Table of contents

1. Presentation to Portfolio Committee on Human Settlementson progress on the Budget Review Recommendations19 February 2014

2. Table of contents • Overview • Accreditation of Municipalities • Human Settlements Policies • AG Management Report • Vacancy rate • Disaster Funds • Officer Accommodation • Mining Towns • Rural Households Infrastructure Grant • Fiscal and Finance Commission

3. Table of contents • Fiscal and Finance Commission • Mortgage Default Insurance Process • Extension of USDG to Secondary Cities and district Municipalities • Housing Development Agency • Purchase of land by provinces • Appointment of engineers and town planners • Closure of Servcon and Thubelisha • Utilization of the USDG • Monitoring and Evaluation Unit

4. Overview Progress is reported on the recommendations made by the Portfolio Committee on 16 October 2013 in respect of their Budgetary and Recommendation Report

5. Accreditation of Municipalities • 8 District/Local Municipalities accredited at level 1. • 8 Metros and 12 District/Local Municipalities accredited at level 2. • Implementation protocols concluded with 24 of the 28 municipalities accredited.

6. Accreditation of Municipalities cont. • The Department has appointed a panel of experts who assisted the provinces the past two years in the evaluation of the municipalities prior to accreditation and to facilitate compliance with the legal requirements and the process leading up to official accreditation

7. Human Settlements Policies • It was a policy requirement that the construction of the houses may not proceed before the properties are transferred to the beneficiary and registered in the Deeds Office; • This policy principle was abandoned in 2007 through a decision of MINMEC in view of the delays the rule has caused in housing delivery; • An alternative strategy will be considered during the 2014/15 financial year to resolve the matter.

8. Human Settlements Policies cont. • The Ministerial National Norms and Standards have been adjusted with effect from 1 April 2014 to comply with the National Building Regulations in respect of energy efficient buildings • The standards apply nationally and have replaced the SCCCA measures with the exception of the plastering and painting of external walls which remains a requirement in the SCCCA to prevent moisture penetration in cold and wet winter months.

9. Human Settlements Policies cont. • In regard to backyard dwellers the Department and SALGA cooperated their efforts to finalise possible interventions that might be considered; • SALGA is now finalising its report for submission to MINMEC while the Department is finalising policy proposals to be considered by MINMEC.

10. AG Management Report • An action plan was developed immediately after the audit. • The action plan is based on the management letter from the Office of the AG. • It was also forwarded to the office of the AG for their possible comment. • The action plan is updated monthly by the responsible managers.

11. AG Management Report cont. • Inputs are collated by the office of the CFO. • Internal Auditors verify progress on a monthly basis and report to executive management. • The appointment of consultants is approved by the accounting officer. • Units have to do a gap analysis before approval indicating reason for such appointments of consultants. • Appointment of consultants now gets reported on the quarterly performance report.

12. Vacancy rate • Recruitment drive underway. • The vacancy rate stands at 19%. • Factors that delay the filling of vacancies: • Posts had to be re-advertized due to fact that no suitable candidates could be found. • Problem with non-disclosure of criminal records on applications disqualifying selected candidates. • Qualification verification by South African Qualifications Authority (SAQA) taking long (improvement has been made after meeting between Department and SAQA) but delays are still experienced.

13. Disaster Funds • The Department received R44m additional during the 2014 Adjustment Budget for disaster relief. • The total allocation for disaster relief amounted to R343.4 million of which R76.2 million has been spent at 31 January 2014. • Eastern Cape spent R76.1 million while Gauteng spent R60 000.00

14. Office Accommodation • The landlord of the building has commenced with refurbishments. • Occupancy is expected to be by the end of June 2014.

15. Mining Towns Progress on Mining Towns as at 31 January 2014

25. Rural Households Infrastructure Grant • The Rural Household Infrastructure Grant is implemented in 23 municipalities. • Of the 23 municipalities 19 submitted business plans for approval before the Department could transfer funds.

26. Finance and Fiscal Commission FINDINGS OF THE STUDY CONDUCTED BY THE FFC ON HOUSING FINANCE OPTIONS • The Financial and Fiscal Commission conducted a research project on Housing Finance Options. • The Commission used the expertise of Housing Finance in Africa (a division of FinMark Trust) to conduct such research • The results of the study revealed that there is discrepancy between the growth of budget allocation versus units delivered. • As a result of this, FFC made a number of recommendations including the following: • Accreditation of municipalities to administer housing programme, in cases where municipal capacity exists. • Government should consider the funding implications of any further policy changes. • Considerations should be given to linking new housing subsidies with the municipal infrastructure grant • Government should conduct a review of the efficacy of current housing finance arrangements in meeting housing needs within the context of creating sustainable and more compact human settlements

27. Mortgage Disclosure Insurance Process • Banks and Mortgage Disclosure Insurance Company (MDIC) signed a contractual agreement. • The borrower applies for a home loan at any bank. • Once the home loan has been approved it is automatically insured by MDIC if it falls into the Affordable Housing market. • The banks sends an electronic file daily to MDIC with all pending registration home loans. The insurance only comes in effect once the premium is paid on registration of the home loan. • When the home loan is registered, the bank sends MDIC a file with the payments as well as all the application information that MDIC need to run the business (monthly).

28. Mortgage Disclosure Insurance Process Cont. • On a monthly basis, the bank sends an electronic file summarising the payment profile of each insured home loan account to track the performance of the Bank as well as forecast the expected insurance claims: • The monthly file gives MDIC an indication of the collection protocol with Banks for accounts in arrears • All this info is verified during the audit process • If the borrower cannot pay and wishes for their home to be sold, then the house is sold (at auction or other means). • MDI is notified by the bank of the intention of sale and the expected selling price. Once the house is sold, the Bank will submit a claim if there is a shortfall. MDIC will verify the claim using external as well as internal sources and pay out the claim.

29. Extension of USDG to Secondary Cities and District municipalities • Alternative to the top slicing of the HSDG and USDG to focus on bucket eradication over and above the agreement signed by Trioka on issues of bulk infrastructure. • The 2014/15 HSDG allocation includes funds for mining towns. • Engaged National Treasury (NT) on possibilities of extending USDG to mining towns, secondary cities and District Municipalities. • Consensus was reached with NT to focus on secondary cities and mining towns during the next MTEF. • NDHS planned to draft Business case to this effect and submit a formal proposal to NT.

30. Housing Development Agency • The HDA is supporting provinces and municipalities with land identification, assessment and acquisition. • The HDA is proactively doing land identification but not land audits.

32. Purchase of land by provinces

33. Appointment of engineers and town planners • The Department has been using Cuban Technical Experts for a number of years in implementing human settlements programmes. • The Department also intends to appoint about 48 Cuban engineers and hydrologists that will be deployed to sanitation projects at both provincial and national level. • The Minister visited  Cuba in November 2013 to conclude an Agreement and the Department will be interviewing the Cuban officials during March 2014 to ensure rapid deployment. • These Cuban engineers will be used in various sanitation projects that include bucket eradication, management of waste water treatment plants, designing alternative rural technology to address sanitation challenges.

34. Closure of Servcon • Servcon concluded a sale agreement on 26 February 2013 to sell 5 properties to the HDA for R27.68 million. • To date the transfer of 3 properties (erf 2663 & 1826 in Queenstown, Portion 237 of 78 Farm Hartebeespoort No. 328 JR and erf 10509 in Philippi) have been concluded. • The outstanding tax liability of Servcon has been reduced from R13.4 million as at 1 April 2013 to R1.7 million as at 1 September 2013.

35. Closure of Servcon cont. • The transfer of the remaining 2 properties (farm EloffsPark No. 772 and Rem Farm 755/2 Machiel Heyns) is in progress and is set to be completed by 31 March 2014. • The conclusion of the transfer of any of the two remaining properties will enable the Servcon to settle the tax liability.

36. Closure of Servcon cont. • The Servcon will subsequently be able to make an application to the Master of the High Court for the appointment of a liquidator to wind-up the company through a voluntary liquidation process.

37. Closure of Thubelisha • Thubelisha Homes (Thubelisha) was placed in liquidation on 29 March 2012. • The liquidator is Admiral Trust. • The issues of staff and provincial project account reconciliations have been concluded. • Thubelisha is in the process of transferring the stands that are registered in the name of the company.

38. Closure of Thubelisha cont. • The transfers are being held up due to issues relating to un-tracable beneficiaries, restrictions on transfers from interdicts and moratoriums, as well as challenges with obtaining rates clearance certificates. • The final closure of Thubelisha is dependent on the finalisation of the transfer of the stands.

39. Utilization of the USDG • USDG is a schedule 4 grant supplementing metros capital budget. • In terms of DoRA, metros are allowed to utilise the USDG allocations on any of their infrastructure projects for the development of Human Settlements. • Performance Matrix has been established for monitoring and reporting of the USDG.

40. Monitoring and Evaluation Unit • Project Management Unit established in April 2012. • All vacant posts advertised and filled where suitable candidates were identified. • Some posts had to be re-advertised as no suitable applications were received. • Additional capacity is being contracted through Professional Resource Teams (PRTs). • Tender proposals in this regard have been received and the evaluation process of proposals received is currently being conducted. • The latter process is taking time due to the detailed nature and complexity of the expertise required.

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