National Department of Public Works Immovable Asset Management

1. National Department of Public WorksImmovable Asset Management Portfolio Committee on Public Works 31 August 2005

2. CONTENTS • The status quo • Improvement initiatives: • GIAMA • Introduction of user charges • Asset register • Proactive disposal programme • Options analysis • Service level agreements • Feedback on specific properties

3. STATUS QUO • Lack of a regulatory framework for immovable asset management • Lack of incentives for departments to utilise immovable assets efficiently • Inadequate budgets for maintenance

4. STATUS QUO ….cont • Quality of information on national asset register needs to be improved • Provincial immovable asset registers need to be improved • Planning weaknesses • Properties left vacant and deteriorating for years • Inadequate analysis before new acquisitions are made • Under-utilisation of existing assets

5. GIAMA • Provides a regulatory framework for national and provincial government for managing immovable assets • Introduces uniform, efficient, effective and accountable management of immovable assets • Each organ of State (users and custodians) will be required to produce an annual immovable asset management plan (AMP) that will form part of the annual strategic planning and budgeting process of Government

6. AMPs will cover: • Description of assets required based on service delivery strategies • Plans for new acquisitions • Consideration of non-asset solutions • Consideration of use of existing assets rather than acquiring new assets • Description of the condition of existing assets • Plans for maintaining assets • Plans for disposing of assets no longer required for service delivery • Production of AMPs should result in improved planning for, and management of, immovable assets

7. Due to (a) complexity of legislation governing Local Government and (b) varying levels of autonomy of Public Entities, Draft legislation currently under consideration will be applicable to National and Provincial Government only. • Following approval by Cabinet during August 2005, draft Bill has now been submitted to State Law Advisor for certification • Bill to be submitted to Parliament during September 2005 12

8. INTRODUCTION OF USER CHARGES • White Paper on Public Works stated that budgets related to immovable assets would be devolved and user charges introduced • Proposals for devolution of budgets and introduction of user charges from 1 April 2006 have been drawn up, currently awaiting final Treasury approval • Responsibility for paying municipal property rates for provincial properties being devolved to provinces from 1 April 2006

9. User charges: • Involves the devolution of budgets to departments, but functions will generally remain with DPW • Departments will pay a rental per square metre to DPW for state-owned assets which they occupy • DPW will use the rental revenue to pay property rates and for maintenance (DPW becomes a landlord for state-owned assets) • Will result in transparency of budgets (all costs associated with a service on that department’s budget) • Will create incentives for departments to utilise their assets more efficiently • Proposed that function of paying municipal service charges (water and electricity) be devolved, as this does not require scarce expertise • Proposals include devolution of both budget and function to SAPS for functional assets, subject to SAPS meeting certain conditions

10. ASSET REGISTER • DPW has immovable asset register in place for national government accommodation-related immovable assets • Provinces are accountable for asset registers for provincial assets • No matters of emphasis on national immovable asset register in 2004-2005 audit report • DPW has agreed with Accountant General on minimum information contents of an acceptable immovable asset register • Currently implementing three-year plan to verify existing minimum information and collect missing minimum information for all assets on the national register

11. PROACTIVE DISPOSAL PROGRAMME • Implementing plan to proactively identify and dispose of immovable assets no longer required for service delivery • Disposal processes • Identify possibly redundant assets (regional offices, head office, departments, public) • Carefully check utilisation and analyse potential for reallocation for other service delivery purposes, including land reform • Provincial State Land Disposal Committee • Consent of Minister of Land Affairs • Approval by Minister of Public Works • Valuation • Disposal through open tender, in terms of Supply Chain Framework and PPPFA, or gratis transfer to province or municipality or other body for land reform purposes

12. Progress to date: • Ministerial approvals obtained for initial group of 177 properties, which are now in stage 7 and are planned to be disposed of by end March 2006 • First group largely consists of residential stands • Submissions for ministerial approvals currently being prepared for second group of 114 properties (i.e. in stage 5), including 24 foreign properties identified by the Department of Foreign Affairs for disposal and including several large local properties • Third group of 2000 properties currently in stage 2 • Estimated revenue from first group of properties = R12 m; second group = R350 m • Department is continuing to endeavour to identify and analyse other possibly redundant and underutilised properties for disposal / reallocation

13. OPTIONS ANALYSIS • No systematic and objective methodology for determining optimal acquisition solution, and optimal method of procurement (eg lease, PPP, purchase) • DPW and National Treasury recently jointly developed a generic options analysis methodology • Options analysis will be carried out for all large acquisitions in future

14. SERVICE LEVEL AGREEMENTS (SLA) • Generic SLA developed in 2004 • To date, only one client department has signed the SLA • SLA currently being revised to reflect GIAMA and introduction of user charges • DPW will seek Treasury approval of revised SLA and Treasury Regulation requiring departments to sign the revised SLA with DPW

15. FEEDBACK ON SPECIFIC PROPERTIES • Jozini Military Base: • SANDF closed down the Jozini military base in 2003 • The base was handed over to SAPS to establish a police station • SAPS handed over some of the properties to DPW in 2004 • Some of the residential properties handed over to DPW were illegally occupied • The municipality has indicated interest in taking over the illegally occupied properties, and discussions are under way in this regard • The municipality has also indicated interest in taking over other parts of the base, including the sports facilities • The possible transfer of the properties to the municipality is complicated by a land claim which has been lodged • DPW regional office is in discussion with the provincial Land Claims Commissioner to try to resolve this issue • In the meantime, DPW regional office is negotiating with the illegal occupants for them to enter into lease agreements

16. Port St John Military Base: • SANDF largely stopped using the base before 1997, apart from a single commando unit, which will be vacating the base by end August 2005 • DWAF is occupying a small portion of the property • A school is leasing part of the property from DPW • Most of the residential properties and some of the offices are illegally occupied • There is a land claim on the property which has recently been resolved in favour of the community • The Land Claims Commissioner is currently having the property valued and then it will be transferred to the community • The Municipality has built 500 houses for the illegal occupants to be moved to, and this is planned once electricity has been installed at the houses • The community is planning to develop the property together with the municipality once the transfer takes place