April 4, 2005
By Lucky Sindane
THE JOHANNESBURG Property Company's Better Buildings Programme is in full swing, with seven buildings being renovated and work soon to start on another two.
Utterly destroyed ... people once lived in these Hillbrow rooms
"Despite many unforeseen obstacles, we have had significant progress. This programme has created a lot of excitement and we believe it is a fundamental building block in the process to reach our goal of Johannesburg becoming a world class city by 2030," said Geoff Mendelowitz, the programme manager.
"The private sector has invested an estimated R40-million in the refurbishment of these nine buildings [which] will be homes for 700 lower to middle income families."
The nine are Mimosa Hotel, Rondebosch, Stanhope, Sunley, Witberg, Waterford Court, The Lloyd, Polly Lodge and the Europa Hotel. The programme was launched in 2003 to attract private sector investment to refurbish buildings in the inner city, which were poorly managed and not maintained properly.
The number of derelict buildings has increased over the past decade as businesses have moved out of the inner city to the northern suburbs, leaving some buildings unoccupied. The problem was compounded when some owners emigrated or absconded, some sold their buildings to slumlords, and others abandoned their properties, allowing squatters to move in. Some buildings became havens of criminal activity.
The property company identifies and prioritises buildings for the programme when the money owed in arrears to the City is more than the value of the building and legal action to recover the debt has not been successful.
"One of the least understood hurdles in our programme is that these bad buildings are not owned by the City of Johannesburg. We have not 'repossessed' them or taken transfer of them even if they are indebted to us," Mendelowitz said.
Rates write-off
The Better Buildings process includes writing off old debts to pave the way for a rates clearance certificate, thus ensuring the transfer of the property as well as a legal "obligation agreement" spelling out the developer's detailed programme.
"More than 200 companies and individuals have registered thus far in the Better Buildings Programme," Mendelowitz added.
To date, of the 52 buildings listed in the programme, 40 are in various stages of the process and have been allocated to investors through proposal and adjudication calls.
An officially constituted adjudication panel made up of city officials from various departments evaluates the proposals, which are scored on a point's basis using criteria agreed by the panel. The main criteria used for evaluation include the price offered, the upgrade details, proof of funding for the purchase and upgrade, and the ability to manage the rental of the building effectively after renovation. Proposals from previously disadvantaged groups are given extra points.
Once work on all 52 buildings has been completed, it is estimated that R116-million worth of rates will have been written off by the City. An estimated reinvestment amount of R130-million will have been made by the private sector back into these buildings, about 3 100 residential units will have been renovated and the City will be generating income from rates and service charges of about R2-million a month. The current income is almost nothing.
"There is an ongoing response to our call and submissions for registration documents indicating to us an interest by prospective investors to take on the challenging role of upgrading bad buildings and becoming an owner or landlord in Johannesburg," Mendelowitz said.
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