Chapter 11 Municipal administration AUTOMATION

● Two Corporate Services customer satisfaction surveys were conducted

● Efficiency and effectiveness was enhanced through the automation and implementation of a range of systems and processes

● Aerial photographs of the city were taken and made available to the departments, UACs and the public

● Learnership and internship programmes were registered and started to promote skills development Achievements

98 SKILLS DEVELOPMENT EFFECTIVENESS

Councillor Thomas Phakathi

Councillor Thomas Phakathi is the Member of the Mayoral Committee for Municipal Administration and has the overall responsibility for Corporate Services. In order to ensure that the CoJ is able to provide ongoing and effective service delivery to the city’s citizens, the maintenance of sound internal support systems is critical. This includes ongoing support and development of human resources, as well as support in a host of other corporate services arenas, such as management of the geographical information system (GIS), valuation services, administration management, legal services, fleet management, occupational health and safety and facilities management. Without these as the backbone of support to the CoJ, the provision of day-to-day services would be severely hampered.

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KEY SERVICE DELIVERY AREAS AND CHALLENGES The Corporate Services Department plays a pivotal and critical role in supporting the City in achieving its aims. This is only possible if support is also given to people, systems, information, processes and the creation of a performance-driven culture within the city. There is therefore an ongoing focus on driving the vision of transformation through the development of skills, continuous empowerment, the promotion of equity and the implementation of a rigorous performance management system in the department’s capacity as the administrative support function for the City. The ideal outcome of this support is that effective decision- making can be enhanced.

PROGRAMME PERFORMANCE Client and stakeholder satisfaction The City has progressively enhanced customer satisfaction through a range of mechanisms implemented across the various services. Corporate Services has a key role to play in this process and supported the initiative through the implementation of customer satisfaction surveys. During the last financial year, two surveys were undertaken to measure the improvement in average client and stakeholder satisfaction. An overall 6% improvement in average satisfaction rating for all functions was achieved. Corporate Services also reduced the turnaround times for all functions, thereby enhancing overall service delivery.

Operational efficiency and effectiveness Corporate Services has enhanced operational efficiency and effectiveness through the automation and implementation of a number of systems and processes.

The electronic business management system for occupational health and safety provides a detailed reporting procedure for work-related injuries and diseases, full coverage of the processes required to manage a comprehensive occupational safety programme and an HIV and AIDS management system.

The implementation of an enhanced human resource information system (SAP/R3 version 4.6 – Phase Two) delivers improved services to customers, reduces payroll queries, improves turnaround time and provides strategic management information.

An electronic records management system has been installed, which ensures conversion of manual filing records to an electronic document filing system. This will be rolled out to all record-keeping sections. This system meets national standards set by the National Archives of South Africa.

A valuations system that is able to generate electronic supplementary valuation vouchers, which are sent electronically to revenue for processing, has been

100 installed. This enables the City to improve the accounts and clearance services to ratepayers. The issuing of valuation certificates has also been automated, which improves turnaround times and reduces the risk of fraud. In June 2004, a website for electronic valuation services was introduced to improve customer service.

A standard property identifier that will allow the exchange of data between the Council’s primary property databases (billing, GIS, valuations and planning) has been set up by the GIS directorate within Corporate Services.

A zoning information tool was developed over the financial year that enables clients to print maps, generate zoning certificates and print copies of approved amendment schemes from the scanned documents in the system. The data capturing for the 12 town planning schemes in operation within the city started in July 2004.

Aerial photographs of the City were taken in July – August 2003 and the process was completed at the end of December 2003. The photographs are available to City departments, UACs and the public at large.

The implementation of these systems and tools has improved efficiency of the City’s operations and has ensured enhanced effectiveness in terms of service delivery.

Effective human resource management and sound employee relations Corporate Services is responsible for the continuous empowerment, skilling of internal staff and the maintenance of sound employee relations. During the last financial year, the department initiated a skills audit, aimed at the identification of skills necessary to provide ongoing and sound service delivery to customers. Key competency gaps have been identified as part of this process.

Corporate Services has been driving the workplace skills plan process through timeous submission of the Workplace Skills Plan and Implementation Report to the Local Government and Water Sector Education and Training Authority (LGWSETA). The department implemented internship and learnership programmes to contribute to the creation of jobs and skills within the broader city context. The City is also supporting over 50 students on bursary schemes.

In support of the City’s commitment to the Employment Equity Act, Corporate Services ensured submission of an employment equity progress report to the Department of Labour. The City’s Employment Equity Plan and Strategy is geared at achieving all of its employment equity targets within the near future. However, improvement was evident, e.g. the gender split between females and males had improved from a 30:70 ratio in 2000/01 to a 40:60 ratio in 2003/04.

The department implemented a Human Resources Strategy that addresses collective bargaining issues, optimal utilisation of staff, change management, skills development and staff retention in order to promote sound employee relations and improved service delivery. The reduction of the backlog of disciplinary cases achieved during the last financial cycle, has also added to the maintenance of sound employee relations.

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Preparedness to respond to HIV and AIDS in the workplace Employers in South Africa have both a social and economic responsibility to positively contribute to the fight against HIV and AIDS. In recognition of this responsibility and in an effort to become part of the broader fight against the pandemic, the past year saw Corporate Services tasked with the implementation of an HIV and AIDS workplace programme within the CoJ. The programme included the education and support of employees living with HIV and AIDS, monitoring and provision of training during the implementation of the programme, and, in some instances, the provision of treatment to staff members who may have been exposed to infections in the workplace. The Knowledge, Attitude, Practice and Behaviour Study (KAPB), a voluntary anonymous prevalence survey and the impact and actuarial analysis for the CoJ were successfully completed.

Municipal Court, by-law enforcement and litigation The Executive Mayor officially launched the Municipal Court in 2004. A prosecutor was appointed, the Chief Magistrate approved the schedule of fines and the court became operational.

To support the enforcement of by-laws, three sets of by-laws information guides have been approved. The translation into Afrikaans has also been completed for the following by-laws: Public Open Space, Street Trading and Metered Taxis. IsiZulu and Sotho translations have been completed on Cemeteries, Street Trading and Public Open Space. The following sets of by-laws are in the process of being finalised shortly: Credit Control (already approved), Dogs and Tariff Policy.

Eleven cases were finalised from 1 July 2004 to 13 December 2004, either by way of judgement or through settlement beneficial to the City. Only one judgement was rendered against the City, which represents a 90% success rate.

CHALLENGES FOR 2004/2005 To improve on the achievements made by Corporate Services during the 2003/04 financial year, the following commitments have been made for the 2004/05 period:

● Maximisation of client and stakeholder satisfaction – with targets including a 2,5% decrease in the operating budget for the management of the City’s fleet, ensuring accurate GIS information which related to billing data, maintenance of sound labour relations, which is to be assessed through staff retention and the handling of disciplinary cases ● Optimisation of services and operations to be achieved, amongst others, through the 50% completion of a human resources shared services centre and the implementation of six internal projects, aimed at the reduction of unfunded liabilities

102 ● Continuation with the general valuation project, which will ensure that an accurate and comprehensive general valuation roll is produced for the entire City, compliant with the new Municipal Property Rates Act ● Ensuring a comprehensive supplementary valuation roll for the period 1 July 2004 to 30 June 2005, which will contribute to an accurate and increased rates base ● Effective management and maintenance of all Council-owned buildings ● Establishment of new public conveniences, especially around the Newtown precinct ● Enrolment of candidates on internship and learnership programmes and 5% enrolment of people with disabilities ● The implementation of the Human Resources Strategy

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Councillor Brian Hlongwa

● Johannesburg Water completed 152 capital investment projects to enhance the City’s water-related infrastructure

● Bacterial quality of drinking water improved and reached 99,7% compliance with required standards

● Upgrades of City Power’s infrastructure contributed to a reduction in outages

● Cash collection of 103% from City Power’s top 10 000 customer base

● Pikitup second out of 100 countries at Commonwealth Achievements Association for Public Management awards

● Job opportunities for 100 people created at Pikitup’s three buy-back/recycling centres

104 INFRASTRUCTURE

Councillor Brian Hlongwa is the Member of the Mayoral Committee responsible for Municipal Service Entities. The entities provide water and sanitation (Johannesburg Water), electricity (City Power) and waste management services (Pikitup).

JOHANNESBURG WATER Johannesburg Water (Pty) Limited was established as an independent utility company, wholly owned by the CoJ, to serve the greater Johannesburg area. Johannesburg Water is responsible for supplying water and sanitation services to approximately 600 000 customers, ranging from domestic, commercial to industrial properties. An estimated three million people make use of the services on a daily basis.

Johannesburg Water, as a company, has a board of directors appointed by the CoJ, the sole shareholder. The annual turnover is approximately R2,6 billion and there is a staff complement of 2 600.

KEY SERVICE DELIVERY AREAS AND CHALLENGES The challenges for Johannesburg Water in 2003/04 included the following:

● Successful and timeous delivery of the capital programme, within budget ● Provision of high quality drinking water ● Effective treatment of wastewater ● Maintenance of water and wastewater networks ● Securing and cleaning of pump stations and reservoirs ● Addressing unaccounted-for water ● Extension of services to low-income areas ● Processing of new township and land development applications

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PROGRAMME PERFORMANCE Capital investment Johannesburg Water successfully completed 152 infrastructure projects to the value of R241 million, constituting 98% of the approved capital budget of R245 million.

Thirty percent of the capital investment of R71 299 425 was allocated to upgrading and expansion of the water and sewer reticulation infrastructure, specifically for informal settlements and low-income formal settlements. These projects included:

● Completion of the water and sanitation infrastructure in Ivory Park ● Completion of the Westlake outfall sewer for the de-densification of Alexandra ● Upgrading of water mains for Alexandra networks ● Upgrading of sewer networks in the Klipspruit catchment area ● Installation of the new Dube outfall sewer for all developments in Bramfischerville ● Upgrading of outfall sewers in Pimville and Diepkloof ● Upgrading of sewer networks in Soweto and Moroka Dam ● Installation of sewer top structures in Matholesville ● Installation of communal sanitation ablution in Alexandra, as well as an education campaign, followed by replacement of on-site leaking taps

Twenty five percent of the capital investment of R60,5 million was utilised for replacements, upgrading and expansion of the water and sewer reticulation infrastructure, such as the extension of the water infrastructure in Midrand. The construction of additional storage capacity for sludge handling and fencing off of sludge lagoons, to ensure safety of pedestrians crossing the farmlands, was also done.

A further 22%, of the investment of R52 million, was spent on the expansion of infrastructure for improved customer services, with a focus on staff training and implementation of an integrated IT system called ‘Watersolve’. An amount of R40,8 million went towards replacements, upgrading and expansion to the wastewater treatment works.

Initiatives to reduce commercial and physical water losses, e.g. to reduce unaccounted-for water through the introduction of the Gcin’Amanzi project, represented 3% of the allocated investment (R7 074 638). Corporate requirements such as refurbishing Johannesburg Water’s training centre was allocated 2% of the investment, while the remaining 2% was used for planning and engineering studies.

106 Operations The following key performance indicators were achieved in 2003/04:

● Bacteriological quality of drinking water, distributed to customers, improved. There was 99,7% compliance, compared with 99,5% in 2002/03 and to 95% required by SABS standards. ● Final effluent at the outlet of Johannesburg Water’s Wastewater Treatment Works has improved to 96% compliance, compared to 95% in 2002/03. ● There was 100% compliance for the disposal of sludge produced at the Wastewater Treatment Works. ● Monitoring of the river quality has enabled the regions to investigate hotspot areas with blockages, which would not normally be reported, due to their location. ● Hydro jetting machines, deployed to start cleaning the sewers in suburbs with the most recurring blockages, was successfully done in Ferndale, Bryanston and Randpark Ridge. ● The overall upgrading/replacement of mechanical assets situated in the Soweto system (valves, pressure reduction equipment) has generated an estimated eight million kilolitres, translating financially into approximately R20 million per year. ● Flow restriction or disconnection of more than 40 leaking ablution facilities was completed. ● More than 500 large meters (diameter of 40 mm and bigger) of top customers managed by Johannesburg Water was replaced/resized. ● Control of overflows at reservoirs and water towers, through the deployment of a telemetry system, was executed. ● A systematic leak detection programme, in both metered and unmetered areas, through the selection of the most critical pressure zones in terms of night flow levels, was implemented.

Customer services Johannesburg Water reported on progress of the Watersolve Project, which entails the installation and integration of software aimed at streamlining both business and operational processes. Another successful project was the migration of water meter readings and related functions to Johannesburg Water. A project in Ivory Park, aimed at the implementation of meter reading and consumption- based billing in a previously ‘deemed consumption area’ in order to improve revenue and payment levels, has made good progress. Billing commenced in November 2003 and to date 1 858 erven out of 2 366 (79%) were converted from standpipes and aqua privies (basic or level of service) to being completely serviced with water, sewer connection and toilet structures (level of service – three).

Unaccounted-for water With regard to unaccounted-for water, the rate for the year was 36%. There are two main components of unaccounted-for water, namely, commercial losses in metered areas and technical losses in ‘deemed consumption areas’. Commercial losses are mainly generated through billing processes. Technical losses occur due to the poor nature of infrastructure (in particular on property) and the absence of any incentive to conserve water (no metering device).

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To achieve a decrease in unaccounted-for water, the following actions were embarked on:

● A systematic repair of valves and pressure reducing equipment has been completed in Alexandra, thereby reducing the physical losses on the Johannesburg Water network and on private property. ● More than 1 200 large meters (diameter of 40 mm and bigger) of top customers managed by Johannesburg Water were replaced or resized, generating around a 10% reduction of commercial losses on the revenue generated through these meters. ● A systematic leak detection programme has been implemented in various water districts. ● The database of top customers, new customers and areas suspected of not being billed has been cleaned through a systematic inspection of meters. ● Meter reading has increased from 50% to 92% of meters read every month. ● The targeted response times to customer complaints have reached 77% for the sewer blockages (24 hours) and 82% for bursts on water pipes (48 hours).

Implementation of pilot projects in informal settlements The Stretford 4 Project (Orange Farm) was completed by piloting shallow sewer systems and prepaid water meters. The results indicated that between 70% and 80% of the community, depending on seasonal demands, were using less than six kilolitres per month and were therefore not liable for payment in terms of the free basic water policy.

An additional 2 500 ventilated improved pit latrines were installed in the past financial year, bringing the total units installed to 6 500. The third phase of the programme, to instal 6 000 toilets, will commence in the new financial year. In addition, a further 7 000 units will also be installed, financed largely by national infrastructure grants.

The implementation of Operation Gcin’amanzi was launched in Phiri, Soweto, in August 2003 and is nearing completion. The project involved extensive re- engineering of the network and involved extensive consultation processes. The project has been extended to the Soweto areas of Senoane, Mapetla, Moletsane, Tladi, Dlamini, Jabavu, Mofolo, Molapo, Moroka, Emndeni and Naledi, all of which comprise approximately 30 000 stands.

PLANS FOR 2004/05 In terms of capital investment Johannesburg Water aims to achieve the following:

● Achieving 98% expenditure of the capital budget by year-end ● Accelerating the updating of the Geographic Information System with all backlog sewer connections and as-built drawings

108 ● Develop/identify and implement training and development programmes for engineering personnel

Johannesburg Water aims to achieve the following in terms of operations:

● Maintaining a good track record for drinking water, final effluent and sludge compliance ● Completing the final Phiri prototype project of Operation Gcin‘amanzi and the successful implementation of the first phase of the macro-scale project in Superblocks one, two and three ● Ensuring an effective coordination with the Housing Department for rolling over of the VIP’s programme in impermanent informal settlements

The customer relations and customer management aims are to:

● Maintain customer service levels at the Customer Contact Centre above the 90% mark, even after the migration of the core functions to Johannesburg Water ● Improve billing and revenue collection ● Improve the quality and quantity of meter reading ● Take over the management of the additional platinum customer database from the City of Johannesburg in February 2005

CITY POWER KEY SERVICE DELIVERY AREAS AND CHALLENGES City Power’s core competency is to purchase, distribute and sell electricity within its licence footprint. It is accountable for constructing networks, connecting customers and repairing and maintaining networks. It also includes installation and maintenance of public lighting. The customer base consists of 10 947 large power users and business clients, 70 314 pre-paid customers, 31 agricultural customers and 222 624 domestic clients.

PROGRAMME PERFORMANCE Major achievements and highlights in 2003/04 are discussed in more detail below.

Improve quality of supply The key service delivery challenge confronting City Power is the problem of power outages, especially during the winter period. This is mainly due to underinvestment and timeous refurbishment of the electricity infrastructure.

The company spent 91% of its revised budget for the year, with the bulk of the expenditure going into the network. Money was spent on electrification (R21,9 million or 8% of the budget), public lighting (R21,5 million or 8%), infrastructure (R147,2 million or 55%), new connections (R44,6 million or 16%) and other (R35,2 million or 13%).

Upgrading of infrastructure was performed in Dainfern, Kya Sands, Modderfontein, Bryanston, Illovo, Inanda, Mayfair, Auckland Park, Weltevreden Park, North Riding, Alexandra, Fordsburg, Jeppestown, Maddison, Bree Street, Kibler Park, Mulbarton, Eldorado Park and Ennerdale. These upgrades resulted in significant reductions of outages in these areas.

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Customer satisfaction The average time to resolve customer queries was reduced, whilst the call centre availability was 98%. The restoration time of faults has shown improvement. Key customers were transferred to an automatic meter reading system, which has already been beneficial to the customer and to City Power.

Financial City Power met financial obligations by remaining profitable after payment of a dividend to the City of Johannesburg. A key achievement was the 103% cash collection of the top 10 000 customer base, which enabled the company to improve its cash flow position and thereby becoming the major cash contributor to the City.

PLANS FOR 2004/05

● Increase capital spending by 74% (R470 million), which will be allocated to electrification (R21,5 million or 5% of the budget), public lighting (R78 million or 17%), infrastructure (R297,8 million or 63%), new connections (R37,8 million or 8%) and other (R34,5 million or 7%) ● Key electrification projects include Devland Golden Triangle (1 800 new connections), Alexandra East Bank Extension Seven (1 600 new connections), upgrade of bulk supply (to meet new demand in the Longmeadow and Modderfontein areas) and the upgrade of bulk in the North Riding and Houtkoppen areas ● Upgrading of the distribution network and public lighting in the inner city ● Appointment of new meter reading companies to enhance performance

PIKITUP Pikitup’s goal is to keep the city clean and to present an attractive and hygienic environment to residents and visitors. Pikitup collects and disposes of the domestic waste generated by the City’s 3,2 million citizens living in one million households. It also offers commercial services to about 19 500 business customers across the city, as well as sweeping and clearing litter from approximately 9 000 kilometres of roads throughout Johannesburg.

The City generates a total of 1,4 million tons of waste per year. Approximately 0,6 kilogram to 1,6 kilogram of waste is generated per person per day. More than 190 informal settlements, which comprise approximately 200 000 dwellings, are serviced weekly. The refuse collection service to these settlements varies from the collections done when the weekly rounds are done, to placement of skip containers, also removed weekly.

Pikitup modernised and improved the waste collection systems by systematically replacing the previous refuse bag system with new and improved 240 litre

110 wheeled bins. The company’s fleet has also been upgraded regularly to facilitate faster and more efficient waste collection and disposal.

KEY SERVICE DELIVERY AREAS AND CHALLENGES Environmental compliance Pikitup has to comply with, amongst others, licensing conditions, environmental legislation and policies. Part of the challenge is the alignment of strategies to the National Waste Management Strategy and compliance with the Polokwane Declaration. Pikitup realised that in order to fully comply with the above strategy there are financial implications for the company, which they did not adequately budget for.

Landfill sites Pikitup is concerned about the rapid manner in which landfill space gets depleted, mainly in the northern area of Johannesburg. However, in an attempt to address the problem, they divert waste to other landfill sites and reached an advanced stage of sourcing an alternative waste disposal site. One of the delaying factors has been the environmental compliance process and also addressing the objections from neighbouring communities.

Recycling Recycling was identified as a focus area in the City’s waste management strategy. In this regard research was undertaken to determine the feasibility of a municipal recovery facility for waste recycling. The findings of the research will be available in the next financial year.

Provincial Government’s Zivuseni Project Through its Zivuseni Project, the Gauteng Department of Public Works and Transport has approved the hiring of more than 400 workers to assist Pikitup with the cleaning of all areas. Pikitup is responsible for the administration, supervision and provision of equipment for the project. One of the aims of the project is to ensure that the workers will be empowered to make a living from recycling after participating in the project for three months.

Garden sites Pikitup successfully operates 48 garden sites across the city. These sites receive an average of 5 920 tons of garden refuse per week, which comprises 20% of the total waste collected. The main purpose of a garden site is to bring waste facilities closer to residents, which eliminates the problem of them having to travel, sometimes great distances, to landfill sites.

Panorama composting plant Pikitup launched several sustainable development initiatives in line with the global aims of the 2002 World Summit on Sustainable Development. One of these initiatives is Pikitup’s pilot composting plant, situated at the Panorama site in Roodepoort. Garden refuse (green waste) is a major component of the total waste load annually generated. Traditionally, green waste was disposed of at the landfill sites operated by Pikitup, taking up valuable space. The green waste is processed into soil-enhancing compost at the composting plant. The compost is sold to the agricultural sector and to Johannesburg’s homeowners.

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PROGRAMME PERFORMANCE Business development The establishment of joint ventures between Pikitup and BEE companies is an important future strategic objective. Currently there are three buy-back/recycling centres in operation, creating job opportunities for approximately 100 people. Black entrepreneurs, in partnership with a large paper manufacturer, manage these centres. Pikitup intends extending this programme by establishing buy- back/recycling centres in previously disadvantaged areas such as Orange Farm and Soweto. Other joint ventures in collaboration with BEE companies, especially in operations, are under investigation.

Social obligations Pikitup started to increase the interaction with communities on waste management-related issues. Some of the issues that will be addressed in the course of this year are free waste management services to the indigent, parity in service delivery to previously disadvantaged communities, community education and participation, job creation and sponsorship of environmental projects and community-based environmental organisations such as eco-garden and youth clubs. As an aspect of strategic objectives, Pikitup intends to establish waste management user forums.

Phases two and three of Project 100 Spots This project is a joint agreement between Pikitup and the JMPD to combat the problem of illegal dumping, which is getting out of hand in many parts of the city. The project entails cleaning up Johannesburg’s worst illegal dumping sites in conjunction with local communities. Educating these communities against illegal dumping and encouraging them to accept stewardship of their open areas, is integral to the project. The aim is to eradicate illegal dumping in the CoJ.

Phase two of the project was initiated after evaluation of the first phase. The target area was Soweto, in particular Meadowlands. Phase three started in July 2003 and involves all the Pikitup depots. Depots identified the spots in their areas and implemented the principles of Project 100 Spots. Remarkable results were registered, with dumping not reoccurring in almost 95% of the spots that were tackled.

The City entered the project in the innovation category of the Commonwealth Association for Public Management Awards. This is an international event which saw more than 100 countries participating. Pikitup and the City of Joburg came second in this prestigious event.

112 PLANS FOR 2004/05 Pikitup developed a programme to address the Polokwane Declaration in terms of environmental imperatives. The declaration prioritised the commitment to reduce waste generation by 50% and disposal by 25% by 2012 and to develop a Zero Waste Plan by 2022. The Polokwane Declaration also aims to improve downstream re-use and recycling of end-of-product materials. Furthermore, some of the related challenges include advocating the use of advanced waste management infrastructure, waste exchange programmes, recycled material market development. It also supports waste-based businesses as a driver for economic development and job creation. The CoJ proposed strategic waste targets and objectives that could, over time, comply with the targets proposed in this declaration. These targets are expressed as ‘Integrated Waste Management Plan’ targets. Education in the form of public awareness and waste minimisation through recycling and disposal (landfills and incinerator) are also strategic waste targets.

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● Johannesburg Property Company converted a number of loss- making property portfolios into viable investments

● Johannesburg Civic Theatre made a net profit of R1,2 million by staging the in-house pantomime ‘Jack and the Beanstalk’

● Johannesburg Zoo celebrated 100 years of existence

● International delegations attended conferences, seminars and symposia at the Johannesburg Fresh Produce Market Achievements

114 CONVEYANCING VIABLE INVESTMENT

Councillor Nkele Ntingane

Councillor Nkele Ntingane is the Member of the Mayoral Committee responsible for Municipal Enterprises. The corporatised entities include Johannesburg Zoo, Johannesburg Civic Theatre, Metrobus, Johannesburg Fresh Produce Market and the Johannesburg Property Company. These municipal enterprises compete in the open market to sell their products or services to individual consumers.

CITY OF JOBURG PROPERTY COMPANY City of Joburg Property Company (Pty) Limited (JPC) provides an all-encompassing range of services that are required for the management and development of the property portfolios of the CoJ and the UACs. These services are commissioned on a sole agency basis to administer the acquisition and conveyancing of all land required or utilised for, or as a result of, the rendering of municipal services. Furthermore, JPC administers, manages, develops and disposes of the property portfolio elements owned by the CoJ and the UACs.

KEY SERVICE DELIVERY AREAS AND CHALLENGES The services rendered by JPC cover all administrative, statutory and other actions pertaining to the following:

● Land acquisitions/expropriations ● Land identification, designation and conveyancing ● Land sales and long-term lease arrangements ● Short- and medium-term leases, including outdoor advertising and servitude encroachments ● Financial and accounting services related to the property portfolios ● Strategic and business planning related to the property portfolios ● Ad hoc property management and/or development services and/or other property portfolio-related services

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One of the KPIs of the JPC is the negotiation and conclusion of Service Level Agreements (SLAs) with the CoJ and the various UACs. The operational efficiency is a further measure of performance and is quantified in the percentage of lease data verified.

The JPC also focuses on improving its market position. This is measured through client satisfaction surveys. The establishment and expansion of the income base of the CoJ and the UACs are measured according to the number of agreements closed, as well as the increase in rental income and the number of new developments.

PROGRAMME PERFORMANCE Over the past year JPC has ensured capacity to operate in all of the areas of their mandate, resulting in the early termination of the contract with Intersite in October 2003, as opposed to March 2004 in terms of the contract. Furthermore, JPC converted a number of the CoJ’s loss-making property portfolios into viable investments.

Standard policies were developed and implemented, including policies regarding land release, exempt cases (NGOs, sports clubs, etc.) and leasehold. In addition, JPC responded strategically to a number of property situations and developed innovative policies and procedures to refine the approach taken towards the management of the CoJ’s property portfolio. These included policies and procedures dealing with:

● Places of worship (which currently has a significant backlog of applications) ● Outdoor advertising market – making it fair, transparent, strategic ● ‘Open Auction’ sales methodology – through this methodology JPC was able to achieve an average of about 80% above market price on some of its properties offered for sale on a conventional basis ● Land preparation – JPC prepares land for development or sale resulting in a greater value to the CoJ

JPC’s results, as at 30 June 2004, reflected an after-tax profit of R665 325 (in 2002/03 the loss was R12 675), thereby reversing the insolvency status of the company.

In 2003 JPC undertook an audit of transactions and found that between 80% and 85% of transactions did not recover costs and that it was essentially performing a subsidised service in respect of the majority of the work. The effort versus reward ratio of staff was also varied. While it took 20 staff members to produce 20% of JPC revenue, only four staff produced 10% of the company’s revenue. This

116 highlighted the critical need for organisational restructuring, as well as significant human resource and systems interventions to improve skills and productivity.

PLANS FOR 2004/05 The JPC aims to improve the responses to clients and customers in respect of property-related queries and transactions through the implementation of a customer relations management system and programme. It further aims to provide expanded services to the CoJ through the provision of strategic and technical property services, as requested. During 2004/05 the value obtained from the property portfolio is to be maximised in terms of financial, economic and social value. This will be effected through the reduction of the cost burden of the portfolio to the CoJ, an increase in the rates collectable to the CoJ, creation of employment opportunities, increase in private sector property investment and entering into appropriate lease agreements, based on social-use properties.

The JPC further wants to develop a CoJ property asset register as well as develop and promote large property-led initiatives to support urban regeneration and broader city-wide economic development.

In terms of financial aims, the JPC plans to develop a Sustainable Pricing Model to promote sustainability and ensure cost recovery. It is also crucial to establish a sustainable income stream for JPC, which could be accomplished through the increase in revenue for property services, as well as reducing the dependency on land sales.

The improvement of organisational capacity in terms of property management, property development and property asset management expertise is also regarded as a priority.

JOHANNESBURG CIVIC THEATRE The Johannesburg Civic Theatre (Pty) Limited was incorporated in July 2000 in order to operate the City of Johannesburg’s Civic Theatre, originally built in 1962. The company’s objective is to develop the theatre into South Africa’s premier house of entertainment.

KEY SERVICE DELIVERY AREAS AND CHALLENGES The Johannesburg Civic Theatre is faced with a plethora of challenges, principally to:

● Retain the reputation of the Johannesburg Civic Theatre as South Africa’s premier home of live entertainment ● Solidify the theatre’s identity of being the country’s ‘receiving house’ of choice ● Continue to build and maintain the theatre’s added-value facilities in order to operate a popular meeting place and leisure destination for all citizens of Johannesburg ● Continue prioritisation of transformation, both from within the company and the involvement of external stakeholders ● Practise excellent corporate governance and thereby assist in promoting the CoJ’s policy of corporatisation

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The Johannesburg Civic Theatre’s mission is to entertain and enrich the lives of the citizens of Johannesburg by providing world-class products, first-rate service standards and an all-embracing policy that welcomes and encourages the use of the theatre by all sections of the population.

PROGRAMME PERFORMANCE Now in its fifth year of operation, the company has increased audience attendance to about 350 000 patrons a year, from a low base of less than 80 000 in 2000.

Parallel to the patron attendance figures, the company’s earned income has increased considerably. The principal method of achieving this has been by producing the annual festive pantomime in-house, bringing an annual income of over R7 million. The pantomime, ‘Jack and the Beanstalk’, in 2003 resulted in a net profit of R1,2 million for the company.

The company receives an operating subsidy from the CoJ. One of the mandates given to the board of directors, at the time of corporatisation, was that the subsidy would decrease over a period of time. In actual percentage terms, the subsidy has decreased by 8,07% over the past four years. However, in real percentage terms, allowing for inflation, the subsidy has decreased by approximately 30,93%.

Despite the decrease in the annual shareholder subsidy and the increase in earned income, operating expenditure (inclusive of the cost of producing the pantomime) has levelled over the past three years.

Decreased subsidy, increased earned income and the levelling of operating expenditure brought about a positive bottom-line for the first four years of the reserve of assets and subsequent deferred taxation. The company has just received its fourth successive unqualified and annual financial audit.

The company strives to present a diverse scenario of live entertainment. Although remaining a receiving house, letting stages to external entrepreneurs, promoters and producers, excluding the pantomime, has become important for income generation. Theatre usage has risen from less than 50% of potential in 2000 to over 93% in the current year.

The company embarked on three major projects during the past year, adding state- of-the-art arts, culture and hospitality facilities to encourage increased usage of the building itself and to promote accessibility for the diverse communities.

118 In March 2003, the theatre went into a partnership with top brand name ‘News Café’ to establish a world-class theatre restaurant on the premises. In the first year, the Johannesburg Civic Theatre’s News Café broke all anticipated business records and is now one of the top News Cafés in South Africa. This venture has greatly assisted in turning the theatre building into a constantly vibrant and welcoming space for all those living, working and visiting the Braamfontein area. On March 2004, the South African Ballet Theatre took occupation as permanent tenant of the Johannesburg Civic Theatre’s new dance studios. Two studios face south onto Simmonds Street. A glass facade on the entire south of the building allows members of the public taking leisure time in the new piazza to watch dancers rehearse, throughout the day and into the evening. The creation of these dance studios brought unanimous acclaim from both the media and the public and has also become a central focus point of the CoJ’s Cultural Arch.

Strategically located in the Johannesburg Civic Theatre precinct, the Premises Gallery overlooks the landscaped piazza. Creatively directed and managed by the independent artists’ lab, ‘the Trinity Session’, a small piece of art-world history was made with South Africa’s newest, multipurpose contemporary art space that hosts much more than just standard exhibitions.

The board of directors approved a discretionary annual social awareness programmes budget. This allows the company’s Chief Executive Officer (CEO) to disburse funds in support of causes and institutions in need and aligned with the company’s arts and culture, entertainment and community improvement goals.

In 2003/04 the theatre used this budget to support:

● Independent Newspapers’ Star Operation Snowball ● Independent Newspapers’ Star Christmas Hamper Fund ● The Actors’ Centre at the Johannesburg Civic Theatre ● South African Police Service’s Hillbrow Operational Division – street children project ● The Mayoral Charity Golf Day ● The Theatre Benevolent Fund ● Amajika Theatre Awareness Youth Education Project ● Themba HIV and AIDS Youth Awareness Project

PLANS FOR 2004/05 The Johannesburg Civic Theatre aims to build on the success of the past and to continue to fulfil its role in contributing to the vision of Johannesburg as a world- class African city. The KPIs for 2004/05 include customer responsiveness and satisfaction and the improvement of usage and output levels. The business plan for the new fiscal year was prepared on the basis of the indicative allocations for subsidy to the company by the shareholder. It could be noted in the budget that extraordinary expenditure items have not been included in forecasts. These items (recarpeting, replacement of the building management system, etc.) will be capitalised and met through existing operating surpluses.

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JOHANNESBURG ZOO The core business of the Johannesburg Zoo is the accommodation, enrichment, husbandry and medical care of wild animals. As a commercial operation the Zoo has expanded into other activities related to the recreational/entertainment and hospitality/tourism markets to ensure survival and future growth.

The Johannesburg Zoo contributes to the quality of life of the citizens of the city through core products and services, including conservation, education, recreation and eco-tourism and research.

KEY SERVICE DELIVERY AREAS AND CHALLENGES The Johannesburg Zoo is one of the premier tourism and recreation destinations in Johannesburg. As such the focus and the strategic direction of the Zoo is to grow and develop in a way that will capture the hearts and minds of the residents of Johannesburg and ensure that they enjoy the many delights that await them at the Zoo.

In 2003/04 over 320 000 visitors enjoyed the Johannesburg Zoo. Peak attendance was over weekends, with Sunday being the most popular day to visit the Johannesburg Zoo. During the week 150 000 scholars attend the educational programmes and learn about animals and the environment. Attendance is seasonal and the wet weather in January and February impacts negatively.

The major challenges facing the Zoo are linked to its 100 years of existence. The infrastructure is old and the Zoo experiences the need to be repositioned. A study of international zoos and the new aquarium in Durban showed that the future lies in ‘immersion design’, meaning that visitors must feel like they are part of the animals’ environment. Focused on the target market of children of 12 and under, this type of adventure is critical. At the same time a balance must be achieved between the development and the gardens of the Johannesburg Zoo.

The Johannesburg Zoo houses 2 000 animals, from 380 species, on 54 hectares of parkland. The Zoo is centrally located in Saxonwold and accessible by public transport. Animal welfare is a key challenge. During the financial year there were 216 births and 261 deaths. Another significant challenge for the Zoo is the aging animals.

PROGRAMME PERFORMANCE The Johannesburg Zoo had a very good year in 2003/04. The efforts of the previous management team paved the way for a solid foundation for the Zoo to meet new challenges.

120 The capital budget was used for new enclosures, the Rand Water Lemur Islands in the central lake and the Lord Derby Eland Camp. The camels moved to a new home and the new brooder room is nearing completion. In terms of infrastructure the exterior wall has been replaced and the replacement of water pipes and upgrade of the wetlands system has resulted in a reduction in the amount of treated water used and therefore considerable savings to the Zoo.

Many policies and procedures were designed and implemented, leading to a great improvement in the governance of the Johannesburg Zoo.

The financial performance of the company is encouraging. The company showed a profit of R255 000, after two years of losses. This is encouraging in the light of the development plan and the need to be able to retain our loyal sponsors and attract new sponsors. Attention to financial performance will always be a priority. New ticketing equipment has been installed to secure the revenue and additional revenue streams have been identified.

The Johannesburg Zoo celebrated its centenary year that started in January 2004. To still be relevant and loved after 100 years of operation is indeed a testament to the Johannesburg Zoo. Media articles, TV interviews and many high profile events formed part of the celebrations. The Johannesburg Zoo was particularly delighted with the loan of two magnificent buffalo in bronze, from Sun International, to commemorate the centenary.

PLANS FOR 2004/05

● A development plan was compiled to guide the development of the Zoo over the next five years. The aim is to create five wild places, where a visitor can come across animals in a very natural setting. The five zones are: – The Heart of Africa – an African Jungle containing gorillas, chimpanzees, bongo, pygmy hippo, red river hogs and a multitude of birds and reptiles. – Amazonia – a South American jungle with exotic birds and animals. – The Spice Route – linking Madagascar, Saudi Arabia, India, Nepal and South East Asia. – Southern Safari – the South African experience to focus on the small, endangered and interesting species, in addition to the big five. – Extreme Environments – showcasing the extents that animals go to in order to adapt to their environments, from the polar bears in the winter extremes, to the camels and their deserts. – The 2004/05 plan covers all critical aspects such as furniture, design, animals, enrichment and nutrition. Work has commenced on the Heart of Africa, which will be opened for the 2004 December school holidays. Corporate interest has been immense and the plan will help create a world-class Zoo. Education, research and conservation remain core to the operation. This plan will allow for focus and targeted decision-making. In 2004/05 the first of the zones will come to life.

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● Ongoing infrastructure projects include the upgrading of the irrigation system linked to borehole water and the replacement of the reticulation system. A number of enclosures have been identified to start the reconstruction process. These include the elephant enclosure, the carnivore curve and the brown bear enclosure.

METROBUS Johannesburg Metropolitan Bus Services (Pty) Limited is a company established in 2000 in terms of the iGoli 2002 Plan. Metrobus currently employs 962 staff. The company has three depots and three satellite depots. Metrobus has a fleet of approximately 500 buses, utilised to operate on scheduled routes on a daily basis. The company provides additional services in order to support the social responsibility programmes, e.g. to people with disabilities, scholar transport, free passes to members of the SAPS, Metro Police and SA National Defence Force and also pensioners’ transport.

KEY SERVICE DELIVERY AREAS AND CHALLENGES Metrobus operates in terms of the SLA with the CoJ and strives to improve the mobility and service excellence within the city. It is the biggest municipality- owned bus company in South Africa. The company is in a growth stage of development.

Metrobus identified four key strategic objectives to ensure service delivery excellence. These include customer service delivery excellence, enhanced shareholder value, investment in people and to ensure good corporate governance.

Metrobus is faced with the challenge of the adverse impact of operating costs, as a consequence of the exchange rate fluctuations. It is also confronted with the impact of the HIV and AIDS pandemic, which threatens the company’s economically active client base.

Blanket permits fell away when the Gauteng Provincial Transport Act was promulgated and this became an extreme challenge, which had to be managed with vision and sophistication. In addition, the reduced need for bus services in terms of the transport mode change from public transport to private motor vehicles, also presented challenges for Metrobus. Furthermore, crime and vandalism need to be monitored as they impact severely on service delivery and financial expenditure.

122 Reliance on diesel suppliers for the uninterrupted supply of diesel, reliance on one ticketing system provider (Questec), as well as reliance on one supplier of computerised ticketing sales outlets (Computicket), presented further challenges. These challenges impact on service reliability, cost reduction and internal controls. There is the need to reduce the dependence on subsidies from the shareholder.

PROGRAMME PERFORMANCE Progress on identified key success factors are reported on below.

Information centre Metrobus opened a new information centre at Gandhi Square in October 2003. The new centre is accessible to all passengers. Passengers now have easy access to information, timetables, route maps and all other relevant information to make their journeys more pleasurable.

Internal and external customer-focused culture Metrobus used the already established call centre at Joburg Connect. The call centre handles 8 000 calls per month. Of these calls 97,2% are information related and 2,8% are complaints. The call centre provides statistics that enable effective decision-making. Metrobus also conducted the staff perception analysis in order to understand what drives employees so that related strategies could be established. In addition to this, Metrobus tracks the Customer Satisfaction Index on a quarterly basis. As at June 2004, the CSI exceeded targets and reached satisfaction levels of 77%. The target for 2004/05 is 80%.

Metrobus achieved about 80% customer awareness for services rendered. Passenger revenue increased by 30%, while the operating profit increased by 350%. The company was chosen as the ‘Number One Bus Company’ in The Star Newspaper’s independent readers’ survey.

Published timetables and schedules Metrobus achieved its target of less than five-minutes variance in departure time from starting point. Spare capacity was achieved at 5% as per the targets. In terms of breakdowns, Metrobus achieved the target of less than 60-minutes waiting time at breakdown point, which means the annual performance in terms of breakdowns is satisfactory.

Tariff adjustments The tariffs increased by only 9% in July 2003. The increase was in accordance with inflation for the period. Over the past few years only cash fares were increased and tag fares remained unchanged. For the first time since the tags were introduced in 2001, the price of tags increased to R35 per tag.

Optimal use of the subsidy Metrobus received a subsidy of R191 million from the City. If the CoJ continued to operate the bus company as a department, taking inflation into account from 2000 to 2003/04, the subsidy would have been R215 million. Corporatisation of Metrobus and the resulting efficiencies saved the CoJ R24 million.

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PLANS FOR 2004/05 Amongst others, the plans for the financial year 2004/05 include the following:

● Ensure sustainability of capacity through developing a long-term capital plan ● Achieve financial sustainability ● Develop and implement a Collective Bargaining Strategy ● Improve customer satisfaction and loyalty through increased reliability, measured in percentage of trips leaving starting point on time (within five minutes of schedule), as well as percentage of trips cancelled (including breakdowns) and percentage of breakdowns leaving passengers waiting ● Contributing to the inner city regeneration through the establishment of a route map with the inner city as the hub ● Promote the safety of passengers by allowing members of the SAPS, Metro Police and SANDF free travel passes

JOHANNESBURG FRESH PRODUCE MARKET The Johannesburg Fresh Produce Market (Pty) Limited (JFPM) is a national and international distribution centre that facilitates the exchange of fresh produce via registered market agents. Over 12 000 producers deliver fresh produce to the market to sell to over 5 000 buyers, closing in excess of 20 000 transactions daily. The average daily turnover is approximately R6 million or R1,8 billion per annum. Approximately 30 000 people visit the market on a daily basis, 40% of them being informal traders. The JFPM plays a crucial role in economic empowerment and poverty alleviation by offering opportunities to SMME producers.

KEY SERVICE DELIVERY AREAS AND CHALLENGES Floor trading provides an environment conducive to the trade in fresh produce in compliance with the market by-laws and the Agricultural Produce Agents Act. Fresh produce is delivered on consignment by farmers to market agents and sold to buyers via a negotiation process. Such price negotiations are based on the parameters of supply and demand, bearing in mind that the quality of the particular produce will also play a role.

Complementary services include those services in support of floor trading, such as cold storage, banana ripening facilities, a pallet pool and a trolley service. The cold storage and banana ripening services are utilised by the market agents for which they pay a fee. As the landlord of the facility, it is the JFPM’s responsibility to manage the site and to ensure that the lease agreements between the company and the tenants are well administered. In the drive to increase the demand for fresh produce, as well as providing quality services to customers, the JFPM established satellite operations, which are supplied from the JFPM.

124 Large retailers tend to prefer to source their fresh produce directly from producers. The JFPM is, however, wooing these valuable customers back to the market by addressing their key needs.

The Sales Processing System (a custom-written computerised trading system) lies at the heart of the trade in fresh produce at the JFPM. It is a 24-hour operation that tracks the fresh produce from entry into the market to point of sale.

PROGRAMME PERFORMANCE The key achievements of the JFPM, apart from a solid financial performance, included those described below.

The substantial improvement in the corporate image was boosted by several international delegations visiting the market and favourable media coverage. There has been significant engagement with corporate traders such as Spar and Score, as well as commercial producers such as Du Toit, ZZ2 and Montina to establish a staging depot.

JFPM is also supporting BEE traders to supply fresh produce to hospitals, prisons and schools around Gauteng. Value-added services are being improved through the upgrading of the cold storage, banana ripening facilities, pallet pool system and cash handling management systems. The operational efficiencies of the market were also improved through security, hygiene and cleanliness.

Despite experiencing 6,2% growth in mass, JFPM registered a growth of 3,8% in turnover (R68,7 million), with this year’s turnover being R1,855 billion. The JFPM performed better than the fresh produce markets industry in mass and turnover by 2,1% and 2%, respectively. Although the JFPM’s average price (Rand per ton of produce) declined by 2,2%, it still maintains the highest average price of all the country’s fresh produce markets at R2 135,83, while also performing better than the industry by 7,5%. In terms of market share, the JFPM now commands 31,9% and 34,2% of the fresh produce market’s market share for mass and turnover respectively.

Insofar as the profit before tax is concerned, JFPM achieved R19,5 million for the year (10,2%), while deteriorating on the previous financial year by R2,2 million. Furthermore EBITDA registered a growth of 36%, while the net profit exceeded the budget by 75%.

Although market research has not as yet been undertaken, it is reasonable to state that the JFPM’s image has improved substantially over the past year. International conferences, seminars and symposia arranged by various producer organisations had resulted in the introduction of the JFPM to global players in the fresh produce industry. International role players have expressed increased interest in the business, as evidenced by the number of delegations who visited the market, including Netherlands, Indonesia, Zimbabwe, Senegal, Kenya, Egypt, China, Israel, Malaysia and the United States of America. These delegations are particularly interested in two aspects of the business, namely the commission system, which is peculiar to this country, as well as the possibility of bilateral agreements in terms of the supply of produce in the off-season.

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Stakeholder relations remained at the forefront of the business strategy, which saw executive management engaging in meaningful discussions with the three major groupings, namely producers, market agents and buyers. Ongoing interaction and meetings are held on site with market agents and buyers.

It is the intention to expand the JFPM’s revenue base to ensure that it is not entirely dependent on the income generated via commission business for its sustainability. The expansion of the business into new income streams is crucial in ensuring that the company is not solely reliant on the commission sales floor trading for its income.

A quality control section is being established at the market through close interaction with the University of Pretoria and the Perishable Products Export Control Board (PPECB). This facility will ensure the opening up of a market to all producers to enable them to adhere to quality standards. The quality of the produce is also important for the export market.

PLANS FOR 2004/05 The JFPM intends to consolidate the major achievements that were attained in 2003/04. In addition, JFPM plans to introduce new innovations in order to make the enterprise internationally competitive. The major plans for 2004/05 include:

● Further improvement in operational efficiencies via the careful analysis of current processes and procedures and the drafting of clear standard operating procedures ● Drawing up of a property master plan that will facilitate the optimum utilisation of the site in terms of revenue growth ● Refurbishment of property with special emphasis on the three major fresh produce sales halls, while also bearing in mind the statutory requirements in terms of occupational health and safety ● Increasing awareness among the general public for food safety and quality standards is putting pressure on the market to deliver such standards of fresh produce. This will include the drafting of a comprehensive food safety manual, while working closely with the National Department of Agriculture in the implementation of produce quality standards ● Maximum and efficient utilisation of the Sales Processing System to ensure optimum business operations ● Poverty alleviation and job creation through implementation of systems to assist emerging producers, transporters and traders ● Increase the market share in terms of mass (currently 33%) and turnover (currently 34%)

126 ● Increase the average price (Rand per metric ton) ● Decrease its wastage (currently 1,2%) ● Management of profitability against budget (EBITDA)

127 Chapter 14 Inner city REVITALISING JOBURG REVITALISING

● Implementation of the Inner City Regeneration Strategy

● A total of 1 608 buildings were surveyed for compliance with by-laws

● The Nelson Mandela Bridge has become a major symbol of a revitalised Johannesburg

● Metro Mall caters for an estimated 150 000 taxi and bus commuters travelling in and out of the city on a daily basis

● Constitution Hill development created approximately 6 000 short-term construction jobs and 500 sustainable

Achievements long-term jobs

● The Drill Hall to be developed into another premier heritage and tourism site

128 REGENERATION IMPLEMENTATION

Councillor Sol Cowan

Councillor Sol Cowan is the Member of the Mayoral Committee responsible for the inner city. The inner city portfolio includes the overall management of the area and the implementation of the strategies specifically designed for regeneration of the area and other prioritised issues. In the implementation of these strategies the regional office plays a lead role. However, a host of other departments and UACs collaborate in the implementation, specifically in view of the inner city being one of the Mayoral Priorities. Participants in the collaborative efforts include the Johannesburg Development Agency, the Economic Development Unit, Development Planning, Transportation and Environment, Johannesburg Metropolitan Police Department, Emergency Management Services, Pikitup, Joburg Water and City Power.

Johannesburg’s inner city is home to a diversity of businesses, as well as the hub of the transportation network, world-class theatres, the University of the Witwatersrand and other education and training institutions. On an average day an estimated one million people may be found in the city. More than 800 000 of these are people commuting to the city, which contributes to the area being a vibrant economic hub. Research commissioned by CoJ suggests that the inner city contributes significantly to the Gross Domestic Product (GDP) and the Regional Domestic Product. Furthermore, the inner city also provides an estimated 12% of national employment. The vast capital investment and significant public and private infrastructure is valued at R30 billion, with capital investment in housing estimated to be in excess of R1,2 billion.

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The above clearly highlights why the importance of the inner city cannot be over emphasised. Johannesburg, like many major cities worldwide, has long been grappling with the problems presented by the phenomenon of urban flight from the city centres. A similar situation occurred in the inner city in the mid-60s when the city centre started to experience decline and decentralisation became a reality. Contributing factors were:

● High land values and rentals in the traditional CBD ● Congestion, lack of parking and the restructuring of the office spaces leading to an increased demand for office parks and the development of suburban shopping malls ● The process intensified in the late 80s and accelerated in the 90s and problems of crime and grime, unregulated street trading and inadequate facilities for taxis started to manifest ● More symptoms of urban decay filtered into the inner city, resulting in vacant or badly maintained buildings, squatting, illegal conversions, overcrowding and a poorly serviced, maintained and managed public environment

The serious implication of this process over a period of three decades resulted in a decrease in the rates base of the inner city by at least 50% and the steady decline of property values. Despite these negative factors there are significant inherent strengths in the inner city, namely the centrality of location, the transport infrastructure and low rentals at this point in time. The current property prices also offer significant competitive advantages to business investors. Development of these strengths, together with the emphasis on regeneration projects, already created a positive impact, and some evidence of change is tangible. Evidence in this respect includes, amongst others, private sector investment, stabilisation of vacancy rates and improved management of the public environment.

KEY SERVICE DELIVERY AREAS AND CHALLENGES The City of Johannesburg has launched and begun implementing the Inner City Regeneration Strategy to address degeneration, the diversity of living and working conditions, and to reinstate the inner city as a thriving and bustling economic area. The strategy consists of five pillars, briefly described below.

● The first pillar is aimed at addressing ‘sinkholes’, namely properties regarded as slums, abandoned properties and ones that are overcrowded or poorly maintained. ● The second pillar is aimed at intensive urban management through the enforcement of by-laws, implementing sound credit control mechanisms and the management of taxis and informal trading in the city.

130 ● The third pillar is aimed at the upgrading and maintenance of infrastructure in the city. ● The fourth and fifth pillars are aimed at providing support to different sectors that will grow and thrive in the inner city and encourage investment (‘ripple- pond’ effect).

The inner city is also involved in providing the full ambit of regional services to citizens, including library, sports, recreation, social and health services. Furthermore, the goal of the regeneration effort in the inner city is to raise and sustain private investment to lead to a steady rise in property values. The main objectives necessary to achieve these goals are discussed below.

Address ‘sinkhole’ properties Several of these ‘sinkhole’ properties are owned by the public sector and neglected. These properties are used for illegal or unsuitable purposes (shebeens and clubs in inappropriate places, prostitution, drugs, sweatshops, panel beaters in residential areas, etc.).

Undertake intensive urban management Intensive urban management implies focused efforts to ensure effective by-law enforcement, management of informal trading, regular or improved delivery of services by the utilities and maintenance of the public realm. Private sector initiatives include the City Improvement District programme and CCTV surveillance, while public-led efforts include the work of the Inner City Task Force.

Maintain and upgrade infrastructure This objective relates primarily to the maintenance and improvement of service delivery infrastructure, including roads, street signs and robots, water, sanitation, power networks and waste collection points. This is primarily a function of the CoJ’s utility companies.

Promote ‘ripple-pond’ investments ‘Ripple-ponds’ are catalytic, concerted investments in property that create confidence for further investment in adjacent areas. These investments refer to public, private or public-private partnerships. Examples include Braamfontein, Metro Mall, Constitution Hill and the Newtown Cultural Precinct. A specific requirement to make a ‘ripple-pond’ investment effective is the support of the City and its partners to ensure that the environment immediately surrounding the investment is particularly well managed. Failing to do this may well negate the value of the initial investment.

Support economic sectors This entails careful assessment of those areas of economic activity that are of current or potential importance to the Gross Geographic Product of the inner city, followed by the design and implementation of carefully crafted interventions to promote and assist growth and development. These actions are usually a combination of public and private initiatives, e.g. the ‘Open for Business’ support centre for SMMEs and the Fashion District.

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PROGRAMME PERFORMANCE Addressing sinkholes In order to support the first pillar of the Inner City Regeneration Strategy, the inner city embarked on a campaign to identify and prosecute those citizens contravening building by-laws, particularly in the areas of Hillbrow and the CBD (Berea, Bree Street, Plein Street and Wolmarans Street). In addition, 1 608 buildings were surveyed for compliance with by-laws. Through the concerted and coordinated efforts of the Inner City Task Force in ensuring the effective and efficient submission of evidence, a substantial number of judgements in favour of the City were passed.

As an extension of this campaign, the City has also taken remedial action to upgrade inner city buildings in terms of the Better Building Framework. The objective of the Better Buildings Programme (BBP) is to facilitate the regeneration of the inner city and to improve the quality of life for both residents and visitors. It is also geared towards attracting investment in the city. The programme focuses on transforming ‘bad buildings1’ to a state where these buildings are renovated, well maintained, professionally managed and properly tenanted, with responsible ownership that has a long-term commitment to maintaining acceptable standards. At present the programme deals exclusively with inner city problem buildings, but will expand into surrounding areas in the future. Currently 52 buildings are on the programme, several of which have already been earmarked for development. The BBP team is investigating a further 90 buildings for inclusion on the programme. Furthermore, through the targeted multi- disciplinary task force, 42 clean-up operations were effected over the past year to address dilapidated buildings and buildings posing a health risk.

The ‘Joubert Park Clean-up Project’ was successfully launched to address one of the worst ‘sinkholes’ in the inner city. Joubert Park, housing the Johannesburg Art Gallery, is the inner city’s main park and green space, but has become dilapidated and destroyed over the years through uncontrolled informal trading and unmanaged taxis. A multidisciplinary task team and City companies including, amongst others, the JMPD, City Parks, Planning and MTC, collaborated to address the above challenges and to transform the park. The project is in the final stages and has thus far started to develop into a clean and safe environment. The success of this project will be a feather in the cap of those responsible for the implementation of programmes related to regeneration and the Inner City Strategy. 1 The term ‘bad building’ refers to buildings: ● Where owners owe large amounts in arrear service charges and/or; ● Which owners have abandoned and/or; ● Which are derelict, overcrowded and in a dilapidated/deplorable state and/or; ● Which are invaded by squatters and/or; ● Which are used for criminal activity.

132 The installation of 200 state-of-the-art surveillance cameras contributed to a drastic decrease in crime levels. Property owners joined forces and established City Improvement Districts (CIDs). They initiated programmes where several business owners take charge of security and cleaning. More than 67 blocks in the inner city have been incorporated into CIDs.

Ensuring ‘Inner City Turnaround’ In order to support the ‘Inner City Turnaround’, a business plan, detailing actions to be taken, was approved by the Mayoral Committee. The development of the business plan marks a positive step in the City’s realisation of the ‘Inner City Turnaround’ projects. The region designed an institutional plan for capacitating the inner city office to support the implementation of the ‘Inner City Turnaround’. This signals a positive move on the part of the region to ‘give life’ to the business plan through the employment of dedicated and competent personnel to carry out the objectives of the plan.

JDA’s inner city regeneration portfolio Various projects were undertaken under the auspices of the JDA (who reports to the MMC for finance). A number of these projects were initiated in previous financial years and as such serve as indicators of progress and performance.

Newtown Newtown is becoming the creative capital of Johannesburg and South Africa. It is a progressive environment and a dynamic, vibrant, sophisticated and cosmopolitan area. Investors are increasingly interested in the area. This is reflected in an increase in the rate of new developments and the refurbishment of properties. The number of both local and international visitors to Newtown has also increased. This positive development could be ascribed to the growth in the cultural variety on offer and the fact that the public environment, safety and access issues have been satisfactorily addressed.

Other major developments during the year included the opening of the Nelson Mandela Bridge. This significant transport infrastructure is fast becoming a major symbol of a revitalised Johannesburg.

Another improvement to the area is the Metro Mall Development. This development is situated at the north end of Newtown near the Queen Elizabeth Bridge and signifies one of the biggest taxi and bus interchanges in Johannesburg. Currently it caters for an estimated 150 000 taxi and bus commuters travelling into and out of the City every day. The Metro Mall also accommodates safe and convenient trading facilities for 600 informal traders in the 3 000 square metres of formal retail space.

The aim is to turn the Greater Newtown Cultural Quarter into a creative destination and cultural hub between 2003 and 2006. The area is gearing up to become the destination of choice for anyone interested in experiencing dynamic cultural activities. In addition, the focus is to establish this area as the desired location in which the creative industries can establish their operations and do

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business. To achieve this, the City has developed a focused cultural programme that will attract attention to Newtown and build the profile of the area.

In just one year, two projects were implemented to promote the concept of a cultural hub. The first was the opening of Moyo’s Restaurant at the Market Theatre. This celebrated restaurant not only provides the area with a high quality eatery, but it also provides a cultural experience that adds to the ambience of Newtown itself.

The second was the start of the Brickfields Housing Development. Although this development is still under construction, by the time it is completed it will easily and comfortably house 2 200 families. In so doing, the Brickfields Housing Development will contribute towards the growing urban residential lifestyle of the inner city.

Plans for the year ahead are in progress. This includes the process of developing Newtown’s infrastructure, involving the redevelopment of the Mary Fitzgerald Square and the completion of the Nelson Mandela Bridge and associated M1 Carr Street interchange. A development and tenanting strategy was designed to bring new investors and tenants into the Newtown area. A new development named ‘Number 1 Central Place’ is already on the cards. This development is planned as a greenfield office and retail development that will span three stories and boast a 60-seat auditorium on the ground floor. It is designed to be both secure and safe, but at the same time accessible to the public. If all goes according to plan, the development should be completed by May 2005. In fact, the Gauteng Tourism Authority has already been contracted as the first major tenant for ‘Number 1 Central Place’. They will be relocating from Rosebank to take up a 10- year lease on 1 May 2005.

Constitution Hill The Constitution Hill development is a unique mixed-use development located between Braamfontein and Hillbrow. The development is one of the major inner city regeneration projects and it is anticipated that it will contribute to economic, social and cultural upliftment. The development will provide facilities on par with other major world-class cities. Further to this, it will create approximately 6 000 short-term construction jobs and 500 sustainable long-term jobs, generate business opportunities, promote tourism to the city, contribute to regeneration in surrounding areas, as well as improve the City’s rates base.

Constitution Hill comprises 95 000 square metres of publicly owned land and hosts important heritage buildings, notably the Old Fort, Sections 4 and 5 (‘Native

134 Gaol’) and the Women’s Prison. The aim is to develop the new Constitutional Court of South Africa, accommodation for the Constitutional Commissions and other related commercial, retail and hospitality activities in 36 000 square metres of commercial space. In addition, the project will create and sustain 1 860 basement parking bays, bus and taxi holdings and drop-off facilities, upgraded peripheral roads and internal streets, a visitors’ information and exhibition centre, new museums and related heritage and tourism activities, approximately 200 rental housing units, community facilities and recreation space.

A year ago Constitution Hill was to most an unknown, invisible and an unacknowledged place. The site’s history of injustice and brutality remains to be told. When completed, this site will be the home of the Law of the Constitution, a place where human rights for every South African citizen will be guaranteed. At the same time this heritage site will be an internationally important symbol of the new South Africa, born by the political process, but now independent of it.

Today numerous visitors, both local and international alike, are astounded at the eloquence of Constitution Hill. The State President was inaugurated in the new Constitutional Court in front of an international audience of jurists and other dignitaries. This ceremony also formed part of the country’s ten years of freedom and democracy celebrations.

Generous investment by philanthropic organisations related to the heritage education and tourism aspects of this development were made by the Ford Foundation, the Mott Foundation, the Kellogg Foundation, the Open Society Foundation and CWCI. These investments were particularly valuable when the site was prepared to start receiving visitors.

Braamfontein The conceptual link with artistic interventions between Constitution Hill and Newtown, via Braamfontein, is referred to as the Cultural Arc and will form the centre of the ‘knowledge economy’ of Johannesburg. The total cost of the Braamfontein development will be R27,5 million and will be completed at the end of 2005. Global corporations such as Sappi, Liberty Life, JD Group and Apex High showed their commitment to urban renewal and have played an active role in upgrading the Braamfontein environment. Sappi provided additional parking bays at the Civic Theatre and was responsible for maintaining the park in front of the theatre. Sappi invested R150 million in the area.

The study area is surrounded by the Braamfontein ridge and Hoofd Street in the north, Joubert Street Extension in the east, the railway yards and Smit Street in the south and the M1 highway and the University of the Witwatersrand campuses to the west.

Currently the declining vacancy rates for A and B grade commercial space has ensured that Braamfontein remains competitive compared to the rest of the city. This is a clear indication that the area has enormous untapped potential. The potential for the tourism sector remains equally attractive. Braamfontein is at the centre of the Cultural Arc and home to the Johannesburg Civic Theatre, South African Ballet Theatre Company, Devonshire Hotel and the Parktonian All Suite Hotel, which also offer conference facilities.

135 Chapter 14 Inner city

The goal of the Braamfontein Development is to create an attractive, well- managed, accessible, mixed-use district. In the year in review, the Sappi Piazza and global corporate headquarters upgrades were completed and new Liberty Life and JD Group Parkades created safe and convenient parking in the area. Extensive public environment upgrades in large parts of Braamfontein were also completed.

Hillbrow Health Precinct The Hillbrow Health Precinct (HHP), immediately adjacent to Constitution Hill, offers the potential to develop, through a partnership between the City, the Gauteng Provincial Government and the University of the Witwatersrand, a Centre of Excellence in the provision of primary health care and the services related to the treatment of HIV and AIDS.

Fashion District It is the home of the garment industry and can be found east of the CBD surrounded by Jeppe Street (north), End Street (east), Market Street (south) and Von Wielligh Street (west).

Johannesburg’s fashion industry historically competed in the narrow buyer-driven clothing market, supplying major South African retailers. Without the efficiencies required to compete against high-production, low-quality international suppliers, this market has proven unproductive. However, the Fashion District provides solutions and should become an area specialising in value-added design and manufacturing in niche products and markets. The Fashion District is about a new vision, focusing on specialist local, regional and even international markets.

The aims for the Fashion District are clear. Focused objectives include increasing the rates base, retention of jobs and creating new employment opportunities. New investment in the area will increase business opportunities and improve turnover for business already in operation. A drive to brand the district as ‘The Urban Edge of African Fashion’ aims to attract national and international tourism to the area and stimulate more cross-border trade. By developing the Fashion District into the preferred area for the fashion industry and related businesses, it will become a hub for economic growth, one that is sustainable, viable and functional.

Improvements to the public open spaces have made the area more pleasing for workers, commuters and visitors. Attractive improvements include mosaic-tiled pavements and distinctive gateways at major road entry points. These changes make the area more enticing for lifestyle-related businesses that fit in with fashion, attracting DJ bars, restaurants, decor and other similar enterprises to the area.

136 The pace of development has been dynamic and it is anticipated that by 2007 the transformation should be completed. In the interim, a business support programme was established to provide bridging support to fashion operators in the area. A market linkage service was also established to improve market access for both designers and operators. A private sector partner developed ‘Sew Africa’, an innovative fashion design incubator and retail facility, providing workspace and support services for designers. Last, but not least, the Department of Trade and Industry has employed a quality expert to provide training and systems development knowledge to businesses in the area.

Faraday Station Precinct This area is located in the south-eastern part of the city and showed signs of decay. It houses a large number of informal taxi ranks, bus ranks and serves a significant number of daily commuters. The area is currently also home to a major traditional muti-market whose tourism potential is untapped. A total of R41,4 million was spent on the now completed development, which included the development and expansion of existing taxi ranks and the provision of a large well-managed market, which includes taxi repair facilities, restaurants, housing and formal retail.

Jeppestown The taxi rank and informal trading areas were completed at a cost of R10 million and is operational.

Drill Hall The Drill Hall is located in the inner city, bordered by Plein, Twist, De Villiers and Quartz Streets. The aim of the development is to create it into another premier City heritage and tourism site. The Drill Hall has an interesting past as it was the place where many South Africans were dispatched to World War Campaigns, young conscripts were sent to serve their compulsory army service from here and it was home to the first Rivonia Trial before it was relocated to Pretoria. Recently it fell into decay and became home to hundreds of homeless people.

The Drill Hall focus is on restoring and developing an area of historical significance, creating open public space and exhibition spaces. The building was reopened on 11 June 2004 in a ceremony led by Johannesburg’s Executive Mayor, Councillor Amos Masondo.

The Drill Hall has been remarkably restored and the history spectacularly conserved. The project’s architect received a merit award from the Architecture South Africa Journal for his concept and design.

The Joubert Park Project, an inner city arts initiative located at Drill Hall, will be developing the programme of events and activating the different public spaces with exhibitions that tell the story of Drill Hall and surroundings. Innovative and creative methods, as well as the use of local artists, mean that the Drill Hall will achieve yet another milestone. The Joubert Park Project will also ensure that learners from far and wide will visit this site and learn about the City’s heritage.

137 Chapter 14 Inner city

Greater Ellis Park Greater Ellis Park consists of Doornfontein, New Doornfontein, the Ellis Park Sports Precinct, Bertrams, Judith’s Paarl, Lorentzville and parts of Bez Valley and Troyeville. The area is home to world-class sports facilities, such as the Johannesburg Athletics Stadium, the Standard Bank Arena, the Olympic-size Swimming Pool and the Ellis Park Rugby Stadium. As such it offers unique opportunities for living, work, play and entertainment. The major objective of the development, in respect of which business planning has been completed, is to regenerate Greater Ellis Park into a sustainable and integrated world-class sports and education mecca, a place providing opportunities for major sports events and sports education, as well as creating jobs, entertainment and tourism opportunities.

Rockey-Raleigh-High Street area The Rockey-Raleigh-High Street area has the potential to be the main commercial, retail and entertainment spine for the Yeoville, Bellevue and Bellevue East suburban areas. The development, in respect of which business planning is complete, focuses in the short term on getting the basics right so as to provide an environment for public and private sector investment in the area.

Improving customer service The region has also made vast strides with respect to customer service. At the close of the financial year, the region resolved 98,3% of all complaints logged through Joburg Connect. In addition, the region progressed in improving citizens’ awareness of the region’s people centre, showing a 13% increase in awareness from January 2003. Such an increase bodes well for ensuring that those citizens who work or reside in the area have a greater awareness of the city’s points of access and therefore are able to seize the opportunity to utilise the services it offers.

PLANS FOR 2004/05 In moving forward, the following are some of the activities that have been committed to in the drive to enhance the state of the inner city to serve and to continue the work undertaken over the past period.

● The enhancement of urban management through actions such as implementing sound credit control measures and by-law enforcement (e.g. through continued surveying of a target of 1 000 buildings in terms of compliance with by-laws) and establishing a transitional shelter ● Ongoing redress of ‘sinkholes’ through actions that will ensure successful prosecutions in relation to unsafe or non-compliant buildings and illegal

138 building usage, ongoing implementation of the BBP and implementation of the Joubert Park Pilot programme ● Coordination and monitoring of the maintenance and upgrading of the inner city infrastructure ● Increased customer satisfaction to be assessed through measures such as the percentage of customer complaints resolved and the number of customers attended to

139 Chapter 15 Conclusion GOOD GOVERNANCE

The 2003/04 Annual Report demonstrates that key strides have been made over the last year in service delivery and good governance. However, a number of challenges persist for the City of Johannesburg.

These challenges, which provide the basis for planning for the 2004/05 financial year, were defined at the Budget Lekgotla, held in October 2004. A number of points emerged which highlight the underlying approach that the City has adopted to address challenges that it confronts:

a) Deepening local democracy: Ensure good governance and enhance community consultation and participation in its work.

b) Developmental local government: Ensure social and economic development.

c) Political and managerial leadership: Councillors and officials alike are charged with the responsibility to provide leadership to communities and institutions of the City.

d) Speed up service delivery: Ensure accelerated delivery of services since policies and institutions are firmly in place.

e) Integrated approach: Ensure integrated approach, across the different spheres, in conjunction with adjacent municipalities and internally within the municipality, in relation to development.

The achievements made by the City were noted at the Lekgotla and the meeting also identified specific challenges to be addressed for the following financial year.

Insignificant economic growth and a growing population can lead to an unsustainable financial situation in the future. Therefore economic growth needs to keep pace with population growth. In this regard the City will harness its resources within the ambit of the Expanded Public Works Programme (EPWP) in order to ensure that its capital budget is spent within a framework favourable to job creation. This is one of the City’s key interventions for promoting job creation.

One major threat to efficient and continuous service delivery to residents of the City of Johannesburg is rapid migration and urbanisation. This rapid migration and unplanned urbanisation poses significant challenges to urban management and overall spatial development planning. In addition, it places huge burdens on the municipality. In subsequent years the city will have to continue its focus on providing basic services, but also ensure commitment to upgrading and maintenance of existing infrastructure.

140 SERVICE DELIVERY

Poverty is one of the key hindrances to advancing human development. In this regard the City needs to consolidate its programmes within a clearly defined human developed strategy that is linked and integrated to interventions with other spheres of government.

Customer satisfaction levels (measured by the City’s Customer Satisfaction Survey) have improved in some areas, but there are still concerns in other areas.

As an ongoing challenge the City urgently needs to ensure effective application of credit control mechanisms to enable financial sustainability. Sustainable service delivery will occur once the City’s administration radically improves on its revenue collection. This will require strategic interventions to be implemented over the medium to long term. In the short term a number of operational improvements are being implemented, which include improvement to query resolution, finalisation of accounts, clearances and refunds, data cleansing, improving internal control and the successful functioning of the RSSC.

Lack of coherent, multidisciplinary and separate departmental by-law enforcement approaches pose a serious threat to the City. Effective by-law enforcement and overall management of the City’s Safety Strategy will go a long way in creating a safe city.

The Operation Clean Audit Report project will continue to progress toward the citywide goal of a ‘qualified’ audit opinion by 30 June 2005. To address the two main shortcomings, completeness of revenue and fixed asset register, identified by the Auditor-General, the City has made substantial progress. On confirming the completeness of revenue the City will put in place an ongoing reconciliation between the valuation roll and the City’s billing system, thereby eliminating the discrepancies between the databases. On the fixed asset register, the City will ensure that the completeness, existence and valuation of fixed assets includes the verification of vacant and improved City-owned properties, and the valuation and recording of improvements to fixed assets will be completed.

These issues pose critical challenges to service delivery and sustainability of the City, which subsequent IDPs will continue to address.

141 Appendix 1

REPORT OF THE AUDITOR-GENERAL TO THE COUNCIL ON PERFORMANCE MEASUREMENT AT THE CITY OF JOHANNESBURG METROPOLITAN MUNICIPALITY FOR THE YEAR ENDED 30 JUNE 2004 1. ASSIGNMENT The compilation, presentation and publishing of performance measurements [as included on pages 1 to 155 of this annual report] and the implementation, management and internal control of supporting systems, are the responsibility of the city manager.

My responsibility is to provide an assessment of the controls implemented by the city manager to develop and manage the municipality’s performance management system as required by section 45(b) of the Local Government: Municipal Systems Act, 2000 (Act No. 32 of 2000).

My role is not to assess or comment on the municipality’s actual performance, but rather to assess the processes followed during the implementation of the performance management system.

2. NATURE AND SCOPE I have performed the procedures agreed with management and described below regarding the performance management system of the City of Johannesburg Metropolitan Municipality (Municipality). The assignment was undertaken in accordance with the Statements of South African Auditing Standards applicable to agreed upon procedures engagements.

The responsibility of determining the adequacy or otherwise of the procedures agreed to be performed is that of Municipality. My procedures were performed solely to evaluate the controls implemented by the city manager regarding the municipality’s performance management system against the criteria set out in:

● chapter 6 of the Municipal Systems Act, 2000; ● the Local Government: Municipal Planning and Performance Management Regulations, 2001 (No. R. 796); and ● international good practices,

so as to report on the applicable compliance with legislation and to assist in identifying possible areas for improvement.

The scope of this report does not extend to the Municipality’s Utilities, Agencies and Corporatised Entities.

142 The procedures performed during our assignment were based on the feedback received from the completion of the high-level overview checklist by the city manager and included a review of the following aspects:

● Development of an integrated development plan ● Development of a performance management system ● Development and implementation of key performance indicators ● Setting of targets for key performance indicators ● Actual service delivery process ● Internal monitoring of performance measurements ● Internal control of the performance management system ● Performance measurement and reporting ● Revision of strategies and objectives

3. FINDINGS The following matters were identified:

3.1 Development of an integrated development plan A formalised process for the development of the five year integrated development plan (IDP) was adopted in the 2002/2003 financial year. For the period under review, annual amendments to the 2002/2003 IDP were made in accordance with the legal requirements.

3.2 Development of a performance management system The Municipality has an approved development framework which was adopted in the previous period ending 30 June 2003. During the current period the Municipality reviewed its performance management system, in consultation with the public and other stakeholders. Regular meetings to monitor the review of the performance management system were held.

3.3 Development and implementation of key performance indicators The Municipality’s key performance indicators (KPI’s) were reviewed according to the process prescribed by the performance management system. This included the amendments made as a result of the revision in the previous year to the KPI’s.

3.4 Setting of targets for key performance indicators A review of the key performance indicators was performed, taking into account the amendments made to the KPI’s in the previous year. Targets were set for each of the performance indicators.

3.5 Actual service delivery process The Municipality has an electronic system for tracking and monitoring the performance of both its service providers and employees. Designated

143 Appendix 1

officials are tasked to continuously monitor the performance of all the major service providers to ensure adherence to the respective service level agreements. Progress is reported on a weekly as well as quarterly basis, however the effectiveness of this system was not verified.

3.6 Internal monitoring of performance measurements The Municipality carried out a review of staff in the form of staff coaching on a quarterly basis and staff reviews in December and June.

However, reporting to Council was only done once a year as opposed to the requirement of Regulation 13 of the Local Government: Municipal Planning and Performance Management Regulations, 2001, to report at least twice per annum.

3.7 Internal control of the performance management system According to management, the Municipality currently utilises the Performance Management and Remuneration Panel as its Performance Audit Committee.

Based on a review of the minutes of the Performance Management and Remuneration Panel, the performance of the Municipality was monitored and evaluated based on the progress made by the City Manager in achieving the targets as set in the City Manager’s performance scorecard.

Although the IDP was used as basis in developing the City Manager’s scorecard, no assurance could be obtained to indicate that the Performance Management and Remuneration Panel was mandated to perform any of the performance management duties required by Regulation 14 of the Local Government: Municipal Planning and Performance management Regulations, 2001.

3.8 Performance measurement and reporting In terms of Regulation 14(1)(b) of the Local Government: Municipal Planning and Performance management Regulation, 2001, the review of performance management by internal audit should include an assessment of the following: i. The functionality of the municipality’s performance management system; ii. The compliance of the performance management system with the Systems Act; iii. The extent to which the performance measurements are reliable in measuring the performance of the municipality against the KPI’s.

144 However, due to the performance management system not being identified as a high-risk area in terms of the risk assessment process adopted by the internal audit function, no specific review of the performance management system, as required by Regulation 14(1)(b), was undertaken.

Furthermore, the value adding guideline issued by the Department of Provincial and Local Government recommends the use of benchmarking as one of the methods for the revision of strategies and objectives, which includes evaluating the following;

● Whether there are other similar municipalities or organisations delivering the same services? ● Whether such other municipalities are doing it better in terms of economy, efficiency, effectiveness and impact?

The review of the municipality’s performance currently does not include the use of this framework principle of comparison by way of benchmarking.

3.9 Revision of strategies and objectives Strategies and objectives were amended and an amended IDP was prepared for 2004/05.

4. CONCLUSION Because the above procedures do not constitute either an audit or a review made in accordance with Statements of South African Auditing Standards, I do not express any assurance on any performance measurement as at 30 June 2004.

An audit of the financial statements in accordance with statements of South African Auditing Standards was concluded and a report to this effect was included in the annual report.

This report relates only to the specific phases of the performance management system as specified above, and does not extend to any financial statements of the Municipality, taken as a whole.

5. APPRECIATION The assistance rendered by the staff of the Municipality during the assignment is sincerely appreciated.

SA FAKIE Auditor-General Johannesburg 11 March 2005

145 Appendix 2

ACCOUNTING OFFICER’S ASSESSMENT INTRODUCTION This chapter provides assessments by the City Manager as required in terms of section 121 (3) (e) and (f) of the Municipal Finance Management Act (No. 56 of 2003).

These sections require an assessment by the accounting officer of any arrears on municipal taxes and service charges (section 121 (3) (e)) and of the Municipality’s performance against performance objectives for revenue collection from each revenue source (section 121 (3) (f)).

These are dealt with in turn in the following sections.

ARREARS Although collection performance was relatively good by historical standards, the City’s total arrears for rates and services increased by R954 million (16,4%) during the financial year (inclusive of UACs).

SUMMARY AGE ANALYSIS (R‘000)

Total 0-30 days Arrears June 2003 6 186 340 5 846 June 2004 7 129 329 6 800 Increase 943 -11 954

In order to deal with the debtors book, the City adopted a new credit control policy during August 2004 and a bylaw based upon this new policy will be effected in 2005. The new policy is more flexible and provides for a range of tougher measures to improve collections performance.

Irrecoverable debts are currently being systematically written off, and proposals to sell part of the debtors book are currently being considered.

REVENUE PERFORMANCE PER REVENUE SOURCE The City’s revenue collection performance was approximately 1,4% above target. The table below sets out billing and collection data for the City as a whole, including the UACs. Comments on each revenue source are provided below.

146 Annual billing and collections Target Actual Receipts Receipts as a % of as a % of Description Billing Receipts billing Billing Receipts billing R000 R000 Annual R000 R000 Annual Assessment rates 2 793 782 2 371 780 84,9 2 936 200 2 855 162 97,2 Water and sewage 2 441 427 2 029 240 83,1 2 774 711 2 232 459 80,5 Electricity 3 495 462 3 340 350 95,6 3,190,320 3 046 149 95,5 Refuse 405 710 278 820 68,7 443 487 301 632 68,0 Total: services 8 816 381 7 805 190 88,5 9 344 718 8 435 402 90,3 RSC Levies 1 600 000 1 600 000 100,0 1 550 922 1 550 922 100,0 City of Johannesburg 10 416 381 9 405 190 90,3 10 895 640 9 986 324 91,7

Assessment rates: The collection rate was 12,3% above target due mainly to the arrear collections and the positive allocation of arrear unidentified receipts.

Water and sanitation: The collection rate was 2,6% below target due to higher than targeted billings. Collections were higher than anticipated due to active interaction and settlement agreements with customers but were not sufficient to cover the increased billings.

Electricity: The collection rate was 0,1% below target. Collections for the year were high due to active interaction and settlement agreements with customers.

Refuse removal: The collection rate was 0,7% below target due mainly to arrear billing adjustments.

RSC levies: The collections were below target due mainly to a VAT adjustment for which a refund is awaited.

PERFORMANCE OF EACH VOTE OF THE BUDGET EXPENDITURE Variance reporting on the performance core Office of the Executive Mayor and City Manager, Ward Councillor Support, People Centres and Support Services

The main items contributing to the overexpenditure in the above is as a result of depreciation and the printing of minutes and agendas. In terms of GAMAP the net effect of depreciation will not affect the bottom line of Core Administration

147 Appendix 2

as the depreciation on assets that was previously financed by grants is now offset against the bottom line. The expense will still be shown on the Statements of Financial Performance, but then reversed against the future depreciation reserve in the Statement of Changes in Community Wealth.

Contract Management Unit There was additional income in the form of rental of facilities by (R8,2 million), other revenues (R6,8 million) and gains on the disposal of assets (R16,4 million). The income on the rental of properties was higher than expected, other revenues are mainly as a result of a fuel rebate received in terms of the Africa Fleet contract and gains on the disposal of assets (R16,4 million) resulted mainly due to land sales by the Property Company.

The overexpenditure in the Contract Management Unit is as a result of depreciation (R99,8 million) and the additional subsidy provision for Johannesburg Water (R200 million). The net effect of depreciation will not affect the bottom line of Core Administration as the depreciation on assets that was previously financed by grants is offset against the bottom line. The expense will still be shown on the Statements of Financial Performance, but then reversed against the future depreciation reserve in the Statement of Changes in Community Wealth.

The additional subsidy to Johannesburg Water was given to address the under- provision of bad debts. The payment levels for customers managed by the Revenue Management Unit were forecast at 85% as per the 2003/04 business plan. After an audit the payment level was determined to be around 69%, leaving a gap in excess of R320 million. A turnaround strategy to make Johannesburg Water more financially stable in the long term has been approved and it is now focusing on the two major areas that are generating losses namely unaccounted-for water and the low payment levels.

Finance and Economic Development The main items that contributed to the favourable income position are:

● Property rates (R41,6 million) and penalties imposed (R75,4 million) that is higher than originally anticipated. ● Service charges (R17,3 million). ● Regional services levies (R71,5 million) – this is mainly as a result of the correct accrual of income in terms of GAMAP. ● Interest earned (R166,9 million) – this amount is mainly in respect of interest earned on cash and ring-fenced investments (sinking funds where the interest is capitalised) that will be used to offset long-term loans as and when they mature. ● Write-off of creditors (unknown) older than three years (R67,2 million)

148 The main items contributing to the overexpenditure in the Finance and Economic Development Department are the following:

● Provision for bad debts (R63,1 million) – the final entries for the provision of bad debts had not yet been passed on the financial ledger when this report was prepared. In terms of the bad debt policy an amount of approximately R430 million still needs to be reversed due to the overprovision of bad debts in previous financial years. ● Interest on external loans (R54,9 million) – this amount is higher than expected, however it is anticipated that the total cost of loans will reduce over the next two financial years due to the issuing of Council bonds. ● Contracted services (R36,9 million) – the main reasons for this overexpenditure is due to revenue improvement projects, appointment of contract workers to deal with the long waiting period of resolving problems/queries on customers’ accounts and the increase in credit control measures. ● Bond issuance (R11,3 million) and the early settlement of old loans (R50,6 million) – this overexpenditure will be recovered over the next three financial years due to the savings that will be effected on the cost of loans. The proceeds of the first bond were mainly used to redeem old expensive loans. ● Internal charges to the UACs (R72,4 million) – this amount is in respect of interest paid to the UACs. Treasury sweeps the cash of the various UACs on a daily basis into a central account for operational purposes and interest earned on this cash is then paid over to the UACs.

Corporate Services The variance on income is due to internal insurance charges (COID) to the UACs and the Core Administration. Previously, these charges were reflected under salaries and allowances and now, in terms of GAMAP, these charges must be reflected as internal transfers.

The provision for staff leave for all the various departments centrally (R106,4 million) and on insurance: COID claims (R9 million) contributed to the overexpenditure. Previously COID charges were reflected under salaries and allowances and now, in terms of GAMAP, these charges must be reflected as internal transfers. This overexpenditure is offset against additional income as reflected in the income of Corporate Services.

Development Planning, Transportation and Environment The income for service charges (mainly for building plans) is approximately R9,6 million more than budget and is approximately 32% more than the previous financial year. Operating and capital grants is over by R7,9 million. Previously capital grants received from Gauteng province and National Treasury was not reflected in the income statement of Core Administration. In terms of GAMAP these grants must now be reflected in the income statement.

Emergency Management Services The additional income is mainly as a result of the increase of the ambulance subsidy by Gauteng province.

EMS has received 40 new ambulances during November 2003 that are funded by Gauteng Province. This overexpenditure is offset against the additional subsidy received from Gauteng province.

149 Appendix 2

Metropolitan Police Department The main items that contributed to the favourable position are traffic fines (R23,3 million) and licence fees (R7 million).

Social Development and Housing Operating and capital grants is over by R157,2 million. Previously capital grants received from Gauteng province and National Treasury was not reflected in the income statement of Core Administration. Now, in terms of GAMAP, this income must be reflected in the income statement.

Variance reporting on the performance of the UACs City Power, Johannesburg Revenue is below budget due to lower than expected revenues from the domestic customer base. The credit adjustment of approximately R20 million was made to the top demand customers as a consequence of the NER rejecting prior year tariff increases.

The main reason for the increase in expenditure is the increase in the bad debt provision as well as the increase in depreciation on the Midrand assets transferred to City Power, Johannesburg.

Johannesburg Water The CoJ provided a subsidy to Johannesburg Water for the interest charges on the shareholder and conduit mirror loans. A number of initiatives were completed during the financial year. The main initiative was improving the billing of customers managed by the CoJ. This included the identification of customers not billed, addressing backlogs and the poor level of meter reading in certain areas, installation of pre-paid meters and the fixing of water leaks (Gcin’amanzi project in Soweto).

The following are the most significant of the initiatives:

● Transfer of the management of meter reading in the Sandton area to Johannesburg Water in October 2003. The number of meter readings increased from 72% to 80% in the second quarter of the financial year. ● Transfer of the management of meter reading in the Midrand and West Rand areas in February 2004, with an increase in meter readings in these areas. ● The identification and addressing of backlog billing, particularly in new sectional title developments in above areas. ● Updating of incorrect tariff rates.

There was an improvement in the payment level for CoJ-managed customers. The average for the CoJ improved from 60,9% in the previous financial year to

150 72,2%. Excluding the R66 million received in respect of interdepartmental billing, the payment level achieved is 69%. This is still 2,6% below the targeted collection rate.

Operating expenses (excluding provision for bad debts) were lower due to savings experienced in virtually all areas of the business. Salaries and related cost were R21,5 million below budget due to a refund of R12 million from the CoJ in respect of gratuities paid to staff and appointments during the year at dates later than budgeted for. Savings in bulk purchases were in the area of chemicals. Outsourced were R13,7 million favourable of which R8,8 million related to savings in motor vehicle costs.

Pikitup Johannesburg Overexpenditure was mainly as a result of delays in the rollout of the 240 litre bins. This led to the decreased revenues and additional cost incurred as these were substituted by an increased consumption of bin liners. Of the total over-run on general expense overheads, R16,3 million relates to an overexpenditure in transport hire cost. R12 million refers to unfunded liabilities and R8 million for bin liners. Repairs and maintenance costs are also higher than budget due to inaccurate assumptions in determining the budget base.

Savings have been reflected in the areas of fuel costs due to lower fuel price increases than initially anticipated and the insurance costs following a revision of the basis of calculation of premiums. Pikitup is technically insolvent to the value of R30 million. The CoJ has subordinated the shareholder loan and mirror conduit loans to the value of R60 million.

Johannesburg Roads Agency There were no significant variances from budget.

JRA did not budget for interest earned on cash balances, and the interest was accounted for in terms of the agreement with the CoJ Treasury.

Johannesburg City Parks City Parks did not budget for interest earned on cash balances, and the interest was accounted for in terms of the agreement with the CoJ Treasury.

Significant reductions in expenditure resulted from the impact of interest rate declines and non-replacement of vehicles, reducing the fleet financing costs and reduction in employee numbers through natural attrition.

Johannesburg Zoo Johannesburg Zoo sold a number of high value animals, which led to the increase in the turnover as reported.

Repairs and maintenance expenditure were higher than the initial budgeted figures.

Johannesburg Fresh Produce Market The increase in income results from increased volumes at higher prices.

151 Appendix 2

There was a revision of the salary levels, which gave rise to the higher personnel costs. Security charges and HR placement fees also contributed to the over- spending.

Metrobus Additional subsidies, insurance recoveries and the profit on the sale of old buses gave rise to the increased income during the financial year.

Expenditure was adversely affected, as trade union opposition prevented the implementation of the planned Route Optimisation Project. In addition, increases in diesel costs contributed to the variance.

Metrobus is technically insolvent as a result of prior year retirement benefits provided to the value of R4,5 million.

The Johannesburg Civic Theatre The Civic Theatre is dependent on the CoJ for its funding of overheads. 48% is subsidised and the balance is funded by means of ticket sales.

Ticket sales were R400 000 above target.

Johannesburg Property Company Johannesburg Property Company did not draw the full subsidy from the CoJ, which resulted in the lower income when compared to the budget.

Johannesburg Property Company reported savings on general expenditure.

Johannesburg Development Agency There were no significant variances from budget.

Metropolitan Trading Company MTC did not budget for interest earned on cash balances, and the interest was accounted for in terms of the agreement with the CoJ Treasury.

MTC is technically insolvent and the shareholders, Gauteng province and the CoJ have subordinated loans to the value of R85 million and R10,5 million, respectively.

Johannesburg Social Housing Company There was no budget prepared for these companies, which only started trading during the financial year.

152 Johannesburg Tourism Company JTC became operational in the current financial year. The company is subsidised mainly by the CoJ.

Expenditure exceeded budget for the year, due to overspending on repairs and maintenance.

153 Abbreviations and acronyms

ABET Adult Basic Education and Training AQM Air Quality Management BBP Better Buildings Programme BEE Black Economic Empowerment CBD Central Business District CBO Community-Based Organisation CID City Improvement District CIF Capital Investment Framework CSF Critical Success Factor DPT&E Development Planning, Transportation and Environment EMF Environmental Management Framework EMS Emergency Management Services EMU Executive Management Unit EP&M Environmental Planning and Management EXCO Executive Committee GAAP Generally Accepted Accounting Practice GALA Gauteng Association of Local Authorities GAMAP Generally Accepted Municipal Accounting Practice GDP Gross Domestic Product GGP Gross Geographic Product GPS Global Positioning System GTA Gauteng Tourism Agency HDI Human Development Index ICC Infrastructure Coordination Committee ICLEI International Council for Local Environmental Initiatives IDC Industrial Development Corporation IDP Integrated Development Plan IIP Integrated Infrastructure Plan IMFO Institute for Municipal Finance Officers ITP Integrated Transport Plan IWMP Integrated Waste Management Plan JDA Johannesburg Development Agency JFPM Johannesburg Fresh Produce Market JIKE Joburg Innovation and Knowledge Exchange JMOSS Johannesburg Metropolitan Open Space System JMPD Johannesburg Metropolitan Police Department JOSHCO Johannesburg Social Housing Company JRAS Johannesburg Risk Assurance Services KPA Key Performance Areas KPI Key Performance Indicator LIA Low Income Areas MFMA Municipal Finance Management Act

154 MSA Municipal Systems Act MIR Municipal International Relations MMC Member of the Mayoral Committee NEPAD New Partnership for Africa’s Development NGO Non-Governmental Organisation NLTTA National Land Transport Transition Act PDI Previously Disadvantaged Individual PJSP Presidential Job Summit Project RDP Reconstruction and Development Programme RMU Revenue Management Unit RSC Regional Services Council RSSC Revenue Shared Services Centre RSDF Regional Spatial Development Framework SACN South African Cities Network SALGA South African Local Government Association SALGBC South African Local Government Bargaining Council SBA Sale of Business Agreement SDF Spatial Development Framework SMME Small, Medium and Micro Enterprises STI Sexually Transmitted Infections UACs Utilities, Agencies and Corporatised Entities UFW Unaccounted-for Water VIP Ventilated Improved Pit Latrine WSSD World Summit on Sustainable Development

155