City of Johannesburg Inner-city Project 2018 Agenda Understanding - - PowerPoint PPT Presentation

City of Johannesburg

Inner-city Project 2018 “Corridors of Freedom - Re-stitching our city to create a new future”

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Agenda

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Understanding our City Project Description Funding Strategy Financial Implications

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Potential Roles for DFIs

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Key Questions

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Understanding our City – Vision, Key Outcomes And Priorities

• The CoJ 2030 Spatial Development Framework

(SDF 2030, approved September 2016) sets out the City’s development trajectory and area prioritisation.

• The SDF seeks to address five major issues in

Johannesburg’s spatial and social landscape: ▪ Spatial inequalities and the job-housing mismatch, ▪ Increasing pressure on the natural environment ▪ Urban sprawl and fragmentation, ▪ Exclusion and disconnection ▪ Inefficient residential densities and land use patterns

Understanding our City – Spatial Development Framework

Understanding our City – Long Term Municipal Investment Need

Four Stream Cash Demand(40% of Total Capex Investment) Current MTEF (Year 1- 3)

Roads & Stormwater R 5,794,121,998 Water & Sanitation R 4,590,381,848 Electricity R 15,603,336,839 Solid Waste R 563,000,000 40% Demand Per MTERF R 26,550,840,685 100% Capex Needed R 66,377,101,712 Currently Approved MTERF Budget R 26,730,371,000 Shortfall R 39,826,261,027

• The four main Service Delivery infrastructure demands accounting for 40%, emanate from Roads,

Water, Electricity and Waste

• Total estimated 3 year capex cost is about R 66,4 billion versus currently approved Total Capex of

R26,7

• This raises a capital expenditure gap of R39,8 billion

5% Economic Growth Inner City Regeneration & Economic Projects PPP & Off Balance Sheet Funding Common Attainment of Joburg 2040 Vision and IDP On Balance Sheet Funding

Funding Strategy

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Understanding our City - Sources of Funding - Institutional Capabilities

• The City increased its annual capital budget from R4,5 billion in 2012/13 financial

year to R9,9 billion in the year under review.

• 2,000,000

4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 2013 2014 2015 2016 2017 2018 (Adjust ed) 2019 (Foreca st) 2020 (Foreca st) Loan Funding 1,311,200 1,458,631 3,276,000 3,940,000 2,626,777 2,998,386 2,349,726 2,742,874 CRR & Surplus Cash 368,408 3,147,604 4,530,718 2,213,072 3,665,553 1,290,986 3,339,902 2,393,837 Grants and Contributions 2,868,251 3,094,028 3,021,231 3,170,485 3,613,240 3,084,698 3,761,103 3,821,815 Total 4,547,859 7,700,263 10,827,94 9,323,557 9,905,570 7,374,070 9,450,731 8,958,526

Sources of Funding

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Liability Profile

Bonds DFI loans Banks Bonds 7 749 000 000.00 DFI loans 9 705 043 559.30 Banks 1 418 034 774.84 Total 18 872 078 334.14

• Weighted Average: cost

borrowing 12.46%

• R2.733 billion to be redeemed in

2017/18 (Sinking Fund)  Nedbank R1 billion  COJ 04 R1,733 billion

Capital Funding Strategy – Liability Profile

• 10,000

20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 2011 2012 2013 2014 2015 2016 2017 BILLION 2011 2012 2013 2014 2015 2016 2017 Total Assets 47,440 56,357 61,132 66,924 78,367 80,377 85,412

Total Assets

Historical Capital Investment Trends

• The increase of assets over the years was mainly due to the growth in PPE and

increase in cash and cash equivalents over the past years.

• PPE increased from R36 billion in 2011 to R66 billion in 2017

Programme / project description

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• The Inner City Roadmap : A framework

for the City of Johannesburg (CoJ) in rolling out the Growth and Development Strategy 2040 in the inner city.

• The Roadmap takes forward the work
• f the 2007-2012 Inner City Charter

which is an outcomes-based approach that requires all departments involved in a particular issue to work together to resolve issues or roll out programmes.

• The Roadmap takes an area-based

management and partnership approach to guide municipal activity in transforming the inner city.

Inner-city Transformation Project – Rational for Project

Inner-city Transformation - Planning: Medium Term Approach

Through the Growth and Investment Stream… What we are resolving:

• 10 Point Plan (Inner City key

priority- focus of 5% economic growth)

• Alignment with infrastructure at

precinct level

• Stimulating Economic

Development and SMME Support

• Agreement on priority precincts (3

precincts in Medium Term)

Inner City Eastern Gateway Park Station Precinct Westgate Inner City Capex Total 2017/2018 Total 2018 /2019 Total 2019/2020 Inner City - DP 115,000,000 160,000,000 160,000,000 Inner City - JDA 1,000,000 11,500,000 54,000,000 TOTAL 116,000,000 171,500,000 214,000,000

= R 501,500,000 MTEF

Inner-city Transformation - Accelerating Economic Growth and Investment

• Prioritized focus on Inner City, i.e. three key precincts:
• Projects in the Inner City Eastern Gateway include, development infill for

greater residential densities, parks, community facilities

• Implementation of environment and social facilities to support of ICHIP / the

Affordable Housing strategy for Inner City Renewal

• Infrastructure upgrades in the Westgate Precinct to unlock investment
• Public Environment Upgrades in Noord Street, Hillbrow Tower Precinct, Park

Station funded from the Inner City Fund

• 1. Inner City Eastern Gateway
• 2. Park Station Railway Seam (incl. Noord

Street Precinct)

• 3. Inner City South West (Westgate)

 Planning and Intelligence in place  Ripe for Re-development and investment  High Impact – Favorable Yields  Market is ready Why?

Inner-city Transformation - Project Summaries

PRIORITY 1: Strengthening the Core

• INNER CITY HOUSING IMPLEMENTATION PLAN (ICHIP)
• Overview:
• A proposed housing strategy and implementation plan for the Johannesburg Inner City

(2014 – 2022);

• 30 000 Households in Risk- provision of rental accommodation of R1000 or less a month
• Short to medium need of 30 000 units of accommodation
• 6 Delivery Programmes
• 5 Facilitation Programmes
• Progress:
• Developing Transitional/ Temporary Emergency Housing as critical for re-development
• f Bad buildings in the Inner City and improving living conditions (JOSCHO)
• Assessing, identifying and packaging land parcels (800) for acquisition and re-

development in the Inner City

• Analysis of Capital Subsidies available to private sector to incentivise them to go down

market

Inner-city Transformation - Project Summaries

PRIORITY 1: Strengthening the Core

• INNER CITY EASTERN GATEWAY
• Overview:
• Regeneration Strategy
• The Inner City Eastern Gateway must become an inclusive series of inter-connected neighbourhoods

accommodating an economically and demographically diverse resident profile in a well-integrated, liveable, high-density urban environment within easy reach of nearby job centres and social amenities.

• Formalisation of housing densification, particularly around transit nodes ;
• Proposed densities for Phase 1 (2017 – 2022): 6 577 dwelling units;
• Proposed densities for Phase 2 (2022 – 2037): 11 699 dwelling units
• Diversified (including affordable and social) housing delivery;
• Public environment upgrades (including pedestrian links and open spaces);
• Increase accessibility and connectivity;
• Infill development in strategic areas;
• New community facilities, schools and parks to cater for the increased population;
• Progress:
• Urban Development Framework (UDF) recently completed and currently undergoing approval.
• Development Facilitation
• Projects underway:
• Contractor appointment for the implementation of the Jeppe Park upgrade up to practical

completion stage.

• Scope development and project package for future developments.

Inner-city Transformation - Project Summaries

PRIORITY 1: Strengthening the Core

• PARK STATION PRECINCT
• Address infrastructure bottlenecks;
• Improve Public Transport Level of Service and Pricing;
• Use Public Land to address gaps and ease congestion;
• Urban Management related issues are critical
• Physical interventions aimed at relieving congestion and

facilitating ease of access by improving key pedestrian linkages

• Projects:
• Construction of JITI is at an advance stage and progress

is at 55%

• Key City acquisitions by JOSCHO for Social Housing in the

Precinct

• Also a focus on creating supporting facilities like the

completion of the Kazerne Inter-modal facility

• Noord Street Trader Facilities

Inner-city Transformation - Release of Bad Buildings in the Inner city

Is A Strategy To:

• Fast track delivery of low cost housing
• To have mix of land uses(social facilities and economic facilities)
• City rejuvenation
• Creating safe living environments

Inner-city Transformation - Proposed Implementing Structure

CITY MANAGER COO OR ED INNER CITY Performance management and evaluation: Cluster convener: Supported by ED CRUM, Inner City Office, Secretariat Role played by Group Governance Sustainable Growth and investment Sustainable urban management: Service delivery Sustainable Human Settlements Capital investment, strategic vision LEAD= Development Planning JDA Service delivery, Billing, Director Service delivery, Billing, Bylaw enforcement, Criminality, Municipal Courts LEAD = REGION F: Regional Director Bad buildings temp accommodation, social housing: Housing LEAD = JDA + JOSCHO WEEKLY: on FRIDAY MONTHLY EVERY 2 WEEKS INTER GOVERNMENT MENTAL RELATIONS National: Home Affairs, SAPS, Transportation, Customs and Estate Duty, SARS,Public works, National Treasury, NPA, HDA,SSA Province: Office

• f the Premier,

Liquor Board, Gamblling Board,Gautrans- taxi license, COGTA,Social Devt, Health, Dept of Education, SHRA SOEs:Telkom,Esk

• m,prasa,ICASA,

Key Delivery Programmes Content and Champion Frequency of Meetings

Role of DFIs

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• To assist municipalities with project

Preparation

• Technical Assistance offering
• Play their role as a development

funding institution to fund social programmes

Potential Role of DFIs

• Underlying Drivers to come up with the Cost of Funding?
• Why are DFI Funding rates comparable to rates from the commercial banks?
• Any possibilities of shortening the approval Processes for the international

DFI’s?

Key Questions to the DFIs

Financing and Incentivising TOD in Dunkeld

TAX INCREMENTAL FINANCING

FINANCING TOD: THE DUNKELD DILEMMA

Item Cost City Power Substation Upgrade (Provisional from City Power)

R 150,000,000.00

88 kV Cables Upgrade (Provisional from City Power)

R 100,000,000.00

Roads

R 23,742,189.73

Sewer

R 297,570.24

Stormwater

R 6,148,537.62

Water

R 190,707.17

Total

R 280,379,004.20

• The city is nearing its ‘sustainable debt limits’- a

financial debt ratio adopted by the City.

• Based on the city’s long term capital budgeting,

the Dunkeld neighbourhood is not budgeted to receive the infrastructure required to unlock density (based on other more pressing priorities).

• The real estate market for Dunkeld is

experiencing an increase in demand.

• This market momentum provides an
• pportunity for the city to:
• 1. Promote sustainable development that supports

desired spatial objectives; and

• 2. Increase the revenue base of the city by

increasing density in high-demand area and thereby increasing property rates collected.

How can the city harness the market momentum in the area to finance the enabling infrastructure required for a low priority investment area? How can the city stimulate the creation of a mixed use neighbourhood; while having minimal (or no) impact on it’s balance sheet?

FINANCING TOD: THE DUNKELD DILEMMA

FINANCING TOD:TAX INCREMENTAL FINANCING

• Financing tool used to frontload

infrastructure investment

• TIF uses the additional property and/or

sales tax revenue paid (future gains), as a result of improvements in the TIF district, to help finance the project related costs (today) that will create the future gains.

• Current property and/or sales tax revenues

being collected become the “baseline”

• Additional property and/or sales tax

revenues, projected to be generated by the project, above the baseline, are deemed the “increment”.

• Government agrees to pledge a portion of

the increment to service debt, issued on behalf of the project.

FINANCING TOD: PROGRESS TO DATE

• Market Study (Complete)

– Indicates development take-up, informs project phasing.

• Infrastructure Requirements (Complete)

– Overall bulk infrastructure requirements and associated costs for the precinct.

• Financial and Legislative Treatment (Complete)

– Treatment of the tool within the financial and legislative structure of the City.

• Monitoring development applications (Ongoing)

– Ensure that proposed development yields do not compromise financial model but support and enhance the revenue generation to service the loan.

BENEFITS FOR DEVELOPERS AND CITY IN TIF

• TIF can unlock Precincts where there is development appetite through

funding of “enabling” infrastructure

• “Contracting” between the City and Special Purpose Vehicles (SPVs)

– Developer agreements; and – City to cede its right to usage of the incremental increase, and channel to SPV for repayment of debt obligation.

MAKING TIF OPERATIONAL

• Political buy-in and directive required.
• CoJ finance to champion TIF. Handover has now been done by

Development Planning.

• Resolve issue of whether TIF should be on and off-balance sheet (Most

likely to be partly on-balance sheet).

• Precinct already redeveloping without TIF as a mechanism. (Most likely to

pilot other areas in the City).

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“A Joburg that works, is a South Africa that works”