What is it: the upcoming lease of well-located public land
In February 2018 the City of Cape Town put out an advert to lease a portion of the Green Point Common which sits on the corner of Beach Road and Helen Suzman Boulevard. The lease includes two portions of land the northern portion being a sports club and measuring 1703m² as portion A and the second being a vacant land piece of land and three under utilized tennis courts 4,123m² as portion B (see picture below).
Ndifuna Ukwazi has made a comment on the lease arguing that it offers an opportunity to undue spatial apartheid in one of Cape Town’s most expensive and exclusive suburbs which is rich in public sector investment (especially in terms of public open space) and close to economic nodes of Sea Point, V&A Waterfront and the CBD.
The thrust of the comment is that there is a dire need for City-owned land to be used
for transformation and redress, to advance spatial justice and basic rights through service delivery, in particular affordable housing. The fact that the way the best public land is used prioritised does not prioritise this is unacceptable reflect is unacceptable, especially in the context of a profound housing and segregation crisis.
What is the big idea?
The idea is for a mixed-use (contains residential and retail components), mixed-income development (contains people who access the development through the market or through government programs such as the Social Rental Housing Programme.
Of course quality public open space is essential for thriving and just cities. But is housing and public open space mutually exclusive? Of course not, this is proved by the very fact the Green Point Common and the Sea Point Promenade are currently surrounded by private apartments and remain exceptional public open space. In fact good design which integrates the two appropriately and includes a mixture of uses produces vibrant and cosmopolitan urban areas – where humans love to live and thrive.
This is the principle which informs this design, that the Common must be retained and protected as truly accessible public open space supported by a ring of mixed income development on its edges.
Publicly owned housing should be seen as public good worthy of its fair share of space on the Common. This is especially pressing when one analyses the current make-up of Green Point Common. We must ask ourselves which land-uses get to claim their share of the nearly 70 hectare pie that makes up the Green Point Common and do they reflect the values of the Constitution of the Republic of South Africa which establishes the right to housing and a duty on the state to propose equitable access to land all guided by the spirit of reconciliation and redress.
Not only are areas like Greenpoint safe and close to jobs and social amenities but the high demand for residential and commercial space provides the City with a unique opportunity to radically reduce the cost of providing affordable housing. This is achieved through on-site cross subsidisation where government housing subsidies are augmented by income from the sale or rental of market apartments and commercial space.
This income could be through sales to reduce capital costs associated with constructing houses or through rent to reduce operational expenses.
The development potential of the site
Following this comment a high level massing exercise was followed for the site, based on the principle of a social rental housing led, mixed-use mixed income development. The design includes three 2-9 storey blocks ranging between 2 – 9 storeys with a “mixed-use heart”. This is a similar scale to the buildings along Helen Suzman Boulevard and seen as an extension of the current grain of the area but with greater density.
Tall buildings to the east of the site relating to the scale of the park and creating an active façade facing it. Forms are to be fragmented to allow for pedestrian permeability and provide for courtyards or fronting courts.
The massing exercise establishes a yield of 323 social housing apartments, 108 market rate apartments and 643m² GLA retail spread across three blocks. The social housing apartments are assumed at 40m² two bedroom units and the market rate units as 59m² two bedroom units. A super basement provides approximately 181 parking bays (5,444 m² single basement area).
What does this mean
If the above assumption were constructed it would mean that some 969 low-moderate income earning people would be able to call Green Point home and live in safe dignified conditions close to work opportunities. This would have number of very positive impacts that deserve a separate post to flesh out but here is one.
According to the City of Cape Town’s Transport Development Index low-income households in Cape Town spend on average 45% of their income on unreliable and unsafe public transport. This amount increases when you consider that time spent in long commute is time spent not working meaning smaller wages (and of course less time with family).
If we assume that half of the people living in the social housing earn R5,000 each (the rest being dependents) and that their transport costs been slashed by from R2,225 p/m to R450 p/m owing to their central location ( this is supported by the fact people can get from Green Point to Camps Bay or to Cape Town CBD in a quick R7 taxi) then the savings would be as follows:
- R859,000 per month.
- R10,309,200 per annum.
- R103,092,000 over ten years.
What is Social Housing and who can benefit from it?
Social Housing is a National Housing Programme in terms of the Housing Act (1997) and is governed by the Social Housing Act and its Regulations. It refers to high-quality and well-located subsidised rental housing managed by viable, sustainable, independent institutions called Social Housing Institutions (SHIs).
It is aimed at providing rent to low-to-moderate-income families, earning between R1,500 – R15 000 p/m household income. These rental units are not available as rent-to-buy which means their affordability is protected in perpetuity. Only first time home buyers with dependents and households who have not already received a housing subsidy in the past are eligible.
Institutional management and experience in the sector has been a key component of the programme’s success. For instance Communicare the oldest and biggest SHI operating in the Western Cape has 3375 residential units as well as commercial property assets. Its 2016 annual report puts rental collections at 102%, vacancy rate at 1,2%, revenue growth at 11,9% and bad debt at 1,8%.
The social housing programme is funded by three main sources: capital grants, equity from SHIs and rentals paid by the low-moderate income earning families calculated at roughly ⅓ of income. These considerably lower than market-rate rentals are possible by significant public capital subsidies.
High level financial feasibility for Green Point Site
A high level feasibility study conducted shows that the above proposal is highly viable in and produces a surplus of R16,964,222.
The following assumptions are made
- Land ownership is retained by the City and is leased to a registered Social Housing Institution on a long term lease at a nominal rate of approximately R150 per annum. This is established precedent using following the City’s prospectus for sites in Woodstock and Saltriver.
- The development includes 323 Social Rental Housing units, 108 market rate apartments with 643m² GLA retail.
- All rates are in 2018 terms and VAT inclusive.
- Capital costs for social housing is R168,386,360.
- Capital costs per social housing unit is R521,320 (R13,033 per m²).
- Capital costs for the market rate housing is R1,402,489 (R23,771 per m²).
- Government subsidies for social housing is R85,272,000 (R264,000 per unit).
- Income for market rate units is R279,861,394 (R2,727,694 per unit).
- Brokerage fee for marketing of market units is 5%.
- Structured (basement) parking costs R28,314,000 (R234,000 per bay).
- Capital surplus of R16,964,222 which can be used as contingency and/or capital reserves for long term maintenance.
- The retail space was left out of the above model. This would have a positive affect on project viability.
- If a Social Housing Institute cannot doesn’t have the capital reserves or risk appetite to raise all the capital itself it may go into a joint venture with a private developer. This will impact on the surplus is distributed.
- Time is an important variable, with each year construction costs escalate yet government subsidies remain static.