24 May 2018

South Africa: Revealed - Factors Fuelling the Fight Over the City of Cape Town's Controversial R1 Billion Prime Land Tender

A lease payment method, forming part of a controversial R1bn tender for the upgrade of stretches of prime City of Cape Town land between Clifton and Camps Bay, means the City's political leadership will gain one mass of income from this rental, but then nothing for nearly half a century, a group of residents has argued in what is becoming a court battle.

In October, after News24 had asked whether the tender had been awarded, the City announced via a press release that it had - it is understood an offer of R1 014 244 500 was accepted.

This had upset some residents, who believed the move would result in the area only being affordable to the wealthy and less affordable to those with lower incomes.

The tender document for the mega development stated that the successful bidder would have to make "an upfront 'bullet payment'" covering a 50-year lease, which would include about 5 000m2 for residential and retail facilities, as well as a 3 500m2 stretch for a boutique hotel or serviced apartments.

However, a group taking on the City in the Western Cape High Court has said it has been told this is "unusual in a lease agreement".

'No income from 2nd to 50th year'

"The 'upfront bullet payment' structure means that the lease will generate a once-off and very significant income for the City under its current political leadership, in Year One.

"However, it will not generate any income in years two to 50," Nele Vermaak, chair of the Bungalow Owners Association said in an affidavit handed up in the High Court recently. The association was established in 1920 and consists of about 170 members of homeowners or residents from areas in and around Clifton.

She said rental lease benefits were usually spread over the period of the leave so that the lessor received regular income.

"The failure by the council to consider this means that it did not properly consider the extent to which rental would result in a significant economic or financial benefit for the City," Vermaak's affidavit said.

The court action includes trying to set aside the City's decision to sell and lease a portion of the land and is being driven by the association as well as three residents.

They are Mark Willcox, a Clifton resident and controversial businessman said to be an associate of embattled Cape Town Mayor Patricia de Lille, Billy Gundelfinger, a top specialist divorce and criminal lawyer, and Gavin Varejes, a businessman living in a sectional title scheme with a homeowners' association of which Willcox is a trustee.

They have submitted that the City's decision to sell and lease the stretch of land was "procedurally unfair".

The group is taking on the City, as well as others, including the South African Heritage Resources Agency and the environmental affairs minister.

It is understood the City is opposing the action.

'No comment'

On Wednesday, due to the court action, the City declined to comment on where the process involving the tender was.Stuart Diamond, the City's Mayoral Committee Member for Assets and Facilities Management, said: "The Bungalow Owners Association and others recently filed a review application to have the sale of the said City-owned property set aside.

"Seeing that this matter is before the Western Cape High Court, the City will not comment until the case has been finalised."

In October 2017, responding to questions from News24, the City of Cape Town issued a press release saying it had awarded the tender, which involves selling, as well as leasing out City-owned land, to K2015298271 South Africa (Pty) Ltd.

READ: Residents furious as City of Cape Town awards controversial R1bn prime land tender

In 2015 the Mail&Guardian reported that De Lille was driving the campaign to have the prime coastal land handed over to private developers and she received an unsolicited bid from a private consortium involving two acquaintances of hers - Willcox and property developer Tobie Mynhardt.

The article pointed out there was nothing to suggest there was anything improper about this.

Willcox had told the publication that he had been a potential financier for Mynhardt's proposal.

News24 has established that one of K2015298271's directors is listed as Tobias Mynhardt.

The Bungalow Owners Association and three residents, including Willcox, lodged an application against the City in April to try and have the sale reviewed and set aside.

'Major flaws'

Vermaak's affidavit in the matter detailed what Bungalow Owners Association members viewed as "major flaws" and "inadequacies" involving processes by the City.

She said the City council decided in January 26, 2015, to authorise a public participation process, however, a report which had accompanied this request for this authorisation had not included a valuation of the Maiden's Cove site, a piece of land falling under the tender.

"This means that the Council's January 2015 decision to authorise the public participation process was invalid," Vermaak said in her affidavit.

She said the January 2015 report had not complied with the requirements of a Municipal Asset Transfer regulation.

Unfair process alleged

"Its ongoing failure to provide a valuation to the public, renders the entire public participation process unfair," Vermaak's affidavit said.

She also said the Maiden's Cove site had protected status under heritage laws and was very close to the Table Mountain National Park, but that the City council had not taken these interests into account.

The tender had been awarded in either August or September 2017, Vermaak said, but the applicants in the case only learnt of this when the City issued a press release in October.

At the time, Brett Herron, Mayoral Committee Member for Transport and Urban Development, said some money would be ploughed back for affordable housing.

"The City will allocate at least 10% of the financial offer to affordable and inclusionary housing projects on well-located land in the inner city," he had said.

Planned upgrades

Details about the project and the tender on the City's Transport and Urban Development Authority's website said the successful bidder would have to upgrade public infrastructure.

This included Victoria Road, to improve the safety of those using it, the Clifton Surf Lifesaving Club Beach steps would have to be rehabilitated and the Maiden's Cove picnic area needed to be transformed into a coastal park similar to the Green Point Urban Park.

A document, a heritage investigation of the Clifton precinct, for the City and by Vidamemoras Heritage Consultants, detailed just how long the stretch of land has been the centre of controversy.

'First Clifton residents were poor'

"The original permanent occupants of Clifton were poor people and the bungalows were cheap structures. However, after the Second World War, the character of Clifton changed. Further to changing scale and nature of houses, the Council suggested conditions for control in 1981 for the area in general and the bungalows in particular," it said.

"Access to the beach was considered a fundamental issue and it was suggested that the council, in consultation with the National Monuments Council, investigate possibilities for reclamation of public land."

The report said the shortage of first-class hotel accommodation was brought up by the City council in 1981 and it was felt this was stunting the growth of tourism.

"In 1981 the Clifton Bungalow Owners Association objected to a plan by council to lease a two ha (hectare) site for a proposed hotel development, citing that the proposal would impact the public facilities in the area and result in environmental effects, calling for the conservation of Clifton in its current form," it said.

Source: News24

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