City of Cape Town’s forensic report says Site B sale was not botched
According to the report, numerous attempts were made to dispose of the land, “however they were unsuccessful therefore the public auction option was explored”.
It also stated that the City’s director of property management Ruby Gelderbloem was advised by the valuations and property disposal department that if the rights of Site B were increased it would generate more revenue. The option to increase its rights was made to mayco member for finance Ian Neilson and chief financial officer Kevin Jacoby.
“Neilson advised Gelderbloem that the application process would be time consuming and therefore advised Gelderbloem to continue with the sale of Site B with its current rights, restrictions and limitations,” the report stated.
It also emerged that Neilson subsequently requested that a clause be inserted into the sale agreement stating that any additional rights by the purchaser must be paid for, however the clause was not inserted in the sale agreement according to the City’s financial services.
According to the City’s valuation report, the estimated market value of Site B was R80 million with a reserve set at R72m.
Growthpoint found out about the sale of the property through a newspaper article in April 2015. The company received a copy of a publicly available prospectus from auctioneering firm Aucor in August 2016, giving notice that the property was to be placed on auction and giving details about the property. In it, they stated the property had 17 500m² of bulk rights.
The auction took place in September 2016 at the CTICC, where Growthpoint paid R86.5m (excluding VAT at 14%) for the land.
The transfer of the land took place in March 2017.
According to Ndifuna Ukwazi, the land could have been sold for between R185m and R240m.
However, according to the report, during the course of the investigation it was pointed out that the City’s planning and building development failed to definitively quantify the permissible floor area and potential accessible bulk in respect to Site B.
The report also stated that the department of planning and building development management failed to maintain adequate records which resulted in incomplete documentation.
City spokesperson Luthando Tyhalibongo said the City had maintained its position that there were no irregularities.
* The full report itself can be accessed here.