Neil Fraser
March 24, 2003
A release from the Office of the Mayor of New York towards the end of last year contained information regarding changes to existing regulations regarding tax incentives for the construction of new multiple dwellings on vacant or underutilised sites.
The old incentives had been instrumental in creating over 132 000 units of housing since 1971. The new incentives remove a three-year period that developers had previously to wait before they could proceed with 'rehabilitation'.
The Mayor, Michael R. Bloomberg, is quoted as stating that this will "facilitate the development of more affordable housing by providing the incentive necessary to spur rehabilitation in neighbourhoods and in buildings that might otherwise remain unattractive to developers."
In 1999, the Johannesburg Council approved a "Proposed Programme on Bad Buidings and Other Buildings in Arrears in the Johannesburg Inner City". A fortnight ago, as in New York, but in a considerably shorter period of time from inception, a revision to the Programme was aired at the monthly Inner City Committee meeting also motivated by a desire to provide a 'spur to rehabilitation'.
The original idea of the "Bad Buildings Programme" (the name was later changed to the "Better Buildings Programme") was to provide a mechanism for dealing with buildings that were classified as "Bad" for a variety of reasons.
These included buildings that had been abandoned by their owners; were derelict or in a deplorable state; invaded by squatters; overcrowded; contravening various by-laws and other legislation; the seat of criminal activities, etc.
But over-riding all of these was the fact that owners of such buildings were heavily in debt to the Council through huge arrears in rates and service charges.
The principle of the Programme was that the Council would acquire the building, sell it to a bona fide developer at a price that was equivalent to the debt owed to the council but discounted to the market value of the building. 122 buildings were identified within the Inner City but mainly on the basis of outstanding arrears.
The Programme proved to be great in theory, but in practice the process was found to be torturous. It took up to two years to accomplish the litigation and judgement processes alone and the worse the condition of the building and the higher the level of arrears, the more complex and time-consuming the process turned out to be. But what in retrospect was found to be a basic problem was that there were certain fundamental conflicts between the various objectives of the Programme.
Thus, whilst the Programme objectives were to facilitate urban regeneration, improve the quality of life of inner city residents and provide increased revenues for the city, the first and last of these were found to be in conflict. The focus of the Programme on debt recovery ignored the broader social and economic development interests and investment opportunities that were needed to achieve the regeneration objective.
The practical problems experienced resulted in extremely few buildings amongst the identified 122 becoming "better buildings"
Last year the then newly established Inner City Regional Office took the bold step of establishing an Inner City Task Force comprising various enforcement agencies both inside and external to the Council.
The job of the Task Force was to identify buildings that were contravening the city's by-laws or that were patently dangerous for habitation and to see that the owners were brought to book. They therefore set about methodically identifying buildings suffering from physical and social problems throughout the Inner City Region - in other words the bottom line was to deal with buildings that were having a negative impact on the urban fabric thus effectively moving the imperative from arrears to regeneration.
A subtle but important change because most 'bad' buildings are also in arrears! In fact the 122 buildings identified grew to 235 with a book value of about R670 million and no less than 85% of these were in arrears.
The detailed report proposing a revision to the implementation framework of the Better Buildings Programme is frank and honest in its appraisal of the problems that have been experienced. It highlights that the priority of the City's Housing Department, given its limited resources, is not this programme but rather the achievement of another existing programme which, under the Presidential Job Summit project, seeks to deliver some 1,000 social housing units by the end of June next year.
It therefore recommends that the "Better Buildings Programme" be the responsibility of the Johannesburg Property Company through a dedicated implementation team for which a budget is to be provided. The medium term output (by June 2006) would be between 3,000 and 5,000 units.
In the longer term, this implementation team would also be responsible for 'developing an agenda of policy and legislative items creating obstacles to the effective implementation of the programme' thus aiming at the revision of legislation and policy bottlenecks.
The report highlights the negative impact of the continuation of the neglect and abandonment of 'bad' buildings on the economy of the city, an issue we have long stressed.
It also asks some questions that many of us have been discussing informally for some time - "what is the potential economic impact on the city and on individuals and communities of different ownership options? What empowerment opportunities are there in the introduction of new property ownership patterns? How can this be further encouraged? How can the individual be capacitated to access the inherent capital of his/her asset in order to spur economic development? What impact could home maintenance and renovation have on properties, areas and the economy as a whole?"
The proposals for a revised implementation framework for the Better Buildings Programme, still to be approved by the Mayoral committee, are a positive move forward just as the revisions to the New York tax incentives are likely to be. But, at the end of the day it is answers and appropriate actions flowing from questions such as those above that will move us further from 'bad' to 'better' to 'best' solutions for the inner city.
