Get IOL's cool new iPad app...
The City of Joburg has lost millions selling off one of its most valuable pockets of land to a consortium involving banking giant Investec - for R45.6 million, less than a third of what it initially expected to get for it.
Now the city’s entity that sold the land - the Johannesburg Property Company (JPC) - is being accused of effectively giving the consortium another 182ha of land that surrounds the property, free.
The property company is also being accused of refusing to accept a purchase offer R3m higher than that from the Investec consortium.
Public Protector Thuli Madonsela is investigating the sale and how the land was sold for under its market value.
City spokesman Gabu Tugwana defended the property company’s actions, saying the land was transferred to Investec in its entirety to expedite the transaction and to enable Investec to start redeveloping “as soon as possible”.
The Huddle Park farm in Bedfordview is 235ha of land bordering Linksfield Terrace, Bedford Park, Senderwood and Sandringham.
It is Joburg’s last remaining public golf course and one of the largest remaining open spaces, with three 18-hole golf courses and a wetland of more than 130ha.
The Investec consortium plans on developing a massive residential complex with a private golf course. The remaining area is being converted into an open space with a public golf course.
Tugwana said the farm was in the process of being subdivided and the remainder of the portion would be transferred back to the city.
But according to the offer to purchase, Investec was supposed to complete the subdivision and the transfer within 12 months of the sale being registered.
And now more than 16 months have passed since October 2011 when the sale was registered with the deeds office and the entire 235ha is still under the ownership of Investec.
Investec’s Heather Casey said the city had retained full occupation of the remainder of the property, and “will in due course be the registered owner”.
She said Huddle Investments’ shareholders were Investec Property, Standard Bank Properties and Global Capital.
The sale, said Casey, was in response to a public tender process.
But according to the complaint to the public protector, a group of concerned residents called Friends of Huddle Park say neither the JPC nor Investec have been able to tell residents where the tender was advertised.
The Sunday Independent has also seen a letter from property developers Waterfall offering R48m for the land. The offer was declined by the JPC in favour of Investec’s R45m offer. Waterfall CEO Werner van Rhyn would not comment on the matter.
Tugwana denied that the city had received a higher offer.
The Sunday Independent has seen a document showing that the city had expected to get between R100m and R150m for the 182ha park.
In the complaint, registered at Madonsela’s office in May, Friends of Huddle Park chairman Daryl Fuchs says local residents had Huddle Park independently valued at R1.4 billion, based on the rates that residents paid.
“This means the piece of land sold is worth between R400m and R600m, but was sold for R46m. This below market price is an immediate red flag,” he said .
“Considering it’s public land it’s completely ridiculous that they attempt to hide so much info from the public and need to be put into order,” said Fuchs in his complaint.
He also raised issues about “zero public participation” on this sale of public land.
“There was no chance to object or anything and this sale totally ignores registered public objection to the 2008 sale of the whole park and the establishment of a township on the park which should apply to this deal,” he states.
He contends that the sale of the land was in opposition to the city’s policy of maintaining open space.
Public protector spokesman Oupa Segalwe said the investigation was expected to be complete by the end of March.
The Huddle Park project has been plagued by controversy since 1998 when the city decided to develop on the property.
This week the property came under the spotlight after residents criticised a scoping report of the development.
The city has called for comments on the scoping report, which looks at the environmental, traffic and crime impacts of a development before it can be built.
In one submission, the Head League – a non-profit company which has been following the development of Huddle Park – said the report reflected a number of concerns that had not been adequately addressed.
They questioned the land being purchased “in response” to a public tender, saying the land was not advertised in a public tender but in a “request for expressions of interest” relating to a portfolio of properties owned by the city.
The tender, they say, had no relevance to land zoned public open space, which is what Huddle Park had been zoned.
They also highlight that Investec only paid R32.6m for the property, as the R45.6m included a R10m facilitation fee to the JPC and a R3m maintenance levy.
According to Druker, the R45.6m sale is converted to a sale of R860 000 a hectare. But if the facilitation fee and the levy are deducted, it only translates to R615 000 a hectare.
This figure is lower than a valuation conducted by the JPC, seen by The Sunday Independent, which valued the land to be sold at R750 000 a hectare. The valuations were done one month after the city decided to sell the land.
According to Druker, in the immediately abutting suburb of Linksfield North, a vacant stand of 3 965m2 is on the market for R2.1m, which translates to R5.3m a hectare.
If that is the case, says Druker, Investec should have purchased the land for more than R275m.
Druker has raised issues about the report not identifying all the legal requirements, such as the Municipal Finance Management Act of 2003 and the City of Johannesburg’s own public open spaces by-laws.
The report fails to address issues around traffic or crime.
He disputes the report’s findings that the area lacks suitable convenience retail facilities, saying that there are five shopping centres within 2km and six more within a 5km radius. - Sunday Independent