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Proceeds from the contentious sale of the Tafelberg School in Sea Point will be used to fund provincial office plan, not social projects
The Western Cape government has promised that the proceeds from the sale of a Tafelberg site in Cape Town’s up-market suburb of Sea Point will be used for social projects.
But GroundUp can reveal that the money has in fact been earmarked to fund a shortfall on a new R540 million provincial office project in the city centre.
The project is a public-private partnership to build new offices for the Western Cape education department on provincial land in the inner city’s Dorp Street.
The R135 million sale of the site of the former Tafelberg School to the Phyllis Jowell Jewish Day School earlier this year was marred by controversy, with activists calling for the land to instead be used for social housing.
Civil organisations Reclaim the City and Ndifuna Ukwazi then went to court to stop the sale, and Western Cape Premier Helen Zille agreed to stop it and open the process again for further public comment.
As early as June 2014, soon after a report by the department of transport and public works recommended that the Tafelberg site be released for sale, Public Works MEC Donald Grant said the money would be used to finance social projects.
The province’s regeneration programme, he said, was established to extract maximum value from inner-city projects to subsidise projects for the poor. The Tafelberg site is part of this programme.
By then, the site’s planned sale had already attracted public attention. Grant was responding in an email to a submission by the Social Justice Coalition, Ndifuna Ukwazi and Equal Education objecting to the disposal of various sites owned by the province.
Grant was even more emphatic about the proceeds of the Tafelberg sale in a written reply to a question in the provincial legislature this year.
Asked whether the sale would enable the province to cross-subsidise projects for the poor, he said: “The answer is yes.”
A few days before that, Grant said Tafelberg and other sites could be leveraged “for economic purposes that will assist us in funding the many social projects that are so desperately in need of funding, particularly during these tough economic times”.
Yet, in correspondence between the department of public works and the provincial treasury in October last year, public works said that money from the sale of Tafelberg should go into the Asset Finance Reserve for the Dorp Street project.
They wrote: “The yield of R135 million from the sale of erf 1675 in Sea Point needs to be allocated to the Asset Finance Reserve for the Dorp Street public-private partnership project purposes.”
In response, provincial treasury said it did not “have any objection, in principle”, but the provincial Cabinet needed to officially approve the allocation.
GroundUp asked the provincial treasury whether the provincial cabinet had indeed approved using the proceeds of Tafelberg on the Dorp Street project.
Spokesperson Daniel Johnson responded: “Yes, cabinet has approved this, based on the department of public works submission of November 11 2015.”
So, rather than ring-fencing the money from the Tafelberg sale for social projects as promised, the provincial executive council approved the use of it for new offices.
What the money will be spent on
The Dorp Street property was bought by the provincial government in 2008 for R72 million.
It is to be developed to house the offices of the Western Cape education department, which leases office space throughout the city at a cost of about R39 million a year.
The original plan was for the provincial public works department to make an upfront capital contribution of R210 million, followed by an annual payment of R72 million for 20 years after the office block was built.
The private partner, Ingenuity Construction, was to cover construction and operating costs until 2038, when the department would take ownership of the building and receive revenue from leases.
But in a bid to cut the annual payments, the provincial treasury recommended to National Treasury in November 2014 that the provincial department of transport and public works increase its upfront contribution from R210 million to R540 million to save R138 million on the total cost.
The difference of R330 million is to be covered partly through the sale of “surplus properties”.
The amount of R200 million, due by the end of this year, will come from properties that have already been declared for sale, and the remaining R130 million, due by the end of next year, from the sale of additional properties.
The department decided to put the Tafelberg property up for sale in March last year, after the shortfall in the capital contribution was identified.
Yet, discussing the Tafelberg sale in an interview on 702/CapeTalk with Redi Tlhabi earlier this year, Human Settlements MEC Bonginkosi Madikizela said that “for example, with the sale of that land, you can provide people with over 1 200 subsidies”.
Madikizela denies that he misled the public, telling GroundUp that “‘for example’ doesn’t mean definitely”.
“You must also understand that the sale of any assets contributes to the entire provincial fiscus. By ring-fencing the proceeds of the Tafelberg sale for CBD development, the department of public works is freeing resources to be used in other projects like housing infrastructure,” he added.
Supporters of Tafelberg’s sale have also made the link between it and social housing. David Polovin, deputy chairperson of the Sea Point, Fresnaye and Bantry Bay Ratepayers and Residents Association, told the Weekend Argus in late May that if Tafelberg were sold, the province could use “proceeds from the sale for affordable housing or other social upliftment needs”.
The Phyllis Jowell Jewish Day School justified the sale in a similar manner, with vice-chairperson Lance Katz writing in a petition that the proceeds from the Tafelberg sale “can be applied by the province to fund social delivery initiatives in the province and the city [including possibly into the area of affordable housing]”.
Asked to clarify Grant’s statements on social projects in light of the decision to use the money for the Dorp Street building, Head of Public Works Jacqueline Gooch said: “As far as the sale of Tafelberg property is concerned, the court order is being executed and I am therefore not in a position to comment on this matter at this time.”
This report was produced by GroundUp
