Cabinet Issues Affordable Housing Instructions and Proceeds with Tafelberg Sale

22 March 2017

Media Statement: Cabinet  Issues Instructions for Affordable Housing on Helen Bowden Nurses Home, Woodstock Hospital Properties, and Decides to Proceed with the Sale of Tafelberg Site

This morning the Western Cape Cabinet has issued an instruction for affordable housing to be included as a condition in the release of the Helen Bowden Nurses Home property, near the V&A Waterfront.

The property, currently owned by the Province, has high cross-subsidisation potential for the viable building of affordable housing.

Cabinet further instructed that any proposed disposal or use of the  old Woodstock Hospital site be brought to cabinet for its consideration, with the intention to resolve that affordable housing be included on the site, as a whole or in part.

Cabinet further deliberated on whether or not to resile from the sale of the Tafelberg site, having received presentations from various departments and the full set of public comments the process has generated to date. 

Cabinet accepted that a holistic approach to the utilisation of provincial assets, and the methods by which the Province is pursuing its legislative obligations and policies in that regard, is preferable to an ad hoc site by site determination.

Cabinet accepted that it cannot achieve all its strategic objectives on every single site. 

On the basis of what was presented to cabinet, including the current pipeline for affordable housing in the Metro, the two aforementioned decisions, legal advice from senior counsel, affordability risks, fiscal constraints in the current economic climate, Cabinet resolved that the Tafelberg site is not ideally suited to affordable housing, especially as the state subsidy cannot be utilised there under current national policy.

Accordingly, Cabinet decided not to resile from the sale of the Tafelberg site to the Phyllis Jowell Day School.

Woodstock Hospital Site

This is a 15 000 m2 property with potential for the cross-subsidisation of affordable housing, within a mixed-income, mixed-use context.

Cabinet has resolved that affordable housing on this site, as a whole or in part, is critical given its locality and size.

Helen Bowden

The Helen Bowden Nurses Home site exhibits high potential to include viable, cross-subsidised affordable housing in the development of this well-located property. The property forms part of the 10.5 ha Somerset Hospital precinct.

On Cabinet’s instruction, affordable housing will be included as a condition in the Request for Proposals to be issued by the Department of Transport and Public Works (DTPW), relating to the Helen Bowden property.

DTPW will therefore release the land on the specific basis that the maximum number of affordable housing units be included in its development, in a way that is viable and rational.

The property is based in Green Point (near the Stadium and V&A Waterfront), an area which falls outside of what is called a “Restructuring Zone” - a legislative area where national subsidies for social housing can be accessed.

The Social Housing Act requires an area to be declared as a Restructuring Zone in order for a Restructuring Capital Grant to legally be released by national government, for the subsidisation of social housing units.

These Restructuring Zones are designated by the National Minister of Human Settlements, following identification by a municipality. The National Minister must publish the declaration in the Government Gazette.

Without this declaration, the relevant national subsidy cannot legally be provided for the building of social housing units, and a financial model would need to be developed for viable social housing in the absence of a government subsidy. This may be possible given the size of the Helen Bowden property, and the scope this provides for cross-subsidisation.

Seapoint, where the Tafelberg property is located, also falls outside of a Restructuring Zone. This is as per the advice of legal counsel to Cabinet, which was requested following this risk being pointed out during the course of public participation on the Tafelberg site.

Legislative Context of Cabinet Decision on Tafelberg

Cabinet resolved to proceed with the sale of the Tafelberg property to the Phyllis Jowell Day School.

The decision in question is polycentric in nature, obligating Cabinet to take into account, all relevant factors relating to its obligations in terms of:

The Constitution;

Government Immovable Asset Management Act;

Social Housing Act;

Provincial Spatial Development Framework;

The instruction from National Treasury regarding fiscal austerity; and

Revenue raising measures currently placed on Provinces.

Cabinet accepted that this decision is policy-laden, and made up of various legal and policy requirements. Cabinet also accepted that it is rational to adopt a holistic approach to the assessment of the Western Cape Government’s efforts to achieve its goals as opposed to a site by site assessment.

The Constitution states that “the state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of the right to adequate housing”.

Completed affordable housing projects in the province to date amount to over R686 million, with 1539 units delivered. A pending increase in the nationally-determined Restructuring Capital Grant, which subsidises social housing, will lead to a dramatic increase in potential affordable housing projects in the pipeline.

In this regard, the total value provincially of potential affordable housing projects in the pipeline now stands at over 40 000 units worth R3.2 billion, across three types of subsidies – FLISP, Social Rental Housing and Institutional Housing, which cater for different market segments.

Several well-located properties are included in the pipeline, notably near CBDs, including Salt River, Woodstock, Observatory, Parow and Bellville, amongst others.

As regards to the financial viability of affordable housing on the Tafelberg property, all substantive public submissions received on the financial modelling noted that the allocated costs of construction had been under-estimated, in some instances by up to100%.

Further, the majority of substantive comments on the financial modelling for Tafelberg did not take into account that a national subsidy cannot be legally released, because the property does not currently fall within a Restructuring Zone, as defined.

The notices opening the public participation process on Tafelberg were served on the City of Cape Town, which did not submit comment in relation thereto.

The Province is currently pursuing the building of well-located viable affordable housing projects on the basis of the Better Living Model, in collaboration with the City.

Better Living Model

Affordable Housing is a strategic priority of the provincial government, particularly as it relates to the reintegration of Cape Town to combat the legacy of Apartheid spatial planning.

The Province’s Better Living Model Game Changer is making progress in creating well-located affordable housing, through mixed income, mixed use developments.

In Pinelands, a residential feeder suburb to the inner city of Cape Town, 22 hectares of land are immediately available. 

We have calculated that 3 600 residential opportunities can be built on this site. This will include a mix of affordable housing options to be cross-subsidised by open market properties and retail space.

A total of 3000 units are also planned for the Belhar CBD, where a mixed-use high density residential development will create an urban context around nearby education facilities – the University of the Western Cape, Cape Peninsula University of Technology, Northlink College and the provincial government’s Oasis School for children with barriers to learning.

The development will include a mix of student accommodation, social rental stock, open market GAP, and bonded properties.

With respect to the current fiscal crisis in which the government finds itself, and following the slashing of Provincial Budgets, National Treasury directed provinces to use their assets to raise revenue.

The proceeds of the proposed Tafelberg site sale were specified  to be used for the completion of the upgrade to the Provincial Governments building in Dorp Street – for occupation by the Western Cape Education Department WCED) in terms of a Public Private Partnership.

The Western Cape Cabinet is committed to redressing the legacy of Apartheid spatial planning, through the provision of well-located affordable housing throughout the province in a rational, prudent and holistic manner.

Statement issued by Michael Mpofu on behalf of the Western Cape Cabinet, 22 March 2017