings,” said Masondo. “They are born, go through life and then eventually die. As such, urban renewal will be an ongoing process … We don’t want any shortcuts. People who win the bids must deliver. There is no room for failure. This is not a money making scheme. Investors must succeed.”
In conclusion, he said: “The ICPS is an original and ground-breaking development that puts Johannesburg at the leading edge of modern thinking on the regeneration of the urban environment.”
The City is confident the scheme will breathe new life into efforts to rejuvenate the inner city; attract more business, investors and tenants; combat urban decay and grime; create the biggest BBBEE owned ICPS in the country; and empower small- and medium-sized businesses in construction.
“This in many ways represents an innovative and creative approach that will take inner city urban renewal and regeneration to a new level,” said Masondo.