22 May 2017
Dear Ms Madikane,
Thank you for putting your story in writing to me, through an open letter published in GroundUp.
We have indeed met and spoken on several occasions, about the growing demand for housing and access to land in Cape Town, and about your personal struggles in particular.
Let me deal with the broader picture first. As you are aware, more and more people want to live in Cape Town. They are coming here from all parts of the country, and beyond. Many can afford to buy homes, and pay their rates and service charges to the City. Many others are indigent, and depend on local and provincial government to provide services – from water and electricity to health and education.
Because of the way funds are allocated from the central government, the money to provide services to many people in Cape Town still goes to the provinces they came from, rather than to the Western Cape. We have to wait till after the next census for this to change. This is one of the reasons that our budgets cannot keep pace with the growing demand. For example, since the last census in 2011, the number of children in our Khayelitsha schools has grown by 30%, but we haven’t received the money we need to support them from the central government tax pool. It is very difficult to keep improving education standards in these circumstances, but we are doing so.
The struggle for access to land and housing is equally intense, leading to conflicts in many parts of the City within and between poor communities. We spend a lot of time trying to mediate these conflicts which often delay our housing programmes for many years – making the situation worse.
The many middle-class and wealthy people who come to Cape Town have a much easier time than poor people, but they also face challenges. The main one is rapidly rising property prices due to growing demand. Properties on the Atlantic seaboard, including Sea Point (for example), have become unaffordable for most people for the same reasons you like living there: safety, access to facilities, proximity to the City, and the beautiful natural surroundings. You will remember that, not too long ago, Sea Point was a suburb in decline, together with the central City, and it took a lot of hard work by many people – councillors, the community, businesses, and the metro police – to turn things around. We are undertaking similar initiatives in many other parts of Cape Town, with different levels of success. The most important success factor is a committed community who take personal responsibility for improving their area.
Wherever we succeed in bringing down crime and grime, property prices rise. That is a sign of success, but it also brings its own problems. One is that it becomes more and more difficult for people (especially working people) to find affordable accommodation in well-located areas, often near to where they work. This is a problem successful cities face all over the world.
We are very aware of this. I consider it so important to address this problem, that I have turned our attempt to find a workable solution into a “game changer” in our provincial government. That means we have a special management team that is working on implementing a new strategy to increase the affordability of housing on well-located land. I follow their progress closely.
As you know, our first project is on the Provincial Government’s 22 hectare Conradie site, conveniently located in Pinelands, a suburb you also know, because you also used to work there.
I have told you how difficult this challenge is. You have on previous occasions asked me why it is so hard.
I replied that we have to work within the Constitution, the law, and many different regulations as well as tight budget constraints. This means we have to be rational and fair, and we cannot take arbitrary decisions or give some people greater benefits, funded by the state, than others in similar circumstances. We have to make the project viable and sustainable, so that we can repeat it for other people in other places, on the basis of the funding we have.
Because of the huge demand for housing, the national government has developed a subsidy system, so that the state can assist poor families to get access to housing. The subsidy falls into different categories, with greater support for indigent families (the RDP or BNG house, as it is known). People who are poor, but not indigent, are eligible for other forms of subsidy to make housing more affordable. The Social Housing Act is a relative newcomer to the government’s suite of interventions, which also seeks to integrate neighbours, something we strongly support and are trying to implement. Here again, the price of property in Cape Town makes affordability a major challenge.
It is a complex system, worked out on the basis of different income categories, for various forms of housing assistance (including rental and purchase). The highest available direct subsidy is R160,000 (which includes a house and services for indigent families).
Despite the billions of Rand allocated to these subsidies, demand outstrips supply by a considerable margin, which is why we have to maintain a database, ordered by date and area, to manage access to scarce housing resources equitably. We refer to this as the “waiting list” and we try to allocate opportunities transparently and fairly, otherwise the process generates terrible conflict, as we have often experienced in the past.
We also have to work within tight budget constraints. State subsidies are not enough (by a wide margin) to make housing in well-located suburbs affordable for working people. So we have to find models that will enable the private sector to cross-subsidise housing. To make this work we need a large site, on which we can build apartments for the open market that can cross subsidise the more affordable units. Providing space for business investment also helps to cross-subsidise housing units. This means the larger the site, the more affordable we can make some of the units. Even then, the margins are very tight.
The Conradie site is 22 hectares in size. The portion of the Tafelberg site in Sea Point that would be available for housing development is just 1.1- hectares in size. According to our assessment of the financial modelling, it does not adequately meet the criteria necessary for sustainable affordability.
For this and other reasons which have been well covered in the media, we decided to sell that site on the open market in order to retain its use as an independent school, for which there is demand in the area.
The money from this sale has been earmarked to relocate the education department head office in its own building, to save tens of millions of Rand a year that we spend on our current unsuitable rented premises.
These are the kind of decisions governments have to take – how to use their resources optimally to achieve the best results on the basis of a huge demand for services.
There are other very well located (and much bigger) sites than Tafelberg in the central city, such as the Somerset Hospital Site and the Woodstock Hospital site, that we plan to use in exactly the same way as Conradie, and we have begun work on this. It takes time, because of all the legal processes we have to go through. But I am driving it from my office.
Now that I have given you the broader picture, let me address your personal circumstances. I asked you whether you had placed your name on a housing waiting list, and you said yes, – as far back as 1999. I tracked your name to the housing database in Worcester, which records that you registered your name for a house there, in that year. I was puzzled as to why you put your name on the Worcester database, and not the Cape Town database, since you have been here since 1987.
The Breede Valley (Worcester) council informs me that they had tried to contact you, but the phone number you gave no longer worked, and you had not updated your details. They asked me to get your updated details urgently for a new project allocation. I presume you would, however, not be interested in a house there. Please let me know urgently if I am wrong.
You have not registered at all on the Cape Town database, so you could not be considered for state-subsidised accommodation in the City, because there are so many people ahead of you in the queue. I’m sure you understand that this is the only way we can run a fair system.
You are now occupying a room in the Helen Bowden nurses home on the Somerset Hospital site – which is one of the properties we want to develop on the cross subsidisation model so that some of the units are affordable to working people, without going beyond what the state subsidy allows.
You have told me you do not necessarily want the flat you are living in to be redeveloped. All you would like is some routine maintenance and the reconnection of services, for you to continue living there. Yet that would still be unfair because even without re-development, those units are worth millions of Rands each in that prime location, between the stadium and the Waterfront. This means that if we allocated the unit to you, and even if you paid a modest rental, you would be getting a huge state-subsidised benefit that hundreds of thousands of other applicants would want to claim too, when the opportunity becomes available. What we cannot do is allow people to claim a massive state subsidy by illegal occupation, all the more so if they are not even on the waiting list.
I am sure you realise that allocating that flat to you would never pass the constitutional test of equity or rationality, and would create tremendous conflict. It would start a scramble across the City to occupy property wherever people wish to do so, which would create massive conflict, and be disastrous for the economy and for jobs – which is the main reason most people come to Cape Town in the first place.
You live with your three daughters (who attend/ed school in Sea Point) and one grandchild. I am very pleased they received (or are receiving or will receive) good education and health care. I trust that their fathers are contributing to the costs of raising them. You will appreciate that it is impossible for the state (with a limited and shrinking tax base) to routinely pick up responsibilities that must be shared by individuals.
The Provincial government has a duty to make education and health care for your family available and affordable, and the City does the same for basic services. But the state cannot provide affordable housing to everyone who wants it in the location of their choice. As hard as that may be to hear, it is the truth. And anyone who promises you anything else, is misleading you.
We nevertheless regard the provision of more affordable housing on well-located land as a top priority for our government, and we are forging ahead with our 3,600 unit pilot project in Conradie to test the limits of affordability. When people illegally occupy the sites where we want to extend this model, they delay the roll-out of the project and undermine the rights of people who have patiently been waiting, sometimes for decades, on the database for the allocation of a housing opportunity.
You have said you are taking your stand in order to help others. I accept that. The best way of doing so is to facilitate, rather than block, the project that seeks to achieve this.
Views expressed are not necessarily GroundUp’s.