The City of Joburg Property Company's better buildings programme has shifted its policy in order to speed up inner-city renewal efforts, trying to include owners in its efforts rather than targeting them.
The programme is aimed at rejuvenating "bad buildings" in inner-city areas such as Hillbrow.
One of the biggest changes in policy is that the programme will move away from penalising owners who have let buildings deteriorate or who are in arrears for rates and taxes.
Instead, the city will try to bring the owners on board and offer incentives to improve the state of buildings and to pay back some of what is owed.
"Essentially the idea was that the better buildings programme was working but it was having a limited impact," says programme head Geoff Mendelowitz.
"What had been done was a spray-and-pray approach. We dealt with the worst buildings, like the (hotels) Mimosa, Europa and Rondebosch. These are all being rehabilitated."
One important issue raised was on the penalties the owners of derelict buildings faced.
Mendelowitz says previously there were situations were the owner had a managing agent who pocketed the money from residents. Sometimes the agent absconded, leaving the owner to find out his building had been "hijacked" and there was major debt - sometimes more than the value of the building.
Mendelowitz says that in these situations the city's revenue department previously would have proceeded with legal action against the owner. This often led to buildings being attached by the city and then sold on to someone else to realise monies owed.
In terms of the new policy, the overall goal now is to deal with all buildings in the inner city including the "good, the indifferent and the bad", he says.
"The programme offers buildings for redevelopment on a tender basis. This is, however, going to become the exception rather than the norm."
Mendelowitz says where legal action on defaulting owners and buildings is over, the city wants to encourage people to buy those buildings when there are sales of execution or liquidation.
"If the arrears are an issue in getting transfer completed, then the revenue department will consider some write downs in exchange for an upgrade plan that is implemented under what we call an obligations agreement.
"Where there is a willing seller and a willing buyer, but there is big council debt and possibly other debt like bonds, the idea is to get everyone around the table to negotiate a deal and be prepared to take a knock," he says.
"The buyer may pay less but he will then be obliged to invest a lot of money to fix the building. The seller won't get as much as he wants and the bank and council will write off some money owed."
Mendelowitz says another scenario is where the owner has been in conflict with the council due to debt on the building and the fact that it has been hijacked.
"In those cases we want owners to come forward and we'll let bygones be bygones. There is negotiation and maybe rescheduling of the debt or some write-down in exchange for a firm commitment and obligation agreement to redevelop the building."
Because of this new approach, officials are gearing up to cope with a "flood of business".
He says 130 buildings are being targeted in the better buildings programme.
"There are also buildings that look bad and are mothballed and the owners aren't doing anything about them.
"We want them to start doing something about them. These guys are up to date with rates and taxes and we want to push them to start doing work on their buildings."
Another category of building included in the programme includes sectional-title schemes that have gone bad.
Mendelowitz says officials want these bodies corporate to rehabilitate buildings in exchange for rescheduling of debt or some write-down of debt.
"It's the same plan. They must sign an obligation agreement and stick to it."
Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge
