Cape Town - Mayoral hopeful Ian Neilson has been fingered to be partly to blame for the loss of R140 million of public money due to an alleged botched auction of prime land on the Foreshore.
A notice by the city council recently announced an intention to develop 3932m² of prime land on the foreshore into offices and hotels, civil rights organisation Ndifuna Ukwazi (NU) said.
The site was bought in 2016 on auction by Growthpoint Properties, the largest South African property investment trust, listed on the JSE with assets on three continents.
However, Growthpoint Properties bought the 46 000m² of bulk, or allowed building magnitude at the price of 17500m², as the latter measurement was stipulated in the city council’s prospectus as the site’s bulk rights.
The cost of the 17500m² was R86m, amounting to R4942 a square metre, the non-profit organisation NU said.
But the city council’s notice read that the proposed development planned to use the entire 46000m² - meaning the city council lost about R140m as a result of the discrepancy during the auction, NU said.
NU co-director Jared Rossouw questioned the competency of Neilson, then mayoral committee member for finance, and city officials Ruby Gelderbloem (director of property management), Kevin Jacoby (executive director for finance at the time) and said they were to blame for the “botched auction”, which resulted in the loss of millions meant for the development of the poor and working class.
Neilson did not respond to questions yesterday. In 1997, Site B was consolidated with Site A, which was across the road, and the latter was sold to a French company for an unknown price and developed into Icon Luxury Apartments, Rossouw said.
The joint size of the land was 69 000m² of bulk, and Icon took up 22896m², leaving Site B at 46000m².
“While we understand that not every piece of well-located state-owned land will be suitable for affordable housing, we note with concern that without a comprehensive strategic plan linking the city council’s expansive property portfolio to its service delivery objectives that such disposals would amount to a series of ad hoc disposals,” Rossouw had written to the city council after the erf was bought.
Mayco member for assets and facilities management Stuart Diamond responded to questions directed to Neilson, saying the city council had received an application by Growthpoint to amend conditions for higher bulk services installation.
Diamond did not answer questions on why the sale was attached to only the 17500m². “Erf 165639, Cape Town (known as Site B) was sold by auction in September 2016 for R86.5m. The property is 3 932m² in extent and is zoned General Business 7 (GB7).
“The permissible bulk services on the property are restricted to an area of 17500m². Growthpoint’s offer of R86.5m (R4943/m²) was market-related.
‘‘Landowners have the right to submit applications to enhance the value of their property, which must follow due process. One will notice that the application is not only applicable to Site B, but includes additional properties or rights in properties (that still needs to be acquired from the city) in order to facilitate the envisaged development,” Diamond said.
A day after the site was sold, NU wrote to the city council to say the land was the last remaining of eight parcels that were subdivided after the demolition of the Foreshore Power Station Precinct, as the others were sold by the city council to developers, and subsequently developed into high-end office spaces and hotels.