BAY RENTAL SHAMBLES
Shake-up on way as city struggles to generate revenue from its 8,000 facilities
Struggling to generate revenue from its 8,000 facilities, the Nelson Mandela Bay municipality wants its development agency to take over the management of municipal leases, with some having expired decades ago.
A human resources and corporate services committee report reveals that the Mandela Bay Development Agency (MBDA) is to be asked to investigate the possibility of taking over the properties.
Should the agency be unable to do so, the municipality should consider putting out a tender for a service provider to carry out the function.
The municipality does not have a property management unit to ensure leases are up to date and that tenants pay their rentals.
A 2021 list of municipal assets shows some of the city’s leases, most of which were entered into in the early 2000s, have long expired and have not been renewed.
Other contracts on the list are more than 100 years old, with monthly rentals of just R2.
The assets include community halls, sports fields, museums, beachfront properties and police stations.
The report was tabled at a human resources and corporate services committee meeting last month.
However, it was retracted at a mayoral committee meeting earlier this month for the municipality to provide more details related to the register of all facilities, the status of leases and current conditions.
“A meeting has been set up with the MBDA,” the report says.
“The chief risk officer during the risk register update meetings recommended that a comprehensive report with all options be prepared for the standing committee to consider and recommend to council.”
However, several councillors questioned the MBDA’s ability to handle such a big task.
Corporate services political head Annette Lovemore said the municipality had not evaluated most of its properties in a long time to determine market values.
“While some of the tenants with expired contracts continued to pay what was initially agreed upon, some simply stopped paying and that’ sa problem.”
Lovemore said the municipality had several occupied properties along the beachfront that should be generating revenue but no-one monitored the leases. “It’s a bizarre realisation that we don’t have a property management function,” she said.
“But even with us roping in the MBDA, we are not saying that they can take over the management of all our properties, but they should maybe handle the management of leases only.”
She said there were two possible options for the MBDA.
One was the MBDA handling the leases and the other was the agency taking over the management of the Feather Market Centre, which was not generating revenue for the city.
Lovemore said she understood that an updated register of properties was being prepared by the budget and treasury department.
MBDA spokesperson Luvuyo Bangazi said the agency could do more to provide additional capacity to the city.
“The MBDA has successfully conceptualised, implemented and operated a range of projects and facilities in pursuit of the urban development agenda
of the city since its establishment in 2003.
“In its 20 years of existence, the entity has demonstrated its capacity and resourcefulness through the delivery of more than R1bn capex (capital expenditure) and opex (operational expenditure) programmes in that time.”
Bangazi said last year’s engagement with the city’s corporate services department identified a range of services that the MBDA could consider taking on.
“The entity has been consulting extensively with internal and external stakeholders, particularly the directorates of the municipality, to assess where there could be greater synergy in planning, implementation and operations.”
He said a range of potential support mechanisms were identified which the agency, due to its configuration and agility, could provide to directorates directly or through the sourcing of such capabilities more efficiently.
“The nature, size and scope of the pending collaboration with specific departments, in particular corporate services, is still to be discussed in detail and formalised by the accountable structures of both organisations,” Bangazi said.
“In principle, though, there is agreement that more can be done to streamline facilities management across the city and deal with any discrepancies in tariffs if they exist, accessibility issues and, most importantly, maintenance and security, replicating the successes of the MBDA in built facilities management so far.”
ANC councillor Bongani Mani said the MBDA did not have the capacity or the expertise to manage the city’s properties.
“You can’t make such a recommendation having failed to make your own internal audit of those facilities,” he said.
“The municipality has not collated a list of all its facilities, or categorised them based on the current conditions and determined how much they will need to be refurbished or even be sold, like we recently did with our fleet.
“One of the only things they’ve been able to handle is the stadium.
“But even that has its own management and it’s not really them doing the amazing work.
“We must not forget the MBDA board is not complete and there has been an acting CEO for years now.
“They won’t be able to do this work and they have proven this in other projects.
“I don’t understand how that item came to the committee.”
DA councillor Rene Meyer said the party also had doubts about whether the agency was capable of performing the property management function.
“We asked if they had enough capacity to do the work and, if not, then ultimately put out a tender and find someone who is capable.”
Meyer said the MBDA was the first option because the metro had ties with the agency.
“The problem is that property management has always been an internal function but it’s now not being performed the best it should be.
“We know this because we don’t even know which buildings are owned by the city.”
She said leaving the function in the hands of the municipality would not be right because it had failed to perform the task.
“In the current state, we are better off having someone external take over.”