Breaking New Ground in the inner city

Neil Fraser

Neil Fraser is a partner in 'Neil Fraser & Associates trading as Urban Inc', an urban consultancy dedicated to the revitalisation and regeneration of cities and of the inner city of Johannesburg in particular.
 

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By Neil Fraser


A NEW phrase, "sustainable human settlements", has appeared in the South African housing sector over the past year or so. It surfaced some time ago on the international scene, largely from UN Habitat programmes.

A South African government definition of "sustainable human settlements" is: "Well-managed entities [urban and rural] in which economic growth and social development are in balance with the carrying capacity of the natural systems on which they depend for their existence and result in sustainable development, wealth creation, poverty alleviation and equity."

Clearly sustainable human settlements go beyond the traditional concept of the provision of shelter.

A speaker at the conference on urban regeneration and sustainable human settlements. I referred to last week unpacked the government definition as follows: "A sustainable settlement is one where people enjoy secure tenure, can access basics such as water, sanitation, healthcare and education and, most importantly, where they enjoy a safe environment and have easy access to safe, affordable public transport, and one which provides sufficient economic opportunities.

"In addition, in a sustainable settlement, these benefits are not derived at the expense of the natural environment."

In September last year a National Housing Indaba was held in Cape Town, the purpose of which was to get from the macro housing industry fresh buy-in to a plan developed by the Department of Housing known as the Sustainable Human Settlement Plan or, as it has come to be known, Breaking New Ground.

The indaba outlined its targets as:
  • Removal or improvement of all slums in South Africa as rapidly as possible, but not later than 2014;
  • Fast-tracking the provision of formal housing within human settlements for the poorest of the poor and for those who are able to afford rent and mortgages;
  • Creation of rental stock for rapidly growing, mobile (migrant) and urban populations within inner cities and other locations close to employment opportunities;
  • Removal of administrative blockages that prevent speedy developments and striving to reduce the time to grant various permissions relating to the built environment to 50 percent of the current time; and
  • Ensuring consumer education and understanding in all housing development projects.

If you read all that carefully, it is a big call. But, taking part in the indaba were representatives of the broad spectrum of housing players from all layers of government to the construction, building material, architectural, mining, banking, property and civil society sectors. Each sector pledged to support the accord in ways pertinent to their own sector.

Rental stock
From a Joburg inner city point of view, the creation of rental stock is happening at a rapid rate as the marketplace responds to pent-up demand. The resultant accommodation tends to be middle income-related, which is obviously where developers are able to produce the sort of returns that the private sector espouses.

 

However, the second point above – Fast-tracking the provision of formal housing within human settlements for the poorest of the poor and for those who are able to afford rent and mortgages – is the issue where response is well below need, obviously because returns are marginal, if at all, and risk is high. Yet that is where so much of our need lies.

Traditionally the South African response has been, "The market can't deal with that sector; it is a government problem, leave it to them to sort out."

Well, Breaking New Ground appears to dispute that as it says it is everyone's problem, and I must say I agree.

I said: "What about placing a small surcharge on development costs of middle-to-upper income projects … Or maybe a by-law requiring new apartment developments to provide 10 percent of their space for the 'working class'. I seem to recall that being done successfully in Ireland and in parts of London.
"24/7 cities need integrated residential development – a preponderance of urban poor will not provide disposal income necessary to generate 24/7. A preponderance of high income might well provide the impetus but we in South Africa cannot allow another skewed society to develop. We must generate a mix."

Inclusionary housing
Since May 2004 I have travelled to a number of cities internationally that, one way or another, have embraced the principle of what I was advocating, now nearly two years ago. In fact, this past January, I stayed in a friend's flat in London that was located very close to the Thames and a couple of blocks from the Tate Modern – a highly desirable area – in a project that had mixed income components.
 

 

Such projects are becoming known as "inclusionary housing".

I also looked at extremely large new inclusionary housing developments in and around Cambridge. The system under which such projects are developed appears to be quite heavily regulated and is controlled through a national obligation known as a Section 106 Agreement. This places specific demands on developers to undertake certain initiatives that will result in various community benefits.

It, however, appears to cause quite a delay in the delivery process.

A new initiative announced last year by the Office of the Deputy Prime Minister created a fund from which private sector developers will be able to access grants to underpin the lower end of the accommodation they are required to provide. There is great concern about resultant regulations slowing down the delivery process even more.
Britain is not the only country that has introduced regulations that relate to inclusionary housing. A variety of inclusionary housing approaches can be found in Europe (Belgium and The Netherlands in particular), Ireland, the USA, Canada, Australia, Malaysia and China.

Breaking New Ground
So it should not have come as a surprise that the Breaking New Ground document introduced a similar approach for South Africa last year, although the actual draft requirements are causing the property industry some concern.

 

The document actually requires the property sector to: "Ensure that commercially driven housing developments above Rx [an amount to be determined], will spend y percent [a percentage to be determined] of the total project value in the housing subsidy category, details of which will be further explored with the sectors concerned, taking cognisance of international best practices."

Thus, if "x" is R10-million and a commercial housing project is proposed of R50-million, and "y" is 10 percent, R5-million would have to be invested in the project at the lower end of the market.

Some may feel that this is a particularly punitive approach that singles out just one sector when the problem should be spread over far more than just the property sector. As I read it, the proposal is exploratory, the details being open to negotiation, while the principle is not.

However, it is important to note that while what could be described as "punitive measures" as is envisaged in Breaking New Ground, has precedent in many countries, so does an incentive approach. Other countries offer tax incentives, VAT reduction, density bonuses, direct subsidies and other mechanisms.

Maybe the answer lies in a combination of both.

Breaking apartheid mould
What is clearly non-negotiable is that we have to find a solution that breaks the apartheid planning mould and that leads to integrated housing provision across the barriers of class, socio-economic issues and race. The inner city is a fertile place to start.
 
The City should be taking a strong lead, getting commercial and non-profit developers as well as relevant community leaders around the table to develop a strategy that can be conveyed back to the national level.

Certainly the property industry, through the South African Property Owners Association, is doing just that. But I believe that this is an issue that must also be jointly tackled at local level because it is the local level that must implement.

Our own indaba could also start essential conversations around the pressing issue of evictions and alternative approaches to this critical aspect if we are to move forward positively.

The five-year report Reflecting on a Solid Foundation by Executive Mayor Amos Masondo, devotes a chapter to sustainable human settlements. It concludes that the last five years has resulted in a policy foundation being laid and a capacity developed to begin to tackle the city's human settlement needs head on.

I think we need to develop that policy further in terms of inclusionary housing – quickly – and then set measurable targets and a strategy to meet them by 2010/11 – the end of the next local government term.

Incidentally, a court ruling on evictions and related issues (as a result of the legal challenge by the international organisation Centre on Housing Rights and Evictions to the City's approach to evictions) was due on Friday, 3 March. Whatever the outcome, we need to create space for debate and seeking solutions.

Maybe we'll have a drier weekend!


Enjoy, Neil


Published courtesy of the Johannesburg News Agency (www.joburg.org.za)
http://www.joburg.org.za/citichat/2006/mar6_citichat6.stm


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