Better Buildings Programme; 7 Buildings Citichat 10 August 2001

CITICHAT 31/2001 10 August 2001


The Better Buildings Programme and the Seven Buildings Project

One of strategies for the urban revitalisation of the Johannesburg Inner City is the upgrading of those residential buildings that have been allowed to deteriorate and the increased provision of new residential accommodation. New residential accommodation is planned to encompass all income levels, low, middle and high, though the latter will take some time to achieve. The plan has made slow but generally steady progress with the completion last year of a number of projects, new, conversions and refurbishments which I have previously reported on. In addition, the MetroMarket project, currently under construction, makes provision for some 800 residential units whilst the development of the Albert Street Housing Project by the Johannesburg Housing Company (JHC) has recently seen construction commence.

The Better Buildings Programme is also steadily addressing the refurbishment of buildings that have been allowed to deteriorate and demolitions of buildings beyond rehabilitation has commenced. Work is also currently under way in revising city bylaws to prevent the uncontrolled conversion of empty office blocks into potential slums rather than appropriate housing. Human nature is such that it often seeks to exploit even the most critical situations and housing is no exception. On the one hand certain ‘slumlords’ seek to maximise their return by upgrading and converting empty commercial premises by providing below standard accommodation as cheaply as possible and cramming as many persons into the space at as high a rental as possible. I remember visiting a three bedroomed house in Bertrams six or seven years ago which accommodated 75 people. At R200-00 each the landlord was earning R15 000-00 per month and was repaying some one or two thousand per month to the bondholder. Oh, the house had no water, electricity or sewage disposal. On the other end of the scale we evidently have groups of people taking over inner-city buildings, driving landlords and law-abiding tenants out and refusing to hand over rentals to the owners. Whilst the report of this latter ‘initiative’ hit our press a month or so ago, it ‘coincidentally’ made front page news last week in ‘The Straits Times’ when the Executive Mayor and a group of provincial and city officials were in Singapore trying to raise funds for private-public partnerships. I’m too naïve to believe blindly in conspiracy theories but this one smells, even to me!

But one of the saddest stories regarding residential regeneration and deliberate malpractice in the city revolves around the Seven Buildings project. I was first made aware of the project way back in 1992, although the saga had started some time previously, when the tenants of seven inner city residential buildings in a poor state of repair, owned by a single owner, started negotiations to purchase the properties. The problem was that finance could not be found for the purchase, the financial institutions were keeping as far away as possible from what they considered a major risk. Eventually, in late 1996, a company that had been established specifically to provide bridging finance to inner city tenants who had structured themselves adequately to purchase their properties, agreed to provide the necessary bridging loan. By ‘structured themselves adequately’ I mean that with the loan company’s facilitation, tenant groups could obtain subsidies and long term finance. The R4million loan was made subject to it being repaid over two years, interest being serviced on a monthly basis – a good repayment profile would then enable the company to demonstrate that the loan was not as risky as the financial institutions believed and would allow for its substituting with long term finance. The 7 Buildings Company would have to also demonstrate that it was committed to properly managing its affairs by appointing a project manager, a firm of accountants, a rental collection agency and an account opened in the name of the 7 Buildings project.

At first the repayments were satisfactory particularly in relation to a couple of the buildings. However, ongoing dissension between tenant committees and tenants, unprocedural changes to the Board, alleged malpractice including the opening of an unauthorised bank account, disunity between the buildings, the dispensing of the services of the individuals and agencies who were seeing to the proper management of the affairs of the company combined to lead to the project reneging on its agreement. Besides not repaying the capital, it failed to maintain interest payments on the loan and built up an arrears on rates and services due to the Council of nearly R2 million. After numerous attempts by the company to recover its funds it has been forced to apply for the liquidation of the 7 Buildings Company. The irresponsible and destructive behaviour displayed by the so-called leadership of the 7 Buildings project severely negatively impacts on all our efforts to stabilise and revitalise the inner city and makes a mockery of trying to redress the injustices of the past. Whilst the Executive Mayor is quite correct in stating that it is preposterous to compare isolated cases of residential thuggery and malpractice to the Zimbabwean situation, the city needs to be seen to be aggressively dealing with anything that might frighten investors away from the city.

To end on a positive note, it is greatly encouraging to see for the first time, certainly in our recent history, that inner city residential developers and agents have established a body to represent their interests in the inner city. This bodes well not only for the ownership aspect of residential accommodation but also for the interests of users.

P.S. We’re ten days away from S.A. Cities 2001 which presents an opportunity to hear and discuss the best in world urban practice with hands-on practitioners. Don’t miss it!