Turning the Tide: the Johannesburg Development Agency And

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TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 2

Case study prepared by the Public Affairs Research Institute, University of the Witwatersrand, in partnership with the Graduate School of Development Policy and Practice at the University of Cape Town.

ACKNOWLEDGEMENTS

This case study was researched and written by a team at the Public Affairs Research Institute (PARI), lead by Tracy van der Heijden, for the University of Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development).

PARI would like to thank Thanduxulo Mendrew, Lael Bethlehem and Sharon Lewis who allowed themselves to be interviewed for the purposes of this case study.

This case study was researched and written by a team at the Public Affairs Research Institute (PARI), led by Tracy van der Heijden, for the University of Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013. TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 3

PUBLIC AFFAIRS RESEARCH INSTITUTE (PARI) TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city

BACKGROUND At the same time that the city centre was becoming less attractive to many corporate tenants, the newer nodes Johannesburg started life as a mining village in 1886. of Bedfordview and Sandton were developing. In the Half a century later it was a fast-growing city, and 1970s, and particularly the 1980s, corporate tenants by 1936 was considered important enough to host started to look outside the city centre for a new type of the Empire Exhibition. Its rapid expansion continued office accommodation for reasons such as easier access, through the 1960s: The South African economy was more parking, and better technology infrastructure. At booming and, given Johannesburg’s undisputed status the same time, large corporate landlords, such as the as South Africa’s industrial and commercial capital, large major insurance companies, were investing heavily in investors poured money into developing the city. In the new property development outside the city centre. This 1960s and 1970s the central business district (CBD) was investment was not driven so much by an increased almost completely rebuilt, with the new 50-floor Carlton demand, but by the relatively low rate of real return in Centre becoming the tallest building in Africa. equity markets, which made property a more attractive long-term investment. Therefore, at the same time Few would have foreseen that, less than 30 years later, when corporate tenants in Johannesburg were looking Johannesburg would be described as ‘a city on the for alternatives, large-scale property investment in areas verge of an abyss, slipping inexorably into ruin and like Sandton had greatly increased the availability of decline; where the streets are littered with refuse and cheap new office space. In some instances, big landlords garbage; a filthy, chaotic, and uninviting place’1. encouraged their tenants to move from Johannesburg to the new areas as a way of ‘demonstrating’ confidence A tight planning regime meant that up to the 1970s in the latter. most corporate head offices and major retail centres were located in the CBD, which helped to maintain One of the factors encouraging the departure of demand for space and property prices. However, traditional white tenants from residential areas such Johannesburg was still a relatively small and white as Hillbrow, situated on the fringe of the CBD, was place. This was largely due to the apartheid regime, that during the 1960s and 1970s a set of new subsidies which went to extreme lengths to restrict the flow of for first-time white home owners encouraged the Africans from rural to urban areas. Given this centralised movement of people out of city apartments into the pattern of metropolitan development, Johannesburg’s growing suburbs. infrastructure was under growing pressure by the 1970s. Traffic congestion became a serious problem. The city During the 1980s there was a significant increase in the responded by trying to discourage motor vehicles number of black people (largely young, employed, and from entering the CBD, and encouraging people to relatively well-educated) living in Hillbrow, despite it use public transport. Among other things, it no longer being designated a ‘white’ area in terms of the Group permitted new parking areas or basement parking in Areas Act, which strictly demarcated residential areas new buildings. permissible for occupation by each race group. In 1982, Judge Richard Goldstone ruled that it was illegal to

1. Martin J Murray, Taming the disorderly city: the spatial landscape of Johannesburg after apartheid

evict tenants who were in contravention of the Group property values meant that the main source of value Areas Act without providing them with alternative for many buildings was the net rental income (rather accommodation. This decision gave some security of than capital appreciation), which landlords wanted to tenure to black residents in areas such as Hillbrow, and maximise. Individuals rather than corporates owned also provided new tenants for landlords, given that many buildings, particularly in Hillbrow, and they often many white residents had left for the suburbs. had limited capital resources to undertake expensive maintenance. In some instances, landlords simply Following the abolition of influx control legislation abandoned their buildings, no longer able to make in 1986 and the Group Areas Act in 1991, black South a reasonable return in the face of rapidly declining Africans began to flood into Johannesburg in far greater property values. numbers than its managers had envisaged or planned for. City managers – still white at that time – made little The late 1980s were characterised by a spiral of effort to provide them with access to infrastructure. decline: informal settlements grew near to the city, Among other things, city management failed to provide overcrowding was a feature in many inner-city rental taxi ranks for the new minibus taxi industry (which was accommodation, and many buildings were abandoned triggered in part by unequal and segregated public by their owners and taken over by squatters or transport services). This rapidly growing industry also slumlords. The situation was particularly bad in Hillbrow, provided new opportunities for informal traders, but but even in the CBD there were buildings that had been the city did not provide them with facilities. Thus City abandoned and taken over by squatters. By the early management at that time largely failed to deal with the 1990s landlords had started to abandon buildings in rapidly expanding and changing urban landscape and significant numbers and property prices had declined its inhabitants. sharply. By the mid-1990s a considerable number of corporate tenants had left the inner city, and by the late Most of the new arrivals streaming into the city could 1990s the deterioration of the inner city was noticeable. not afford the rentals paid by previously white flat dwellers, and in areas like Hillbrow they could only A NEW VISION afford formal rental accommodation if they shared. As a result, landlords allowed the overcrowding of In the wake of the first free general election in 1994 the buildings as a way of maintaining their real incomes in first democratic local government elections were held in the face of demand for more affordable rentals by new November 1995. Thereafter, the Greater Johannesburg black tenants. This significantly increased pressure on Transitional Metropolitan Council (GJTMC) and buildings, including lifts and plumbing, and increased four Transitional Metropolitan Local Councils were maintenance costs. Landlords generally failed to established. The new local government structure respond, and buildings started to decline. faced considerable challenges – most particularly the integration of previously separate (overwhelmingly There were a number of factors that undermined the under-serviced and poor) black townships around the landlords’ willingness and ability to maintain buildings. city. There were also administrative problems: in the These included perceptions that black tenants would late 1990s there were three re-organisations of council tolerate a lower level of service. In addition, the high structures in what is now the greater Johannesburg real interest rates of the 1980s and early 1990s made area. This created effective administrative chaos. For loan repayments relatively expensive, and reduced the example, every time there was a re-organisation, vital income available for maintenance. Finally, declining billing information was lost, and city management had

little idea of who owned buildings or who was resident One of Planact’s contributions at the time was to analyse where in the city. The GJTMC was essentially bankrupt the financial crisis of Soweto and other BLAs in terms of by the end of the 1990s (unable to pay Eskom a R300 the apartheid political economy. In essence, they argued million bill for bulk electricity purchases), and was saved that Soweto and Johannesburg were indivisibly part of by a restructuring grant from the Treasury. the same urban economy. Soweto residents worked in factories and in businesses in Johannesburg, and they Yet bankruptcy was not a result just of bad management did their shopping there as well. Yet the new city of or poor economic times. Instead it was a consequence Soweto was demarcated in such a way that all industrial of the very structure of Johannesburg as an apartheid and business areas were included in the jurisdiction of city. During the 1980s, political activists and left-wing the ‘white’ city of Johannesburg. In effect, industries academics had come together in Johannesburg to form and businesses, and white residents paid their rates what they called at the time a ‘service organisation’, and taxes to the city of Johannesburg exclusively. whose task was to bring high quality research on urban Soweto residents were deprived of the benefit of any development into the service of the anti-apartheid of this income. Instead, Soweto’s only revenue was struggle. The organisation was called Planact. Planact from the rates it could charge for water and electricity. gave advice and assistance to trade unions and civic BLAs quickly found that their tax bases were not large associations. Established originally by planners and enough to support the cost of providing municipal architects, the organisation supported initiatives that services there. Soweto was no different. Inspired by this would contribute to democratic and egalitarian post- analysis, civic organisations mobilised on the slogan: apartheid cities. ’One City, One Tax Base’.

In an attempt to ‘reform’, but definitely not to abolish In 1998 the new ANC government adopted the apartheid in the early 1980s, the P.W. Botha government Municipal Structures Act, which specified that had brought in a new constitution. It introduced Black metropolitan areas should have single-tier integrated Local Authorities (BLAs), ostensibly to give black, African municipalities. In 2000, after the second round of South Africans political rights at local government level, inclusive local government elections, Johannesburg’s but not a national franchise. Former townships were four local councils were combined into a ‘unicity’, which thus reconstituted as autonomous municipal areas later became the Joburg Metropolitian Municipality. with their own elected local councils. Soweto, a former township of Johannesburg, became after 1982 a city At the same time, the boundaries of the city were in its own right with its own municipal authority, the extended to incorporate Midrand in the North and Soweto City Council. Almost immediately afterwards, Modderfontein in the east. A new plan – iGoli 2002 – two things happened: firstly, charges for services was launched. It recommended a restructuring of city in Soweto rose dramatically, nearly doubling every functions by separating out a number of municipal couple of months, and secondly, new kinds of political activities into utilities, corporate entities and agencies, organisations, focused on the local level, emerged. with the city as sole shareholder. They were known as civics or civic organisations. Most civics quickly joined the United Democratic Front, a The mayor of the new unicity was Amos Masondo. broad anti-apartheid grouping with a similar political Born in Soweto in 1953 and educated there, he had orientation to the banned and exiled African National been politically active from a young age, and had been Congress (ANC). incarcerated in Robben Island from 1975 to 1981. On his release he became a member of the Soweto Civic

Association and joined the General Allied Workers customer care and Batho Pele2; inner-city regeneration; Union. He was a founder member of the United and combating HIV and AIDS. This prioritising of inner- Democratic Front. As the new mayor, Masondo’s city regeneration resulted in a much stronger focus on priorities were addressing poverty, unemployment and the area and the allocation of resources. It also paved crime, access to housing and basic services, reversing the way for the establishment of the Johannesburg urban decay, and responding to the HIV/Aids Pandemic. Development Agency (JDA). He also undertook in 2003 to tar every gravel road in Soweto (around 314kms) by 2005, a goal that was seen The ‘inner city’ is located in Region F of the City of as unattainable, but successfully achieved. Johannesburg, and comprises of the CBD, Braamfontein, Berea, Hillbrow, Yeoville, Bertrams, Troyeville, In 1995 the then GJTMC and the Gauteng provincial Jeppestown, Fordsburg, Pageview, Vrededorp, and light government convened an inner-city summit aimed at industry areas in the south and southwest of the CBD. devising a strategy for revitalising the inner city. The Most of these areas are the oldest parts of the city. resultant initiative, called ‘Inner City Ivukile’, proposed the introduction of an inner city ‘stabilisation strategy’. A January 2001 Inner City Position Paper described the However, the initiative petered out, largely as a result importance of the inner city: of limited inclusion of the business sector in the city, as well as expected changes in city governance. The inner city plays a vital role within the city as a whole. With 7 million m2 of floor space, In 1996 the Gauteng provincial government started an representing a replacement cost of built initiative called Vusani Amadolobha, a four-point plan infrastructure in excess of R 30 billion and housing for the regeneration of cities, towns and townships in stock at R1,2 billion plus, the inner city is an asset the province. In 1997 the then deputy president, Thabo that the country cannot afford to let waste.It is Mbeki, announced a new vision for Johannesburg. positioned in a pivotal location with regard to the Entitled ‘The Golden Heartbeat of Africa’, it had been consolidating formal economic hub stretching negotiated in consultation with business, labour and from the inner city to Midrand in the north and the community organisations. Johannesburg International Airport in the east, or what is known as the ‘Gauteng Golden Triangle’. It During Masondo’s first term, the city developed is the major public and quasi-public transport hub a new vision to replace The Golden Heartbeat of in Johannesburg, with 800,000 people travelling Africa. Entitled ‘Joburg 2030’, it set out to develop into the inner city every day to work, trade, Johannesburg into ‘a world-class African city’, and conduct government business, and onward travel. an engine of economic growth and development. It remains the largest employment centre in greater ‘Joburg 2030’ also reflected Gauteng’s new vision of a Johannesburg and the home to the head offices ‘smart province’ focused on high-value and high-tech of major corporations, the mining houses, banks economic sectors. and assurance companies and as such is a major economic generator and employment and service Masondo formulated six priorities for his first term centre. of office, namely good governance; economic development and job creation; byelaw enforcement The inner-city visioning process resulted in four and crime prevention; service delivery excellence, structures tasked with inner-city renewal.

2. Batho Pele (SeSotho for ‘People First’) was introduced by the Mandela administration to encourage public servants to act in the best interests of citizens, and provide them with better services.

• The Inner City Development Forum (later the Section would lift up surrounding areas by providing incentives 79 Inner City Committee. This committee makes to private investors. An important requirement for this recommendations to the Section 80 committee, and kind of investment was that the City would ensure that is intended to include a wide range of stakeholders. the environment around the investment was ‘especially Section 79 and Section 80 committees are well managed’. committees established in terms of the Municipal Systems Act. Both have an oversight mandate. Section ESTABLISHMENT OF THE JDA AND ITS EARLY YEARS 79 committees have powers and duties delegated by Council, and Section 80 committees have powers and ‘The perception of any city is primarily informed by duties delegated by the Executive Mayor.) the quality of its public spaces, as well as the state of • The Section 80 Inner City Committee. its landmarks’. Johannesburg: Ten Ahead • The Inner City Office (later the Johannesburg Development Agency). In 1999, the city government adopted a Spatial and • The Region 8 directorate and office (later the Region Economic Framework for the Inner City, which identified 8 Inner City Task Team, and then the Region F the goals of promoting investor confidence and directorate. After the 2006 reorganisation of the City’s supporting economic growth as key to its revitalisation. regions, Region 8 and parts of Region 9 became the It acknowledged that investor perceptions of the current Region F.) inner city were largely negative, and that investment in the area was widely considered as high-risk. It also The City of Joburg’s website states that the goal of recognised that the inner city had to compete for the Inner City Regeneration Strategy is ‘to raise and investor attention and funds with other areas. Changing sustain private investment in the inner city, leading perceptions was a key challenge. to a rise in property values’. The strategy identified five intervention pillars. The first was intensive urban The Johannesburg Development Agency (JDA) was management, which included the goals of better established in April 2001, essentially by transforming the service delivery, stricter enforcement of byelaws, city’s Inner City Office into a company with a board of improved management of informal traders and taxis, directors appointed by the City. Its establishment was and maintenance of public space. The second was the part of the city restructuring process called for in the maintenance and upgrading of infrastructure: The goal ‘iGoli 2002’ strategy, and reflected the economic vision was to create an attractive environment for business, for the city set out in ‘Joburg 2030’. As such the JDA is and to improve the quality of life of city residents. The a wholly owned city agency, subject to all legislation third was to support high-potential economic sectors. applicable to its parent. The JDA started up with just five staff members, and has remained relatively small; by The fourth pillar was to address “sinkholes”. This 2005 it had 35 staff, and today it has about 50. In 2001, term was given to properties and areas that had been its objectives were to: abandoned, were overcrowded or badly maintained. • Promote economic growth by developing and The sinkholes were seen to have the potential to pull promoting efficient business environments in defined down the value of surrounding areas and to create geographic areas; a self-perpetuating cycle of decay by discouraging • Regenerate decaying areas of the city; private-sector investment. The final pillar of the strategy • Unlock public- and private-sector investment in was to promote ‘ripple-pond’ investments: These were marginalised areas; conceptualised as the opposite of the sinkholes. They

• Undertake area-based regeneration projects in areas Getting Attention judged not to be meeting their potential; Reid faced a big challenge in his new role: given the • Promote economic empowerment; enormous task at hand, where should the JDA start? The • Promote partnerships and co-operation between inner city takes up 18 km2, and was and is very diverse, stakeholders; and encompassing many different kinds of buildings, • Develop and implement best practice in area-based landlords and tenants, and stages of prosperity or decay. development management. Soweto is also a vast area, and in 2001 faced enormous development challenges. Its overarching aim was to create an environment that would attract new investors, and increase occupancy Following on from the strategy adopted at the Inner levels and property prices. Its mandate initially only City Office, Reid and his team decided that a relatively covered the inner city, but was later extended to the small number of ‘mega projects’ would be the central entire metropole. strategy to send a strong signal that things were changing in the City. His intention was to show that The first CEO of the JDA was Graeme Reid. Graeme was the City had confidence in the future of the inner a lawyer by profession, and had had a history of working city (and Soweto), and was prepared to back that up with community-based organisations. He had practised with considerable amounts of money. Hopefully this as a lawyer and taught law, and thereafter had joined would change the negative perceptions of investors, Planact, becoming the General Manager in the early as well as their potential tenants, and turn the tide of 1990s. After 1994, many Planact staff took up senior disinvestment. positions in local governments around the country. Johannesburg and Pretoria (Tshwane) had a number Amos Masondo was critical in creating the kind of of former Planact staff in senior management. When political “space” within which the JDA flourished. Graeme Reid joined the City of Joburg many of his new He recognised the importance of restoring investor colleagues were, in fact, old Planact colleagues. They confidence in the city, and understood that large-scale shared, not only a common history of political struggle, attention-grabbing projects were central to that goal. but values and ideas about the city that Johannesburg The JDA was also championed and supported by Khetso should be. They often shared long and deep friendships Gordhan, city manager at the time of the Agency’s as well. A former colleague, who had returned full time establishment. to the Planning department at the University of the Witwatersrand, referred to this network as the ‘Planact In the early years, the JDA received much of its funding mafia’. It said something about the close relationships from Blue IQ, a capital infrastructure investment agency that existed between them. Wherever they were, established by the Gauteng government. The JDA acted colleagues in the same city, or in same organisation or as project manager and project facilitator, deriving its even in different cities and different organisations, they operating costs from project management fees. (In could call on each other for advice or for support. 2012, Blue IQ was merged with the Gauteng Economic Development Agency to form the Gauteng Growth And Reid spent three years as the Inner City Manager for Development Agency). Johannesburg, during which time he established the Inner City Office (which then became the JDA). One of the JDA’s first showcase projects was the Established in 1998, the Inner City Office gained a development of Constitution Hill, a multipurpose reputation as the most innovative organisation in the municipality.

heritage site on the northern edge of the city between for far less money, and in a much shorter time, but Hillbrow and Braamfontein. It would be anchored by a Reid insisted that the need for the bridge created an new Constitutional Court, built next to the notorious opportunity for an ‘iconic’ project that would redefine Old Fort Prison complex, where some of the country’s the city’s skyline, and provide another positive pointer best-known political prisoners – including Mahatma to its future. Gandhi, Nelson Mandela and Walter Sisulu – were held before and during the apartheid years. An international competition was held to source a design. The winning design cost R120 million to build, It was a brave and audacious project, and getting and 18 months to complete. At 295m, the Nelson it approved took a lot of advocacy, despite the Mandela Bridge is the longest cable-stayed bridge in historical symbolism of the intended site. The national southern Africa. Mandela opened it on 20 July 2003 as government had to agree to place the constitutional part of his 85th birthday celebrations. court, symbol of the country’s new-founded democracy, close to Hillbrow, then widely regarded as an In 2003, the Minister of Finance announced a new overcrowded urban slum marked by crime and drug national tax incentive – the Urban Development abuse. It also had to agree to move the Johannesburg Zone (UDZ) depreciation allowance to support mortuary to make way for a massive multilevel parking the development of new buildings and the complex. Blue IQ committed R375 million to the project. refurbishment of existing buildings in declining Other stakeholders included the National Department inner cities. This created an additional incentive for of Justice and Constitutional Development, the Gauteng private investors. Initially, the scheme included the provincial government, and the City of Johannesburg. following two components: • A 20% straight-line five-year depreciation The R750-million project planned for a precinct of allowance for building refurbishment; and 95,000 m2, including the building of the Constitutional • A 17-year write off period for new buildings, Court and the renovation of various heritage buildings with 20% in the first year and 5% a year for the following 16 years Constitution Hill signalled that the authorities were prepared to spend a lot of money on regenerating the The scheme has been critical in ‘tipping’ investment inner city. It also received a lot of media attention, and decisions in the inner city: It has been estimated that got people talking about the inner city from a very almost R9 billion in investment has been attracted different point of view than the more usual ‘crime and to the City of Joburg (up to March 2011) as a result of grime’. This was exactly what Reid had in mind. (The the UDZ scheme. Joburg has been the biggest UDZ Gauteng provincial government also helped to change scheme in the country. By early 2011, more than 200 perceptions of the inner city in other ways, inter alia UDZ projects were in development, with around by moving its offices there. This took up a lot of vacant 45% of these being undertaken by smaller investors. office space and brought large numbers of employees Initially the scheme did not include sectional title into the area, which created new opportunities for retail ownership, but this was amended in 2005 to include and service businesses.) larger sectional title units. This has greatly increased the pool of potential UDZ beneficiaries. Another major project was the construction of the Nelson Mandela Bridge. It could have been built The rejuvenation of Newtown was another important early JDA project undertaken in partnership with Blue

IQ. Located in the western sector of the Johannesburg requirements before they would consider moving in. city centre, Newtown covers an area that stretches from They wanted a taxi rank to be constructed nearby, and the marshalling yards and railway lines to the north, for a city improvement district (CID) to be established. the M2 motorway in the south, West Street in the east The JDA made sure that these conditions were met, and and Quinn Street in the west. The current Newtown in return secured a significant private-sector investment Precinct area was originally known as the Brickfields, in the area. and is one of the oldest parts of the City. By 1896, about 7000 people of all races lived in the area. As this land Once again, choices were made in Newtown, which was close to the centre of Johannesburg and the railway may have seemed to be excessive. Mary Fitzgerald line, many businesses and new immigrants bought Square – which has capacity for around 50,000 people land there. Soon, trading companies, banks, brick – is a central public space in Newtown. The lighting companies and a brewery moved into the area. In April for the square – and the surrounding areas – was 1904, the Johannesburg fire brigade set the area alight, commissioned from a famous French lighting engineer, destroying almost everything – a measure allegedly to Patrick Rimoux, despite the extra cost. combat the recent outbreak of bubonic plague. The area was surveyed, re-planned in record time and renamed The Newtown precinct is also the site of the Newtown by October 1904. It became a thriving Johannesburg Housing Company’s massive Brickfields commercial area, focused on milling, the production of housing scheme, reflecting the goal of creating vibrant sugar and food merchandising. residential areas within the inner city.

However, by the start of the twenty-first century From the very beginning, public art has been a Newtown was in decay. Many buildings were empty or strong focus of the JDA. While on paper this may derelict, and there were a large number of squatters in seem to be frivolous and extraneous to the serious the area. Ironically, many of the buildings in Newtown business of building investor confidence and (including some of those in the worst shape) were supporting economic development, senior JDA staff owned by various government entities. Newtown was – current and past – believe strongly that it has been also home to the Market Theatre and surrounding central to achieving the task at hand. The JDA was restaurants and clubs. instrumental in conceptualising and implementing the ‘Percent for Public Art’ policy in the city, in terms The JDA envisaged Newtown as a ‘culture precinct’ and of which 1% of the construction budget for major started inviting NGOs to move into empty buildings. The city projects is allocated to public art. derelict Turbine Hall was put on the market. Property developer Tiber Group brought Anglo American The JDA has always argued that public art is a Holdings to the table, with subsidiary Anglogold relatively cheap intervention, but one that can create Ashanti as a potential tenant. Tiber was one of the significant benefits: New installations attract the first developers to obtain a grant under the new UDZ press and generate media coverage which present scheme, for the Turbine Hall project. an alternative, more optimistic view of the inner city. They get people talking and generate excitement. In securing the Turbine Hall deal (which would be Existing and potential investors (and, even more enormously important in changing perceptions of importantly, their potential tenants and customers) Newtown) the JDA had to demonstrate responsiveness start to perceive an area in a more positive light. and flexibility: Anglogold Ashanti had a list of Public art also tells residents that the city is making

an effort in their area, and encourages the civic pride Bremner and others complained that investment in so important to creating new perceptions. the city was and would continue to drive up rentals, making the CBD attractive to yuppies and other wealthy types while excluding families and individuals living The historic area of Kliptown (site of the June 1955 in precarious financial circumstances. Given Graeme Congress of the People at which the Freedom Charter Reid’s political past, as an activist for the poor and was adopted) was the first site of the JDA’s efforts in for participatory democracy, his new role earned him Soweto, in a R436 million project, which included the accusations of betrayal. development of the Walter Sisulu Square of Dedication precinct. A design competition was held, with a total The JDA during this period often supported the action of 34 entries received. In recent years the project has of landlords seeking to evict tenants that could not or attracted criticism for its failure to significantly impact did not pay their rents. The infamous ‘red ants’ – private on economic development in the area, or the quality of guards tasked with removing people’s goods from their life of nearby Kliptown residents and informal traders. dwellings – were a regular feature of inner¬-city life.

Under Graeme Reid the JDA developed a reputation for The JDA’s approach to informal traders was equally one of the most efficient and effective City agencies, controversial. As the minibus taxi industry developed, able to successfully implement projects as large and as and the city changed its character, street trading important as Constitution Hill and the Nelson Mandela blossomed. While this gave the city new life and colour, Bridge. It was largely projects such as these that were and aided its subsistence economy, the traders also central to changing popular and investor perceptions of clogged the pavements. As a result, the JDA decided the inner city. The JDA’s success became a symbol of the to remove them from the streets and accommodate City’s desire to reinvent itself as a dynamic ‘world class’ them in purpose-built markets. Among other things, place. this strategy was meant to help them develop from survivalist enterprises into proper business enterprises, Whose Joburg? with larger and more sustainable revenue. For the first In 2004 Lindsay Bremner, a prominent South African time, though, the traders had to rent their sites; on scholar and head of the school of architecture at the the streets they had no such obligations. The markets University of the Witwatersrand published a collection also distanced them from passing trade, and could not of essays on Johannesburg, One City, Colliding Worlds. accommodate all the traders. She described the city’s senior managers, including (and especially) Graeme Reid as follows: ‘While one can only A new regulatory environment commend their missionary zeal, none among them has In the early years the JDA had considerable freedom the personality, authority (or the colour?) the city needs to design and implement projects, choose its partners, right now. Together they head up the bunch of suit-and- and determine its working arrangements with those tied, middle-class, middle aged white men leading the partners. Its managers were given the space to innovate inner-city regeneration drive’. and make brave (and even reckless) decisions. The Municipal Finance Management Act (MFMA) of 2003 The decision to work with business people and removed most of this discretionary space. The Act entrepreneurs on high prestige projects was not and its regulations provide a strict framework for without controversy. It meant privileging investment regulating business relations between the public and in the city instead of focusing on the inner-city poor. private sectors, particularly those resulting in financial

benefits to private-sector companies. They are aimed at to replicate the JDA’s efforts, but rather to perform a providing oversight over local government expenditure, complementary role. and preventing fraud and corruption, but create various problems for agencies such as the JDA whose mandate At the time that Bethlehem took over the JDA, the is precisely to facilitate projects that create value for the agency’s funding (and thus by necessity its operational) private sector. model started to change. Up to that point Gauteng’s Blue IQ programme had been the main source of The MFMA contains a very clear and specific ban project funding (and thus the JDA’s operational income, on ‘unsolicited bids’. This means that it is virtually derived from project management fees). This was now impossible for a private-sector investor who has a coming to an end, and smaller projects meant smaller good idea for a particular part of the area to approach management fees. This, together with a more stringent the city (or any of its agencies) directly with the view oversight environment, meant the end of the mega to entering into a partnership, without being guilty of project era. At the same time the JDA’s initial mandate of a contravention of the legislation. Under the MFMA, the inner city was expanded to include Soweto, Orange the Tiber Group-Anglogold Ashanti deal with Turbine Farm and Diepsloot. Hall would have been very difficult, if not impossible. It would also have been very difficult to justify (or get Under Bethlehem, the JDA started to focus more approval for) the extra expense involved in iconic attention on ‘precinct’ or area development, doings lots projects such as the Nelson Mandela Bridge. of smaller projects in a particular area rather than a few massive ones. This approach required partnerships with There is little space for ‘iconic’ projects in the property owners to upgrade and invest in a particular MFMA’s demands for value-for-money public-sector area, while the JDA and other public organisations took expenditure, and very little opportunity for ad hoc or responsibility of upgrading the public infrastructure. innovative public-private partnerships. Just one example of a successful partnership during this period was the 2008/2009 partnership with the In 2005 Lael Bethlehem took over as CEO of the JDA, Affordable Housing Company (Afhco), whereby Afhco a position she held until mid-2010. From 2002 to 2005 renovated a very large but dilapidated office building Bethlehem was the Director of the City of Joburg’s at 120 End Street in the inner city. They spent around Economic Development Unit (EDU), in which position R180 million and created 924 housing units. Across she had a strong working relationship with the JDA, the road from the development was an existing but and was involved in inner-city regeneration efforts. very degraded public park, which gave the entire area The EDU was instrumental in conceptualising the City’s a derelict feel. The JDA agreed to renovate the park Better Buildings Programme (BBP), which aimed to turn on condition that Afhco manage and maintain the around ‘bad’ buildings whose owners were heavily park, and enter into an agreement to this effect with indebted to the city council, by acquiring them and Joburg City Parks. This they did, and the park is still well then selling them on to new developers. (The scheme maintained and well utilised by local residents. The area is now known as the City Property Programme.) The upgrade has had a considerable impact; the building is good cooperative relationship between the JDA and the currently almost fully occupied, and the ground floor EDU was necessary since they had in effect overlapping has attracted retail tenants. mandates: both were concerned with increasing economic activity and encouraging investment in Bethlehem was clear that since the JDA couldn’t do the City. Under Bethlehem, the EDU did not attempt everything that the inner city required at once, the best

strategy was to approach it ‘block by block, building by SUCESSFUL PARTNERSHIPS building’, focusing on making slow progress day by day. The theme was making sure that government did what ‘The Johannesburg inner-city provides proof government was supposed to do – basic infrastructure, positive that regeneration comes about when a street lighting, pavements, public parks and so on. This whole spectrum of diverse people, organisations certainly did not have the cachet of building a Nelson and policies work in conjunction for change.’ Mandela bridge, but the strategy was working. As the ‘Johannesburg: Ten Ahead’ public environment started to improve, so did investor perceptions of the city, and property values started to Partnerships have always been central to the JDA’s increase and occupancy rates rose. activities. Even when the agency had access to considerable funding it understood that property Bethlehem cites the example of Chancellor House as owners, landlords, tenants, citizens and other an example of how one building can be instrumental government departments all had to be willing and in pulling down or upgrading an area. The building – committed partners in order for inner-city revitalisation located on the corner of Fox and Gerard Sekoto streets to be sustainable. The real challenge for the JDA was in the inner city was once the offices of Mandela & that it did not have (and still doesn’t have) any legal or Tambo Attorneys. The building had been allowed to regulatory tools at its disposal to enforce partnerships: become derelict, and the owner had refused to refurbish they are all voluntary, depending critically on the it or sell for what the City considered a reasonable price. goodwill and commitment of a wide range of parties to As a result, not only was an important historical site maintaining the integrity of a particular area. As current becoming more and more dilapidated (the roof was CEO Thanduxolo Mendrew points out; ‘when you enter collapsing, a fire had destroyed most of the ground into an arrangement with property owners and other floor, and almost 70 homeless people were living in the stakeholders in a particular area around maintenance building), but it was also a major deterrent to upgrading and upkeep of infrastructure, you have no remedy for surrounding buildings. In the face of the owner’s breach, and the other parties also know that you know intransigence (they refused to sell, believing that the that you have no remedy’. historic property, notwithstanding its extremely poor state, was worth a lot more money than the City was As Sharon Lewis, the JDA’s Executive Manager: Planning offering), the City expropriated the property in 2010. and Strategy, points out: ‘informal arrangements only Bethlehem was quoted at the time as saying that ‘for work if your organisation has credibility’. Building a building of such historic importance, the situation is these kinds of relationships often requires overcoming reprehensible and this shows rampant disrespect for the scepticism on the part of private investors about the history of the building as well as for the City’s by-laws’. commitment and capacity of government entities. One way to deal with this is to build a reputation as an The renovated and refurbished building was opened effective organisation. in May 2011. Not only has a historic building been preserved but as Bethlehem noted that it had created In contrast to many other major South African-based ‘a great ripple effect’ in the area, motivating other corporations, which have fled the inner city, the property owners to upgrade their own buildings in wood and paper company Sappi has remained in its response. global headquarters in Braamfontein, and has been an enthusiastic participant in JDA initiatives. André Oberholzer, Group Head: Corporate Affairs, says: ‘They

(the JDA) had a vision and were able to implement a project. The JDA is also clear that it cannot enter their plans accordingly.’ Similarly, Richard Rubin, CEO of into partnerships with organisations whose business Aengus Properties, which has a portfolio of 1600 inner- practices are unethical. One thing the JDA has come city apartments, describes the JDA as an ‘extraordinary to understand is that potential investors come in many organisation with able leadership’. shapes and sizes, ‘and not just private-sector men in suits’, as Bethlehem puts it. NGOs, trade unions, other Despite the JDA’s reputation, it is not always easy to government agencies and individual residents have convince private-sector property owners to enter all been key in rebuilding the inner city. Thus many of into neighbourhood organisations, and commit to the JDA’s programmes are informed by a broad and the (essentially voluntary) long-term maintenance of innovative conception of what constitutes ‘investment’ the upgraded public spaces provided by the JDA. As and ‘investors’. Mendrew points out: In 2008, in partnership with the city government, Many (private) landowners come reluctantly into the JDA introduced the annual Halala Awards, which the relationship because they are saying ‘why do recognise people and projects ‘who have made an you want us to assist you to do the job that the City innovative, inventive and inspirational impact to the Council is supposed to be doing. You are telling that regeneration of Johannesburg’s architecture and you want us to manage all sorts of things which are form’. They are awarded in seven categories: living actually what the government should be doing’. And Joburg; working and buying Joburg; relaxing and our response to that is ‘if you look at the benefits playing Joburg; caring Joburg; believing in Joburg; and that are going to accrue to your private property conserving Joburg. because of the neighbourhood that is well managed, that is well cared for, it far surpasses what you can The City Improvement District (CID) has been a key tool achieve on your own. Fortunately, once you actually in partnership building. The formation of a CID requires get to a particular dominant landlord then things that more than 50% of all titleholders in a particular start to move. Most fortunately, in the Inner City, area vote in favour thereof, which sometimes requires most of those people understand the value that the long periods of negotiation and interaction with a wide JDA developments bring to their properties, into the range of interested parties. Some CIDs are legislated entire neighbourhood so we seldom get a dominant entities, but the majority are voluntary associations. landlord who won’t participate. (One problem noted with the formation of CIDs has been around the way the City has insisted on treating According to Mendrew, one of the potential problems sectional title arrangements: each individual titleholder, with the JDA’s approach is what happens when a for example, each apartment owner in a sectional titled dominant landlord changes its managers, and its block of flats, is counted in the calculation of the 50% previous commitment to JDA projects wanes. Another titleholder threshold, and it is often very difficult – challenge is selecting the right partners. Organisations sometimes impossible – to get together the requisite constantly approach the JDA with new ideas and number of votes. The problem is exacerbated when proposals, but these are often about benefiting private there are large numbers of absent landlords. For this investors only, with little or no benefit for the broader reason, CIDs have proven more difficult to establish community. Although Mendrew acknowledges that in dominantly residential areas than in office or the JDA has to demonstrate private-investor benefit, commercial nodes.) this cannot be the only criterion for embarking on

In many cases, the formation and early mentoring and at Edward Nathan Friedland Attorneys when he made encouragement of the neighbourhood institutions the decision to move into the public sector because he (particularly when smaller landlords are the norm) felt a strong need to make a contribution to building the has been facilitated by the JDA. In other areas big country. He joined the City of Joburg in 2004 as Director corporates have shown strong commitment to of Corporate Governance. In this role he was involved buildings CIDs, such as the leading role played by then in structuring and formalising the relationship between Sappi chairman Eugene van As in establishing the the city and its municipal entities, including the JDA. He Braamfontein Improvement District (BID), and working immediately felt a connection with the organisation, to convince other property owners to join the initiative. which he found to be: ‘an entity that was very bold, very daring, innovative, a group of people that were actively It is noteworthy that one of the biggest property owners involved in projects that I really loved’. in Braamfontein which did not join the initiative was state-owned Transnet, whose refusal to participate After a few years in Corporate Governance Thanduxolo effectively resulted in the BID only covering part of the started thinking about moving to a place where he Braamfontein precinct. could be more actively involved in making a difference, and jumped at the opportunity to join the JDA as Paradoxically, in some instances the City of Joburg itself Executive Manager: Risk, Compliance and Human has been the most problematic partner for the JDA. Resources. The JDA’s role in revitalising public spaces is to make the initial investment in a park, new pavements, etc but Entering its second decade of operation, the JDA thereafter it is often handed over to an operational City has faced a number of new challenges in executing division – such as City Parks – to maintain, and they do its mandate, not the least of which was the decline not always live up to their commitments. There is little in operating revenue as the number of very large that the JDA can do in these circumstances to enforce projects under management fell off sharply. (The last the obligation, and they sometimes find that poor mega project that the JDA has managed has been maintenance of a JDA-led upgrade is attributed to the the Rea Vaya bus rapid transit (BRT) system, which agency, which is the City’s ‘face’ of the development. implementation commenced in 2009.) The Agency is Overall service-delivery problems in the City – such also competing with other City entities for funding, and, as the prolonged billing issues, which saw significant despite its success, city management has been clear number of property owners struggling for years to that the JDA needs to be self-funding. Mendrew and obtain correct municipal accounts – also undermine the his team have seen the tight funding environment as efforts of the JDA. Many investors, tenants and residents a challenge, rather than an insurmountable problem. see all city agencies as part of the same municipality, They are adamant that smaller projects are as capable of and often infer inefficiencies in one area as applicable to making a real difference to the city as big ones. everyone. Mendrew is also clear about how the organisation has A NEW ROLE decided to position itself in this new environment: One (way) was to say we need to earn a reputation that Following Bethlehem’s departure in 2010, Thanduxolo surpasses anyone in municipal government, first of all, Mendrew was appointed, first as acting CEO and then or generally in the public sector, so whatever project we permanently to the post in December 2012. Thanduxolo touch should be delivered on time, on budget, with the studied law, and was on a commercial lawyer fast track best possible quality. That way you earn a reputation

that says this is the right party to partner with. understand that inclusion of the informal sector requires far more than simply constructing formal trading There are some unexpected results and hard choices to spaces, or enforcing byelaws. Instead, it requires that be made, from this decision to be the ‘go to’ entity for City Planning, and investors and developers active in the the management and implementation of projects. There City, plan for inclusion. To this end the JDA has acted as has been an increase in the number of organisations facilitator, bringing together a range of stakeholders to that approach the JDA to manage capital projects, and try and reach common understanding. project management fees are a key source of income for the organisation. But Mendrew is clear that the The JDA has also faced challenges in defining and organisation is not interested in just being another maintaining its mandate ‘space’ as other agencies and project manager, no matter how attractive the fee. departments grew and developed in a maturing and Instead, their focus is on what the organisation refers expanding city structure. The City’s Department of to as ‘development facilitation’, and there is a clear Economic Development (DED) was a relatively small difference between implementing a capital project unit with limited capacity when Lael Bethlehem was (albeit on time and to budget) and actually facilitating Director, and was happy to let the JDA take the lead in development. Development facilitation requires a many inner-city projects. But now the Department has a more thoughtful and holistic approach, based on an staff complement of more than 120 (more than double understanding that it takes more than the construction that of the JDA), and is considered the lead organisation of a building to change the development trajectory of for economic development in the city. It is not always a neighbourhood. The successful and inclusive precinct clear where the inner-city regeneration mandate of the approach, followed in areas such as Braamfontein reflect JDA ends and the economic development mandate of a development facilitation strategy. DED begins.

The JDA’s Sharon Lewis describes ‘development Another inter-agency challenge is related to the facilitation’ as everything that makes development more ownership of property. The City is a considerable likely, and includes the following factors: landowner in the inner city, but none of that land • An inclusive neighbourhood vision is directly owned by the JDA. Instead it falls under • Funding the Joburg Property Company (JPC). The prospect • Project development of gaining access to city-owned land is often a big • Feasibility and design incentive for private-sector investors, but the JDA • Partnerships, especially with property developers is unable to make that kind of commitment, and • Capital funding relies heavily on the JPC to be a willing partner in its • Urban management and the ongoing securing of the initiatives. investment. The objectives of the JDA were restated in 2011/12 in It is not always easy to convince all the parties that a order (according to the organisation’s third quarter long and often complex process is preferable to just report for the 2011/2012 financial year) to achieve building something. One example of this process during greater alignment with the strategic priorities of the City the current CEO’s tenure is the efforts to include the of Joburg. often-marginalised informal sector as an integral part of the city’s development process. JDA management

These redefined objectives are to: • Restructure the city by developing defined, strategic geographic areas around the city and the movement corridors that link them; • Promote economic growth by creating efficient and competitive business environments that cluster industries and functions in these areas; • Turn around declining investment trends in these areas by upgrading public space, generating shared visions for future development, and encouraging urban management partnerships; • Develop local economic potential in marginalised areas to promote access to jobs and markets; • Encourage sustainable energy consumption and land- use in the city by developing strategic transit nodes and corridors; • Promote economic empowerment through the structuring and procurement of JDA developments; and • Support productive development partnerships and co-operation between all stakeholders in these areas.

Some questions to consider: 1. What was the nature of the problem that the JDA was set up to address and how did that affect its orientation? 2. Who were the potential allies in the efforts to rejuvenate the city centre and how did this influence the strategy of the JDA? 3. How did each of the different leaders of the JDA establish the political space to operate effectively? 4. How did the regulatory and governance environment change over time, and how did this influence the strategies in different periods? 5. How would you explain the change in the set of goals adopted in 2011 to those adopted in 2001?

Johannesburg inner city overview presentation

National Treasury’s 2012/13 Mid-year budget and performance visit TURNING THE TIDE: The Johannesburg Developm20 Marchent Agen 2013cy and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 18

ADDENDUM ONE: Extract from a March 2013 presentation by the City of Joburg made on the occasion of National Treasury’s 2012/13 Mid-year budget and performance visit

Timeline of Johannesburg’s inner city regeneration 1960s and 1980s 1990s 2000-2005 70s National Flight of head Lack of urban Inner city identified as a Mayoral economic cycles offices to northern management and priority: Inner city office established, are reflected in nodes. resulting crime and JDA established in 2001 with area boom periods of and grime. based development responsibilities in property Growth in the inner city. development in residential Parts of the inner the inner city. population of poor city become no-go Central Johannesburg Partnership people in Hillbrow areas. active and first CIDs established. Parking and and other inner congestion limits city areas. Built environment UDZ tax incentive is introduced in confidence and quality declines 2003. 4/4/2013 new business and Retail sector goes further. shopping nodes down-market. Various urban regeneration strategies are established. including Social Housing Regeneration Strategy. 1

Timeline of Johannesburg’s inner city regeneration

2007 2008 2009 2010 2011 2012 1 Inner City Dedicated Inner City 2010 FIFA Inner city core Westgate Regeneration funding for Urban Design world cup. public Station Charter signed inner city Implementatio Inner City environment Precinct focus. public n Plan Traffic and upgrade And Charter environment approved. Transport continued. End of Inner Partnership upgrades in Study. City Charter. established precincts. Rea Vaya BRT Inner city core Gautrain to service is public Park Station. UDZ extended Hillbrow, operational on environment to 2014. Berear and first trunk upgrade focus Chancellor Yeoville public route. (EO Park). House environment Barbican refurbished. upgrade focus. Ellis Park and refurbishment Fordsburg 15th anniversary Johannesburg Zurich precinct focus. of the signing of Fashion Week building. the Constitution. in the inner Inner city 3 New Hotels. AZA 2010. city. roadmap….. 2

This case study was researched and written by a teamInner at the Publiccity Affairs upgrading Research Institute expenditure (PARI), led by Tracy planvan der Heijden, for the University of Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013.

The five year public environment upgrade programme prioritised the following precincts for investment over the 5 years of the Inner City Charter:

•Year 1 (2007/08) Hillbrow, Berea and Yeoville •Year 2 (2008/09) Doornfontein, Ellis Park and Bertrams •Year 3 (2009/10) Pageview, Fordsburg and Vrededorp and the Retail Improvement District •Year 4 (2010/11) The Core CBD •Year 5 (2011/12) The SW part of the inner city 3

2 4/4/2013

Summary of upgrading analysis and plans

• The Inner city urban design implementation plan (ICUDIP) was approved in 2009. It is based on in-depth analysis of the spatial aspects of the inner city, and proposes an annual 5-point implementation approach that (a) Redevelops pocket spaces; (b) Transforms linear spaces; (c) Advances long term strategic projects; (d) Develops functional community facilities; and (e) Promotes inclusionary housing projects.

• The Johannesburg inner city traffic and transport study of 2010 proposes a series of transit-oriented responses based on a detailed analysis of traffic and transport patterns and problems.

• Neighbourhood-level plans (Spatial Development Frameworks) for many precincts in the inner city, most recently: – Westgate Station Precinct SDF (2010); Wits Precinct UDF (2008); Jeppestown / Troyeville / Fairview / Malvern UDF (2008); Retail Improvement District: Status Quo, Visioning and Action Plan (2008); Greater Park Station Urban Design and Heritage Framework (2008); Fordsburg / Mayfair UDF (2008); Pageview / Vrededorp SDF(2007).

TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 19

ADDENDUM ONE: continued

PRECINCT PLANNING

HILLBROW / BEREA / YEOVILLE

HILLBROW HEALTH PRECINCT W ITS UNIVERSITY

UJ DOORNFONTEIN

PAGEVIEW INNER CITY COMMUTER LINKS GREATER ELLIS PARK

NEWTOWN CULTURAL PRECINCT

FASHION DISTRICT

FORDSBURG

JEW EL CITY CHINATOWN

WESTGATE

4/4/2013

Summary of inner city upgrading expenditure 3

2007/08 2008/09 2009/10 2010/11 2011/12 Total Charter commitment (R'm) 400 425 425 500 250 2 000 Actually spent (R'm) Inner city upgrading fund 163 188 45 116 48 560 Other funds including JDA precincts, and BRT 377 561 149 92 117 1 296 Total % of target achieved 135% 176% 46% 42% 66% 93%

Note: These allocations exclude some capital expenditure in the inner city by Joshco, the Department of Community Development and the Department of Economic Development.

Inner city upgrading expenditure by precinct

Note: This graph excludes expenditure in development areas that were not identified as priority areas in the Inner City Charter, such as Newtown and 7 Braamfontein.

4 4/4/2013

Summary of inner city upgrading expenditure

Note: These allocations exclude some capital expenditure in the inner city by Joshco, the Department of Community Development and the Department of Economic Development.

TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 20 4/4/2013 6

ADDENDUM ONE: continued

Inner city upgrading expenditure by precinct

Note: This graph excludes expenditure in development areas that were not identified as priority areas in the Inner City Charter, such as Newtown and 7 Braamfontein.

UDZ tax incentive 2003 - 2012 4

Over R10 billion cumulative private sector investment attracted since 2005;

8% of investment by BEE, Women, Youth

Estimated +70,000 construction related jobs created 30% of which are deemed to be permanent; 10.0 9.0 R7 Billion worth cumulative investment for 8.0 7.0

completed buildings; 6.0 5.0

R500 million constitutes small sectional title R'billion 4.0 3.0 ownership. 2.0 1.0 0.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year 17

This case study was researched and written by a team at the Public Affairs Research Institute (PARI), led by Tracy van der Heijden, for the University of Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013.9 TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 21

4/4/2013

ADDENDUM ONE: continued

Inner City Property Scheme 2008 - 2012

Through the Inner City Property Scheme (ICPS), the City sought to forge a partnership between the City and the Private sector to transform and rejuvenate the Inner City through the acquisition and development of properties in the following categories:- • Hi-jacked buildings abandoned by absentee landlords or forcefully ejected owners; • Properties abandoned to the City via its credit control measure; • Voluntary abandoned properties by owners, and • City-owned properties in a dilapidated state.

Phase I of the ICPS was awarded to Norvena Property Consortium, a consortium comprising 8 entities. The initial award to the consortium comprised of 30 City-owned properties offered through a development lease transaction.

The consortium has packaged 10 properties from the initial allocation of 30. Construction on the initial lot of properties started in July 2012 and is envisaged to be completed in October 2013. The building hand-over and occupation is expected to be done in November 2013. 18

Housing development 2007 - 2011

• 44 000 new housing units in the inner city between 2007 and 2011.

• Most of these are affordable rental units delivered through the conversion of office buildings.

• 120 End Street by Afhco Holdings is the biggest office to residential conversion in the Southern Hemisphere, delivering 940 new apartments with ground floor retail space.

• Afhco Holdings has the largest residential portfolio in the inner city, having delivered 5 700 new units between 2007 and 2011. City property has delivered 4 600 new units, and the Trust for Urban Housing Finance (TUHF) has financed the delivery of almost 5 000 new units by individual developers.

• There have been some failed attempts to develop up-market apartments, Urban Ocean still owns a number of vacant properties, and Ponte City is now being renovated successfully with more modest finishes.

• Propertuity are selling apartments in the Maboneng Arts and Culture Precinct priced between R1.5 million and R350 000, and Southpoint properties have a student accommodation offering in Braamfontein.

• New housing is planned for the Westgate and Park Station precinct s (including the Westgate Station Redevelopment, Stimela Square, Brickfields phase 2, projects by the CoJ Dept of Housing), and in Bertrams and Doornfontein. 19

This case study was researched and written by a team at the Public Affairs Research Institute (PARI), led by Tracy van der Heijden, for the University of Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013. 10 TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 22

4/4/2013

ADDENDUM ONE: continued

Office rentals 2003 - 2010

Newtown R25/m2 R59/m2

Fashion 2 District R12/m R42/m2

High Court R22/m2 R58/m2

2003 2010

Inner city crime rates 2002 - 2011

Johannesburg Central Hillbrow

25,000 25,000

20,000 20,000

15,000 15,000

10,000 10,000

5,000 5,000

- -

Contact crime Property-related crime Contact crime Property-related crime Other serious crime Other crime Other serious crime Other crime

Source: From 2001 to 2004 - JDA (2006) Performance Surveys, from 2006 onwards - SAPS Crime Statistics

11 TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 23

4/4/2013

ADDENDUM ONE: continued

JDA investment gearing ratios 2001 - 2011

Between 2001 and 2011, for every R1 invested in public environment upgrading through the JDA, private investors put in the following amounts in each development area: Development area R value invested by private property owners for every R1 spent by JDA Braamfontein 71.2 Newtown 14.4 Ellis Park 10.0 Fashion District 75.8 High Court Precinct 360.8 Average across all precincts 33.8

Inner city investor’s opinions on what drives investment decisions

12 estimates of the demand for low cost housing in the inner city. Assuming a demand of 20,515 households earning less than R3,200, using 2001 figures, the delivery of 4,000 social housing units over the next two to three years, will still not pull well over 15,000 poor people out of ‘bad’ buildings and into secure, affordable accommodation. TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city 24 Third, in its implementation, the Better Buildings Programme does not giveUCT adequate GRADUATE attentionSCHOOL OF DEVELOPMENT POLICY AND PRACTICE to the needs of people currently living in ‘bad’ buildings earmarked for the Programme. While, in theory, the developer to whom ‘bad’ buildings are awarded is supposed to engage with residents of the buildings in order to ascertain their needs and arrange for their voluntary vacation of the building, this does not happen in practice. People living in these buildings seldom have anywhere else to go, and private developers have neither the capacity nor the inclination to assist residents ADDENDUto re-accommodateM t themselves.wo: In two cases of which COHRE is aware, a municipal eviction Exapplicationtract fromunder the Any Building Room Standards for the Act P hasoor followed? Forced hard Eonvictions the heels ofin theJohannesburg award of a , South Africa. A reportbuilding to prepared a private developer by the under Centre the Better on HBuildingsousing Programme. Rights and Evictions (COHRE, 2005).

Conclusion: Any room for the poor in the Inner City?

This chapter has demonstrated that there is a large unmet demand for low cost housing in the inner city. The physical and social manifestation of this demand is the existence of urban slums, referred to as ‘bad’ buildings by the municipality and often housing very poor people, for whom no affordable accommodation is provided by the market or the state. ‘Bad’ buildings also house slightly wealthier people who can afford some low cost housing products in the inner city. However, since demand for these products far outstrips supply, their only affordable alternatives are slums, or ‘bad’ buildings. Not all ‘bad’ buildings are slums. They do not all constitute grave threats to life and health. Nor are they all hotbeds of criminal activity. Some are simply run down, in arrears with rates and service charges and have no effective property management regime in place.

There is broad agreement amongst state officials, urban policy specialists and civil society activists that this unmet demand exists. There is less agreement, however, on whether or not it should be met. Some urban policy specialists COHRE interviewed expressed a belief that low cost housing in the inner city is too expensive for its provision to be equitable. It is unfair, they say, to spend R80,000 on upgrading an inner city unit for occupation by a low-income family, while RDP housing beneficiaries are given subsidies of less than R30,000 to live in poor locations. Further, the money spent on providing a few poor inner city households with low cost housing would be better spent providing large numbers of informal settlement dwellers with secure tenure or a formal house.

These ethical arguments should be taken seriously. Ultimately, however, they are likely to be forestalled by practical reality. Whether developmentally convenient or not, poor people do live in the inner city and will carry on living there whether policy makers like it or not. Best practice in Asia and Latin America shows that the sooner this is realised, and embraced as an unavoidable part of reality in any developing country, the sooner the poor themselves can be involved in the conceptualisation and design of their living space, an approach which offers the best chance of sustainable solutions.

The poor of the inner city have to be dealt with in some way. So the real question is whether or not they ought to be accommodated in the inner city or relocated to informal settlements or RDP housing projects on the urban periphery. The latter strategy is unlikely to be effective in pushing poor people out of the inner city for good; while large-scale evictions and relocations to 70 the urban periphery are so reminiscent of the apartheid era as to be politically unconscionable. Moreover, under current land tenure and eviction law, such a sustained programme of removals is likely to be successfully opposed in court.

Apart from these practical considerations, there are also powerful ethical counter-arguments in favour of providing low-cost housing in the inner city. Any policy that requires poor people to move from the inner city to the urban periphery to benefit from state housing subsidies would probably involve asking them, in the short-to-medium term at least, to choose between a house and a livelihood, given the economic disadvantages of peripheral locations. This is manifestly unfair and frustrates the overall objective of housing delivery, to improve beneficiaries’ quality of life. There are also serious ethical problems with very idea that poor people can be told where to live, simply because they are poor. Markets that restrict access to rich residential suburbs are one thing. A state-led programme which deliberately forecloses poor people’s access to economically productive areas of the city would be quite another.

There are also pressing economic questions. Are the costs of providing land and upgrading buildings for housing development in central locations, any greater that the combined costs of constructing and providing services (transport, health, education, water, electricity) to peripheral housing developments? At least one study suggests that they might not be.132 This case study was researched and written by a team at the Public Affairs Research Institute (PARI), led by Tracy van der Heijden, for the University of

Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment In the final analysis, the inner city poor cannot simply be evicted out of existence. Nor, despite the assertions of many private developers, and Promotionsome municipal Programme officers, (funded are by themost Department of them for International Development). April 2013. criminals or illegal aliens who deserve to be evicted from their homes. This much was recognised, and raised by some speakers, at a recent Cities in Change conference, held in Johannesburg. In his address, Johannesburg Housing Company chairperson Murphy Morobe ‘applauded the fact that investment is returning to the inner city - both in commercial and residential sectors - but criticised the city's managers for not doing enough for the poor bearing the brunt of urban renewal’. According to Morobe:

‘The blind spot in this increasing formalisation of the inner city, and the increasing management of the social and financial terrain, is to threaten the presence of the poor. The eviction of people in dilapidated buildings without alternative accommodation deprives not only gangster landlords of a captive income, but also decent, honest people of the cheapest accommodation available … This blind spot, caused by the necessary processes of development, undermines the very development in whose name it is being done.’133

Neil Fraser, Executive Director of the Central Johannesburg Partnership (CJP), had expressed similar concerns a few days before, in his column, CitiChat:

‘I have voiced the opinion previously that the City does not have a coherent policy in its approach to the urban poor. This concern is exacerbated when it comes to residential accommodation. I think it is time to step back and look critically at where we are and where we are going. I think it is time to develop a new model that breaks with apartheid

132 ‘Poor Should be Housed in City Centres, MPs told’ Business Report, 12 August 2003. 133 Quoted in City of Johannesburg, Official website, ‘Speakers urge solution for inner-city poor’, 24 August 2004 (www.joburg.org.za/2004/aug/aug24_inner1.stm). 71 pushing poor people out of the inner city for good; while large-scale evictions and relocations to the urban periphery are so reminiscent of the apartheid era as to be politically unconscionable. Moreover, under current land tenure and eviction law, such a sustained programme of removals is likely to be successfully opposed in court. TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city 25 Apart from these practical considerations, there are also powerful ethical counter-argumentsUCT GRADUATE SCHOOL OFin DEVELOPMENT POLICY AND PRACTICE favour of providing low-cost housing in the inner city. Any policy that requires poor people to move from the inner city to the urban periphery to benefit from state housing subsidies would probably involve asking them, in the short-to-medium term at least, to choose between a house and a livelihood, given the economic disadvantages of peripheral locations. This is manifestly unfair and frustrates the overall objective of housing delivery, to improve beneficiaries’ quality of life.ADDENDU There are alsoM tseriouswo: ethical problems with very idea that poor people can be told where to live,continued simply because they are poor. Markets that restrict access to rich residential suburbs are one pushingthing. A poorstate-led people programme out of the which inner deliberately city for good; forecloses while large-scale poor people’s evictions access and to relocationseconomically to productivethe urban periphery areas of the are ci soty wouldreminiscent be quite of another.the apar theid era as to be politically unconscionable. Moreover, under current land tenure and eviction law, such a sustained programme of removals Thereis likely are to bealso successfully pressing economicopposed in questions. court. Are the costs of providing land and upgrading buildings for housing development in central locations, any greater that the combined costs of constructingApart from theseand providing practical considserviceserations, (transport, there health, are also education, powerful water, ethical electricity) counter-arguments to peripheral in housingfavour of developments? providing low-cost At least housing one study in the suggests inner thatcity. theyAny mightpolicy not that be. requires132 poor people to move from the inner city to the urban periphery to benefit from state housing subsidies would probablyIn the final involve analysis, asking the them,inner cityin the poor short-to-med cannot simplyium termbe evicted at least, out to of choose existence. between Nor, adespite house andthe assertionsa livelihood, of givenmany theprivate economic developers, disadvantages and some of peripheralmunicipal locations.officers, areThis most is manifestly of them unfaircriminals and orfrustrates illegal thealiens overall who objective deserve ofto housing be evicted delivery, from to improvetheir homes. beneficiaries’ This much quality was of life.recognised, There are and also raised serious by ethical some problems speakers, with at avery recent idea thatCities poor in Changepeople canconference, be told whereheld toin live,Johannesburg. simply because In his they address, are poor. Johannesburg Markets that Housing restrict accessCompany to rich chairperson residential Murphy suburbs Morobeare one thing.‘applauded A state-led the fact programme that investment which deliberately is returning fo reclosesto the inner poor citypeople’s - both access in commercialto economically and productiveresidential sectorsareas of - thebut cicriticisedty would thebe quitecity's another.managers for not doing enough for the poor bearing the brunt of urban renewal’. According to Morobe: There are also pressing economic questions. Are the costs of providing land and upgrading buildings for housing development in central locations, any greater that the combined costs of constructing‘The andblind providing spot in servicesthis increasing (transport, formalisation health, education, of the innerwater, city,electricity) and the to peripheralincreasing housingmanagement developments? of Atthe least social one and study financial suggests terra thatin, theyis to might threaten not thebe. 132presence of the poor. The eviction of people in dilapidated buildings without alternative accommodation In the finaldeprives analysis, not onlythe inner gangster city landlordspoor cannot of asi camplyptive be income, evicted butout alsoof existence. decent, honest Nor, despitepeople the assertionsof the cheapestof many accommodationprivate developers, available and some… This municipal blind spot, officers, caused are by most the necessaryof them criminalsprocesses or illegal of development,aliens who deserve undermines to be the evicted very development from their inhomes. whose Thisname much it is being was 133 recognised,done.’ and raised by some speakers, at a recent Cities in Change conference, held in Johannesburg. In his address, Johannesburg Housing Company chairperson Murphy Morobe Neil‘applauded Fraser, the Executive fact that Director investment of the is Centralreturning Johannesburg to the inner Partnership city - both (CJP), in commercial had expressed and similarresidential concerns sectors a few- but days criticised before, the in city'shis column, managers CitiChat: for not doing enough for the poor bearing the brunt of urban renewal’. According to Morobe:

‘I have voiced the opinion previously that the City does not have a coherent policy in its approach‘The blind to spot the urbanin this poor. increasing This concernformalisation is exacerbated of the inner when city, it comes and the to residentialincreasing accommodation.management of the I think social it andis time financial to step terra backin, isand to lookthreaten critically the presence at where of we the are poor. and whereThe eviction we are going.of people I think in itdilapidated is time to debuildingsvelop a newwithout model alternative that breaks accommodation with apartheid planningdeprives notbecause only Igangster really don’t landlords think weof ahave captive achieved income, that. but In alsofact decent,I see little honest evidence people of revolutionaryof the cheapest thinking accommodation when it comes available to housing… This policyblind spot,at any caused level ofby government.the necessary I 132 ‘Poor mustprocessesShould sadly be Housed of concur development, in City with Centres, Stephen undermines MPs Greenberg told’ Business the vein Report rya recentdevelopment, 12 AugustCentre 2003. infor whose Civil Societyname it Research is being 133 Quoteddone.’ in City133 of Johannesburg, Official website, ‘Speakers urge solution for inner-city poor’, 24 August 2004 (www.joburg.org.za/2004/Report when he statesaug/aug24_inner1.stm that “In the face). of a coldly rational model of planning, the horror of forced removals has not been consigned71 to history along with apartheid, but remains Neil Fraser,alive inExecutive post-apartheid Director South of the Africa.”’ Central134 Johannesburg Partnership (CJP), had expressed similar concerns a few days before, in his column, CitiChat:

This case study was researched and written by a team at the Public Affairs Research Institute (PARI), led by Tracy van der Heijden, for the University of Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013. Photo: Guy Tillim Aftermath of an eviction Noverna Court, Hillbrow, May 2004

Without a much more repressive response from the state, including the introduction of limited access, curfews and no-go areas, or a massive and unprecedented gentrification of the inner city, the poor cannot and will not be forced out. The only sustainable solution to the problem of Johannesburg’s bad buildings is to begin to re-accommodate their residents, or contract someone else to accommodate them, in affordable, well-managed housing, which caters for their basic needs and gives them the security they need to meaningfully participate in Johannesburg’s otherwise exciting and innovative urban renewal.

Whatever happens, official stereotyping of people who live in inner city slums as criminals must cease immediately, as must their eviction without alternative accommodation.

134 Neil Fraser ‘Decade of Change Scorecard (2) - how are we making out in the Residential Sector?’, 16 August 2004 (http://www.joburg.org.za/citichat/2004/aug16_citichat.stm). 72 TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 26

planning because I really don’t think we have achieved that. In fact I see little evidence of revolutionary thinking when it comes to housing policy at any level of government. I must sadly concur with Stephen Greenberg in a recent Centre for Civil Society Research Report when he states that “In the face of a coldly rational model of planning, the horror ADDENDUof forcedM removals two: has not been consigned to history along with apartheid, but remains continuedalive in post-apartheid South Africa.”’134

Photo: Guy Tillim Aftermath of an eviction Noverna Court, Hillbrow, May 2004

Whatever happens, official stereotyping of people who live in inner city slums as criminals must cease immediately, as must their eviction without alternative accommodation.

134 Neil Fraser ‘Decade of Change Scorecard (2) - how are we making out in the Residential Sector?’, 16 August 2004 (http://www.joburg.org.za/citichat/2004/aug16_citichat.stm). 72

ADDENDUM three: Extract from Johannesburg inner city – common vision, shared success. End of Term Report 2006 – 2011 (City of Joburg, 2011).

Regeneration in action

Partnerships are key The successes of urban regeneration have not come about through the actions of any one party alone. Instead it has relied on collaboration between the city authorities, the private sector and community organisations.

Partnerships welcomed To bring the ambitious vision for the inner city to reality is no easy task. While clear vision and leadership on the part of the municipality is absolutely essential, implementation will not be successful if it depends on the public sector alone. Instead the buy-in of all role-players in the inner city is required. This includes national, provincial and local government as well as the private sector and community organisations.

Projects implemented successfully throughout the inner city during the past decade have proved that partnerships between the municipality, the private sector and community organisations can work. Therefore, the City of Johannesburg’s strategy to build partnerships in order to upgrade the public environment was prudent. It ensured that the city maintained a balance between its available resources and the risks it took. The onus for success was not solely placed on the municipality, and with a wider grouping taking emotional and financial ownership the sustainability of projects was ensured.

When approached with proposals for public-environment upgrades such as Gandhi Square, the City of Johannesburg has welcomed the initiatives and worked hard to clear obstacles to the establishing of partnerships. The lesson here is that it is not only important for the city to initiate urban regeneration projects, but as important is the facilitation of processes where projects are initiated by other partners. The easier it is for the private sector and community organisations to engage the city council in new initiatives, the faster and more effectively new projects will be implemented.

Partnerships no coincidence

The city’s policy to pursue partnerships for urban regeneration did not happen by coincidence. It was a conscious strategy based on leading development practice.

Schematic illustration of ideal partnership types

Implementation Rule-setting and innovation Well defined Well Purpose Open-ended Formal Informal

Level of institutionalisation

24 This case study was researched and written by a team at the Public Affairs Research Institute (PARI), led by Tracy van der Heijden, for the University of Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013. TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 28

ADDENDUM three: continued

In South Africa two broad categories of partnerships have been identified in urban development literature. The first being “implementation partnerships” and the second “innovation (or rule- setting) partnerships”1.

Implementation partnerships focus on achieving clearly defined, measurable objectives that rely on formal institutional arrangements. Innovation partnerships, in turn, hinge on informal collaborations that seek to address open-ended social problems. Chapter 2 In the case of the Johannesburg inner city, many of the urban regeneration interventions are a hybrid between the two types of partnerships, especially since they involve complex, multi- stakeholder partnerships.

Project planning partnerships that define project priorities and outcomes can be classified as innovation partnerships. On the other hand, project implementation partnerships such as city improvement districts or infrastructure PPPs need to be managed in a formal way with binding agreements. This involves a clear definition of roles and responsibilities, assignment of risk, outputs with timeframes, and expected impacts.

Crisis is a potent galvanising force for partnerships, even reluctant partnerships. In the absence of crisis, partnerships can become dysfunctional. They may either require extensive facilitation, administration and secretariat support, or they may have rules that compel participation.

Partnerships should create dynamic tensions that lead to more innovation and so better solutions2. Key to holding partnerships together is the effective management of these tensions.

ADDENDUM three: continued

Representing private property owners in the city is the JICBC, formed in 1998 with the express goal of ensuring economic growth and the rejuvenation of the urban environment to deliver an improvement in the quality of life for all city stakeholders and role-players. Johannesburg’s Inner City Regeneration Charter is a prime example of a hybrid partnership. It does Thecontain JICBC clearlyis a strong defined lobby groupand measurableworking on behalfobjectives of inner and city it relies property on owners,formalised developers structures, and but it is corporatealso innovative bodies. Itin regularly nature, interfacesresponding with to the the committees, crisis of inner utilities city and decline agencies and of allowing the City partnersof to Johannesburgapproach the to cityshare with information solutions and that ideas. are Ita isdeparture a signatory from to the the Inner norm City and Regeneration that address Charter specific and is managed by the Central Johannesburg Partnership. problems. In most cases, this involves informal collaborations. Chapter 2 The JICBC has been led by Rory Roriston, Gert Dry, Anne Steffney and Renny Plit as chairs or vice-chairsCity leadership since 2006. The City of Johannesburg’s commitment to inner city regeneration is clearly apparent from the City investment sparks private investment Executive Mayor Amos Masondo’s initiative in launching the Inner City Regeneration Charter in 2007. The success of the public-private partnership model in the Johannesburg inner city is all too obvious To ensure delivery of the charter’s targets, the city has established various structures and appointed from the JDA’s research8. In six selected areas where the JDA spent a total of R540 million between key people. These include: 2001 and 2007, the private sector invested an additional R5,8 billion in refurbishments, conversions andMayoral upgrades. Committee The result is that vacancy rates have declined in all these areas – from an average peakInner of city 40% regeneration in 2003 down is ato top an priorityaverage atof the17% highest in 2008, level while of thehigher local rentals government. have been The mayor is involved achievedhimself acrossand interacts the board. with inner city stakeholders on a quarterly basis through various working groups.

ResearchMayoral proves Sub-committeebeyond any doubt onthat the a close Inner correlation City exists between city-led investment 8 leadershipThis committeeand a positive consists response of membersin the form of of the private-sector mayoral committee investment with. the city manager as an attendee. It resolves implementation blockages and provides political-executive guidance to solve Investmentassociated statistics problems and speed up delivery.

Members of the committee in this mayoral term arePublic Cllrs investment Amos Masondo (Chair),Private Bafana investment Sithole, Area 2001 – 2008 2001 – 2008 Christine Walters, Ruby Mathang, Roslynn Greeff, Parks Tau, Eljinah Ndlovu and Rehana Moosajee Braamfontein precinct R55,7 million R4,0 billion29 The Inner City Section 79 Committee Newtown precinct R188,7 million R2,7 billion This committee provides political oversight on the progress of programme implementation. Greater Ellis Park precinct R106,7 million R1,1 billion

MembersFashion District of this & committee Jewel City include precincts the following Councillors:R33,2 million R2,5 billion Ashraf Alli (Boeta) Rajah (Chair) High Court Precinct R8,3 million R3,0 billion Shirley Ancer “ThereJoy Coplan no doubt a strong link between the scale and duration of public sector investment and the level of privateDavid sectorDewes investment and leverage, as well as the ultimate sustainability of any area regeneration project”8. Esther Dipale DaphneFurther Zodwa proof Madiba

FrancinaRental rates Mashao for Joburg and intervention areas, 2003 to 2008 (Nominal) Nomaswazi Phyllis Mohlala Joburg: Office A Newtown Ellis Park Indistrial A Mokoena Joburg: Office C Braam: Office-A Fashion Disctrict: Office Cce C Mzobansi PhilemonJoburg: Average Ntuli Ellis Park Office High Court – A and B Juned Pahad 80 Patience Petersen Julius70 Sadiki Zama60 Shezi

Stanley) (Sipho) Sigotyana 2 50 Darrel Strydom Zanenceba40 Zietsman Tamela

BeverlyRental (R/m 30 Turk

0 2003 2004 2005 2006 2007 2008 26This case study was researched and written by a team at the Public Affairs Research Institute (PARI), led by Tracy van der Heijden, for the University of Cape Town’s20 Graduate School28 for Development41 Policy and Practice.53 Funding61 for the development75 of the case study was provided by the Employment 17 23 21 Promotion27 Programme30 (funded by the 35Department for International Development). April 2013. 18 21 28 41 53 61 25 26 31 37 38 57 30 32 35 36 47 50 40 30 12 13 11 17 20 27 22 25 27 30 40 60

30 Investment statistics

Public investment Private investment Area 2001 – 2008 2001 – 2008

Braamfontein precinct TURNING THE TIDE: The JohanneR55,7sb millionurg Development AgenR4,0cy billion and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 30 Newtown precinct R188,7 million R2,7 billion

Greater Ellis Park precinct R106,7 million R1,1 billion

Fashion District & Jewel City precincts R33,2 million R2,5 billion

High Court Precinct R8,3 million R3,0 billion ADDENDUM three: continued“There no doubt a strong link between the scale and duration of public sector investment and the level of private sector investment and leverage, as well as the ultimate sustainability of any area regeneration project”8.

Further proof

Rental rates for Joburg and intervention areas, 2003 to 2008 (Nominal)

Joburg: Office A Newtown Ellis Park Indistrial Joburg: Office C Braam: Office-A Fashion Disctrict: Office Cce C Joburg: Average Ellis Park Office High Court – A and B

60 ) 2 50

Rental (R/m 30

0 2003 2004 2005 2006 2007 2008

20 28 41 53 61 75 17 23 21 27 30 35 18 21 28 41 53 61 25 26 31 37 38 57 30 32 35 36 47 50 40 30 12 13 11 17 20 27 22 25 27 30 40 60

ADDENDUAnalysis ofM the fo Impactur of :the JDA's Area-Based Regeneration Projects on Private Sector Investments Extract from Analysis of the Impact of the JDA’s Area-Based Regeneration Projects on Private Sector Investments (JDA, 2009)

2 Theoretical Background

2.1 Urban renewal & area-based regeneration

Central to the research and the overall approach adopted to this assignment is the current theoretical and existing research in respect of urban renewal and area-based regeneration. In particular this background provides the basis for the development of indicators to measure such interventions.

2.1.1 Area-based regeneration

Area based regeneration programmes have been conducted under various ‘labels’ such as:

• urban regeneration (European terminology, usually linked to the upgrading of human and social capital through the development of derelict industrial and residential areas),

• urban renewal (terminology used in the USA, typically with an emphasis on the upgrading of economic infrastructure) and lastly

• urban upgrading (generally adopted internationally but mostly within the developing world, an urban focus which overlaps with both the above definitions).

For theAnalysis purposes of the of Impact this ofdocument, the JDA's Area-Based the general Rege termneration urban Projects renewal on Privat is usede Sector to describeInvestments urban upgrading interventions undertaken within Inner Cities. Area Based Regeneration or Area Based Interventions (ABIs) are used to describe specific projects in a particular geographic location, local in nature, mostly undertaken over the short to medium term. The role of ABIs is generally to assist and speed up the response of the state and the private sector to overcome the problems which the most deprived and dysfunctional urban areas experience.

Urbanof wealth renewal and poverty constitutes within a urbanvital component centres. Public of urban response and toeconomic this often development occurs through strategy. urban Whilstregeneration urban renewalinterventions, interventions, the success be they of wh areaich baseddepends or uponother, theare relationshipstraditionally seenbetween as the the responsibilitypublic and private of local sectors and and provincial civil society. government, both the public and private sectors now recognise the importance of participation in renewal from all key stakeholders, to ensure sustainability2.1.2 International of the interventions & local as urban well as renewal achievement trends of broader policy objectives. For this reason, government agencies seek to attract greater private sector participation in regeneration.Internationally To and achieve in South this, Africa, the success there have of previous been a wideand currentrange of policy programmes mechanisms designed which to guideaddress renewal legacies and areaof basedconflict, interventions residential is secritical.gregation and poverty. Urban regeneration interventions and trends are designed to contribute towards a more macro perspective of city Whereeconomic markets development. work, they Assumpti are the mostons which efficient underpin means decisionsof meeting for the public needs sector and preferences intervention 1. Within a market system, the public sector should only really be ofare individuals based on andmarket companies failure following private sector with-drawl due to a loss of confidence in a intervening in the country’s economy or structure (perhaps through urban renewal) when particular area / city. “Based upon this understanding, the dominant objective of the renewal of markets are failing or inefficient, presuming that the intervention will remedy the situation and urban centres has been to restore the confidence of the private sector, to create a sustainable improve the efficiency – national strategy will often directly intervene in the land market so as to property market and to restructure and diversify the local economy.” 2 facilitate private sector initiatives. Disturbances in the market brought about by urban transformation are caused at a macro level by globalisation, migration trends, and increasing In the 1980s, urban renewal was strongly property–led with an emphasis on visible results in poverty. Internationally, socio-economic trends have tended towards an increasing polarisation the public realm, achieved through flag-ship projects, such as London Docklands, the Albert

1Docks, and Grand Central station. The concentration on improving the physical environment was Greater considered London Authority, important The Rationale to increase for Public theSector apprec Interventioniation in theby Economy,existing GLA business Economics, and 2006. residents of their physical environment as well as being a key element in strategy designed to leverage new investment in the area. This emphasis on physical renewal ignored social and economic problems.

In the 1990s, priorities changed, and the emphasis shifted to become more focused on a Rhizomewelfare-basedThis case Management study approachwas researched Services as well– Cliand entas written Confidentialdeveloping by a team (28the February economicat the Public 2009) potential Affairs ofResearch brownfields Institute areas (PARI), and led Page by Tracy3 van der Heijden, for the University of Capemarginalised Town’s Graduate communities. School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013. The 1990s also saw the rise of urban development corporations and enterprise zones. Policies were targeted on tightly defined geographic areas (ABIs) with the hope that the ‘economically and socially disadvantaged’ in those areas would benefit from the physical upgrade. Examples of policy with this new socio-economic focus in the UK included the City Challenge and the Single Regeneration Budget (SRB) approach to ABIs. In fact the SRB, was responsible for all ABI funding between 1995 – 2001. It is also interesting to note that an emphasis on flexibility within ABIs was the key hallmark of the SRB approach. These programmes sought to bring about multi-faceted economic and social regeneration in relatively small neighbourhood areas3.

Towards the late 1990’s the focus shifted again, this time towards the beginnings of partnerships between the public and public and public and private sectors, as well as working with local stakeholders to address problems within their areas, involving stakeholders in decision making and disbursement of regeneration funds. ABIs now included a focus on training local residents so as to meet demands from the labour market, increasing employment as well as educating and up-skilling the youth. Community development as well as tackling crime became a part of building the sustainability of interventions. Some ABIs started targeting health issues, offering support to clinics and upgrading health facilities and health education programmes within the target areas.

2 Engelbrecht C, People and Places, an Overview of Urban Renewal, for SA Cities Network and Cities Alliance, 2005 3 Rhodes J, Assessing the Effect of Area Based Initiatives on Local Area Outcomes, Urban Studies 42(11), 2005

Rhizome Management Services – Client Confidential (28 February 2009) Page 4 Analysis of the Impact of the JDA's Area-Based Regeneration Projects on Private Sector Investments

of wealth and poverty within urban centres. Public response to this often occurs through urban regeneration interventions, the success of which depends upon the relationships between the public and private sectors and civil society.

2.1.2 International & local urban renewal trends

Internationally and in South Africa, there have been a wide range of programmes designed to address legacies of conflict, residential segregation and poverty. Urban regeneration interventions and trends are designed to contribute towards a more macro perspective of city economic development. Assumptions which underpin decisions for public sector intervention are based on market failure following private sector with-drawl due to a loss of confidence in a particular area / city. “Based upon this understanding, the dominant objective of the renewal of urban centres has been to restoreTURNING the confidence THE TIDE: ofThe the Jo hanneprivatesb sector,urg De vtoe lopmcreateent a Asustainablegency and its role in revitalising the inner city 32 property market and to restructure and diversify the local economy.” 2 UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE Analysis of the Impact of the JDA's Area-Based Regeneration Projects on Private Sector Investments In the 1980s, urban renewal was strongly property–led with an emphasis on visible results in the public realm, achieved through flag-ship projects, such as London Docklands, the Albert Docks, and Grand Central station. The concentration on improving the physical environment was considered important to increase the appreciation by existing business and residents of ADDENDUtheir physicalAnalysis environmentof Mthe Impactfour of asthe: wellJDA's as Area-Based being a key Rege elementneration Projectsin strategy on Privat designede Sector to Investments leverage new continuedinvestment in the area. This emphasis on physical renewal ignored social and economic Recently,problems. area based urban renewal approaches have involved public-public partnerships, hence the growth of Development Agencies. Funding for renewal usually comes from local and provincialIn the 1990s, government priorities changed,levels, hoping and the to emphasisleverage shiftedprivate to sectorbecome investment. more focused National on a governmentwelfare-based often approach provides as fundingwell as developingthrough national the economic fiscal mechanisms potential of andbrownfields incentives areas such and as TIFsmarginalised and in South communities. Africa the UDZ. of wealth and poverty within urban centres. Public response to this often occurs through urban ManyTheregeneration 1990s of the also moreinterventions, saw comprehensive the rise theof urbansuccess ABIs developmen ofhave which worked dependst corporations towards upon andtheovercoming enterpriserelationships property zones. between Policiesmarket the failureswerepublic targeted andso as private toon encourage tightly sectors defined and new civil geographicinvestment society. areaand sdiversification (ABIs) with the of hopeland usethat awaythe ‘economically from historic patternsand socially (often disadvantaged’ includes the upgradingin those areas of ageing woul dinfrastructure), benefit from thei.e. tophysical encourage upgrade. new Examplesland uses capableof policy of with supporting this new growing socio-economic economic focussectors. in Thesethe UK new included uses would the City bring Challenge new employment and the opportunities,Single2.1.2 Regeneration International hopefully Budget taken & (SRB)local up by approachurban local reside renewal to ABnts.Is. Further In trends fact thedevelopments SRB, was responsible in the UK have for all been ABI thefunding New betweenDeal for Communities1995 – 2001. and It theis alsoNeighbourhood interesting Renewalto note that Fund. an As emphasis well as ABIs on operatedflexibility Internationally and in South Africa, there have been a wide range of programmes designed to bywithin National ABIs Governments,was the key hallmarkindividual of department the SRB approach.s have begun These to implementprogrammes focused sought initiatives to bring - address legacies of conflict, residential segregation and poverty. Urban regeneration buildingabout multi-faceted Education Zones,economic Health and socialAction regeneration Zones and Employmentin relatively small Zones. neighbourhood In the 1990s areas in the3. interventions and trends are designed to contribute towards a more macro perspective of city United States ABIs were implemented through Empowerment Zones/Enterprise Communities, economic development. Assumptions which underpin decisions for public sector intervention throughTowards which the financelate 1990’s was funnelled the focus by Nationalshifted agGovernmentain, this time into investmenttowards the in specificbeginnings areas. of are based on market failure following private sector with-drawl due to a loss of confidence in a partnerships between the public and public and public and private sectors, as well as working particular area / city. “Based upon this understanding, the dominant objective of the renewal of Thewith Empowermentlocal stakeholders Zone/Enterprise to address Communityproblems within(EZ/EC) their programme areas, involvingwas established stakeholders in 1993 in urban centres has been to restore the confidence of the private sector, to create a sustainable bydecision theAnalysis Clinton making of Administration the and Impact disbursement of the asJDA's part Area-Basedof of regeneration their community Regeneration funds. revitalization Projects ABIs now on Privatincluded strategy.e Sector a focus TheInvestments programme on training property market and to restructure and diversify the local economy.” 2 waslocal designedresidents soto asempower to meet people demands and from communit the labouries market,across theincreasing United employmentStates by inspiring as well Americansas educating to workand togetherup-skilling to developthe youth. strategic Comm plansunity designeddevelopment to create as well jobs as and tackling opportunities crime In the 1980s, urban renewal was strongly property–led with an emphasis on visible results in inbecame the US’s a part most of building impoverished the sustainability urban and of ruralinterventions. areas. A Some nation ABIs wide started competition targeting forhealth the the public realm, achieved through flag-ship projects, such as London Docklands, the Albert designationissues, offering of six support urban toEZs clinics and sixty-fiveand upgrading urban ECshealth (Enterprise facilities Communities)and health educationbegan in Docks, and Grand Central station. The concentration on improving the physical environment Januaryprogrammes of 1994 within and the each target awarded areas. federal grant funds along with various tax benefits for EZ- was considered important to increase the appreciation by existing business and residents of based businesses. A community-based strategic plan for revitalization was the fundamental their physical environment as well as being a key element in strategy designed to leverage new requirementRecently, area requiring based communities urban renewal to assesapproaches their assets have andinvolved problems, public-public creating partnerships,a vision of a 2investment in the area. This emphasis on physical renewal ignored social and economic betterhence Engelbrecht future,the growthC, Peopleand structuringof and Development Places, ana planOverview Agencies. for ofachieving Urban Fund Renewal, thating forvision.for SA renewal Cities Network usually and comesCities Alliance, from 2005 local and 3 problems. provincial Rhodes J, Assessing government the Effect levels,of Area Based hoping Initiatives to onle Localverage Area Outcomes,private Urbansector Studies investment. 42(11), 2005 National 72government urban areas often and provides 33 rural funding communities through were national designated fiscal mechanisms in the first round and incentivesof the competition such as In the 1990s, priorities changed, and the emphasis shifted to become more focused on a withTIFs andeach in urban South EmpowermentAfrica the UDZ. Zone receiving $100 million and each rural, $40 million, in welfare-based approach as well as developing the economic potential of brownfields areas and performance grants for job creation and job-related activities. Upper Manhattan, which includes marginalised communities. Harlem,Many of was the one more of thecomprehensive designated areas. ABIs have worked towards overcoming property market failures so as to encourage new investment and diversification of land use away from historic The 1990s also saw the rise of urban development corporations and enterprise zones. Policies InpatternsRhizome 1999, Management(often 20 additional includes Services theeconomically upgrading– Client Confidential ofdistressed ageing (28 infrastructure), Februarycommunities 2009) i.e.were to encouragedesignated new as landRound uses II Page 4 were targeted on tightly defined geographic areas (ABIs) with the hope that the ‘economically Empowermentcapable of supporting Zones, growingmaking economicthem eligible sectors. to share These in new $3.8 uses billion would in federalbring new grants employment and tax- and socially disadvantaged’ in those areas would benefit from the physical upgrade. Examples exemptopportunities, bonding hopefully authority. taken Becomi up byng local one resideof thents. designated Further developments EZs was clearly in thea big UK fillip have for been the of policy with this new socio-economic focus in the UK included the City Challenge and the Harlemthe New community Deal for Communities and area. and the Neighbourhood Renewal Fund. As well as ABIs operated bySingle National Regeneration Governments, Budget individual (SRB) approach department to ABs haveIs. In begun fact the to SRB, implement was responsible focused initiatives for all ABI - funding between 1995 – 2001. It is also interesting to note that an emphasis on flexibility Abuilding similar Educationprogramme Zones, in Gauteng, Health ActionSouth ZonesAfrica, andwas Employmentestablished byZones. the DepartmentIn the 1990s of inLocal the Unitedwithin StatesABIs was ABIs the were key implemented hallmark of thethrough SRB Empowermentapproach. These Zones/Enterprise programmes sought Communities, to bring Governmentabout multi-faceted in the Gauteng economic Provincial and social Administration regeneration in in the relatively ‘90s on small an obviously neighbourhood much smallerareas3. budget.through (Gandhiwhich finance Square). was funnelled by National Government into investment in specific areas. TowardsAnalysis the of thelate Impact 1990’s of the JDA'sthe focusArea-Based shifted Rege agnerationain, Projectsthis time on Privattowardse Sector the Investments beginnings of The Empowerment Zone/Enterprise Community (EZ/EC) programme was established in 1993 However,partnerships a greater between degree the ofpublic complexity and public exists and in publicthe case and of private South Africansectors, Cities as well where as working urban by the Clinton Administration as part of their community revitalization strategy. The programme renewalwith local practitioners stakeholders need to to address address problemseconomic withinand social their dualit areas,ies involvingwhich exist stakeholders in our cities. in was designed to empower people and communities across the United States by inspiring Formaldecision and making informal and landdisbursement uses, a complex of regeneration transportation funds. ABIssector, now divers includede economic a focus onactivities, training Americans to work together to develop strategic plans designed to create jobs and opportunities thelocal often residents illegal dominanceso as to meet and demands control of from public the space labour together market, with increasing increasing employment skills shortages as well in the US’s most impoverished urban and rural areas. A nation wide competition for the withinas educating Local Government and up-skilling are challenges the youth. faced Comm byunity the developmentpublic sector inas thewell local as tacklingcontext. crimeUntil designation of six urban EZs and sixty-five urban ECs (Enterprise Communities) began in aroundbecame 2005, a part South of building African the renewal sustainability interventions of interventions. were heavily Some biased ABIs towards started property-related targeting health January of 1994 and each awarded federal grant funds along with various tax benefits for EZ- projects.issues, Moreoffering recently, support projects to clinics have and started upgrading to follow health international facilities trendsand health and focuseducation on based businesses. A community-based strategic plan for revitalization was the fundamental economicprogrammes and socialwithin renewal.the target areas. requirement requiring communities to asses their assets and problems, creating a vision of a better future, and structuring a plan for achieving that vision. 2.1.3 Property based urban renewal & investment perspective 2 Engelbrecht C, People and Places, an Overview of Urban Renewal, for SA Cities Network and Cities Alliance, 2005 723 urban areas and 33 rural communities were designated in the first round of the competition Rhodes J, Assessing the Effect of Area Based Initiatives on Local Area Outcomes, Urban Studies 42(11), 2005 Thewith centralityeach urban of propertyEmpowerment within urbanZone receivingrenewal lies$100 in millionits unique and role each as rural,a physical $40 million,asset in in providingRhizomeperformance Management the grantsfacilities Servicesfor and job spacecreation – Client in Confidentialandwhich job-rela economic (28ted February activities. functions 2009) Upper and otherManhattan, activities which are includescarried Page 5 4 out.Harlem, Property was oneis also of thean designatedasset providing areas. retu rns in the development and investment markets. Based on this premise, any decision to invest in renewal interventions therefore must take into account issues in relation to property from a development and investment point of view – risk In This1999, case 20 study additional was researched economically and written distressed by a team communities at the Public wereAffairs designated Research Institute as Round (PARI), II led by Tracy van der Heijden, for the University of and return. EmpowermentCape Town’s Graduate Zones, makingSchool for them Development eligible to Policy share and in Practice.$3.8 billion Funding in federal for the grantsdevelopment and tax- of the case study was provided by the Employment Rhizome Management Services – Client Confidential (28 February 2009) Page 4 exempt bonding authority. Becoming one of the designatedPromotion EZs Programme was clearly (funded a big by fillip the Departmentfor the for International Development). April 2013. LandHarlem markets community within and and area. around area based renewal interventions are often problematic due to imperfections in the land market where supply and demand don’t equate. According to Adair (1999),A similar whilst programme the physical in Gauteng, quantity ofSouth land Africa,is largely was fixed, established its supply byfor thedevelopment Department fluctuates. of Local SupplyGovernment is determined in the Gauteng largely Provincialby public Administrationpolicy and demand in the by ‘90s the on private an obviously sector. muchOne specific smaller objectivebudget. (Gandhi of area Square).based interventi ons should be to ensure the correct functioning of Inner City land markets through the process of raising land value. However, a greater degree of complexity exists in the case of South African Cities where urban 2.2renewal Investment practitioners need & risk to a ddressissues economic and social dualities which exist in our cities. Formal and informal land uses, a complex transportation sector, diverse economic activities, 2.2.1the often Private illegal dominance sector investors and control & of risk public space together with increasing skills shortages within Local Government are challenges faced by the public sector in the local context. Until Relativelyaround 2005, little Southresearch African is available renewal interventionson the nature were of private-sectorheavily biased investment, towards property-related the type of investor, the strategy employed, attitudes towards specific delivery mechanisms, or the perception and handling of risk5. That which does exist shows a relatively high concentration of private developers involved in residential property within ABI portfolios - the same is true within the context of Johannesburg.

With government’s move away from flag-ship projects, there seems to be a shift within the privateRhizome sector Management towards Services lower-value, – Client riskConfidential averse, (28 community February 2009) based schemes, reflecting a wide Page 5 mix of funding sources. According to Adair, (1999), perceived total return is the primary motive for holding a current portfolio of urban regeneration investments with less emphasis placed on the spreading of risk. Investors in ABI areas take a long-term view on their investment with the expectation of future capital appreciation. As Adair notes:

“….in the assessment of new regeneration projects it is apparent that capital appreciation , rental growth, perceived level of risk and quality of development are nearly all equally weighted factors implying that generally speaking, investors are becoming more risk averse.” (Adair, 1999)

The private sector consists of short and long term investors, developers and occupiers. Short term investors / property development companies usually invest first thus creating opportunities for long-term / institutional investors and occupiers. It is generally accepted that the private sector will not initiate urban renewal. (This is not true in the case of Johannesburg –

4 Adair, Berry, McGreal, Financing Property’s Contribution to Regeneration 5 Adair A et al, Evaluation of Investor Behaviour in Urban Regeneration, Urban Studies, 36/2031, 1999

Rhizome Management Services – Client Confidential (28 February 2009) Page 6 Analysis of the Impact of the JDA's Area-Based Regeneration Projects on Private Sector Investments

projects. More recently, projects have started to follow international trends and focus on economic and social renewal.

2.1.3 Property based urban renewal & investment perspective

The centrality of property within urban renewal lies in its unique role as a physical asset in providing the facilities and space in which economic functions and other activities are carried out. Property is also an asset providing returns in the development and investment markets. 4 Based on this premise, any decisionTURNING to invest THE inTIDE: renewal The Jo interventionshannesburg D thereforeevelopm entmust Agen takecy intoand its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 33 account issues in relation to property from a development and investment point of view – risk and return.

Land markets within and around area based renewal interventions are often problematic due to imperfectionsAnalysis inof thethe Impact land ofmarket the JDA's where Area-Based supply Rege andneration demand Projects don’t on equatePrivate Sector. According Investments to Adair ADDENDU(1999), whilst theM physical four quantity: of land is largely fixed, its supply for development fluctuates. Supply is determined largely by public policy and demand by the private sector. One specific continuedobjective of area based interventions should be to ensure the correct functioning of Inner City land marketsAnalysis through of the Impact the processof the JDA's of Area-Basedraising land Rege value.neration Projects on Private Sector Investments

2.2projects. Investment More recently, & riskprojects issues have started to follow international trends and focus on Analysis of the Impact of the JDA's Area-Based Regeneration Projects on Private Sector Investments economic and social renewal. 2.2.1 Private sector investors & risk 2.1.3 Property based urban renewal & investment perspective Relatively44 Stanley little Ave, research Gandhi isSquare, available Braamfontein). on the nature The of public private-sector sector usually investment, needs to the support type ofthe investor, the strategy employed, attitudes towards specific delivery mechanisms, or the processThe centrality or act asof aproperty catalyst within to offset urban the perceivedrenewal lies risk in within its unique the renewal role as areas. a physical asset in perception and handling of risk5. That which does exist shows a relatively high concentration of providing the facilities and space in which economic functions and other activities are carried private developers involved in residential property within ABI portfolios - the same is true within 44Privateout. Stanley Property sector Ave, isinvolvementGandhi also an Square, asset has providing Braamfontein).traditionally retu beenrns Th in edriven thepublic development by sector locally usually based and needs investmentproperty to supportdevelopment markets. the 4 the context of Johannesburg. processandBased investment oron act this as premise, acompanies catalyst any to decisionwhichoffset theadopt to perceived invest less risk-aversein riskrenewal within interventionsstrategies the renewal than therefore areas. institutional must investors. take into Privateaccount sector issues investorsin relation also to property apply specific from a developmentdecision-making and parametersinvestment pointto regeneration of view – risk by With government’s move away from flag-ship projects, there seems to be a shift within the Privateseekingand return. sector returns involvement in excess has oftraditionally those achieved been driven by non-regeneration by locally based propertyprojects developmentto offset the andprivateadditional investment sector risk towards 6companies. lower-value, which adopt risk averse,less risk-averse community strategies based thanschemes, institutional reflecting investors. a wide mix of funding sources. According to Adair, (1999), perceived total return is the primary motive PrivateLand marketssector investors within and also around apply area specific based de renecision-makingwal interventions parameters are often to problematicregeneration due by to for holding a current portfolio of urban regeneration investments with less emphasis placed on seekingDecisionsimperfections returns made inin theto excess invest land marketwithinof those areawhere achieved based supply re bynewaland non-regeneration demand precincts don’t are equate noprojects different. According to fromoffset to normal Adairthe the spreading of risk. Investors in ABI areas take a long-term view on their investment with 7the additionaldecision(1999), whilstriskmaking6. the processes physical quantity – based of landup on is risk-rewardlargely fixed, strategies. its supply forAccording development to Ratcliffe fluctuates. the expectation of future capital appreciation. As Adair notes: comprehensiveSupply is determined refurbishment largely by of publicbuildings policy can and gene demandrally be byundertaken the private at sector.a cost ofOne about specific 20- Decisions25%objective less made ofthan area tothe basedinvest cost interventiofwithin a new area onsdevelopment basedshould re benewal projto ensureect. precincts Despite the coare rrectthis, no functioningmarketdifferent rules from of show Innernormal thatCity “….in the assessment of new regeneration projects it is apparent that capital appreciation , rental decisiondevelopersland markets making traditionally through processes the use process – the based least of up raisingdifficult on risk-rewardland sites value. which strategies. means that According Inner City to brownfields Ratcliffe7 thesites comprehensiveneed togrowth, be made refurbishmentperceived as attractive level of of risk buildingsas and possible quality can ofto gene developmentdevelopersrally be are–undertaken usually nearly all achieved equally at a cost weighted through of about factors focused 20- implying that generally speaking, investors are becoming more risk averse.” (Adair, 1999) 25%policy2.2 lessAnalysis and Investment than incentives. of thethe Impact cost of& the arisk JDA'snew developmentissuesArea-Based Rege projnerationect. ProjectsDespite on this, Privat markete Sector Investmentsrules show that developers traditionally use the least difficult sites which means that Inner City brownfields sites needTheThere private to isbe often madesector a perception asconsists attractive of gap short as between possible and long thoseto tedevelopersrm investors investors, –who usually developers have achieved achieved and through occupiers.projected focused returnsShort policytermand2.2.1 andthoseinvestors Private incentives. who think/ sectorproperty this isinvestors notdevelopment possible &8 .risk Thecomp challengeanies usually for development invest first agencies thus andcreating other opportunitiesurban renewal for professionalslong-term / institutional is how to bridgeinvestor thiss and perception occupiers. ga p.It isOne generally method accepted is through that the TheretheprovisionRelatively private is often of sectorlittle enhanced a perception research will not information initiate isgap available between urban on renewalrenewal.on those the nainvestorsin (Thisvestmentture isof not whoprivate-sector whichtrue have in could theachieved case pointinvestment, of outprojected Johannesburg the theactual returns type risks – of andandinvestor, those returns. whothe Anotherthinkstrategy this is employedisthe not adoption possible, attitudes of8. aThe master challengetowards planning specific for developmentapproach delivery towards mechanisms,agencies ABIs. and A masterotheror the 44 Stanley Ave, Gandhi Square, Braamfontein).5 The public sector usually needs to support the urban planperception renewalapproach and professionals to handling Urban Renewal of riskis ho . w isThat toconsidered bridgewhich doesthis essential perception exist shows to attract ga ap. relatively Oneprivate method sectorhigh concentrationis investment, through the asof 4 processprovision Adair,itprivate shows Berry, or developersof localact McGreal,enhanced as government’s a Financingcatalyst involved information Prtooperty’s inoffsetcommitment residential onContribution the renewal perceived propertyto to the inRegenerationvestment arrisk withinea within and whichABI gives the portfolios couldrenewal investors point - areas.the aout degreesame the actualis of true certainty. riskswithin 5 and AdairABIsthe returns. contextA as et al,isolated Evaluation Anotherof Johannesburg. interventions of isInvestor the adoptionBehaviour are seen in of Urban aas master Regeneration, high risk, planning low Urban return approachStudies investments., 36/2031, towards 1999 WithinABIs. AABI master areas, Privateplanthe approach private sector sector involvementto Urban generally Renewal has looks traditionally is forconsidered about been a 20% essential driven return byto on attractlocally investment. basedprivate 9 propertysector investment, development as andit showsWith investment government’s local government’s companies move whichawaycommitment fromadopt flag-ship less to the risk-averse arprojea ects,and strategies givesthere investors seems than to institutionala bedegree a shift of investors. certainty.within the PrivateABIsprivate as sectorisolated sector investors towardsinterventions lower-value,also areapply seen specific risk as averse, high de cision-makingrisk, community low return basedparameters investments. schemes, to Within regenerationreflecting ABI areas, a wideby seekingthe2.2.2mix private of fundingreturns Public sector sources. ingenerallyrisk excess According looks of those for toabout Adair,achieved a 20%(1999), returnby perceivednon-regeneration on investment. total return 9 projects is the toprimary offset motive the additionalfor holding risk a6 .current portfolio of urban regeneration investments with less emphasis placed on Urban renewal locations are often economically obsolete places with derelict structures, Rhizomethe spreading Management of risk. Services Investors – Client in ConfidentialABI areas take (28 February a long-term 2009) vi ew on their investment with thePage 6 Decisions2.2.2possiblyexpectation Public contaminationmade of futureriskto invest capital and within outdatedappreciation. area basedinfrastructure. As reAdairnewal notes: Theseprecincts factors are allno increase different investment from normal risk, decisionhence themaking importance processes of the – valuebased of up the on land risk-reward within the strategies. area based According renewal project.to Ratcliffe Within7 the this Urbancomprehensivecontext, renewal public“….in therefurbishment locationssector assessment intervention are ofofoften new buildings comesregeneration economically canwith gene projectsinherent obsoleterally it beisrisks apparent undertaken places and atthat witha capitalcost.at aderelict costAs appreciation with of structures,about the private, rental20- possibly25%sector, less contaminationit than growth,must the be perceived costdemonstrated and of levela outdated new of risk developmentthat andinfrastructure. any quality intervention of proj development ect.These will Despite factorsmake are nearly an this,all actualincrease allmarket equally improvement investmentrules weighted show factors as risk,that well hencedevelopersas show the importance implying traditionallythat the that benefits ofgenerally use the the value speaking,will least ofoutweigh difficultthe investors land sites thewithin ar whichecosts. becomingthe areameansTo achievemorebased that risk renewalInner averse.”this Cityand project. (Adair, brownfields ensure 1999) Within that sites this the context,needinvestment to publicbe made is sectorsustainable, as attractiveintervention the asfollowing comespossible interven with to inherentdeveloperstion objectives risks – usuallyand are at typiachieveda cost.cally Asfound through with among the focused private ABIs: sector,policyThe andprivate it must incentives. sector be demonstrated consists of shortthat any and intervention long term investors,will make developersan actual improvement and occupiers. as wellShort • asterm show investors thatEnsure the correct /benefits property functioning will development outweigh of the landthe comp marketscosts.anies To by achieve raisingusually landthisinvest value.and first ensure thus that creating the investment is sustainable, the following intervention objectives are typically found among ABIs: Thereopportunities •is oftenSeeking a for perception long-termto engage gap / institutionalthe between private those investorsector investors ins andthe whooccupiers.absence have achievedofIt iseffective generally projected demand accepted returns in thatthe 8 andthe those private identifiedwho sector think willareas. this not is initiate not possible urban renewal.. The challenge (This is notfor developmenttrue in the case agencies of Johannesburg and other – urban• renewalEnsure professionals correct functioning is how of to the bridge land thismarkets perception by raising gap. land One value. method is through the • provision• ofTo enhanced refurbish information and reinstate on renewalderelict inlandvestment or property which andcould attempt point out to thecreate actual new risks land Seeking to engage the private sector in the absence of effective demand in the and4 returns.uses Another and sub-markets. is the adoption of a master planning approach towards ABIs. A master Adair, Berry,identified McGreal, areas. Financing Property’s Contribution to Regeneration 5 plan Adair approach A et al, Evaluation to Urban of InvestorRenewal Behaviour is considered in Urban Regeneration, essential to Urban attract Studies private, 36/2031, sector 1999 investment, as 6 it shows Adair• A, Tolocal Berry, refurbish government’sMcGreal, andFinancing reinstate commitment Property’s derelict Contribution to theland toar Regenerationorea property and gives and investors attempt a todegree create of newcertainty. land 7 ABIs Ratcliffe as isolateduses J, New and Building interventions sub-markets. from Old – Aare Review seen of asProperty high Refurbishment, risk, low return Hong Konginvestments. Polytechnic WithinUniversity, ABI Hong areas, Kong, 1993 8 9 the Adair private A, Berry, sector McGreal generally and Poon, looks Investment for about Performance a 20% withinreturn Urban on Regenerationinvestment. Locations, paper for the University 6 Adairof Glasgow, A, Berry, 2004 McGreal, Financing Property’s Contribution to Regeneration 7 9 Ratcliffe Adair AJ, et New al, TheBuilding Financing from Old of Urban – A Review Regenerat of Propertyion, paper Refurbishment, for the University Hong of Kong Ulster, Polyte Landchnic Use University, Policy, No Hong17, 2000 Kong, 1993 82.2.2 Public risk AdairRhizome A, Berry, Management McGreal and Services Poon, Investment – Client PerformanceConfidential within (28 February Urban Regeneration 2009) Locations, paper for the University Page 6 of Glasgow,This case 2004 study was researched and written by a team at the Public Affairs Research Institute (PARI), led by Tracy van der Heijden, for the University of Urban9 renewal locations are often economically obsolete places with derelict structures, AdairCape A etTown’s al, The Graduate Financing of School Urban Regenerat for Developmention, paper for Policy the University and Practice. of Ulster, Funding Land Use for Policy the, Nodevelopment 17, 2000 of the case study was provided by the Employment possibly contamination and outdated infrastructure. These factors all increase investment risk, hence the importance of the value of the land within Promotionthe area based Programme renewal (funded project. by Within the Department this for International Development). April 2013. context,Rhizome public Management sector Servicesintervention – Cli entcomes Confidential with inherent (28 February risks 2009) and at a cost. As with the private Page 7 sector, it must be demonstrated that any intervention will make an actual improvement as well as show that the benefits will outweigh the costs. To achieve this and ensure that the Rhizomeinvestment Management is sustainable, Services the – Clifollowingent Confidential interven (28tion February objectives 2009) are typically found among ABIs: Page 7

• Ensure correct functioning of the land markets by raising land value. • Seeking to engage the private sector in the absence of effective demand in the identified areas. • To refurbish and reinstate derelict land or property and attempt to create new land uses and sub-markets.

6 Adair A, Berry, McGreal, Financing Property’s Contribution to Regeneration 7 Ratcliffe J, New Building from Old – A Review of Property Refurbishment, Hong Kong Polytechnic University, Hong Kong, 1993 8 Adair A, Berry, McGreal and Poon, Investment Performance within Urban Regeneration Locations, paper for the University of Glasgow, 2004 9 Adair A et al, The Financing of Urban Regeneration, paper for the University of Ulster, Land Use Policy, No 17, 2000

Rhizome Management Services – Client Confidential (28 February 2009) Page 7 Analysis of the Impact of the JDA's Area-Based Regeneration Projects on Private Sector Investments

44 Stanley Ave, Gandhi Square, Braamfontein). The public sector usually needs to support the process or act as a catalyst to offset the perceived risk within the renewal areas.

Private sector involvement has traditionally been driven by locally based property development and investment companies which adopt less risk-averse strategies than institutional investors. Private sector investors also apply specific decision-making parameters to regeneration by seeking returns in excess of those achieved by non-regeneration projects to offset the additional risk6.

Decisions made to invest within area based renewal precincts are no different from normal decision making processes – based up on risk-reward strategies. According to Ratcliffe7 the comprehensive refurbishment of buildings can generally be undertaken at a cost of about 20- 25% less than the cost of a new development project. Despite this, market rules show that developers traditionally use the least difficult sites which means that Inner City brownfields sites need to be made as attractive as possible to developers – usually achieved through focused policy and incentives.

There is often a perception gap between those investors who have achieved projected returns and those who think this is not possible8. The challenge for development agencies and other urban renewal professionals is how to bridge this perception gap. One method is through the provision of enhanced information on renewal investment which could point out the actual risks and returns. Another is the adoption of a master planning approach towards ABIs. A master plan approach to Urban Renewal is considered essential to attract private sector investment, as it shows local government’s commitment to the area and gives investors a degree of certainty. ABIs as isolated interventions are seen as high risk, low return investments. Within ABI areas, the private sector generally looks for about a 20% return on investment.9

2.2.2 Public risk TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 34 Urban renewal locations are often economically obsolete places with derelict structures, possibly contamination and outdated infrastructure. These factors all increase investment risk, hence the importance of the value of the land within the area based renewal project. Within this context, public sector intervention comes with inherent risks and at a cost. As with the private sector, it must be demonstrated that any intervention will make an actual improvement as well ADDENDUas show that theM fobenefitsur :will outweigh the costs. To achieve this and ensure that the continuedinvestment is sustainable, the following intervention objectives are typically found among ABIs: •AnalysisEnsure of the correct Impact functioningof the JDA's Area-Based of the land Rege marketsneration by Projects raising on land Privat value.e Sector Investments • Seeking to engage the private sector in the absence of effective demand in the identified areas. • To refurbish and reinstate derelict land or property and attempt to create new land uses and sub-markets. • To ensure structures and mechanisms are in place to lever private sector finance. 6 Adair A, Berry, McGreal, Financing Property’s Contribution to Regeneration 7 Ratcliffe• J,To New attract Building investment from Old – A Review of Property Refurbishment, Hong Kong Polytechnic University, Hong Kong, 1993 8 Adair• A, Berry,To increase McGreal and the Poon, competitiveness Investment Performance of the withinidentified Urban localRegeneration area Locations, paper for the University of Glasgow, 2004 9 Adair• A et Toal, Theestablish Financing how of Urban the Regenerat activitiesion, financed paper for the under University the of initiativeUlster, Land are Use believedPolicy, No 17,capable 2000 of translating into final outcomes which will improve the problems which ‘users’ face in the identified area. • To improve the socio-economic status of the identified area through improved quality of life for all local users.

PartRhizome of the Management risk of government Services – Cli interventionent Confidential is that (28 Februarythe way 2009) in which the private sector and the Page 7 market will respond is an unknown. It is possible that investment (in this case specifically in urban renewal interventions) may crowd out or displace investment by individuals and firms. To mitigate risk, government will seek to involve the private sector in the renewal process. When seeking to leverage private sector investment, the timing of the ABI is critical and, according to Hui, depends on three fundamental issues;

• The present value of existing use of the land resources; • The present value of the best alternative use; and • The cost of rebuilding. 10 All three of these issues need to be taken into account within any feasibility analysis. Various risk reduction measures can stimulate confidence for investors – land assembly removes the risk of site purchase, thus reducing cash outflows in the initial stages of a project.

In support of the above information, research from the Urban Task Force (Rogers 1999) reported that the most efficient use of public money in urban renewal is to pave the way for investment of much larger sums of money by the private sector; “Money follows money and where pockets of value exist, the rippling out effects should be facilitated as much as possible”.

2.3 Leverage mechanisms

As discussed above, to mitigate risk and ensure efficiency within the free market, government will seek to involve the private sector in the renewal process. Mechanisms to leverage private sector involvement typically fall into two categories:

• direct (fiscal); and • indirect (non-monetary) typologies. Both these typologies are largely about risk sharing.

Research into international ABI interventions show that factors perceived to improve the flow of private sector finance into urban renewal areas are dominated by a range of non-fiscal based instruments, the aim of which is to develop a facilitative regulatory environment. Such instruments may include:

10 Hui E, Wong J, & Wan J, A Review of the Effectiveness of Urban Renewal in Hong Kong, Paper for the Hong Kong Polytechnic University, www.emeraldinsight.com/0263-7472.htm, 2007

This case study was researched and written by a team at the Public Affairs Research Institute (PARI), led by Tracy van der Heijden, for the University of Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013. Rhizome Management Services – Client Confidential (28 February 2009) Page 8 TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 35

ADDENDUAnalysis of theM Impact four of the: JDA's Area-Based Regeneration Projects on Private Sector Investments continued

• Simplification of the development process • An increase in the speed of procedures as well as • Integrated local planning; ensuring a transparent process and providing as much information as possible about the programme • Clarity in terms of policy • Technical assistance As Adair et al note:

“…there is not a demand for more public sector money, but for greater flexibility in existing practices and more innovative policy initiatives with regeneration agencies being able to react to changing market conditions.”11

Case studies and research show that the most frequently used monetary (directly impact on budget) measures to leverage private sector investment include the use of:

• Capex and opex grants targeted specifically to development within urban renewal areas • The establishment of urban development zones • Fiscal approaches such as tax relief, tax dis-incentives on greenfields sites, Tax Increment Financing, ring-fenced incentives such as urban development zones, • Upgrading of often dilapidated and inefficient or even non-existent infrastructure; • Area based supply side mechanisms such as land assembly or the facilitation of land and building sales. An example of this works in Singapore through the Land Title Strata Amendment Act, the aim of which is to assist private sector led development within ABIs. Under the Act, local government facilitates the assembly and sale of land and buildings as a collective (an ‘en bloc’ sale). The purpose of this is to overcome the problem of the minority holding back the sale process. This has made significant contributions towards increasing the amount of property available for residential development. The process increases the role of the private sector in the renewal process and spreads risk between sectors. (similar to the original intention of the Better Buildings Programme). • Restrictions on Green fields developments; urban edges, tax dis-incentives, loaded expense on bulk contributions etc. • Planning incentives such as the relaxation of zoning requirements, granting an increase in bulk and height allowances.

11 Adair A et al, Evaluation of Investor Behaviour in Urban Regeneration, Urban Studies, 36/2031, 1999

This case study was researched and written by a team at the Public Affairs Research Institute (PARI), led by Tracy van der Heijden, for the University of Rhizome Management Services – Client Confidential (28 February 2009) Page 9 Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013. TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 36

ADDENDUAnalysis ofM the foImpactur of the: JDA's Area-Based Regeneration Projects on Private Sector Investments continued

Figure 1: Incentive Typology

Source: The Impact and Effectiveness of Incentives in South Africa, Presentation for SACN, 2006

2.4 Measurement, monitoring & review

Monitoring and review throughout the process of urban renewal has significant value. ABIs have developed rapidly both locally and internationally with little known to date about their successes or failure. This has mostly been due to an inadequate understanding of the nature of policy intervention, insufficient development of evaluation theory, and a lack of available information regarding the key outcomes on which the ABIs were designed to impact.

It is clear that in order to establish relevant benchmarks and indicators, there needs to be a clear understanding of what the renewal objectives are. Within monitoring and review, there is an emphasis placed on indicators which reflect core policy objectives.

Taking these into account, indicators could include:

• base-line socio-economic conditions, • change measures which record the rate and direction of area change, • disparity measures which plot the degree to which an area is highly differentiated from others.12 As an ideal example of monitoring and review, this document is based on an adaptation of typical UK measurements:

• The first stage requires a selection of representative urban areas in which area based regeneration has taken place as well as adjacent urban areas in which no public sector investment has taken place (used as a control).

12 Murtagh & Sterrett, Instrumental and Interpretive Methods in Evaluating Urban Programmes, School of Environmental Planning, Queens University, Belfast.

RhizomeThis case Management study was researchedServices – Cli andent written Confidential by a team(28 February at the Public 2009) Affairs Research Institute (PARI), ledPage by 10Tracy van der Heijden, for the University of Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013. TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 37

ADDENDUAnalysisM f ofi theve Impact: of the JDA's Area-Based Regeneration Projects on Private Sector Investments Extract from Analysis of the Impact of the JDA’s Area-Based Regeneration Projects on Private Sector Investments (JDA, 2009)

4.4 JDA intervention areas

4.4.1 Inner city intervention areas

The figure below provides an overview of the broad location of each of the five intervention areas in the inner city considered in this assignment.

Figure 11: Location of intervention areas in the inner city

A brief overview of each of the five intervention areas is provided below. These overviews provide background to each area as well as the nature of the interventions.

Pictures illustrating the various investments and interventions in each precinct are provided in Appendix 7.

Rhizome Management Services – Client Confidential (28 February 2009) Page 29

ADDENDUAnalysis of Mthe Impactfive of: the JDA's Area-Based Regeneration Projects on Private Sector Investments continued

4.4.2 Braamfontein precinct

Table 2: Braamfontein regeneration context Boundary map Precinct background • Braamfontein is a mixed use precinct with an emphasis on commercial and residential land-use. • The area went through a period of severe urban decay between late 1980s and early 2000s. • At least 4 major corporate tenants are in the area, primarily along Ameshof Street. • Prior to renewal, Braamfontein displayed challenges, including vacant floor space, parking and access difficulties, a lack of public infrastructure investment, a lack of public open space & increasing crime & grime.

Public environment interventions Nature of intervention • This was the second precinct in Johannesburg to see significant private sector investment in a public realm upgrade. • JDA’s intervention built on this investment through streetscape upgrades, greening & the installation of public art. • An active CID ensures quality urban management & marketing of the precinct. • Land values have increased along with a decline in vacancies & private sector investment subsequent to work undertaken by the JDA has mostly been in the office & residential markets.

Private investment 2001 – 2008: R 3,968 million

Public investment 2001 – 2008: R 55.7 million

This case study was researched and written by a team at the Public Affairs Research Institute (PARI), led by Tracy van der Heijden, for the University of Rhizome Management Services – Client Confidential (28 February 2009) Page 30 Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013. TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 39

Analysis of the Impact of the JDA's Area-Based Regeneration Projects on Private Sector Investments ADDENDUM five: continued

4.4.3 Newtown precinct

Table 3: Newtown regeneration context Boundary map Precinct background • The site of forced removals under apartheid, a brickyard & power station, Newtown has been the subject of many urban renewal programmes. • The majority of land is owned by CoJ which has enabled public sector investment and renewal at scale. • The precinct is largely mixed use but caters predominantly for the cultural & entertainment industries. • Many structures have heritage value & have undergone adaptive re-use.

Public environment interventions Nature of intervention • Intervention has been visible in the public realm, creating public space, educational & entertainment venues, e.g. Mary- Fitzgerald square, as well as through the upgrade of existing structures; Sci-Bono & Museum Africa precinct.. • The JDA has also invested in the creative industries, developing venues for dance & music, in Heritage venues such as the Worker’s Library and in commercial developments - 1 Central Place. • The Area Based Regeneration has attracted substantial private sector investment with more projected for 2009. A CID funded by the City ensures quality urban management.

Private investment 2001 – 2008: R 2,716 million

Public investment 2001 – 2008: R 188.7 million

Rhizome Management Services – Client Confidential (28 February 2009) Page 31 This case study was researched and written by a team at the Public Affairs Research Institute (PARI), led by Tracy van der Heijden, for the University of Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013. TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 40

Analysis of the Impact of the JDA's Area-Based Regeneration Projects on Private Sector Investments ADDENDUM five: continued

4.4.4 Greater Ellis Park precinct

Table 4: Greater Ellis Park regeneration context Boundary map Precinct background • The precinct includes the Greater Ellis Park Precinct and overlaps into Bertrams, Doornfontein and New Doornfontein. • The precinct has experienced significant urban decay, which is undermining the potential of the educational, sporting & cultural facilities. • The precinct structure includes a Manufacturing Hub, an Educational Precinct, a Sports Mecca Precinct, a Mixed Use Precinct (mainly light industrial with some office and retail use), the Bertrams Heritage Cluster, Doornfontein & New Doornfontein. • The precinct contains buildings with significant heritage value.

Public environment interventions Nature of intervention • The intervention here is significant and is on both a strategic / policy level as well as physical intervention in the urban fabric. • The objectives of the intervention are numerous with the main focus being to consolidate and extend the sporting and educational role of the precinct, create an upgraded, managed, safe public realm, create a new tourism destination place and promote the development of a range of housing options. • The objectives & vision are being achieved through significant implementation of (not exclusively) infrastructure upgrades, introduction & upgrading of public transport routes, stations and taxi ranks, creation of a significantly upgrade public & pedestrian environment, establishing gateways, upgrading of sports facilities, providing mixed income & social housing as well as increased residential density.

Private investment 2001 – 2008: R 1,071.8 million

Public investment 2001 – 2008: R 106.7 million

RhizomeThis case Management study was researchedServices – Cli andent written Confidential by a (28team February at the Public2009) Affairs Research Institute (PARI), ledPage by 32Tracy van der Heijden, for the University of Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013. TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 41

Analysis of the Impact of the JDA's Area-Based Regeneration Projects on Private Sector Investments ADDENDUM five: continued

4.4.5 Fashion District & Jewel City precincts

Table 5: Fashion District & Jewel City regeneration context Boundary map Precinct background End • The Fashion District is a vibrant precinct both Street visibly in the public environment & internally Park among the many SMEs creatively involved in the manufacture and production of ‘Fashion’ related items. During the 60s the industry High went into decline & the District started to Court decay. Uses are mainly retail & light manufacturing, a small amount of dense residential with dense informal sector activity selling fashion related items along the streets. Studies of current businesses in the area have identified a fashion cluster comprising of a mix of design, manufacturing, sales & supply components. • Jewel City is a key site for diamond cutting & related beneficiation businesses. Carlton ABSA • The project was initiated by the private sector needing to create a secure environment for business. Leases & rights were obtained to close off roads & create an internally focused high security cluster of diamond related activity. Public environment interventions Nature of intervention • JDA’s intervention began with sector support through the establishment of the Fashion District Institute. The goal is to build a sustainable, viable, fashionable and functional Fashion District as a hub of economic growth and jobs in the emerging fashion cluster. Interventions have included marketing the precinct, attracting designers & manufacturers, upgrading & improving the public environment through sidewalk upgrades, the creation of visual ‘gateways’, and establishment of the Fashion Kapitol public square. • Partnership with the private sector has been key, most notably with regards to the Institute & the Kapitol. A voluntary CID is also operational within the precinct. • Jewel City has identified the need to expand into the surrounding urban fabric. Intervention here is therefore been to upgrade the public environment, an initiative which has attracted private sector investment

Private investment 2001 – 2008: R 2,515.3 million

Public investment 2001 – 2008: R 33.2 million

RhizomeThis case Management study was researchedServices – Cli andent written Confidential by a (28team February at the Public2009) Affairs Research Institute (PARI), ledPage by 33Tracy van der Heijden, for the University of Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013. TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 42

Analysis of the Impact of the JDA's Area-Based Regeneration Projects on Private Sector Investments ADDENDUM five: continued

4.4.6 High Court precinct

Table 6: High Court regeneration context Boundary map Precinct background • The High Court Precinct saw the flight of many legal firms to the North following decline of the Inner City, resulting in vacant buildings & related failing commercial & retail uses. • Upgrade of the precinct was initially conceptualised by the private sector, implementing urban management through a CID. Property owners & legal firms which had left then expressed an interest in taking up offices in close proximity to the court for convenience.

Public environment interventions Nature of intervention • Apart from urban management, JDA’s intervention has a focus on public environment upgrade, creating a piazza, extending the amount of public space available to users, traffic calming & an enhanced pedestrian environment. An upgraded managed environment has attracted private sector investment as well as new residential uses & supporting retail & commercial facilities.

Private investment 2001 – 2008: R 2,994.4 million

Public investment 2001 – 2008: R 8.3 million

RhizomeThis case Management study was researchedServices – Cli andent written Confidential by a (28team February at the Public2009) Affairs Research Institute (PARI), ledPage by 34Tracy van der Heijden, for the University of Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013. TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 43

Analysis of the Impact of the JDA's Area-Based Regeneration Projects on Private Sector Investments ADDENDUM five: continued

Project No / Projects Intervention Areas / Precincts

006 - Braamfontein Regeneration Braamfontein Regeneration

009 - Fashion District Fashion District

013a - Jewel City Jewel City

024 - High Court Precinct High Court Precinct

Summarised in the table below are the annual amounts that have been invested in each of the intervention areas since 2001. These investments comprise mainly capital expenditure on infrastructure / urban upgrade as well as professional fees and ancillary services such as area- marketing.

Also indicated in the table is the total budget per area as well as the expenditure to end 2007 (calendar year). Typically – in line with most infrastructure projects - the JDA expends 60% plus of its capital budget in the last two quarters of each financial year. Consequently the budget for 2007-2008 financial year is here only reflected in respect of expenditure as at 31 December 2007. Additional detail in respect of the budgets and expenditure per project is provided in Appendix 3.

Table 8: JDA Expenditure in selected precincts: 2001 - 2007

Expenditure Total Budget 2001 2002 2003 2004 2005 2006 2007 Spent R m R m R m R m R m R m R m R m R m

Greater Newtown 200.9 20.7 39.3 29.2 49.7 21.8 21.8 6.0 188.7

Greater Ellis Park16 241.8 1.4 2.8 0.2 0.0 0.0 17.3 85.0 106.7

Braamfontein 55.7 0.0 0.6 13.2 6.9 7.7 14.0 13.4 55.7 Regeneration

Fashion District 28.2 0.0 0.0 1.9 1.5 2.7 3.3 10.8 20.2

Jewel City 13.5 0.0 0.0 0.0 0.0 0.0 5.1 7.9 13.0

High Court 17 8.3 0.0 0.0 0.0 0.0 0.0 5.3 3.0 8.3 Precinct Total 548.3 22.2 42.8 44.6 58.0 32.2 66.7 126.1 392.6 Source: JDA DIMS, own analysis Note: All amounts indicated are exclusive of VAT The JDA’s total budget in respect of the selected intervention areas is R 548.3 million of which R 392.6 million had been spent by the end of December 2007.

16 The Greater Ellis Park budget and expenditure does not include the BRT funding and investment. 17 JDA have indicated that the DIMS contained an omission in respect of the High Court data, being an amount provided directly by the private sector as a contribution to that development. Consequently an amount of R 3 million has been added for the 2007 calendar year in line with available project documentation.

RhizomeThis case Management study was Servicesresearched – Cli andent writtenConfidential by a (28team February at the Public2009) Affairs Research Institute (PARI), ledPage by 36Tracy van der Heijden, for the University of Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013. TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 44

Analysis of the Impact of the JDA's Area-Based Regeneration Projects on Private Sector Investments ADDENDUM five: continued

5.2.1 Vacancy rates

Vacancy rates are an indicator of the overall health of the commercial property sector in an area. Many of the JDA’s intervention areas historically suffered from the flight of businesses and very high vacancy rates.

The figure below provides insight into the trend in respect of vacancy rates for A and B Grade office space in the intervention areas as well as Johannesburg as a whole.

Figure 22: Vacancy rates (A & B grade office) for Joburg and intervention areas, 2003 - 2008

60.0%

50.0%

40.0% %

Rate 40% 30.0% Vacancy 20.0% 17%

10.0%

0.0% 2003 2004 2005 2006 2007 2008 Joburg 24.4% 25.2% 24.8% 16.7% 17.0% 11.2% Braamfontein 11.9% 14.2% 14.6% 8.8% 10.2% 8.1% Fashion District 45.0% 50.0% 45.0% 35.0% 30.0% 25.0% Newtown 41.5% 43.7% 44.3% 27.2% 16.8% 15.6% High Court 52.0% 43.0% 22.0% 22.0% 22.0% 18.0%

Source: Viruly, 2008 Note: Nominal values (i.e. not adjusted for inflation); A and B Grade office space

The data show a very positive impact in respect of declining vacancy rates across the intervention areas – from an average peak of 40% in 2003 down to an average of 17% in 2008.

While Braamfontein has historically had the lowest vacancy rates of the intervention portfolio, it has continued to decline and is currently on a par with other prime office nodes such as Sandton.

Most notable is the substantial improvement in Newtown, High Court Precinct and the Fashion District – substantially more significant than the overall Johannesburg average.

Rhizome Management Services – Client Confidential (28 February 2009) Page 48

Analysis of the Impact of the JDA's Area-Based Regeneration Projects on Private Sector Investments ADDENDUM five: continued

Overall it is clear that the JDA / CoJ interventions have had a very positive impact. While the overall market improved in 2005, the more rapid improvement in the intervention areas can be ascribed in large measure to the public sector interventions.

5.2.2 Rental rates

Rental rates are a further indicator of health in respect of the commercial property sector. The figure below indicates A, B and C-grade office as well as industrial rentals that could be sourced.

Figure 23: Rental rates for Joburg and intervention areas, 2003-2008 (Nominal)

40 (R/m2)

Rental 20

0 2003 2004 2005 2006 2007 2008 Joburg:Office A 20 28 41 53 61 75 Joburg:Office C 17 23 21 27 30 35 Joburg: Average 18 21 28 41 53 61 Newtown 25 26 31 37 38 57 Braam: Office‐A 30 32 35 36 47 50 Ellis Park Office 40 Ellis Park Industrial 30 Fashion District:Office C 12 13 11 17 20 27 High Court ‐ A & B 22 25 27 30 40 60 Year Source: Viruly, 2008 Note: Nominal values (i.e. not adjusted for inflation)

The data show a significant improvement across the board in rental achieved for all classes of property.

In some cases (Braamfontein and High Court District), rentals are on par with other prime nodes in the city.

The figure below provides some insight into the annual growth rates (in nominal terms) of rentals in these areas.

Figure 24: Rental growth rates for Joburg and intervention areas, 2003-2008 (Nominal)

Rhizome Management Services – Client Confidential (28 February 2009) Page 49

Analysis of the Impact of the JDA's Area-Based Regeneration Projects on Private Sector Investments ADDENDUM five: continued

60%

50%

40% Year

30% on

Year 20%

10% Growth

% 0%

‐10%

‐20% 2004 2005 2006 2007 2008 High Court ‐ A & B 13.6% 8.0% 11.1% 33.3% 50.0% Fashion District:Office C 8.3% ‐15.4% 54.5% 17.6% 35.0% Braam: Office‐A 6.7% 9.4% 2.9% 30.6% 6.4% Newtown 4.0% 19.2% 19.4% 2.7% 50.0% Joburg: Average 16.7% 33.3% 46.4% 29.3% 15.1% Joburg:Office C 35.3% ‐8.7% 28.6% 11.1% 16.7% Joburg:Office A 40.0% 46.4% 29.3% 15.1% 23.0%

Source: Viruly, 2008 Note: Nominal values (i.e. not adjusted for inflation)

Evident above is that most of the intervention areas have typically followed the overall Johannesburg growth trajectory. However notable exceptions are Braamfontein and the High Court Precinct which have in recent years outperformed the Johannesburg average.

Most notable above is the very significant and rapid improvement in the Fashion District – albeit for C-grade office space. Clearly there is a demand for such office accommodation.

The improved and in instances better than Johannesburg average performance must be ascribed to the increased attractiveness of these areas and increased demand for quality affordable office accommodation in those locations. It is clear that public sector interventions play a critical role in improving and retaining this competitiveness.

Rhizome Management Services – Client Confidential (28 February 2009) Page 50

Analysis of the Impact of the JDA's Area-Based Regeneration Projects on Private Sector Investments ADDENDUM five: continued

5.2.3 Transaction Levels

The third area for consideration is property transaction levels. Based on a review of deeds registry data this analysis provides insight into changes in the volume and value of property transaction in each of the intervention areas since 1997.

While limitations are noted (see Section 3 above), deeds registry data nevertheless provides an important indicator as to the health of a property market. Typically the higher the number of transactions the healthier a market, while increases in average price per square meter are a good measure of confidence. Because almost all property transactions in these areas stem from the private sector, the deeds data is also an important proxy for overall levels of private sector investment.

The transaction data is reviewed per intervention area and the years of JDA intervention is also indicated – as is evident in most of the graphs there is a clear correlation between increased and improved market activity and the JDA / CoJ interventions.

The table below summarises the volume and value of transactions since 1997.

Table 9: Property Purchases – JDA Intervention Portfolio, 1997-2008

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 200818 Total

Braamfontein Total Trsx (No.) 14 2 7 37 127 39 40 53 78 62 1249 629 2337 Total Trsx Value 27.65 4.00 26.52 85.87 53.65 308.54 125.60 155.02 179.70 194.30 499.81 848.80 2,509.5 (R-million) Greater Ellis Park Total Trsx (No.) 23 10 10 30 17 52 49 13 160 26 52 44 486 Total Value 11.27 6.30 2.05 12.52 6.71 18.15 32.22 30.57 96.78 25.04 159.95 320.47 722.0 (R-million) Greater Newtown Total Trsx (No.) 13 27 19 16 42 4 2 27 23 94 23 290 Total Value 110.54 63.21 6.59 70.05 25.65 4.20 1.00 86.94 35.35 932.01 399.05 1,734.6 (R-million) Fashion District / Jewel City19 Total Trsx (No.) 26 4 30 231 20 37 28 36 70 88 72 354 996 Total Value 47.26 1.58 9.76 51.68 6.95 202.07 69.09 33.71 145.16 250.96 488.13 71.51 1,377.9 (R-million) High Court Precinct Total Trsx (No.) 7 6 6 19 6 129 34 19 25 29 440 471 1191 Total Value 6.22 22.00 0.00 45.36 25.45 332.59 284.83 97.25 108.83 154.23 328.34 286.00 1,691.1 (R-million) Source: Deeds Registry, AfriGIS, own analysis

18 It should be noted that 2008 deeds data reported here is only for the period January to August 2008. 19 In undertaking the deeds data analysis Fashion District and Jewel City have been analysed as a single area due to their proximity.

Rhizome Management Services – Client Confidential (28 February 2009) Page 51

ADDENDUM five: continued

Analysis of the Impact of the JDA's Area-Based Regeneration Projects on Private Sector Investments

Indicated in the figure below are the total property transactions for the period 1997 to 2008 for the Johannesburg Inner City.

Figure 25: Property Purchases – Johannesburg Inner City, 1997-2008

R 10,000 4,000

R 9,000 3,500

R 8,000 3,000 R 7,000

2,500 million)

‐ R 6,000 (R

(No.)

R 5,000 2,000 Value

Total R 4,000

1,500 Transactions

R 3,000 1,000 R 2,000

500 R 1,000

R 0 ‐ 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Total Trsx Value (R‐million) R 248 R 6,159 R 724 R 8,286 R 3,227 R 1,257 R 2,996 R 3,669 R 9,392 R 6,393 R 6,591 Other Trsx Value (R‐million) R 220 R 5,723 R 674 R 8,246 R 3,105 R 970 R 1,166 R 1,422 R 2,636 R 3,156 R 3,128 Total Section Title Trsx Value (R‐million) R 28 R 426 R 50 R 40 R 122 R 287 R 1,830 R 2,246 R 6,756 R 3,237 R 3,462 Total Trx 763 1,975 1,228 1,223 1,172 1,182 1,925 2,906 2,780 3,716 3,102 Year Source: Deeds Registry, AfriGIS, own analysis Notes: “Other” includes all transactions except section title Evident in the figure are significant increases in investment in 2001 and once again in 2006. While general property market and economic factors such as lower interest rates are an important cause, it is equally notable that these improvements correlate to period of increased JDA / CoJ investment and urban management activity.

Rhizome Management Services – Client Confidential (28 February 2009) Page 52

ADDENDUM five: continued

Analysis of the Impact of the JDA's Area-Based Regeneration Projects on Private Sector Investments

The figure below provides insight into the level of private sector investment in property purchases from 1997 to 2008 per JDA intervention area.

Figure 26: Property Purchases – JDA Intervention Portfolio, 1997-2008 1,000

Start of JDA investments 900

800

700

600

500 millions

R 400

300

200

100

0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Greater Newtown Greater Ellis Park Braamfontein Regeneration Fashion District & Jewel City High Court Precinct

Source: Deeds Registry, AfriGIS, own analysis

Rhizome Management Services – Client Confidential (28 February 2009) Page 53

ADDENDUM six: Extract from JDA Business Plan 2012-2013

4. STRATEGIC FOCUS AREA The JDA‟s strategic objectives are clearly aligned with GDS 2040 for the City of Joburg and in particular with the cluster plan for Sustainable Services in the integrated development plan. Promoting resilient city strategies by restructuring spatial logic is the primary objective towards which the JDA will work in the medium term. This will be achieved through:

 The introduction of a new Transit oriented development (TOD) programme that seeks to reshape land use patterns to promote new mobility systems and mass public transport use.

In addition to public investment, the development of transit oriented precincts require substantial development facilitation to re-orientate property values and land uses towards agglomerated and high intensity uses and functions (including high density affordable housing and suitable office and retail activities).

This is a medium-term programme that has been developed as a key IDP sub- programme for the sustainable services cluster. The JDA‟s role will be to support DPUM in planning and facilitation, and to implement public environment upgrading projects that support more intensive private investment, encourage pedestrian movement and the use of public transport, and provide community facilities and amenities for larger residential populations.

The JDA will seek to incorporate pathways, cycleways and pedestrian infrastructure such as shelters and lighting into all public environment upgrading projects, and will continue to construct Rea Vaya bus ways.

In 2012/13 JDA will continue to implement the Rea Vaya BRT infrastructure on behalf of the Department of Transportation and funded through the Public Transport Infrastructure and Systems Grant from the National Department of Transport.

A number of priority TOD precincts have been identified for JDA projects including Park Station and Westgate Station precincts in the inner city; Randburg CBD; Jabulani, and

ADDENDUM six: continued

Nancefield Railway Stations in Soweto; and a number of future TOD precincts that must be planned during this Mayoral term.

 The continued strengthening of the position of the inner city as a critical business and residential node and the primary gateway to transit networks for the city, the city region, the country and the continent. The JDA will continue to implement a phased plan to strengthen inner city nodes, address movement challenges, and improve the quality of the built environment across the inner city.

In 2012/13 the focus will be on the commuter links precinct (focused especially around the Johannesburg Art Gallery Rea Vaya bus station and the Park Station Precinct); the Westgate Station precinct; the core inner city; and Newtown.

Over the medium term the emphasis will shift to the Southern part of the inner city (the New Centre precinct), Doornfontein Student Precinct, and the new public places partnership programme that allows the CoJ to respond to private partner initiatives.

 The ongoing prioritisation of key activity nodes in marginalised areas that will create new economic opportunities, accommodate employment opportunities, and provide access to markets.

Led by urban development frameworks prepared in partnership with DPUM, JDA will continue to implement multi-year township development projects that include the creation of high streets and activity nodes, and the construction and upgrading of strategic amenities such as transit facilities (including taxi ranks), trading infrastructure, libraries, recreation centres, multi-purpose centres, public open spaces and green spaces. Wherever possible, development facilitation by the JDA will seek to establish community development partnerships, and to stimulate private property development including through partnerships in the retail and housing sectors.

28 This case study was researched and written by a team at the Public Affairs Research Institute (PARI), led by Tracy van der Heijden, for the University of Cape Town’s Graduate School for Development Policy and Practice. Funding for the development of the case study was provided by the Employment Promotion Programme (funded by the Department for International Development). April 2013. TURNING THE TIDE: The Johannesburg Development Agency and its role in revitalising the inner city UCT GRADUATE SCHOOL OF DEVELOPMENT POLICY AND PRACTICE 52

ADDENDUM seven: Regions of the City of Joburg – 2012

-76349 1 01 A AE F

1 0 4 1 1

- N 0 S 02 0 . 4 6 4 1 N 4 2 K

D OA E

ROA R D R 5 E V D AT I RI V R P

D I R A 62 U RO E D R5 E V D ROA 1 T R

L N A B V E 4 N 7 O

I N 1 2- 1

R N 10 1 C 6

P D F 6 8 S A N 1 6 D

1 1 R E S 0 A 4 M - N O U 9 1 2 O N A 0 3 N I 3 E 1 R N 2 AD V L G D A L S 1 I A IN R N P MA RO W E A E 14 D D R L 1 D R I 56 D I 2 A A N R O R O D M A R A H R RA K B P E O G D N C A T A

A A E R RI V D 1 E O O N E B A R U E D N I

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City of Johannesburg

Legend CORPORATE GEO-INFORMATICS City of Johannesburg B Township Boundaries C Telephone: +27 11 407-6095/6200/6134 Regional Map Email: [email protected] National Roads / Motorways D Workspace: /projects/standard maps/RegionAtoG_A0.mxd Date: 18 January 2012 Provincial / Major Roads E Compiler: Dinao Tjia Region A to G Source: City of Johannesburg F Projection: Transverse Mercator (LO 29) ± Regions Datum: Hartebeeshoek 1994 (WGS84 Ellipsoid) 1:70 000 A G Kilometers 2 1 0 2