Mr. Neil D. Eybers
Project
Manager: Development and Facilitation
Property
Management Department
13th
Floor, Civic Centre, Hertzog Boulevard
CAPE
TOWN, 8000
3rd
August 2015
Dear Mr
Eybers
Re: Proposed Disposal of land for the development
known variously as the Clifton ‘Precinct’ Development and Maidens Cove Village.
Ground rule
The
Clifton-on-Sea Bungalow Owners’ Association (BOA) is on record as objecting to any development on the Clifton Scenic
Reserve, a Provincial Heritage Site (Gazette No:
3932 Date: 13/02/1948). Our objection to any development on
this site frames our comments and concerns related to the processes followed by
the City to dispose of this asset and this includes the public participation
process. We fully reserve our rights to
deal further with all elements of further processes such as the re-zoning and
environmental authorization.
In
making the following comments we trust the City’s commitment to taking
cognisance of public sentiment and constructive comments. This implies a
willingness to approach the proposed development with an open mind and not
bulldoze through development by circumventing protective measures and engaging
in sleight of hand. These comments are
therefor provided in good faith and in an effort to prevent a development that
has the potential to be a shameful
monument to a discordant relationship between politics, developers, development
and public spaces.
1. Public participation - The Proposal
Process to date.
The BOA
finds the public participation process followed by the City to date sub-optimal
in a number of ways. The BOA is an interested and affected party and encouraged
to make informed comments but engagement in the process has been minimal and
information is scant. These will be
dealt with in more detail in due course; but our key points are:
· There has been no attempt to list
and review alternatives; but rather, a plan has been presented on a stand-alone
basis.
· There has been no “base-line”
analysis of the constraints as they relate to the site, existing services and
legislative restrictions.
· There has been no clear
representation as to the current zoning of the sites.
· It is of especial concern that the
City is itself considering the rezoning of the sites in question, since it would
be both applicant and adjudicator.
· There is the appearance of undue
haste, especially given how long a process that such a development plan might
“normally” be subject to , were the applicant to be an arm's length member of
the private sector.
2. Development
Alternatives.
As
explained by the presenters, the SV proposal presents elements that fall into two
categories:
-
elements
that are seen as inclusionary, that would make the precinct and its
amenities more accessible to the general public (such as the board-walk, etc.);
-
elements
that are exclusionary (or, more correctly, exclusive), which would , by
their nature, restrict access to those who could afford the price of entry,
this latter category including the bulk of the built forms proposed, such as
housing, hotel, retail and parking.
In fact,
we think it fair to say that the inclusionary elements are pure costs, whose
expense will be borne by revenues generated elsewhere. We therefore think it
appropriate that various alternatives along what SV referred to as the
“development continuum” should have been explored in somewhat greater detail;
and the input of the public sought. We offer the following possible “levels” of
development, by way of example.
•
Level Zero – no development. The area has been protected from formal development for a
long time, in order to maintain its natural beauty and unspoilt nature.
Although shabby, the existing facilities do function; and could be modestly
upgraded. In the light of the importance of the area to both locals and
visitors, it does not seem unreasonable that the public at large would see this
no-development scenario, with modest upgrades via the public purse, as being
worthy of debate. Similarly, local residential ratepayers, who undoubtedly
contribute far in excess of average rates and taxes, could reasonably expect
some of their “surplus” to be spent on such upgrades.
•
Level Zero Plus – an “improvement district”. The inclusionary elements – and
perhaps others – proposed by SV could be funded by a voluntary increase in
rates and taxes, along the lines of the various City Improvement District
initiatives in other parts of the City. Local residents might consider this an
acceptable price to pay to avoid the disturbances of developments, of the types
proposed by SV.
•
Level One – washing of the hands. Assuming that it is agreed that the inclusionary
elements need to be funded by exclusionary development on the site, should the
scope of such development not be limited to only that which would fund the
inclusionary elements? The two pieces of land, which are currently zoned, being
the old commercial site and the existing garages, would surely be able to be
put to “exclusive” uses which would adequately fund the SV proposals (and
probably provide a surplus!)
•
Level Two – benign residential. We argue that residential development is
potentially more benign in its impact on what is essentially an existing
residential neighbourhood, as opposed to retail and/or commercial development,
which by their nature need a certain critical mass in order to be successful;
and such resulting mass is inevitably at the expense of the residents and the
public seeking to get away from commercial glitz.
•
Level Three – …… and so on to the full scope of development as
presented by SV
3. Baseline Analysis.
We feel
the public in general, and the BOA in particular, are deserving of some more
detailed analysis of the obvious and existing constraints to development; and
how such constraints are to be balanced in a development scenario. Amongst
others, more reference should, in our view, have been made to:
· existing legislated protocols,
such as the Scenic Drive, Provincial Heritage Site, Coastal Zone Strategy,
National Environment Management Act. It
is common cause that the citizens of Cape Town have, in the past, sought to
protect the area from development.
· The removal of the
public parking, and a drive towards paid parking especially with regards to
Maidens' Cove. A City official is on
record as saying that free parking is at an end.
· Infrastructure constraints. Bulk
services in the area appear at full stretch, especially sewerage.
· Traffic along Victoria Rd and
Kloof Rd are both problematical especially in summer.
· Parking demand varies wildly, with
peak demand only on the busiest summer days. At night, parking areas are
currently liabilities rather than assets to local residents.
· Public transport, as a viable
alternative to passenger vehicles and parking, also seems constrained by road
conditions at peak times. The contradiction between
the MyCity bus service (which has resulted in narrowing of roads!), and the
increased private vehicle traffic, is glaring
· Analysis of retail market size for
this catchment area, demand and need for additional retail space.
· Residential property demand
· Current usage of and demand for
recreational amenities on the site : cricket, bowls and tennis, paragliding and
outdoor event such as cycle races, walking and running events
The BOA is
supportive of a process that is seen to be rigorous and fair. To us,
both of these prerequisites are potentially compromised, not only by the City's
stated desire to make money from the rezoning and development process; and,
into the future, through increased rates and taxes; but also, by the appearance
of undue haste which seems to be part of the current process, where only
lip-service is paid to the concept of real public participation.
We urge
the City to consider
•
slowing
down the process, to a pace more usual for this kind of development;
▪
following
the usual process by conducting a full EIA and land use planning application
which will inform
what can or cannot be developed
on the site rather than devising an optimal development (seen from the
City’s perspective) and then following due process to force the desired
development through; and
•
introducing
checks and balances that would mitigate the view that the City is both judge and
jury in its own application. Some
form of independent ombudsman would go a long way to allaying our
fears in this regard.
4. Shortcomings of the SV Presentation.
In the
view of the BOA, there are certain aspects of the SV presentation that are
important to the Association; and were either glossed over or missing entirely.
The main items are:
•
residential
security
•
development
risk analysis
•
financial
analysis.
4.1 Residential Security. The existing bungalow precinct and
its residents grapple with issues of security and petty crime. On the face of
it, the SV presentation does nothing to address these issues; and perhaps may
even exacerbate them. Providing more numerous and easier ingress and egress to
the precinct would, in terms of conventional security advice, make things
easier for both professional and opportunistic criminals. The impact of more
night time traffic implied by the retail/food-service components would only
serve to increase the risks of both crime and disturbance. It would therefore
seem to us that the residents would have bear the brunt of the effort and
expense of mitigation of these factors, probably through the use of alarms,
patrols, armed
response, electric fences, lighting, etc. The BOA feels
that its members need much greater attention given to this issue; and do not
accept that “more people and better access improves security”, as put forward
by SV.
4.2 Development Risk Analysis.
The BOA accepts that the primary motivation behind the City's proposals
are to unlock the value of the precinct, in a way that optimises the financial
returns to the City; and allows the cross-subsidisation needed for enhanced
service delivery to disadvantaged areas of the Metropole. In order to do this
to the best advantage of both citizens and, especially, ratepayers, it would
seem to be both desirable and necessary to consider the vital aspect of the
risks associated with the various development aspects proposed in the SV
scenario. By way of simple examples :
· the provision of parking,
especially on the scale suggested, appears to involve very high risk.
This is because there can be little ability to accurately estimate future
parking revenues. In fact, we suggest that underground parking is generally not
financially viable on a stand-alone basis in even the busiest areas of SA – and
this precinct could never be included in that category! The construction cost
alone of an underground bay is about R250 000 today; and any reasonable
allocation of land value in the precinct would, in our view, bring the cost to
no less than R500 000 per bay. There are also substantial fixed costs
associated with operating such a facility. We estimate the City's WACC at
around about 10%; implying that the break-even net revenue, after expenses,
would need to be R50 000 per annum per bay. Our research suggests that
pre-expense break-even would therefore be about R6000 per bay, per month, over
all 800 bays – which seem far-fetched. The real problem is that the full
expenditure (R100 million for the costs, excluding land, of the proposed 800
car garage) must be incurred before the actual revenue number is revealed. The
likelihood that local residents will be interested in securing parking space is
a reality however not in an open parking garage situated a good walking
distance from the nearest bungalows. The market value of garaging facilities
increases with the proximity as security, adverse weather conditions, lugging
shopping etc. are big considerations.
Ideally garage/parking facilities should be located in/below the parking
areas on the mountain side of Victoria Rd above 3rd Beach.
· Retail, especially of the types
contemplated in the SV proposal, we would consider being high risk. Rentals
from anchor tenants, such as a food store, would never, in our view, justify
the costs associated with a fair
land value, construction cost, the costs of providing the
required 6 bays per hundred of parking, development risk/profit and a WACC for
developers far higher than that of the City. Furthermore, food-service
operations involve the highest costs per square meter as well as the highest
failure rates in the retail industry – so they are only “nice to have” if
someone else pays ….The CBOA would suggest that, inevitably, developers will
mitigate their risk at the City's expense, by lowering the residual land values
attributable to the retail component in their feasibilities.
· Residential development is seen as
a low risk. Land values in the area are easily established, no
additional parking is required in terms of the SV proposals, phasing is easy,
the likely impact of additional bulk infrastructure is the lowest of any built
form, and the quantum and quality of ongoing revenues in terms of rates and
taxes is the easiest to establish. It is also fair to say, in our view, that
the demand profile for single residential plots with self-contained parking
within this precinct would seem to be high.
· Finally, revenues precede or
closely follow expenditures, especially in the sale of serviced plots.
Our
conclusion, therefore, is that based upon a sensible assessment of risk, the
development proposal should emphasise residential and reduce or eliminate the
retail and parking elements entirely.
4.3 Financial
Analysis. We suggest that the complete absence of “ballpark” estimates for
the financial implications of the SV proposals do a disservice to the public
participation process.
A
concerned party would need to know, in broad terms, some of the following:
· The costs of the public or
“inclusive” aspects of the proposals; and an estimate of the ongoing costs of
their maintenance.
· The financial targets for the disposals;
and the potential amounts available for the cross- subsidies involved.
· The potential amounts of
development profits to be made by third parties.
· Ongoing revenues to the City; and
their impact on the local residents.
The BOA is
aware that financial projections are a double-edged sword; and can be used to
prove or disprove whatever the authors determine; but we believe their absence,
in this case, materially diminishes the cogency of the proposal and the extent
to which it can be properly understood by parties on the margin.
We trust
that you will find our comments constructive and balanced but I must reiterate
that our position is one of opposing any development on the Clifton Scenic
Reserve, a Provincial Heritage Site.
Yours
sincerely
Paddy Walker
Chair
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