Gauteng social development department wants to buy multimillion-rand building, but doesn’t know what for

By Raymond Joseph and Joseph Bracken

8 Jul 2024

Up to R70-million budgeted for building in central Pretoria.

The cash-strapped Gauteng Department of Social Development (GDSD) plans to spend up to R70-million to buy a building in central Pretoria.

In the November 2023 medium-term budget, the Gauteng treasury allocated the funds to the department “for the acquisition of a new building which will be repurposed into a shelter for the homeless”. But a document leaked to GroundUp suggests that the department had begun shopping around for a building before it was decided what it would be used for.

One of the buildings it considered was a former Protea Hotel. It has two wings with 106 guest rooms, a reception area, a large dining room, offices, a boardroom, and a large kitchen with two cold rooms and a freezer. It also has a swimming pool and parking for 49 cars.

After the Protea Hotel stopped operating, the building was leased by the Department of Public Works on behalf of the SANDF.

A delegation from the Gauteng Department of Social Development, led by then head of department Matilda Gasela, inspected the property in July last year. Gasela left under a cloud at the end of April when her contract was not renewed.

Report

In a report compiled after the site inspection, Portia Nemathithi, the department’s acting social work manager for partnership and finance, said the visit had been conducted “to assess if the building complies with the norms and standards for victims of gender-based violence (GBV) shelters”.

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In her report she said the building was situated on a busy road and there was also a nearby tavern “which poses a risk to the victims of gender-based violence”. The report also says the building is less than two kilometres from two existing shelters funded by the department and there is a third GBV shelter in central Pretoria, whereas Gauteng needed GBV shelters in townships, informal settlements and hostel areas, including Hammanskraal, Soshanguve, Mamelodi, Mabopane and Ga Rankuwa.

Nemathithi recommended that the former hotel rather “be earmarked for a different programme that can benefit from it other than the Victim Empowerment Programme”.

GroundUp has reliably learned that the department also considered using the building as a drug rehab facility, but this was also rejected.

Spokesperson Themba Gadebe told GroundUp that the department intended to now buy a building “as a shelter for the homeless in response to the provincial priority on homelessness”.

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Department sources claim the procedure followed is highly irregular. They told GroundUp that normally the department would inform the Gauteng Department of Infrastructure Development (DID) of its requirements for a building and provide a supporting business case. DID would then put it out for tender and the social development department would then inspect the buildings that had successfully tendered. The sources say this never happened.

The hotel is situated on Struben Street, the same road as a homeless shelter that offers refuge to about 500 people. The shelter is housed in a dilapidated City of Tshwane municipal building. We reported in October last year that the shelter was filthy and neglected, and occupants were concerned about their safety due to drug use on the premises and a lack of security. GroundUp visited the building last month and found the situation unchanged.

Gadebe said the occupants needed to be relocated because the City and a police report had declared the shelter uninhabitable.

Besides the former hotel, two other Pretoria buildings, the Fedsure Forum Building and ABSA Towers, both in Lilian Ngoyi Street, had also been inspected, Gadebe said.

The R70-million budget to buy a building was approved in the 2023/24 financial year. But due to lengthy supply change management processes “the budget could not be spent”, Gadebe said.

The department has now asked the provincial Treasury for the funds to be rolled over to the current 2024/2025 financial year, and the application is pending.

Gadebe said the department “has taken the decision to prioritise the acquisition of existing buildings, as opposed to embarking on the construction of a new building given the lengthy construction period and high cost associated with green field developments”.

Inflated rental

During the site inspection at the former hotel, which has stood empty for some time, department officials met representatives of Khulemani Masingita Holdings, the owner of the property, Nemathithi said in her report.

“During the engagement, the representatives of Khulemani indicated that the building would cost R5-million to rent on a monthly basis and R60-million to purchase,” Nemathithi said.

The building is currently being offered for sale for R65-million.

But Michael Nkuna, the sole director of Khulemani, said a “fair market rental” for the premises was only R1.5-million a month.

“The building used to be rented for R1.5-million by the Department of Public Works for the Defence Force, the previous tenants, who used it for their War College,” he said. “I’m not sure where the figure of R5-million a month comes from.”

“We were approached (by the social development department) and told they were looking for a building. We said we were not going to do any deal as the building would first have to be put out on tender and we would then decide if we would bid for it.

“We made it clear that the proper tender procedures would have to be followed.

“The (department’s) people who did the inspection said someone from the government would call us. We said we were not interested until a tender for the property was advertised. We heard nothing more,” Nkuna said. DM

First published by GroundUp.

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Inflated rental