Bobani’s last big promise thwarted

Ex-mayor jumped gun in pledging R36m to Despatch housing project developer

Former Nelson Mandela Bay mayor Mongameli Bobani’s R36m pledge to a housing developer was dealt a blow shortly after his ousting, with the municipality saying it was impossible to carry out.

On November 25, Bobani pledged money from the city to the man behind the R10bn Florida Heights housing development project near Despatch.

With no signed agreement in place, nor any money set aside for it in the city’s budget, Bobani committed the “immediate dispense and release of R36.4m for planning and bulk services” towards the project.

The rest of the money — meant to total R100m — would come at a later stage.

But as things stand now, no money would be handed over, according to municipal spokesperson Mthubanzi Mniki, who said it had not been budgeted for.

Also, an environmental impact assessment has yet to be authorised and the municipality has not signed a memorandum of agreement (MOA) with the developer, Sakhisizwe Renewable Energy.

Construction can only start on the development once an EIA has been issued by the environmental affairs department.

An EIA for the project lapsed in December 2017, but a new application has since been submitted.

While the council decided on December 4 2018 that the bulk infrastructure be funded from a R750m loan the city took out for what government refers to as “revenue-generating infrastructure”, the amended loan application was never brought back before the council for its approval.

In the Treasury-approved loan plan, the money was meant for new smart water meters, pipes, water reticulation projects and to reduce illegal electricity connections.

Bobani wrote to Sakhisizwe Renewable Energy director William Charles on November 25 2018, saying the city “confirms its support for the Florida Heights Portion 6 project”.

“Sakhisizwe’s bid was successful and was approved by and has the support of the national and provincial departments of human settlements, the social housing regulatory authority and also the NMBM,” Bobani wrote.

“The Eastern Cape human settlements department has committed subsidies to the tune of R39,816,880 and the

NMBM has committed R100m in the form of bulk infrastructure and planning,” he wrote.

The provincial human settlements department is the developer of the project while the Sakhisizwe Trust — which Charles is also part of — is the implementing agent.

Masiza Mazizi, spokesperson for human settlements MEC Nonkqubela Pieters, said the R39m had yet to be approved by the department.

“There is no signed funding agreement yet between the department and Sakhisizwe,” Mazizi said.

“The amount is still undergoing a departmental approval processes and has not been approved.

“The final project appraisal will be finalised soon.”

Mazizi said Sakhisizwe’s request was a top-up application to fund 171 subsidy houses.

“The application translates to R39m worth of subsidies, which is the subsidy component of the larger planned mixed-mode development only.”

He said Charlies had submitted a full project application with all supporting documents.

Meanwhile, it has been a year since the sod-turning cere

mony of the Florida Heights project, but no progress has been made.

When Bobani visited the site on November 4, he told reporters: “The money is there. It was approved in the 2019/2020 budget.”

At the time, he was accompanied by then infrastructure and engineering political head Andile Lungisa as well as Charles at the site where Phase 1 of the development would be built on the outskirts of Despatch.

Phase 1 would house more than 1,000 families and was expected to be completed in five years.

This would consist of 741 rental units, 200 units for military vets and RDP houses, four mixed-use business sites and a mall the size of the Kenako Mall in Zwide.

Phase 2 — which would take at least 15 years to complete — would include a further 14,000 residential opportunities.

Contacted on Friday for comment on why he had committed the city to releasing funds which were not in the 2019/2020 budget, Bobani said any questions related to Florida Heights could be asked at a press conference he would schedule later to discuss his removal as mayor.

Bobani was ousted after a vote of no-confidence at a council meeting on Thursday.

“Even if you send questions, I won’t comment [now],” he said.

Charles said he could not comment on the timing of Bobani’s letter, saying the municipality had approved the project in line with the Housing Development Agency and provincial government.

“It is important to emphasise that the municipality approved the Florida Heights in 2018.

“That approval means the municipality committed to this project beyond any personalities.

“The latest immediate guarantee letter does not negate any development.

“The project is going ahead and final submission as requested by the department of environmental affairs has been submitted.

“Final award [of the EIA] is anticipated by or before January 10 2020.”

He said all issues raised by the municipality’s legal department had been resolved.

“The final draft [MOA] was signed by Sakhisizwe Developments and sent back to the municipality,” Charles said.

He declined to name any of the investors for the project.

“Our investors will be announced shortly as part of our marketing communications strategy, hence we are not in a position to make a public announcement at this stage.

“We are confident that their involvement will play a vital role in the realisation of an important mixed housing development that will assist the Nelson Mandela Bay municipality in reducing its housing backlog,” Charles said.

He said no money had been paid to the company from municipal coffers yet.

Municipal legal services director Teboho Motasi raised several red flags about the draft MOA in November 2018 after a mayoral resolution that the document be signed.

“Upon considering the documents at our disposal, it was agreed between ourselves and [municipal human settlements and infrastructure and engineering departments] that legal services cannot proceed with the drafting or vetting of the MOA,” he wrote.

This, Motasi said, was because the land availability agreement was signed with Sakhisizwe Trust and not Sakhisizwe Renewable Energy.

“The infrastructure and engineering department has advised that they will only provide bulk services in lieu of the funding.

“However, the draft MOA imposes a plethora of obligations in respect of funding on the municipality.

“It should be noted that the land availability agreement expressly imposes this obligation on the Sakhisizwe Trust,” Motasi wrote.

Municipal spokesperson Mthubanzi Mniki said even though the council endorsed using money from the loan to fund the infrastructure for the project, he said it would still have to agree to change the agreement to cover the R100m.

“A change can only be made if council rescinds the original decision of going out on the loan market, which will have costs as the successful bankers were already informed in writing,” Mniki said.

Environmental affairs regional environment head Dayalan Govender said Sakhisizwe would not be able to start construction until the EIA was approved.

“If the development does not trigger any listed activities then a development can proceed, but if listed activities in terms of EIA regulations of 2014 are triggered then the developer would need to apply to secure the necessary approvals.

“In this case the development does trigger listed activities, hence an application was lodged,” he said.