Residents and ratepayers in the city are alarmed at a proposal by the City to lease the Cape Town Stadium for a mere R100 a year to a municipal entity created to operate and manage the stadium. Photo: Ross Jansen/African News Agency (ANA) Archives
Cape Town - Residents and ratepayers in the city are alarmed at a proposal by the City to lease the Cape Town Stadium for a mere R100 a year to a municipal entity created to operate and manage the stadium. The Stadium Company will also receive a subsidy from the City to do its job.

The City said it intended to enter into a lease agreement with the newly-created municipal entity that is responsible for the operation and management of the Cape Town Stadium Precinct. The lease agreement falls within the definition of “right to use, control or manage” a capital asset. The City will still be responsible for major capital infrastructure maintenance and upgrades.

The municipal entity will be responsible for the day-to-day operational costs and maintenance. But there will be no transfer of ownership.

The proposed lease duration is for 50 years with an option to renew for a further 49. The period is to bring it in line with the service delivery agreement already entered into between the City and the municipal entity.

According to the City, the rental will be R100 at year, with a rental review every three years.

The City subsidises the stadium and explained that if a market-related rental was charged, the municipal entity would use the subsidy to pay the market-related rental back to the City.

“It therefore does not make sense to charge a market-related rental if it is just going to be paid back. A nominal rental of R100 per annum was therefore used.

“The municipal asset transfer regulations require that the rental be reassessed every three years. The City called for the public to comment on the proposal in August but said the comments and objections received were not upheld.

Mayco member for economic opportunities and asset management James Vos said that as the Stadium Company became less reliant on the City subsidy, there was scope for the rental to move closer to a market-related rentals.

Objectors to the City’s proposals have expressed “disgust” over the leasing of the property for a meagre R100.

Green Point Ratepayers Association said: “This objection to the leasing of erf 2188 by the Municipal Management Entity is based on the total lack of disclosure to the public and interested parties.

“Until a full investigation has been held into the accountability for the huge sum that was either donated or loaned to this management entity, this lease must not be allowed to be granted.”

Resident Brad Peng said: “I am absolutely disgusted by how the City and DA wish to rent the stadium and such a large space out for R100 per annum for the next 50 years? How does this even make economic sense?”

STOP COCT founder Sandra Dickson said the project was of concern as the City stated clearly that public comments were not “upheld”.

“In other words, the City rejected public comment on the issue. This is of concern as the City not only chose to ignore public comment, but they spent money on running the public participation process.

“It is with great alarm that STOP COCT takes note of this public participation process the City chose to ignore.

“The City is now so bold in taking one-sided decisions that they even state on paper that public participation is no longer taken as a lawful requirement in City decisions.”

In July, the Cape Argus reported that Cape Town Stadium was struggling to make its revenue targets and the City, in its June income statement, reported that there was an under-recovery of R132million in rental revenue from sport and recreation. It also painted a bleak picture of the entity struggling to acquire revenue.

Stadium chief executive Lesley de Reuck said: “We disagree with the statement that the stadium was a bad idea and a white elephant. (It) has had an extremely positive performance against its scorecard for the financial year ending in June. To improve the financial performance the board has approved a commercialisation strategy whereby various additional revenue streams would be activated.”

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