Stringent black economic empowerment (BEE) tender conditions - which will ensure that the Western Cape government and not a bidder decides who the BEE partner will be for the Somerset Hospital site - are raising the hackles of potential bidders. They say the strict rules set by the province for acquisition of the prime Cape Town waterfront property are open to abuse.
The tender allows for bidding for leasehold ownership of two-thirds of the 8,5 ha site, while a broad-based Western Cape BEE group will bid for the rest. The province will decide who will partner whom. The lead developers will still be scored on their own BEE component, which means they could end up with only 50% of the property for which they would have paid full price. Successful bidders may procure services and sub-contracts only from a list of BEE companies specified by the province.
Public works MEC Marius Fransman says the conditions aim to spread property development and ownership as broadly as possible. "Ownership patterns are skewed to the previously advantaged and foreigners," he says. "We also find developers and contractors tend to limit their BEE partnerships and subcontracts to a few enriched individuals they know, who are often fronts for them. The provincial cabinet decided in February that we must put in place a fair and transparent process that will truly broaden the opportunities."
The Somerset Hospital site can be converted into a multibillion-rand, mixed-use development and is regarded as the "jewel" in the province's real estate crown.
A past attempt to dispose of the land by former transport & public works MEC Mcebisi Skwatsha was derailed by premier Ebrahim Rasool (Cover Story January 19). Therefore, the details of how the site is to be disposed of and who, if anyone, stands to benefit, are seen as broadly reflecting the intra-party machinations of the ANC in the province.
Potential bidders, who did not want to be named, say a "forced marriage" between a lead developer and a BEE partner will not necessarily lead to the kind of innovation in prime property ownership the province wants.
Experience, good relationships and communication are key to successful developments, particularly in long-term ownership of a property and a truly broad-based group is unlikely to have any experience and will achieve little more than a share of profits, instead of the intended property ownership.
"Lack of relationships will also limit skills transfer," says a developer.
Fransman maintains that "skills transfer is very dear to my heart".
Despite being clear since February on what it wants to achieve, the provincial government appears to have consulted little with its officials on how best to get there. DA spokesman on corruption Robin Carlisle says he questioned the head of treasury, Dr J C Stegman, and a Mr Pillay during discussions of the provincial treasury's annual report. "They said the first they knew of the tender for Somerset Hospital was when it was advertised in the press. They said they had conveyed their problems with the tender to the premier's office."
