of the commercial property sector · the role and impact of the commercial property sector...

THE ROLE AND IMPACT of the

COMMERCIAL PROPERTY SECTOR

M p u m a l a n g a

2017

THE ECONOMIC VALUE of the

COMMERCIAL PRIVATE PROPERTY SECTOR

APPLICATION PROCESSING REPORT

Ermelo

Nelspruit

Bethal

Piet Retief

EmalahleniBarberton

Dullstroom

Lydenburg Sabie Hazyview

White River

BelfastEmgwenya

eManzana

Carolina

Breyten

KwaMhlanga

Siyabuswa

Sabi Park

Marloth Park

Skukuza

KomatipoortMalelane

Jeppes Reef

Amsterdam

EvanderSecunda

Standerton

Embalenhle

Volksrust

Daggakraal

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1Mpumalanga Province - 2017

THE ECONOMIC VALUE OF THE COMMERCIAL PRIVATE PROPERTY SECTOR

2 Mpumalanga Province - 2017


Part 1Part 1

Section 1: Introduction 41.1 Study Area 41.2 Research Approach 51.3 Report Outline 5

Section 2: Defining the Commercial Private Property Sector 62.1 Property Components 62.2 The Commercial Private Property Sector and its Related Economic Sectors 72.3 Relationship between the Private and Public Property Sectors 8

Section 3: Current Economic Value 103.1 Economic Quantification: Approach 103.1.1 Economic Quantification Projections 103.2 Economic Performance and Main Representative Sectors 113.2.1 Overall Economic Performance 123.2.2 Sectoral Composition in Context to Property Representative Sectors 133.2.3 The Construction Sector 143.2.4 The Business and Finance Sector 153.3 Value in terms of GDP (Gross Domestic Product) 163.4 Value in terms of Sustained Jobs 173.5 Value in terms of Tax Revenue Generated 18

Section 4: Overview of the Economic Value of Commercial Private Property 19

List of DiagramsDiagram 1: Private Commercial Property Impacting Factors 5Diagram 2: Report Outline 5Diagram 3: Property Components of the Public and Private Sectors 7Diagram 4: Relationship Scenarios between Private and Public Sectors 9

List of FiguresFigure 1: Primary Economic Sectors 11Figure 2: Cyclical Economic Performance (2008-2016) 12Figure 3: Mpumalanga Province Sectoral Contribution 13Figure 4: Sectoral Composition of the Relevant Economies, 2016 13Figure 5: Composition of the National Construction Sector, 2016 14Figure 6: Composition of the National Business and Finance Sector, 2010 14Figure 7: Cyclical Growth of the Construction Sector, 2008-2016 15Figure 8: Cyclical Growth of the Business and Finance Sector, 2008 - 2016 16

List of Tables Table 1: Overall Projected Economic Value 12Table 2: Construction Sector GDP Values, 2016 15Table 3: Business and Finance Sector GDP Values, 2016 16Table 4: GDP Output-Commercial Private Property Sector 2016 17Table 5: Jobs sustained by the Private Property Sector 17Table 6: Tax Revenue 18

Role and Value Analysis ContentsForward

MEGA’s role as a development finance institution is to stimulate the growth and development of the Mpumalanga economy by attracting and facilitating investment in the province.

At its core, the strategy calls for MEGA to be a n investment-centric institution, facilitating high impact investments in the province through partnership.

MEGA has been specifically mandated to stimulate growth in various sectors of the provincial economy and therefore provides opportunities to the residents of Mpumalanga through the funding of projects, promotion of Small, Medium, and Micro Enterprises (SMME’s), Cooperatives (Co-ops) and other businesses thereby contributing to the constitutional imperative in Section 22 of the Constitution, which stipulates that citizens have a right to choose their trade, occupation or profession freely while also focusing on economic activity.

Our OriginsMEGA was formed in terms of the MEGA Act No. 1, of 2010, to provide funding to and promote foreign trade and investment in Mpumalanga, for the benefit of Historically Disadvantaged Individuals (HDIs).

The entity itself was borne of a merger of three bodies: l The Mpumalanga Economic Growth Agency (the former MEGA), responsible for funding

small, medium and micro-enterprises and promoting trade and investment; l the Mpumalanga Agricultural Development Corporation, responsible for financing and

growing agricultural projects; l and; the Mpumalanga Housing Finance Company, which financed housing.

MEGA is now responsible for funding SMMEs; agro projects and farming; and housing; and for promoting trade and investment in Mpumalanga. Further, the Agency invests in strategic projects that require an equity partner, like Tekwane Citrus, Nkomati Anthracite, Loopspruit Wine Estate and Highveld Fruit Packers – all of which have benefited from MEGA’s experience in commercialising start-ups.

Why MEGA? l MEGA offers expertise on Mpumalanga’s economy and investment potential. l MEGA’s investment opportunities are packaged for a high probability of success. l MEGA enjoys alliances and relationships with investors and other stakeholders. l MEGA provides innovative solutions accompanied by a high level of service.

Our vision is to be a capable, credible and resilient institution that stimulates growth and development in Mpumalanga, to reduce unemployment, poverty and inequality.

Our primary mission is to foster the sustainable growth and development of Mpumalanga’s economy by attracting, facilitating and maximizing investment.

Mr. X.G.S Sithole Chief Executive Officer

MEGA HEAD OFFICE

ABSA Square Building, 20 Paul Kruger Street, Mbombela, 1200, Mpumalanga, South Africa

Postal Address: PO Box 5838, Mbombela, 1200

t: 013 752 2440 f: 013 755 1756 e: [email protected]

2 Mpumalanga Province - 2017 3Mpumalanga Province - 2017

APPLICATION PROCESS REPORT APPLICATION PROCESS REPORT

Part 2Part 2

Section 1: Introduction 221.1 Study Area 221.2 Research Approach 221.3 Purpose of this report 231.4 Research Limitations 231.5 Report Outline 24

Section 2: The Regulatory Environment 252.1 Understanding the Spatial Planning and Land Use Management Act 16 of 2013 252.2 National Legislative Framework 272.3 Provincial Legislative Framework 282.4 Municipal Legislative Framework 29

Section 3: Land Development Applications 313.1 Types of Development Applications 313.1.1 Building Plan Applications 313.1.2 Land Use Management Applications 313.2 Regulatory Entity Responsibilities 333.3 Regulatory Transformations 34

Section 4: Development Planning and Application Administration Processes 354.1 Land Use Management Applications 364.1.1 SPLUMA application processes 364.1.2 Township Establishment 374.1.3 Scheme Amendment (Rezoning) 384.1.4 Subdivision and Consolidation 394.2 Building Plan Applications 40

Section 5: Application Tracking Analysis 435.1 Land Use Management Application Tracking 445.2 Building Plan Application Tracking 455.3 Public Sector Inputs on Application Delays 45

Section 6: Private Sector Perspectives 476.1 Approach 476.2 Key Limitations 476.3 Private Sector Inputs on Application Delays 47

Section 7: Recommendations 49Application Administration 49Capacity Issues 50Communication 50Technical Issues 51

Section 8: Economic Impact of Application Delays 528.1 Approach 528.2 Quantifying the Economic Impact of Property Development 538.3 The Financial Impact of Delays in Processing of Development Applications 54

Section 9: Conclusion 55

Application Processing Analysis Contents

List of FiguresFigure 1: Mpumalanga Province: Building Plans Passed 42Figure 2: CoM Commercial LUM Applications 44Figure 3: CoM Building Plan Applications 45Figure 4: Total economic injection 53

List of TablesTable 1: CoM Township Application Process 38Table 2: CoM Scheme Amendment/Rezoning Application Process 39Table 3: CoM Subdivision/Consolidation Application Process 40Table 4: Rezoning Application Sample 44Table 5: Township Establishment Application Sample 45Table 6: Primary Application Processing Delays 49Table 7: Property development variable assumptions 53 Table 8: Comprehensive overview of economic impact 54

List of MapsMap 1: Mpumalanga Province 22Map 2: The Golden Triangle, Mbombela 30Map 3: LED opportunities, CoM 31





Part 1Part 1

In its commitment to actively advance the commercial property interests within the property industry, the South African Property Owners Association (SAPOA) commissioned the services of Urban-Econ to embark on an analysis of the commercial private property industry in the Mpumalanga Province, with specific reference to the City of Mbombela Local Municipality. The analysis of the commercial private property sector in the City of Mbombela forms part of a series of comparable reports formerly published by SAPOA. These include analysis of the role and value of the commercial private property sector in the Western Cape (2010), Kwa-Zulu Natal (2015), and the Gauteng Province (2016).

This report is the first component of the “The Role and Impact of the Commercial Property Sector in the Mpumalanga Province” analysis. The overall objective of the first component is to provide context in terms of the economic contribution and scope of the commercial private property sector in the Mpumalanga Province. The second component of the analysis supplements the first through analysing development application case studies as a means of linking processing timeframes to economic performance.

Introduction

The purpose of the first component of the study is to quantify the commercial private property industry in terms of its value for the provincial economy. This will assist in developing a comprehensive understanding of the role and value that the private property sector plays in the economic development within the Province.

It is important to note that the report does not represent an asset audit of the commercial private property industry. It presents a statistical evaluation of the total contribution that the private commercial property sector makes to the provincial economy in terms of the GDP, employment and tax revenue.

n 1.1 Study AreaThe Mpumalanga Province is famous for

being one of the most beautiful and dynamic provinces in South Africa. The province is situated in the north-eastern parts of South Africa and borders the south of the Limpopo Province, east of the Gauteng Province and North of Kwa-Zulu Natal. In addition, the Mpumalanga Province borders neighbouring countries Swaziland and Mozambique east of the Province. The capital city of the Mpumalanga Province is Mbombela, formerly known as Nelspruit, located within the Mbombela Local Municipality. As of August 2016, the Mbombela Local Municipality is named the City of Mbombela due to the amalgamation of the Mbombela Local Municipality and the Umjindi Local Municipality.

Ermelo

Nelspruit

Bethal

Piet Retief

EmalahleniBarberton

Dullstroom

Lydenburg SabieHazyview

White River

BelfastEmgwenya

eManzana

Carolina

Breyten

KwaMhlanga

Siyabuswa

Sabi Park

Skukuza

KomatipoortMalelane

Jeppes Reef

Amsterdam

EvanderSecunda

Standerton

Embalenhle

Volksrust

Daggakraal

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City of Mbombela Local Municipality

Gert Sibande District Municipality

Nkangala District Municipality

Ehlanzeni District Municipality

n 1.2 Research ApproachThe purpose of this section is to define

the methodology utilised to measure the economic value of the private commercial property sector within the City of Mbombela and the Mpumalanga Province.

It is widely recognised that all economic activity typically takes place in a specific space or area, as such, all economic activities are related to property either directly or indirectly. To measure the economic value of the private commercial property sector the relevant activities within the sector needs to be identified and evaluated per specific analysis factors. For this report, only property-centred economic activities with a direct impact on the local, provincial and national economies are evaluated in line with generic economic impact practices.

The directly impacting factors analysed, as

illustrated in Diagram 1, are Gross Domestic Product (GDP), direct employment and tax revenue by the private commercial property sector in the Mpumalanga Province.

It is understood that “The Role and Impact of the Commercial Property sector in the Mpumalanga Province” study will be used to obtain valuable information regarding the civic administration of property development within the study area to quantify the distinct role that the public and private sectors play in property development, particularly in terms of timeframes.

Through quantifying the economic value of the sector and applying the findings to estimated application processing timeframes, one can determine whether possible processing delays by the public sector or private sector might have any impact on the provincial economy.

Diagram 1: Private Commercial

Property Impacting Factors

A quantitative measure that includes all public and private consumption, investments and net exports to measure the size of the national economy as well as representing the market

value of a specific economic sector, such as the commercial property sector

All persons that are employed on an annual basis within the commercial property sector

GROSS DOMESTIC PRODUCT (GDP)

All collected revenues from taxed income and profits within the commercial property sector

DIRECT EMPLOYMENT

TAX REVENUE (COMMERCIAL PROPERTY SECTOR)

n 1.3 Report OutlineThis report defines the economic value

of the commercial private property sector as per the various components of property construction and property management. In addition, it illustrates the value of commercial property construction and management based on job creation, economic production and tax revenue generated.

The report outline is illustrated in Diagram 2.

Defining the Commercial Private Property Sector

Section

2 Private property is defined as part of the property components of a larger economy in order to

identify the relevant economic sectors representing the private property sector

Current Economic Value

Section

3 This section includes an analysis that illustrates the existing value of the private property sector in terms of economic production and growth, job

creation and tax revenue generated.

Synopsis

Section

4 Summary of the findings of the aforementioned analysis presenting the value of the private

property industry in Mpumalanga, with specific reference to the City of Mbombela

Diagram 2: Report Outline

Section 1





Part 1Part 1Defining the Commercial Private Property Sector

In basic terms, commercial property is defined as property that is used for purposes of gaining monetary value. Before we can analyse the economic value of the commercial property sector it is vital that its role is clearly defined within the larger economy. Typically, commercial property includes a variety of development types such as retail, offices, industrial, and large scale residential developments. The activities within the commercial property sector is grouped into either property construction activities or property management activities. These have been critically analysed to identify the primary and secondary sectors and in which markets these activities operate. When analysing the components or activities of the commercial property market it should be noted that it is a market that is incessantly poignant and largely dependent on the interactions between the various stakeholders and role-players operating in the sector. As with any economy, the two main role-players are the public and private sectors. The successful growth and development of the commercial private property sector is highly dependent on the productive interaction and relationship between the private and public sectors. It is vital that both sectors aspire to establish a good relationship that translates into outcomes based interactions that will benefit both entities.

The private sector comprises of organisations that are privately owned. In property development,

the private sector is the primary implementing agent. Private developers acquire land and take on

the construction and operation processes of commercial property development. The primary

objective of the private sector is to generate profit and reduce development timeframes

The public sector performs an administrative and guiding role in the commercial property market.

Public sector entities take part in the development application processes through scrutinising

applications and ensuring that the development is in line with the regulatory frameworks and

policy guidelines of the municipal entity.

n 2:1 Property Components The commercial private property sector has

a variety of components that form part of the larger economic profile of the Mpumalanga Province. The primary components of the commercial private property sector are construction and management. The sub-components of construction include the construction of privately owned and income generating property entities, along with the recruitment of private contractors and other professional services required.

In terms of property management, it is mainly the private sector’s responsibility to exchange private land by controlling the

sales and leasing of property entities. In addition, the operation of property including maintenance, cleaning and security are also the responsibility of the private sector. These components are divided between the public and private sectors each with its own role and responsibilities in terms of property development and management.

The public sector typically plays the role of the financier in property construction as well as the administrator in property management and development application processes. The construction responsibilities of the public sector mainly includes the financing of primary roads and services,

along with supporting infrastructure such as libraries, administration offices and other social facilities. The public sector therefore employs contractors and professionals from the private sector to undertake the construction of primary and supporting infrastructure.

The public sector does not have any construction implementing bodies in the state, as such the private sector plays a dual

role in terms of property construction. Private contractors are responsible for both privately driven and public property construction activities. The responsibilities of the private sector in terms of property management mainly relates to activities such as sales and operation of privately owned land. Diagram 3 classifies all the components of property based on its relevance to the public and private sectors.


CONSTRUCTION

PRIV

ATE

SEC

TOR

MANAGEMENT

PUBL

IC S

ECTO

R

Construction of privately owned, income generating property

entities i.e. Asset Holder

Private contractors (for private and public sector)

i.e. Builders

Professional Services (for private and public sector)

i.e. Engineers

Financing of primary infrastructure

i.e. Public Works

Financing of supporting infrastructure

i.e. Public Works

Operation

i.e. Cleaners

Sales

i.e. Real Estate agents

Leasing

i.e. Real Estate agents

Regulation

i.e. Planning and Building Control

Administration

i.e. Planning and Building Control

Section 2

n 2.2 The Commercial Private Property Sector and its Related Economic Sectors

Commercial activities associated with the private property sector are related to the applicable economic sectors as per the Standard Industrial Classification (SIC) as utilised by Statistics South Africa. This is done to identify relevant sectors that make up the industry and ultimately contribute to its value.

Most of the components within the commercial private property sector relate to the ‘construction activities’ sub-sector, as defined by the SIC, comprising of major activities such as site preparation,

building construction, building installation, building completion and renting of building equipment. Hence, the economic construction sector presents the main indicator for performance and measurement of such activities. Nonetheless, the professional services components include architectural, engineering and other technical activities, which are categorised within the business and finance sector of the SIC. Commercial private property management pertains to all ‘real estate activities’ with owned or leased properties as well as per fee or contract basis. Real estate activities also form part of the business and finance sector as classified within the SIC .

Diagram 3: Property Components

of the Public and Private Sectors





Part 1Part 1

Construction of privately owned, income generating

property entities

Construction activities

PRIVATE PROPERTY CONSTRUCTION

Site preparation

Building of complete constructions or parts thereof; civil engineering

Building installation

Building completion

Renting of construction or demolition equipment with

operators

Private contractors

CO

NST

RUC

TIO

N A

CTI

VIT

IES

Personal Services Architectural, engineering and other technical activities

Other business activities

BUSI

NES

S A

ND

FI

NA

NC

E SE

CTO

R

Operation Real estate activities with owned or leased property

PRIVATE PROPERTY MANAGEMENT

Real estate activities

BUSI

NES

S A

ND

FI

NA

NC

E SE

CTO

R

Sales

Leasing

Real estate activities on a fee or contract basis

Property Components Major Activities (SIC) Sub and Main Economic Sectors

(SIC)

n 2.3 Relationship between the Private and Public Property Sectors

Naturally, the relationship between the public and private sector in the Mpumalanga Province has a significant role and impact on property development within the province. Aside from the fact that the public sector deals with the administrative processing of development applications, its role also transcends into providing guidance to the private sector through the implementation of policy and strategic planning initiatives.

Therefore, the public sector’s role is to ensure that the development goals and visions are transpired to the private sector as a means of ensuring cooperative property development.

Alternatively, the role of the private sector in terms of property development is primarily pro-development and investment driven. The private sector identifies development opportunities within the province and is ultimately responsible for the implementation of property development. Central to the relationship is the submission and processing of development applications otherwise known as land use management applications. Prior to any property development, private developers must, by law, obtain written permission from the municipal entity before development can commence.

As a means of illustrating the relationship between the two entities, Diagram 4, indicates two scenarios of private and public sector relationship.

PRIVATE SECTOR PUBLIC SECTOR

DEVELOPMENT ADMINISTRATION

POLICY AND STRATEGY FORMULATION

PROPERTY DEVELOPMENT VISION

PRO-DEVELOPMENT

PROPERTY INVESTMENT

DEVELOPMENT IMPLIMENTATION

The first scenario plots the development of a privately owned mixed use development in which private contractors and professionals are responsible for the construction and preparation of specialised applications to submit to local authorities for approval, after which property management is totally within the competence of the private sector. The scenario highlights the important regulatory and administrative role that the public sector plays in private development.

The second scenario shows the development of government administration offices in addition to supposed infrastructure upgrades to the surrounding roads. It emphasises the public sector’s role in terms

of financial provision for construction with all construction activities as well as construction of major bulk services that are outsourced to the private sector.

The two scenarios assist with explaining the role and value of the private sector in terms of the construction of public sector developments. In addition, it also illustrates the importance of the public sector administration and regulation of private commercial property developments. To facilitate successful and sustainable property development, it is imperative that both the public and private property sectors execute their roles and functions in a cooperative manner.

Construction and operation of a mixed use development comprising of residential, commercial and retail

components

SCENARIO 1

Construction and operation of government administration o ces with surrounding road

infrastructure upgrades

SCENARIO 2

CONSTRUCTION RESPONSIBILITIES

PUBLIC SECTOR PRIVATE SECTOR

*NONE

*Physical construction *Preparations of building plans and land

use management applications for approval

MANAGEMENT RESPONSIBILITIES


*Approval of building plans and land use management applications

*Sales and leasing of residential, commercial and retail space

*Building maintenance/cleaning/ security

CONSTRUCTION RESPONSIBILITIES


*Financing of construction (outsourced to private sector by public works)

*Physical construction *Preparations of building plans and land

use management applications for approval

MANAGEMENT RESPONSIBILITIES


*Approval of building plans and land use management applications

*Maintenance of development

Construc)onandopera)onofamixedusedevelopmentcomprisingofresiden)al,

commercialandretailcomponents

SCENARIO1

Construc)onandopera)onofgovernmentadministra)onofficeswithsurroundingroad

infrastructureupgrades

SCENARIO2

CONSTRUCTIONRESPONSIBILITIES

PUBLICSECTOR PRIVATESECTOR

*NONE

*Physical construction*Preparations of building

plans and land use management

applications for approval

MANAGEMENTRESPONSIBILITIES


*Approval of buildingplans and land usemanagementapplications

*Sales and leasing ofresidential, commercial

and retail space *Building maintenance/

cleaning/ security

CONSTRUCTIONRESPONSIBILITIES


*Financing ofconstruction (outsourcedto private sector bypublic works)

*Physical construction*Preparations of building

plans and land use management

applications for approval

MANAGEMENTRESPONSIBILITIES


*Approval of buildingplans and land usemanagementapplications

*Maintenance ofdevelopment

What’s happening in Mbombela?Makro Nelspruit opened in 2011 in Mbombela’s fastest

growing area, Riverside. Riverside is located along the R40 regional road toward White River. Various light industrial, as well as commercial facilities have opened in the Riverside area. Riverside facilitates rapid economic growth within Mbombela as various retail, industrial, warehousing, light industrial and commercial office developments have been developed in the past five years. These new developments are all near the existing Riverside developments such as the Riverside Shopping Centre and the Grove Shopping Centre. Various developments are still planned within Riverside and Riverside Industrial. There are currently still 30 to 35 hectares of developable land available within Riverside Phase 2 and 140 hectares available within Riverside Phase 3, which is currently being planned.

Diagram 4:

Relationship Scenarios between

Private and Public Sectors





Part 1Part 1Current Economic Value

The following section intends to quantify the value of the commercial private property sector in the Mpumalanga Province, with specific reference to the City of Mbombela. The economic value refers to the contributions made towards GDP, employment and tax revenue by the commercial private property sector.

The value of the commercial private property sector is measured by analysing the economic contribution made by the relevant economic sub-sectors and relating the findings to the total GDP output of the focus areas. Additionally, captured findings include information regarding the employment sustained and tax generated by the commercial private property sector.

Section 3

n 3.1 Economic Quantification: Approach

The quantification approach illustrates the methodology used to determine the current economic value of the commercial private property sector in terms of construction and management of buildings.

The quantification approach was adapted per the following data limitations:

❍ Availability of recent statistical releases: The most recent published economic figures for the identified geographic levels are only available up to 2015. Projections, based on historic statistical trends therefore had to be made to acquire 2016 figures.

❍ Availability of detailed economic statistics: Comprehensive composition break-downs are only available on national level.

❍ All economic values provided are based on constant prices, with 2010 being the basic year.

The methodology was developed based on a uniform distribution analysis technique, which collates projections based on the 2015 economic performance with the composition of relevant national economic sectors to present up-to-date statistics for the Mpumalanga Province and the City of Mbombela. A five-year average annual growth rate was calculated and utilised to acquire the estimated 2016 economic performance figures.

The approach consists of the following components:

❍ Economic performance projections and cyclical analysis

❍ Identification of the main economic role-playing sectors in the commercial private property sector in the Mpumalanga Province

❍ Quantification of the economic value of the commercial private property sector as derived from the main role-playing economic sectors. It is important to note that the most

recent available statistics were utilised for projection purposes. Published data sources are presented unless otherwise indicated.

n 3.1.1 Economic Quantification Projections

The economic contribution made by the private property sector is quantified by analysing the composition of the various economic sectors namely construction, finance and business. Economic quantification of the commercial private property sector is given in terms of the value of the following indicators:

❍ GDP generated ❍ Jobs sustained ❍ Tax revenue generatedAs part of the analysis of the value of the

commercial private property sector, the following projections are applied to the GDP figures:

Ecconomic Indicator Projection Period Reason for Projections Assumption

National GDP 2016

The national GDP is presented in an annual bulletin released by Statistics South Africa; with the latest release indicating the GDP up to 2015. To present the 2016 GDP a five-year average growth rate was derived and applied to the 2015 figure.

Economic performance in 2016 is on par with the trends observed for the previous five years (2011 – 2015)

Provincial GDP 2016

The provincial GDP is presented in an annual bulletin released by Statistics South Africa, therefore the latest release indicates the GDP up to 2015. To present the 2016 GDP a five-year average growth rate was derived and applied to the 2015 figure.

Provincial economic performance in 2016 remained in line with the performance achieved over the last five years (2011 – 2015)

Local GDP 2016

The latest local GDP figures are available up to 2015, as presented by Quantec Easydata’s Standardised Regional dataset, which is derived from employment and economic performance variables as published by Statistics South Africa. To present the 2016 GDP a five-year average growth rate was derived and applied to the 2015 figures.

Local economic performance in 2016 remained in line with the performance achieved in the last five years (2011 – 2015)

Ecconomic Indicator Projection Period Reason for Projections Assumption

National, Provincial and Local Employment Value

2016

Employment value is presented in an annual bulletin released by Statistics South Africa; with the latest release indicating employment figures up to 2015. To present the 2016 employment value a five-year average growth rate was derived and applied to the 2015 figure.

Employment per industry figures in 2016 is on par with the trends observed for the previous five years (2011 – 2015)

National, Provincial and Local Tax Revenue

2016

The latest annual tax revenue figures are available up to 2015, as presented by Quantec Easydata’s Standardised Regional dataset. To present the 2016 Tax Revenue generated a five-year average growth rate was derived and applied to the 2015 figures.

Tax revenue generated in 2016 remained in line with the performance achieved over the last five years (2011 – 2015)

The following projections are made for the employment and tax data gaps:

n 3.2 Economic Performance and Main Representative Sectors

In calculating the overall value of the commercial private property sector, several direct and indirect influences are considered. The overall economic performance in South Africa is measured by the growth and performance if its primary economic sectors.

These include, agriculture, forestry and fishing; mining and quarrying; manufacturing; Electricity, Gas and Water; Construction; Wholesale, Retail and Trade;

Agriculture, Forestry and Fishing

Mining and Quarrying

Manufacturing

Electricity, Gas and Water

Construction

Wholesale, retail and Trade

Transport, storage and communication

Finance, insurance, real estate and business

Community, social and personal services

General government

Figure 1:

Primary Economic Sectors





Part 1Part 1

Transport, Storage and Communication; Finance, Insurance, Real Estate and Business services; Community, Social and Personal Services; and General Government. The primary economic sectors in South Africa are illustrated in Figure 1.

n 3.2.1 Overall Economic Performance

The overall performance and growth of the primary economic sectors in South Africa serve as a potential representation for the performance of the property industry. Figure 2 illustrates the combined economic performance of South Africa.

Based on the cyclical economic performances of the identified economies it is evident that that all of them have experienced relatively stable growth patterns during the analysis period with a slight dip between 2010 and 2011. Although the national economy increased to 3.5% during 2010, it is evident that the Province as well as the local municipality’s economic growth declined from 2.5% and 2.1% to 2.1% and 2.0%, respectively.

In terms of provincial economic growth, it is noticeable that the provincial economic performance has remained below the national average between 2009-2012, nevertheless an above average growth is evident in 2013 with an average of 3.1%. The provincial growth rate has declined since

2014 from 3.1% to 0.6%. As the Mpumalanga provincial economy is dominated by the mining sector, the national mining strikes that occurred in 2014 have evidently resulted in a severe economic impact on the province. Although the provincial growth rate has declined since 2014, the City of Mbombela economic growth rate remained relatively stable and on par with national trends.

The average economic growth rate in the Mpumalanga Province is estimated at 2.08%, slightly higher than that of the City of Mbombela with an average growth rate of 1.9%. Both the provincial and local annual economic growth rates are just below the national average of 2.39%.

Based on statistical projections, the Mpumalanga provincial economy contributes just over 7% to the national GDP, with a total contribution of roughly R209 billion. The total value of the City of Mbombela’s economic contribution is projected at R 34 billion, and constitutes roughly 16.42% and 1.19% to the provincial and national economies respectively. Figure 3 indicates the provincial sectoral contribution of each of the economic sectors in the Mpumalanga Province.

The primary contributing sectors in the Mpumalanga Province is the Mining and Quarrying sector which contributes a quarter (25%) to the provincial economy. Subsequently, the Wholesale, Retail trade, catering and accommodation sector

Figure 2: Cyclical Economic

Performance (2008-2016)

Source: Quantec Easydata –

Standardised Regional and Statistics

South Africa Data 2016

-1,3%

2,5% 2,1% 2,1% 2,1%

3,1%

0,6% 0,6%

-1,4%

2,1% 2,0% 1,7% 1,9% 2,4%

1,5% 1,5%

-1,3%

2,9% 3,5%

2,2% 2,4%

1,9% 1,4% 1,4%

-2,0%

-1,0%

0,0%

1,0%

2,0%

3,0%

4,0%

2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

Mpumalanga Province City of Mbombela South Africa

Economy 2016 GDP (Rand Millions, Constant 2010 prices) Share of National Economy

South Africa 2 900 641 100%

Mpumalanga Province 209 905 7.24%

City of Mbombela 34 471 1.19%

Table 1: Overall Projected

Economic Value

Economy

contributes 15% to the provincial economy, followed by the manufacturing sector with a 14% contribution.

n 3.2.2 Sectoral Composition in Context to Property Representative Sectors

Any economic activity must take place in a specific area, thus all economic activities are related to property either directly or indirectly. However, for this study only property-centred economic activities with a more direct impact are evaluated. Figure 4 compares the sectoral contribution of South Africa, Mpumalanga Province, and the City of Mbombela Local Municipality. Focus should be placed on the contribution of the construction, and business finance sectors as these sectors encompass the property market activities.

The national construction sector contributes approximately 3.9% to the national economy, along with the supplementary business and finance sector which contributes a portion of 22.2%. In terms of the provincial economy it is evident that the construction sector contributes to roughly 3% of the provincial economy, relatively on par with that of the national contribution. Alternatively, the business and finance sector within the province contributes to 13% of the provincial economy, significantly lower than the national average.

Figure 3: Mpumalanga Province

Sectoral Contribution




3%

25%

14%

5%

3%

15%

6%

13%

12%

4%

0% 5% 10% 15% 20% 25% 30%

Agriculture, forestry and shing

Mining and quarrying

Manufacturing

Electricity, gas and water

Construction

Wholesale and retail trade, catering and accommodation

Transport, storage and communication

Finance, insurance, real estate and business services

Community, social and personal services

General government

-1,3%

2,5% 2,1% 2,1% 2,1%

3,1%

0,6% 0,6%

-1,4%

2,1% 2,0% 1,7% 1,9% 2,4%

1,5% 1,5%

-1,3%

2,9% 3,5%

2,2% 2,4%

1,9% 1,4% 1,4%

-2,0%

-1,0%

0,0%

1,0%

2,0%

3,0%

4,0%

2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

Mpumalanga Province City of Mbombela South Africa

Figure 4: Sectoral Composition of

the Relevant Economies, 2016




Furthermore, the construction, and business and finance sector within the City of Mbombela has a very similar contribution as that of the national share with approximately 3.84% in the construction sector and 21.88% in the business and finance sector. It should be noted that only a portion of the business and finance sector forms part of the commercial private property sector, whereas the entire construction sector contributes to its performance directly.

An in-depth analysis of the main economic sub-sectors is required in order to acquire a better understanding of the economic value of the private property sector. As indicated, there are certain data limitations that necessitate the assumption that the composition of each of the main role-playing economic sectors are uniform for the national, provincial, and local economies, considering that similar activities within the sectors relate to similar contributing sub-sectors. This assumption is made since the data pertaining to the





Part 1Part 1

economic sectoral composition is only provided on a national level.

Figure 4 and Figure 5 illustrates the national composition of both the construction sector as well as the business and finance as provided in the most recent statistical publications of South Africa.

In terms of the composition of the national construction sector it is evident that the building of civil engineering services, as well as the building of complete constructions or parts thereof take up the largest portion of the construction sector with 42% and 29% respectively, and totalling to 71%. The remaining activities include building installations (15%), building completion (8%), renting of construction or demolition

2%

29%

42%

15%

8% 5%

Site preparation Building of complete constructions or parts

thereof

Building of civil enginering structures

Building installation Building completion Renting of construction or demolition equipment with

operators

Figure 5: Composition of the

National Construction Sector, 2016

Source: Statistics South Africa

Publication: The Construction

Industry, 2016

Figure 6: Composition of the

National Business and Finance

Sector, 2010

Source: Statistics South Africa

Publication: Real estate, activities

auxiliary to financial intermediation

and business services industry, 2010

18,8%

2,6%

9,9%

2,2%

16,7%

8,9%

2,4%

38,6%

Real estate activities Renting of machinery/equipment as well as

personal and household goods

Computer and related activities

Research and development Legal, bookkeeping and business management

activities

Architectural, engineering and other technical activities

Advertising Other business activities

equipment (5%), and lastly site preparation (2%). As indicated, the real estate activities make up 18.8% of the sector in the national market, followed by legal bookkeeping and business management activities with 16.7%.

n 3.2.3 The Construction SectorFigure 7 indicates the comparative

cyclical performance of the construction sector in South Africa, the Mpumalanga Province, as well as the City of Mbombela Local Municipality.

Economic growth within the construction sector has followed a similar growth path across all three economies. Evidently, the construction sector in the Mpumalanga Province and City

Figure 7: Cyclical Growth of the

Construction Sector, 2008-2016




8%

0% -1%

1%

3% 2%

3% 3%

-2%

0%

2%

4%

6%

8%

10%

2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

South Africa Mpumalanga Province City of Mbombela

of Mbombela has experienced higher growth than the national average since 2014. The five-year average national growth rate in the construction sector is estimated at 2.4%, which equals the provincial growth rate of 2.4% per annum. The average construction growth rate in the City of Mbombela is estimated at 1.2% per annum.

Table 2 represents the projected value of the construction sector for the relevant study areas in 2016.

Projections indicate that the

Mpumalanga provincial construction sector contributes approximately 6.4% to the national construction sector’s value of R 112 billion. In terms of the local construction sector contribution, it is evident that the City of Mbombela has a contribution of 1.2% to the national construction sector and an 18.4% contribution to the provincial construction sector valued at R1.3 billion. The construction sector contributions made by the Mpumalanga province suggest that the value of the local construction sector performs a key role in national economic growth as it takes up a sizeable portion of the national construction sector.

n 3.2.4 The Business and Finance Sector

Figure 8 illustrates the cyclical growth performance of the relevant business and finance sectors.

It is evident that the provincial business and finance sector has largely experienced higher growth patterns when compared to the national business and finance sector

Economy2016 GDP

(Rand Millions, Constant 2010 prices)

Share of National

Construction Sector

Share of Provincial Construction

Sector

South Africa 112 444 100% n/a

Mpumalanga Province 7 201 6.4% 100%

City of Mbombela 1 325 1.2% 18.4%

Table 2: Construction Sector GDP

Values,2016




SOUTHAFRICA2.4%

MPUMALANGAPROVINCE2.4%

CITYOFMBOMBELA1.2%

CO

NST

RUC

TIO

N S

ECTO

R A

NN

UA

L G

ROW

TH





Part 1Part 1

1%

2%

4%

3%

1% 1%

3% 3%

0%

1%

1%

2%

2%

3%

3%

4%

4%

5%

5%

2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

South Africa Mpumalanga Province City of Mbombela

growth rates. The City of Mbombela’s business and finance sector significantly decreased between 2011 and 2013, however has experienced an upward improvement since then. Both the provincial and local sectors have remained relatively on par with the recent national growth rate signifying relatively stable economic growth.

The five-year average growth rate of the business and finance sector in South Africa is estimated at 2.8%, which is slightly higher than the provincial growth rate of 2.5%. The average growth rate in the City of Mbombela’s business and finance sector is calculated at 2.3% per annum.

Table 3 presents the projected value of the business and finance sector for the relevant study areas in 2016.

Projections indicate that the Mpumalanga provincial business and finance sector contributes approximately 4.1% to the national business and finance sector with a value of R26 billion. In terms of the local construction sector contribution, it is evident that the City of Mbombela contributes 1.2% to the national business and finance sector,

and approximately 28.1% to the provincial business and finance sector.

n 3.3 Value in terms of GDP (Gross Domestic Product)

The value of the commercial private property sector, in terms of GDP output, is measured by applying the national GDP distribution to the Mpumalanga province as well as the City of Mbombela for 2016. It is assumed that the composition of the relevant sectors within the provincial and local economies are in accordance with the national economy.

Table 4 provides the resultant calculated GDP output of the commercial private property sector.

In 2016, the private property sector contributed approximately R 237 billion to the National GDP of creating a share contribution of 8.2%. On a provincial level, it is evident that the private property sector contributed approximately R 13 billion in 2016. Furthermore, the City of Mbombela contributed approximately R2.8 billion 2016.

Figure 8: Cyclical Growth of the

Business and Finance Sector,

2008 - 2016




Economy2016 GDP

(Rand Millions, Constant 2010 prices)

Share of National Business and Finance Sector

Share of Provincial Business and Finance

Sector

South Africa 652 103 100% n/a

Mpumalanga Province 26 823 4.1% 100%

City of Mbombela 7 543 1.2% 28.1%

Table 3: Business and Finance

Sector GDP Values, 2016




Main Sector Sub-Sector Major Activities 2016 GDP Value (Rand Millions, constant 2010 prices)

South Africa Mpumalanga Province City of Mbombela Local Municipality

Construction Construction Activities Site preparation 1 754 112 21

Construction Construction Activities Building of complete constructions or parts thereof

(excluding civil engineering) 32 885 2 106 388

Construction Construction Activities Building installation 46 858 3 001 552

Construction Construction Activities Building completion 17 398 1 114 205

Construction Construction Activities Renting of construction or demolition equipment

with operators 8 464 542 100

Business and Finance Other business activities Architectural, engineering and other technical services 5 085 326 60

Business and Finance Real estate activities Real estate activities with owned or leased

properties and on a fee or contract basis 40 093 1 873 497

Total commercial private property construction 152 538 9 074 1 823

Total commercial private property management 84 578 3 950 1 049

Total commercial private property sector 237 116 13 025 2 871

Share of own total economy 8.2% 6.2% 8.3%

Share of total national economy 8.2% 0.45% 0.10%

CONS

TRUC

TION

M

ANAG

EMEN

T

Table 4: GDP Output-Commercial

Private Property Sector 2016




Table 5: Jobs sustained by the

Private Property Sector




n 3.4 Value in terms of Sustained Jobs

The number of jobs sustained by the construction and management of commercial private property is derived from the national employment distribution per major activity, which is applied to the total employment of the relevant regions. It is therefore assumed that the distribution of employment in the relevant sectors within the provincial and

local economies are in accordance with the composition of the national employment market. This is due to the fact that data pertaining to the detailed distribution of employment per major economic activity is only available on a national level.

Table 5 presents the value in terms of jobs sustained by the private property sector within the national, provincial and local economies.

Main Sector Sub-Sector Major Activities 2016 Employment


Construction Construction Activities Site preparation 23 867 2 239 426


(excluding civil engineering) 838 009 78 601 14 951

Construction Construction Activities Building installation 241 325 22 635 4 305

Construction Construction Activities Building completion 172 375 16 168 3 075


with operators 55 690 5 223 994

Business and Finance Other business activities Architectural, engineering and other technical services 87 587 4 453 1 083


properties and on a fee or contract basis 98 368 5 001 1 216

Total commercial private property construction 1 418 855 129 319 24 834

Total commercial private property management 98 368 5 001 1 216

Total commercial private property sector 1 517 223 134 320 26 050



CONS

TRUC

TION

M

ANAG

EMEN

T

SOUTH AFRICA 2.8%

MPUMALANGA PROVINCE 2.5%

CITY OF MBOMBELA 2.3%

BUSINESS AND FINANCE SECTOR ANNUAL GROWTH





Part 1Part 1The commercial private property sector

employs roughly 1.5 million people in South Africa, accounting for 9.4% of all the jobs within the country. The Mpumalanga Province contributes approximately 0.8% of the national labour force and 11.5% of its own economy. In the City of Mbombela approximately 26 050 people are employed within the commercial private property sector contributing to 11.1% of its own economy.

n 3.5 Value in terms of Tax Revenue Generated

Tax revenue generated on production activities that are related to the commercial private property sector indicates the contribution made to state revenue by this sector. Tax revenue is a function of income generated and is therefore estimated by calculating the national proportion of production for each relevant activity and equating it to total tax received by the construction, and business and finance sectors of the Mpumalanga

Province and the City of Mbombela in 2016. This calculation is based on the

assumption that the GDP composition of the relevant sectors within the provincial and local economies are in accordance with the national economy, which in turn presents the level of tax revenue generated by the SARS. Kindly note that the tax calculations present tax income of SARS and not the local municipal tax revenue.

Table 6 indicates the tax revenue calculations for the national, provincial and local economies.

The private property sector contributes approximately 12% of tax revenue generated within the national economy (R 8.3 billion). In terms of the private property sector of the Mpumalanga Province, it is evident that the private property sector contributes to 9.5% (R 425 million) of all tax revenue generated in the province. In addition, the private property sector in the City of Mbombela has a local tax revenue contribution of 12.53% (R 11 million).

Main Sector Sub-Sector Major Activities

2016 Tax Revenue (Rand Millions, constant 2010 prices)


Construction Construction Activities Site preparation 18.9 1.2 0.2


(excluding civil engineering) 861.4 54.3 10.1

Construction Construction Activities Building installation 187.9 11.8 2.2

Construction Construction Activities Building completion 91.4 5.8 1.1


with operators 54.9 3.5 0.6

Business and Finance Other business activities Architectural, engineering and other technical services 2 216.8 108.3 26.9


properties and on a fee or contract basis 4 914.6 240.0 59.6

Total commercial private property construction 3 431 185 41

Total commercial private property management 4 915 240 60

Total commercial private property sector 8 346 425 101



CONS

TRUC

TION

M

ANAG

EMEN

T

Table 6: Tax Revenue




Overview of the Economic Value of Commercial Private Property

Commercial private property is essentially defined as land or buildings that belong to a private individual or company/group of individuals, rather than the government. In other words, the property owned by non-governmental entities. Private commercial property for the purpose of this report, specifically include retail, office, industrial buildings as well as large-scale residential property developments and does not refer to individual private residences.

Section 4

The commercial private property construction performance is derived from the construction activities sub-sector comprising 57% of the construction main sector, with 8.9% of the business and finance sector also represented in the form of specialised services. The real estate activities of commercial private property management highlights the business and finance sector as its main economic role-player with 18.8% of the main sector comprising of commercial private property management related services.

The estimated value of the commercial private property sector is summarised as follows:

Gross Domestic Product - The private property sector contributes approximately R 237 billion to the national economy (8.2%), with construction contributing approximately R 152 billion and property management R 84 billion. In terms of the Mpumalanga Province it is evident that approximately 6.2% (R 14 billion) consists of private property sector activities of which R 9 billion is attributed to property construction and R 3.9 billion to property management activities.

On the other hand, the private property sector in the City of Mbombela contributes approximately 8.3% (R 2.8 billion) to the local economy of which R1.8 billion is attributed to property construction and R 1 billion to property management activities.

Jobs sustained – Private property sustains roughly 1.5 million jobs within the national economy of which 94% (1.4 million jobs) is within the property construction sub-sector and the remaining 6% (98 368156 jobs) in the property management sub-sector. The jobs sustained within the private property sector

takes up approximately 9.4% of the national employment level.

On a provincial level it is evident that the private property sector in the Mpumalanga Province employs roughly 135 320 people of which 96% (129 319 jobs) is attributed to property construction and 4% (5001 jobs) to property management activities. The City of Mbombela has roughly 26 050 people employed in the private property sector of which 95% (24 834 jobs) is within property construction and 5% (1 216 jobs) is occupied in the property management sub-sector.

Tax generated – The National private property sector generated R8.3 billion for the tax fiscus during 2016, of which 41% (R3.4 billion) was generated from property construction and 59% (R4.9 billion) from property management activities. In terms of the provincial tax generated it is evident that the private property sector has contributed roughly R425 million of which 44% (R185 million) was from property construction and 56% (R 240 million) from property management activities. Furthermore, the tax generated in the City of Mbombela in 2016 was R 101 million with 40.5% (R 41 million) from property construction and 59.5% (R 60 million) from property management.





Part 1Part 1What’s happening in Mbombela?

Several prominent commercial developments are planned in the Riverside area of Mbombela. The Riverside Park - Ext 24 project is a 74-ha mixed-use development, including retail, wholesale, accommodation, motor dealer, business, and office functions. Included in the confirmed anchor tenants include several large retailers and motor dealers. The township application of this project has been approved and will form part of the larger Riverside Precinct in Mbombela.

An additional commercial investment is the Riverside Commercial Park - Ext 12, a 12-ha development marketed as visible and accessible to transient consumers. Zonings associated with this development include motor dealers, manufacturing, and retail. Also, included in the Riverside Precinct is the Riverside Office Park, which offers 15 000m2 office space with sectional title ownership, centrally located in Riverside, with state-of-the art design aspects, with good access to retail and restaurant facilities in the Riverside Mall.

THE ROLE AND IMPACT of the


M p u m a l a n g a

2017


Ermelo

Nelspruit

Bethal

Piet Retief

EmalahleniBarberton

Dullstroom


White River

BelfastEmgwenya

eManzana

Carolina

Breyten

KwaMhlanga

Siyabuswa

Sabi Park

Marloth Park

Skukuza

KomatipoortMalelane

Jeppes Reef

Amsterdam

EvanderSecunda

Standerton

Embalenhle

Volksrust

Daggakraal

Wakkerstroomll

l

l

l

l

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l

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Part 2Part 2

The purpose of this report is to investigate the second component of the “The Role and Impact of the Commercial Private Property Sector in the Mpumalanga Province study. The first component contextualises the size and quantity of the private property sector in the Mpumalanga Province to provide a foundation for the importance of the industry and specifically the value that it holds within the larger economy. Essentially the purpose of this section of the report is to supplement the first component of the study by analysing the development application processes of the City of Mbombela Local Municipality (CoM). Moreover, this report intends to provide a perspective on existing administrative processes, highlighting certain areas of concern and possible improvements where required.

The analysis of the commercial private property sector in the City of Mbombela forms part of a series of comparable reports formerly published by SAPOA. These include the analysis of the role and value of the commercial private property sector in the Western Cape (2010), Kwa-Zulu Natal (2015), and the Gauteng Province (2016).

Introduction Section 1

n 1.1 Study AreaThe Mpumalanga Province is famous

for being one of the most beautiful and dynamic provinces in South Africa. The province is situated in the North-eastern parts of South Africa and borders the south of the Limpopo Province, east of the Gauteng Province and North of Kwa-Zulu Natal. In addition, the Mpumalanga Province borders neighbouring countries

Ermelo

Nelspruit

Bethal

Piet Retief

EmalahleniBarberton

Dullstroom

Lydenburg SabieHazyview

White River

BelfastEmgwenya

eManzana

Carolina

Breyten

KwaMhlanga

Siyabuswa

Sabi Park

Skukuza

KomatipoortMalelane

Jeppes Reef

Amsterdam

EvanderSecunda

Standerton

Embalenhle

Volksrust

Daggakraal

Wakkerstroomll

l

l

l

l

l

ll

l

l

l

l

l

l

ll

ll

ll

l

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City of Mbombela Local Municipality

Gert Sibande District Municipality

Nkangala District Municipality

Ehlanzeni District Municipality

Swaziland and Mozambique east of the Province. The capital city of the Mpumalanga Province is Mbombela, formerly known as Nelspruit, located within the Mbombela Local Municipality. As of August 2016, the Mbombela Local Municipality is named the City of Mbombela due to the amalgamation of the Mbombela Local Municipality and the Umjindi Local Municipality.

n 1.2 Research ApproachThe general research approach intends

to clarify the methodology and approach utilised to measure the performance of the application administration processes within the relevant departments of the CoM. The private commercial property sector comprises of various construction and property management activities as identified in Section 2 of the first component of this study.

As indicated, the commercial private property sector consists of construction activities along with property management activities. Various administrative processes are involved within the value chain of each of these activities. For this study, it is impractical to measure administration efficiency within the entire development cycle. Therefore, this report identifies the administration of development applications including building plans and Land Use Management (LUM) applications as the central component of the development lifecycle from an administrative point of view. Administration of the relevant

development applications are dealt with in this report taking into consideration that this is a municipal function.

Application processing proficiency is measured by utilising application tracking case studies provided by the private and public sector respectively, in addition an overall assessment of the municipal development application database. However, to provide context, it is important to firstly provide clarity on the regulatory environment in which the application processes function, along with the general timeframes prescribed for administration.

After forming an understanding of the regulations and processes involved in building plan and LUM application administration, the application tracking analysis is initiated by identifying a sample of applications provided by the private and public sector thereafter identifying any delaying factors experienced by the private sector respondents on the one side as well as the municipal respondents on the other.

As per the Spatial Planning and Land Use Management Act 16 of 2013 (SPLUMA)1, effective from 1 July 2015, all local municipalities are now responsible for the control and regulation of the use of land within their respective municipal areas. As such, all building plan and LUM applications are dealt with primarily at municipal level.

Departments and government entities consulted during the research process

l Statistics South Africa l City of Mbombela Local Municipality l Mpumalanga Province

n 1.3 Purpose of this reportUltimately the purpose of this report is to

utilise existing application tracking scenarios as tools to measure the turnaround times of the development applications in terms of timeframes prescribed by the relevant regulatory entity. It should be noted that this report does not represent an audit of all development applications administered by the CoM but rather, an evaluation of application tracking case studies provided by both the public and private sectors.

This report was compiled after a time of fundamental change in development

planning legislation . Therefore, not only does this report seek to identify factors influencing the development application processes and timeframes, but it also intends to recognise the relevance of the transformed legislation.

Furthermore, it is understood that the “The Role and Impact of the Commercial Private Property Sector in the Mpumalanga Province” study will be utilised to obtain valuable information regarding the civic administration of property development within the identified study area to quantify the distinct roles that the public and private sector play in property development, particularly in terms of timeframes. Through quantifying the economic value of the commercial private property sector and determining the estimated application timeframes, the study provides insight on the level of impact that the development application administration tempo has on the provincial and local economy.

n 1.4 Research LimitationsDue to the qualitative and quantitative

research methodology, certain limitations were noted during the research process. It is important that the limitations are stated and recognised in the report to ensure that there is a contextual understanding of the results. The basic limitations to the research are:

➦ Primary data sources were largely reliant on verbal communications by various government officials and private property professionals. For the sake of objectivity, all detrimental remarks have been excluded in the research. The captured information provides a multisided perspective based on the highest possible representation of the private and public sector respondents.

➦ It should be noted that the response received from the application tracking questionnaires that were distributed to the private sector was insufficient, however a significant number of interviews were completed as a means of obtaining the required information. All the limitations are addressed through

the provision of a wide variety of case studies. The limitations are therefore, mitigated as far as possible to ensure that the report contains accurate results.

1The SPLUMA came into operation on the 1st of July 2015, resulting in a number of LUM changes in the application process.

Map 1: Mpumalanga Province



Part 2Part 2n 1.5 Report Outline

The report firstly investigates the policy and legislative environment in which development processes operate and secondly identifies the various application administration processes with regard to property development applications.

Furthermore, it determines the application administration efficiency and provides a number of recommendations and guidelines in terms of improving the existing administrative functions of the CoM.

The following sections are included in this report:

Regulatory Environment Section 2

The regulatory and legislative environment in which application processing functions is outlined.

Land Development Applications and Regulatory Entity Responsibilities

Section 3

This section includes an analysis of the types of development applications and the regulatory responsibilities of the municipality in

terms of application processing.

Development Planning Application Process Section 4

This section provides a summary of the development planning application processes in terms of each phase of the application and

the relevant timeframes.

Application Tracking Analysis Section 5

An overview of the number of applications processed as well as the e ciency rate. Applications are reviewed and assessed in order to

determine the pressing challenges and shortcomings.

Private Sector Perspectives Section 6

The purpose of this section is to outline the municipal performance based on the experiences of the private sector in terms of LUM and

building plan application submissions.

Recommendations Section 7

This section summarises the key problems and challenges identi ed in the analysis and ultimately provides recommendations based on the

issues identi ed in the preceding sections.

The Economic Impact of Application Delays Section 8

All variables are processed into the economic impact assessment model in order to determine the potential nancial losses associated

with application delays.

Conclusion and Final Remarks Section 9

An overview of some nal deductions and remarks based on the analysis conducted.

Section 2 The Regulatory Environment

To be able to recognise and analyse the tempo and proficiency of the application administration processes within the CoM, it is important to obtain an understanding of the legislative environment that influences the application processes. This section of the report therefore provides a perspective on the relevant national, provincial, and local legislation and policies in order to gain context and background, along with forming a basis from which application processes can be examined.

The legal framework under which municipal spatial planning functions in South Africa has, since the 1994 elections, changed significantly. Prior to 1994, planning was essentially regulated according to the division of land through implementing racial segregation known as apartheid. As such, South Africa had distinct planning legislations for the then four Provinces as well as for the former black homelands. Although much of the Apartheid planning legislation remained unchanged subsequent to the 1994 democratic elections, new legislation was adopted as a means of reversing or mitigating the spatial injustices of the Apartheid planning administration. One of which was the Development Facilitation Act No 67 of 1995 (DFA).

The DFA was employed as an interim measure to deal with the spatial issues as a result of the apartheid legacy. It should be noted that the DFA was, at the time, the only legislation that specifically dealt with spatial development principles and land use management. During 2010, the DFA chapters that dealt with LUM were deemed unconstitutional and were subsequently repealed along with a number of other planning related legislation that operated parallel with the DFA.

As a means of providing a single legislative, integrated planning system for the entire country the department of Rural Development and Land Reform (DRDLR) introduced the Spatial Planning and Land Use Management Act No 16 of 2013 (SPLUMA). Essentially, SPLUMA was introduced as a legislative instrument to replace the DFA in terms of regulating spatial planning and land use management in South Africa. The legal basis for the origin of SPLUMA was prompted by the constitutional court2 in which it found that, unlike the regulations stipulated in the DFA, municipal planning is the exclusive function of a municipal government in terms of LUM. SPLUMA was implemented on the 1st of July 2015 along with additional legislation intended to ultimately provide a platform for sustainable and resilient development planning in South Africa.

n 2.1 Understanding the Spatial Planning and Land Use Management Act 16 of 2013

The purpose of the Spatial Planning and Land Use Management Act No 16 of 2013 is to essentially provide for a uniformed spatial planning system in South Africa that allow municipalities to have the majority of control in land use management and development processes.

The enactment of SPLUMA has a significant role in terms of the socio-economic context of South Africa. Apart from the provision of comprehensive and sustainable planning systems, the purpose outlined in SPLUMA is motivated by a strong need for social and economic inclusion. As

What’s happening in Mbombela?The construction of the Mpumalanga High Court in Mbombela started

in 2013 and is scheduled for completion in 2017. The five-story court building, which has five criminal courtrooms and six for civil cases, is developed at an estimated cost of R800 million. The addition of the new High Court development within Mbombela facilitates an injection for local economic growth and employment opportunities as the High Court serves the entire Mpumalanga Province.

2Constitutional court of South Africa: City of Johannesburg Metropolitan Municipality v Gauteng Development Tribunal and Others CCT89/09 18 June 2010



Part 2Part 2

SPLUMA SPATIALPLANNINGANDLANDUSEMANAGEMENTACTNO16OF2013

Purposeoftheact>Toprovidea

frameworkforspa0alplanningandlandusemanagementinSouthAfricathatprovidesforinclusive,developmental,equitableandefficientspa0alplanningatthedifferentspheresofgovernment.

OBJECTIVES of the Act: ü Provide for a uniform, effec1ve and comprehensive system.

ü Ensures that spa1al planning promotes social and economic inclusion.

ü Provide for development principles, norms and standards.

ü Provide for sustainable and efficient use of land.

ü Provide for coopera1ve government and intergovernmental rela1ons. ü To redress the imbalances of the past and to ensure that there is equity.

Sec1on 2(2) : No other legisla1on may prescribe an alterna1ve or parallel mechanism, measure, ins1tu1on or system on spa1al

planning, land use, land use management and land development in any way inconsistent with the Act.

This makes SPLUMA the most relevant and important piece of legisla<on in spa<al planning.

CATEGORIES OF SPATIAL PLANNING SP

ATIA

L

RES

ILIE

NC

E GO

OD

ADM

INISTR

ATION

SPATIAL SUSTAINABILITY

Municipal Control and regulate the use of land through IDP’s, Land use Scheme’s and SDF’s.

Provincial Monitor compliance by municipali<es with SPLUMA Compile, approve and review Provincial SDF and

other policies.

National Making and review of na<onal policies designed to monitor other spheres

Compile, approve and review Na<onal SDF .

Support and Monitor other spheres and priori<se na<onal

interests.

Support and Monitor provincial and municipal ac<vi<es and priori<se

provincial interests.

Municipal differen<a<on – each municipality is unique.

ALIGNMENTOFAUTHORISATIONPROCESSESonpoliciesandlegisla0onimpac0ngonlanddevelopmentapplica0onsanddecisionmakingprocesses.

MUNICIPALITIESASAUTHORITIESOFFIRSTINSTANCE.Reitera0onofthesolemandateofmunicipali0eswheremunicipalplanningisconcerned.

ESTABLISHMENTOFMUNICIPALPLANNINGTRIBUNALSANDAPPEALSSTRUCTURESbymunicipali0estoprocesslanddevelopmentapplica0ons.

PREPARATIONOFRESPECTIVESDF’Sbyallthreespheresofgovernment,basedonnormsandstandardsguidedbydevelopmentprinciples.

DEVELOPMENTOFALANDUSESCHEMESingleandinclusivefortheen0remunicipalitywithemphasisonmunicipaldifferen0a0on.

STRENGTHENEDINTERGOVERNMENTALSUPPORTthroughenforcement,complianceandmonitoringprocesses.

NEWDEVELOPMENTAPPLICATIONSmadeintermsofSPLUMAandmunicipalby-laws.

Legislation repealed by SPLUMA Removal of Restric<ons Act 84 of 1967

Physical Planning Act 88 of 1967

Less Formal Township Establishment Act 113 of 1991

Physical Planning Act 125 of 1991

Development Facilita<on Act No 67 of 1995

FREQUENLTY ASKED QUESTIONS

1.  What happens to pending old order Ordinance applica1ons now that SPLUMA has

been enacted as of 1 July 2015? Depending on which phase the applica<on is in, the

municipality can either process the applica<on in terms of the old legisla<on and

transi<onal measures, or request that a new applica<on be lodged.

2.  What happens to the former Development Facilita1on Act applica1ons that have not

been finalised by the province? The Gauteng Province is categorising all DFA

applica<ons into their respec<ve municipality and these will then be handed over to

the municipality to process.

3.  Can the municipality accept development applica1ons in terms of the old Ordinances

subsequent to the 1st of July 2015? The old ordinance remains in opera<on un<l the

municipal by-laws have been adopted. However, development applica<ons shall be

lodged in terms of the old Ordinance AND in accordance with SPLUMA.

a)  Who can appeal? Any person whose rights are affected by the municipal tribunal decision

b)  What can be appealed? Appeal against (i) En<re decision, (ii) Condi<ons, (iii) Appeal based on process review applica<on, and (iv) failure to make a decision

c)  How does one go about a_aining intervener status? Submit a pe<<on to the MPT with an affidavit proving that no collusions are evident.

d)  When granted intervener status, pe<<on to intervene is lodged. When is intervener status granted to objector? When an applica<on is submi_ed an interested person can at any point in <me, but should apply within 7 days of becoming aware of proceedings, be granted intervener status by the tribunal or authorized official.

e)  Theore<cally, how long does the appeal process take? Appeals are to be lodged within 21 days of decision. Pre-hearing process should be completed within 150 days of no<ce to appeal. Appeal is submi_ed within 14days ader comple<on of pre-hearing process.

Createdby:Urban-EconDevelopmentEconomists

a result, many of the poverty stricken and previously excluded areas should have the opportunity to improve socio-economic conditions and ultimately contribute towards the national economy. In addition, the enforcement of the sustainable and efficient use of land through cooperative governance ultimately results in enhanced opportunities and potential for increased economic investment. The purpose of SPLUMA outlines the intentions of national, provincial and local government to provide a socio-economic environment that is reflective of a democratic society.

n 2.2 National Legislative Framework

The legislative framework under which development planning on a national scale functions is based on the following:

Constitution of RSA No 108 of 1996 > In terms of municipal planning the role of the Constitution of RSA is that of assigning municipal planning responsibilities to municipalities in terms of Section 156 of the Constitution of RSA read with Part B of Schedule 4, in terms of which municipalities have both executive authority and a right to administer to the extent set out in Section 1553. Municipal planning is therefore the constitutional responsibility of local and metropolitan municipalities.

Municipal Systems Act No 32 of 2000 > Requires that local government prepare Integrated Development Plans (IDP’s). The IDP is a comprehensive plan that should reflect, among other, the long term municipal development vision within its area of jurisdiction, identify areas of highest need for basic municipal services, as well as the municipal development strategies accompanied by a detailed financial plan. In addition, it is required that all IDP’s include a Spatial Development Framework (SDF) which includes the basic guidelines for a land use system within the municipality.

Development Facilitation Act no 16 of 1995 > Prior to its repeal, the DFA intended to facilitate and speed up the implementation of the reconstruction and development

programmes and projects in relation to land, along with providing general principles governing land development throughout South Africa. After the DFA was repealed, all applications in were submitted in terms of the Town Planning and Townships Ordinance No 15 of 1986 until the municipal by-laws (as stipulated by SPLUMA) are in place.

Spatial Planning and Land Use Management Act 16 of 2013 > The mandate for national government as stipulated by SPLUMA indicates that national government should provide support and assistance to municipalities as well as monitor the compliance of municipalities and provinces to SPLUMA. In addition, SPLUMA stipulates that a national SDF should be developed in order to guide development in all of the provinces.

National Building Regulations and Building Standards Act No 103 of 1977 > Essentially implemented for the purpose of building control, prescribing building standards and other related matters. All proposed building plans are submitted in line with this Act.

Additional Acts that have relevance to development planning >

− South African National Road Agency Limited and National Roads Act No 7 of 1998

− Restitution of Land Rights Act No 22 of 1994

− Restitution of Land Rights Amendment Act 48 of 2003

− Restitution of Land Rights Amendment Act 15 of 2014.

− Housing Act No 107 of 1997 − Land Survey Act No 8 of 1997 − Local Government Municipal Property

Rates Act No 6 of 2004 − Subdivision of Agricultural Land Act No

70 of 1970

National Economic Policies > The National Development Plan (NDP)

2030 highlights, among other, the need for the improvement of local township economies and employment creation,

3SALGA-South African Local Government Association 2011



Part 2Part 2investing in infrastructure and environmental sustainability, planning for an inclusive rural economy, and building a capable and developmental state. A summary of the directives announced in the NDP includes, among others, the reversing of urban sprawl; sustainable human settlements; new urban development around transport and economic nodes; creating township economic hubs; integrating townships into the wider economy; informal settlement upgrades; quality design of public space; and redirecting state-funding from non-strategic investments towards more valuable investments.

The New Growth Path (NGP) 2011 advocates the creation of jobs largely in the private sector and highlights the need to address unemployment, poverty and inequality. Furthermore, the NGP sets a target of creating five million jobs by 2020. This target is projected to reduce unemployment from 25% to 15%.

ENVIRONMENTAL RELATED LEGISLATION

On a national level there are also a number of environmental related policies and legislations that influence LUM and building plan applications, which are listed as follows:

National Environmental Management Act (NEMA) 107 of 1998 and associated Acts > although primarily related to environmental matters, NEMA also contains certain principles relating directly to planning where the environment may be affected. The Act requires sustainable development, i.e. where there is an integration of social, economic and environmental factors in the planning, implementation and evaluation of decisions, so as to ensure that development serves both present and future generations.

The Act provides for the establishment of regulations and listing activities that require a suitable level of environmental assessment. Furthermore, it indicates the extent of such an assessment and ensures that an integrated environmental management approach is followed.

Other specific environmental management Acts that were promulgated to deal with specific methods of environmental management are listed below:

− NEMA: Protected Areas Act No 57 of 2003. − NEMA: Biodiversity Act No 10 of 2004. − NEMA: Air Quality Act No 39 of 2004. − NEMA: Integrated Coastal Management

Act No 24 of 2008. − NEMA: Waste Act No 59 of 2008.

n 2.3 Provincial Legislative Framework

The mandate of the Mpumalanga provincial government lies first and foremost in the Constitution of RSA in which it states that the Premier performs executive, policy, legislative, intergovernmental and ceremonial functions in the province. Furthermore, the provincial government must be capacitated and positioned to effectively provide leadership, oversee functional administration processes, and provide long term planning and policy coordination.

The legislative framework under which development planning on a provincial scale operates is based on the following:

Spatial Planning and Land Use Management Act 16 of 2013 > the mandate for provincial government is to essentially provide support to municipalities as well as assist in any land development disputes. Furthermore, SPLUMA stipulates that provincial government should strengthen the capacity of municipalities to implement an effective system of LUM. SPLUMA came into effect on the 1st July 2015. Importantly, SPLUMA does not have the legal right to repeal any provincial planning legislation or national planning legislation that was assigned to the provincial sphere. Any provisions in provincial legislation that are inconsistent with SPLUMA will however be of no effect.

Mpumalanga Town Planning and Land Related Laws Repeal Bill 2016 > In response to SPLUMA, the provincial government introduced the Town Planning and Land Related Laws Repeal Bill to

FRAMEWORK

THE NEW GROWTH PATH:

Private Bag X9047, CAPE TOWN, 8000120 Plein Street, 15th Floor, CAPE TOWNTel: (021) 466 9800 • Fax: (021) 461 0428

Private Bag X149, PRETORIA, 000177 cnr Meintjies and Esselen Streets, DTI Campus, 3rd Floor, Block A, Sunnyside, PRETORIATel: (012) 394 1006 • Fax: (012) 394 0255

Publications in the Series

1. The New Growth Path: Framework2. Accord 1: National Skills Accord3. Accord 2: Basic Education and Partnerships with Schools4. Accord 3: Local Procurement Accord5. Accord 4: Green Economy Accord

NEw GrowTh PATh: ACCORD 3

LoCAL ProCUrEMENT

ACCorD

Private Bag X9047, CAPE TOWN, 8000120 Plein Street, 15th Floor, CAPE TOWN

Tel: (021) 466 9800 Fax: (021) 461 0428

Private Bag X149, PRETORIA, 000177 cnr Meintjies and Esselen Streets,

DTI Campus, 3rd Floor, Block A, Sunnyside, PRETORIA

Tel: (012) 394 1006 Fax: (012) 394 0255

basic educationDepartment:Basic EducationREPUBLIC OF SOUTH AFRICA

higher education& trainingDepartment:Higher Education and TrainingREPUBLIC OF SOUTH AFRICA

Publications in the Series

1. The New Growth Path: Framework

2. Accord 1: National Skills Accord

3. Accord 2: Basic Education and Partnerships with Schools

4. Accord 3: Local Procurement Accord

Accord03ProcureJfinal.indd 30-31 2011/11/19 4:18 PM


NATIoNAL SKILLS ACCorD





Accord01skills6EDUdept.indd 1 2011/09/21 8:50 PM


BASIC EDUCATIoN AND PArTNErShIPS

wITh SChooLS





Accord02BasicEDUdevEDUdept.indd 1 2011/09/21 8:53 PM

THE NEW GROWTH PATH:FRAMEWORK

THE NEW GROWTH PATH:FRAMEWORK

Eco final cover.indd 1 3/25/11 4:07 AM

manage the transition from the former planning dispensation to the new planning dispensation namely SPLUMA. Among other, the Bill seeks to repeal the following acts:

❍ Transvaal Town Planning and Townships Ordinance, No 15 of 1986;

❍ Division of Land Ordinance, No 20 of 1986 ❍ Removal of Restrictions Act, No 84 of 1967 ❍ Physical Planning Act, No 88 of 1967 ❍ Regulations Relating to Township Establishment and Land Use Government, 1986

❍ Less Formal Township Establishment Act, No 113 of 1991

Mpumalanga Planning Bill 2013 > The Bill provides for the planning and implementation of a uniformed land development and land use management system. The intention of the Bill is to guide development through the provincial and municipal spatial development frameworks as well as the procedures, processes and formats of land applications. Importantly, the Bill provides for the support to municipalities and to promote the integration of provincial policies and frameworks with national and municipal plans. The Bill guides the process to be followed in the application for development and clearly states that the onus lies solely with the municipality in terms of the approval or rejection of all applications.

Provincial Spatial and Economic Policies > The Mpumalanga Economic Growth and Development Path 2011 aims towards a more ‘equitable and inclusive economy’. The policy emphasises the economic challenges experienced by the province including the decline in mining jobs, manufacturing jobs, and employment growth in the tertiary sectors. Furthermore, it intends to improve and strengthen the provincial economy by providing bold and effective strategies to achieve an equitable economy. The policy defines a set of principles for unlocking economic and employment growth. These include Broad Based Black Economic Empowerment, strategic procurement that benefits SMME’s, and labour and skills development. In addition, the province will form inclusive and shared economic growth

by focussing on cost reductions in business. The province, along with the municipalities, will acquire strategic land and rezone it as a ‘tool to foster economic development’.

The Mpumalanga Dept. of Economic

Development and Tourism Strategic Plan 2015 - 2020 provides a framework to consolidate efforts on provincial priorities in all matters affecting the provincial economy. The overarching vision of the plan is to ‘drive economic growth that creates decent employment and promote sustainable development through partnership’. The strategic plan highlights, among other, the importance of job creation and seizing potential for new economies. Importantly, the plan highlights the need to form strong partnerships with the private sector.

The Mpumalanga Vision 2030 expresses

the key priorities, objectives and targets of the province. The overall objectives of the vision is to facilitate decision making and prioritisation to foster informed decisions and trade-offs. The key outcome of the vision is to promote employment and economic growth within the province. The target set forth by the Mpumalanga Province includes reaching a total of 1.2 million additional jobs with an unemployment rate of 6% and an average GDP growth above 5%.

n 2.4 Municipal Legislative Framework

Prior to the promulgation of SPLUMA, the legislative framework in which development planning operated was based on the former town planning schemes as stipulated by pre-SPLUMA legislation as well as the Town Planning and Townships Ordinance No 15 of 1986. Essentially, the Town Planning and Townships Ordinance intended to control planning in the province. The Ordinance stipulates specific guidelines

Draft Mpumalanga Economic Growth & Development Path

“Towards a more equitable and inclusive economy”

February 2011



Part 2Part 2about development planning application processes and the role that provincial and local government play. The following legislation applies to the CoM:

Spatial Planning and Land Use Management Act 16 of 2013 > the mandate for local government is to fundamentally place development planning processes in the domain of the local municipality. As a means of providing a uniformed development application approach, SPLUMA stipulates that each municipality is responsible for the establishment of a municipal planning tribunal or any other authority to mandate land development decisions. SPLUMA indicates that local municipalities must develop an SDF, IDP, and land use scheme. According to SPLUMA, each municipality should also develop municipal planning by-laws that are in line with the regulations stipulated in the Act.

Municipal Spatial and Economic Policies > The objective of the Mbombela Local Municipality Spatial Development Framework (2011-2030) is to present a strategic roadmap guiding decision-making associated with the development of land within the municipality. This includes the conception of principles and directives regarding spatial development to direct

public and private sector investment. The Mbombela SDF highlight several key spatial strategies as a means of ensuring the realisation of its spatial vision. These strategies reflect the unique context of the local municipality, and are adapted to foster economic growth as per the needs of the community. Strategies include the following:

l The creation of a Municipal Open Space System (MOSS);

l Protection of prime agriculture land; l Prioritise land reform; l Develop rural-based tourism; l Development of an integrated movement system;

l Plan compact urban growth; and l Prioritising development in Economic Opportunity Zones.Ultimately, the primary objective of the

SDF is to ensure responsible development that prioritises the economic and social empowerment of the community, while retaining environmental sustainability.

The Mbombela Local Economic Development Strategy (2015) serves to highlight potential projects to unlock economic growth within CoM, with specific reference to employment creation and SMME empowerment. The LED Strategy highlight the critical economic sectors that will catalyse local economic growth over the long term, including agriculture, trade,

Map 2: The Golden Triangle, Mbombela

manufacturing, tourism, and construction. “Together in partnership, stimulating economic

development by providing efficient service delivery, meeting the needs of local communities, and creating an enabling

environment for business development, economic growth and employment creation” – Mbombela LED Strategy

As per the mandate of the municipality, the Strategy envisions local economic growth and development in accordance with the following objectives:

l An efficient and enabling municipality with exceptional infrastructure;

l An inclusive municipal economy; l An innovative and technologically advanced municipality;

l An education and skills development orientated municipality; and

l An environmentally friendly and tourism centred municipality.

Map 3: LED opportunities, CoM

Section 3 Land Development Applications

n 3.1 Types of Development Applications

There are two distinct categories of development applications that are addressed in this report. These are building plan applications and Land Use Management (LUM) applications. Typically, building plan applications have to adhere to a specific set of standards, whereas LUM applications tend to be more complex.

n 3.1.1 Building Plan ApplicationsThe purpose of a building plan application

is to permit the new construction of buildings in order to comply with the minimum construction standards and specifications, as specified in the National Building Regulations and Building Standards Act No. 103 of 1997. According to the Act, any new or additional alteration to the existing structure of a

building is to be approved by the CoM. The Act requires that any building plan application must satisfy both the requirements of the Act and any other applicable laws pertaining to issues relating to the environment, heritage, planning etc. According to the Act building plan applications include - the alteration, conversion, extension, rebuilding, re-erection, subdivision of or addition to, or repair of any part of the structural system of any building.

n 3.1.2 Land Use Management Applications

LUM is the legislative mechanism through which new development is approved and managed, and is therefore an implementation tool for municipal spatial development frameworks. Depending on how it is implemented, LUM can be utilised as



Part 2Part 2an effective supporting mechanism for growth management. The types of LUM applications that exist as per SPLUMA, are summarised in the following section. All LUM applications are carried out in terms of the Spatial Planning and Land Use Management Act 16 of 2013. SPLUMA divides land development and land use applications into category 1 and 2 applications. The following category 1 and 2 applications can be made at CoM:

Some of the above mentioned land use applications are defined as follows:

The establishment of a township or the extension of the boundaries of a township – The establishment of a township is where land is subdivided into individual land parcels or erven for various land uses including roads and public places (open space).

The amendment of an existing scheme or land use scheme by the rezoning of land (Rezoning) – zoning assigns certain rights to a property (it normally specifies what the free entry, consent and prohibited land uses are and sets out the limitations and bulk factors for the zone). The initial zoning is normally undertaken by the municipality when a scheme is prepared and an applicant will then seek to amend the scheme and/or rezone the land in question. Cases may however exist where properties fall outside a

scheme and an initial zoning is sought by an applicant for the land’s incorporation into a scheme (MILE, 2013)

The removal, amendment, or suspension of a restrictive or obsolete condition, servitude or reservation against the title of the land - Applications submitted due to obligations or restrictions which are binding on the owner of the land by virtue of a restrictive condition or servitude registered

against the land, condition of approval for the amendment to the municipality’s scheme; a condition of approval for the subdivision or consolidation of land; a condition of approval for the development of land situated outside the area of a scheme; or a condition of approval for the phasing or cancellation of an approved layout plan.

The amendment or cancellation in whole or in part of a general plan of a township - Applications for the phasing or cancellation of an approved layout plan for the subdivision or the development of land. Such applications normally occur when a developer has second thoughts on a particular township development and wants to phase or stagger such development and/or wishes to modify the layout plan over a portion of the original township area. (MILE, 2013)

Category 1 Applications Category 2 ApplicationsAll category 1 applications and all opposed category 2

applications must be referred to the Municipal Planning Tribunal

All category 2 applications that are not opposed must be considered and determined

by the authorised official

The establishment of a township or the extension of the bound-aries of a township.

The subdivision of any land where such subdivision is expressly provided for in a land use scheme.

The amendment of an existing scheme or land use scheme by the rezoning of land. The consolidation of land.

The removal, amendment, or suspension of a restrictive or obsolete condition, servitude or reservation against the

title of the land.

The simultaneous subdivision and consolidation of land.

The amendment or cancellation in whole or in part of a general plan of a township.

The consent of the municipality for a land use purpose or departure or deviation in terms of a land use scheme or existing

scheme which does not constitute a land development application.

The subdivision4 and consolidation5 of any land other than a subdivision or consolidation which is provided for as a category

2 application.

The removal, amendment or suspension of a restrictive title condition relating to the density

of residential development on a specific erf where the residential density is regulated by a land use scheme in operation.

Permanent Closure of a public place.4The division of a piece of land into two or more portions (SPLUMA Regulations Schedule 5(4))

5The joining of two or more pieces of land into a single entity (SPLUMA Regulations Schedule 5(4)) 6 A land use right that may be obtained by way of consent from the municipality and is

specified as such in the land use scheme. (SPLUMA Regulations Schedule 5(4))

Any consent or approval required in terms of a condition of title, a condition of establishment of a township or condition of an existing scheme or

land use scheme.

Any consent6 or approval provided for in a provincial law.

The subdivision and consolidation of any land - Subdivision normally refers to the subdivision of a parent erf into a limited number of portions of the original erf and each portion is so designated. Consolidation occurs when several erven are consolidated into one newly designated erf with a new number. (MILE, 2013)

Permanent Closure of a public place – Applications for the permanent closure of open space or roads. Closure of such land has often been closely associated with the consolidation and re-subdivision or re-layout of land and where it is incorporated into the proposed new township.

n 3.2 Regulatory Entity Responsibilities

To have a comprehensive understanding of development application types and processes, it is important to understand where the responsibility of application administration lies. Development applications consist of both land use management applications (LUM) as well as Building Plan applications. In terms of development applications, the legal framework is evolving swiftly and local and provincial governments are engaging in a law reform process to ensure that all land use planning activities can function accordingly. The following section provides an overview of the regulatory entity responsibilities as stipulated by planning law.

Land Use Management Applications As previously indicated, SPLUMA had

various implications on the operations of both municipalities and provinces in terms of their responsibilities and functions within the former legislative environment of development planning. Of significant importance for all provinces and municipalities is the finalisation of all appeals, land use and development applications which have been submitted in terms of legislations preceding SPLUMA.

From a spatial planning perspective, SPLUMA stipulates the roles and responsibilities of each sphere of government. According to SPLUMA the roles and responsibilities of each sphere are as follows:

National Government > Should monitor and support provincial and municipal spheres of government whilst prioritising national interests. In addition, it is the responsibility of national government to establish and review national development policies that are designed to monitor other spheres of government. Furthermore, SPLUMA Section 13 indicates that (1) “The Minister must, after consultation with other organs of state and with the public, compile and publish a national spatial development framework”.

Provincial Government > Responsible for monitoring the compliance of local municipalities with SPLUMA. Furthermore, SPLUMA Section 15 indicates that (1) “The Premier of each Province must compile, determine and publish a provincial spatial development framework for the Province” and (2) “A provincial spatial development framework must be consistent with the national spatial development framework.”

Local Government > Responsible for the control and regulation of land. SPLUMA indicates in section 20(1) that “the municipal council of a municipality must by notice in the Provincial Gazette adopt a municipal spatial development framework for the municipality” and in section 20(2) that “the municipal spatial development framework must be prepared as part of a municipality’s integrated development plan in accordance with the provisions of the Municipal Systems Act”. In addition, SPLUMA section 24(1) requests that all municipalities should adopt and approve a single land use scheme within 5 years of the commencement of SPLUMA. All land use management applications, including appeals, will be processed by the local municipality.

Because of SPLUMA, municipalities are mandated with significantly more responsibility in terms of spatial planning and land use management. First and foremost, all local municipalities are required to develop municipal by-laws in terms of SPLUMA. The purpose of the municipal by-laws is to give effect to ‘Municipal Planning’ as contemplated in the South African constitution and thereby laying down and consolidating development application processes and procedures.


APPLICATION PROCESS REPORT

Part 2



Part 2Building Plan Applications

Building plan applications are regulated by the National Building Regulations and Building Standards Act No 103 of 1997. The Act stipulates that approval is required from the respective local authority prior to the construction or alteration of any buildings. As such, local municipalities undertake all decisions made on building plan applications. All building plan application appeals are dealt with by the national review board which is to be set up by the Minister.

n 3.3 Regulatory TransformationsIt is important to note that the regulatory

environment in which land development and planning operates has undergone tremendous reform. The legislative measures that used to govern planning and application processes have changed and the following section intends to highlight some of the key changes and their development implications. The building plan application process remains unchanged, however with the proclamation of SPLUMA many changes are occurring in the land use management processes.

The following key changes include: ü All provincial ordinances inconsistent with the Act are repealed, or otherwise amended through provincial legislation.

ü Laws repealed by SPLUMA include the Removal of Restrictions Act No 84 of 1967; the Physical Planning Act No 88 of 1967; the Less Formal Township Establishment Act No 113 of 1991; the Physical Planning Act No 125 of 1991; and the Development Facilitation Act No 67 of 1995.

ü Comprehensive and uniform planning system - SPLUMA stipulates that no legislation not repealed by the Act may prescribe to an ‘alternative or parallel mechanism’ on spatial planning, land use, land use management and land development inconsistent with the Act.

ü The development of municipal planning by-laws as a way of stipulating the new development application processes.

Following the formal release of SPLUMA in July 2015, the CoM initiated the process of developing the municipal planning by-law, referred to as the Mbombela by-law on spatial planning and land use management. The by-law is written in terms of SPLUMA which, among other, sets out the development principles that apply to all organs of state and other authorities responsible for land use regulation and management.

The by-law provides information and approaches regarding the following municipal functions of the CoM:

ü Municipal spatial development framework and land use scheme;

ü Institutional structure for land development and land use management decisions;

ü Development management; ü Application procedures; ü Engineering services and development charges;

ü Appeals and hearings; ü Compliance and enforcement; and ü Traditional provisions.

Section 4 Development Planning and Application Administration Processes

What’s happening in Mbombela?The Ilanga Mall, which opened its doors for the first time in 2010, is currently in the

process of being expanded, which is said to be complete in September 2017. The expansion, which includes the development will feature a Ster-Kinekor cinema, an ice-skating rink,

and an entertainment area with expanded restaurants, will increase the total floor space by approximately 20 000m². New additions to the Mall includes the international brand H&M from Sweden, Queenspark, Exclusive Books and Contempo. Other existing stores is in the process of expansion of their respective floor areas. The expansion of the retail space is also accompanied by additional covered parking, new entrances to the mall, as well as a change in road access to the site (additional traffic circles and traffic lights).

The commercial private property is an exceedingly valuable commodity within South Africa and property development processes should therefore be treated with utmost scrutiny in order to warrant economically sustainable property development and sector growth. Unfortunately, the development application processes have become quite complex. Although the stakeholders within the property development process have different motives, it is important to recognise that all stakeholders, albeit the private or public sector, equally aspire to finalise property development processes. Diagram 1 summarises, theoretically, the various components of the generic land development process, including land use management and building plan applications. It should be noted that this is a generic process, the detailed processes are outline in the remainder of this section.

When LUM approval has been granted, the following information should be completed within 24 months of approval (if applicable):

SUBMISSION OF LUM APPLICATION

NOTICE TO ORGANS OF STATE AND INTERNAL

CIRCULATION

FINAL APPLICATION DECISION

PUBLIC NOTICE Advertising

BULK SERVICES AGREEMENT AND

APPROVAL

ASSESMENT BY RELEVANT DEPARTMENTS

APPEAL

SUBMISSION OF FINAL BUILDING

PLANS SCRUTINY FINAL BUILDING

PLAN DECISION

COMMENTS

AMENDMENTS

Land

Use

Man

agem

ent A

ppro

val

Build

ing Pl

an Ap

prov

al

:Municipality Legal Admin

Applicant To comply with all conditions of approval

All applications must be accompanied by: - Completed application form - Power of attorney - Bondholders consent - Motivation - Copy of SG-Diagram - Locality and site development plan - Proof of payment

RECORD OF RECEIPT

30 DAYS NOTICE OF OUTSTANDING INFORMATION

ONLY WHEN REQUIRED

COMMENTS REQUIRED WITHIN 60 DAYS

(ORGANS OF STATE) AND 21 DAYS (INTERNAL

CIRCULATION)

Building Plans with GLA: >500m² : 30 days to approve/reject <500m² : 60 days to approve/reject

(National Building Regulations and Standards Act 103, 1997)

The land development application process has several crucial components. Before an application is submitted it is important that the local municipality is consulted by the applicant to determine firstly, whether the application is in line with the municipality’s spatial development framework, and secondly what documentation is required as part of the proposed application. Once the application is submitted and recorded, the applicant must within 30 days of notice that the application is complete place a public notice of the

application and provide proof thereof to the CoM. According to the by-law, applicants must give notice on the following applications:

ü An application for a rezoning; ü The subdivision of land larger than five hectares inside the outer limit of urban expansion as per the municipal spatial development framework;

ü Subdivision of land larger than one hectare outside the outer limit of urban expansion;

ü An application of the establishment of a township;

Diagram 1: Generic Application

Process



Part 2



Part 2

TOWNSHIP ESTABLISMENT

APPLICATION SUBMISSION

APPLICANT GIVES PUBLIC NOTICE Once a week for 2 weeks Notice for 14days on site

LOCAL AUTHORITY DISTRIBUTES APPLICATION TO DEPARTMENTS

PUBLIC HAS 30 DAYS TO LODGE AN OBJECTION

LOCAL AUTHORITY FORWARDS ALL COMMENTS AND OBJECTIONS TO APPLICANT

LOCAL AUTHORITY CONSIDERS THE APPLICATION

APPLICANT MAKES AMENDMENTS TO THE APPLICATION

APPLICATION IS ESSENTIALLY APPROVED REPORT AND CONDITIONS OF ESTABLISHMENT ARE DRAWN UP

DEPARTMENTS HAVE 21 DAYS TO COMMENT

APPLICANT HAS 30 DAYS TO RESPOND – NO RESPONSE INDICATES NO COMMENTS FROM APPLICANT

(I) May carry out inspection (II) May determine date and time of hearing if necessary

(I) Application is approved subject to conditions: - Conditions of establishment are drawn up - Lodging of plans for approval to the surveyor general - Compliance with pre-proclamation conditions (Section 47 certi cate) - Opening of township register (Section 48 noti cation) - Proclamation of Township (Section 49) - Permission to transfer erven (Section 68 certi cate)

Step Number of Days Application Docs

1 Submit application 1 Day 1 Completed application form

Power of Attorney

Company Resolution

Bondholder’s Consent

Motivation Memorandum (Based on SPLUMA

criteria)

SG Diagram/ General plan

Locality Plan

Application Fee Payment Proof

Title Deed

Conveyancer Certi cate

Community Approval

Zoning Plan

Land-Use Plan

Site Plan

Layout Plan

Phasing Plan

Flood Line Certi cate

Services Report

Development Charge

Home Owners Comment

NEMA Approval/Exemption

Tra c Impact Study (if required)

Geotechnical Report/ Letter signed by Engineer

Application Process can take 237 days if external circulation is not required and no objections have been received.

2 Local authority noti es record of receipt, as well as

completion status 30 Day 2- Day 31

3 Applicant gives public notice and application is circulated to

external departments 30 +30 Day 32- Day 91

4 Local authority distributes to internal departments for

comments 1 Day 32

5 Comments received by all departments 21 Day 32 – Day 52

6

Local authority noti es applicant on comments and

objections

14 Day 92 – Day 105

7 Applicant forwards response to comments and objections 30 Day 105 – Day 135

8 Application is referred to the MPT or AO and decision is made 120 Day 136 – Day 255

9 Noti cation Period 21 Day 256 – Day 276

Total (with objections and external circulation) 276 days

LOCAL AUTHORITY DISTRIBUTES APPLICATION TO EXTERNAL DEPARTMENTS

60 DAYS TO COMMENT

ü The closure of a public place; ü Application in respect of a restrictive condition; and

ü Other applications that materially affect the public or community interests.

Simultaneously, notice is given to organs of state and invited to comment within 60 days of notifications. In addition, the application is circulated internally to any department that may have a direct interest in the application for comment within 21 days of receipt. Once all comments have been received the applicant can make amendments to the application after which the application will be considered for approval.

When no appeal has been lodged against the final decision on the application, the post approval process of 24 months can commence. The post approval process involves role players from both the public and private sectors. It is the responsibility of each entity to ensure that the post approval requirements are met within the designated timeframes. If the requirements cannot be met, the applicant may apply for an extension of time. Once all the requirements are met, the building plan application process can commence.

It should be noted that for the purposes of this study, the LUM and building application processes are analysed independently. In other words, the analysis does not evaluate the post LUM approval period, but rather analyses the process from the submission of the application to a decision made on each of the respective application processes.

The following sections intend to provide

detail in terms of the building plan and LUM application processes as currently implemented by the CoM.

n 4.1 Land Use Management Applications

n 4.1.1 SPLUMA application processes

All local municipalities are legally mandated by SPLUMA to develop municipal planning by-laws to indicate the development application process. Importantly these application processes should be in line with the development application processes outlined in the SPLUMA regulations. Chapter 3 of the SPLUMA regulations makes provision for land development and land use application processes, categories and timeframes. According to regulation 14(1) local municipalities must determine the following:

ü The ‘manner and format’ in which LUM applications are submitted, including the applicable fees to be paid;

ü Subject to regulation 16 – determine the timeframes for each application;

ü The public participation process as well as the inter-governmental participation process;

ü Procedures for site inspections and application amendments;

ü Location for application submission; and ü Procedure for dealing with incomplete applications.

Diagram 2 indicates the application timeframe as per regulation 16 of SPLUMA. According to the regulation, all application processes shall consist of three phases. The first phase is the administration phase during which all public participation notices are published and responded to, all parties are informed and the intergovernmental participation process finalised. The application is then referred to the Municipal Planning Tribunal (MPT) or Authorised Official (AO) for consideration.

The next phase is the consideration phase, in this phase the MPT or AO decides on the application and may undertake investigations if required. According to SPLUMA, if no decision

SPLU

MA

REGU

LATI

ON 16

Phase1: Administrative Phase 12 MONTHS (365 Days)

Phase2: Consideration Phase 3 MONTHS (90 Days)

Phase3: Decision Phase

PUBLIC PARTICIPATION NOTICES

INTER GOVERNMENTAL PARTICIPATION

ONLY AFTER APPLICATION IS SUBMITTED AND COMPLETE

MPT OR AO MAKES DECISION ON APPLICATION

MUST BE MADE WITHIN 30 DAYS OF LAST MEETING OF MPT OR AO

is made within 3 months the applicant may report the ‘non-performance’ of the MPT or AO to the municipal manager, who subsequently reports it to the municipal council and mayor. On the other hand, if an applicant fails to provide the required information to the municipality, the application may be deemed to be refused and the applicant will have to resubmit. In addition, if no comments are received by any of the departments which the application was circulated to, it will be accepted that the respective department has no objection to the application. The municipality may allow a time extension for the comment period however, may also report the department to the executive authority and Minister as a non-performance. The final phase of the application process is the decision phase in which the MPT or AO either approves or refuses the application.

Based on the above mentioned processes the CoM developed the municipal planning by-laws that was gazetted on the 10th of July 2015. The application processes highlighted in the Mbombela spatial planning and land use management by-law, should be followed by all applicants in the development process.

For the purposes of this study the following LUM processes are defined:

ü Township establishment ü Scheme amendment (rezoning) ü Subdivision and Consolidation It should be noted that the CoM has similar

target timeframes for these application processes

Township EstablishmentWhen applying for the approval of a

township establishment at the CoM, the following process should be followed:

According to the by-law, applying for a township establishment application involves 8 steps and should take roughly 276 days,

excluding a public hearing. The timeframes provided by the municipality are used as guidelines in the processing of the application.

The CoM aspires to continuously follow the guided timeframes as per the by-law, however acknowledges that in practice this is not always the case.

Table 1 provides more detail in terms of the expected number of days as well as the required documentation for the township application to be processed. A crucial step in the application process is ensuring that all of the required documentation is submitted with the application. The CoM cannot process any application if the required documentation is outstanding. Applicants should confirm with the CoM what the required documentation is prior to submitting the application as a means of fast-tracking the application process.

The CoM is responsible for notifying the applicant of any outstanding information on the application which then places the responsibility on the applicant to provide the said information.

As indicated, there is a considerable number of documentation that is required as part of the application.

Municipal Planning Tribunal Applicatins Considerations

ü The application should be in line with the municipal Spacial Development Framework

ü The application should not be in conflict or negatively impact on the existing surrounding land uses

ü High potential agricultural land and formalising existing lawful land use

Diagram 2: SPLUMA Regulation 16

Diagram 3: CoM Township

Establishment Process:



Part 2Part 2

SCHEME AMENDMENT/REZONING

SUBMIT APPLICATION AND PAY RESPECTIVE FEES



21 DAY COMMENT PERIOD

APPL

ICANT

HAS

30 D

AYS T

O RE

SPON

D TO

OBJ

ECTIO

NS M

ADE

LOCAL AUTHORITY DECISION

IF APPROVED: NOTICE IS PLACED IN THE PROVINCIAL GAZETTE



Power of Attorney

Company Resolution



criteria)


Locality Plan


Title Deed

Community Approval

Zoning Plan

Land-Use Plan

Site Plan

Development Charge

Home Owners Comment









comments 1 Day 32


6


objections

14 Day 92 – Day 105






LOCAL AUTHORITY DISTRIBUTES APPLICATION TO EXTERNAL DEPARTMENTS 60 DAYS TO COMMENT

SUBDIVISION/CONSOLIDATION





APPLICANT HAS 30 DAYS TO RESPOND TO OBJECTIONS MADE




Power of Attorney

Company Resolution



criteria)


Locality Plan


Title Deed

Community Approval

Zoning Plan

Land-Use Plan

Site Plan

Development Charge

Home Owners Comment









comments 1 Day 32


6


objections

14 Day 92 – Day 105





LOCAL AUTHORITY FORWARDS ALL COMMENTS AND OBJECTIONS

TO APPLICANT IF APPROVED: CONDITIONS MAY BE IMPOSED

ENGINEERING AND OTHER SERVICES AGREEMENTS DRAWN UP











Power of Attorney

Company Resolution



criteria)


Locality Plan


Title Deed

Community Approval

Zoning Plan

Land-Use Plan

Site Plan

Development Charge

Home Owners Comment









comments 1 Day 32


6


objections

14 Day 92 – Day 105









process as well as the required documentation. As indicated that target timeframes for

processing a rezoning application is roughly 276 days, however can be reduced to 237 days if external circulation is not required by the CoM and if no objections were received on the application.

Subdivision and ConsolidationThe application process for a subdivision

or consolidation application follows a similar process and target timeframe as that of the rezoning and township establishment applications. The target timeframe for any subdivision/consolidation application is similar to that of the rezoning and township establishment applications of 276 days (237 excl. external circulation and objections).

The CoM states that although it follows a similar process to that of the rezoning and township establishment applications, certain aspects of the application process might be exempted upon the discretion of the CoM and in line with the by-law.

It should be noted that public notice is only required when the following applies:

ü The subdivision of land larger than 5 hectares inside the outer limit of urban expansion as per the municipal SDF.

ü The subdivision of land larger than 1

TOWNSHIP ESTABLISMENT

APPLICATION SUBMISSION



PUBLIC HAS 30 DAYS TO LODGE AN OBJECTION


LOCAL AUTHORITY CONSIDERS THE APPLICATION

APPLICANT MAKES AMENDMENTS TO THE APPLICATION

APPLICATION IS ESSENTIALLY APPROVED REPORT AND CONDITIONS OF ESTABLISHMENT ARE DRAWN UP

DEPARTMENTS HAVE 21 DAYS TO COMMENT

APPLICANT HAS 30 DAYS TO RESPOND – NO RESPONSE INDICATES NO COMMENTS FROM APPLICANT

(I) May carry out inspection (II) May determine date and time of hearing if necessary

(I) Application is approved subject to conditions: - Conditions of establishment are drawn up - Lodging of plans for approval to the surveyor general - Compliance with pre-proclamation conditions (Section 47 certi cate) - Opening of township register (Section 48 noti cation) - Proclamation of Township (Section 49) - Permission to transfer erven (Section 68 certi cate)



Power of Attorney

Company Resolution



criteria)


Locality Plan


Title Deed

Conveyancer Certi cate

Community Approval

Zoning Plan

Land-Use Plan

Site Plan

Layout Plan

Phasing Plan

Flood Line Certi cate

Services Report

Development Charge

Home Owners Comment



Geotechnical Report/ Letter signed by Engineer







comments 1 Day 32


6


objections

14 Day 92 – Day 105





LOCAL AUTHORITY DISTRIBUTES APPLICATION TO EXTERNAL DEPARTMENTS

60 DAYS TO COMMENT

The application process requires the involvement of both the CoM and the applicant to ensure that the timeframes provided are met. By working together, the application process can be streamlined and without any unnecessary delay.

Scheme Amendment (Rezoning)An application for the amendment of

the land use scheme, also referred to as a rezoning, is completed by following the process highlighted in Diagram 4.

As with the township establishment application process, the rezoning application process follows a specific process whereby the applicant should ensure that all the required documentation is submitted with the application. In addition, the application will undergo public scrutiny prior to approval. If the CoM is satisfied with the application and comments received from the public and municipal departments, it can decide on the application.

Table 2 provides additional detail into the steps involved in the rezoning application

Table 1: CoM Township Application

Process

Diagram 5: CoM Subdivision/

Consolidation Application Process

Table 2: CoM Scheme Amendment/

Rezoning Application Process

hectare outside the outer limit of urban expansion as per the municipal SDF. Table 3 (over page) indicates the application

process to be followed in a consolidation/subdivision application.

The CoM is pro-development and therefore encourages that all land use management applications should be streamlined to ensure maximum output.

Diagram 4: CoM Scheme

Amendment/Rezoning Application

Process



Part 2



Part 2










Power of Attorney

Company Resolution



criteria)


Locality Plan


Title Deed

Community Approval

Zoning Plan

Land-Use Plan

Site Plan

Development Charge

Home Owners Comment









comments 1 Day 32


6


objections

14 Day 92 – Day 105









n 4.2 Building Plan ApplicationsThe building plan application process

is legislated through the National Building Regulations and Standards Act No 103 of 1997. All building plan applications require land use management clearance prior to processing the

control office along with the respective application fee prior to its consideration. During this process, the application is scrutinised in order to ensure that all the required documentation is correct and accounted for. The appointed building control officer evaluates the application and inspects the attached title deed, the approved general plan, any pre-proclamation conditions, and the approved site development plan. All building plan applications are strictly evaluated by the regulations set out in the Act. To address amendments required on the application, the applicant has access to all comments made on the application right through the process. As

part of the evaluation process, the application may be circulated to several departments for comment. After the application evaluation, the application is recommended either for approval or rejection.

Once approval has been granted the applicant is notified and the plan is available for collection from the building control office. The applicant can then commence with construction and should ensure that the building inspector is notified to, as mandated, inspect the process. Upon completion of the building construction or alteration, the applicant is issued with a certificate of occupancy confirming that the

NBRS Act Section 5 – “Any application in respect of which a local authority refused in accordance with subsection (1)(b) to grant its approval, may, notwithstanding the provisions of section 22, at no additional cost and subject to the provisions of subsection (1) be submitted anew to the local authority within a period not exceeding one year from the date of such refusal

(i) if the plans, specifications and other documents have been amended in respect of any aspect thereof which gave cause for the refusal; and

(ii) if the plans, specifications and other documents in their amended form do not substantially differ from the plans, specifications or other documents which were originally submitted; or (b) where an application is submitted under section 18”

LAND USE MANAGEMENT APPLICATION APPROVAL

SUBMIT APPLICATION

PLAN INSPECTION AND CIRCULATION

DECISION MADE ON THE APPLICATION

APPROVAL OF A BUILDING PLAN IS VALID FOR 12 MONTHS

Build

ing

less

than

500

m2 =

30

days

Build

ing

mor

e th

an 5

00m

2 = 6

0 da

ys

BUILDING PLAN APPLICATION

Diagram 6: Building Plan

Application Process

application. Diagram 6 illustrates the generic building plan application process after land use management authorisation. Typically, the building control officer evaluates the plans in accordance with the Act and any other law including the town planning scheme of the respective municipality. The plans will also be circulated to various city departments for comment and approval.

In terms of the building plan application timeframe the Act indicates the following:

ü Where the architectural area of the building is less than 500m² - the local authority shall grant, or deny approval within 30 days after the receipt of the application.

ü Where the architectural area of the building is more than 500 m² - the local authority shall grant, or refuse to grant approval within 60 days after the receipt of the application.

ü Where an application is refused, the reasons must be provided in writing. The applicant may within 12 months of the application being refused, re-submit the application ‘anew’ with no additional costs, subject to the necessary amendments having been made. As previously indicated, the building plan

application process can only commence once LUM approval has been granted. The building plan application is submitted to the building

What’s happening in Mbombela?The Mataffin Precinct is a prominent commercial development within the City of Mbombela, and includes a variety of

housing types and tenure statuses, allowing for a range of affordable units. Public transport, accessibility and the provision of retail space are key components of this development. Facilities to be developed include educational facilities (university, tourism-related skills training); health facilities; innovation hub; recreational facilities. These facilities are considered potential anchors to the development. Currently, the environmental impact assessment (EIA) is completed, bulk electrical and water infrastructure installed, and designs for phase 1 of the development finalised.

Table 3: CoM Subdivision/

Consolidation Application Process



Part 2Part 2

NBRS Act Section 9 – (1) Any person who- (a) Feels aggrieved by the refusal of a local authority to grant approval referred to in section 7 in respect of the erection of a building; (b) Feels aggrieved by any notice of prohibition referred to in section 10; or (c) disputes the interpretation or application by a local authority of any national building regulation or any other building regulation or by-law, may, within the period, in the manner and upon payment of the fees prescribed by regulation, appeal to a review board (2) The review board referred to in subsection 1 shall consist of- (a) A chairman designated by the Minister; and (b) Two persons appointed for the purpose of any particular appeal by the said chairman from persons whose names are on a list compiled in the manner prescribed by regulation.

Section 5Development Planning and Application Administration Processes

The property development sector in the Mpumalanga Province made a national contribution of 3.9% between January and February 2016, and has lowered to 2.5% in January and February 2017. This suggests that the property development sector is on a slight decline in the Province. However, the commercial building plans passed in the Province amounts to a total of R47 million for January-February 2016 and has increased to R78 million for the same period in 2017.

The contribution made by the Mpumalanga Province is relatively small in comparison to provinces such as Gauteng and the Western Cape, nevertheless, the contribution made in the industry contributes to employment and wealth creation in the Province. In terms of the value of commercial buildings passed in the province it is evident that the sector is growing and therefore attention should be given to ensure that the application processes involved in the development of commercial properties are streamlined.

To identify whether there are any complications or difficulties with the application processing system a comprehensive analysis is required. As such, the purpose of this section is to offer the application tracking measurements as a means of identifying the key challenges within the application system.

Information is provided for the CoM as follows:

ü Overall Municipal Application Benchmark Statistics (Building Plans and Land Use Management Applications)

ü Municipal Application Sample Analysis (Building Plans and Land Use Management Applications)

ü Key observations The overall application benchmark statistics

indicate the application processing efficiency within the CoM in terms of the finalisation of building plans and land use management applications. This provides an overview of the generic shortcomings in terms of adhering to the timeframes provided by planning legislation. Subsequently, the municipal application sample analysis provides greater detail in terms of the application processing system within the municipality. For the purpose of this investigation a five year

analysis period was utilised from 2012-2016. The purpose of the application sample

analysis is to essentially determine the timeframe applicable to decide on a land use management or building plan application at CoM. The municipal application sample analysis will determine and interpret the administration proficiency. For this analysis, all building plans and LUM applications for developments above R10 Million in development costs and from 2012-2016 were requested and analysed accordingly. In cases where the information was not available as per the criteria, all other applications were analysed. The actual timeframes achieved to finalise the applications are compared to the maximum timeframes outlined in the relevant legislation. In reference to the ‘maximum timeframe’ it should be considered that generally municipalities have limitations associated with application delaying factors that are outside of their control and therefore, in practice the legislative responsibility cannot

MPUMALANGA PROVINCE

BUILDING PLANS PASSED JAN-FEB 2016/2017

NATIONAL CONTRIBUTION 2016: R 297 593 000 (3.9%) 2017: R 271 758 000 (2.5%)

BUILDING PLANS PASSED COMMERCIAL JAN-FEB

2016/2017

COMMERICIAL CONTRIBUTION 2016: R 47 179 000 (2%) 2017: R 78 532 000 (2%)

Figure 1: Mpumalanga Province:

Building Plans Passed

Source: STATSSA, 2017

NBRS Act Section 14 – “Certificates of Occupancy in Respect of Buildings (1) A local authority shall within 14 days after the owner of a building of which the erection has been completed, or any person having an interest therein, has requested it in writing to issue a certificate of occupancy in respect of such building.

building has been built in accordance with the approved plan.

In the case of an application being refused, the applicant would be notified in writing. As provided for in the Act, the applicant, having amended, corrected or modified the application, may re-submit the application at no additional cost. When an applicant desires to make an appeal against the decision made

on the application, such an application may be made to the high court. Any person who is aggrieved by the refusal of the local authority to approve a building plan application or who disputes the interpretation of a national building regulation or by-law may appeal to the review board in terms of section 9 of the National Building Regulations and Standards Act 103 of 1997.



Part 2Part 2be placed on them entirely.

In terms of the analysis, the following key limitations are identified:

ü Significant delay in obtaining information for Building Plan Applications along with lengthy processes in gathering of data.

ü Substantial delays in receiving application benchmark statistics for both building plans and LUM applications.

ü In cases where examples of commercial property could not be provided, other land use applications such as large-scale residential developments were used.

Land Use Management Application Tracking

Before identifying the key challenges within the application administrative processes of the CoM an analysis of the overall application benchmark is determined. The following information is representative of all commercial land use management applications within the CoM with a development cost of above R10 million.

Figure 2 indicates the total number of high-value commercial land use management applications processed by the municipality from 2012-2013 as well as the average processing time and the number of applications that were finalised in time.

As indicated, the number of high-valued commercial applications have increased since 2012, with 14 applications processed in 2012 and up to 27 in 2016. The average processing time has also increased since 2012, and remains on average below the target of 276 days. In terms the applications processed in time i.e. 276 days, it is evident that the

application processing efficiency rate has decreased from 92% in 2012 to 69% in 2015 and 82% in 2016. The very high application processing rate shows that the administrative processes within the CoM is relatively efficient.

To obtain a more comprehensive understanding of the high-valued commercial applications at the CoM, a sample of Rezoning and Township establishment applications are analysed. The samples consist of 10 rezoning and 5 township establishment applications. Table 4 indicates the sample of rezoning application obtained from both the private and public sector and was chosen randomly.

It is evident that some of the primary challenges in application processing is incomplete submissions as well as delays in terms of tribunal hearings and application reports from the public sector. For applications to be processed efficiently, it is vital that all necessary documentation should accompany the application. Applicants could avoid delays by ensuring that proper communication is made with the municipality in terms of what the documentation should be.

The number of township establishment application submissions is relatively lower than rezoning applications, however the database received from the municipality does provide some insight on the efficiency of the application processing system. Table 5 provides detail on a sample of 5 township applications.

Rezoning type Processing Time (days) Reason for Delay

Special to Special for industries, workshops, commercial use, service retail, motor sales, offices, panel beat

251 Approved in time

Business 1 to Business 1 with decreased FAR 95 Approved in time

Special to Business 4 with amended development controls 74 Approved in time

Business 1 to Business 4 with decreased FAR 85 Approved in time

Residential 1 to Business 4 523 Outstanding application documents

Residential 3 to Business 4 with annexure conditions 1221 Hearing

Agricultural with business rights to Special for production facilities of paving and bricks

425Delayed as application needed to be amended in terms of the proposed zoning (not Industrial 1, but Special)

SubdivisionPending

(submission 2016)

No approval has been issued as a report must be completed before the approval letter can be issued. This report has not been completed, to date.

RezoningPending

(submission 2016)

Awaiting tribunal hearing. The hearing has been delayed due to cancellation because of a lack of Tribunal members available, and the lack of availability of objector’s attorneys.

RezoningPending

(submission 2015)

The submission of additional documentation required by the municipality, including a document which, according to the private sector representative, was not on the list of requirements as received.

Application type Processing Time (days) Reason for Delay

Township Establishment 439

Amended Application submitted due to request for amendments by Mbombela

Township Establishment 1110

Objection was made by 1 objector, appeal was made and a tribunal could not be arranged (internal issues at Mbombela). A council meeting was held in September 2013. Tribunal hearing took place 1/07/2015

Township Establishment 134 Approved in time



As indicated, the efficiency of township application approvals at the CoM is relatively high. In the sample, 3 of the applications were approved in time. The delays occurred in the remaining 2 applications were a result of amendments that needed to be made on the application as well as an appeal made that resulted in a tribunal hearing.

n 5.2 Building Plan Application Tracking

The building plan application process is followed by the approval of a land use management application and, like the land use management application process, requires participation from both the private and public sector entities.

Figure 3 indicates the average processing time for building plan applications within the CoM. As indicated, the maximum timeframe to process a building plan application is 60 days (depending on the size of the property).

The average processing time for 2012 was roughly 106 days, nearly double the legislated timeframe. In 2013 and 2014 the average processing timeframe is relatively efficient with 59 and 66 days for each year, however application processing efficiency has decreased between 2015 and 2016 to 80 and 81 days respectively.

This suggests that there are some challenges in the processing of building plan applications. According to the CoM,

the primary reason for delays is attributed to incomplete submission of applications. The database provided by the municipality does not indicate specifically what the reasons for delays are for each application, however responses from the private sector suggest that in many cases poor communication in terms of what is required is a major concern in building plan application delays.

n 5.3 Public Sector Inputs on Application Delays

Through deliberations with the relevant municipal administrators regarding the timescales of applications, numerous reasons for possible were identified. Accordingly, this section seeks to illuminate the challenges regarding the barriers public entities face in the timely processing of planning applications.

Determining these challenges involved the following information-gathering exercises:

Figure 2: CoM Commercial LUM

Applications

Table 5: Township Establishment

Application Sample

Figure 3: CoM Building Plan

Applications

Table 4: Rezoning Application Sample



Part 2Part 21. Extraction of qualitative data through

interviews with the relevant departments in the City of Mbombela Local Municipality;

2. Analysing a sample of applications as acquired from the aforementioned municipality.

This process highlighted the following challenges faced by the municipality:

ü Incomplete applications with outstanding information on key aspects of the application, which result in significant delays in the application process. The responsibility lies with the applicant to ensure complete adherence to the regulations pertaining to the respective legislation.

ü Content errors on motivating memorandums in the form of incorrect information and references, leading to unnecessary delays as the applicant is required to make amendments.

ü Capacity issue in terms of registered Town Planners, which slows down the writing of evaluation reports and signing of evaluation reports as only registered town planners can do the sign-off.

ü Adaptability to SPLUMA leads to a process change with respect to the evaluation

reports and approval/rejection of applications, thus lengthening the time it takes to sign off approval letters.

ü Poor methods of communication with applicant with respect to comments and

amendments required. However, a new system is in the process of being implemented that notifies applicants immediately

when new comments are made by the local authority.

ü Applicants are uninformed and unfamiliar with the regulations, causing delays as many applications don not comply with the regulations and applicants then need to re-apply and pay additional costs.

ü Backlogs caused by amalgamation with Umjindi Local Municipality as additional applications need to be assessed by a small group of people due to the additional capacity constraints suffered by the Umjindi Local Municipality.

ü Other reasons for application delays include:

- Objections received leading to Public Hearings.- Late preparations of application advertisements by the applicants.

What’s happening in Mbombela?The University of Mpumalanga (UMP) was formally and legally established through the

publication of Government Notice (No. 36772) on 22 August 2013 and launched on the 31st of October 2013. The university offers several programmes including Bachelor of Education (Foundation Phase); Diploma in Hospitality Management; Bachelor of Agriculture. Programmes added since 2015 include the Diploma in Agriculture (Plant Production) and a Diploma in Information Communication Technology (Application Development). The Lowveld College of

Agriculture was formally incorporated into the UMP on the 1st of January 2015. Although the UMP is currently operational, it is still being constructed and expanded in certain sections of the site. The University is expected to grow rapidly in the next few years, once the infrastructure has been fully developed and new programmes have been introduced.

Section 6Private Sector Perspectives

This section serves to illuminate private sector viewpoints concerning the application processes in terms of land use management and building plans, respectively.

n 6.1 ApproachTo effectively gather and accurately

communicate the private sector perspectives, the following sources were consulted:1. The circulation of an application tracking

questionnaire to a suitable sample of private development firms relevant to the study area.

2. Interviews with municipality-relevant private entities.

n 6.2 Key LimitationsIn undertaking the private sector

application processing analysis, an important limitation is the inadequate response received from the identified private sector consultants in completing the research questionnaire. The reason for the limited response is the time constraints endured by the commercial private property sector associated with the end of financial year deadlines at time of research. In spite of some reluctance from the private sector to respond to interview requests (on account of losing their anonymity resulting in future discrimination from the municipality), the targeted interviews stimulated fluid discussions with private sector firms, proving invaluable and compensated for the limited questionnaire response. Interviewees included several commercial private property specialists in the CoM.

n 6.3 Private Sector Inputs on Application Delays

The fundamental issues identified by the private sector respondents include the following:

üThe new SPLUMA by-Law lengthens to the process as the new by-law states that the municipality has 30 days to acknowledge receipt of application and to give notice to

the completeness of the application. This usually takes 14 days but sometimes can take the full 30 days.

ü Delaying of distributing signed approval

letters, which is delayed to between 4-8 weeks as all applications must be checked by a registered Town Planner. The CoM experiences a capacity issue with insufficient land use management staff, some of which aren’t registered as Town Planners.

ü New by-law does not account for all scenarios, provisions and eventualities, which result in the delays when legal opinions are required. Delays in proclamation of between 2-4 months are experienced as the by-law does not make provision for proclamations and Town Planners prefer to finalise proclamations themselves.

ü Tribunals are not controlled according to legislation, as these tribunal meetings are not held 120 days after objections have been received as the by-law states. Tribunals have mostly been postponed or never took place.

ü Capacity issue in terms of tribunal members, as the tribunal members do not attend the set tribunal dates. The CoM does not make use of external members, which also adds to the capacity issue. There is also a lack in the availability of objector’s attorneys.

ü Technical issues within the CoM as the private sector finds the system on which the applications are submitted is not user-friendly and inadequately accessible to all parties. This leads to multiple visits to the CoM offices, delaying the application process.

ü Comments from two internal departments exceed the allocated timeframe. The majority of the private sector respondents agree that processes are delayed due

to a delay in comments by the Electrical Engineering Department, as well as the Fire Chief Department (for Building Plans). The other departments are effective and rapid pertaining to comments.

ü Lack of cooperation and communication from external departments, specifically experienced with SANRAL and National Agricultural Department.



Part 2Part 2 ü Costing of Service Contribution payments are abnormally high and there is no indication or assurance where the payments are invested.

ü Poor communication and accessibility of various internal departments within the CoM, as they don’t prioritise meetings with the private sector and are rarely accessible or available should the private sector have enquiries. This causes an unreceptive relationship between the private sector and some of the CoM departments.

ü The legality of objections is questioned by the private sector as some objections appear irrelevant or even occur after the deadline.

ü Policy inconsistencies. Some private sector respondents have experienced LUM decisions being taken contrary to what has been approved in policy.

ü Poor inter-departmental communication, as well as between individuals within the same department resulting in poor information dissemination regarding priority and merit of applications. If communication is effective, it should logically accelerate the processing of applications.

ü The checklist approach followed by the municipality when processing applications often has negative implications as it does not consider the application merit in terms of the economic

benefit for the community or public or practicality in adhering to the conditions for development. This is of particular concern when an authorised official is absent and the application cannot progress due to this absence.

ü Other reasons for application delays include:• Due to delays in the completion of a

report which is a prerequisite for the issuing of the subdivision approval letter.

• Requests to submit forms which are not listed on the list of requirements for rezoning.

Strengths identified by the private sector within the CoM and the application processes are:

ü Timeframes stipulated by the new By-Law are considered an improvement.

ü The majority of departments are rapid with their comments and the process is seldom delayed due to delaying comments.

ü General applications that encounter no objections usually take

approximately 3 to 4 months to be approved.

ü Decisions made by department heads indicate that the departments are lead by specialised knowledge and high standards.

ü The CoM’s acknowledgment of application receipt is effective and speedy.

What’s happening in Mbombela?The Crossings Centre has been expanded from a FAR of 15 000m² to 31 000m². The

expansion started at the end of 2014 and was completed by the end of 2016. The expansion included approximately 30 new stores, additional parking areas, as well as the expansion of existing anchor stores. In effect of the expansion, an additional entrance from Samora Machel Drive has been added and the upgrading of the existing entrance from the R40 resulted in the expansion of the R40 regional road with the construction of additional lanes.

Section 7Recommendations

The analysis of the application processing systems within the CoM has provided valuable insights in terms of the shortcomings from both the private and public sector’s perspective. As with many processes that involve numerous stakeholders, certain challenges will occur that ultimately result in frustration and development delays. The nature of the relationship between the private and public sector in the CoM is relatively good, however there are certain areas in which both the private and public sector could improve on. By acknowledging these challenges and constructively implementing ways of mitigating them, the property development sector within the municipality can develop a momentum that will have positive outcomes on the economy of the municipality and the province entirely.

The primary issues related to application process is summarised in Table 6.

The following recommendations apply to the CoM as well as the private sector stakeholders operating within the municipal region. It should be noted that the recommendations highlighted in this section are intended to guide the municipality and private sector stakeholders towards improving the application administration process. Both the municipality and the private sector stakeholders should endeavour to positively respond to the presented recommendations and should also explore alternative methods of improving the application administration process.

Application AdministrationPublic Sector Recommendations

The analysis indicated a few challenges within the administrative system of application processing. The challenges identified include administrative problems with application submissions, in particular the submission of incomplete application documentation:1. The municipality should actively promote

and enforce the submission of quality and complete applications through continued engagements with the private sector property developers and applicants.

2. The pre-consultation process should be properly facilitated by the relevant departments within the municipality.

3. Ensure that all departments and sub-offices involved in the processing of LUM and building plan applications follow a comparable approach when processing

1. Application Administration

2. Capacity Issues

3. Communication

4. Technical Aspects

PRIMARY REASONS FOR APPLICATION DELAYS

Reason For Delay Key Issues

1 APPLICATION ADMINISTRATION

ü Applications submitted by applicants are incomplete and often have incorrect information

ü Application record files are often incomplete ü Information and data on application processing efficiency is not kept

effectively to monitor finalisation timing ü System on which the applications are submitted is not user-friendly and

inadequately accessible to all parties.

2 CAPACITY ISSUES ü Lack of personnel capacity in certain departments result in processing

delays and backlogs in the application system ü Tribunals are not controlled efficiently

3 COMMUNICATION ü Communication gaps between external departments and local

municipality ü Poor communication between the local municipality and the applicant

4 TECHNICAL ASPECTS

ü Policy implementation is not always in line with the spatial planning policies of the municipality

ü Applicants do not always refer correctly to the relevant Town Planning Scheme or Spatial Development Framework

ü Lack of meaningful participation between private and public sector regarding policy formulation

ü Poor adaptability to SPLUMA

applications. This will enable effective and accurate evaluation of performances.

4. Information on the application processes and requirements should be more visible to the private sector as a means of ensuring that applications are complete. In addition, applicants should be notified timeously of incomplete applications.

5. Accurate records should be kept of all application files for monitoring and evaluation purposes.

6. The improvement of records management, in particular application files, should be more efficient in the municipality.

Private Sector RecommendationsIn terms of the administration of

applications by the private sector it is

Table 6: Primary Application

Processing Delays



Part 2Part 2important that all applicants acknowledge the responsibility of ensuring that the process of submitting applications is done in a manner that contributes towards the improvement of the overall administrative process to benefit the entire property development sector. The following recommendations are made in terms of improving the application administration processes:1. Make use of pre-submission consultation

methods with the municipality to develop an understanding of the technical requirements of the application. Pre-consultations with the municipality enables interaction between private property professionals and public sector officials before the submission of applications and payments of the respective fees.

2. Ensure that the information submitted as part of the application is accurate and updated. Memorandums should be well written and include all the relevant information in order to avoid any misunderstandings. It is vital that no information is omitted from the application.

3. All applicants should ensure that an accurate understanding of the requirements set out in the municipal by-laws is obtained.

4. If amendment requests are issued, quick responses to the requests are required to ensure that the process is not unnecessarily delayed.

5. Records of all application documentation including correspondence with the local municipality and other entities should be accurately kept.

Capacity IssuesPublic Sector Recommendations

The outcome of the analysis indicated that there are capacity issues in a number of application processing departments. The outcome of these capacity issues results in significant application backlogs within the administration process. The following recommendations should therefore be considered by the CoM:1. Conduct an in-depth evaluation

on possible staff shortages in all departments, in particular municipal tribunals, and in response increase staff capacity where needed.

2. Provide continuous training opportunities for personnel. Training should include project management and administrative organising skills.

Private Sector RecommendationsIn terms of the private sector’s role in

enhancing capacity issues within the CoM the private sector could possibly provide sponsorship to local municipalities in terms of training municipal officials or providing additional resources with the aim of improving the knowledge and skills.

Furthermore, it is recommended that SAPOA commits to offering relevant basic training to the public sector at a reasonable rate to facilitate capacity and general knowledge of the property sector. Added to this, SACPLAN should play a role in terms of ensuring that qualified town planners are well versed in property related matters.

CommunicationPublic Sector Recommendations

The processing of LUM and building applications involve extensive engagements between various departments within the public sector as well as engagements with the private sector (applicants). To ensure that the engagements are productive it is important that the following recommendations are considered:1. During the processing of applications, the

responsible official should be in continuous communication with the applicant as well as the departments that the application is circulated to.

2. In cases where problems with the application have been identified it is important that communication to the applicant is done timeously.

3. Avoid misunderstandings by communicating in a manner that is understandable to all parties involved in the processing of the application.

Private Sector RecommendationsIn terms of the private sector’s role in terms

of improving relations and communication the following recommendations apply:1. Private sector firms should take active

steps to continuously improve their

relationship with the local municipality through continuously enhancing communications methods.

2. Applicants should respond timeously to requests made by the municipality with regards to their applications.

Technical IssuesPublic Sector Recommendations

Several technical aspects involved in the application process were identified in the analysis, these include discrepancies between implementation and policies, poor adaptability to the new SPLUMA regulations and applicants not referring to the correct town planning scheme or spatial policies of the municipality. To mitigate these issues the public sector should

consider the following recommendations:1. Ensure that the municipal planning by-law

is a workable document accessible to all2. Provide practical information sharing

mechanisms that can be utilised by the private sector as a means of obtaining any new and relevant amendments made in terms of the regulatory environment (i.e. notices on website, newsletters etc.)

3. Land use management decisions should reflect the development objectives set out in the spatial development frameworks and other development policies.

Private Sector RecommendationsThe responsibility lies with the private

sector to make use of the legislative and policy guideline documentation not only

Primary Reason for

DelayPrivate Sector Recommendations Public Sector Recommendations

Application Administration

1. Make use of pre-submission consultation methods with the municipality to develop an understanding of the technical requirements of the application. Pre-consultations with the municipality enables interaction between private property professionals and public sector officials before the submission of applications and payments of the respective fees.

2. Ensure that the information submitted as part of the application is accurate and updated. Memorandums should be well written and include all the relevant information in order to avoid any misunderstandings. It is vital that no information is omitted from the application.

3. All applicants should ensure that an accurate understanding of the requirements set out in the municipal by-law is obtained.

4. If amendment requests are issued, quick responses to the requests are required to ensure the process is not unnecessarily delayed.

5. Records of all application documentation including correspondence with local municipality and other entities should be accurately kept

1. The municipality should actively promote and enforce the submission of quality and complete applications through continued engagements with the private sector property developers.

2. The pre-consolation process should be properly facilitated by the relevant departments within the municipality.

3. Ensure that all departments and sub-offices involved in the processing of LUM and building plan applications follow a comparable approach when processing applications. This will enable effective and accurate evaluation of performances.

4. Information on the application processes and requirements should be more visible to the private sector as a means of ensuring that applications submitted are complete. In addition, applicants should be notified timeously of incomplete applications.

5. Accurate records should be kept of all application files for monitoring and evaluation purposes.

6. The improvement of records management should be more efficient in the municipality.

Capacity Issues

1. Conduct an in-depth evaluation on possible staff shortages in all departments, in particular municipal tribunals, and in response increase staff capacity where needed.

2. Provide continuous training opportunities for personnel. Training should include project management and administrative organising skills.

3. During the processing of applications, the responsible official should be in continuous communication with the applicant as well as the departments that the application is circulated to. This can easily be done through actively engaging through existing communication methods.



Communication

1. Private sector firms should take active steps to continuously improve their relationship with the local municipality through continuously enhancing communications methods.

2. Applicants should respond timeously to requests made by the municipality with regards to their applications

1. During the processing of applications, the responsible official should be in continuous communication with the applicant as well as the departments that the application is circulated to.



Technical Issues

1. All private sector property development professionals should familiarise themselves with the municipal by-law and spatial policies of the municipality

2. Policy documents that specifically relate to the spatial development of the municipal area, namely the Spatial Development Framework should be incorporated as part of the application submission process. This will enable an understanding among private sector development professionals with regard to the type of land uses and the areas they will be supported in

1. Ensure that the municipal planning by-law is a workable document accessible to all2. Provide practical information sharing mechanisms that can be utilised by the private

sector as a means of obtaining any new and relevant amendments made in terms of the regulatory environment (i.e. notices on website, newsletters etc.)

3. Land use management decisions should reflect the development objectives set out in the spatial development frameworks and other development policies.



Part 2Part 2to ensure that development is aligned with the legislative and policy directives, but also to contribute to the objective of achieving a collective property development approach among the private and public sector stakeholders. In terms of the technical aspects of application administration, the following recommendations can be made:1. All private sector property development

professionals should familiarise themselves with the municipal by-law

and spatial policies of the municipality. 2. Policy documents that specifically

relate to the spatial development of the municipal area, namely the Spatial Development Framework should be incorporated as part of the application submission process. This will enable an understanding among private sector development professionals with regard to the type of land uses and the areas they will be supported in.

Any development constitutes an injection into the local economy. When this development is delayed, its impact and multiplier effect on the economy will also be delayed. This amounts to economic losses equal to the injection that would have been added by the development. This section thus seeks to quantify this economic loss as a result of delays in the relevant application processes associated with the development. The objective of this section is to illustrate to private and public sector entities the impact of inefficiencies in the application process on the local economy and property development at large.

Economic Impact of Application Delays Section 8

n 8.1 ApproachIn addition to the cost associated with

development, the financial feasibility of any new development is substantially influenced by time delays in getting the development off the ground. As per the objective of quantifying the economic and societal impact of any given development, the econometrical modelling technique that involves the construction of a Social Accounting Matrix (SAM) model, is applied. Economic impact assessments are conducted to primarily determine how businesses, households, and government will be affected by a particular intervention (investment in property development, including housing, commercial spaces, and

transport amenities) in the economy.The economic modelling is based on

the capital (CAPEX) and operational (OPEX) expenditure of the commercial property development. For the purpose of this analysis the CAPEX and OPEX were based on a number of industry standard assumptions. The impact is measured in terms of the direct, indirect and induced impacts of new business sales, GDP, employment and income. The economic impacts are defined as follows:

ü Direct impact: Based on macro-economic aggregates as a direct consequence of the development.

ü Indirect impact: Based on activities of suppliers through application of the model.

ü Induced impacts: Goods and services demanded due to increased expenditure by households from income earned due to the project.

ü The direct, indirect, and induced impact of the commercial development is measured in terms of the stimulating effect on new business sales, GDP, job opportunities created, and income generated.Table 7 illustrates the assumption used

in determining the economic impact of application delays. These assumptions are based on industry medians and standards, adjusted to represent a conservative estimate.

n 8.2 Quantifying the Economic Impact of Property Development

This section illustrates the findings of the Economic Impact Assessment (EIA) based on the determined assumptions and specifications. The basis of this EIA is theoretical and is not meant to epitomize the impact of existing developments in the CoM, but rather to illustrate the economic impact of application delays. In addition to the specification indicated in Table 7, the

economic model is based on 10 commercial property developments, each 1000m2 in size.

The EIA thus seeks to illustrate the impact of this developmental injection on the local economy. The total economic injection is illustrated in Figure 4.

The development of 10 commercial properties of 1000m2 in the CoM has a total economic injection of R 93 618 640.75. Within this injection, 82% is attributed to CAPEX while 18% can to OPEX. A comprehensive overview of the economic impact of this development is illustrated in Table 8.

It is evident that the implementation of 10 commercial property developments with an average size of 1000m² will generate roughly R261.28 million in new business sales. This suggests that for every R1 million rand invested, approximately R2.44 million will be generated. The primary industries affected by this is the real estate (34%), construction (23%) and manufacturing (18%) sectors.

Furthermore, the value-added component of economic activity, measured by the GDP, will increase by roughly R 100.08 million, suggesting that for every R1 million invested approximately R1.05 million will be injected

CAP Rate 10.73%

Commercial Property Rental Income R/m2per month R 126.25

Annual Rental Escalation 8.5%

Average Construction Cost R/m2 R 7 700.00

Average Operational Income per month R/m2 R 150.00

Average Operational Expenditure per month R/m2 R 15.00

Average Maintenance Cost per month R/m2 R 12.00

Total Rateable Property Value R 77 000 000.00

Table 7: Property development

variable assumptions

Figure 4: Total economic injection

Diagram 7: The economic

modelling process

INCOME

EXPENSES

INCOME

EXPENSES

CAPEX

OPEX

R77 000 000

R16 618 640.75

TOTAL ECONOMIC INJECTIONR98 618 640.75



Part 2Part 2

into the economy. In terms of the economic impact on employment it is evident that the development scenario will generate approximately 571.28 employment opportunities largely in the real estate, construction and trade/accommodation sectors.

Lastly, the additional income generated by the proposed development scenario is estimated at roughly R48.94 million, indicating that for every R1 million invested approximately R400 000 is generated in additional income per annum.

n 8.3 The Financial Impact of Delays in Processing of Development Applications

Based on the EIA analysis of the identified development scenario several deductions can be made in terms of the financial impact of delaying the development application process. The impact is viewed in terms of the entire economic contribution to the area of influence and does not represent the financial impact experienced by the private property developer.

development process. The delay in processing development applications directly contributes to the delay in construction and operation of commercial

property, ultimately resulting the delay of potential economic contributions to the local area (business sales, GDP, income, employment).

Based on the analysis the following deductions can be made on the economic impact of application delays:

ü New Business Sales – An application processing delay of 30 days will delay an economic contribution of approximately R 2 million in new business sales and production. This can be interpreted to approximately R 70 000 a day per application.

ü Gross Domestic Product (GDP) – When there is a delay of 30 days for 1 application (representative of the criteria) a GDP contribution of approximately R 800 000 does not materialise in the provincial economy. This can be interpreted to approximately R 27 000 a day.

ü Employment – An application processing delay of 30 days will delay the opportunity for employment for approximately 4 prospective employees.

ü Income – An application processing delay of 30 days will delay income generation of approximately R 400 000. This can be interpreted to approximately R 13 500 of additional income a day.

CAPEX + OPEX (R/Millions) Direct Indirect Induced Total Main Industries

Affected

New Business Sales R 93.62 R 127.82 R 39.84 R 261.28 Real Estate – 34%Construction – 23%Manufacturing – 18%Per R1m / annum R 1.00 R 1.10 R 0.35 R 2.44

Impact on GDP R 30.16 R 52.96 R 16.96 R 100.08 Real Estate – 41%Construction – 18%Manufacturing – 10%Per R1m / annum R 0.44 R 0.46 R 0.15 R 1.05

Impact on Employment 79.54 396.72 95.02 571.28 Real Estate – 37%Construction - 21%Trade/Accommodation – 9%Jobs/R1m 0.7 3.1 0.8 4.6

Impact on Income R 13.61 R 27.26 R 8.08 R 48.94 Real Estate – 23%Construction – 20%Manufacturing – 9%Per R1m / annum 0.1 0.2 0.1 0.4

Section 9Conclusion

Based on the analysis of the economic value of the commercial property sector in the City of Mbombela it is evident that the contribution made by the sector is growing in the municipality. It’s important to consider that the city of Mbombela is relatively small in comparison to other major urban centres of South Africa, nevertheless the commercial property sector does make quite a significant impact on the local economy. For this reason, it is essential that the processes surrounding application administration should be streamlined in such a manner that the commercial property sector can function efficiently and without unnecessary delays. The relationship between the private and public sector’s in the CoM is relatively good, both entities have an understanding, or at least attempt, to understand the dynamics and shortcomings affecting the property development market. The CoM strives to ensure that the development process is working effectively and consciously campaigns to the private sector to work in partnership with the municipality in fostering a dynamic and growing commercial property sector.

Some final considerations to be made:

We are all on the same team – Whether a property developer, architect, planner, building inspector, municipal official or whatever the case may be, we all want the same thing: Improving and fast-tracking development processes that ultimately contribute to the local economy. Development essentially results in the building of facilities that potentially provide income and employment opportunities to local communities. The private and public sectors should both aspire to develop a culture of professional cooperation. Working towards ways of enhancing the cooperation between commercial property development professionals (public or private) will ultimately contribute to the improvement of local communities.

Local authorities should acknowledge their responsibility to promote development – Active steps should be taken to ensure that the local municipality understands the need for fast-tracking

development processes. Furthermore, there should be a comprehensive understanding of the responsibility and role they play in development. In terms of public policy, local authorities should ensure that public policy reflects the economic realities of the local municipality.

Target development opportunities – The municipality as well as the private developers should partner up to identify areas of development potential and opportunity. This will foster a bonded relationship between the private and public entities from the get go. The public sector should use this opportunity to effectively implement spatial and economic policies by allowing the private sector to take part in the implementation thereof.

Table 8: Comprehensive overview

of economic impact



Part 1



Part 2

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Part 2THE ROLE AND IMPACT of the


M p u m a l a n g a

2017

THE ECONOMIC VALUE of the COMMERCIAL PRIVATE PROPERTY SECTOR


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