Don't do it, Mashaba

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Don't do it, Mashaba

Property developers warn Joburg mayor Herman Mashaba against his expropriation plans for hijacked buildings

Journalist

Property developers in Johannesburg believe the city’s management is flogging a dead horse in its plans to expropriate buildings that have been neglected, abandoned and unlawfully occupied.
They hit out at city mayor Herman Mashaba’s plans to take ownership of close to 300 “hijacked” buildings that would be redeveloped into quality low-cost housing, student accommodation and affordable rental space for small businesses.
This was despite Mashaba’s intentions to outsource all of the redevelopment of derelict buildings to the private sector.The CEO of commercial financiers The Urban Housing Finance (Tuhf), Paul Jackson, said expropriation was not a new solution to the inner city’s problems and that it would be another failed repeat of previous interventions.
“The  City of Johannesburg has attempted to solve this problem for more than 15 years,” Jackson said.
“Firstly under the ‘Bad Buildings’ programme, then the ‘Better Buildings Programme’, the ‘Inner City Property Scheme’ and later the ‘Revised Inner City Property Scheme’.”
“We do not see expropriation without compensation as a viable solution as this will undermine the value of property for everybody and, if we learn from history, it is highly unlikely that expropriation in itself is the silver bullet [the] city is looking for it to be.”
Jackson said in order to provide decent and affordable housing at scale to those most in need, the city would reap “far better results” by looking at other options.
“Those buildings [should be] put up for fair value sale,” said Jackson.
“The execution of the debt coupled with finance to enable necessary refurbishment will be a powerful combination, where the public sector takes responsibility for urban management and the private sector provides funding for regeneration.”
But Mashaba had different ideas and told Times Select that the ownership of expropriated buildings would remain with the municipality “subject to long-lease agreements made with developers who would be able to receive income from the development”.
But the director of architecture and urban design firm Local Studios, Thomas Chapman, said there was no way the private sector would get into a deal without seeing a return on their investment.
“One way to do it is for the private sector to be responsible for the redevelopment and for the city to guarantee the rental [costs],” said Chapman.
Many of the buildings the city had earmarked for expropriation had outstanding rates and services fees. Among the avenues the city planned to use to take ownership of the buildings are court applications to seek attachment of debt orders.“Owners can sign an acknowledgement of debt which will stipulate a payment arrangement for the old debt, while they commit to pay for current consumption,” said Mashaba.
“Where the property owner is unwilling to sign an acknowledgement of debt or sign an abandonment agreement, the city is also able to bring an application to court.
“The alternative option for the city in such instances is to commence expropriation proceedings in order to take over ownership of the building.”
Attorney Greg Vermaak, who represents a number of owners of inner-city buildings that were at risk of being expropriated, said that it would be better to leave buildings in the hands of business and use the rates thereon to uplift and house the poor.
“Where the owners are genuinely absent, or are slumlords, there may well be a case for expropriation, but obviously not without compensation,” Vermaak said.
“The occupiers of one slum building would fill several buildings when compliant with the building regulations. This means that this is a very inefficient solution to the housing backlog, to say nothing of eroding the rates base. The better solution is for the state to start building sufficient volumes of RDP or low-rental housing in relative proximity to the inner city.”

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