JDA Citichat 23 February 2001

CITICHAT 7/2001 - 23 February 2001.


Establishment of the JDA

Two of the features of US urban 'redevelopment' are Development Agencies/ Corporations and the financial mechanisms that they often employ known as TIFs (Tax Increment Financing). More about the latter next week. Towards the end of last year a small group of persons (2 from Johannesburg and one each from Cape Town and Pretoria) were funded by USAID to attend the International Downtown Association (IDA) Annual Conference in Los Angeles. Following the conference, the Johannesburg Inner City Manager, Graeme Reid and I went on a whistestop visit to three of these agencies in California, at Long Beach, San Diego and San Jose.

We found that all three operated on similar principles and that all three had made significant impacts on their cities. Basically, the Agencies/Corporations are non-profit companies usually established by the local City Council (in terms of State legislation) with Boards drawn from both private and public sectors. The Boards set policy, hire their own staff and establish strategic plans for the areas they are focusing on and are responsible for the strategic planning, urban design, negotiations with developers, acquisition of properties, public improvements, financing and relocation of affected residents and businesses. Generally this will all be done within the parameters of a City Redevelopment Plan so that the agency really becomes a public/private delivery vehicle for the Council bringing a business focus that Local Authorities can seldom provide.

The San Diego Centre City Development Corporation suggests the following steps in redefining the centre city:

1. Start with an outstanding redevelopment agency

2. Add strong, committed leadership to achieve successful public/private partnerships

3. Create neighbourhoods that change the face of downtown

4. Strike a balance with business, residential, entertainment and cultural projects

5. Make a positive financial impact on the economy, and

6. Be visionary and look 10, 20 or more years down the road.

The San Diego Development Corporation basically controlled the redevelopment of 325 acres of what they described to us as 'blight' spread over four precincts. In the process they attracted almost $2 billion from the private sector leveraged from $200 million from the public sector. Not a bad ratio! And what they have achieved over the past twenty years to date is quite spectacular. The Centre City Redevelopment project calls for the public and private sectors to continue to work together through this vehicle over 'the next several decades' to develop a further 1,4 million square metres of Class A office space, 150 000 square metres of new service, entertainment and retail space, 5,600 new hotel rooms, 300 000 square metres of rehabilitated space and 22, 250 new residential units.

The Redevelopment Agency of the City of Long Beach has an equally impressive track record and vision for the future. They have set the following goals for their downtown;

1. Make downtown a distinct and unique place

2. Capitalise on the locational strength of Downtown Long Beach, primarily regarding its maritime and coastal character.

3. Encourage diversity and choice

4. Make downtown a vital place during daytime, evenings and weekends

5. Promote development downtown which provides economic benefits to the entire community

6. Reinforce the economic position of downtown Long Beach within the Los Angeles region

7. Create a flexible approach to downtown development which will be responsive to changing market conditions

8. Promote opportunities for cultural events and facilities within downtown

9. Expand and integrate the residential presence within downtown and

10. Improve transportation and signage systems to create a sense of orientation and ease of access to and from downtown.

What is encouraging about the approaches, goals and visions of the development agencies of all of the three cities visited (San Jose is very similar to the other two not only in approach but in results achieved) is that they are so close to the outcome of the work we had been doing with the City here particularly over the past two years.

So the GOOD NEWS is that our new Metropolitan Council has recently approved the establishment of a similar development corporation to be known as the Johannesburg Development Agency or JDA, modeled on much of what we saw and experienced. The purpose of the JDA is to:

• Promote economic development for the City (in the form of jobs and wealth creation) as its prime objective

• Use City assets as inputs (especially under-utilised assets, land, property)

• Use City leverage as inputs (especially powers and finance)

• Create a formal link to the private sector to facilitate the establishment of Public-Private partnerships

• Respond to private sector preferences that necessitate the creation of a separate entity for sustained and/or increased partnership and involvement

The JDA will be a Proprietary Limited Company (Pty Ltd). The shareholder structure allows for participation from government, the private sector and other organisations. The founding shareholders are the Metropolitan Council and the Johannesburg Inner City Business Coalition (JICBC). Key performance indicators are being developed to ensure accountability to the Founding Shareholders and the Metro Council in particular.

The JDA's project development role will include:

• Project packaging, facilitation, management and leadership, including formation of public and/or private partnerships for large scale projects

• Establishing Special Purpose Vehicles (SPVs) and/or associated companies to carry out specific projects, limit risk and meet project financiers requirements

• Acting as developer on catalyst projects, to be either sold on or held within the JDA's portfolio to provide income streams

• Marketing, promotion and communication for projects, sectors and locales

• Co-ordination of public, private and civil society elements

• Provision of venture capital and development finance, and taking return on investment commensurate with risk

• Acting as Agency on behalf of the Metro Council and other stakeholders to provide transactional and asset management services.

The initial focus of the JDA will be a number of the major projects that we reviewed at the end of last year including the Constitutional Hill Precinct, the Greater Newtown Precinct including the Metro Mall project now under construction, the Mary Fitzgerald Square redevelopment (design proposals currently being assessed) and a variety of regeneration projects.

As with the American cities, we must have the correct institutional vehicles in place if we are to reach our macro objective of turning the city into the premier African city and the JDA will play a major role in achieving this.