12 September 2017

South Africa: Durban Clubs Stalling R35 Billion Development

The Durban Point Development Company (DPDC) says a R35bn project to upgrade the area close to the harbour mouth is being delayed - at a potential cost of up to R100 000 a day - because two water sports clubs are refusing to vacate their clubhouses overlooking Vetch's Beach.

The company, in its urgent application before the Durban High Court today, is seeking immediate eviction orders against the Point Yacht Club and the Durban Paddle-Ski Club.

But the clubs are fighting back, accusing the company of reneging on agreements and placing their sports in jeopardy.

The dispute has a long history which has been brought to a head by today's application.

But it is unlikely that a victor will emerge any time soon with the clubs raising legal points and the yacht club seeking to join the MEC of economic development and tourism in the action.

To further complicate matters, the two clubs are involved in an acrimonious dispute with the other two affected clubs, the Durban Undersea Club (DUC) and the Durban Ski Boat Club (DSBC), both of which have agreed to move to a "glass fronted" temporary facility which, the company says, it has built at a cost of R2.5m.

Umbrella body

They also have a controlling vote in an "umbrella body". Point Water Sports Club - refused to be recognised by other clubs - has been negotiating with the developer, which is half owned by the city and half by a Malaysian consortium.

Project manager Soban Gangaraju insists in his affidavit that the clubs have no right to stay.

"The heart of our case is that we are the owner[s] of the property," he said.

"The company intends to construct an extension to the current promenade, extending it from uShaka Marine World to the harbour entrance. It is a massive undertaking, with construction on reclaimed land which requires specialised techniques. The total budget is about R370m.

"We intend to sign with the successful tenderer within weeks. The promenade development will include accommodation for the Point Water Sports Club."

Gangaraju said any delays would cost R37m a year - or about R100 000 a day. On top of that, the roll-out of the entire 15-year R35bn project would be delayed, eroding investor confidence.

He said this would also affect 11 000 jobs, surrounding property values and impact on potential rates income of R200m a year, and tax revenue of R1.7bn.

He said in terms of a Memorandum of Agreement signed in 2008, it was always contemplated that the umbrella body would negotiate on behalf of the clubs and it was "well within its rights" to conclude the lease agreements for a temporary site and the final clubhouse to be built under a new promenade.

Gangaraju conceded that the original agreement had provided for the clubs to purchase the site for about R873 000 and erect their own building, but said things had changed and the deal was now that they would lease the property.

"The said agreement fell away for the simple practical reason that the clubs were unable to raise sufficient funds to finance the purchase of vacant land and the construction of a clubhouse building," he claimed.

Not the original agreement

But Craig Millar, former yacht commodore, has denied this.

In his affidavit, he said the question of funds had never been raised. "It is bizarre to suggest that between all the clubs members - about 8 000 - money could not be raised to purchase the land and erect the joint clubhouse."

He said his club was only interested in promoting sailing and not "running a restaurant", which was the only way the new lease agreement would make financial sense.

He said his club had never waived its rights regarding the 2008 memorandum and what was now offered "doesn't come close" to the original agreement.

"We do not want to be obstructive and we are not opposed to development...all that is required to resolve this dispute is for the company to talk to us to conclude an amendment, to ensure we are afforded a clubhouse on terms and conditions not inconsistent with the spirit of the memorandum which, at the same time, do not conflict with the proposed development.

"That should not be impossible."

The Paddle Ski Club has submitted a provisional affidavit aligning itself with the yacht club's submissions.

An 'evolved' plan

On side with the company is Cuane Hall, who is the chairperson of the Durban Undersea Club and also the chairperson of newly created Durban Point Watersports Club.

However, he disagrees with the company's explanation for the change in the deal from freehold to leasehold.

He said this was because the plan had "evolved significantly", which entailed the clubhouse would be a multi-level building with a small footprint set back from the beach.

"The company decided that the land under the promenade [with direct access to the beach] would be made available and, together with the clubhouse, would be leased at a highly favourable rate, substantially less than the anticipated market rental."

Hall proposed an alternative to the "stalemate", saying the parties should put aside their differences.

The matter is expected to be adjourned for the filing of further papers.

Source: News24

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