Private Treaty Agreement

Document Sample
Private Treaty Agreement Powered By Docstoc
					Accelerated rental/social
   housing delivery
 Land release and packaging –
key issues and bottlenecks, conclusions and
                 June 2008
  Main processes in the social housing
           project life cycle:
Included in this presentation:
• Land identification, allocation and release
• Land packaging (obtaining planning approvals, and
Not included in this presentation:
• Design and construction of units
• Unit take on (External by SHI from contractor, Internal by
  property management from development)
• Ongoing property management
Phase 1 - Land identification,
   allocation and release
  Most critical phase, with potential for long
             delays due mainly to:
 “Politics” of competing/vested interests, and “soft issues”
  (personalities and power plays)
 Inadequate understanding of social housing among
  politicians, and…
 insufficient political will to support social housing
 Problems of capacity and interdepartmental co-
  ordination within municipalities to screen land registers
  and pre-assess land parcels w.r.t. suitability for social
 Long disposal process due to little understanding of
  MFMA compliant ways available to municipalities for
  disposal of land other than at “market” value through
  open tender
  Existing land identification, allocation
          and release process:
 Existing process as appears to be practiced in most
  municipalities (with some local differences) :
   • PRZs are demarcated in line with IDPs/SDFs
   • Municipality identifies areas (and possibly some specific land
     parcels) for housing development within PRZ
   • Specific parcels for social housing (SH) are identified through a
     screening or pre-assessment process that is carried out either
     internally (by technical departments), or by procuring
     professional consultants to do the job
   • Council takes a decision that the land is surplus to municipal
     service delivery requirements and can be disposed of for SH
   • Disposal procedure through open tender/proposal call in line with
     municipality’s procurement policies and procedures (usually
     open tender)
   Main problems with existing process (1):

 Land registers/data bases do exist, but status and
  condition of information could be incomplete/suspect/out
  of date
 Social housing not high priority and competing for land
  with “RDP” housing, banks and private developers – little
  pressure to prioritise land for social housing
 No social housing “champions” in municipality to drive
 Non-existent and/or understaffed capacity to screen land
  registers for suitable parcels of land and do pre-
  assessments on identified pieces of land with potential
  Main problems with existing process (2):

 In many cases land disposal is managed by estates
  (property management) departments or even separate
  municipal entities whose (real and perceived) mandate is
  to maximise financial returns from land disposal,
  resulting in a bias towards commercial development, and
  a mind-set focused on obtaining market value
 In addition land disposal policies and procedures in
  municipalities informed and guided mainly by legal and
  treasury departments  narrow interpretation of MFMA
  and treasury regulations which limits it to open tender
  and evaluation of bids on price basis
 Above usually results in land being unaffordable to SHIs
  Main problems with existing process (3):

 Land identified and taken through municipal evaluation
  and decision-making processes on ad-hoc rather than
  planned basis – wasteful and time-consuming replication
  of bureaucratic procedures in each case
 The above is exacerbated by the absence of:
   • Clear provisions within the municipality’s supply chain
     management policy for disposal of land via “private treaty” (direct
     “sale”) to SHIs as catered for in MFMA/treasury regulations
   • Coherence between housing plan and land disposal framework
     in the above policy
   • Co-ordination between infrastructure budgets (including MIG)
     and housing
 Main reason for some problems above – no coherent
  municipal rental/social housing policy and/or
  delivery framework
    Suggested general principles for land
               release (1):

 Land for social housing should preferably be made
  available through the Provincial Steering Committee
  (PSC) process, ensuring provincial and local government
  and the delivery agencies (SHIs & developers) are all in
  the loop
 Land should be targeted by ownership in the following
  order of preference:
•   Municipal
•   Provincial
•   National and parastatal
•   Private
 Suggested general principles for land
            release (2):
 Focus initially should be on municipal land - process for
  devolution and acquisition from other levels of
  government and parastatals complicated in short term
 General consensus that municipalities unlikely to procure
  additional land (at a cost) and then release it to delivery
  agencies (SHIs, etc) without recovering costs
 Private treaty/direct sale (or leasehold) approach should
  be favoured above currently common disposal method of
  open tender/proposal call which adds months to process
 Nothing precludes SHIs from identifying parcels of land
  on their own and approaching municipalities with
  unsolicited bids, but then municipal policies should be
  clear on how to deal with these within MFMA, etc
  Suggested general principles for land
             release (3):

 There should be strategies for land release in both the:
• Short term (ready for project funding in next financial year), and…
• A medium term pipeline (1-3 years)
 Remain within social housing policy context i.e.:
• Land should be within Provisional Restructuring Zones (short term),
  but don’t exclude looking at land…
• with potential i.t.o. criteria to be included in possible future
  “expanded” PRZs (medium term)
  Suggested process for land identification,
        allocation and release (1):
 Municipalities put in place a “champion” with the
  necessary support structure to drive the process (with
  technical support as required)
 Municipalities develop comprehensive rental/social
  housing delivery frame works, inclusive of policies,
  strategies and procedures, which deal with:
   • Identification of, and equitable land distribution agreements with
     delivery partners (SHIs, etc)
   • Up to date and pre-assessed land data bases
   • Land disposal frame works in line with housing plans, spatial
     planning frame works and supply chain management policies
  Suggested process for land identification,
        allocation and release (1):
 Municipalities are appraised of the fact that land can be
  released to SHIs directly by private treaty (direct “sale”)
  at nominal value within the MFMA/treasury regulations
  framework with the motivation that:
   • It alleviates the plight of the poor
   • It is in the public interest
   • The land is surplus to own strategic service delivery requirements
 Municipalities are provided with technical support where
  required to ensure they have in place:
   •   Rental social housing delivery frame works
   •   the necessary and correct land data bases,
   •   housing plans,
   •   supply chain management policies (with land disposal frameworks),
       guidelines, templates/standard documents suitable for the direct sale
       approach (with protective conditions and claw-back clauses)
  Suggested process for land identification,
        allocation and release (2):
 Municipality sets up internal liaison/co-ordinating
  structure (interdepartmental steering committee) driven
  by appointed “champion” with necessary status to
  ensure social housing is prioritised at the right level
 Process is monitored (and assisted) through PSC
  process, with technical and other support as and when
  required from PSS/TS teams
 Municipality develops and implements comprehensive
  rental/social housing delivery frame work, including
  policy, strategy and procedures
 In terms of framework above, municipality identifies
  preferred delivery agencies (SHIs), and works out an
  equitable land distribution agreement with them
  Suggested process for land identification,
        allocation and release (3):
 Municipality decides on preferred disposal medium:
   • Outright “sale”
   • Outright sale with conditions (registered in title deed)
   • Long term leasehold with suspensive conditions
 Social housing champion drives process to obtain
  council decisions that:
   • Land is surplus to municipal requirements
   • Land can be allocated for SH and disposed of for that purpose,
     subject to positive outcome of pre-assessment
 Potential parcels pre-assessed internally – technical
  evaluation by departments (with external technical
  support where required)
  Suggested process for land identification,
        allocation and release (3):
 Intentions advertised to allow for public participation and
  transparency (say 30 days) – experience and opinion
  indicate that no major objections can be expected if all
  prior processes followed properly
 Enter into private treaty (direct sale) or leasehold
  agreement with preferred agency(ies) – must include
  suspensive conditions and claw-back clauses to ensure:
   • Land is used for the intended purpose only
   • Land is kept out of speculative for profit market, and remains in
     service of low income people over some generations
   • Delivery partner performs as intended
  Suggested process for land identification,
        allocation and release (4):
 Pre-assessment of land (desk-top internal, with technical
  support where required) should include at least:
• Ownership check (land register and/or deeds search)
• Title and cadastral check for servitudes, long leases and other legal
• Availability of bulk services
• Confirmation that it is within PRZ
• Current zoning, and formal town planning/EIA procedures required
  for further packaging (check especially for agricultural zoning which
  complicates sub-division, environmental approvals, etc)
• If possible with existing information in municipal and other data
  bases - preliminary assessment of slopes, geotechnical conditions,
  flood lines, etc
    Suggested process for land identification,
          allocation and release (4):
 Full feasibility assessment by delivery agent (SHI) - involve external
  professionals such as town planners, environmental assessment
  professionals, engineers, conveyancers, etc., and should include at
•   Formal title deed and cadastral checks
•   Formal geotechnical survey
•   More in-depth bulk services investigation and engineering services
•   Formal report on town planning and environmental assessment procedures
•   Cost estimates and initial financial viability studies incorporating all the
 The possibility of making available to SHIs financial assistance for
  the above should be urgently considered
 The possibility of establishing a “bridging” fund for bulk services
  where municipalities are waiting for other funding (MIG, DBSA, etc)
  to be investigated
Recommendations for assistance to municipalities
from Public Sector Support and Technical Support
                    teams (1):
 Collate legal opinions (from e.g. Treasury, SALGA,
  certain municipalities), document case-studies and
  existing practices that have been successfully used in
  some municipalities (i.e. find “precedent”) in support of
  the direct sale approach (a study is currently underway)
 Investigate “Status quo” and evaluate in the selected
  municipalities the following (PSS team facilitates entry
  and co-ordinates through the PSC process):
• Land data bases
• Housing plans in IDP/SDF
• Reliability (how realistic) of capital budgets for bulk services aligned
  to proposed release of land for SH in IDPs/MTEFs
Recommendations for assistance to municipalities
from Public Sector Support and Technical Support
                    teams (2):
 Investigate “Status quo” and evaluate in the selected
  municipalities the following (PSS team facilitates entry
  and co-ordinates through the PSC process) (continued):
   • Social housing policies if any (including for instance policy on
     waiver of or discounts on bulk contributions)
   • Supply chain management policies and land disposal
   • Existing procedures for identification, allocation and disposal of
     land for social housing
   • Structuring of, and co-ordination between divisions that are
     involved in making social housing happen
Recommendations for assistance to municipalities
from Public Sector Support and Technical Support
                    teams (3):
 Provide guidelines and assist with formulation of comprehensive
  rental social housing strategy and delivery framework (NMBM pilot
 Draw up guidelines for the streamlining of procedures, and
  alignment of the above (data bases, housing plans, SH and supply
  chain management policies, etc)
 Assist where required, with screening of land data bases, and pre-
  assessment of potential land parcels
 Collate, and where required prepare templates/standard documents
  for use by municipalities in the direct sale approach e.g. Land
  Availability or Sale Agreements with the necessary protective
  conditions and claw-back clauses
 Assist with the dissemination of all the above information within
  municipalities to promote streamlined liaison and co-ordination (via
  PSC and direct one on one contact)
         Land identification and release –
                 conclusion (1):

 In practice the above means that by the time a parcel of land comes
  through the PSC “gate” and is given to the SHI/developer for further
  packaging, it should be as “clean” as possible, and sail through the
  EA/township establishment/re-zoning process relatively smoothly
 In addition this prior process should remove all obstacles to the
  release of the land, and result in an irrevocable commitment to
  alienate the land to the SHI/developer (Council/provincial resolution
  and acceptable legal agreement in line with PFMA/MFMA, supply
  chain management policy and land disposal framework).
 LAs in some cases probably need guidance and technical support in
  this regard to provide the with the mechanisms and “comfort” to
  allocate and alienate land for social housing without having to put it
  out to tender and obtain market value (i.e. release it free of charge
  or at nominal prices where no prior expenses have been incurred in
  for instance partial or full establishment and servicing)
           Land identification and release –
                   conclusion (2):
 Although it was agreed that preference be given to municipal land
  (simplest process and affordability), some municipalities may
  already have a shortage of, or run out of suitable land in the near
 Strategies to deal with the above may have to include more
  consideration of:
•   Land banking (problems with this acknowledged)
•   Devolution of more provincial/state land to municipalities (problems with
    holding costs and loss of rates revenues acknowledged)
•   Bad/better buildings programmes i.e. redevelopment of existing buildings
•   Acquisition (and expropriation) of private land – possibly time-consuming
    and costly
•   Incentives for private developers to include more social housing in proposed
    mixed-income developments
           Land identification and release –
                   conclusion (3):
 The following were considered to be key issues in shortening both
  this pre-packaging process, (and also the subsequent packaging
•   Good strategic thinking/planning by LAs resulting in solid planning and
    policy frameworks (IDPs – especially with regard to infrastructure and
    housing plans, SDFs, SEAs)
•   LA housing policy must be in place, and supportive of social housing
•   Co-ordination and communication between technical departments in LAs
•    Alignment of funding from different sources (MIG, LA capital budget,
    provincial subsidy, Capital Re-structuring grant, loan funding, etc) with cash-
    flow requirements of the process (certain steps are often long delayed while
    funding is awaited). This also means alignment of approvals and
    agreements by different authorities and other parties, e.g. integrating
    technical approvals and financial closure requirements for provincial
    subsidies and Capital Re-structuring Grants
 Finally, Public Private Partnerships (PPPs) in formal form were to be
  avoided due to the complexity of treasury requirements, etc
Phase 2 - Land packaging

     Town planning and
environmental approvals, and
       land servicing
  Land packaging process (PHASE 2 in the
            flow charts below)

 Consensus is that the actual application for approvals should be run
  by the SHI/developer, as their interest in fast approval would
  expedite the process better than were the “disinterested” LA to drive
  the process. Clear agreements would be needed as to division and
  overlapping of responsibilities for actions, financial obligations where
  costs were involved (and how these would be funded), and legal
  implications for instance with regard to warranties implied or
  otherwise. Infrastructure maintenance planning and provision should
  be an integral part of all processes.
 Once the land has been identified, allocated and released to the
  SHI/developer through the PSC gateway, the SHI/developer
  becomes the “applicant” in the township establishment process.
  This process involves the following main steps to be undertaken by
  the applicant with the help of a professional team:
Township establishment – main steps (1):

   SHI appoints and briefs the planning, design and
    environmental professionals
   Town planning and design professionals gather the
    information and prepare the planning report (basic layout,
    motivation, preliminary engineering services design) in a
    consultative and iterative process for submission to LA
    (provincial ordinance route) or province (DFA route)
   Environmental assessment practitioner (EAP) advises on
    development alternatives and type of EA required, and uses
    information from planning report to prepare submission for
    environmental approval
   Urban designer/architect and planner work together on Urban
    Design Framework and development concept. QS prepares
    initial viability studies.
   Town planner submits application to LA (ordinance) or
    province (DFA) – forms and fees
Township establishment – main steps (2):

   From here the ordinance and DFA routes respectively diverge
    (municipal process for ordinance, provincial tribunal for DFA)
   Advertisement to invite public participation. If no objections, LA
    departments carry out technical evaluation, involving provincial
    or national departments or parastatals if required. If there are
    objections, hearings are held and rulings given. Rulings can
    be taken to higher authorities on appeal, with potentially
    serious delays.
   In meantime EAP drives and obtains environmental
    approval/Record of Decision (RoD) – this can also take quite
   Once objections/appeals are settled, and RoD has been
    obtained, departments within LA continue with technical
    evaluation and issues comments
   Professionals attend to comments
   LA admin section places item on council agenda for approval
    (this can be a “black hole” of administrative delay, and needs
    constant attention from professionals “walking” the documents
   Council approves the plan or refers it back to technical for
    amendment (repeat previous 3 steps =delay!)
Township establishment – main steps (3):

   If DFA route was followed, all of steps in municipal process
    above, would be dealt with within the sittings of the DFA
    Tribunal where all affected parties are given a hearing, and
    LAs are given prescriptive time-frames for evaluations and
   DFA Tribunal approves plan
   From here the ordinance and DFA processes converge again
    for steps below
   Approval to proceed with implementation of TSE, subject to
    conditions of establishment is gazetted
   Engineer prepares detail services design, obtains approval
    from LA (design services agreement), calls tenders and
    supervises installation of services, obtains final LA approval
    (services certificate)
Township establishment – main steps (4):

 SHI appoints land surveyor who calculates co-
  ordinates, and prepares survey diagram of outside
  figure for Surveyor General (SG) approval, followed
  by General Plan approval
 Once SG approval obtained, conveyancer forwards
  approved General plan to Deeds Office, and
  prepares opening of Township Register (includes
  complying with conditions of establishment,
  obtaining LA rates clearance, etc)
 Opening of Township Register and issueing of
  services certificate conclude the process
                Overall conclusions and
 Most critical and problematic phase is land identification, allocation
  and release for social housing by municipalities – streamlining and
  alignment of land registers, plans, policies, procedures, co-
  ordination and land disposal process management structures (with
  PSS/PSC facilitation and technical support where required) needed
 Phase 2, land packaging should be run by delivery agents (SHIs) as
  they have direct interest in its speedy conclusion. Technical
  competence exists, but financial support/bridging finance to carry
  out early assessments, planning applications and land servicing
 The bottlenecks caused by misalignment between planning and EA
  processes, housing planning and infrastructure budgeting, have
  been identified, and could be alleviated through some directed
  technical support to municipalities to ensure proper pre-planning
                Overall conclusions and
 NDoH/SHF need to sit down and work out/clarify the roles of e.g.
  Public Sector Support Team, Technical Support Team, ISHP and
  M&E t avoid duplication and complication in the process
 TS teams should be established on regional basis with small team
  at national level to co-ordinate and oversee
 Assessment tools and process must be reviewed and streamlined
  where required – e.g. project status assessments for inclusion in the
  PSC pipeline, Quickscans for ISHP funding evaluations, etc
 Suggested that PSS and TS teams work together and are involved
  in assessments from the start (PSC pipeline) through to final ISHP
  funding assessments
 PSS/TS teams to carry out immediate status quo/needs analysis
  within the targeted municipalities (land registers, land disposal
  mechanisms, etc)

Description: Private Treaty Agreement document sample