SAPOA 2014 Western Cape Commercial Property Impact Report

WESTERN CAPE

2014

THE ROLE AND IMPACT THE ECONOMIC VALUE

of the

COMMERCIAL PRIVATE PROPERTY SECTOR

of the

COMMERCIAL PROPERTY SECTOR THE ECONOMIC VALUE of the COMMERCIAL PRIVATE PROPERTY SECTOR APPLICATION PROCESSING REPORT

WEST COAST

CAPE KAROO

WINELANDS CAPE TOWN

OVERBERG

MARCH & APRIL 2014

GARDEN ROUTE & LITTLE KAROO SAPOA - the voice of commercial property

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THE ECONOMIC VALUE

of the

COMMERCIAL PRIVATE PROPERTY SECTOR

CONTENTS TABLE OF CONTENTS 8

SECTION ONE:

8

1.1

Study Area

INTRODUCTION

9

1.2

General Research Approach

9

1.3

Purpose of Report

10

1.4 Limitations

10

1.5

11

SECTION TWO: DEFINITION OF THE COMMERCIAL PRIVATE PROPERTY SECTOR

11

2.1

Property Components as Elements of a Larger Economy

11

2.2

Components of the Commercial Private Property Sector

12

2.3

The Commercial Private Property Sector in Terms of the Relevant Economic Sectors

13

2.4

Relationship Between the Private and Public Property Sectors

15

SECTION THREE: CURRENT ECONOMIC VALUE

15

3.1

Economic Quantification: Approach

15

3.1.1

Economic Performance Projections

16

3.1.2

Identification of Main Role-Playing Economic Sectors

16

3.1.3

Economic Quantification of the Commercial Private Property Sector

17

3.2

Economic Performance and Main Representative Sectors

17

3.2.1

Overall Economic Performance

17

3.2.2

Sectorial Composition in Context to Property Representative Sectors

18

3.2.3

The Construction Sector

19

3.2.4

The Business and Finance Sector

20

3.3

Value in Terms of Gross Domestic Product (GDP)

21

3.4

Value in Terms of Sustained Jobs

22

3.5

Value in Terms of Tax Revenue Generated

24

SECTION FOUR: ECONOMIC VALUE OF COMMERCIAL PRIVATE PROPERTY IN BRIEF

Report Outline

LIST OF FIGURES 17

Figure 3.1: Cyclical Economic Performance: 2007-2013

18

Figure 3.2: Sectoral Composition of the Relevant Economy: 2013

18

Figure 3.3: Sectorial Growth of the Construction Sector: 2007-2013

19

Figure 3.4: Composition of the Construction Sector of the National Economy: 2011

20

Figure 3.5: Sectorial Growth of the Business and Finance Sector: 2007-2013

20

Figure 3.6: Composition of the Business and Finance Sector: 2010

LIST OF TABLES 17

Table 3.1: GDP Value: 2013

19

Table 3.2: Construction Sector GDP Value: 2013

20

Table 3.3: Business and Finance Sector GDP Value: 2013

21

Table 3.3: Gross Domestic Product of the Commercial Private Property Sector: 2013

22

Table 3.4: Employment of the Commercial Private Property Sector: 2013

23

Table 3.5: Tax Revenue generated by the Commercial Private Property Sector: 2013

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MARCH & APRIL 2014

THE ECONOMIC VALUE

of the

COMMERCIAL PRIVATE PROPERTY SECTOR

CONTENTS LIST OF MAPS Map 1.1:

Districts of the Western Cape

8

Map 1.2:

Study Area

9

LIST OF DIAGRAMS Diagram 2.1: Property Components defined according to Private and Public Sector

12

Diagram 2.2: Components of the Commercial Private Property Sector

12

Diagram 2.3: Commercial Private Property Sector in terms of the Relevant Economic Sectors

13

Diagram 2.4: Hypothetical Situations of State and Private Sector Responsibilities

14

LIST OF ACRONYMS GDP –

Gross Domestic Product

MM –

Metropolitan Municipality

SIC –

Standard Industrial Classification

Published by SAPOA, Paddock View, Hunt’s End Office Park, 36 Wierda Road West, Wierda Valley, Sandton PO Box 78544, Sandton 2146 t: +27 (0)11 883 0679 f: +27 (0)11 883 0684 SAPOA publications are intended to provide current and accurate information, and are designed to assist readers in becoming more familiar with the subject matter covered. SAPOA published this document for a general audience in accordance with all applicable laws. Such publications are distributed with the understanding that SAPOA does not render any legal, accounting,

Compiled by:

or professional advice. Use of this publication is voluntary and relianceon this document should be undertaken based on an

Urban-Econ

independent review by the user.

Development Economists

Information provided in this document is "as is" without warranty of any kind, either express or implied, including but not limited to the implied warranties of merchantability, fitness for a particular purpose, or freedom from infringement. SAPOA hereby disclaims all liability for any claims, losses, or damages in connection with use or application of this document.

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This document is the sole and exclusive property of SAPOA. Reproduction or redistribution in whole or in part without the express written consent of SAPOA is prohibited.

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CONTENTS TABLE OF CONTENTS 26

SECTION ONE:

26

1.1

Study Area

27

1.2

General Research Approach

28

1.3

Purpose of Report

28

1.4 Limitations

29

1.5

31

SECTION TWO: THE REGULATORY ENVIRONMENT

31

2.1

Current Regulatory Background

33

2.1.1

Western Cape Land Use Planning Ordinance (LUPO)

33

2.1.2

Cape Town Spatial Development Framework (CTSDF)

33

2.1.3

Cape Town Zoning Scheme (CTZS)

34

2.2

Current Regulatory Entity Responsibilities

35

2.2.1

Interaction Between The City Of Cape Town Metro And Provincial Government

36

2.3

Recent And Planned Transformation In Regulations

36

2.3.1

Spatial Planning And Land Use Management Act (SPLUMA)

36

2.3.2

Western Cape Land Use Planning Act (LUPA)

37

2.3.3

Proposed Improvements

38

2.3.4

Changes in Interaction Between The City of Cape Town Metro and Provincial Government

38

2.3.5

Results Of Transformation In Legislation And Operations

39

2.4

The Regulatory Environment In Brief

40

SECTION THREE: CURRENT ECONOMIC VALUE

40

3.1

Generic Property Development Cycle

41

3.2

City Of Cape Town Metropolitan Municipality

41

3.2.1

Land Use Management (Lum) Applications

42

3.2.2

Building Plan Applications

43

3.3

Department Of Environmental Affairs And Development Planning – Western Cape

Provincial Government

44

3.3.1

Lupo Appeals

44

3.3.2

Removal Of Restrictions Application

46

3.4

The Application Administration Process In Brief

47

SECTION FOUR: ECONOMIC VALUE OF COMMERCIAL PRIVATE PROPERTY IN BRIEF

47

4.1

Building Plans

48

4.2

Land Use Management (Lum) Applications

50

4.3

Application Processing System

50

4.3.1

Planned Improvement - The Development Application Management System (DAMS)

51

4.4

The Application Administration Benchmark In Brief

52

SECTION FIVE:

52

5.1

Purpose And Approach

52

5.1.1

Case Study Summary

52

5.2

Building Plan Case Study

53

5.3

Lum Application Case Study

54

5.4

The Municipal Application Tracking Case Study In Brief

SAPOA - the voice of commercial property

INTRODUCTION

Report Outline

MUNICIPAL APPLICATION TRACKING CASE STUDY

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APPLICATION PROCESSING REPORT COMMERCIAL PRIVATE PROPERTY SECTOR

CONTENTS

SECTION SIX:

PRIVATE SECTOR APPLICATION TRACKING CASE STUDY

55

6.1

Purpose And Approach

55

6.1.1

Case Study Summary

55

6.2

Scenario Findings

56

6.2.1

Scenario 1: Residential Development Applications

56

6.2.2

Scenario 2: Non-Residential Development Applications

57

6.2.3

Scenario 3: Lupo Appeals

58

6.2.4

Scenario 4: Removal Of Restrictions

59

6.2.5

Scenario Finding Summary

60

6.3

Factors Influencing The Administration Tempo

61

6.4

The Private Sector Application Tracking Case Study In Brief

62

SECTION SEVEN: CONCLUSION AND RECOMMENDATIONS

63

7.1

Application Administration Performance Summary

63

7.1.1

Land Use Management Applications – Municipal Proficiency

63

7.1.2

Building Plans – Municipal Proficiency

63

7.2

Administration Blockage / Delay Factor Identification

64

7.2.1

Uncompliant/Incomplete Submissions

64

7.2.2 Controversy

64

7.2.3

Clerical Errors

64

7.2.4

Advertising Delays

65

7.2.5

Internal And External Circulation

65

7.2.6 Delegation

65

7.3

Ways To Address Administration Blockages

65

7.3.1

Eight-Point Plan In Place For Municipal Administration

65

7.3.2

Additional Recommended Improvements For Municipal Administration

68

7.3.3

Responsibilities Of The Private Sector

69

7.4 Conclusion

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CONTENTS LIST OF FIGURES 47

Figure 4.1: <40m2 Building Plan Finalisation Efficiency

47

Figure 4.2:

<500m2 Building Plan Finalisation Efficiency

48

Figure 4.3:

>500m2 Building Plan Finalisation Efficiency

48

Figure 4.4:

Total Building Plan Submissions versus Finalisations

49

Figure 4.5:

Four Month LUM Application Finalisation Efficiency

49

Figure 4.6:

Seven Month LUM Application Finalisation Efficiency

49

Figure 4.7:

Total LUM Application Submissions versus Finalisations

52

Figure 5.1:

Building Plan Processing Timeframes

53

Figure 5.2:

Building Plan Timeous Processing

53

Figure 5.3: Building Plan Processing Time Median

53

Figure 5.4: Building Plans Affected by Delay Factors

54

Figure 5.5: LUM Application Processing Timeframes

54

Figure 5.6:

54

Figure 5.7: LUM Application Processing Time Median

54

Figure 5.8: LUM Applications Affected by Delay Factors

56

Figure 6.1: Scenario 1: Processing Timeframes

56

Figure 6.2: Scenario 1: Timeous Processing

57

Figure 6.3: Scenario 1: Processing Time Median

57

Figure 6.4: Scenario 2: Processing Timeframes

57

Figure 6.5: Scenario 2: Timeous Processing

57

Figure 6.6: Scenario 2: Processing Time Median

58

Figure 6.7: Scenario 3: Processing Timeframes

58

Figure 6.8: Scenario 3: Timeous Processing

58

Figure 6.9: Scenario 3: Processing Time Median

59

Figure 6.10: Scenario 4: Processing Timeframes

59

Figure 6.11: Scenario 4: Timeous Processing

59

Figure 6.12: Scenario 4: Processing Time Median

61

Figure 6.13: Applications Affected by Delay Factors

LUM Application Timeous Processing

LIST OF TABLES 55

Table 6.1:

Case Study Approach Description

55

Table 6.2:

Scenario Application Summary

59

Table 6.3:

Private Sector Application Tracking Scenario Findings

LIST OF MAPS 26

Map 1.1:

Districts of the Western Cape

27

Map 1.2:

Study Area

LIST OF DIAGRAMS 31

Diagram 2.1: Section Two Outline

35

Diagram 2.2: Interaction between the City of Cape Town and Western Cape

38

Diagram 2.3: Changed interaction between the City of Cape Town and Western Cape

40

Diagram 3.1: Generic Phases in Property Development

41

Diagram 3.2: Generic Development Cycle

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APPLICATION PROCESSING REPORT COMMERCIAL PRIVATE PROPERTY SECTOR

CONTENTS

Diagram 3.3: Generic Land Use Planning Ordinance Application Process

42

Diagram 3.4: Generic Building Plan Application Process

43

Diagram 3.5: Generic Land Use Planning Ordinance Appeal Process

44

Diagram 3.6: Generic Removal of Restrictions Application Process

45

Diagram 3.7: Application Administration Summary

46

Diagram 4.1: Application Processing

50

Diagram 6.1: Potential Delay Factor Description

60

Diagram 6.2: Top Delay Factors per Scenario

61

Diagram 6.3: Private Sector Application Tracking Summary

62

Diagram 7.1: Section Seven Outline

63

Diagram 7.3: Major Administration Blockages / Delay Factors

64

Diagram 7.4: Eight Main Points of Municipal Administration Strategy

66

LIST OF ACRONYMS CLUMR

– Chief Land Use Management Regulator

CoCT

– City of Cape Town

CTIDP

– Cape Town Integrated Development Plan

CTSDF

– Cape Town Spatial Development Framework

CTZS

– Cape Town Zoning Scheme

DAMS

– Development Application Management System

DEADP

– Department of Environmental Affairs and Development Planning

DFA

– Development Facilitation Act

IDP

– Integrated Development Plan

LFTEA

– Less Formalised Township Establishment Act

LUM

– Land Use Management

LUPA

– Land Use Planning Act

LUPO

– Land Use Planning Ordinance

MM

– Metropolitan Municipality

MSA

– Municipal Systems Act

NEMA

– National Environmental Management Act

NHRA

– National Heritage Resources Act

NIMBY

– Not In My Backyard

PAB

– Planning Authority Board

PBDM

– Planning and Building Development Management

RSA

– Republic of South Africa

SAPOA

– South African Property Owners Association

SDF

– Spatial Development Framework

SPLUMA

– Spatial Planning and Land Use Management Act

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SECTION ONE: INTRODUCTION

U

rban-Econ Development Economists was commissioned by the South African Property Owners Association (SAPOA) to undertake a detailed investigation of the private property industry in the Western Cape Province, with special reference made to the City of Cape Town Metro.

This report is the first component of the â&#x20AC;&#x153;The Role and Impact of the Commercial Property Sector in the Western Capeâ&#x20AC;? study. This report aims to contextualise the size and quantity of the private property sector in the Western Cape to provide a foundation for cost calculations related to application and other administrative processing timeframes. The second report supplements the first by analysing development application case studies in order to link processing timeframes to economic performance.

1.1. Study Area and commercial activities within the province, The Western Cape is the most southern

with the higher portion of the Western Cape

province of the nine provinces situated in

population residing within its borders. The City

the Republic of South Africa. It is located

of Cape Town MM is analysed as a representative

in the south-western part of the country

case study in combination with the province

and comprises of one metropolitan and

owing to the fact that a large portion of the

five district municipalities. The metropolitan

private commercial developments is centred in

area is known as the City of Cape Town and

the city of Cape Town.

the five district municipalities are the West Coast, the Central Karoo, Overberg, Eden

Map 1.2 illustrates the metropolitan focus area.

and the Cape Winelands regions (Map 1.1).

The study is envisioned to analyse the The five district municipalities are divided into

commercial private property sector within

24 local municipalities. The City of Cape Town

the Western Cape Province. The City of Cape

Metropolitan Municipality (MM) is home to

Town MM is the capital of the Western Cape

one of the major cities within South Africa.

Province. An active commercial property

It accommodates the majority of economic

market and prominent economy are centred

Map 1.1 Districts of the Western Cape Source: ArcGIS Explorer, 2013

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COMMERCIAL PRIVATE PROPERTY SECTOR

Map 1.2 Study Area Source: ArcGIS Explorer, 2013 The study area comprises of the Western Cape Province in its entirety. The City of Cape Town MM is highlighted as the main avenue for property development and economic role-player within the province.

The City of Cape Town MM is analysed as a representative case study in combination with the province considering that a large portion of the private commercial developments is centred in the City of Cape Town.

within Cape Town therefore it is the centre of

Domestic Product (GDP), direct employment and

major economic growth and expansion within

tax revenue generated by the private commercial

the province.

property sector in the Western Cape.

1.2 General Research Approach

The below illustrated factors are considered to be prominent measurements which can be

The general research approach describes the

utilised to assess the economic intervention of

basic methodology implemented to measure

a specific sector within a geographic scale. The

the economic value of the private commercial

exact quantification approach are illustrated in

property sector of the Western Cape.

the subsequent sections of the report.

In essence all economic activity has to take

1.3 Purpose of Report

place in a specific space, thus all economic activities are related to property either directly

The purpose of this research component is

or indirectly. In order to measure the economic

to quantify the commercial private property

value of the private commercial property

industry in terms of its value for the provincial

industry the relevant activities within the

economy. This will assist in developing an

specific sectors needs to be identified and

understanding of the role that the private

evaluated according to specific analysis factors

property sector plays in economic development

which complies with standard case practise for

within the jurisdiction area of the governing

economic impact calculations. For the purpose

entities (public sector). It is important to take

of this report only property-centred economic

cognisance of the fact that the report does

activities with a direct impact are evaluated, in

not represent an asset audit of the commercial

*Please note: Tax refers

line with generic economic impact practises.

private property industry. It presents a statistical

to the level of tax revenue

The directly impacting factors analysed are Gross

evaluation of the total contribution that the

generated by the South African Revenue Service (SARS). The tax calculations present tax income of SARS and not the local municipal tax revenue

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THE ECONOMIC VALUE

of the

COMMERCIAL PRIVATE PROPERTY SECTOR

private commercial property sector makes

thus mitigated to not affect the results if the

to the provincial economy in terms of GDP,

report in any negative manner.

employment etc.

1.5 Report Outline Objective of the report:

Additionally, it is understood that “The Role

quantifying the size and scope of

and Impact of the Commercial Property Sector

The report outlines the economic value of the

the commercial private property

in the Western Cape” study will be utilised to

commercial private property sector according

sector’s impact on the economy

obtain valuable information regarding the civic

to the various components of property

measured in terms of Gross

administration of property development within

construction and management. It illustrates the

Domestic Product, employment

the study area in order to quantify the distinct

economic value of commercial private property

and tax revenue generated.

role that the public sector plays in property

construction and management on the basis of

development, especially in terms of timeframes.

job creation, economic production/growth and

Through quantifying the economic value of the

tax revenue generated.

sector and applying the findings to estimated application processing timeframes, one can

The remainder of the report will be structured

determine whether the effect of possible

under the following sections:

processing delays by the public sector have any Section Two: Definition of the

impact on the provincial economy.

Commercial Private Property Sector

1.4 Limitations

Private property is defined as part of the property components of a larger economy in

The report will conclude by

Due to the qualitative and quantitative

order to identify the relevant economic sectors

presenting the value of the

investigation methodology a few limitations

representing the private property sector.

commercial private property sector

were noted during the research process. It

in terms of economic performance,

is vital that the limitations are stated and

Section Three: Current Economic Value

employment and public sector

recognised in order to have a contextual

Analysis illustrating the present value of

understanding of the results.

the private property sector in terms of

revenue (tax) catalyst.

economic production, job creation and tax The

basic

limitations

to

the

economic

revenue generated.

quantification process are: • Data sourced for the economic analysis is

Section Four: Economic Value of Private

reliant on statistical data publications from

Property in Brief

reliable sources. The most recent available

Summary of the findings of the afore-

detailed information pertaining to the

mentioned analysis presenting the value

national business and finance sector is

of the private property industry for the

representative of 2010 figures. Whereas

Western Cape economy.

the local (City of Cape Town MM) GDP and national construction industry figures are representative for 2011. Projections for 2013 was therefore required.

• Data

sourced for the economic analysis

is reliant on statistical data publications from reliable sources. These statistical publications present economic data on various geographic levels for different time periods.

Please note that the limitations are addressed within a detailed quantification process and

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COMMERCIAL PRIVATE PROPERTY SECTOR

SECTION TWO: DEFINITION OF THE COMMERCIAL PRIVATE PROPERTY SECTOR

P

rior to the analysis of the economic value of the commercial private property sector, its role is defined as part of the property components of a larger economy in order to identify the relevant economic sectors representing the private property sector.

Activities within the commercial private property sector can be grouped into two main categories, namely construction and management activities. These activities have been critically analysed to identify the economic sub and main sectors in, which they operate.

As with any economy the two main role-players are the state and private sectors. This applies to the property industry in the following way: Public property (also known as government property) can be commonly defined as the land

2

and improvements owned by the South African government or one of its agencies, divisions, or

dictionary.cambridge.org,

entities.2 It is commonly a reference to property regularly used by the general public including

http://www.dictionary.

basic and social infrastructure.

com and http://www.

Commercial private property is basically defined as land or buildings belonging to a private 3

individual or company/group of individuals, rather than the government.

Derived from http://www.

thefreedictionary.com/

In other words, the

property owned by non-governmental entities. Private commercial property for the purpose of

3

this report, will specifically include retail, office and industrial buildings as well as large-scale

dictionary.cambridge.org and

residential property developments and not refer to individual private residences.

http://www.dictionary.com

Derived from http://www.

2.1 Property Components as Elements of a Larger Economy Diagram 2.1 classifies all components of The public sector plays the role of financier

property according to its relevance to public

in property construction and administrator

and private sectors.

in property management. The construction responsibilities of the public sector mainly

The role of the commercial private property

pertain to the financing of primary roads and

sector is discussed in more detail in the

services etc. and supporting infrastructure such

following sub-section.

as libraries, administration offices and other social facilities. The public sector therefore employs contractors and professionals from the

2.2 Components of the Commercial Private Property Sector

private sector to undertake the construction of primary and supporting infrastructure.

Diagram

2.2

summarises

the

property

construction and management components of The public sector does not have any construction

the private sector.

implementing bodies in the state, therefore the private sector plays a dual role in terms

As previously mentioned, the private sector

of property construction. Private contractors

is responsible for all physical construction

are responsible for both privately driven and

activities of private and government-owned

public property construction activities.

The

land. In addition to the construction of privately

responsibilities of the private sector in terms

owned property entities, private contractors

of property management mainly pertains

and professionals are employed by the public

to activities such as sales and operation of

sector to construct public infrastructure and

privately owned land. Recent trends indicate

buildings.

that government departments are nowadays

In terms of property management, the private

inclined to lease private buildings rather than

sector is mainly responsible for the exchange of

occupying their own in, which case the private

private land by controlling the sales and leasing

sector acts as the property manager/landlord.

of property entities. Additionally, operation of

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THE ECONOMIC VALUE

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Diagram 2.1 Property Components defined according to Private and Public Sectors

Diagram 2.2 Components of the Commercial Private Property Sector

property including maintenance, cleaning and

Standard Industrial Classification (SIC) as

security are also the responsibility of the private

utilised by Statistics South Africa. This is done

property sector.

to identify relevant sectors that make up the industry and ultimately contributes to its value.

2.3 The Commercial Private Property Sector in terms of the Relevant Economic Sectors

The major components within the commercial private property construction sector mainly relate to the â&#x20AC;&#x2DC;construction activitiesâ&#x20AC;&#x2122; sub-sector

SAPOA - the voice of commercial property

Commercial activities associated with the

as defined by the SIC comprising of major

private property sector are related to the

activities such as site preparation, building

applicable economic sectors as per the

construction, building installation, building

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THE ECONOMIC VALUE

completion and renting of building equipment.

Hence, the economic construction sector

of the

COMMERCIAL PRIVATE PROPERTY SECTOR

2.4 Relationship between the Private and Public Property Sectors

presents the main indicator for performance measurement of such activities. Nonetheless,

Diagram 2.4 provides hypothetical scenarios in

the professional services component includes

order to show an example of the responsibilities

Please note that the economic

architectural, engineering and other technical

of the public and private sector in a

value calculations for the private

activities, which are categorised within the

real-world situation.

sector construction in Section

business and finance sector of the SIC.

• The first hypothetical situation plots

Three will only be based on

the development of a privately owned

the construction of properties/

Commercial private property management

mixed-use

buildings and not the provision of

pertains to all ‘real estate activities’ with

private

owned or leased properties as well as per fee

are responsible for the construction and

The economic value of private

or contract basis. Real estate activities also

preparation of specialised applications to

sector management will pertain to

form part of the business and finance sector

submit to local authorities for approval,

all operational sales and leasing

as classified within the SIC.

after which property management is

activities of private properties.

Diagram 2.3 presents the relevant sectors

totally within the competence of the

and activities.

private sector. This scenario highlights the

development

contractors

and

in

which

professionals

infrastructure and bulk services.

important regulatory and administrative The identified economic components are analysed in the subsequent sections in order to quantify the monetary value of the commercial

role that the public sector plays in private development.

• The second hypothetical situation plots

private property sector. However, hypothetical

the

scenarios are used to show how the process

administration offices in addition to

development

of

governmental

of relating the economic value of the private

supposed upgrades to the surrounding

property sector is done with the use of

road infrastructure. It emphasises the

realistic examples.

financial provider role of the public The strongest component of private property construction is the construction activities subsector, which forms part of the construction main sector, with the business and finance main sector also represented in the form of specialised services. The real estate activities of private property management highlight the business and finance sector as its main representative economic sector.

Diagram 2.3 Commercial Private Property Sector in terms of the Relevant Economic Sectors

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THE ECONOMIC VALUE

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COMMERCIAL PRIVATE PROPERTY SECTOR

Diagram 2.4 Hypothetical Situations of

sector in terms of construction with all

State and Private Sector

construction activities and construction of

Responsibilities

major bulk services that are outsourced to the private sector.

The hypothetical situations explain the value of the private sector for

The economic value of the private property

the construction of public sector

sector is investigated in the following section.

developments. To another extent it also illustrates the importance of public sector administration and regulation for private commercial property development.

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SECTION THREE: CURRENT ECONOMIC VALUE

E

conomic value of the commercial private property sector refers to its contribution towards the Gross Domestic Product (GDP) of the Western Cape provincial and City of Cape Town municipal economies.

The Gross Domestic Product (GDP) can be defined as the monetary value of all finished

4

goods and services produced during a specific time period, within the borders of a specific

investopedia.com, http://

geographic area.4

www.dictionary.cambridge.

Derived from http://www.

org and http://www.

The value of the commercial private property sector is measured by analysing the economic

dictionary.com

contribution made by the relevant economic sub-sectors and relating the findings to the total GDP output of the focus regions. Additional captured findings include information regarding jobs sustained and tax generated by the private property sector.

3.1 Economic Quantification: Approach

economic performance with the composition of relevant national economic sectors in order to present up-to-date statistics for the

The quantification approach illustrates the

Western Cape Province and the City of Cape

methodology used in order to determine the

Town Metro.

current economic value of the commercial private property sector in terms of construction

The approach comprise of the following

and management of buildings.

components:

Please note that the approach was adapted according to the following limitations:

• Economic performance projections and cyclical analysis

• Availability of recent statistical releases:

• Identification of the main economic role-

The most recent published economic

playing sectors in the commercial private

figures for the lower geographic levels (such as the City of Cape Town Metro) are only available up to 2011.

property sector • Quantification of the economic value of the commercial private property sector

• Availability of detailed economic statistics: Comprehensive composition break-downs

as derived from the main role-playing economic sectors.

are only available on national level.

3.1.1 Economic Performance Projections The methodology was developed based on a

The cyclical performance of the overall

uniform distribution analysis technique, which

economy is analysed. The following projections

collate projections regarding the current (2013)

were made for GDP figures:

Economic Indicator

Projection Period

Reason for Projection

Assumption

National GDP

2013 Q4

National GDP is presented in a quarterly bulletin released by Statistics South Africa; therefore the latest release indicates GDP up to the third quarter of 2013. In order to present the annual GDP an average of the first three quarters was derived and applied to project the fourth quarter.

Economic performance in the final quarter of 2013 will be on par with the trend observed for the rest of the year.

Provincial GDP

2013

Provincial GDP is presented in an annual bulletin released by Statistics South Africa, therefore the latest release indicates the GDP up to 2012. In order to present the 2013 annual GDP for the province the average proportional provincial GDP values in relation to the national GDP (over the analysis period) was applied to the 2013 National GDP.

Proportional economic growth of the Western Cape Province in relation to the South African market remained in line with the performance over the past five years (2007-2012).

MARCH & APRIL 2014

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THE ECONOMIC VALUE

of the

COMMERCIAL PRIVATE PROPERTY SECTOR

Economic Indicator

Projection Period

Local GDP

2012 - 2013

Reason for Projection

Assumption

Latest local GDP figures is only available for 2011 as presented by Quantec Standardised Regional database derived from employment and economic performance variables as published by Statistics South Africa. In order to present the 2012 and 2013 annual GDP the average proportional local GDP values in relation to the national GDP (over the analysis period) were applied to the 2012 and 2013 National GDP.

Proportional economic growth of the City of Cape Town Metro in relation to the Western Cape and South African market remained in line with the performance over the past four years (2007-2011).

It is important to note that the most recent

Economic quantification of the commercial

available statistics was utilised for projection

private property sector is given in terms of the

purposes. Published data sources are presented

value of the following features:

unless otherwise indicated.

• GDP generated • Jobs sustained

3.1.2 Identification of Main Role-Playing Economic Sectors

• Tax revenue generated

The value and cyclical performance of important

The detailed composition of the representative

economic sectors are presented to assist in the

sectors are only available on national level.

economic quantification of the commercial

Projections regarding the provincial and local

private property sector.

contribution to GDP, jobs and tax are calculated

The main economic components were identified

by applying the national distribution of GDP, jobs

in accordance with the economic activities

and taxes to the relevant values of economies

identified in Diagram 2.3.

in 2013 for the construction as well as business and finance sectors. It is consequently assumed

Economic Indicator Provincial Local Employment Value

3.1.3 Economic Quantification of the Commercial Private Property Sector

that the local and provincial contribution

The contribution of the private property

recent published national composition, which

sector to the provincial and local economy

represent current values (2013).

is quantified by analysing the composition

The following projections were made for

of the various economic indicators namely

employment and tax data gaps in addition to

construction, business, and finance.

the above stipulated GDP projections:

Projection Period 2012 - 2013

SAPOA - the voice of commercial property

of the sub-sectors are in line with the most

Reason for Projection

Assumption

Provincial employment is presented in the quarterly bulletin released by Statistics South Africa, therefore the latest release indicates the total employment per sector for the third quarter of 2013. The 2013 Q3 employment total was utilised as the most recent employment value representing the annual employment for 2013.

In order to present the local 2012/2013 employment values the average local employment to GDP ratio for the period 20072011 was applied to the 2012 and 2013 local GDP figures to derive employment numbers.

Provincial: The most recent available (third quarter) 2013 employment per industry figures are representative of the annual values for that year.

Local: The average proportional employment versus economic growth ratio recorded from 2007 to 2011 is representative of the ratio to be expected in the years 2012 and 2013.

MARCH & APRIL 2014

THE ECONOMIC VALUE

Economic Indicator

Projection Period

Provincial and Local Tax Revenue Generated

2012 - 2013

of the

COMMERCIAL PRIVATE PROPERTY SECTOR

Reason for Projection

Assumption

Tax revenue is a function of income generated. Therefore the average tax to income (GDP) ratio of 2007-2011 period was applied to the 2012/2013 provincial and local GDP figures to present the relevant levels of tax revenue generated.

PThe average proportional tax versus income ratio recorded from 2007 to 2011 is representative of the ratio to be expected for the following years (2012-2013).

3.2 Economic Performance and Main Representative Sectors

According to projections, the Western Cape economy constitutes approximately 14.9% of the 2013 national economy with a GDP

Direct and indirect influences were taken into

contribution of approximately R293.5 billion.

account to determine the overall value of the

The value of the Cape Town local economy was

private commercial property sector.

projected to be roughly R215.1 billion in 2013.

3.2.1 Overall Economic Performance The overall performance of the relevant

3.2.2 Sectorial Composition in context to Property Representative Sectors

economies serves as a proxy for the subsequent

In essence any economic activity has to take

performance of the applicable property market

place in a specific space, thus all economic

and is illustrated in Figure 3.1.

activities are related to property either directly

All economies record stable average growth

or indirectly. However, for the purpose of this

rates for the analysis period with the provincial

assessment only property-centred economic

and

the

activities with a more direct impact are

national economy at 2% with average growth

evaluated. Figure 3.2 presents the sectoral

rates of 2.2% and 2.1% respectively during

composition of the Western Cape and the

this period. Table 3.1 presents the projected

City of Cape Town economies in terms of

value of the relevant economies for 2013.

GDP contribution. Special attention should be

local

economies

outperforming

Figure 3.1 Cyclical Economic Performance: 2007-2013 Source: Quantec EasyData: Standardised Regional and Statistics South Africa data, 2014

Economy South Africa

2013 GDP Value (Rands millions)

Share of National Economy

Table 3.1 GDP Value: 2013

1 974 343

100%

Western Cape

293 506

14.9%

Standardised Regional and

City of Cape Town MM

215 089

10.9%

Statistics South Africa data, 2014

MARCH & APRIL 2014

Source: Quantec EasyData:

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THE ECONOMIC VALUE

of the

COMMERCIAL PRIVATE PROPERTY SECTOR

granted to the contribution of the construction

Figure 3.4 and Figure 3.6 offer this detailed

and business and finance sectors considering

inspection of the composition of each of

these are the sectors that encompasses the

the main role-playing economic sectors in

main role-playing activities in the private

the national economy as provided in most

property sector (refer to Section 2.3). These

recent statistical publications of Statistics

sectors are therefore used as proxy for the

South Africa. As previously stated, data

commercial private property sector.

limitations necessitate the assumption that the composition within the main sectors

From Figure 3.2 it is evident that the

are uniform for the national, provincial and

construction sector constitutes 3.9% and 3.6%

municipal economies considering that similar

to economic activity in the Western Cape and

activities within the sectors relates to similar

City of Cape Town economies respectively. The

contributing sub-sectors.

supplementary business and finance sector drives approximately 29.9% of the provincial economy

3.2.3 The Construction Sector

and 33.0% of the municipal economy. It should

Figure 3.3 presents the comparative cyclical

be noted that a smaller portion of the business

performance of the construction sectors in

and finance sector forms part of the commercial

South Africa, the Western Cape and the City

private property sector when considering that

of Cape Town.

the entire construction sector contributes to its performance in a more direct way. An in-depth

From Figure 3.3 it is clear that the local

analysis of the main economic sub-sectors is

construction sector has surpassed its provincial

required to form a better understanding of the

counterpart in recent times. Nonetheless, the

economic value of the private property sector.

Western Cape economy recorded stronger

Figure 3.2 Sectoral Composition of the Relevant Economy: 2013 Source: Quantec EasyData: Standardised Regional and Statistics South Africa data, 2014

Figure 3.3 Sectorial Growth of the Construction Sector: 2007-2013 Source: Quantec EasyData: Standardised Regional and Statistics South Africa data, 2014

SAPOA - the voice of commercial property

MARCH & APRIL 2014

THE ECONOMIC VALUE

of the

COMMERCIAL PRIVATE PROPERTY SECTOR

growth during the 2012/2013 period. Table

Diagram 2.1 and Diagram 2.4). The private

3.2 presents the projected value of the

sector is represented by the remaining 61%

construction sector for the relevant study areas

of the construction sector with the â&#x20AC;&#x2DC;building

in 2013.

of complete constructions or parts thereofâ&#x20AC;&#x2122; being the major contributor (32.1%) of the

Projections indicate that the Western Cape

construction sector overall.

economy forms approximately 19.2% of the 2013 national construction sector with a GDP

3.2.4 The Business and Finance Sector

contribution of approximately R59.7 billion.

Figure 3.5 illustrates the cyclical growth

The local construction sector is valued at

performance of the relevant business and

roughly R7.6 billion in 2013, which constitutes

finance sectors.

approximately

12.8%

of

the

national

construction sector.

Figure 3.5 indicates that the provincial business and finance sector (average 3.5%) performed

The composition of the national construction

slightly stronger than the local business and

sector is presented below, which will be

finance sector (average: 3.4%) over the analysis

applied to the respective local economies to

period. Table 3.3 presents the projected value

inform calculations regarding the value of the

of the business and finance sector for the

particular private commercial property sectors.

relevant study areas in 2013.

The building of civil engineering structures

According to estimates, the Western Cape

(infrastructure) accounts for more than a

business and finance sector is valued at

third (39%) of the economic activity recorded

approximately R87.9 billion in GDP, which

within

sector.

accounts for roughly 20.4% of the national

This is however not a representation of the

the

national

construction

business and finance sector. The local business

commercial private property sector as it is

and finance sector also presents a prominent

financed by the public sector (please refer to

share of 16.5% of the national sector with a

Economy

2013 GDP Value (Rands millions)

Share of National Construction Sector

South Africa

59 741

100%

GDP Value: 2013

Western Cape

11 463

19.2%

Source: Quantec EasyData:

City of Cape Town MM

7 608

12.8%

Table 3.2 Construction Sector

Standardised Regional and Statistics South Africa data, 2014

Approximately 61% of the national construction sector comprise of private construction activities.

Figure 3.4 Composition of the Construction Sector of the National Economy: 2011 Source: Statistics South Africa Publication: The Construction Industry, 2011

MARCH & APRIL 2014

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THE ECONOMIC VALUE

of the

COMMERCIAL PRIVATE PROPERTY SECTOR

Figure 3.5 Sectorial Growth of the Business and Finance Sector: 2007-2013 Source: Quantec EasyData: Standardised Regional and Statistics South Africa data, 2014 Table 3.3

Economy

2013 GDP Value (Rands millions)

Share of National Business and Finance Sector

South Africa

431 449

100%

Western Cape

87 880

20.4%

City of Cape Town MM

71 036

16.5%

Business and Finance Sector GDP Value: 2013 Source: Quantec EasyData: Standardised Regional and Statistics South Africa data, 2014 Private property construction

projected value of approximately R 71 billion.

estate activities identified in Diagram 2.3 that

activities constitutes approximately

The composition of the national business and

is applicable to commercial private property

8.9% of the South African business

finance sector is presented below, which will

management industries.

and finance sector and a further

be applied to the respective local economies

18.8% related to private

to enable estimates regarding the value of the

property management

particular private property sectors.

3.3 Value in terms of Gross Domestic Product (GDP)

From Figure 3.6 it is evident that the professional

The value of the commercial private property

services component of commercial private

sector in terms of GDP output is measured by

property construction namely architectural,

applying the above-referenced national GDP

engineering and other technical activities

distribution to the Western Cape and City of

encompasses approximately 8.9% of the

Cape Town GDP outputs of 2013. It is assumed

national business and finance sector.

that the composition of the relevant sectors

In addition, roughly 18.8% of the business

within the provincial and local economies are

and finance sector consist of the relevant real

in accordance with the national economy.

(real estate) activities.

Figure 3.6 Composition of the Business and Finance Sector: 2010 Source: Statistics South Africa Publication: Real estate, activities auxiliary to financial intermediation and business services industry, 2010

SAPOA - the voice of commercial property

MARCH & APRIL 2014

THE ECONOMIC VALUE

of the

COMMERCIAL PRIVATE PROPERTY SECTOR

Table 3.4 provides the resultant calculated GDP

employment distribution per major activity,

output of the commercial private property sector.

which is applied to the total employment of

The provincial private property sector consists

the relevant regions.

of roughly R31.3 billion and R24.3 billion on

It is therefore assumed that the distribution

municipal level.

of employment in the relevant sectors within the provincial and local economies are in

3.4 Value in terms of Sustained Jobs

accordance with the composition of the national employment market.

The number of jobs sustained by the

Table 3.5 presents the value in terms of jobs

construction and management of commercial

sustained by the private property sector within

private property is derived from the national

the Western Cape and the City of Cape Town.

2013 GDP Value (Rands millions) Main Sector

Sub-Sector

Major Activities Western Cape

City of Cape Town MM

377.25

252.62

3 676.62

2 462.01

Construction Construction Building installation activities sector

1 737.17

1 163.27

Construction Construction Building completion activities sector

760.02

508.94

437.88

293.22

CONSTRUCTION

Construction Construction Site preparation activities sector Construction sector

Building of complete Construction constructions or parts activities thereof (excluding civil engineering)

Renting of construction

Construction Construction or demolition activities equipment with sector

MANAGEMENT

operators

Business and finance sector Business and finance sector

Other business activities

Architectural, engineering and other technical activities

7 822.94

6 323.49

Real estate activities

Real estate activities with owned or leased properties and on a fee or contract basis

16 502.63

13 339.51

Table 3.4 Gross Domestic Product of the Commercial Private Property Sector: 2013

Total commercial private property construction

14 811.89

11 003.55

Total commercial private property management

16 502.63

13 339.51

Quantec EasyData: Standardised

Total commercial private property sector

31 314.52

24 343.06

Regional and Statistics South

10.7%

11.3%

Africa data, 2010/2011/2014

Share of total economy MARCH & APRIL 2014

Source: Calculations based on

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21

THE ECONOMIC VALUE

of the

COMMERCIAL PRIVATE PROPERTY SECTOR

2013 Employment (Persons) Main Sector

Sub-Sector

Major Activities Western Cape

City of Cape Town MM

5 081

2 972

42 384

24 794

Construction Construction Building installation activities sector

43 164

25 251

Construction Construction Building completion activities sector

24 424

14 288

13 153

7 694

Table 3.5

Construction Construction Site preparation activities sector

Employment of the Commercial Private Property Sector: 2013

Regional and Statistics South Africa data, 2010/2011/2014

CONSTRUCTION

Source: Calculations based on Quantec EasyData: Standardised

Construction sector

Building of complete Construction constructions or parts activities thereof (excluding civil engineering)

Renting of construction

Construction Construction or demolition activities equipment with sector operators

Business and finance sector

Other business activities

Architectural, engineering and other technical activities

12 807

11 388

Real estate activities

Real estate activities with owned or leased properties and on a fee or contract basis

14 384

12 789

Total commercial private property construction

141 013

86 387

Total commercial private property management

14 384

12 789

sustained by property

Total commercial private property sector

155 396

99 177

construction activities.

Share of total economy

8.4%

7.2%

MANAGEMENT

22

Private property management sustains nearly 14 400 jobs within the Western Cape Province in addition to the 141 00 employment opportunities

The

Business and finance sector

commercial

private

property

sector

sector illustrates the contribution made to state

employs approximately 155 400 Western

revenue by this sector.

Cape residents accounting for 8.4% of all jobs

Tax revenue is a function of income generated.

within the province. In the City of Cape Town

The revenue gained from tax is therefore

approximately 99 200 people are employed

estimated

within the commercial private property sector.

proportion of production for each relevant

by

calculating

the

national

activity and equating it to total tax received

3.5 Value in terms of Tax Revenue Generated

by the construction and business and finance sectors of the Western Cape and the City of Cape Town economies in 2013.

SAPOA - the voice of commercial property

Tax revenue generated on production activities

This calculation is anchored in the assumption

related to the commercial private property

that the GDP composition of the relevant

MARCH & APRIL 2014

THE ECONOMIC VALUE

sectors

within

the

provincial

and

local

The

private

of the

property 15.8%

COMMERCIAL PRIVATE PROPERTY SECTOR

sector of

contributes

economies are in accordance with the national

approximately

tax

revenue

economy, which in turn presents the level of

generated within the provincial economy

tax revenue generated by the South African

(R1.1 billion). The local private property

Revenue Service (SARS). Please note that the

sector contributes 16.6% of all tax revenue

tax calculations present tax income of SARS

generated within the Metro, equating to

and not the local municipal tax revenue.

R890 million generated in 2013. It is clear from Table 3.6 that the activities related to

Table 3.6 presents the tax revenue calculations

private property management exhibit a higher

for the Western Cape Province and City of

contribution to state revenue than private

Cape Town Metropolitan Municipality.

property construction.

2013 Tax Value (Rands millions) Main Sector

Sub-Sector

Major Activities Western Cape

City of Cape Town MM

3.43

2.30

33.40

22.37

Construction Construction Building installation activities sector

15.78

10.57

Construction Construction Building completion activities sector

6.91

4.62

CONSTRUCTION

Construction Construction Site preparation activities sector Construction sector

Building of complete Construction constructions or parts activities thereof (excluding civil engineering)

Private property management generated R700 million in 2013,

MANAGEMENT

Construction sector

Business and finance sector Business and finance sector

Renting of construction Construction or demolition activities equipment with operators

which is considerably higher than the R400 million tax generated by

3.98

2.66

Other business activities

Architectural, engineering and other technical activities

338.28

273.91

Real estate activities

Real estate activities with owned or leased properties and on a fee or contract basis

713.61

577.82

private construction activities.

Table 3.6 Tax Revenue generated by the Commercial Private Property Sector: 2013

Total commercial private property construction

401.78

316.43

Total commercial private property management

713.61

577.82

Quantec EasyData: Standardised

1 115.39

894.25

Regional and Statistics South

15.8%

16.6%

Africa data, 2010/2011/2014

Total commercial private property sector Share of total economy MARCH & APRIL 2014

Source: Calculations based on

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24

THE ECONOMIC VALUE

of the

COMMERCIAL PRIVATE PROPERTY SECTOR

SECTION FOUR: ECONOMIC VALUE OF COMMERCIAL PRIVATE PROPERTY IN BRIEF

C

ommercial private property construction performance is mainly derived from the construction activities sub-sector comprising of 61% of the construction main sector, with 8.9% of the business and finance main sector also represented in the form of

specialised services. The real estate activities of commercial private property management highlights the business and finance sector as its main economic role-player, with 18.8% of the main sector comprising of commercial private property management related activities.

Accordingly, the estimated economic value of the private property sector can be summarised as follow: • GDP - The private property sector contributes approximately R31.3 billion to the provincial economy (10.7%), with construction encompassing R14.8 billion and property management R16.5 billion. Approximately 11.3% (R24.3 billion) of the Cape Town MM economy consists of private property sector activities of which R11.0 billion is attributed to property construction and R13.3 billion to property management activities.

• Jobs sustained - The private property management sustains nearly 14 400 jobs within the Western Cape Province in addition to the 141 000 employment opportunities maintained by property construction activities. In the local economy approximately 86 400 jobs are sustained by private property construction and 12 800 by private property management.

• Tax generated - Private property management generated R700 million in 2013, which is considerably higher than the R400 million tax generated by private construction activities.

This is also seen in the local metropolitan economy in which private property management contributed approximately R580 million in tax revenue in relation to R320 million generated by private property construction.

It is clear from this analysis that the commercial private property sector currently contributes significantly to the economy within the Western Cape Province. The local and provincial contribution in terms of GDP and tax (to a lesser extent employment) are generally aboveaverage when considering an equal contribution from all sectors (11.11%), thus indicating that the contribution by the private commercial property sector is in fact more significant than the majority of the other sectors. It is therefore paramount to examine the effects that application processes have on the private property sector, especially in terms of time management. The ‘lost’ economic value/benefits of the property sector due to delayed application processes are measured via an application tracking process, which highlights the performance of the entities handling applications.

REFERENCES Cambridge Online Dictionary, 2014, http://www.dictionary.cambridge.org.

Dictionary.com, 2014, http://www.dictionary.com.

Quantec Easydata, 2014, Standardised Regional statistical database.

Statistics South Africa Publication, 2011, The Construction Industry.

Statistics South Africa, 2010, Real estate, activities auxiliary to financial intermediation and business services industry.

Statistics South Africa, 2012, Standard Industrial Classification of All Economic Activities (Seventh Edition).

The Free Dictionary, 2014, http://www.thefreedictionary.com/.

SAPOA - the voice of commercial property

MARCH & APRIL 2014

WESTERN CAPE

THE ROLE AND IMPACT

2014

THE ECONOMIC VALUE

of the

APPLICATION PROCESSING REPORT COMMERCIAL PRIVATE PROPERTY SECTOR

25

of the

COMMERCIAL PROPERTY SECTOR

APPLICATION PROCESSING REPORT

WEST COAST

CAPE KAROO

WINELANDS CAPE TOWN

OVERBERG

MARCH & APRIL 2014

GARDEN ROUTE & LITTLE KAROO SAPOA - the voice of commercial property

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THE ECONOMIC APPLICATION PROCESSING VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR

SECTION ONE: INTRODUCTION

U

rban-Econ Development Economists was commissioned by the South African Property Owners Association (SAPOA) to undertake an investigation of the private property industry in the Western Cape Province, with special reference made to the City of Cape

Town Metro.

This report is the second component of the â&#x20AC;&#x153;The Role and Impact of the Commercial Property Sector in the Western Capeâ&#x20AC;? study. The first component contextualises the size and quantity of the private property sector in the Western Cape to provide a foundation informing on the prominence and importance of the industry and value it holds as a contributor to the Western Cape economy. This report supplements the first by analysing development application case studies as an influencing factor of new development and growth in the property industry with special reference to application submissions at the City of Cape Town and Western Cape Provincial Government.

The report should thus be viewed in relation to the first component as it aims to provide a perspective on administrative processes, highlighting areas of concern and possible improvement where required.

1.1 Study Area district municipalities are divided into 24 local The Western Cape is the most southern

municipalities. The City of Cape Town (CoCT)

province of the nine provinces situated in

Metropolitan Municipality (MM) is home

the Republic of South Africa. It is located

to one of the major cities in South Africa. It

in the south-western part of the country

accommodates the majority of economic and

and comprises of one metropolitan and five

commercial activities in the province, with the

district municipalities. The metropolitan area

higher portion of the Western Cape population

is known as the City of Cape Town and the

residing within its borders. The City of Cape

five district municipalities are the West Coast,

Town MM is analysed as a representative case

the Central Karoo, Overberg, Eden and the

study in combination with the province owing

Cape Winelands regions (Map 1.1). The five

to the fact that a large portion of the private

Map 1.1 Districts of the Western Cape Source: ArcGIS Explorer, 2013

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MARCH & APRIL 2014

THE ECONOMIC VALUE

of the

APPLICATION PROCESSING REPORT COMMERCIAL PRIVATE PROPERTY SECTOR

commercial developments are centred in the

the study). Various administration processes

City of Cape Town.

are involved within the value chain of these identified activities. It is impracticable to

Map 1.2 illustrates the metropolitan focus area.

measure

administration

efficiency

within

For the purpose of this report

the entire development cycle. This report

only the timeframes relevant to

The study is envisioned to analyse the

identifies the administration of development

the processing of development

commercial private property sector in the

applications such as building plans and

applications are analysed.

Western Cape Province. The City of Cape

Land Use Management (LUM) applications

Development applications consists

Town MM is the capital of the Western Cape

as the most important phase in the cycle in

of building plans and

Province and the most active commercial

the requirement for timeous management.

LUM applications.

property market in the province. As a result

Administration of the relevant development

prominent economic contributors are centred

applications are handled in this report

within Cape Town. It is therefore considered

considering that it is a municipal function

to be the centre of major economic growth

within

and expansion within the province and an

influences the private commercial property

important analysis area.

market in the province. Specific reference

the

development

cycle,

which

is made to external processes involved with

1.2 General Research Approach

development application administration such as environmental, heritage and transport

The general research approach describes the

impact assessments, however these processes

1

basic methodology implemented to measure

are not analysed in detail in this report.

refers to the speed in which

the

application

administration

tempo1

of

Administration tempo

development applications

the relevant departments within the City of

Application processing proficiency is measured

are finalised by the relevant

Cape Town MM and of the Western Cape

by utilising two application tracking case

governing entity. This tempo

Provincial Government.

studies provided by the private and public

is measured by determining

sector respectively, in addition to an overall

the duration of administrative

assessment of the municipal development

processes of typical

application database.

development applications.

The

private

comprises

commercial

property

various

construction

of

sector and

property management activities identified in

However, before the afore mentioned a brief

the Economic Value Report (component 1 of

overview of the regulatory environment and Map 1.2 Study Area Source: ArcGIS Explorer, 2013 The study area comprises of the Western Cape Province in its entirety. The City of Cape Town MM is highlighted as a prominent economic role-player and the main avenue for property development in the province. The City of Cape Town MM is analysed as a representative case study in combination with the province considering that a large portion of the private commercial developments are centred in the City of Cape Town and the Metro has a detailed database of sample applications.

MARCH & APRIL 2014

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28

THE ECONOMIC VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR APPLICATION PROCESSING

administration processes are given in order

application tracking case studies provided

to present the relevant governing entity

by the public and private sectors in order to

responsibilities,

identify and highlight the most frequent delay

along

with

the

general

timeframes prescribed for administration.

factors and administrative blockages. The report was compiled at a time of fundamental

After a firm understanding of the regulations

change in national and provincial planning

and processes involved in building plan and

legislation. It therefore seeks to identify

LUM application administration is formed,

factors currently influencing the tempo of

the municipal benchmark for development

development

application over the past two years is

as well as recognising its relevance for the

analysed to provide background in terms of

transformed legislation.

application

administration

the total number of plans and applications handled and finalised by the municipality. The

Additionally, it is understood that â&#x20AC;&#x153;The Role

subsequent application tracking analyses of

and Impact of the Commercial Property Sector

sample applications provided by the public

in the Western Capeâ&#x20AC;? study will be utilised

and private sector are then employed to

to obtain valuable information regarding the

identify delay factors as per the experience of

civic administration of property development

the private sector respondents on the one side

within the study area in order to quantify

and the municipal respondents on the other.

the distinct role that the public sector plays in property development, especially in terms

The City of Cape Town Metro is responsible

of timeframes. Through quantifying the

for the administration of the majority of

economic value of the sector and determining

the

economically

estimated application processing timeframes,

significant developments in the commercial

the study provides the reader with insight

private property sector. Please note that the

and an understanding on the level of impact

analysis is mainly aimed at the City of Cape

that the tempo of development application

Town MM to offer a basic representation

administration has on the provincial economy

of the Western Cape Province considering

according to his/her own deductions.

most

prominent

and

that regulatory entity responsibilities differ and

the

prominence

of

development

1.4 Limitations

applications handled by this governing entity.

Nonetheless, the private sector application

Due to the qualitative and quantitative

tracking case study includes samples received

investigation methodology a few limitations

for applications submitted to the Western

were noted during the research process.

Cape Provincial Government.

It is vital that the limitations are stated and recognised in order to have a contextual

1.3 Purpose of Report

understanding of the results.

The objective of the report is

The application processing report utilises

The

to measure civic administration

application tracking scenarios as instruments to

quantification process are:

timeframes in order to identify

measure the turnaround times of development

â&#x20AC;˘ Primary data sourced is typically reliant on

factors influencing the processing

applications in terms of timeframes prescribed

verbal explanations by different government

by the relevant regulatory entity.

officials and private property professionals.

duration of development

limitations

to

the

economic

For the sake of fairness in analysis, all

applications.

SAPOA - the voice of commercial property

basic

It is important to take cognisance of the fact

detrimental remarks were excluded from

that the report does not represent an audit

the research. The information captured

of all applications administered by the City of

provides a multi-sided perspective with the

Cape Town Metro and Western Cape Provincial

respondents widely consulted to provide

Government. It presents an evaluation of

the most reliable representation possible.

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• Primary data is also reliant on information

has research value considering that the

provided by representatives of the private

findings will be presented according to its

and public sector. Limited response among

relevance for future legislation.

local private property professionals were noted mainly owing to capacity pressures.

Please note that the limitations are addressed

• Due to the limited and unrepresentative

via the provision of a wide variety of case

information, building plan finalisation

studies and ground level audits. The limitations

was omitted from the private sector case

are thus mitigated to not affect the results of

study analysis.

the report in any negative manner.

• Additionally it should be acknowledged that the public sector was more willing

1.5 Report Outline

to assist and provided the required information promptly. It is clear that the

The report outlines a development application

governing entities exhibit dedication from

processing tempo as identified in various

their side to promote transparency and

benchmark and application tracking analyses.

access to information, especially during

It illustrates the administration efficiency on

this research campaign.

the basis of the general guidelines provided

• Applications comparable has

a

are

identically

in national and provincial legislation to

each

application

ultimately identify factors influencing the

spatial

component,

and

unique

timeframe,

not

activity,

all

and

processing tempo.

process.

Informed generalisations were used to

The remainder of the report will be structured

make

under the following sections:

applications

more

comparable

by sorting them according to basic Section Two: The Regulatory Environment

representative features.

• The negative cases are anticipated to

The regulatory environment in which

be the main submission of the private

development

sector. Therefore, the private sector

defined and planned future transformations

survey sample may illustrate a worst-

in legislation are discussed in order

case scenario in terms of time taken to

to provide background to the type of

finalise applications.

development applications and its relevant

• The manner and format in which the

application

operates

is

administration processes.

municipal statistics are captured does not allow the tracking of the exact processing

Section Three: Application

time per application for the entire

Administration Processes

database; therefore specific high value

Breakdown of the development application

development projects of R5 million or

administration processes and identification

more were identified and traced in detail

of

to act as a representative sample.

regulatory entities.

timeframes

prescribed

by

the

• The report was compiled at a time of fundamental change in national and

Section Four: Application

provincial

Administration Benchmark

planning

legislation

with

the recent introduction of the Spatial

Overview of the application processing

Planning and Land Use Act and ongoing

efficiency of the City of Cape Town MM

formulation of the Western Cape Land Use

in terms of building plan approvals and

Planning Act. All applications tracked were

land use application finalisation during a

historically submitted under the current,

two-year analysis period ranging from the

soon to be replaced, legislation. However,

third quarter of 2011 to the third quarter

the application tracking campaign still

of 2013.

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Section Five: Municipal Application

Section Seven: The Application

Tracking Case Study

Processing Report in Brief

Primary analysis of high value (R5 million +)

Summary of the findings of the afore-

development applications as provided by

mentioned analyses in order to assist in the

the relevant governing entity.

formulation of recommendations regarding ways to improve application management

Section Six: Private Sector Application

proficiency of the public sector.

Case Study Primary analysis of development applications submitted to the relevant governing entities by the private sector.

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SECTION TWO: THE REGULATORY ENVIRONMENT

I

t is important to understand the regulatory environment in which development applications are submitted, prior to the detailed analysis and tracking of applications submitted to the Provincial and Metropolitan Municipalities.

As previously mentioned, the report was compiled at a time of fundamental change in national and provincial planning legislation. It is therefore vital to understand that this section summarises the current planning legislation as well as the recent and proposed transformations. ‘Current’ legislation refers to the governing documents under, which the historical sample applications were tracked. Future/transformed legislation refers to policies and acts, which are currently in the process of being introduced or were introduced in 2013. Due to the recent implementation, no representative sample of development applications are available at this time.

The section outline, illustrated in Diagram 2.1, therefore firstly consists of a basic overview of the current regulations which guides municipal decision making with respect to the sample case studies and informs approval processes given below. Followed by an explanation of the responsibilities of each regulatory entity and new transformations in the planning legislation relevant to the Western Cape Province and all applications submitted from 2013 going forward.

2.1 Current Regulatory Background thereof. The IDP is required in terms of Rural

the act to include a Spatial Development

2

identifies

Framework (SDF), which must include the

Rural Development and

the following key regulatory documents that

provision of basic guidelines for a land use

Land Reform, Overview

govern municipal decision-making in terms of

system in the municipality.

of Legislation and Existing

The

National

Department

Development and Land Reform

of 2

building standards and land use planning in South Africa:

• National

Building

Regulations

and

Source: Department of

Classification Effort, 2012

Building Standards Act No 103 of 1977: solely implemented for the purpose of building

National level:

control, prescribing building standards and

• Constitution of RSA No 108 of 1996: the

other related matters. All proposed building

primary role being the assigning of municipal

plans should be submitted in line with

planning responsibility to municipalities.

this Act.

• Municipal Systems Act (MSA) No 32

• Less Formal Township Establishment

of 2000: setting out in Chapter 2 the

Act No 113 of 1991: this act provides for

requirement, among others, for newly

shortened procedures for the establishment

elected municipal councils to prepare

of townships, for less formal forms of

and adopt an Integrated Development

residential settlements and to regulate

Plan (IDP) for their respective areas

the use of land by tribal communities for

and to provide for annual revision

communal forms of residential settlements.

Diagram 2.1 Section Two Outline

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THE ECONOMIC APPLICATION PROCESSING VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR

Provincial level:

levels, which broadly coincide with their

• Planning Acts and Ordinances in the

national, provincial and local significance.

provinces: the majority of legislation directly controlling planning in the nine

Please note:

provinces are still pre-1994 legislation

• The Development Facilitation Act No 67

enacted by the original four provinces of

of 1995 (DFA) is no longer considered to

South Africa and they are all also generally

be relevant governing documentation

unconstitutional in some or other aspect.

considering that a section of this legislation

The local planning ordinance (Western

have been declared unconstitutional by

Cape Land Use Planning Ordinance) is one

the Constitutional Court as it usurped the

example of pre-1994 legislation, which

decision-making powers of municipalities

has undergone numerous amendments

and is required to be repealed or amended

following new legal presidents set in

by June 2012. Despite sections of the

various court cases. The Habitat Council

Act being declared unconstitutional by

and other vs the Western Cape Provincial

the court, its General Principles for Land

Government is the most prominent of

Development as contained in Chapter 1,

these cases and the implications thereof will be handled in Section 3.1.1 and 3.3.

Section 3 of the act, are still deemed valid.

• The national Spatial Planning and Land Use Management Act (SPLUMA), and the

Auxiliary

regulatory

property

development

documents in

the

affecting

Provincial Land Use Planning Act (LUPA)

national

are regarded as recent transformations

environment includes:

in planning legislation and are discussed under Section 3.3.

3

Source: South Africa

• National Environmental Management

National Environmental

Act (NEMA) No 107 of 19983: NEMA is

The overall purpose of the presented Acts

Management Act –

environmental framework legislation, which

is to ensure that municipalities develop

Legislation and Environmental

provides for environmental management.

their land use planning processes, and

Acts, http://www.

The Act aims to provide for cooperative

approval of such applications in line with the

environment.co.za, 2014

environmental governance by establishing

national development goals and strategies.

4

principles for decision-making on matters

It is therefore important to note that all

Source: Construction

affecting the environment, institutions that

development applications submitted to the

Industry Development

will promote cooperative governance and

local governing entities should be aligned with

Board, Overview of National

procedures for coordinating environmental

the national policies (some of which might not

Heritage Resources Act, 2005

functions exercised by organs of state;

be mentioned above).

and to provide for matters connected therewith. Other specific environmental

This sub-section briefly discusses the main policies

management

promulgated

and guidelines relevant to private property

to deal with specific mediums of the

development and all development applications

environment. Various amendments to the

submitted before the instatement of the LUPA

Act ensure that it remains relevant.

within the Western Cape Province, with specific

• National

Acts

Heritage

were

Resources

Act

reference to the City of Cape Town Metro.

4

(NHRA) No 25 of 1999 : NHRA aims to introduce an integrated, three-tier system for the identification, assessment and management of the national estate. That will operate on a national, provincial and local level. The legislation also makes provision for a grading system for the evaluation of heritage resources on three

SAPOA - the voice of commercial property

These regulatory documents include: • Western

Cape

Land

Use

Planning

Ordinance (LUPO), 1985 (Ordinance 15 of 1985).

• Cape

Town

Spatial

Development

Framework (CTSDF).

• Cape Town Zoning Scheme (CTZS).

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2.1.1 Western Cape Land Use Planning Ordinance (LUPO)

2.1.2 Cape Town Spatial Development Framework (CTSDF)

A Land Use Planning Ordinance can be

As previously mentioned the Municipal Systems

5

defined as an authoritative rule prescribed

Act No 32 of 2000 mandates the Cape Town

http://www.investopedia.

to guide the development of land passed

Integrated

com, http://www.dictionary.

by a legislative body, enacted by a city or

provide strategic framework guiding future

cambridge.org and http://

5

economic and spatial development within

www.dictionary.com

provincial government.

Development

Plan

(CTIDP)

to

Source: Derived from

the municipality over the course of a political The Western Cape Land Use Planning Ordinance

term. It should therefore be revised every five

(LUPO), 1985 (Ordinance 15 of 1985) is the

years and includes a Spatial Development

most important legislative policy governing

Framework (SDF) to steer spatial planning

land use development within the Western

projects encompassed by the IDP.

Cape Province. The LUPO provides a set of written regulations and laws that define how

According to the 2012-2017 IDP, the Cape

property in the Western Cape Province may

Town Spatial Development Framework

be used. The ordinance therefore constitutes

(CTSDF) guides the spatial form and structure

a legal framework for land use within the

of Cape Town in the future. In effect, providing

6

province as it facilitates the formulation and

a long-term (20+-year) plan to manage new

Integrated Development Plan

implementation of municipal structure plans

growth and change in Cape Town.

6

Source: City of Cape Town

Draft, Five Year Plan for Cape

and zoning schemes. The LUPO describes the

Town, 2012 – 2017

procedures for handling land use applications

The CTSDF indicates the areas most suited

submitted (such as rezoning and sub-division

for urban development in contrast to areas

of land etc.) to the relevant municipal entity in

that should be protected (or areas of sensitive

terms of general provisions and the planning

management) while offering a clear guide for

advisory board.

sustainable private and public investment.

According to the IDP, the CTSDF will be

One of the most important aspects currently

utilised in the future to assess applications

covered by the ordinance is the process of appeal,

submitted by property developers and guide

which allows the movement to appeal a decision

changes in land use rights. All land use

made by the MM in front of the provincially

planning applications should be in line with

assembled committee. However, the Western

the local SDF. However, the CTSDF does not

Cape Province and City of Cape Town Metro are

grant or take away zoning rights.

currently in the process of revising the LUPO and replacing it with the proposed Western Cape

The main objective of the CTSDF is to

Land Use Planning Act/Bill (LUPA), which may

synchronise spatial and infrastructure planning

disband the current appeal process, following the

for the way forward in order to ensure the

Habitat Council and other vs. the Western Cape

sustainable development of the City of Cape

Provincial Government court case.

Town. Ultimately, to realise the vision, goals and

The Habitat Council and other vs. the Western

objectives set out in the municipal Integrated

Cape Provincial Government court case had the

Development Plan.

most prominent impact on the review of the LUPO and introduction of the LUPA. In August

“For the City to meet the commitments outlined

2013 the Western Cape High Court ruled that

in the CTSDF and sector-based policies, all plans

the LUPO is unconstitutional in the way that it

and budgets need to be aligned in the IDP.”

7

governs the appeal process. As a result, appeals

Source: City of Cape Town

Integrated Development Plan Draft, Five Year Plan for Cape

will now fall within the competency of the City

2.1.3 Cape Town Zoning Scheme (CTZS)

of Cape Town MM under the new LUPA. Please

“A zoning scheme is a legal document that

note that the LUPA will be handled in detail in

records all land use rights on properties in

Section 3.3.

its area of jurisdiction. It includes regulations

MARCH & APRIL 2014

7

Town, 2012 – 2017

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THE ECONOMIC APPLICATION PROCESSING VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR

8

and restrictions on such rights and how they

for Land Use Management can be summarised

can be exercised. All municipalities have such

as, in no particular order :

10

• Site Development Plan

Source: City of Cape Town

a scheme, and they usually serve to manage

Municipal Website,

urban growth and development, as well as

LUM Applications:

http://www.capetown.gov.

conserve the natural and cultural environment

submitted to obtain approval for the

za/en/Planningportal/Pages/

within their area of jurisdiction.”

8

proposed form and layout of envisaged development on a property in order to

Zoningscheme.aspx, 2014 9

According to the CTZS regulations , the scheme consists of zoning regulations, zoning 9

Source: City of Cape

Town Zoning Scheme

• Consent Use LUM Applications:

map(s) and a register or record of all approved

submitted to obtain special consent from

departures, consent uses and conditions.

local authority to utilise land outside its primary use as stated in zoning

Regulations, A Component of the Policy-Driven Land Use

The City of Cape Town MM recently

Management System, 2012

collapsed 27 area-specific zoning schemes

9

accelerate building plans approval.

scheme regulations.

• Rezoning LUM Applications:

into one integrated zoning scheme. The

submitted to change the primary zoning

Integrated Zoning Scheme is mainly utilised

classification prescribing the admissible land

Source: City of Cape

to determine land use rights and to provide

uses of a property in the relevant zoning

Town Zoning Scheme

for control over use rights and over the

scheme regulations in order to allow new

Regulations, A Component

utilisation of land in the area of jurisdiction

permitted land uses for the property.

of the Policy-Driven Land Use

• Subdivision LUM Applications:

of the City of Cape Town.

submitted to allow the division of one or

Management System, 2012

2.2 Current Regulatory Entity Responsibilities

more properties into smaller units with separate title deeds for each in order to enable the transfer of land.

This sub-section presents the regulatory entity

• Temporary and Permanent Departure

responsibilities as at the time of the application

LUM Applications:

tracking survey. Therefore, the responsibilities

submitted to permit the permanent or

listed below form the foundation for the

temporary departure from provisions of the

application tracking process and do not consider

zoning scheme regulations applicable to a

any recent transformations in planning legislation.

specific property.

• Amendment Applications: submitted to change certain conditions

Metropolitan Municipalities operate in the

of use as prescribed by the conditions of

capacity of equal spheres of government

establishment document coupled to the

Each

entity

has

specific

title deed of a specific property.

• Building Plan Applications:

responsibilities in terms of processing different

submitted to permit the new construction

types of applications. The City of Cape Town

or reconstruction of buildings in order

MM is currently responsible for the processing

to comply with minimum construction

of building plans and basic LUPO applications

standards and specifications, specified in

with the Western Cape Department of Environmental Planning Town Zoning Scheme

LUM

Cape Provincial and City of Cape Town

applications.

Source: City of Cape

Conditions

It is firstly important to state that the Western

for the administration of local development

10

of

Affairs

(DEADP)

and

handling

Development

the relevant national legislation.

• Municipal Systems Act Appeals:

applications

an internal appeal lodged against any of

submitted under more specialised legislation

the conditions imposed by a decision or

and LUPO appeals.

the decision itself. Decisions granted by un-delegated powers can be appealed

Regulations, A Component of the Policy-Driven Land Use

The applications and appeals submitted to the

to the City Manager while delegated

Management System, 2012

City of Cape Town Metropolitan Municipality

decisions can be appealed to the Planning

SAPOA - the voice of commercial property

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and General Appeals Committee. Once the

as an implication of the Habitat Council

Municipal Systems Act appeal is resolved, it

and other vs. the Western Cape Provincial

becomes the final decision of Council.

Government court case.

11

• Less Formal Township Establishment

The City of Cape Town

competencies were identified

(LFTEA) Applications - Act 113 of 1991:

via interviews with the

Provincial Government in terms of type of

specialised

municipal officials and

applications processed can be summarised as,

the establishment of townships and

documentation from the

regulation of land use for less formal forms

municipal website

of residential settlement such as tribal/

(www.capetown.gov.za).

The

competence

of

the

Western

Cape

11

in no particular order : • Removal of Restrictions and

applications

submitted

for

Relaxation of Title Deed Conditions -

community land as propagated under the

Act 84 of 1967:

Less Formal Township Establishment Act

submitted to remove restrictive conditions

(Act 113 of 1991). Please note that LFTEA

The application tracking case

in terms of permitted land uses and

is repealed by SPLUMA and will therefore

study was conducted according

development, as stipulated on the title

have little to no impact in the near future.

to the identified type of

deed of a property.

applications above.

• LUPO Appeals - Ordinance 15 of 1985:

Section Three offers an overview of the generic

submitted to request a revaluation of a

processes involved with the identified applications

decision given on a LUPO application by

following the Regulatory Environment.

the Metropolitan Municipality. Appeals on land-owners as well as objectors with un-

2.2.1 Interaction between the City of Cape Town Metro and Provincial Government

delegated rezoning applications (such as in

As previously mentioned, the City of Cape Town

the case when public open space is involved)

MM and Western Cape DEADP currently operates

and regulation appeals of applications with

in the capacity of equal spheres of government,

delayed decision (in excess of 210 days)

with each entity responsible for processing

also referred to the Provincial Government.

different types of development applications.

all LUPO applications may be lodged by

As previously mentioned, LUPO appeals are likely to become a Metropolitan Municipal

Diagram 2.2 summarises the relationship of

function with the introduction of LUPA

the governing bodies.

Diagram 2.2 Interaction between the City of Cape Town and Western Cape

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THE ECONOMIC VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR APPLICATION PROCESSING

The City of Cape Town MM processes building

kinds of planning; 3) to provide for the inclusive,

plan approvals and LUPO applications, with

developmental, equitable and efficient spatial

Under the planning legislation

the interaction from the MM with Provincial

planning at the different spheres of government;

utilised in the application tracking

Government only recorded when appeals

4) to provide a framework for the monitoring,

case studies, interaction between

are lodged against these application results.

coordination and review of the spatial planning

the Metro and province pertains

The DEADP manages LFTEA and Removal of

and land use management system; 5) to provide

to LUPO appeals and Removal of

Restrictions applications. The City of Cape

a framework for policies, principles, norms and

Restriction applications.

Town MM assists in the collection of Removal

standards for spatial development planning

of Restriction applications.

and land use management; 6) to address past spatial and regulatory imbalances; 7) to

2.3 Recent and Planned Transformation in Regulations

promote greater consistency and uniformity in the application procedures and decision-making by authorities responsible for land use decisions

12

Source: Department of

Recent

in

and development applications; 8) to provide for

Rural Development and

and

planned

transformations

legislation within the land use planning

the establishment, functions and operations of

Land Reform, Spatial

environment

property

Municipal Planning Tribunals; 9) to provide for

Planning and Land

development

Use Management Act, 2013

influences

affects is

the

way

governed

and

therefore

the facilitation and enforcement of land use and

developers

operating

development measures; and 10) to provide for

property

12

matters connected therewith.”

within the private sector.

Noteworthy changes include: • The amendment of national and provincial

The SPLUMA will therefore regulate all spatial

administration with the signing into law

development within the national borders with

of SPLUMA and alignment of the Western

specific aim to:

Cape LUPA with national legislation.

• Promote sustainable agricultural

• The transformation of local spatial planning processes and management of land.

development.

• Prevent urban sprawl.

• Improve environmental management

2.3.1 Spatial Planning and Land Use Management Act (SPLUMA)

instruments.

• Reduce the impact of economic

SPLUMA was introduced in the National

and environmental shocks via clever

Assembly in June of 2012 and approved in

management.

February 2013. In August 2013, President Jacob Zuma signed it into law to provide a uniform

• Encourage good administration among regulatory entities.

and comprehensive system of spatial planning The spatial planning system, as defined in

2.3.2 Western Cape Land Use Planning Act (LUPA)

the Spatial Planning Land Use Management

The proposed LUPA aims to produce a

Act, should integrate spatial development

modernised and efficient system of land use

frameworks, development principles, land

planning facilitating sustainable development

use

in the Western Cape Province, as demanded

and land use management in South Africa.

SAPOA - the voice of commercial property

facilitation

and

processes

of

land

development applications.

owing to the change in national legislation.

The objective of SPLUMA according to

“The Land Use Planning Bill centres around

the proposed Spatial Planning and Land Use

five objectives: 1) it establishes a firm link

Management Bill (2012): “1) To provide a

between forward planning and development

framework for spatial planning and land use

management

management in the Republic; 2) to specify the

management decisions to be aligned with

relationship between the spatial planning and

spatial development frameworks; 2) it seeks

the land use management system and other

to clarify municipal and provincial roles in land

by

requiring

development

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use planning; 3) it puts in place an ‘asymmetric’

ever before. This has brought numerous changes

planning system, which caters for various levels

and challenges, and greatly accelerated the

of planning capabilities; 4) it seeks to find a way

processes of urbanisation… To capitalise on its

13

to deal with objections against land use decisions

strengths and meet its challenges head-on, Cape

Use Planning Bill, Explanatory

and disputes between levels of government;

Town must position itself accordingly and unlock

Memorandum, 2012

and 5) the Bill seeks to rationalise the current

its full potential.”

Source: Western Cape Land

14

fragmented legislative framework and create mechanisms for ‘one stop’ applications. It

During a speech delivered by the Executive Mayor

consolidates the various land use control

of Cape Town during the 45th SAPOA annual

14

instruments (such as rezoning, subdivision,

convention in May of 2013, reference was made

Integrated Development Plan

removal of restrictions etc.) into one provincial

to proposed changes in the method of handling

Draft, Five Year Plan for Cape

menu of instruments that can be addressed in

private and public property development.

Town, 2012 – 2017

one application to the municipality.”

Source: City of Cape Town

13

The majority of the proposed changes mainly The establishment of the LUPA follows the

pertain to urban management and faster

decision received in the Habitat Council and other

processing of land use applications, aiming to

vs. the Western Cape Provincial Government high

satisfy the local property developers’ need for

court case in August 2013. The proposed Bill

efficient and effective development processes.

clearly establishes the relevant responsibilities of

Current reorganisation of the internal municipal

governing entities. The Metro will be responsible

structure forms the basis for all transformation

for adopting municipal regulatory documents

within the local property development sector.

such as Spatial Development Frameworks and regulating planning by-laws while delivering

Ground-breaking initiatives such as electronic

decision on all land use applications in the

submissions (‘e-submissions’) of planning and

municipal area. The competence of the Western

building plan applications intend to ease the

Cape Provincial Government pertains to the

application process by enabling the applicant

approval of Provincial and Regional Spatial

to self-track the progress of the application.

Development

to

Furthermore, a one-user-interface is proposed,

regulating, supporting and monitoring land

Frameworks

in

addition

which allows for easier tracking of the submitted

use planning activity within the province. It is

application by allowing the applicant to have one

proposed that provincial government remains

point of communication within the municipality.

responsible for processing land use applications,

These initiatives ensure that municipal officials

in cooperation with the Metro that has a distinct

are held to strict timeframes for their required

provincial dimension.

inputs or comments. Ultimately, guaranteeing that the City will adhere to the overall timeframe

The most significant suggested alteration to the

when processing specific land use applications

LUPA from the LUPO is the exclusion of the right

while promoting good governance within the

to appeal municipal decisions to the provincial

municipality. Especially in terms of private-public-

government. A system of internal municipal

partnerships and other major development

ordinance appeals are recommended, which will

projects within the Metro, which will be driven

have good or bad repercussions for local private

by a personal investment facilitator to the

property developers. This should not be confused

Executive Mayor. For instance, the waiving of

with the current internal municipal system for

development contribution fees in priority areas,

appeals received according to the MSA.

such as Atlantis, provides the private property developer with private-public-partnership and

2.3.3 Proposed Improvements

new market entry opportunities.

“The world is changing. As the global economy shifts, the developing world is generating financial

Nonetheless,

forces with greater strength and frequency than

not only relate to changes in the application

MARCH & APRIL 2014

proposed

improvements

do

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THE ECONOMIC VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR APPLICATION PROCESSING

process,

planned

changes

in

planning

legislation will also have a profound impact

transformation in legislation be approved; this is likely to take place in middle 2014.

on private property development. The recent advancement of a new integrated zoning

Under the proposed LUPA, all applications

scheme (CTZS) and planning by-law, collapsed

will become municipal functions with internal

27 old and complicated zoning schemes into

appeals and municipal processing of Removal of

one modernised scheme. The purpose of this is

Restrictions applications instated. The Provincial

to simplify land use planning across the entire

Government will play the role of mentor rather

Metro by providing consistent regulations to

than primary application processor.

which each administrative region is held.

All proposed interventions are in line with an

2.3.5 Results of Transformation in Legislation and Operations

eight-point implementation plan identified

Major results of the transformation in planning

by the City, which will be handled in the final

legislation and operations encompass various

section of the report.

advantages to local private property developers: â&#x20AC;˘ Well-defined application processes

2.3.4 Changes in interaction between the City of Cape Town Metro and Provincial Government

promoting transparency in processing of land use planning applications by the municipality.

The transformation in legislation will alter the entity responsibilities and ways in which

â&#x20AC;˘ Promotion of good governance.

- Municipality has greater capacity to

applications are handled. The role of the

address maladministration and ineffective

Provincial Government will be lessened in

management among underperforming

terms of application management. Diagram 2.3

presents

the

potential

changes

in

entity responsibilities should the proposed

departments and its staff.

- Municipality has greater capacity to address maladministration and ineffective

Recent transformations in planning legislation result in lower levels of interaction between the Metro and province, especially in terms of the LUPO appeals, which is becoming a function of the City.

Diagram 2.3 Changed interaction between the City of Cape Town and Western Cape

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management among underperforming

the Western Cape Department of Environmental

departments and its staff.

Affairs and Development Planning concerns

• Consistency in planning by-laws and

the

handling

of

applications

submitted

regulations help to minimalise confusion

under more specialised legislation and LUPO

among local property developers and

appeals.

professionals.

national, provincial and local land use planning

However, noted changes in the

• Fast-tracking of prioritised developments.

environment include the implementation of

• The elimination of long appeal processes.

SPLUMA, the LUPA and various local initiatives.

These planned advances may influence the

However, potential pitfalls include: • Internal appeals may lead to unfair

responsibilities of each entity in the near future, especially in terms of LUPO appeals.

and biased decisions on behalf of the municipality.

• Disputes should be settled in court, which may result in inflated legal cost.

• Fast-tracking of major development

The eradication of lengthy external appeal processes will be advantageous for local property developers considering the resulting fast-tracked development projects.

projects at the expense of smaller planned developments.

2.4 The Regulatory Environment in Brief Regulations and standards are vital for the sustainable development of any geographic region, especially large metropolitan areas. It promotes fair governance to ensure that the full potential of the city structure is unlocked by endorsing optimal integration of land uses. The major documents regulating spatial development in South Africa include: • Constitution of RSA No 108 of 1996.

• Municipal Systems Act No 32 of 2000.

• National Building Regulations and Building Standards Act 103 of 1977.

• Spatial Land Use Management Act of 2013.

Provincial planning acts and ordinances regulate development in various provinces with the Western Cape Land- Use Planning Ordinance (LUPO) 1985 (Ordinance 15 of 1985); Cape Town Spatial Develop Framework (CTSDF); and the Cape Town Zoning Scheme (CTZS), which are the most important strategic documents governing land use planning in the Western Cape Province.

The responsibilities of the City of Cape Town Metropolitan Municipality pertain to processing of basic LUPO applications. The competence of

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SECTION THREE: APPLICATION ADMINISTRATION PROCESSES

A

pplications are mainly submitted to permit the construction and change of land use of a specific terrain to make it more suitable for the envisaged development, with opportunities for appeal granted if it is believed that these applications are not handled according to

specific rules and regulations set out in national and provincial legislation.

It is of utmost significance to understand the processes involved in the predetermined type of applications submitted to the relevant government entities. The generic development cycle is firstly plotted to illustrate where the application submission process is situated in the cycle. This is followed by summaries of the way in which all relevant applications are processed by the City of Cape Town MM and Western Cape Provincial Government.

3.1 Generic Property Development Cycle From the diagram above it is clear that the LUM The generic development cycle consist of twelve

application process starts after viability studies

(12) major processes ranging from initial vision,

and financial planning have been completed.

technical research, conceptual design, physical construction and property management. Please

Diagram 3.2 illustrates the various components

note that the cycle listed only presents the typical

of the generic LUM process. The role of

processes involved with property development

supplementary studies such as environmental,

in theory. The property development cycle does

heritage and traffic impact assessments should

not always follow the exact processes illustrated.

be noted. Diagram 3.2 clearly illustrates that

Diagram 3.1 on the following page presents the

the LUM applications are typically submitted

generic development cycle in which the focus

after pre-consultations with municipal officials.

area of this report is highlighted, namely land

Supplementary analysis such as environmental,

use management approvals.

heritage or traffic impact assessments may

This report only analyses the administration and processes involved with development applications, which consist of LUM and building plans.

Diagram 3.1 Generic Phases in Property Development

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Diagram 3.2 Generic Development Cycle External processes coupled to supplementary research such as environment, heritage, traffic and market studies may have an impact on the tempo at which LUM applications are administered when considering that it falls within the generic LUM application and building plan process.

process, which might extend the timeframe of

3.2.1 Land Use Management (LUM) Applications

such applications. Building plans can only be

Diagram 3.3 illustrates the generic process

15

submitted once final approval of the proposed

for typical applications submitted under the

timeframes are sourced

LUM application has been granted.

Western Cape LUPO and CTZS.

from the City of Cape Town

be requested during the LUM application

15

The way in which all relevant applications

All processes and

Municipal website in addition

are processed by the City of Cape Town MM

During interviews with city officials operating

to interviews with municipal

and Western Cape Provincial Government are

in the Development Processes and Policies

officials. Please note that all

analysed in the following sub-sections.

Department of the PBDM average timeframes

timeframes expressed in this

of 120 days (four months) for delegated and

document presents the typical

3.2 City of Cape Town Metropolitan Municipality

210 days (seven months) for un-delegated LUPO

time it takes municipal officials

application decisions were established.

to administrate the relevant

The competence of the City of Cape Town

The generic LUPO application approval process

are dependent on complete

MM concerns the processing of LUPO

can be summarised as follows:

applications.

applications and approval of building plans

1. Initial

applications. Timeframes

submission:

applicant

submits

by the Planning and Building Development

application to the LUM Department and

Management (PBDM) Department.

a Planning Official captures it on the

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Diagram 3.3 Generic Land Use Planning Ordinance Application Process Source: City of Cape Town Metropolitan Municipality, http:// www.capetown.gov.za and interview with officials from the Development Processes and Policies Department, 2013 Delegated LUPO applications should be finalised within 120 days (four months) with decision and un-delegated applications expected within 210 days (seven months).

Planning Module in order to generate a

to comment on objections, if applicable.

tax invoice. After payment, the Planning

Applicant may also request a 30 day

Official evaluates the completeness of the

extension period to comment on objections.

application and informs the applicant if

The Planning Official acts accordingly and

additional information is required within 14

captures the findings of the objection period.

5. Council decision: decision is received

days of submission.

2. Scrutiny and Circulation: the application is

from council or sub-council and applicant

circulated among the relevant departments

is notified. The right to appeal is also

for comments. Planning Officials evaluate

emphasised to the applicant or objectors.

the application and starts compiling a

6. Appeals: appeals according to the MSA,

recommendation

report

in

which

the

CTZS and LUPO may now be handled

decision of the council is represented

by the council. The matter is referred

All processes and

(approval/refusal). If delegated, the council

to the Western Cape DEADP if appeals

timeframes are sourced

can adjudge the application to be compliant

from the City of Cape Town

or uncompliant. If un-delegated, the matter

16

Municipal website in addition to interviews with municipal

is referred to a sub-council for decision.

3. Advertising:

when

all

information

are received.

7. Final decision: final decision is given when the appeals process has run its due course

is

and building plans may be submitted.

officials. Please note that all

captured, the Planning Official determines if

timeframes expressed in this

advertisement should commence. If required,

3.2.2 Building Plan Applications

document presents the typical

the application needs to be advertised in the

Diagram 3.4 presents the generic process16

time it takes municipal officials

form of published press releases and site

adhered to for the approval of building plans.

notices for at least 30 days.

According to the PBDM Department, the average

to administrate the relevant applications. Timeframes are dependent on complete applications.

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4. Objections: the City allows internal and external

objections

on

the

timeframe for building plan approval is between

advertised

30 to 60 days (one to two months) depending

application. The applicant has 60 days

on the size of the envisaged construction project.

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Diagram 3.4 Generic Building Plan Application Process Source: City of Cape Town Metropolitan Municipality, http://www.capetown.gov.za and interview with officials from the Development Processes and Policies Department, 2013 Building plan approval should take between 30 (smaller than 500m2) and 60 (larger than 500m2) days.

“In terms of the National Building Regulations

Standards Act). An approved building plan

17

and Building Standard Act, the City has 30 days

is captured within the Building Inspectors

Metropolitan Municipality,

to approve or refuse a building plan application

Module followed by an inspection of the

http://www.capetown.gov.za,

for buildings smaller than 500m2 and 60 days

construction by a City official. If all is in order

2013

for buildings larger than 500m2.”

17

Source: City of Cape Town

an occupancy certificate will be generated for the building.

The building plan approval process can be summarised as follows: 1. Initial submission: applicant hands in plan to a City clerk to assess the land use requirement. If the land use requirement

3.3 Department of Environmental Affairs and Development Planning – Western Cape Provincial Government

is not met, the case is referred to the LUM Department to obtain the correct land use

The Western Cape DEADP mainly administers

permissions.

the LUPO appeal and Removal of Restrictions

2. Creation of record: when the land use

applications under the current legislation

requirement is met, the clerk captures

on, which the application tracking campaign

important erf details and tax invoice for

was based.

payment of the plan submission. The plan is then handed to an administrative official

3.3.1 LUPO Appeals

who creates an income module record, once

Diagram 3.5 shows the generic process18 for

payment has been received

the management of appeals lodged against

3. Plan

examination:

the

administrative

a decision made on a LUPO application.

official circulates the proposed plan to

LFTEA applications typically run the same

different internal departments and the plan

general course.

examiner who then examines the plan for approval or rejection. If basic standards or

As a guide the average processing timeframe

regulations are not met, the plan is returned

for LUPO appeals range from 230 working days

to the applicant for amendments.

(11 months) for a typical rezoning appeal to

4. Approval: the plan may be approved once it

300 working days (14 months) for other LUPO

is adjudged to be in line with all the required

applications. However, it is crucial to note that

standards and regulations (as stipulated in the

this is only prescribed guidelines. Each appeal

National Building Regulations and Building

has its own characteristics and vary in terms of

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THE ECONOMIC VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR APPLICATION PROCESSING

Diagram 3.5 Generic Land Use Planning Ordinance Appeal Process Source: Interviews with officials from the Western Cape of Environmental Affairs and Development Planning Department, 2013

The DEADP aims to process all LUPO appeals and LFTEA applications within 300 working days (14 months). However, this is only a guideline. Timeframes are greatly dependant on the complexity of the applications and appeals.

level of difficulty, especially when strict objections

Management

are involved.

Planning Advisory Board (PAB) for inputs,

Regulator

(CLUMR)

and

after which the recommendation report draft The LUPO appeal process can be summarised as

5. Circulation for endorsement: when the

follows: 1. Registration: appeal is received and registered

draft recommendation report has been

by the Western Cape Provincial Government.

finalised and all errors have been rectified,

An Administration Clerk is responsible for

the appeal is circulated to the Director,

registering the appeal application once it is

Chief Director and Head of Department for

assigned to a case officer.

endorsement and additional comments.

2. Obtain information from council: the

19

All processes and

timeframes are sourced from

is finalised.

6. Ministerial

review:

the

complete

case officer requests all available information

recommendation report is sent to the

from the City council. If no information is

Minister for evaluation. The Minister is

received within 30 days, a reminder should

responsible for the final decision.

7. Final decision: the ministry refers the

be sent to the involved parties.

interviews with government

3. Application verification: the case officer

application back to the department once

officials. Please note that all

verifies the advertisement of the appeal and

the final decision is made. The applicant is

timeframes expressed in this

establishes if all processes enabling public

notified of the final decision and the case

participation are in order.

is closed.

document presents the typical time it takes government

4. Scrutiny

and

circulation:

once

the

officials to administrate

application is verified, a recommendation

the relevant applications.

report can be created. The preliminary

3.3.2 Removal of Restrictions Application

Timeframes are dependent on

recommendation report is circulated to

Diagram 3.6 illustrates the generic Removal of

complete applications.

the Chief Town Planner, Chief Land Use

Restrictions application process19.

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Removal of Restrictions is a complex process of

received and establishes if the process of

interaction between the City of Cape Town MM

public participation can commence. Case

and Western Cape Provincial Government with

officer then drafts the first advertisement

complicated advertising requirements. Generally

and

such applications can take up to 610 working

accompanying

days (two years and four months).

locality plan with advertising instructions

The Removal of Restrictions application process

sends

a

letter first

to

the

Council

advertisement

and

and request for comments by the Council.

3. Advertisement: Council / Applicant is

can be summarised as follows: 1. Registration: the application is received

responsible for advertising application in

and registered by the City Council and

accordance with advertising instructions

Western

Cape

Provincial

Government.

issued by DEADP.

An Administration Clerk is responsible

4. Objections: the DEADP allows internal

for registering the application once it is

and external objections on the advertised

assigned to a case officer.

application and requests the City to provide

2. Application verification: the case officer

information on any objections if received.

verifies if all the required documentation is

If objections are noted, the applicant is

As a general guide, the Western Cape DEADP attempts to finalise Removal of Restriction applications within 610 working days (two years and four months).

Diagram 3.6 Generic Removal of Restrictions Application Process Source: Interviews with officials from the Western Cape of Environmental Affairs and Development Planning Department, 2013

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THE ECONOMIC VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR APPLICATION PROCESSING

allowed to present comments on the relevant objections.

5. Scrutiny

and

9. Final decision: once the title deed is endorsed and returned to the Department,

circulation:

the

the case officer must draft a final letter to

advertisements and objections are verified,

once

applicant informing him/her of the decision,

a recommendation report can be created.

where after the case is closed.

The preliminary recommendation report is circulated to the Chief Town Planner (if objections are received); the Chief Land

3.4 The Application Administration Process in Brief

Use Management Regulator (CLUMR) and Planning Advisory Board (PAB) for inputs,

Development applications follows the viability

after which the recommendation report

and financial planning phase of the generic

draft is finalised.

property development cycle. LUM applications

6. Circulation

for

endorsement:

when

are typically submitted after pre-consultation

the peer review has been finalised and all

with municipal officials regarding the required

errors have been rectified, the appeal is

documentation and application where after it

circulated to the Director, Chief Director

runs its course within the municipal structure.

and Head of Department for endorsement

Building plans can only be submitted after LUM

and additional comments.

approval is granted. Refer to Diagram 3.7 below

7. Ministerial

review:

complete

for a summary of the prescribed timeframes of

recommendation report is sent to the

the various development applications along

Minister for evaluation. The Minister is

with the governing entity responsible for

responsible for the final decision.

its administration.

8. Final

the

advertisement:

Case

officer

drafts final advertisement to place in the

Government

Gazette.

Once

the

advertisement is finalised it should be sent to gazette printers along with the necessary annexures. The advertisement is then circulated to the title deeds office for endorsement.

• City of Cape Town MM • 120 - 210 Days

Diagram 3.7 Application Administration Summary

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• Western Cape Provincial Government • 230 - 300 Working days

• City of Cape Town MM • 30 - 60 Days

LUPO Applications

Building Plans

LUPO Appeals

Removal of Restrictions • Western Cape Provincial Government • 600 Working days

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SECTION FOUR: APPLICATION ADMINISTRATION BENCHMARK

T

his section offers the application administration benchmark measurement to serve as background to the subsequent municipal and private sector application tracking case studies.

The administration benchmark analysis aims to highlight the application processing efficiency of

Please note that all the findings

the City of Cape Town MM in terms of building plan approvals and land use application finalisation.

stipulated in this efficiency

For the purpose of this investigation a two-year analysis period were utilised ranging from the first

analysis were derived from

quarter of 2012 to the fourth quarter of 2013.

information provided by the City of Cape Town MM Planning

4.1 Building Plans The City distinguishes between three main types

and Development Management building plans, which was finalised during the

Department. The analysis

specific analysis period.

is reliant on the data made available by the public sector

of building plans in line with the prescribed timeframes involved. Firstly the evaluation of

The finalisation efficiency ratio clearly improved

and the presentation of such

plans submitted for developments (mainly

over the analysis period with 91.0% of all minor

data is influenced by the form

alterations and additions) smaller than 40m2 with

work building plans finalised in-time during the

in which it is captured by the

a timeframe of 5 days, secondly 30 day building

final quarter of 2013.

relevant department.

plans for developments between 40m2 and

Figure 4.2 illustrates the finalisation efficiency

500m2, lastly building plans for developments

ratio of smaller than 500m2 building plans.

The CoCTMM records a high

larger than 500m2 with a timeframe of 60 days.

According to the analysis illustrated above,

in-time finalisation ratio with

Figure 4.1 illustrates the finalisation efficiency

the recent number of in-time finalisations

regards to building plan

ratio of minor work (<40m2) building plans by

per quarter have increased faster than

administration, especially in the

presenting the total number of plans finalised in-

the increase noted in the total number of

case of building plans for minor

time as a function of the total number of relevant

finalisations. This results in an improvement

works and smaller developments (<500m2).

Figure 4.1 2

<40m Building Plan Finalisation Efficiency

Source: City of Cape Town Metropolitan Municipality, Planning and Development Management Department, 2014

Figure 4.2 <500m2 Building Plan Finalisation Efficiency

Source: City of Cape Town Metropolitan Municipality, Planning and Development Management Department, 2014

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THE ECONOMIC VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR APPLICATION PROCESSING

in the municipal administration proficiency

Figure 4.4 presents the total number of

with the most recent period (2013 Q4)

finalisations recorded during the analysis period

The efficiency ratio displayed

recording an efficiency ratio of 91.1%.

in relation to the total number of plans submitted

relates to the total number of

Figure 4.3 offers a similar analysis of building

in this time.

in-time finalised building plans

plans submitted for developments larger

according to the building plan

than 500m2.

finalisations of the relevant

The City received a total of approximately 53 800 building plans from 2012 Q1 to 2013 Q4

year. The year of origin for the

500+ square metre building plan finalisation

of which roughly 52 100 were finalised. This

finalised plans are not given

ratios illustrates a more irregular trend than

relates to a gap of close to 1 700 un-finalised

and accumulation of un-

its smaller counterparts. The efficiency ratio

plans (3.2% of all submissions). The CoCTMM

finalised submissions should be

varies between 62.1% and 86.8% during the

employs a figurative â&#x20AC;&#x2DC;processing poolâ&#x20AC;&#x2122; approach

taken into consideration. The

analysis period with the latter achieved during

to explain this phenomenon, which is clarified in

the most recent interval (2013 Q4).

Section 4.3.

4.2 Land Use Management (LUM) Applications

municipal proficiency indicator is therefore an indicator of timeous processing according to the

It is important to note that although the

definition of in-time finalisations

City maintains a high efficiency benchmark

defined by the Metro.

in terms of in-time finalisations, un-finalised building plans is noted within the analysis

LUM applications are captured by the City

sample. Un-finalised building plans refer to

according to the relevant timeframe under which

Analysis indicate that

building plans submitted but not finalised.

it is administrated. This sub-section therefore

approximately1 700 building

Building plans of this nature may still be in the

presents the LUM application management

plans submissions are still within

process of being administrated or withdrawn

efficiency according to delegated (four month)

from the process.

and un-delegated (seven month) applications.

the administration system or awaiting amendments from the applicants.

Figure 4.3 2

>500m Building Plan Finalisation Efficiency Source: City of Cape Town Metropolitan Municipality, Planning and Development Management Department, 2014

Figure 4.4 Total Building Plan Submissions versus Finalisations Source: City of Cape Town Metropolitan Municipality, Planning and Development Management Department, 2014

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un-delegated

of the

(seven

APPLICATION PROCESSING REPORT COMMERCIAL PRIVATE PROPERTY SECTOR

Figure 4.5 illustrates the delegated (four month)

The

applications according to in-time finalisations.

application finalisation ratio presents a vastly

month)

LUM

different trend, as illustrated in Figure 4.6.

The efficiency ratio displayed relates to the total number of

The Planning and Development Management Department of CoCTMM maintains high levels

In contrast to the delegated applications, only

in-time finalised applications

of administration efficiency with an average of

44.4% of the un-delegated applications were

according to the application

92.1% over the analysis period. The most recent

finalised within the prescribed timeframe during

finalisations of the relevant

available statistics indicate that the City finalised

the analysis period.

year. The year of origin for the finalised applications are not

approximately 2 000 LUM applications in the final quarter of 2013, of which roughly 1 900 were

Nonetheless, Figure 4.7 below illustrates a high

given and accumulation of

finalised within the prescribed timeframe (94.5%).

rate of overall finalisation of LUM applications.

un-finalised submissions should be taken in consideration. The municipal proficiency indicator is therefore an indicator of timeous processing according to the definition of in-time finalisations defined by the Metro.

Figure 4.5 Four Month LUM Application Finalisation Efficiency Source: Source: City of Cape Town Metropolitan Municipality, Planning and Development Management Department, 2014

Figure 4.6 Seven Month LUM Application Finalisation Efficiency Source: City of Cape Town Metropolitan Municipality, Planning and Development Management Department, 2014

Figure 4.7 Total LUM Application Submissions versus Finalisations Source: City of Cape Town Metropolitan Municipality, Planning and Development Management Department, 2014

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THE ECONOMIC APPLICATION PROCESSING VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR

Approximately 8.7% of all submitted LUM applications are

The system utilised for application processing

spent the last two years developing a new

during the benchmark analysis period is

system named the Development Application

summarised in the subsequent section to offer

Management System (DAMS).

an explanation of why un-finalised applications exist, according to the CoCTMM.

The DAMS is an integrated system that

currently un-finalised.

links to the City’s Property Value Chain and

4.3 Application Processing System The system does not enable

accounting system (SAP). The new system makes provision for standardised processing

the prioritisation of projects,

It is firstly important to understand the manner

of

which is still in-progress past

in which applications were handled before the

visibility and transparency at every step of the

the prescribed timeframe.

Development

Applications

ensuring

inception of DAMS on 1 April 2014.

process. DAMS has recently been completed

It is therefore likely that

Building plan and LUM applications are received

and final implementation started on the

the administration process

and captured within a figurative processing

1 April 2014.

enabled fast processing of

pool.

During

this

time

the

application

straightforward submissions

administering process is initiated and proceeds.

The key features of DAMS:

with more technical submissions

All applications are retained within this ‘pool’

Electronic (digital) submission of building plans and land use applications.

remaining in the processing pool

until they have been finalised. The management

for longer owing to the influence

of development applications therefore operated

of delay factors, especially in

in the same manner a dam operates in nature.

terms of LUM applications.

The inflow of water (applications in this case) is held in the dam and gradually filters out the exit (as the applications are completed and

DAMS is utilised to capture and

finalised). The management system aimed to

manage all building plans and

keep the processing pool (‘dam’) as empty as

applications received in order

possible. It did however not take into account

to ensure optimal finalisation

how long the specific application is retained

efficiency for the City.

within the processing pool.

• Electronic circulation among departments.

• Comments are made on documentation and is sent back and received electronically.

• The same interface as all other SAP applications is used.

• Standardised business processes across all eight district offices.

• Providing progress information and allows the applicant to know at what

Diagram 4.1 offer a basic visual representation of

stage the application is in the process.

the manner in which submissions are managed

• A single customer record of transactions

during the benchmark analysis period.

and interactions.

• Streamlined, simplified and improved

20

https://www.capetown.gov.

4.3.1 Planned Improvement The Development Application 20 Management System (DAMS)

za/en/Planningportal/Pages/

The

Source: City of Cape Town Metropolitan Municipality,

Development-Application-

CoCTMM

Planning

and

counters.

• Every customer is identified using their business partner number throughout any Building

Development Management Department has

interaction with the city.

• Allowance electronic payments (EFT).

Management-System-(DAMS). aspx

Diagram 4.1 Application Processing Source: City of Cape Town Metropolitan Municipality, Planning and Development Management Department, 2014

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4.4 The Application Administration Benchmark in Brief

of the

APPLICATION PROCESSING REPORT COMMERCIAL PRIVATE PROPERTY SECTOR

terms of the finalisation of minor work building 2

2

plans(<40m ), smaller building plans (40m

- 500m2) and delegated (four month) LUM applications over the analysis period, respectively.

21

The City of Cape Town MM Planning and

It records a lower success rate of 74.3% for

administration proficiency

Development Management Department handled

buildings plans larger than 500m2 and 44.4% for

ratios are listed according

close to 54 000 building plans and 20 000 LUM

un-delegated (seven month) LUM applications. In

to the preceding analysis. It

applications between the first quarter of 2012 to

total, approximately 3.2% of all building plans

therefore presents the average

the fourth quarter of 2013.

and 8.7% of all LUM applications submitted

municipal efficiency of in-time

The municipality maintains a high administration

during the analysis period have been withdrawn

finalisations over the analysis

or in the process of finalisation. â&#x20AC;&#x192;

period (2011 Q3 to 2013 Q3).

21

proficiency

of 52.0%, 81.9% and 74.3% in

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Please note that the

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THE ECONOMIC VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR APPLICATION PROCESSING

SECTION FIVE: MUNICIPAL APPLICATION TRACKING CASE STUDY

T

he municipal application tracking case study provides a collection of findings pertaining to administration efficiency of the CoCTMM by analysing a sample of development applications for high value projects.

5.1 Purpose and Approach 28 LUM applications and 13 combined The purpose of the application tracking case study

applications (comprising of building plans and

is to investigate the timeframe taken to make a

LUM applications.

decision for relevant high value applications in

All applications analysed were finalised by the

order to identify potential delays in application

time of the analysis. No ongoing applications

processing. The municipal tracking case study

were included in the case study.

will ultimately determine and interpret the administration proficiency of the CoCTMM, with

5.2 Building Plan Case Study

reference to significant development projects acting as economic turnkeys in the local market.

From the municipal building plan

Figure 5.1 presents the processing time in relation to the maximum prescribed municipal

tracking case study it is clear

For the purpose of this assessment, all building

that the CoCTMM Planning

plans and LUM applications for developments

and Development Management

timeframe of the total building plan sample.

The building plan case study highlights that the

Department mainly struggles

above R5 million in value were requested

median processing timeframe for building plans

with submissions that do

from the Metro and analysed accordingly. The

of high value (R5 million +) is approximately

not meet the predetermined

actual timeframes achieved to conclude the

170 days. This is 110 days more than the

requirements and slow

applications are compared to the timeframes

maximum prescribed timeframe of 60 days.

responses from the private

as prescribed by provincial and national

Only 12% of the sample has been finalised

sector after non-compliance

legislation. The case study tracking campaign is

within time. It is therefore vital to assess the

22

concluded with a brief overview of the factors

reasons for delay as stated by the municipality.

potentially

Figure 5.4 on the following page presents the

have been communicated.

22

Please note that this is

influencing

the

administration

tempo of the municipality.

responses received from the

main factors influencing the administration of building plans in the respective sample.

statement is based on the

5.1.1 Case Study Summary

municipality regarding the

The case study sample consists of 79 entries

From the responses captured from the

specific sample.

in total of which 37 are building plans,

CoCTMM it is clear that the administration

Figure 5.1 Building Plan Processing Timeframes

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process is mainly halted by untimely responses

Approximately 37% of the sample applications

to amendment requests (40% of plans

are affected by slow responses received from

affected), followed by incomplete (14%) and

the private sector following amendment

uncompliant submissions (8%).

requests.

Objections

clearly

impacts

the

application administration process with 20%

5.3 LUM Application Case Study

of the sample subjected to this delay factor.

Figure 5.5 below summarises the high value LUM application case study.

Of the 41 LUM applications captured, only 18 applications extended past the maximum prescribed processing timeframe of 210 days.

However, four of these extended applications took longer than 800 days to process resulting in an increased processing time median of 173 days for the administration of high value LUM applications, which is 37 days less than the

Figure 5.2

prescribed timeframe.

Building Plan Timeous Processing

Figure 5.3 Building Plan Processing Time Median

Figure 5.4 Building Plans Affected by Delay Factors

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THE ECONOMIC VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR APPLICATION PROCESSING

Figure 5.5 LUM Application Processing Timeframes

According to the CoCTMM, applications are mainly delayed

5.4 The Municipal Application Tracking Case Study in Brief

owing to amendment requests and objections received.

23

The municipal case study concludes that approximately 56% of all high value LUM

23

Please note that this

applications submitted over the past two

statement is based on the

years have been finalised in-time in contrast to

responses received from the

only 12% of the building plans. Out-of-time

municipality regarding the

plans and applications are mainly attributed

specific sample.

to slow response from the private sector to amend requests on incomplete submissions.

Figure 5.6 LUM Application

In addition, LUM applications are generally delayed owing to objections received.

Timeous Processing

Figure 5.7 LUM Application Processing Time Median

Figure 5.8 LUM Applications Affected by Delay Factors

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SECTION SIX: PRIVATE SECTOR APPLICATION TRACKING CASE STUDY

T

he private application tracking case study benchmarks the municipal performance according to actual building plan and land use application submissions to the City of Cape Town Metropolitan and Western Cape Provincial Municipalities. This case study follows

the municipal comparative in order to present the experience of the private sector in terms of applications submitted to the respective regulatory entities.

6.1 Purpose and Approach The purpose of the application tracking case study

6.1 displays the main categories in which the

It should be noted that all

sample applications were grouped.

the findings stipulated in this application tracking analysis

is to investigate the timeframe taken to make a decision for relevant applications in order to

The

standard

were derived from information

identify potential delays in application processing.

applications submitted to the City of Cape

provided by the local property

The

first

two

categories

cover

relevant

Town MM, with the former encompassing

professionals operating within

development processes, in terms of application

developments with a residential component

the private sector. The analysis is

submissions, to ultimately determine and interpret

and

reliant on the case studies made

the administration proficiency of the governing

residential developments. The third and fourth

available and private property

entities as experienced by the private sector.

categories analyse LUPO appeals and Removal of

professionals tend to highlight

The actual timeframe achieved to conclude the

Restriction applications submitted to the Western

negative performance of the

applications are compared to the timeframes as

Cape Provincial Government, respectively.

public sector administration. A

case

study

summarises

the

the

latter

comprising

of

non-

factor of perception is therefore

prescribed by provincial and national legislation.

Factors influencing the administration tempo

6.1.1 Case Study Summary

will be investigated accordingly. Because the

The

types of applications processed by the governing

applications of which the majority falls within

be documented as a limitation to

entities vary for the purpose of a comparison, a

the first and second scenario. The third and

the benchmark analysis.

standard case scenario has been developed in

fourth scenario have a lower representation

order to standardise the performance. The case

in the survey campaign; this is in line with the

study plots the research findings according to

actual quantity of submissions considering that

major type of developments and applications

much fewer applications are generally submitted

handled by the various regulatory entities. Table

for this purpose. In addition it is also important

respondent

Type of Development/Application 1. Residential development applications.

sample

involved within the application

consists

of

129

tracking case study and should

Description Residential development application submitted to the City of Cape Town MM

2. Non-residential development applications. Non-residential development applications submitted to the City of Cape Town MM

3. LUPO appeals.

LUPO appeals submitted to the Western Cape Provincial Government

4. Removal of Restriction applications.

Removal of Restriction applications submitted to the Western Cape Provincial Government

Table 6.1 Case Study Approach Description

Number of applications

Finalised

Ongoing

1. Residential development applications.

59

47.5%

52.5%

2. Non-residential development applications.

47

53.2%

46.8%

3. LUPO appeals.

8

50.0%

50.0%

4. Removal of Restriction applications.

15

26.7%

73.3%

Table 6.2

129

47.3%

52.7%

Scenario Application Summary

Scenario

Total MARCH & APRIL 2014

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24

to emphasise that the new planning legislation

residential (or partial residential) use. Typical

in the province recommends that the typical

applications include rezoning from agricultural/

Ongoing applications are

scenario 3 application become a function of

commercial land to allow the construction of

applications with a decision

the CoCTMM and no longer falls within the

residential units, and subdivisions of residential

pending at the time of

competency of the Western Cape DEADP. Table

land to authorise the development of double

capture. In other words

6.2 offers a detailed summary of the respondent

dwellings on, each with individual title deeds,

applications, which are

database per survey scenario.

on one stand.

municipalities. It should

As previously stated, 129 applications are captured

Figure 6.1 presents the processing time in relation

be noted that ongoing

in the application tracking survey. Approximately

to the maximum prescribed municipal timeframe

applications are likely

53% of this sample consists of applications which

of the total residential sample.

handled by the

to extend past the current

is still ongoing24 during the time of capture.

Scenario

timelines identified.

6.2 Scenario Findings

1

comprise

of

59

residential

applications of which 52.5% are still ongoing.

Approximately 44% of the sample has been

The private sector application tracking case study

finalised in time or is still running within the

Please note that only land use

gives an account of development applications

prescribed timeframe of 210 days (seven

applications are analysed in the

submitted to the City of Cape Town MM and

months). According to the median processing

application tracking analysis.

Western Cape Provincial Government, by means

time, residential LUM applications are finalised

Land use applications have

of the aforementioned scenario approach. The

within 273 days, which is only a 63 day

greater potential to cause

City of Cape Town MM is the main processor of

extension on the prescribed timeframe for un-

time delays than building plan

applications and acts as the first contact point for

delegated applications, as illustrated in Figure

approvals, considering that

development application submissions, with the

6.3. Please note that the factors influencing

adjudication of building plans

Provincial Government administering uncommon

the administration tempo will be handled in

are expected within 60 days

and specialised development applications. In

Section 6.3.

in contrast to the prescribed

order to facilitate a clear analysis and relevant

timeframe of 210 days for LUM

findings, the application tracking was structured

applications. No building plan

to mainly encompass applications submitted to

case studies were sourced due to

the MM, with a provincial representation of close

the lack of response from private

to 20% in terms of the sample applications.

property professionals.

6.2.1 Scenario 1: Residential Development Applications Figure 6.2

Residential development applications generally

Scenario 1: Timeous

exist of LUPO applications to obtain permission

Processing

to utilise a specific portion of land for

Figure 6.1 Scenario 1: Processing Timeframes

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Figure 6.3 Scenario 1: Processing Time Median

6.2.2 Scenario 2: Non-Residential Development Applications Non-residential construction

of

developments commercial

include offices,

non-residential LUM applications of which approximately 47% are still ongoing. the retail

Figure 6.5 shows that roughly 60% of the

shops, tourist accommodation facilities (hotels,

respective scenario applications extended past

guesthouses etc.), industrial lots and mixed-use

the maximum prescribed timeframe of 210

developments excluding a residential component.

days. The typical non-residential application

Typical analysed applications mainly comprise of requests for departures and consent use to allow commercial uses in residential subzones or

tourist

accommodation

facilities

on

residentially zoned property.

Figure 6.4 illustrates the processing time in relation to the maximum prescribed municipal

Figure 6.5

timeframe of the total residential sample.

Scenario 2: Timeous

The second scenario sample consist of 47

Processing

Figure 6.4 Scenario 2: Processing Timeframes

Figure 6.6 Scenario 2: Processing Time Median

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THE ECONOMIC VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR APPLICATION PROCESSING

within the sample, is finalised within 358

individual sample applications in relation to the

days, which relates to an extension period of

maximum prescribe timeframe, which includes

148 days.

the LUM application process.

Please note that the factors influencing the

This scenario sample comprise of eight LUPO

administration tempo will be handled in

appeals, which were handled by the Western

Section 6.3.

Cape DEADP. Half of the LUPO appeals are still running or have been finalised within the

6.2.3 Scenario 3: LUPO Appeals

prescribed time frame of 454 working days (300

As previously stated, the Western Cape DEADP

workings days for the appeal and 154 working

currently handles slightly more complex types

days for the LUM application) according to the

of applications submitted under specialised

captured private sector responses. Figure 6.9

legislation, involving convoluted communication

illustrates that the typical LUPO appeal runs

procedures between different departments of

for approximately 407 working days, which is

the provincial and metropolitan municipalities.

47 working days shorter than the prescribed

Hence, it should be mentioned that the proposed

deadline.

Please

note

that

the

factors

Figure 6.7 Scenario 3: Processing Timeframes

guidelines present a timeframe directive only for land use applications.

Typical LUPO appeals included in the sample consist of objections raised mainly against decisions adjudicated by the City of Cape Town Figure 6.8

Municipality. The majority of the applications

Scenario 3: Timeous

are for the developments of mixed-use facilities.

Processing

Figure 6.7 illustrates the processing time of

Figure 6.9 Scenario 3: Processing Time Median

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influencing the administration tempo will be

operating or have been finalised within the

handled in Section 6.3

prescribed timeframe of 600 working days. The case study indicates that Removal of Restriction

6.2.4 Scenario 4: Removal of Restrictions

Figure 6.11

Removal of Restriction applications processed

Scenario 4: Timeous

by the Western Cape Provincial Government

Processing

constitutes roughly 12% of the total sample case studies. The representative Removal of Restriction applications are submitted mainly to permit the development or expansion of accommodation facilities (including residential dwellings and guesthouses).

According to survey findings, approximately 53% of the 15 sample applications are

Figure 6.10 Scenario 4: Processing Timeframes

Figure 6.12 Scenario 4: Processing Time Median

Median Timeframe Over/Under Prescribed In-Time Out-of-Time Timeframe

Number of Applications

Processing Time Median

1

59

273

63

44.1%

55.9%

2

47

358

148

40.4%

59.6%

3

8

407 working days

-47 working days

50.0%

50.0%

Table 6.3

4

15

381 working days

-219 working days

53.3%

46.7%

Private Sector Application

44.2%

55.8%

Tracking Scenario Findings

Scenario

Total MARCH & APRIL 2014

129

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THE ECONOMIC VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR APPLICATION PROCESSING

Diagram 6.1 Potential Delay Factor Description

SAPOA - the voice of commercial property

applications are generally finalised within 381

6.2.5 Scenario Finding Summary

working days, which is 219 working days less

Table 6.3 is provided below in summary of the

than the suggested benchmark.

application tracking case study.

Please note that the factors influencing the

In general it can be noted that applications

administration tempo will be handled in

are finalised between 273 to 358 days by

Section 6.3.

the CoCTMM. Non-residential applications

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tend to be processed slower than residential

influencing factors. From the private sector

applications

such

survey findings it is clear that uncompliant

applications finalised within the timeframe

applications, clerical errors, controversy and

set out by the CoCTMM.

advertisement delays are the major role-players

with

only

40%

of

in the application processing tempo.

6.3 Factors Influencing the Administration Tempo

The top three delay factors / administration blockages per scenario are summarised in

A variety of factors may cause delays in the

Diagram 6.2.

application administration. Analysis of the

From the private sector analysis25 it is clear:

belated applications submitted to the City

â&#x20AC;˘ Residential

(Scenario

1)

applications

of Cape Town MM highlights the possible

tend to be subjected to incomplete

reasons for postponement. These reasons are

submissions. Clerical errors are also

identified according to responses received from

recorded with applications of this nature

the private sector respondents. The potential

with documentation lost/misplaced in

delay factors / administration blockages are

13.6% of all recorded residential cases

25

described in no particular order in Diagram 6.1.

and 10.2% delayed due to mistakes made

illustrated concludes the

by municipal officials.

delay factors/administration

Please note that findings

Figure 6.13 summarises the level of impact from

â&#x20AC;˘ Non-residential (Scenario 2) cases are mainly

each delay factor by illustrating the number

delayed because of additional information

private professionals operating

of applications affected by the respective

requests following submission of incomplete

within the local landscape.

blockages as presented by

Figure 6.13 Applications Affected

by Delay Factors

Diagram 6.2 Top Delay Factors per Scenario

MARCH & APRIL 2014

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Diagram 6.3 Private Sector Application Tracking Summary

applications. Other main delay factors are

• Removal of Restriction applications are the

contentious of nature. Approximately 28%

only applications, which are generally finalised

of all non-residential samples received

within the prescribed timeframe, according to

objections with environmental (12.8%),

the sample analysis findings.

heritage (6.4%) and transport (10.6%) additional

research

requirements

also

The major causes of delay in LUPO applications

playing important roles in the administration

(Scenario 1 and 2) according to the surveys are

efficiency of the municipality.

incomplete submissions, additional information

• LUPO appeals (Scenario 3) are mainly

requests and clerical errors made by city officials

subjected to internal circulation and clerical

with

the

non-residential

applications

also

errors, possibly owing to the increase

subjected to more objections. Currently, the main

requirement for communication between

delay factors for LUPO appeals can be attributed

internal departments within the CoCTMM

to belated internal circulation, clerical errors and

and Western DEADP. 50% of the recorded

objections. Removal of Restriction applications

clerical errors are attributed to lost/misplaced

are mainly delayed by uncertainty regarding

documentation (25%) and internal project

advertisement and uncompliant applications.

allocation problems (25%).

• Uncertainty regarding advertisement (53.3%) and application requirements (46.7%) are the main delay factors for Removal of Restrictions (Scenario 4) applications.

6.4 The Private Sector Application Tracking Case Study in Brief Diagram 6.3 summarises the private sector application tracking campaign.

Important findings include: • Non-residential LUPO applications tend to take 85 days longer to process when compared to the residential counterparts.

• Residential applications have the highest in-time administration proficiency of approximately 56%.

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SECTION SEVEN: CONCLUSION AND RECOMMENDATIONS

T

he final section of this report presents the analysis findings regarding application processing, realistic timeframes and administration blockages in order to identify delay factors likely to All findings and

remain relevant in the future regulatory environment of the Western Cape.

The purpose of the concluding section is to identify manners in which the administration blockages

recommendations stipulated in

can be addressed by considering the proposed interventions of the CoCTMM and recommending

this section are subjected to the

possible further interventions for the Metro. This section will also clarify the responsibilities of the

limitations listed in Section 1.4.

private sector in order to minimise delays. Diagram 7.1 below presents the section outline.

Diagram 7.1 Section Seven Outline

7.1 Application Administration Performance Summary

The application tracking case studies indicate that factors. In no way or form does this represent

administration blockages result

The application administration performance

an audit of all applications handled by the

in the typical captured residential

summary concludes the benchmark analysis

relevant governing entity.

LUM application to be delayed by up to 63 days with non-

and application tracking case studies to identify

7.1.1 Land Use Management Applications â&#x20AC;&#x201C; Municipal Proficiency

residential applications being

of processing timeframes of development applications

According to the conducted primary research,

the deadline.

the general municipal proficiency in terms significant

for

economic

contribution in the province.

the

processing

timeframe

median

finalised 329 days past

ranges

between 173 and 273 days for residential For the purpose of the timeframe and municipal

LUM applications and up to 358 days for non-

proficiency analysis, attention is mainly given

residential applications. In comparison to the

to development applications with recorded

application timeframe medians, the municipal

Please note that the median

delays according to the application tracking

benchmark is generally exceeded by up to 63 days

calculations implemented

case studies and applications falling within

for residential LUM applications and 148 days for

to identify the extensions in

the competency of the same regulatory entity

non-residential LUM applications. Nonetheless,

processing timeframes. The

under the new legislation. Therefore Removal

the application tracking sample indicated some

maximum processing timeframes

of Restriction applications and LUPO appeals

applications (statistical outliers) which extended

below do not consider major

are only analysed in terms of the relevant

past 1 600 days in the administration process.

statistical outliers.

administration blockages and not in terms of It is essential to note that the municipal

7.1.2 Building Plans â&#x20AC;&#x201C; Municipal Proficiency

proficiency indicated is only utilised as a

Primary research conducted illustrates that

performance

the

the median processing time for high value

impact of administration blockages and delay

building plan is 170 days, which exceeds

timeframes currently achieved.

benchmark

MARCH & APRIL 2014

to

illustrate

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THE ECONOMIC APPLICATION PROCESSING VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR

CONTENTS the

by

delayed administration processes. This blockage is

the CoCTMM by 110 days. However, the

maximum

timeframe

prescribed

noted in all (residential and non-residential) LUM

Please note that the median

building plan tracking sample indicated two

applications, building plans as well as Removal of

calculations implemented

building plan submissions (statistical outliers)

Restriction application submissions with close to

to identify the extensions in

which have been 500 days or more in the

half of all sample applications affected.

processing timeframes. The

administration process.

Possible reasons for delay: either the

maximum processing timeframes below do not consider major statistical outliers.

Administration blockages cause average delays of 110 days in the processing of building plans.

applicant does not have knowledge of the

7.2 Administration Blockage / Delay Factor Identification

correct procedures or the requirements per type of application is unclear.

Diagram 7.2 below illustrates the major

7.2.2 Controversy

administration

to

Description: applications in which disagreement

the level of importance, as identified in the

among certain parties within the public or

application tracking case studies conducted.

private sectors delay administration. Applications

Please note that delay factors are identified

affected by controversy are subjected to

according to the private and public sector

objections and appeals, which result in strenuous

application tracking scenarios.

consultation and circulation requirements.

blockages,

according

Main application types affected:

LUPO

7.2.1 Uncompliant/Incomplete Submissions

appeals, non-residential LUM and Removal of

Description: submitted application/plans, which

to

do not comply with specific requirements of

participation practises.

the relevant development application type.

Possible

Incomplete applications lead to an amendment

objections are received on major development

request, which in turn delays the administration

projects, which is considered to impact its

process if the private sector applicant do not

surrounding location in a negative manner. A

respond timeously.

factor of Not in My Back Yard (or NIMBYism)

Main application types affected: uncompliant

should also be considered. Objections and

applications are the main reason identified for

appeals are generally not the applicant or the

Restriction applications are often subjected objections

and

reasons

appeals for

from

delay:

public typically

Increasing Level of Importance

64

Diagram 7.2 Major Administration Blockages / Delay Factors

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CONTENTS governing entities fault, however it can still be

Possible reasons for delay: delays are

addressed during policy formation.

caused owing to belated responses from the departments involved. This can typically

7.2.3 Clerical Errors Description:

delays

be attributed to possible capacity overload encountered

in

the

within specific departments or a shortage of

application process owing to human error within

specialised officials.

the administration value chain. Documents are

7.2.6 Delegation

often misplaced or not circulated to the correct

Description: timeline extensions experienced

internal and external departments.

because of allocation to third party committees.

Main application types affected: residential

Main application types affected:

and non-residential LUM applications are

applications

mainly affected by clerical errors.

delegation delays.

Possible reasons for delay: As previously

Possible reasons for delay: delegation for

stated, clerical errors are human errors, which

decision by committees of council mainly

are bound to occur within a bureaucratic system

hinders the administration process due to

in which various persons handles a submission

organisational and logistical arrangements.

without taking ownership for its finalisation.

Respondents indicated that it is occasionally

are

usually

subjected

LUM to

difficult to establish a date in which the case

7.2.4 Advertising Delays

can be discussed with the relevant committee

Description: hold-ups in the application

members owing to capacity overloads.

process owing to problems with advertisement or the payment thereof.

Main application types affected: applications

7.3 Ways to Address Administration Blockages

in which the specific entities, such as the Western Cape Provincial Government are responsible

The introduction of the newly formulated

for the placement of advertisements tend to

legislation along with planned improvement

be delayed by such processes. According to

strategies posed by the City of Cape Town MM

the application tracking surveys, Removal of

will address some administrative blockages.

Restriction applications are typically subjected to

This section therefore firstly states the

delayed advertisement.

proposed eight-point improvement strategy

Possible reasons for delay: Miscommunication

of the Metro along with its possible impact

between the regulatory entities and applicants

on the administrative delays and secondly

results in uncertainty regarding advertisement

identifies additional recommendations for

requirements and amounts payable. Some

optimal functionality.

26

reported cases can also be attributed to human

Source: City of Cape Town

error such as government officials not placing

Recommendations are not only aimed at the

Metropolitan Municipality,

the advert in time.

public sector, but also to advise the private

Planning and Building

sector on how to do their part to resolve

Development Management

administration blockages.

Department, 2014 27

between internal and external departments.

7.3.1 Eight-Point Plan in Place for Municipal Administration26

Main application types affected: applications

“The Planning and Building Development

Planning and Building

generally affected requires various inputs from

Management Department (PBDM) of the City of

Development Management

various internal and external departments.

Cape Town works on a clearly defined strategy

Department, 2014

Non-residential LUM applications and LUPO

to address the so-called ‘blockages’ in the

appeals

occurrence

development processes, while simultaneously

with some cases reported in building plan

improving on the processing development

administration as well.

applications.” 27

7.2.5 Internal and External Circulation Description: postponements in the application process

due

to

records

MARCH & APRIL 2014

delayed

the

correspondence

highest

Source: City of Cape Town

Metropolitan Municipality,

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THE ECONOMIC APPLICATION PROCESSING VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR

The complexity of the task at hand is

the legislative and regulatory framework in

understood by the City and significant

terms of which the department operates.

progress has been made in implementing an eight-point strategy to address administration

All reform processes will ultimately result in

inefficiencies. The PBDM is focussing its

more decision-making power to be given to

approach based on the following action areas,

the City itself, which may result in shorter

all which assists in reducing blockages, red

decision-making periods. For instance, the

tape reduction and promoting a development

establishment of a Municipal Planning Tribunal,

friendly environment.

which will replace current political decision-

Diagram 7.3 illustrates the main points of the

making structures, and thereby reduce current

relevant strategy.

timeframes where decisions needs to circulate through

lengthy

political

decision-making

1. Statutory complexity /

processes. Another example is the appeal

regulatory and law reform

authority to be established within the City,

The implementation of new CTZS, which

and not in another sphere of government,

replaces previously disjointed, fragmented

which will also reduce timeframes to deal with

and

has

appeals. This will also do away with the current

been successful with the scheme already

outdated

27

zoning

schemes

dual appeal processes (section 62 MSA Appeal

undergoing its first round of improvements.

plus the section 44 LUPO appeal).

The unified CTZS has resulted in more cohesive regulatory processes and certainty

2. Policy and decision-making

with regard to property rights, thus clearing

The Planning Policy Rationalisation Project

any confusion, which might have existed on

resulted in withdrawal or repeal of 268

the applicantâ&#x20AC;&#x2122;s side. In addition, it has allowed

obsolete

for an approximate 25% reduction in the

contributed significantly to simplifying the

number of departure applications.

regulatory and decision-making environment.

Council

policies,

which

has

PBDM is continually engaged in policy clean-up The broader statutory regime setting the

processes. Currently, a second-round of policy

norms and standards for governing planning in

rationalisation is taking place, to ensure that the

the City of Cape Town is however not within

policy environment in which the Department

the control of the Metro. Various national,

operates is fresh, relevant and conducive to the

provincial and municipal reform processes are

strategic direction that the City is moving in.

currently underway, which are likely to change

The System of Delegations, by which decision-

Diagram 7.3 Eight Main Points of Municipal Administration Strategy

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making power is delegated to officials in the

In addition, DAMS can also be used as a

Department, is also continually updated and

management tool for accurate reporting on

improved on to ensure a minimum of delays

performance targets as well as an early warning

in processing and finalising applications. There

system to pick up negative or positive trends so

were serious shortcomings in the system of

as to proactively respond to such trends.

delegations that was rectified in January 2014 when the Council adopted its new System of

5. Application submissions

Delegations. The new delegations will assist in

The CoCTMM is actively promoting and

the approval times of undelegated applications

enforcing the submission of quality and

and applications subjected to controversy.

complete applications. This is done through continued engagements with professional

3. Service delivery

associations representing the development

model of PBDM Department

industry

The Department is committed to ensure that

development

the decentralised district service delivery model

complete applications will dramatically improve

in which it operates, is conducive to fast

processing times by eliminating time spent on

and effective regulatory processes. Decision-

aspects of the process that could have been

making authorities are mostly decentralised

avoided by a complete application submission.

within the district planning offices to facilitate

Pre-submission meetings are encouraged, to

processing and assessment of applications, in

ensure that applicants are informed of the

order to speed up decision-making.

application requirements.

A Standard Operating Procedure is also in place

6. Management systems and processes

among PBDM and the services departments

DAMS is intended to assist in further

who comment on applications to assist in

standardisation

efficient finalisation of applications, as well as

offices to ensure more certainty to the public,

to speedily resolve contradictory comments

applicants and the industry in what they can

and address administrative blockages coupled

expect throughout the regulatory process

to internal and external circulation.

when submitting an application to any one of

or

the

professions

applications.

across

submitting

Quality

different

and

district

the District Planning Offices.

DAMS developed by the Department and

From the analysis given above it is clear that the CoCTMM

implemented with effect from 1 April 2014

For the first time, the PBDM Department would

PBDM Department is focussed

is likely to assist in making circulation to

be able to draw management reports on the

on the upgrade of its internal

commenting line departments faster and

performance of each of the departments in the

systems to ensure improvement

more efficient when assessing applications.

Council that contributes to the various elements

in development application

This system also provides for the escalation of

of the planning and building application

processing timeframes. Increased

work to a manager in cases where work is not

processes. The basis has now been put in place to

transparency appears to be a

completed within set timeframes.

draw management information that can be used

major goal of the Metro, which

by various managers in a complex environment.

will have a profound effect on

4. Circulation and

the speed in which applications

assessment of applications

7. Registry and records management

are administered considering a

DAMS enables electronic circulation (and

The records management of the PBDM

potential decrease in clerical errors.

e-submission as the second phase to this

Department has been addressed corporately

While electronic management

project) of applications. This is likely to assist in

and there has been facilities secured for the

systems are likely to improve

reducing timeframes in the regulatory process

storage of files. With the implementation

internal circulation and delegation

to a large extent. The electronic submissions

of DAMS there will be a shift towards an

of submissions. It should however

to be introduced towards the end of 2014

electronic environment, which will bring huge

be noted that the success of the

would also make it convenient for applicants

advantages for record keeping purposes and

eight-point strategy is reliant on its

to submit and track their applications online.

the ease and speed of access to information.

effective implementation.

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THE ECONOMIC APPLICATION PROCESSING VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR

8. Staff resources

sector users (including professionals, which is

The department has a staffing strategy to

not part of such bodies) should be provided a

cater for future needs, taking into account

platform to discuss and report on any potential

the mature workforce in certain areas of the

faults or limitations that the newly developed

department.

software may have to ensure continues process

The department has gone on

an aggressive drive to increase its student and

of improvement and streamlining.

internsâ&#x20AC;&#x2122; component and these people have 2. Different format for capturing

assisted the department substantially.

It is understood that the newly developed It is also the intention of the department

DAMS will assists in this cause. Nonetheless,

over the next 5 years to ensure that its staff

it is imperative for the City to modify the

has increased its professional stature. This

manner in which applications are captured

will require registration with professional

and filed within its records. Applications need

institutions

to be tracked individually with each start and

qualifications,

and etc.

bodies, The

appropriate has

end-date clearly captured. The current system

furthermore developed internal functional

department

allows for some applications to slip through

area training programmes, standard operating

the cracks of the administration process. As

procedures, manuals, standard forms and staff

clearly seen in some LUM applications taking

circulars to work towards a base standard

almost five years to finalise.

method for operations in the department.

A

more

detailed

record

of

application

7.3.2 Additional Recommended Improvements for Municipal Administration

submissions and finalisations will assist the City

It is currently difficult to make further

3. Communication with relevant persons

recommendations regarding the improvement

This document acknowledges the various

of administration processes considering that the

improvements in communication between the

effect of the newly proposed transformations

public and private sector with various platforms

cannot be measured. This section therefore

provided such as quarterly meetings with

aims to highlight potential problematic focus

professional bodies, workshops, forums and

areas, which might still be relevant in the

pre-consultations. However, progress reporting

transformed property development market.

and communication during the administration

in identifying additional areas for improvement.

process seems to remain a problem within the 1. Training in DAMS

organisational structure.

The innovation and improvement offered by the DAMS is noted, however it is vital that

Private sector respondents complains about

all public and private sector representatives

a lack of communication regarding proposed

are trained in the system to ensure optimal

amendments or additional information requests

operation. The City needs to ensure that

and the requirement thereof. According to

all municipal officials working with DAMS

the respondents, it is difficult to reach the

understands its operation and functionality. In

correct contact person within the municipal

addition, information dissemination with the

structure in a timeous manner. Constant

property professionals in the private sector are

follow-up attempts and miscommunication

also vital to guarantee that they understand

adds on to the frustration experienced by the

how to track their application and report any

private sector and this fosters an unproductive

perceived hold-ups in the process.

working environment for both parties.

It is understood that the City have continued

SAPOA - the voice of commercial property

consultations with various professional bodies

The possible effect of DAMS is once again

of the private sector. Nonetheless, all private

noted in this regard, however no direct

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mention is made to the manner in which

6. Benefit compliant

communication deficiencies are going to be

private sector applicants

addressed in the new interface provided by

Approximately 50% of the private sector and

the DAMS.

40% of the public sector application tracking sample are affected by incomplete applications

4. Clarification of application types

with amendment requests issued by the City. It

required and list of requirements

is currently understood that once amendments

This focus area correlates with the previous

are received by the City the application

point regarding communication. The private

is captured within the processing pool as

sector

illustrated on page 44.

application

tracking

case

study

highlighted the prominence of incorrect application types submitted with a shortage

Applicants will be more motivated to respond

of information in some cases. It is understood

timeously if benefits are provided to such

that the pre-consultations offered by the

applicants. For instance, if an applicant

public sector is in place to address this

responds within a reasonable timeframe

problem, but somehow this problem still

conveyed by the public sector, the application

lingers in the administration process.

handled before new submissions to ensure smaller delays for the application, which is

It is recommended for the City to provide a

already in progress.

detailed list of requirements to the private sector applicant and enforce the submission of complete applications.

7.3.3 Responsibilities of the Private Sector The private and public sector application

5. System of delegation and relationship

tracking case studies did not only highlight

with external departments

shortcomings in the administration process

The internal system of delegation is addressed

caused

within the eight-point strategy listed above.

administration blockages have a private sector

Nonetheless, it remains relevant to stress the

component to it as well. It is therefore vital that

importance of improvement on this front.

the private property professionals understand

Approximately 21% of the private sector

their responsibilities in terms of development

application tracking sample was subjected to

application submission and the way in which

delegation causing delays in the administration

they can assist in the improvement of the

of these applications.

administration process.

It is vital to exclude

by

the

public

sector.

Certain

unneeded delegations and improvement of communication between the council and sub-

1. Utilise pre-consultations

committees of the council.

It is the responsibility of the private sector representative to ensure that the application

In addition, the private sector tracking case

submitted

study highlights that approximately 22% of

according to the entity it is submitted to.

the sample was affected by delayed interaction

Pre-consultations

between the City and external departments.

enables interaction between private property

Some form of accountability should be created

professionals and public sector officials before

among municipal and external department

the submission of applications and payments

officials to ensure the timeous inputs in the

of any fees. It provides a platform to the

administration process. If capacity issues are

private property professional to establish what

noted as the main reason for delayed response

type of application is required and the specific

from external departments it is vital to ensure

requirements of the relevant application type in

the appointment of more specialised individuals

addition to administrative matters such as the

in these fields.

required payments etc.

MARCH & APRIL 2014

for

approval with

are the

complete municipality

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THE ECONOMIC APPLICATION PROCESSING VALUE of theREPORT COMMERCIAL PRIVATE PROPERTY SECTOR

7.4 Conclusion

2. Pre-check requirements of the application before submission Once the required application type is identified

As seen in “The Economic Value of the

and fees are available, it is vital to ensure

Commercial Private Property Sector” report

that the application submitted complies with

(Component One of the research initiative), the

the requirements set by the governing entity.

commercial private property sector contributes

These requirements may include specialised

significantly to the economy of the Western

viability or impact studies.

Cape as well as the City of Cape Town. For that

3. Respond timeously

reason the streamlining of public administration

to amendment requests

processes is of cardinal importance to ensure that

If amendment requests are issued, quick response

all parties involved banks on the opportunities

to the requests is required to ensure the process

presented for economic growth and expansion.

is not unnecessarily delayed. Approximately 50% of the private sector application tracking sample

The essential concluding remark posed by

is affected by incomplete applications.

the conducted research is one of cooperation

4. Participate in consultation

between the public and private sector.

platforms provided

Functionality barriers and limitations will always

The CoCTMM has quarterly meetings with

be experienced when operating in any multi-

the Cape Town Institute of Architects, South

dimensional structure, such as the development

African Association of Consulting Professional

application processing structure. It is not

Planners,

of

only the responsibility of the public sector to

South Africa, Practice Notes Work Group

address these limitations and therefore a one-

and the Western Cape Property Developers

dimensional approach is not the solution. Both

Forum. It is recommended that private sector

the private and public sectors are responsible

representatives attend these meetings and

for the improvement of the current manner

voice their opinion regarding specific concerns

in which the processing structure operates by

of the administration process.

utilising communication platforms to identify

5. Participate in any training

the limitations and address it as far as possible.

workshops hosted by regulatory entities

It is therefore important for the private sector

The introduction of the newly developed

to voice their opinions regarding potential ways

DAMS will be accompanied by significant

to improve and the public sector to take note

changes in the manner in which applications

of the inputs received for the purpose of policy

are submitted to the City. It is the private

and implementation framework formulation.

the

Geometrics

Association

sector respondent’s responsibility to ensure that they understand how the process have changed and how submissions should now be handled.

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REFERENCES Cambridge Online Dictionary, 2014, http://www.dictionary.cambridge.org.

City of Cape Town Metropolitan Municipality, 2012, City of Cape Town Zoning Scheme Regulations: A Component of the Policy-Driven Land Use Management System.

City of Cape Town Metropolitan Municipality, 2013, City of Cape Town Integrated Development Plan Draft: Five Year Plan for Cape Town 2012 – 2017 City of Cape Town Metropolitan Municipality, 2013, City of Cape Town Municipal Webpage, www.capetown.gov.za.

City of Cape Town Metropolitan Municipality, 2014, City of Cape Town Zoning Scheme Webpage, http://www.capetown.gov.za/en/Planningportal/Pages/ Zoningscheme.aspx.

City of Cape Town Metropolitan Municipality, 2014, Development Application Management System Webpage, https://www.capetown.gov.za/en/ Planningportal/Pages/Development-Application-Management-System-(DAMS).aspx.

Construction Industry Development Board, 2005, Overview of National Heritage Resources Act. Department of Rural Development and Land Reform, 2012, Overview of Legislation and Existing Classification Effort.

Department of Rural Development and Land Reform, 2013, Spatial Planning and Land Use Management Act. Dictionary.com, 2014, http://www.dictionary.com.

South Africa, 2014, South Africa National Environmental Management Act – Legislation and Environmental Acts, http://www.environment.co.za.

The Free Dictionary, 2014, http://www.thefreedictionary.com/.

Western Cape Provincial Government, 2012, Land Use Planning Bill: Explanatory Memorandum.

Western Cape Provincial Government, 2013, Western Cape Provincial Government Webpage, http://www.westerncape.gov.za.

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Published by SAPOA, Paddock View, Hunt’s End Office Park, 36 Wierda Road West, Wierda Valley, Sandton PO Box 78544, Sandton 2146 SAPOA - the voice of commercial property t: +27 (0)11 883 0679 f: +27 (0)11 883 0684

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