SAPOA KZN REGIONAL COMMITEE EMBRACES PRECINCT MANAGEMENT
The KZN SAPOA Regional Committee has embraced the new energy surrounding precinct management and believes it could be the answer to revitalising urban decay. It is a great entry point for private-public partnerships and is a win-win situation for all in the property sector through the inevitable increase in property values.
The KZN SAPOA Regional Committee has been tasked with creating a multistate holder forum in eThekwini and setting up a single voice for the municipality to communicate with. This is an endorsement for SAPOA as the representative of the owners of the rates base. SAPOA KZN has appointed Andrew Layman, the former Chief Executive Officer of the Durban Chamber of Commerce, to set up the forum and research the options of a formalised legal structure to roll out “urban improvement precincts” (as they are known in Durban) throughout the City.
Layman gives us further insight into precinct management below.
The value of precinct management
In many countries throughout the world, local governments have been unable to arrest urban decay without the active support of property owners and other members of private sector constituencies. It is for this reason that in the US and the UK strong movements have emerged during the past 20 years.
The UK has more than 200 business improvement districts (BIDs), which were motivated by the New Labour government in 2004. In the US it may be described as the “main-street” movement, as actions were initiated to regenerate the former commercial importance of these precincts.
We have an excellent local example of this in the Umhlanga Village which, in the wake of the La Lucia and Umhlanga Ridge developments, lost a good deal of its economic lustre. The restoration of vibrancy is attributable to the establishment – and excellent performance – of two urban improvement precincts (UIPs). In line with similar entities, which are known by many different names, such as city improvement districts, (CIDs), BIDs and urban renewal districts (URDs), property owners, having
agreed by majority vote to support the process, pay an additional amount as a levy on top of their property rates. This extra funding is available to the property owners for them, via a management board, to determine how they would like to enhance their precincts.
In the South African context, the capacity of municipalities to provide equitable services
to meet all expectations is severely limited, with the result that the necessary “top-up” activities, principally in the “crime and grime” spheres, are inclined to dominate the enhancement programmes. Successful UIP management includes service level agreements with a municipality to ensure that the services delivered are adequately commensurate with the normal rates paid. This allows the UIP to plan for a constructive “top-up” of security, maintenance and cleanliness, and design other complementary plans to make the precinct more attractive to businesses, investors, tourists, pleasure-seekers and residents. The objective of these interventions is to increase property values in the longer term. This is to the advantage of municipalities as much as to investors and owners, because increased values result in more income from rates. In eThekwini, the pace at which rates income has increased is too pedestrian – especially in the inner city, where it has actually declined in real terms – to enable the city to play an optimally active role in its economic development. For this reason, the municipality has committed itself to a partnership with the private sector to promote the establishment of more UIPs. The private sector in this initiative is led by the KZN branch of SAPOA, which is already involved in negotiations around the legislative framework with the National Treasury, which is equally enthusiastic about private sector participation in precinct management. At present, the legislation supports “special rating areas” and is not definitive on the critical aspect of property owner decision-making. It does, however, ensure levels of accountability, the lack of which has resulted in some criticism of UK BIDs, and is quite clearly at odds with an earlier trend towards exclusion. (Gated suburban communities are an extreme example of this.) The reality is that if UIPs are to facilitate local commercial activity and economic growth, they must manage accessible precincts and, indeed, seek opportunities to extend their prosperity into poorer neighbourhood communities. It is quite possible to achieve these objectives, which may appear paradoxical to some, through effective management. This includes holding the municipality and other agencies to account for the provision of expected facilities and consistent enforcement of laws. This is achieved less by confrontation than by cooperation, and a good deal of Umhlanga’s success may be attributed to the mutual understanding that has been achieved between Brian Wright and city officials – an understanding that, incidentally, is at the heart of the private-public partnership being explored by SAPOA KZN. The Florida Road UIP is relatively newly established but is already making good progress. Many of the issues that made property and business owners unhappy about this once-vibrant precinct are being addressed. A somewhat different vibrancy will be recovered, one that will promote business activity and encourage visitors. It represents a new wave of collective enthusiasm for UIPs, which will be increasingly important to Durban’s development.
SOUTH AFRICAN PROPERTY REVIEW
Author: Edwin Van Niekerk