Briefing by the Department of Public Works on legislation, status of the Construction and Property

Charters and all other outstanding policies

Presentation to the Portfolio Committee on Public Works

by

Acting DDG: Construction & Property Policy Regulation (Mandisa Fatyela-Lindie)

18 February 2014

Presentation outline:

A. Legislation:

A.1 Establishment of Agrèment South Africa as a Public Entity

A.2 Review of Expropriation Act

A.3 Built Environment Professions Proposed Policy

A.4 Establishment of Independent Development Trust as a Public Entity.

B. Construction Sector Charter Council

C. Status of other outstanding Policies

C.1 Immovable Asset Condition Assessment Guideline

C.2 Prestige Norms and Standards

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A.1 ESTABLISHMENT OF AGRÈMENT SOUTH AFRICA AS A PUBLIC ENTITY

A: LEGISLATION

1. Introduction

Agrément South Africa (ASA) was established by the Minister of Public Works in 1969, through a delegated authority.

Its mandate is to

“support and promote the process of integrated socio-economic development in South Africa as it relates to the construction industry by facilitating the introduction, application and utilisation of satisfactory innovation and technology development, in a manner which will add value to the process and by so doing enhance Agrément South Africa`s position as the internationally acknowledged, objective South African centre for the assessment and certification of innovative non-standardised construction products, systems, materials, components and processes, which are not fully covered by a South African Bureau of Standard standard or code of practice.”

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2. ASA Current Objectives

Serve specifier and user interests by providing assurance of fitness-for-purpose and value for money of innovative, non-standardised construction technology as well as ongoing quality assurance;

Work with the construction sector to facilitate the introduction of cost effective innovative, non-standardised construction technology;

Disseminate correct, objective and relevant information to all concerned in respect of the technical, socio-economic, and regulatory aspects of innovative, non-standardised construction technology;

Support policy makers at all levels and minimize the risk associated with the use of innovations;

Support the application of the National Building Regulations;

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ASA Current Objectives ..cont…

Maintain links with international peer organizations and support the South African construction industry in its export activities by facilitating the approval of South African innovative construction products into foreign countries;

Facilitate the acceptance of innovative products within the context of the government’s new priorities and policies;

Serves a national interest by being internationally acknowledged as an objective and independent South African centre serving the building and engineering communities by providing assurance to specifiers and users via technical approvals for the fitness-for-purpose of innovative, non-standardised construction technology.

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3. Need to Establish ASA as a Public Entity

ASA’s lack of legal status:- Dependent on Council for Scientific & Industrial Research (CSIR)

to fulfill its administrative requirements and to manage its technical agency;

AG Report classified transfers to ASA Irregular Expenditure.

Draft ASA Business Case was developed motivating the establishment of ASA as a juristic person and submitted to the Joint Evaluation Committee (JEC) for approval in March 2013.

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4. Business Case

Business Case: Format situation analysis, problem statement; needs analysis; service delivery options, governance issues, and recommendations on appropriate service delivery option.

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5. Consultation

Purpose:

analyze the strengths, weaknesses, opportunities and threats that exist in the current mode of service delivery;

situation analysis;

determine whether:

- any synergies exist between ASA and other public entities;

- there is a duplication of ASA’s mandate with other public entities; and

- there is a need for ASA to exist in its own independent space or whether ASA should reside within one of the other public entities.

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6. Stakeholders

Department of Trade & Industry (the dti): Two entities with related but distinct mandates from ASA: South African Bureau of Standards (SABS):

- develops standards for existing products on market. National Regulator of Compulsory Standards (NRCS):

- sets and monitors compliance to compulsory standards.

Department of Human Settlement: National Home Builders Registration Council:

- protects home buyers against shoddy workmanship by home builders.

Dept. of Cooperative Governance and South African Local Government

Association supports ASA as certifier of “fit-for-purpose” non standardized building

material and products.

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• Dept. of Science & Technology :– CSIR develops non-standardised materials & products, therefore

cannot also certify;– DST recommends establishing synergies between ASA and the

Technology Innovation Agency (TIA).• Council for the Built Environment:

– Supports ASA proposals, given its own regulatory role over the built environment.

• Construction Industry Development Board

- Supports ASA proposals given its own regulatory role over the construction industry.

• South African Revenue Service:

– Recommends all non-standardised building materials and products imported into South Africa (SA) are compliant to ASA.

Stakeholders ...cont…

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7. Consultation Outcome

• Stakeholders in principle supported:

the need for ASA to retain its mandate and to continue to exist as a separate, independent organisation (in line with international trends);

a proposal for the extension of ASA’s mandate to include a regulatory function – Future Action.

– DTI advised that ASA regulatory function should not infringe any provisions of World Trade Organisation Trade Agreements, to which South Africa is a signatory – this means a clear health, safety, or environmental reason for regulatory exclusion of an imported commodity is required.

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8. Impact of Policy Position

Irregular expenditure concerns by the Auditor-General (AG) will be addressed with ASA fully functional as an independent entity.

ASA will be able to effectively promote the value of certification of non-standard construction materials & systems – thus promoting innovation, local manufacturing and job creation.

Increased availability and reliability of non-standard materials will impact on lowering construction costs for public and private sector.

Through international engagements, ASA will ensure SA assessment standards remain internationally accepted - thus facilitating SA exports of products, materials and systems.

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Draft ASA Bill addresses the following: Objects of Agrément South Africa; Powers and Functions; Certification and Renewal of Certification Process; Keeping of a Register; Board of Agrément South Africa:

Composition,Term of Office,Disqualification & Vacation of Office,Remuneration and allowances of members of Board, andConflict of interest of members of Board.

9. Draft ASA Bill

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Cabinet approved that the draft ASA Bill, 2013 and its Memorandum on the Objects, be gazetted for public comment in December 2013.

Draft ASA Bill was gazetted on 15 January 2014 for public comment which closes on 17 February 2014.

Workshops on draft ASA Bill to be held during February 2014.

ASA Bill to be tabled in Parliament by September 2014.

10. Current status

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A.2 REVIEW OF EXPROPRIATION ACT, 1975

The proposed Expropriation Bill seeks to align the Expropriation Act, 1975 with the Constitution, 1996 and to provide a common framework to guide the processes and procedures for expropriation of property by organs of state.  The Bill does not seek to interfere with the powers of expropriation conferred by specific legislation, but prescribes uniform procedures to be followed by all expropriating authorities when exercising their powers.

The Bill introduces certain measures that differ significantly from the existing Expropriation Act. Noteworthy is the recognition and compensation of unregistered rights in property in all expropriations.

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The proposed Expropriation Bill confirms the power of the Minister of Public Works to expropriate property for purposes connected with the execution of his/her mandate.

The Bill does not grant expropriating powers to any other functionary, but rather prescribes uniform procedures to be followed by all expropriating authorities who derive their powers to expropriate from other pieces of legislation.

The aim is therefore to introduce consistency and uniformity in the way that organs of state undertake the expropriation of property.

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In contrast to the Expropriation Act, 1975 the proposed Expropriation Bill embodies the constitutional principle of just administrative action by, amongst other measures –

providing for the publication of an intended or actual expropriation, incorporating the rationale for such expropriation;

providing for notices of an intended or actual expropriation, incorporating the rationale for such expropriation, to be served on or delivered to all known affected persons; and

affording interested parties an opportunity to raise objections and make representations to an expropriating authority, and requiring that authority to consider such submissions before taking a decision whether or not to proceed with an expropriation.

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In the development of the Expropriation Bill, the Department sought advice from various prominent legal practitioners on specific constitutional and practical matters relating to expropriation.

The draft Bill was gazetted for comment in March 2013. Wide-ranging submissions were received from organised agriculture; commerce and industry; the financial sector; the legal fraternity; the property industry; professional associations; public entities; government departments and members of the public.

Following thorough consideration of the public comments, a revised draft Bill was submitted to NEDLAC. A joint Task Team of the Trade and Industry and Development Chambers has concluded its deliberations, with relatively few areas of disagreement recorded. There are, however, no areas of disagreement where Labour, Community and Business unanimously oppose any provision of the proposed Bill.

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The implementation of the uniform procedures for expropriation proposed in the Bill should not have a significant impact on the staff structures of expropriating authorities. Some existing personnel may require initial training on the new procedures.

The Department of Public Works will establish capacity to provide guidance on the new uniform procedures to all expropriating authorities.

The Department will now be seeking Cabinet’s approval to table the Expropriation Bill in Parliament.

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A.3 BUILT ENVIRONMENT PROFESSIONS PROPOSED POLICY

1. Introduction

Built Environment Professions (BEP) Bill was tabled in Parliament and withdrawn from the NCOP in 2008 – citing the need for further consultation.

Review of BEP was re-introduced in 2011.

Interactions between CBE, the Professional Councils and DPW culminated in the development of a new policy document titled “Policy Document on the Proposed Amendments of the Statutory Regulatory Framework of the Built Environment Professions”.

Policy document aims to review BEP based on the following three principles :- Public protection, Integrity of professions, and Government policy objectives.

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2. Challenges with the current regulatory system

Policy document put forward the following challenges identified in the BEP: Poor cooperation between CBE and PC’s, Poor oversight and lack of accountability by PC’s, Inadequate governance regulations, Lack of alignment to government policy planning, Lack of transformation, Gaps in the registration processes, Cost of investigating complaints.

In addressing these challenges, various options were identified.

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3. Option Analysis

3.1A Single CBE with 6 Professional Boards

This option provides for the establishment of a “super council”.

Built Environment Professional Councils (BEPC) Acts will be repealed and BEPCs to be converted to Professional Boards accountable to the Council.

This option restructures the current system to provide standardised regulation for the built environment professions.

This option was not preferred by the BEPCs and Government (National Treasury and Department of Science and Technology).

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Option Analysis … cont…

3.2 CBE and 6 Professional Councils (amending legislation)

This is the current situation.

Minister regulates BEPC and CBE – flat structure remains.

BEPC can report through CBE but cannot be accountable to CBE.

Amendment of Legislation is a tedious process.

This option largely maintains the status quo.

Option may not be ideal for the above reasons.

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Option Analysis … cont…

3.3 Relocation of functions within DPW

CBE currently plays a promotional, facilitation and coordination role to BEPCs;

The functions be relocated within DPW.

Current Professional Councils legislation will be amended to address shortcomings.

This is a preferred option.

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4. Preferred Option

4.1 Relocation of functions within DPW:

Authority derived directly from the Minister and not from the Council (CBE).

Functions of CBE ring-fenced within DPW:BEPCs to report to the Minister;Saving – Council fees; Improved synergy within DPW – further cost saving;Remove duplication in functions; andDPW to ensure BEPCs give effect to the mandate. Implementation of policies will ensure synergy with DPW.

Legislation: Repeal CBE; Amend Regulations for BEPC Acts.

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5. Addressing current challenges

Alignment to government policy planning: Empowered through a direct mandate from Minister – direct planning with

DPW (Strategic Planning sessions). Governance:

No competing interests or conflicting views in executing the mandate. Accountability:

BEPCs to report directly to DPW. Poor cooperation:

Enhance cooperation through amendment of BEPC legislation. Oversight:

DPW in good stead to oversee alignment in the implementation of the legislation and to government priorities.

Governance matters firmly addressed. Lack of Transformation:

DPW to drive transformation in the built environment. Ensure consistent application of policies.

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6. Current Status

In finalising the draft policy document, the following key stakeholders were consulted:

May 2013: CBE Council June 2013 CBE Staff and BEPCs.

Draft BEP Policy will be gazetted for public comment by the end February 2014.

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A.4: ESTABLISHMENT OF INDEPENDENT DEVELOPMENT TRUST AS A PUBLIC ENTITY (PROPOSED MANDATE)

1. Background The Independent Development Trust (Trust Registration no. 669/91) was established in 1990, as an

independent, civil society, temporary grant-making agency with a R2 billion Government endowment to be invested, with the returns to be utilised to achieve the IDT’s primary goal of enabling disadvantaged communities to access resources, and recognise and unlock their potential to continuously improve their quality of life. This was to be achieved together with strategic partners.

In March 1997, Cabinet endorsed a recommendation of a Cabinet Advisory Committee that, inter alia, “The IDT must be transformed into a government development agency that will implement projects which are commissioned by government departments. It must cease to be a civil society organization, an independent agency or a funding agency”.

With the establishment of the National Development Agency (NDA) in 1997, the IDT ‘handed over’ its funding agency role by way of a R100 million grant to the NDA. In the context of this new role, the IDT has implemented over 20,000 projects on behalf of the State since 1997.

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Background … cont… In October 2001, the Trust was amended to make provision for appointment of

new Trustees; its goals and objectives to complement Government’s national development policies and priorities; and ensuring co-operation with Government, development agencies and the private sector. Its primary goal was to “use its resources together with strategic partners, in ways which in the opinion of the Trustees will best serve to enable poor communities in the Republic of South Africa to access resources and recognise and unlock their own potential, so as to continuously improve their quality of life”.

From 1998 to 2005, the IDT provided programme management services to Government, initially at no cost and later at a nominal fee. The no cost/nominal fee service offering was largely funded by capital endowment the IDT received in 1990 and the interest accrued thereon.

The IDT evolved from a granting making institution that funded qualifying community initiatives to the provision of programme management services that support Government’s social infrastructure delivery programmes. However, the formal mandate, positioning and structure of the IDT had not changed during these transitions.

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2. IDT Strategic Objectives

To address the on-going need for a community-oriented development agency that is able to support the efforts of all spheres of Government with development specialists and expertise in implementation of projects at a community level.

To facilitate, contribute and integrate the efforts of all spheres of Government, and leverage efforts of the private sector and civil society in support of community development particularly in the delivery and maintenance of social infrastructure.

To contribute towards a long-term vision of a consolidated development agency which plays a programme and project management role for all of Government’s development initiatives, with a view of meeting long-term mutually reinforcing roles of economic, social and sustainable development. This includes facilitating development programmes within communities by setting development priorities, managing outcomes, tracking impact that will over time reduce dependency and enhancing self-reliance at a community level.

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3. Problem Statement A change in the IDT’s mandate in 1997 saw an increase in services offered to the State at no cost to the

latter and with no adjustments to its funding from the fiscus. This adversely impacted on the IDT’s capital base. This was exacerbated by increasing overheads stemming from its growing portfolio of programmes and decreasing interest rates.

Financial modelling undertaken in 2006, indicated that the IDT’s grant would be exhausted by 2012/13. In light thereof, the IDT embarked on a course of securing its long-term future. The interventions pursued by the IDT in 2006, were two-fold. One sought to introduce a cost-recovery mechanism to a category of the IDT services (i.e. programme management) as part of a short-term intervention, while the other sought to initiate a process of developing a business case for the long-term sustainability, in accordance with the revised mandate of the organisation.

While the cost-recovery mechanism was implemented, it failed to generate sufficient revenue to ensure the IDT remains financially viable. Further, the business case process was never finalised as it did not address the IDT’s core function and its long-term financial sustainability.

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Problem Statement …cont…

The current low level of spending by spheres of Government informs the need for the State to accelerate its capacity and ability to deliver social infrastructure. Hence it is vital to consolidate an institution specifically mandated to deliver social infrastructure for all spheres of Government to achieve the core outcomes of job creation and poverty alleviation. To maximize these outcomes and secure a sense of community ownership of these assets, the delivery of social infrastructure must actively involve community participation and responsibility for public assets.

In addition, Cabinet established the Presidential Infrastructure Coordinating Commission (PICC) to coordinate, integrate and accelerate implementation of infrastructure, and to develop a single common National Infrastructure Plan beyond one administration to avoid a stop-start pattern to the delivery of infrastructure. The IDT is currently acting as joint coordinator of the PICC’s Strategic Integrated Project (SIP13): National School Build Programme and it continues as an implementing agent of social infrastructure for a number of provincial and national Government departments.

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4. Consultation process

Purpose: to identify the strengths, weaknesses, opportunities of and threats to the

IDT – current and future; examine its delivery model; establish whether synergies exist between the IDT and other State

institutions; determine whether a role exists for the IDT in the delivery of infrastructure.

Consultation sessions were planned for May and June 2013. While all stakeholders were contacted, not all were consulted. Some did not honour meetings and others were not available – consultations were held with 4 national departments, 16 provincial departments and 3 State institutions.

To supplement the consultation, a desktop analysis was undertaken of institutions with a similar mandate to the IDT.

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Consultation process …cont…

4.4 Consultation list:

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National Departments Consultation dates Provincial Departments Consultation dates

1 National Treasury 19 April 2013 D: Limpopo:

2 Defence 24 April 2013 12 Agriculture 21 May 2013

3 South African Police Service (SAPS) 08 May 2013 13 Education 21 May 2013

4 Justice & Constitutional Development 22 May 2013 14 Health 21 May 2013

Provincial Departments Consultation dates 15 Public Works 21 May 2013

A: Eastern-Cape: E: Mpumalanga:

5 Education 29 May 2013 16 Education 28 May 2013

6 Health 29 May 2013 17 Public Works 28 May 2013

7 Public Works 29 May 2013 F: Northern Cape:

B: Gauteng: 18 Education 27 May 2013

8 Department of Roads & Transport 09 May 2013 19 Public Works 27 May 2013

C: KwaZulu-Natal: G: North West:

9 Education 29 April 2013 20 Public Works 31 May 2013

10 Health 29 April 2013 State Institutions Consultation dates

11 Public Works 29 April 2013 21 Hibiscus Coast

Development Agency

29 April 2013

National Departments: 4 Provincial Departments: 16 (Only

Western Cape & Free State provinces not consulted)

State Institutions: 3

TOTAL: 23

22 Development Bank of

Southern Africa

08 May 2013

23 Housing Development

Agency

10 May 2013

5. Consultation outcome

Identified the IDT’s market space as the provider of social infrastructure; Proposed that the DPW:

responds to clients needs, a client needs; allocates projects to the IDT for implementation; plays an oversight role in the implementation of such projects; and provides clients with feedback on the projects;

The IDT to become the implementing arm of the DPW for the provision of social infrastructure; and

The IDT to consider building internal capacity and skills to undertake projects to ensure cost savings to client departments.

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6. Recommendations

Governance

Schedule 3A: the preferred model, as the procurement process in a public entity will be quicker and will allow for quicker response in the delivery of projects. The IDT as a coordinator will complement the DPW in the delivery of social infrastructure by enhancing the DPW’s capacity and in turn advance the achievement of the national development objectives and thus enable the DPW to deliver on urgent and immediate infrastructure requirements. The IDT will enhance its programme and project management capacity to ensure speedy response in the delivery of projects on behalf of the DPW.

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Recommendations…. cont….. Mandate

Client Departments (national and provincial level) proposed that DPW take responsibility for all social infrastructure projects and allocates projects to IDT for implementation on its behalf.

DPW to play an oversight role in the execution of projects but will critically be responsible for issuing of certificates of completion – thus guaranteeing the quality of asset. An implementation protocol defining roles and responsibilities between DPW, IDT, client departments (including provincial DPWs) and possibly the Local Government.

The above will fortify the IDT as a delivery arm of the DPW focusing on provision of social infrastructure thus embed participation of local communities into the project (from concept to completion) to ensure communities derive maximum benefit from the delivery of the asset.

IDT as a Schedule 3A public entity will complement the DPW in the delivery of infrastructure by enhancing the DPW’s capacity and in turn advance the achievement of the national development objectives and thus enable the DPW to deliver on urgent and immediate infrastructure requirements.

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Recommendations…. cont…..

Mandate …

DPW through this entity will better address the developmental gap in terms of poverty eradication at the community level and advance social facilitation with marginalised communities to ensure effective empowerment of communities to drive its development agenda, with a spread focus in the health, education and justice sectors.

IDT mandate as per Cabinet’s approval of 1997 remains unchanged, in so far as it supports all spheres of Government to implement national development agenda to the eradicate poverty, create employment, and the create sustainable and cohesive communities.

IDT will enable DPW to deliver on urgent and immediate infrastructure requirements and better address the developmental gap in terms of poverty eradication at community level and advance social facilitation with marginalised communities.

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7. Current status

The Human Resources and Finance models are currently under development – estimated completion date: end March 2014.

Submission of completed IDT Business Case to the Joint Evaluation Committee (JEC) by mid-April 2014.

Submission to Cabinet for approval by end April 2014.

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B.1 CONSTRUCTION CHARTER

B: STATUS OF THE CHARTERS

Background and processes towards the gazette of the charter.

Gazetting of the Broad Based Black Economic Empowerment(BBBEE) Codes in 2007 and the framework for charters.

Signatories to the charter and the approval in June 2009.

Establishment of the Charter Council in 2010 and registration as a NPO.

Outline of the construction code targets and measurement period.

Broad Outline of CSCC (Members of EXCO).

Appointment of the Chief Executive Officer.

Finalization of the Baseline Study for purposes of annual reporting.

Progress in the appointment of the Chairperson.

Increasing compliance targets (Self Regulation).

Monitoring and evaluation going forward.

Public Engagement and Self Funding Model.

Challenges facing the Construction Industry.

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1.1 Construction Sector Charter Council (CSCC) :

Established as the result of the gazette of the Construction Sector Codes in June 2009.

Registered as an NPO (October 2012) pursuant to the signature of the founding constitution by 16 (sixteen) of the 17 (seventeen) founding major commercial associations, industry bodies, including the National Department of Public Works.

As the monitoring and overseeing body of the construction sector code, the CSSC has the executive authority on all matters related to the interpretation, measurement and implementation of the construction code (as may, from time to time, be amended and reviewed).

Reports to regulatory stakeholders on the annual measurement of the construction sector code (CSC) such as Parliament, BBBEE Advisory, Departments of Public Works and Trade and Industry.

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2.1 Progress on CSCC Programmes namely:

a. Baseline Project: measures performance of the construction sector against the charter since its

gazette in 2009 with a target, to analyze and report on about 6000 scorecards of the construction value chain for period between 2009 and 2012.

to be used by the CSCC to create an empowerment database in the future. over 2500 certificates & scorecards captured – represents a spread between

EMEs, QSEs & large entities. preliminary report expected by March 2014.

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Progress on CSCC Programmes namely:

b. Practice Notes and Information / Guidance notes :

CSCC has uncovered a number of inconsistencies in the application and/or interpretation of the construction sector code.

Closely working with the Association for BEE  Verification Agencies (ABVA) and Independent Regulatory Board of Auditors (IRBA) to correct these irregularities and to ensure that practice notes issued talk to the guiding principles of the CSCC.

The CSCC is in discussions with the dti to confer the CSCC with a mandate to approve the issuance of verification certificates – projected completion by August 2014.

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3.1 Process towards alignment:

a. Amendment of BBBEE framework & Alignment of the Sector Code: Following the publishing of the revised BBBEE codes in October 2013, the

construction sector codes, together with all other gazetted sector codes are expected to be aligned with the new codes within twelve (12) months.

The CSCC is facilitating the process of negotiations on the elements of the scorecard and to guide all founding members on the process of alignment.

Working groups made up of industry organizations will be constituted. The CSCC is in a process of appointing facilitators & advisors (for established and emerging constituencies).

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b. Alignment timelines are outlined below:

Sep – October

2014

5.1 Key interactions implemented by the CSCC during 2013:

a. DPW & CSCC Road shows and Training:- Both DPW and the CSCC have undertake training to ensure compliance to the

construction sector charter codes, including measures to enforce such in the procurement of public sector infrastructure projects.

- Training sessions held in four Provinces (Western Cape, Kwa-Zulu Natal, Eastern Cape and Gauteng) respectively.

- Efforts are underway to continue with these sessions in the remaining provinces by 31 March 2014.

b. Engagements and Partnerships:

- A National Task Team made up of the Construction Industry Development Board(CIDB) and the CSCC to facilitate the workshops that will, amongst other things, assess the impact and effectiveness of the construction charter.

- The CSCC has facilitated engagements with the National Home Builders Registration Council (NHBRC) with the view to develop common and best practice programmes to ensure competence, empowerment and development of largely black owned and managed construction firms who make up the NHBRC register.

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c. Private Sector and Labour Movement Partnerships:

- In raising awareness of the CSCC, presentations were made in at least 13 (thirteen) industry forums ranging from SAFCEC conventions, MBSA conference and the annual construction project management conferences.

- Construction Sector Codes presented to the National Union of Mineworkers who sought to understand the relevance and impact of the sector code on jobs and employment opportunities.

- Engagement between the CSCC and the Mineworker Development Agency (MDA) ensued and a proposed Memorandum of Understanding (MOU) is to be concluded to determine areas of collaboration between the CSCC and the MDA.

d. Financial Sustainability Model:

- The 2014/15 financial year will mark the last year of funding by DPW which has been responsible for the funding of the CSCC activities for a period of three years.

- The Finance Sub-Committee is considering and finalizing a proposed model of revenue generation that will be presented for finalization and adoption at the first Council meeting

of 2014.

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B.2 PROPERTY CHARTER

B: STATUS OF THE CHARTERS

Property Sector Charter Council (PSCC) :

PSCC was an initiative of DPW and other Property sector stakeholders.

October 2007 - Property Sector Charter gazetted [Section 12 of BBBEE Act, 2003] recording commitment of sector members to drive transformation in Property Sector.

August 2010 - Draft Property Sector Code gazetted [Section 9(5) of BBBEE Act, 2003] for public comment.

June 2012 - Property Sector Code gazetted [Section 9(1) of BBBEE Act, 2003] aligning Code to BBBEE targets of 6 to 10 years .

Current Status Property Charter Council in process of aligning Property Sector Code to revised Codes of Good Practice (gazetted in Oct 2013).

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PSCC monitors compliance by all parties involved in commercial and residential property for purposes of business. The Property Sector includes:

A. Commercial Property Office Property IndustryIndustrial Property industryRetail Property IndustryLeisure Property Industry

B. Residential Property IndustryHousesFreeholdLeaseCommunity schemesApartments, Cluster homes, Town houses, etc.

C. Zoned Land (zoned for commercial or residential development)

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Nedlac Government: National Department of Public Works Regulators: SA Council of Property Valuers Profession (SACPVP) Estate Agency Affairs Board (EAAB) Commercial Property Loan Stock SA (PLSA) Association of Property Unit Trust Stock (APUTS) SA Institute of Black Property Practitioners (SAIBPP) SA Facility Mangers Association (SAFMA) SA Black Technical & Allied Careers Organisation (SABTACO) Black Association of Property Commercial Owners (BAPCO) Real Estate Business Owners Association of SA (REBOSA)

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SA Property Owners Association (SAPOA) SA Council of Shopping Centres (SACSC) National Association for Youth Empowerment in Construction (NAYEC) National Association of Managing Agents (NAMA) Residential Institute of Estate Agencies of SA (IEASA) National Property Forum (NPF) SA Forum of Real Estate (SAFRE) Women Association of Women in Property (AWIP) Women Network Properties (WNP) Professional Bodies Black Professional Valuers Association (BPVA)

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South African Property Sector

R4.9 Trillion

South African Property Sector

R4.9 Trillion

Non- residentialR780 Billion

Non- residentialR780 Billion

ResidentialR3.0 TrillionResidentialR3.0 Trillion

PublicR570 Billion

PublicR570 Billion

Zoned urban land

R520 Billion

Zoned urban land

R520 Billion

Retail: R340 Bill

Office: R228 Bill

Hospitality, Leisure & Other: R25 Bill

National: R188 Bill

Provincial: R342 Bill

Local Gov: R37 Bill

State-owned Enterprises: R6 Bill

Industrial: R187 Bill

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PSCC’s function – Report on transformation progress in Property Sector

Phase 2: Contribution of the Property Sector to the SA Economy

AimAnalysis covers various phases in the life cycle of the property –origination phase;property management and transacting phase; andend of cycle [disposal / refurbishment / redevelopment].Provides overview of the activities in each phase

ScopeResearch covers various sub industries in the property sector – Non-residential Property Industry; and Residential Property Industry.

Definitions and Acronyms used in Property SectorCreate a consolidated body of knowledge which fosters consistent understanding of the Property Sector

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• O

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South African Property SectorR291.9 Billion

South African Property SectorR291.9 Billion

Direct InjectionR90.4 Billion

Direct InjectionR90.4 Billion

GDPR201.5 Billion

GDPR201.5 Billion

TotalR291.9 Billion

TotalR291.9 Billion

Non-Residential Property IndustryNon-Residential

Property Industry

Residential Property Industry

Residential Property Industry

“End of Cycle”“End of Cycle”

R53.4 Billion R60.8 Billion R114.2 Billion

R33.2 Billion

R136.6 Billion R169.7 Billion

R3.8 Billion

R4.1 Billion R7.9 Billion

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BASELINE STUDY RESEARCH REPORTING PROCESS

Step 1: Scoping the Property Sector

Step 2: Segmenting the Property Sector

Step 3: Conduct estimated value assessment per segment

Step 4: Identifying the significant players per segment and their value contribution

Step 5: Sample using value contribution per company

Step 6: Collection of scorecard data of the sampled companies

Step 7: Analysis of data and report generation

DoneDone

In progress

In progress

PSCC Research (Phase 3: B-BBEE Score card analysis)

Sampled: companies that contribute more than 70% of value in sector. Property Segments -

Property Owners Property Services Real Estate Professionals

Categories under each segment - Property Owners

Listed property Owners and Unit Trust Owners (R250 Billion)– 30 listed companies

Institutional Owners– 3 companies (Old Mutual, Sanlam and StanLib)

Private Owners (9 companies) Public Sector (9 departments / entities)

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Property Services Property Brokers/Managers

– 9 companies Assets Managers

– 21 companies

Real Estate Estate Agencies

– 10 agencies Managing Agencies

– 5 companies

Professionals 4 companies

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Phase 3 completion expected by April 2014.

Consolidated Phase 1, 2 and 3 Report by May 2014. Market size and its components Contribution of Sector to SA economy (direct & indirect) Players and facilitators in industry and their size Number of people the Sector employs Skills gap in Sector Opportunities in Sector for SMMEs and new entrants

– Enterprise development– Procurement by Sector

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Residential Industry Out of 38 000 Estate Agents only 13% are Black (2012) Out of 11 000 agencies it is estimated that only 2% - 4% are black,

with no black agencies in the leading pack

Commercial Industry Listed Funds (R250 Billion) - started at R4 Billion around 1995 Contributors to growth -

» Implementation of DPW’s Leasing Strategy (Property Management Strategy on BEE, Job Creation and Poverty Alleviation, 2007) which provided certainty in market

» International economic growth and SA Life Insurance Companies transferring assets to management companies

About 12% black shareholding // Only 5% black managed companies

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Commercial Industry

Driven directly by Property Charter and the implementation of DPW’s Leasing Strategy (Property Management Strategy on BEE, Job Creation and Poverty Alleviation, 2007). This resulted in -

Ownership: Black Listed companies

» Rebosis (R4 Billion) – 2011» Dipula (R3 Billion) – 2011» Ascension (R2 Billion) – 2012» Delta (R3 Billion) – 2012» Vukile (R7 Billion) – 2013

White funds seeking black partners» Arrowhead (R3 Billion) disposing assets to Indite – 2014

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Property Services: Property Management:

» 2 Major Black Players (Dijalo & Herman & Roman)» Competing with industry giants (Broll, JHI, Bidvest)

Facility Management:» 1 Black Player (Motseng)

Funding: PIC – allocation of R2 Billion for BEE – awaiting approval.

Enterprise Development by large companies: Resulted in listed companies (Dipula and Vunani)

Procurement: TMFC – Largely Telkom properties (40% Black-owned)

Development in under-resourced areas: Growing number of shopping centres in townships

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Funding for Black Companies: Bank funding – requires high level of equity (40%) National Empowerment Fund – Funding halted Industrial Development Corp – Does not fund property transactions No other evidence of funding by Development Finance Institutions

Implementation challenges BEE listed companies under threat of take-overs. Smaller companies

with attractive asset portfolios become prey to larger companies BEE listed companies still require 100% funding vs. leveraging on

available assets Property services: No creation of big black-owned property services companies Existing black companies competing with industry giants

(Broll, JHI, Bidvest)

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C.1 Immovable Asset Condition Assessment Guideline

C: STATUS OF OUTSTANDING POLICIES

1.1 Background:

The Government Immovable Asset Management Act, 2007 (GIAMA) requires Custodians to conduct condition assessment of all their immovable assets periodically.

Pursuant to this requirement, the Department lead the development of an Immovable Asset Condition Assessment Guideline in respect of General Buildings for National and Provincial Custodians.

1.2 Purpose:

The purpose of this Guideline is to be a first point of reference and to provide Custodians with a framework to conduct assessments of the physical state and functionality of immovable assets under their control and their impact on User Departments’ service delivery ability.

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1.3 Current status:

The Guideline (with a standard template to record findings) was developed by a task team comprising property managers and built environment professionals from the National and Provincial Public Works Departments.

As the Guideline will be applicable to both National and Provincial Custodians, it will in due course be submitted to the Public Works MinMEC for endorsement, prior to final approval by the Minister of Public Works (in terms of the provisions of GIAMA).

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C.2 Prestige Norms and Standards

The Department is responsible for the following prestige services: Provision of office accommodation and furnishings. Provision of residential accommodation and furnishings. Provision and maintenance of security infrastructure Cleaning services. Horticultural services. Building maintenance. Provision of infrastructure for State functions.

The Department’s execution of prestige services is informed by the following legislation and policies:

Ministerial Handbook Policy on Benefits of the Executive Office, March 2009 Parliamentary Villages Management Board Act, 1998 National Key Points Act, 1980 Cabinet decisions. Government Immovable Asset Management Act, 2007

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The purpose of the Prestige Norms and Standards are:

To standardise and provide uniformity in the management and administration of the Prestige Accommodation Portfolio;

To provide for standard costs related to certain services that the Prestige Accommodation Portfolio renders;

To provide standard practice guidelines to ensure adherence to statutory and policy prescripts; and

To ensure good governance and eliminate inconsistencies in the provision of services to Prestige clients.

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The following categories of persons are included in the Prestige Norms and Standards.

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CATEGORY PRESTIGE CLIENT

Category I(a) The President and the Deputy President of the Republic of South Africa

Category I(b) The former President and former Deputy President of the Republic of South Africa

Category II Ministers, Deputy Ministers, Presiding Officers, Deputy Presiding Officers, Chief Justice, Deputy Chief Justice, Chairperson and Deputy Chairperson of the House of Traditional Leaders and eminent persons declared by the President.

Standard relating to the size and value of the residences and offices of the President and the Deputy President.

Standard and standard cost relating to the provision of furnishing for the President and the Deputy President’s residences and offices.

Standard cost relating to maintenance of the President and the Deputy President’s residences and offices.

Standard practice guideline to be following in respect of the provision of services to the President and the Deputy President.

Standard and standard cost (for rental, cleaning and maintenance) relating to the office of the former President and Deputy President.

Standard practice guideline to be followed in respect of the provision of services to the former President and Deputy President.

 

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Standard relating to size of residences and offices of Category II clients.Standard and standard cost relating to the furnishing of residences and offices of Category II clients.Standard practice guideline to be followed in respect of the provision of services to Category II clients.Standard costs relating to provisioning of infrastructure for State Functions.Policy on the Allocation and Occupation of State-owned residences.  

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The Prestige Norms and Standards document has been endorsed by the Governance and Technical Committee of FOSAD.The document has been submitted to National Treasury for comments.Final Prestige Norms and Standards document to be submitted to Cabinet for final approval.

 

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The End

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