Billions of Rands worth of Joburg developments on hold, says developers

Property developers in Johannesburg have expressed frustration over delays in getting job-creating projects off the ground, blaming the city departments and municipal entities for holding up the approval processes.

Speaking to BusinessTech, the developers, who asked to remain anonymous, said that several projects worth billions of rands - that would employ thousands of people in the city - have been on hold for two years or longer, with no progress in getting rezoning approvals from the city.

The main issue relates to water infrastructure upgrades, they said. In the past, a rezoning application would be submitted to the City of Joburg and proceed to a comment period where various municipal services - like Joburg Water - could provide feedback and make recommendations.

Typically this feedback would include requirements for developers to upgrade the municipal infrastructure as part of the project. Once rezoning approval is given, these upgrades are put into the development plan and the developers can source funding, pay the necessary fees and move ahead with the project - including infrastructure upgrades.

However, this process has drawn to a halt, the developers said, with entities like Joburg Water now insisting that infrastructure upgrades be done before any rezoning approvals are given.

This would mean developers have to spend millions of rands upgrading municipal infrastructure at their own cost, with no guarantees that their projects will even move ahead.

It also presents a significant hurdle to source funding, as many investors will not feed money into developments that have no approvals from the city - so the money that would have been used for infrastructure upgrades during development is also frozen.

'It's not us'

Joburg Water denied blocking approvals, saying that it doesn't have the authority to do so - shifting the blame to the City of Johannesburg.

The municipal water entity said that it can only object to plans and insist that required infrastructure upgrades are implemented first.

"Joburg Water is currently experiencing storage capacity issues with numerous reservoirs and towers within CoJ as well as certain capacity constraints with water and sewer reticulation. JW is unable to support certain rezoning applications that are supplied from the affected towers and reservoirs until the upgrades as identified in our master planning have been implemented," it said.

The group said that with rezoning applications done in the past, it could withhold Site Development Plan (SDP) approval until it had, at the very least, engineering drawings indicating any rezoning infrastructure upgrades required.

However, it said that the CoJ no longer circulates SDPs to municipal entities, so this process is lost.

"Joburg Water has had numerous meetings with CoJ Town Planning requesting some form of a clearance letter process prior to the approval of the rezoning application. This process is still ongoing," it said.

Pay for it yourself

When asked about the "clearance letter" process mentioned by Joburg Water, the City of Joburg said that clearances are issued within 30 days - but only once it has received confirmation or approval from municipal entities like Joburg Water.

"The city cannot grant a clearance unless infrastructure has been installed to the satisfaction of JW. We do issue the clearance when that has been confirmed by JW," it said.

Joburg Water, however, stressed that it cannot give positive comments or approval on developments unless the required upgrades are built into the plans - feedback which it says it is not receiving from CoJ.

This has led to an 'approval stalemate' - where the City of Joburg won't give any clearances or pre-approvals unless Joburg Water is satisfied, and Joburg Water cannot be satisfied until the infrastructure upgrades are complete, or the city introduces a pre-approval clearance process.

The city denied that there was a stalemate, but could not provide any solution to the hold-up. It suggested that developers either wait for Joburg Water to get the budget to do the necessary infrastructure upgrades, or do the upgrades themselves at their own cost.

Specifically, it said that infrastructure development should be negotiated between developers and entities like Joburg Water - and if developers want to speed up the process, they need to make arrangements with the water utility to address the absence of infrastructure at the developer's cost in the immediate term.

"When there is an agreement regarding that, then Development Planning will issue the clearance certificate," it said.

"Developers are encouraged to engage with Joburg Water regarding entering into a bulk infrastructure provision agreement where the developer can construct the services at their own cost with a view to speedily obtain clearances from Development Planning and refunded a portion of their costs in the form of offsets refund.

"Offsets applications are considered by Development Planning in consultation with the services departments and are approved by the Development Planning Executive Director if less than R5 million, and recommended to the Mayoral Committee if more than R5 million."

What's on hold

The CoJ said that its development planning office receives an average of 50 rezoning applications per month and concludes about 40 per month.

At this point, Municipal Owned Entities - Johannesburg Road Agency, Johannesburg Water, City Power - are in the process of commenting on or have raised objections with or there are in discussion with applicants for more information on approximately 400 rezoning projects.

Joburg Water would not specify how many rezoning applications it has at present, but said that most of the applications on hold would be developments that rely on the following water reservoirs or towers:

• Bryanston Tower;
• Forest Hill Tower;
• Linbro Park Tower;
• President Park Reservoir;
• Erand Tower and Reservoir;
• Blue Hills PRV zone 1;
• Kensington B Reservoir; and
• Lanseria Reservoir and Tower.

"Where rezoning applications are located within these reservoir and tower zones, we provide comment on the current hourly storage capacity below the allowable minimum storage capacity and, when possible, Capital Budget may be available to affect the upgrades required as well as the anticipated completion dates for the upgrades to be implemented.

"This is however subject to budget availability and prioritization," Joburg Water said.