Social Housing Social Housing FoundationFoundation

“Building Communities,Building Social Housing”

Social Housing BillSocial Housing Bill

Presentation to Parliament11th September 2007

Contents

1. History2.SHF’s Response3.ISHP + Turnaround4.Functions in the Bill5.Phasing-In

1. History • SHF is a Section 21 company in existence since 1997

and listed as Schedule 3A public entity in PFMA• Provided capacitation, research and policy

development expertise to the sector.• Took as its point of departure, the Institutional Subsidy

regime as espoused in the Housing Act, and Chapter 6 of the Housing Code.

• Established international relationships with sector leaders to research international trends and to develop a world-class best practice model for SA.

1. History • Institutional subsidies were disbursed in the absence of

a well constituted policy framework – leading to inconsistent and non-sustainable application.

• The institutional subsidy instrument was incongruent with construction practices, causing frustration in financial modelling and project packaging.

• Private sector funders (banks etc) were reluctant to extend credit facilities to the institutions due to this being unchartered territory and also due to doubts as to organisational strength and competence (non-profit sector, corporate governance etc)

1. History • Provinces were planning and budgeting for institutional

subsidies, but, because the approval process is reactive (they wait for an SHI to submit projects), under-expenditure and under-delivery of units was realised.

• Government was also concerned that its significant investment was left largely in the hands of external entities, who were un-regulated and did not necessarily marry themselves to the mandate of ensuring that low income earners were also accommodated.

• Projects submitted by SHI’s did not always conform with municipal IDP processes.

2. SHF’s Response • SHF was given the mandate to manage the EU-sponsored

Special Programme for Social Housing (SPSH) and a Programme Management Unit (PMU) was created.

• Focus was given to the capacitation of institutions to be able to bolster delivery.

• Tools were developed to facilitate technical SHI operations as well as good governance.

• Technical support was provided for ready-to-go projects.• Support was also provided to the 3 spheres of

government

2. SHF’s Response • Research was commissioned that covered the following

areas of concern:-– A Regulatory framework for SHI operations– A financial model that kept pace with construction sector and

the property management sector (operations and maintenance)– A strategy to attract private sector funding– A modus operandi that allowed proactive interaction by

municipalities (IDP process inclusion, etc)– Different grants that could be accessed – the Restructuring

Capital grant which favoured development in Restructuring Zones coupled with a bias for low income earners as the target market.

2. SHF’s Response • NDoH, partnered by SHF, harnessed together a team of

specialists drawn from international expertise as well as domestic industry leaders to form a “think-tank”, or laboratory of sorts to address the shortcomings of our policies and to customise an international solution to the South African scenario.

• The result of this passionate labour is the Bill before you.• Elements of the Bill formed part of the Minister’s

ground-breaking “Breaking New Ground” document in 2004 and was also the basis for the Social Housing Policy approved by Minmec in 2005.

2. SHF’s Response • The Bill seeks to address, inter alia, the following:-

– The formation of a regulatory and compliance body – the Social Housing Regulatory Authority

– 5 types of new grants, over and above the institutional subsidy (now referred to as the “Top-Up” portion). The most significant is the Restructuring Capital Grant which provides subsidies in line with inflation, CPIX, Construction Index.

– Provisional Restructuring Zones and Restructuring Zones– An Interim Process– Processes and cycles– Roles and Responsibilities

3. ISHP + Turnaround• Whilst SH Bill undergoing enactment process and SHRA

still to be formed, NDoH mandated SHF to run with the Interim Social Housing Programme.

• Budgets: – 2006/07 : R107m– 2007/08 : R180m – 2008/09 : R250m

3. ISHP + Turnaround• Turnaround Strategy addresses SH projects in distress –

future role of SHRAPROBLEM

CONFIRMATION

SOLUTIONDEVELOPMENT

SOLUTIONIMPLEMENT

EVALUATION

Preliminary Report

Recommendations

Turnaround Plan

Implementation Report

Evaluation Report

Engage SHI, tenants, funders, province, municipality

Investigate Legal, financial

Communication, Interim management, regularisation, finance

Execute Turnaround Plan, Right-size, sale

Document experience, Early Warning Signals

4. Functions Outlined in the Bill• Bill envisages the following functionality:-

– Accreditation of Institutions– Registration of Institutions– Funding/Disbursement– Regulation– Compliance/Enforcement– Capacitation– Research– Support (SHI’s, govt, others)– International linkages and networks– Marketing and Communication

• Referee and player implications

5. Phasing In• Phase I

18 months allows for complete development (regulations) hand-holding fine-tuning and tweaking sector communication – not a knee-jerk switch-over

5. Phasing In• Phase II

Clear understanding of roles Well performing sector Separate legal entities but interdependent

PolicyStrategy

Funding

ProgrammesResearchCapacity BuildingRegistration & Accreditation

Compliance & Legal

Interventions & Turnaround

5. Phasing In• Considerations

– Policy– Strategy (New Rental Strategy)– Legal– Programme (SH, CRU, Tenants)