Workshop on Land Identification, Release, Packaging and Transfer: Legal and Regulatory framework

1. Welcome… Workshop on Land Identification, Release, Packaging and Transfer:Legal and Regulatory framework 28 August 2013 1

2. Legal and Regulatory Framework Introduction and Constitutional Context of Local Government • Local Government is a sphere of government and consists of municipalities; • National and Provincial government may not impede on local government’s right to exercise its powers or perform its functions. • Actions of municipality must be consistent with the legal environment of the Constitution and the legislation flowing from it. • Principle of legality extends beyond what a municipality does, to include what it is, how it structures itself, how it operates, manages its finances and funds itself.

3. Legal and Regulatory Framework General provisions: Constitution of the Republic of South Africa, 1996: Section156: • LG has the executive authority in respect of and has the right to administer local government matters listed on Part B of Schedules 4 and 5 and any other matter assigned by National and Provincial Government. • Housing not a Schedule 4 or 5 B function, however obligations in municipalities in terms of the Housing Act and Housing Code as well as jurisprudence, particularly relating to evictions and emergency housing

4. Legal and Regulatory Framework Housing Act, 1997 • 9. ( 1 ) Every municipality must (a) ensure that— • (i) the inhabitants of its area of jurisdiction have access to adequate housing on a progressive basis; • (iii) services in respect of water, sanitation, electricity. roads, storm water drainage and transport are provided in a manner which is economical and efficient: • (b) set housing delivery goals in respect of its area of jurisdiction; • (c) identify and designate land for housing development; • (d) create and maintain a public environment conducive to housing development • (f) initiate, plan. co-ordinate, facilitate. promote and enable appropriate housing development in its area of jurisdiction: • (g) provide bulk engineering services. and revenue generating services in so far as such services are not provided by specialist utility suppliers: and • (h) plan and manage land use and development.

5. Legal and Regulatory Framework Local Government: Municipal Structures Act, 1998 • Section 19: Municipality must annually review the needs of the community and prioritise those needs • Section 84 : Division of powers between district and local, but does not address housing function

6. Legal and Regulatory Framework Local Government: Municipal Systems Act, 2000 • Sect 4(2)(f) municipalities must contribute with other organs of state to the progressive realisation of right to amongst others housing • Section 25 municipalities must adopt an integrated development plan and align resources and budget to the plan • Section 41 annual review of IDP • Section 76 provides for internal and external service delivery mechanisms • Section 78 provides for the criteria for determining appropriate mechanism, which includes assessment process • Section 80 addressing SDA in case of external service provider • Section 83 provides that service provider needs to be identified through a competitive bidding process • Act also provides for elaborate governance structures for municipal entities

7. Legal and Regulatory Framework Local Government: Municipal Systems Act, 2000 (Cont.) • Local Government: Municipal Planning and Performance Management Regulations, 2001 contains detail to be included in IDP, which includes: • development initiatives, • 3 year budget projection, • financial resources available • the spatial development framework. this must indicate where private and public land development and infrastructure investment must take place. • Project must thus be identified and included in the IDP

8. Legal and Regulatory Framework Other legislative requirements: • Geotechnical report – to determine suitability of land for housing development prior to acquisition • Environmental study - to determine suitability of land for housing development prior to acquisition and to determine whether housing development will be allowed on the specific land • Township establishment process also needs to be done post acquisition

9. Legal and Regulatory Framework Acquisition: Local Government: Municipal Finance Management Act, 2003 (MFMA) • Section 15 MFMA: may only incur expenditure in terms of an approved budget • Section 16: annual budget, can appropriate money for capital expenditure for a period not exceeding 3 years, but separate appropriation must be made for each year. Unspent funds lapse unless so provided for (sect 30). In multiyear appropriations fund may be shifted, but increase may not exceed 20% of appropriation • Section 17: full cost of capital project to be considered and project approved by council

10. Legal and Regulatory Framework Local Government: Municipal Finance Management Act, 2003 (MFMA) (Cont.) • Section 110 provides all goods and services to be procured through SCM process. Supply Chain Management Regulations, 2005 • Regulation 36 provide for deviations. • Accounting officer to apply this in case of procuring land. • Buy in accordance with process above or expropriate

11. Legal and Regulatory Framework Expropriation Act, 1975 • Expropriate where no agreement of sale is reached • It is done by municipality in accordance with strictly prescribed procedure • The amount to be paid includes the amount which the property would have realized if sold on the date of notice in the open market by a willing seller to a willing buyer and an amount to make good any actual financial loss caused by the expropriation

12. Legal and Regulatory Framework Expropriation Act, 1975 (Cont.) In addition, the following amount: • An amount equal to- • (a) ten per cent of such total amount, if it does not exceed R100 000; plus • (b) five per cent of the amount by which it exceeds R100 000, if it does not exceed R500 000; plus • (c) three per cent of the amount by which it exceeds R500 000, if it does not exceed R1 000 000; plus • (d) one per cent (but not amounting to more than R10 000) of the amount by which it exceeds R1 000 000. • Interest payable as indicated in the Act. • If amount not agreed upon, determined by the High Court

13. Legal and Regulatory Framework Alienation / release MFMA: Section 14: • Municipality may not dispose of ownership of capital asset needed to provide the minimum level of basic services • May only transfer capital asset after municipal council had resolved the asset is not thus needed and has considered the fair market value of asset and economic and community value. • Any such transfer must be fair, equitable, transparent, competitive and consistent with the SCM Policy of the municipality.

14. Legal and Regulatory Framework MFMA (Cont.) Section 120: PPPs • Require feasibility study to determine if value for money, affordable, will transfer risk to third party. • Feasibility study include the benefits for municipality, the exact role the private party will play, public participation, soliciting the views of national and provincial government. PPP partner to be identified through SCM process and if a multi-year project section 33 to be complied with. • If PPP involves a municipal service, section 76-78 procedure to be followed. • Municipal Public Private Partnership Regulations, 2005 contain the detailed requirements

15. Legal and Regulatory Framework Municipal Asset Transfer Regulations, 2008 • Not applicable to PPPs and release to beneficiaries of housing projects • Applies where land is transferred to a third party, even for the purpose of institutional housing. • In the latter instance, a public participation process to be followed, a number of factors need to be considered, value to be determined and written transfer agreement must be entered into after a competitive bidding process

16. Legal and Regulatory Framework Thank you