Inner City Summit Economic Development Citichat 23 February 2007

CITICHAT 7/2007 - 23 February 2007


Economic Development and the Inner City Summit

The Economic Development Stakeholder’s Working Group (SWG) was held last week and completes the first round of SWG sessions leading to the Summit.



I don’t intend to provide details of every single session – each of the 6 sectoral SWGs meets four times, 24 in all – but I did think I should cover the first session of each SWG which is what I call the ‘dumping’ session. Thereafter we prioritise issues and move into finding solutions. The dumping session is where everyone gets the opportunity to get what’s on their mind onto the table. So this will be the last report of a first session having covered Safety, Security & Urban Management (Citichat 45/206); Arts, Culture, Heritage & Public Spaces (Citichat 46/2006);Transportation (Citichat 1/2007); Social Development (Citichat 5/2007) and Residential (Citichat 6/2007).



Prof Francois Viruly of Wits University helped to set the economic scene starting with an economic vision for the city: “A city economy that plays a role as the key economic hub on the continent , and a national economic growth-leader, by ensuring sustainable shared growth that benefits all.” Neat!



He then went on to paint the following picture:



 Currently the costs of doing business in the Inner City are high:

o Transportation costs (Bold steps are required – free public transportation?)

o Location costs are high

o Regulatory burdens and lengthy processes hinder investment.



 In terms of land economics, the highest office vacancies are usually found where there is no retail / lifestyle within urban areas.

 We must understand that there is such as thing as a commercial ladder as well as a residential ladder

 The built environment can play a critical role in Economic Development – (example of providing smaller retail space for smaller shops, smaller offices, clusters to create economies of scale.)

 There will be a negative impact on Inner City retail due to the construction of new retail malls in the former Township areas.

 With regard to office to residential conversions, the Inner City is structured as an office node, with no amenity for high density residential use. How do we create this?

 Who is going to live in the Inner City? The income level of the market we attract has very different implications in terms of economic development

 The property market delivers – it can either be done in a planned organized manner or …not. Either way it still delivers

 Gautrain has implications – it could be a positive intervention for the Inner City. It could also move people out of and away from the Inner City as it gives fast easy access to other nodes.

 Institutional investment in the Inner City has been reduced from 10% to 1%. At this level, what sort of commitment can we expect from institutions in the future?

 We need to explore the use of space in terms of economics. Can we use vacant space to start businesses? Can we use space as a commodity, as venture capital? Current Inner City vacancy rate is 20-25% and is stable. Decentralised nodes are sitting at 2% vacancy rates. Lower rentals in the Inner City are still an opportunity.

 The City is shifting from a place of ABC&D grade office space towards not offering BC&D grade.

 Concepts of sustainable development offer the Inner City an opportunity – EIAs make Greenfield development very expensive and problematic. Developers may turn towards Brownfield development opportunities.



The following are some of the comments received from Stakeholders:





Parking There is currently a lack of affordable parking in the Inner City. We need to look carefully at where the parking should be located. How can we employ more people and attract people to the Inner City if we cannot accommodate more employees with private vehicles?

Gautrain The area around Hoek Street and Park Station is a huge problem in terms of movement and grime. Gautrain will also have an impact on this area and one wonders if the Gautrain designers are aare of current problems.

Connectivity What is also important to remember is the interconnectedness between different economic sectors. How can we integrate these sectors in a positive way, rather than looking at sectors in Silos? This is especially important in terms of Policy.

Culture We are still living in a country where the makers of the laws in the City have not come to terms with the users of these laws. We must encourage those involved in Planning to become more familiar with the lifestyles, economics and cultural ways of the people who live in the City. These ways are often only visible in the rural areas but are invisible in an urban context. We seem to continually be trying to bring back people from the North and from the suburbs whilst those already living in the Inner City seemingly don’t exist. We need to be more open-hearted and open minded about whom we are making the City for. If we’re serious about creating an African Environment, let’s not fuzz it by using words like ‘Global’ and ‘International’. Stop glamorizing the City around Western Values. What is it that attracts the majority of the city users to come to the City. We must be more ready to consume indigenous African culture. We are still not bringing together the diversity of the users of our City

Diversity Re diversity – we must avoid ‘one size fits all’ thinking. The richness of South Africa and of Johannesburg lies in diversity. Each sector has complexities and a range of issues. There also may be issues for each rung of complexity. Thus we need to understand the complexities before we can deal with the issues effectively. We must also respect that some people are happy sitting on the lower rungs of the economic ladder and some aren’t.

Policy differentiation We must be careful of separating out policies into those for the first economy and those for the second economy.



Bandwith The issue of Bandwidth is also critical. Business cannot deal with or afford Telkom lines to fail – has a significantly negative impact on business. If adequate Bandwidth is not available in the City, business will move to where it is.

A plea to “do the basics” ! There are many lessons to be learned from interventions which have already taken place in the Inner City. These lessons in a way contribute towards the ‘treasury of the Inner City’. One major corporation in the inner city reported that they had run into immense problems with certain UACs on a major construction project. The UACs did not perform when the company embarked on construction after very adequate notice and constant reminders (to which there were never acknowledgements). Here we have an example of the private sector having to step in and provide for and upgrade what they City has failed to do and yet still be hampered by the inefficiency and lack of competence in the City departments. These UACs caused 30 – 40 days delay during construction, costing the company more than R650 000.00 and recourse will be sought against them.



THE CITY JUST NEEDS TO DO THE BASIC JOB FOR WHICH IT IS BEING PAID!



Planning The Planning Process is currently a disaster. This chases potential developers away. People stop development because of the costs and inefficiencies of infrastructure such as power and roads. There are also problems around building management and inspection. Developers who could be building in the Inner City are building in Midrand because of the easier conditions. An interesting study to undertake would be: “what does the inefficiency of the CofJ cost the City every month?”

Conference facilities Another international corporation stated that they were excited about the potential. They required global conferences and meetings. But these all usually take place outside the Inner City as there are no adequate facilities available.

The devil is in the detail! Work which has already been done in the Inner City is fantastic. The Big Picture is in place and is good. But the detail is failing. It’s not working. The Transportation or lack thereof is totally unacceptable. Bad attitudes need to be resolved. Problems with Metro Police are increasingly becoming an issue. We need to be able to distribute people effectively and efficiently as well as paying attention to sustainability issues and climate change.

Mechanisms and Institutions Do we have the correct mechanisms and institutions in place? Or do we have an institution delivering the wrong mechanisms? The macro vision of the City is OK but we seem to be getting stuck on what we’re doing with respect to this. Also – we must be careful of favouring tax incentives over other issues. Tax incentives are the cherry on the top, a ‘nice to have’. We need to ensure that we get all the other things (basics) right and in place so that people in the Inner City can live / work effectively. Then use the tax system as an added bonus. We must not use tax to compensate for inefficiency which is already being paid for.

Provincial capital The institutions already exist. Perhaps they need to be improvedor should improvise. Their operations seem to be missing the target. The rigidity of the mindset of those who work in the institutions around what their goals and objectives are, is not acceptable. E.g. the JDA materialized ‘their’ visions but were these the right visions? Were they open enough? JRA seems to not be able to break out of the pattern which it has operated in for a number of years.

Johannesburg is now a Provincial Capital and yet spatially does not look like one. We need Boulevards and Public Open Spaces. But no capital is being spent to give the City status. Street Traders should be viewed as creating the City, not destroying it. Don’t clog them up in markets

There is nothing ‘normative’ about the way in which we make our Cities. Rather than chasing away the users of the City, change the public realm to accommodate their activities.

Shift the focus away from trying to attract Sandtonites back into the City. Recognise that those in the City actually do have money.



The following issues were distilled and clustered from the input received:



1. The CoJ must deliver on what it’s being paid to do.

Refers to various City departments and UACs being inefficient, not delivering, not communicating, very slow turnaround times, complex expensive processes for investors and developers.

Notion that the City is actually hindering the location and expansion of business and investment in the Inner City rather than helping and facilitating.



2. Movement and congestion of people, goods and services in the Inner City inhibits Economic growth

Cluster refers to the shortage of Parking in the Inner City which only the private sector seems to be currently addressing

A lack of accessibility within the Inner City – access between places and key land uses

Congestion of certain nodes, particularly the Park Station / Hoek Street / Noord Street node as well as congestion of pavements by Street Traders

Need for efficient and effective public transportation in the Inner City



3. Need for more Bandwidth in the Inner City.

Currently this is a problem and business will move elsewhere if it cannot access this.



4. Review Institutional Arrangements

Are the current institutions and the mechanisms which they deliver correct or should the status quo be reviewed and changed so that it becomes more focused and efficient?

The Big Picture in terms of Inner City regeneration which has already been put in place is good and works. Attention needs to be paid to the detail in between which is not working.



5. Make available existing research and information

Currently information is not available to stakeholders – institutional barrier to investment



6. Embrace diversity and complexity

Diversity and complexity are a unique advantage for the Inner City and must be embraced and enhanced



7. Recognise that the built environment can facilitate Economic Development!

Start with a quality, enabling built environment.



So, another interesting session! The second round of SWG workshops (which have already begun) will start to focus on those five or six critical issues that will really make a difference and start to seek solutions. Cheers, neil