Joburg coalition plans to blow R2-billion on tarting up its own offices as city services collapse

Council chambers during the 16th extraordinary council meeting which has the election of a new mayor for the City of Johannesburg as an item on 5 May, 2023 in Johannesburg, South Africa. (Photo: Gallo Images/Sydney Seshibedi)

By Ferial Haffajee

12 May 2023

At the same time, it’s signing a R1.8-billion World Bank loan to fund shortfalls.

The new Joburg mayor

mayors New Johannesburg Mayor Kabelo Gwamanda of Al-Jama-ah. He was elected at the 16th extraordinary council meeting on 5 May 2023 after the resignation of Al Jama-ah's Thapelo Amad from the position in April 2023. (Photo: Gallo Images / Sydney Seshibedi)

and the City’s ANC-led coalition are expected to ink a deal that will cost R2-billion to refurbish the Metro Centre, which has fallen into disrepair and after an adverse health and safety inspection.

But the opposition says this is a waste as city services collapse in the country’s financial capital.

The City is in financial distress and plans to borrow R5.5-billion over the medium term; it is also about to sign a loan deal with the World Bank’s International Finance Corporation for R1.8-billion this year.

After a fire on the ground floor of the metro building in March, the plans have been accelerated.

In a proposal to Gwamanda’s first council sitting on Friday 12 May, the Johannesburg Property Company (JPC) says health and safety inspectors found the building unsafe in a July 2022 inspection. It says that civil and structural challenges have rendered it “inhabitable [sic], hazardous and a life-threatening risk to all its occupants”.

The JPC proposes two options, both equally expensive. It wants to “decant” staff into new office space for periods ranging from five years to almost 10 years, costing an estimated R120-million a year.

Then, it wants to refurbish the metro building at an additional cost. “The kind of refurbishment is required to comply with the Confirmatory Notice (of the Department of Employment and Labour) and Engineers Report is currently estimated at R800-million.”

The JPC proposes two options: to fund the repairs and the refurb off the balance sheet or to enter into a public-private partnership (PPP) where a private company or consortium undertakes the repairs and extensions and then leases the property back to the City with repayments, usually over 20 years.

Council chambers, Metro Centre Council chambers during the 16th extraordinary council meeting which has the election of a new mayor for the City of Johannesburg as an item on 5 May, 2023 in Johannesburg, South Africa. (Photo: Gallo Images/Sydney Seshibedi)

A privately built and run state-of-the-art Joburg City campus

The MMC for Finance, Dada Morero, told Daily Maverick that the City had already lodged the PPP with the National Treasury. This extended plan includes a campus including private offices, restaurants and retail, city offices, a city hall, and a public and private metro square.

“The calculations estimated that the complete redevelopment of the Metro Centre will be R2-billion. The City will put the existing land and buildings as part of the PPP. We will only fund the PPP if it is for bulk services. This is how we do our land developments. We provide the land and the private sector with the funding.

“The R850-million is for when we don’t use the PPP model but we decided to only refurbish the current building. I must add that the Project has been registered with the National Treasury,” said Morero.

DA councillor and representative for Group Corporate and Shared Services (which oversees facilities) Leah Knott said Council had not passed the PPP. All capital projects have to be approved by the Council.

“Engineers confirmed that the building is not in danger of collapsing,” said Knott, who said the JPC had been trying to put through the big spend for years. “These are fixable issues that the City can achieve by moving people out of sections of the building. It’s items like fixing the lifts, putting strips on stairs and corridor lighting. You can fix most things in three months. Engineers (said they) can’t confirm that the building is in danger of collapsing.” She said that the JPC failed to maintain the Metro Centre adequately.

“The City should be prioritising water, electricity and refuse collection. City Power is in crisis,” said Knott.

City services collapsing

According to officials, Johannesburg power cuts and rolling blackouts mean the City is effectively on Stage 8 or Stage 9 blackouts. Citizens regularly have multi-day power cuts as City Power battles to tamp down an R9.11-billion overdraft. Councillors say the entity has lost R1.36-billion in the past three months as collections are down. It has been late paying contractors and suffered shortages of parts, extending the time of outages.

Michelle Banda has reported on the Joburg Water crisis here and here.

Electricity, water and rates tariffs are set to go up by 18.65%; 9.3% and 5.3%, respectively, but a property revaluation could see increases shoot up if objections are not successful.

According to reports, Johannesburg has more than 30,000 open potholes and reinstatement holes (when water pipe repairs leave gashes in roads) at any one time. The R2-billion for the refurbishment will come from services, says Nott. “It’s a tenderpreneur scheme waiting to happen,” she believes. Tenderpreneurship is where businesses close to politicians in power win government tenders and make substantial profit margins. DM

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A privately built and run state-of-the-art Joburg City campus

City services collapsing