Staff Writers

The City of Cape Town says a lease agreement error, which could see its World Cup stadium being rented to operator Sail Stadefrance for R1 a year, is "immaterial".

A bungle on the Cape Town Stadium lease agreement has reduced the annual base rental from R100 000 to R1.

The error was repeated twice - in digits and words - in the lease agreement.

But the city says the mistake is nothing to worry about, because the lease agreement obliges the operator to pay the greater amount of either the base rental of R1 or 30 percent of the operator's profit before tax.

The city's 2010 project head, Mike Marsden, told the Cape Argus that the base rental would only come into play if the operator's earnings before tax fell below R333 333.

Attempts to correct the "omission" by simple rectification was rejected by Sail Stadefrance, according to a report before the mayoral committee (Mayco) yesterday.

The company said it would only make the change if it was compensated in the form of event-day subsidies.

The report noted that city officials viewed the matter as "largely immaterial", as it would be taken up by the revenue-sharing formula which was expected to "far exceed" the R333 333 below which the base rental became operative.

"The stadium lease will accordingly remain as currently worded, i e with a base rental of R1," the report noted.

Marsden said the city was not prepared to offer compensation to the operator elsewhere in the lease agreement in order to have the base rental increased from R1 to R100 000.

"This is clearly not worth arguing about as both parties are looking to significantly greater earnings," he said.

"The city is of the view that, based on the tender received from the operator, the city's negotiating team have managed to secure the best possible stadium lease agreement which is fair to both parties."

Earlier this year the city revealed that it had miscalculated the budget on its planned integrated rapid transit (IRT) system - an error which drew derision and outrage from many quarters.

A city council official is facing a disciplinary hearing for the IRT error, but Marsden did not say whether anyone would be held accountable for the lease bungle.

Yesterday Mayco dismissed objections submitted during the public participation process concerning the stadium lease.

Deputy mayor Ian Neilson, who is also Mayco member for finance, said objections, which emanated solely from nearby ratepayers associations and the body corporate of a Mouille Point sectional title development, had been considered.

Neilson said it was necessary to look at the bigger picture and he recommended that objections not be upheld.

"That does not mean that we won't look at ways to mitigate difficulties for residents in the area," Neilson said.

Ratepayers associations had submitted detailed objections to the lease, but in summarising, the Sea Point Fresnaye Bantry Bay and Green Point residents' and ratepayers' submission, Green Point Common Association chairman David Polovin said the objectors considered the lease proposal to be "an inherently flawed commercial and legal arrangement".

But councillor J P Smith said that after a recent meeting with objectors from the area, they had appeared to be satisfied that the best possible lease and environmental protections had been secured.

In 48 hours, the city is to finally give the green light for work to begin on 45 new buses which will carry 2010 Soccer World Cup passengers.

These are the vehicles that will make up the city's scaled-down version of its original Bus Rapid Transit (BRT) plan.

On Thursday the council will name its choice of company to manufacture the buses and work is expected to begin immediately.

The buses will follow set routes through the city for the World Cup, between three destinations: the airport, the civic centre and Cape Town Stadium.

A ticketing system, possibly using "smart" digital technology, has not yet been finalised.

The buses will cost R101 million. They will be housed at a depot in Green Point and a further R191m is to be allocated to refurbish this depot.

Council spokeswoman Kylie Hatton said today that a two-year lease for the site was being negotiated with Transnet, the owners of the property, with an option on buying the property in the third year.

The council has already given the city permission to source bridging finance for the buses and the depot.

Mayco was presented with the plan yesterday.

The city's procurement committees have identified a preferred bidder to build the buses.

Hatton suggested that it could be a partnership between local coach-builders and an international company.

Work on the bus stations has already begun, with a fourth "pilot station" in Granger Bay nearing completion.

And after the World Cup the buses will be used as part of Phase 1A of the BRT system  servicing the inner city and the West Coast suburbs.

Concerns have been expressed about the tight deadline which the coach-builders will have to meet, but Hatton said the aim was for the buses to be ready by kick-off next year.