BRIDGING DIVIDES BUILDING AN INCLUSIONARY HOUSING POLICY IN CAPE TOWN - Land ...
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BRIDGING
DIVIDES
BUILDING AN
INCLUSIONARY HOUSING
POLICY IN CAPE TOWN
The National Land Value Capture Programme was
launched in South Africa in March 2020 and is a
tripartite partnership between the Development
Action Group (DAG), the Lincoln Institute of Land
Policy, and the National Treasury’s Cities Support
Programme (CSP). The three-year programme
CONTENTS
aims to strengthen the capability of metropolitan
governments to efficiently and effectively imple- Chapter 1: Sharing the Wealth . . . . . . . . . . . . . . 03
ment innovative Land Value Capture tools and Land Value Capture. . . . . . . . . . . . . . . . . . . . . . . . 03
strategies. Simultaneously, the programme seeks Inclusionary Housing. . . . . . . . . . . . . . . . . . . . . . . 05
to build capacity in built environment practitioners Mounting pressure . . . . . . . . . . . . . . . . . . . . . . . . 08
and civic organisations to influence institutional, Chapter 2: A Risky Business . . . . . . . . . . . . . . . . 11
regulatory, and other procedural changes re- Finding a middle ground. . . . . . . . . . . . . . . . . . . . 12
quired to implement these Land Value Capture Feasibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
tools and strategies. The programme is currently Sharing is caring . . . . . . . . . . . . . . . . . . . . . . . . . . 14
at the inception phase which comprises a series No silver bullets . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
of planned activities aimed at defining project
scope, key thematic areas, and a detailed imple- Chapter 3: Conclusion & Discussion Points. . . . . 19
mentation plan for the next three years. References and Notes . . . . . . . . . . . . . . . . . . . . 21
Published by Development Action Group Published in association with the South African National
101 Lower Main Road, Observatory, 7925. Treasury and the Lincoln Institute of Land Policy.
Cape Town, South Africa
Tel: +27 21 448 7886
Fax: +27 21 447 1987
Email: dag@dag.org.za
www.dag.org.za
ISBN (Print): 978-0-620-91055-2
ISBN (E-book): 978-0-620-91056-9
© Development Action Group (DAG), 2021. DAG is a registered non-
profit organisation with the South African Government’s Department
of Social Development, registration no: 0069-194 NPO. DAG is an
association not for gain incorporated under Section 21, of the South
African Companies Act, registration no: 1993/006859/08. DAG is
a public benefit organisation with South African tax exemption,
registration no: 930016961.
Text and editing: Lee Middleton
Design and layout: Gaelen Pinnock: www.polygram.co.za
Photographs: Credits not marked in the captions include:
Front cover: Kundai Nyamutenha; Back Cover: Alexia Webster;
Page to the right: Paul Grendon.
Intro text to start this
chapter. Debisit laut que
arum voloreserum que
raeseca tatusanis exceate
vent, omnist laccus volecte
comnihit dolo minvell
ecearit, is est quel.
02
CHAPTER 1
SHARING THE
WEALTH
An occasional creak of a chair punctuated processes and spatial transformation, and plac-
the silence in the wood-panelled, wall-to-wall es the responsibility to realize this connection at
carpeted space that is the Goodwood Council the feet of local government.
Chambers. Breathing the anodyne air of bu- “SPLUMA was the legal framework [for] a new
reaucracy, the dozen or so people assembled order in terms of planning practice. Its principles
— property developers, planners, and housing and provisions created an expectation that any
activists — waited to hear if the Planning Tribunal new package of municipal plans should serious-
would greenlight a disputed multi-million-rand ly start to address issues around equality and
development in the heart of Cape Town. advancing spatial transformation,” notes Willard
While not quite the stuff of primetime courtroom Matiashe, a researcher at the Development
drama, the Municipal Planning Tribunal (MPT) Action Group (DAG), a Cape Town-based urban
in Cape Town has been pulled into some very land rights NGO.
high-stakes battles in its short existence. A body Enacted in July 2015, SPLUMA is also the leg-
comprised of experienced spatial planning pro- islation that conjured the MPTs into being, spec-
fessionals, the MPT typically weighs in on land- ifying that SPLUMA’s “five principles” of spatial
use management issues requiring an extra dose justice3 guide tribunal decisions. Consolidating
of technical savvy: title deed restriction removals, and giving legal heft to an array of existing tools
impact assessment reviews (e.g., environmental, and policies, SPLUMA’s arrival is seen by many as
heritage, or transport), and development ap- an inflection point in the larger story of efforts to
Left: plication objections. While most of the latter are redress the legacy of spatial apartheid in South
Bantry Bay located on filed on the basis of things like lost views or traffic Africa.
the Atlantic Seaboard of
Cape Town boasts some concerns, in September 2017, Cape Town’s MPT But how cities can transform these principles
of the highest priced met to hear something new: opposition to a ma- into implementable programs and practices —
properties in Cape Town jor development on the basis of the principle of not to mention how to finance such work — and
– inaccessible to the
majority of Capetonians. spatial justice, as outlined in the national Spatial one of the ways in which the City of Cape Town
Meanwhile, the spatial Planning and Land Use Management (SPLUMA) is trying to do just that, is the subject of this story.
marginalisation of the
working class families
Act 16 of 2013.
A gamechanger for South African city planners,
LAND VALUE CAPTURE
to the urban periphery
has not only further SPLUMA is the legislation that cedes all planning
entrenched the apartheid
city, but has deepened and land-use management authority to munic- By the time SPLUMA was unveiled, the right
poverty. ipalities1. It also compels those municipalities to angles of cranes had seemingly become a per-
Top photo from the DAG apply principles of spatial justice in their plans manent fixture foregrounding Table Mountain’s
archives. Bottom photo
by Ashraf Hendricks
and decision making2. In other words, SPLUMA iconic skyline. Urban renewal efforts initiated over
- GroundUp. makes explicit the connection between planning a decade earlier were bearing fruit. Throughout
03
the Mother City, even the grittiest industrial neigh- cognitive function, Land Value Capture (or Value
bourhoods were sprouting new developments Return) is in fact just what it sounds like: a way
from art galleries to luxurious multi-storey apart- to recoup value related to public improvements
ment blocks. But for every shiny new establish- to land6. Operating from the premise that pub-
ment, dozens of people no longer able to afford lic actions can increase the value of nearby
what had been the city’s few remaining afford- land and real estate, LVC is a policy approach
able enclaves were being pushed out. that says that such publicly generated windfall
In spite of the significant strides made since should be shared with local governments to help
South Africa’s 1994 transition to democracy, pay for things in the public interest (e.g., transit
backlogs in social service delivery—in particular, systems, parks, affordable housing, etc.)7. While
a housing backlog that grew from 1.5 million in the increased values (or “increments” as they are
1994 to 2.1 million in 20104—remained all too evi- often called) can be captured by familiar mecha-
dent, one and even two decades on. At the same nisms such as taxes8, they can also be garnered
time, the residential property market was boom- through less obvious means, such as infrastruc-
ing. With house prices increasing by an average ture or other developments that respond to public
of 20% a year from 2000-2005, it was clear to needs (see Box 1).
anyone paying attention that land, and particu- “Land Value Capture is based on a simple core
larly the issue of where housing was being built, premise: public action should generate public
remained stubbornly at the heart of the country’s benefit,” says Enrique Silva, Director of Interna-
growing inequality, urbanization of poverty, and tional Initiatives at the Lincoln Institute of Land
burgeoning informal settlements5. Policy (LILP), an esteemed US-based foundation
But as much as land posed a problem, it was that seeks to improve quality of life through the
also viewed by some as fundamental to possible effective use, taxation, and stewardship of land.
solutions. With its long history working to ensure Around the world, fiscally constrained urban
widespread access to and equitable use of ur- policymakers have made creative and innovative
ban land, the Development Action Group (DAG) use of LVC to help fund public-sector develop-
was firmly in this latter camp, and had begun ment needs. Yet the use of LVC’s most efficient
exploring the then-nascent concept of Land Value and innovative mechanisms in South Africa,
Capture (LVC). while potentially tremendous, remains largely
Despite being one of those jargon-y terms untapped.
whose very utterance can seemingly paralyze
BOX 1
WHAT IS LAND VALUE The increased values (or “increments” as they
are often called) can be captured by familiar
CAPTURE? mechanisms such as taxes. But less obvious
means, such as infrastructure or other devel-
Land Value Capture (or Value Return) provides opments that respond to public-sector needs,
fiscally constrained urban policymakers a way are another more innovative way of capturing
Below:
to recoup and share with the broader public these values.
Different situations,
the increased values that are related to public
improvements to land (e.g., changes in land- Land Use different LVC options
use regulations, installation of infrastructure). Existing New
Operating from the premise that public actions Property Tax Sale of Development
Infrastructure
Existing
can increase the value of nearby land and real
Rights
estate, LVC is a policy approach that says that
such publicly generated windfall should be
shared with local governments to help pay for Betterment Land Readjustment
New
things in the public interest (e.g., transit sys-
Contribution
tems, parks, affordable housing, etc.).
04 – L A N D VA L U E C A P T U R E P R OGR AMME: CA S E S TU DY
“South Africa ought to embrace innovative LVC national housing backlog, growth of informal
mechanisms, which have potential to addresses settlements, and inadequacy of basic services,
spatial inequity of our cities by using land-value among other land-related issues. SPLUMA’s pas-
windfalls to co-finance the construction of afford- sage had increased pressure on municipal offi-
able housing in well-located areas,” says DAG’s cials to rethink planning frameworks, and more
Matiashe, who explains that the limited supply than a few were exploring integrated strategies
of well-located affordable housing is too-often like Transport Oriented Development (TOD)9. But
blamed on resource scarcity. accessing the financing and the land that were
One of the first NGOs to talk about LVC in both central to such plans remained challenges
South Africa, in 2006 DAG started promoting the exacerbated by the property market boom, which
concept among policymakers through lobbying, was making well-located land even more costly
trainings, and sharing global examples (see Box and scarce.
5). In 2010, after hosting the “Reimagining the City The time had come for South African cities to
Towards a New Urban Order” conference with stop talking about and start applying more inno-
LILP, the organization found itself repositioning its vative LVC mechanisms in response to growing
own efforts away from individual ad-hoc projects. urban pressures. Given the urgency around
“We began re-imagining the city in a way that re- housing, something called Inclusionary Housing
quired us to approach our work as a whole pleth- topped that list.
ora of instruments and tools that needed to be
packaged together: LVC, medium-density rental
housing, municipality-wide planning, informal
INCLUSIONARY
settlement upgrading. We wanted to be so inten- HOUSING
tional and focused around land at the centre of it Employing urban land-use regulations that in-
all. And it was obvious that LVC in particular could centivize (or require) developers to include afford-
leverage the value of land,” recalls Helen Rourke, able units, Inclusionary Housing (IH) refers to the
programme manager at DAG. resulting affordable units in new developments
Meanwhile, the need for sensible policies and that would otherwise solely include market-rate
feasible programs that could truly drive transfor- housing. Suited to robust property markets with
mation stood in stark contrast to the still-massive increased demand for development rights (e.g.,
greater densities, re-zoning, etc.), this form of IH
is based on LVC, in that it leverages a portion of
the increased land value associated with public
regulatory changes and/or additional develop-
“It changes the narrative. It goes ment rights to finance the resultant housing. Also
from being a situation in which a tool for integration, the land-use regulations
behind IH make certain types of development
we have segregated housing conditional on the inclusion of affordable units
in areas where the market would otherwise
scattered across the city, to a preclude them. By mitigating against the spatial
clearly supported, reinforced idea inequality that results from purely market-based
planning practice, IH can, over time, also equal-
of putting people of all income ize out-of-control land markets (see Box 3). In light
levels in well-located spaces — of all of this, the relative absence of IH in South
Africa—in the form of either policies or actual
and it gives teeth to that. It gives us constructions—appears almost perverse.
a way of actually doing that, not In fact, IH has been on the table as a way to
address spatial segregation and the need for
just speaking about it,” affordable housing since 2005. Prior to SPLUMA,
both the National Department of Housing (now
Human Settlements) and the Western Cape
provincial government attempted but ultimately
Sharing the Wealth – 0 5
failed to finalize policies10 for what is admittedly components—requires a level of coordination
an intricate tool with myriad implementation and planning between multiple spheres and
possibilities (see Box 4). Those previous high- departments that mostly does not exist.
er-level policy development efforts snagged on “The complexity comes in what happens inter-
various questions, including legality11, the sphere nally within an organization or institution, where
of government that ought to be responsible12, you have to navigate across a range of different
and whether IH was a function of housing or departments in order to get done what you need
planning13. Although none of those issues is done. It kicks off a really complicated internal
insurmountable, they underscore the reality process,” explains Margot Rubin, associate pro-
that IH—with its numerous stakeholders and fessor in spatial analysis and city planning at Wits
University.
BOX 2 That said, successful examples abound. Used
BOX 2 around the world since the 1970s, IH has been
WHAT IS INCLUSIONARY critical in maintaining affordable housing stock in
cities from the USA to Brazil (see Box 5). As a plan-
HOUSING? ning-related LVC mechanism that can ensure that
the benefits of growth in desirable areas extend
Employing urban land-use regulations that incentivize (or require)
beyond those communities that can afford to pay
developers to include affordable units, Inclusionary Housing (IH)
market rates to live in them, the use of IH in South
refers to the resulting affordable units in new developments that
Africa is long overdue.
would otherwise solely include market-rate housing. Suited to
The City of Johannesburg (CoJ) recognized and
robust property markets with increased demand for development
responded to this imperative in 2019, when it be-
rights (e.g., greater densities, re-zoning, etc.), IH is based on Land
Value Capture, in that it leverages a portion of the increased land came the first South African municipality to adopt
value associated with public regulatory changes and/or additional a citywide IH policy. Much of the credit for this
development rights to finance the resultant housing. goes to the administration of Mayor Parks Tau,
which in 2016 adopted its Spatial Development
Perhaps most significantly, IH can act as a tool for integration. The Framework 2040, where the widespread use of
outcome of land-use regulations that make certain types of devel- Inclusionary Housing was specifically called for14.
opment conditional on the inclusion of affordable units in areas Taking a relatively straightforward approach,
where the market would otherwise preclude them, IH has the abil- Johannesburg’s policy requires that 30% of any
ity in the long term to ensure that housing for people at the lower private development over 20 units be inclusion-
end of the market exists, and that diversity is dispersed throughout ary. Achieved through either rental and/or size
a geography or jurisdiction.
caps15, the developer receives the incentive of in-
creased Floor-to-Area-Ratios (FARs) and densities
to accommodate the inclusionary units, as well as
BOX 3 reduced parking ratios for the same. According
HOW IH CAN AFFECT to senior urban planner in the CoJ’s Development
Planning Department, Dylan Weakley, developers
LAND VALUES so far have almost entirely opted for the size cap.
Based on supply and demand economics and
By mitigating against the spatial inequality that results from purely
linked to densification policies (e.g., 2020 Nodal
market-based planning practice, IH can, over time, also equalize
Review), the rationale behind this option is that an
out-of-control land markets. In cities with clear IH policies, property
abundance of “micro units” will generally reduce
developers and land owners alike are aware that development
projects meeting policy criteria must factor in costs of IH. As such, housing prices over time.
a clear IH policy gives property developers a negotiation tool when Although the policy has been criticized for
purchasing land, and can serve to reduce land prices. As a result, IH being too soft — allowing developers to meet its
can help to moderate or equalize property markets that have been requirements simply by building market-rate mi-
thrown out of balance by activities like land speculation and/or in- cro units — its existence sets a critical precedent.
ternational buying. By contrast, the absence of IH policy certainty “It changes the narrative. It goes from being a
and clear guidelines stymies correct estimations of total property situation in which we have segregated housing
development project costs at the time of land acquisition. scattered across the city, to a clearly supported,
reinforced idea of putting people of all income
06 – L A N D VA L U E C A P T U R E P R OGR AMME: CA S E S TU DY
BOX 4
SUMMARIZING IH APPROACHES & POLICY ELEMENTS
Although IH has been on the table as a way to address spatial segregation and the need for affordable
housing in South Africa since 2005, national or provincial policies have yet to emerge. This is due in part to
the fact that IH is an intricate tool with myriad implementation possibilities that must take local contexts into
account. In 2015 SPLUMA made municipalities responsible for spatial planning, and thus IH policy. Follow-
ing are some aspects of the different implementation approaches and policy elements to be considered.
Implementation Approaches
Mandatory: Where all new developments meeting certain criteria (e.g., over a certain size, or
within certain areas) must include IH.
Voluntary: Where only new residential (and possibly commercial) developments applying for
additional rights allocate a portion of the area or value of the additional rights to IH.
• Applicable in a context lacking policy certainty and/or basic minimum require-
ments to determine IH contributions. This option is useful in places where legal
concerns complicate the imposition of IH as a condition of any development
approval, and assists developers to deliver IH in cases where its inclusion will
improve the chances of planning application approval.
Incentive Based: Where IH provision within a specified overlay zone (areas of the city identified to have
strong urban land markets) will be incentivized.
• IH policies are effective in strong residential land markets, where residential
developments are likely to elicit more value. Hence Overlay Zones align with a
city’s stronger land markets.
• This option can pro-actively up-zone development rights to a set threshold above
the existing zoning scheme. Thus if a developer uses the additional rights, then a
proportion is reserved for affordable housing.
• Other incentives that can be considered in addition to density/additional develop-
ment rights include reduced parking requirements and fast tracking of approval
processes.
Negotiated/Formula: Each application is considered on a case-by-case basis, with a calculation for IH
made per development
• Contributions based on a standard formula (“calculator”), determined from
residual land value & development costs
Mode of provision: Refers to how the inclusionary contribution will be made (see Box 6).
Policy elements
Affordability definitions: Refers to how affordability is defined (see Box 7).
Affordability Refers to how recipients will benefit. All options have implications related to keeping
mechanism: the units affordable in perpetuity. That is:
• Ownership: (Use title deed restrictions? How are levy costs handled?)
• Rental: (Who manages? the City? an Agency? Social Housing Institute? And how
are levy costs handled?)
• Whether opting for rental or sale, maintenance and operational expenditures
must be considered, and the institutional mechanisms also established.
Sharing the Wealth – 0 7levels in well-located spaces — and it gives teeth projects take years to unfold, and most would not
to that. It gives us a way of actually doing that, have factored an IH contribution into project cal-
not just speaking about it,” says Rubin of the sig- culations when originally acquiring the land for
nificance of having a policy, and what IH could redevelopment (see Box 3). In other words, devel-
potentially achieve in contrast to other existing opers balked at how a new IH requirement how
affordable housing options16. could negatively affect the financial feasibility of
projects that were themselves driving the need
for a tool like IH. Such was the context in which
MOUNTING PRESSURE the SPLUMA-based objections mentioned at the
While Johannesburg was first out of the gate with start of this story began.
a policy for IH, the City of Cape Town (CoCT) has In 2017, the housing activist group Ndifuna
hardly been lagging. Engaged in efforts to har- Ukwazi (NU), seeking to reverse Cape Town’s
ness LVC since 2008, the CoCT saw LVC, and IH increasingly exclusive development landscape,
in particular, as a way to “anchor planning and began reviewing all of the land-use applications
infrastructure investments in the larger debate coming through Cape Town’s Development Man-
about undoing apartheid’s land patterns,” says agement Department. Correlating property mar-
LILP’s Silva, who has worked with the CoCT on ket information with data on racial demographics
these questions since 2016. and household incomes, NU sought to objectively
Housed within and intended to correspond to demonstrate that the majority of the new, most-
the City’s 2016 TOD strategic framework, the CoCT ly high-end developments being approved in
approached IH very much as a tool of LVC and well-located parts of Cape Town contravened the
spatial transformation (versus a housing delivery spatial justice directive of SPLUMA, as price points
mechanism). As such, its IH policy had to speak to — vastly out of reach for most Capetonians —
the complexities of Cape Town’s property market, effectively perpetuated racial segregation in
which had reached new extremes. Although IH desirable areas.
can only function in a healthy market, by 2015 “What we did was systematically object to as
Cape Town’s property market, flooded with high- many developments as possible to show the
end luxury developments, was affordable to only extent of the racial exclusion in private develop-
a fraction of Capetonians17. While it was precise- ments, and to propose a constructive condition
ly this situation that necessitated a mitigating for the inclusion of affordable housing on that
tool like IH, the reality is that such development development,” says Jonty Cogger, an attorney at
NU’s law centre.
To NU’s great surprise, the MPT that heard
the organization’s first major objection agreed,
It was clear to anyone paying imposing a 20% affordable housing inclusion as
a condition on the additional rights requested by
attention that land, and the developer in question.
particularly the issue of where “That set in motion a trajectory for how this
journey would play out,” recalls Cogger, referring
housing was being built, to the 50-some objections NU would file against
remained stubbornly at the developments requesting additional rights with-
out an IH component from late 2017 to 2018.
heart of the country’s growing Fearing the costly delays these objections
could trigger, some developers began pre-emp-
inequality, urbanization of tively adding IH components to projects. But in
poverty, and burgeoning the absence of a policy, there were no clear rules,
and the resulting chaos and uncertainty were
informal settlements. taking their toll on an industry that was now also
suffering a general downturn. While mounting
pressure from developers and activists alike
pushed IH to the top of the City’s agenda, it also
stymied consensus.
08 – L A N D VA L U E C A P T U R E P R OGR A MME: CA S E S TU DYBOX 5
GLOBAL EXAMPLES OF INCLUSIONARY HOUSING
Although many countries have some form of policy using IH as a mechanism for Land Value Capture, they differ accord-
ing to planning and housing contexts. In many European and South American countries, land value increases are seen
as resulting largely from society’s efforts; as such, they do not belong to the landowner and should be captured by the
public sector. For example, Spain and Brazil have enshrined in their constitutions that land value increments created by
public action must be captured for public benefit. The extent to which this belief in the importance of LVC is reflected in
public policy varies widely between states and countries.
Leveraging fee-in-lieu funds, Seat- Since 1983, Scotland has used Shared In the past, affordable housing in the
tle, Washington (USA) produced Equity Agreements (previously ‘shared United Kingdom was produced pri-
three times more affordable units ownership’), where the owner or ben- marily by the public sector or social
than would have been built on-site, eficiary of an IH unit pays a share in housing providers, on land acquired
all of which were built in the same the property, and the remaining equity through either the market or the dis-
neighbourhoods. is held by the Scottish Government. position of publicly owned property.
More specifically: That model was radically transformed
with the passage of legislation like
With a grant from the Scottish Gov- the Town and Country Planning Act
ernment, Registered Social Landlords of 1990, which, under section 106,
(RSLs) build or buy new homes for introduced planning obligations (‘de-
shared ownership. The RSL markets veloper contributions’) that focused on
the properties to priority purchasers site specific mitigation of development
(who would otherwise be unable to impact. Mitigation is achieved in two
In Los Angeles, California (USA) vot- afford to buy a home), and the house- ways:
ers approved a law in 2016 allowing hold can acquire an equity stake
development projects near public (generally 25%, 50%, or 75%). The • Using the development permission
transit to build up to 80% more den- purchaser then pays their mortgage system as a means of encouraging
sity if they include 10-25% affordable costs and/or a reduced rental charge, developers to include lower-cost
housing. In the first year, they received depending on their equity stake to the units within market housing
applications for 112 projects with 5,571 RSL. The purchaser owns the prop- schemes.
units (1,145 affordable units). erty outright, but the interests of the • Creating a subsidy for housing
Scottish Government are secured by development by granting
a mortgage (or standard security) on development permission to
the property. “affordable housing” providers on
sites that would not normally be
Since 2009, the Open Market Shared
released for housing, and which
Equity (OMSE) scheme, which oper-
therefore have lower market value.
ates on the same principles as the
The IH units either become social
With historical legal frameworks that NSSE above, has allowed eligible pur-
housing rental stock, or are sold to
offered incentives to private developers chasers to acquire properties on the
qualifying beneficiaries.
who incorporated affordable housing open market (rather than only through
within market-driven developments, RSLs) across all of Scotland.
São Paulo, Brazil and Bogota,
Colombia are both global pioneers
when it comes to IH programmes
designed to capture land value
generated by real estate dynamics.
Sharing the Wealth – 0 9The scuffle between
housing activists,
developers, and ratepayers
associations throwing their
political weight around
had obscured the middle
path, and highlighted
how urgently a policy was
needed.
Developers in Cape Town face risk,
even when focusing on high-end
luxury apartments like the ones to
be featured in this new complex in
Woodstock. Photo by Alexia Webster.
10CHAPTER 2
A RISKY BUSINESS
Seagull cries and the kelpy tang of ocean spray expressing the usual concerns (traffic conges-
are discernible at the bustling Y-junction in Sea tion, strain on infrastructure, etc.), but primarily
Point where Main Road splits into Regent and focusing on the extra height. Given that Sea Point
Kloof. Towering over a block that includes a fire is Cape Town’s one residential suburb where
station, medical centre, and numerous multi-sto- multi-storey buildings are common, Burls felt this
rey apartments and shopping centres, the arm objection was, if not specious, then veiling some-
of a yellow crane stretches across a building thing else.
site encircled by a black fence from which the “I’ve never made an application as a town
beginnings of a ground floor structure can be planner where we didn’t have an objection, but
glimpsed. the volume of objections and the underlying
“It was going to be one of the tallest buildings tone… I’ve never experienced before,” he recalls.
in Sea Point,” says Nigel Burls, the planning con- In spite of that volume, the MPT decided 4-1
sultant appointed to secure the additional build- in favour of granting the Fulcrum’s additional
ing rights desired for “the Fulcrum”. development rights. However, the City ultimately
It was early 2018 when Burls took the project backed the appeal that followed, with no sugges-
on, and developers seeking additional rights tion of negotiating a reduction in height (which
were keenly aware that they excluded IH at their would have meant reducing but maintaining the
peril. Despite the absence of a policy to require inclusionary component).
or guide IH, Burls advised the developers to “get “They just said you’re dead in water. That for
ahead of the curve” in a “meaningful” manner. me smacks very much of a decision around the
“It couldn’t be an add-on. The IH residents inclusionary component, and a pandering to the
needed to be part and parcel of the total project, Sea Point resident base,” says Burls, adding: “If
[and] have exactly the same rights and access there was a policy in place, and we were ad-
as the person who’s bought the penthouse,” dressing inclusionary in terms of that policy, then
says Burls. “It was a hard pill for the developer the council would not have been able to say no.”
in terms of marketing and selling that penthouse, Whatever the reason for the rejection, the
but [they] bought in,” says Burls with a note of episode highlights how contentious things had
admiration. gotten by that time: how the dust kicked up in
Local residents, however, did not. The Sea the scuffle between housing activists, develop-
Point, Fresnaye & Bantry Bay Ratepayers & Res- ers, and ratepayers associations throwing their
idents Association (SFB) galvanized hundreds of political weight around had obscured the middle
objections to the additional development rights, path, and how urgently a policy was needed.
11FINDING A MIDDLE market and the City’s institutional arrangements,
and engaging with the nitty gritty of calculating
GROUND developer contributions and the mechanics of the
Fortunately, another process that would help model (see Box 6).
clear the air was also underway in early 2018. In Key to the Series’ success was the diversity of
partnership with the LILP, DAG had organized a people around the table, and their trust in DAG’s
“Land Value Capture Dialogue Series”. Envisioned facilitation. “I was really impressed by who was
as a “neutral platform”, the Series allowed 30 in that room… it was one of the most represen-
key stakeholders — civil society organizations, tative gatherings of people I’ve seen in a long
developers, city officials, politicians, academics, time,” says Rob McGaffin of the Urban Real Estate
Research Unit (URERU). “But there was also a lot
IH is a long-term and activists — to meet over
four sessions to explore how
of emotion, you had parties who in the same
proposition, and mutual LVC could best be used in Cape week were in court with each other. DAG did an
exceptionally good job of allowing a practical
understanding and open Town.
and pragmatic conversation to take place. As a
channels of communication “These processes are set
result, a lot of issues were put on table.”
up to ask the right questions,
between stakeholders as build the capacity to articulate Top-line issues focused on feasibility and im-
this unfolds over time could the intricate issues, and create plementation, discussions of which were framed
by the questions and choices the City — which
make the difference in a safe space in which people was already in the process of drafting a concept
implementing what is an can express pertinent con- note on IH18 — would need to consider in devel-
inherently complex process. cerns linked to policy options.
You’re not trying to answer all
oping a viable IH policy.
“We literally wouldn’t be here at this stage if
the questions, [but rather] to grapple with them
DAG hadn’t played the role they did,” says Gail
in that process,” explains DAG’s Rourke, who also
Eddy, a Senior Professional Officer in the CoCT
facilitated the sessions.
Human Settlements Directorate, referring to the
Although the Series’ original intent was to dis-
IH feasibility study that she is currently driving for
cuss LVC more generally, the first session’s key
the City.
outcome was consensus to focus on the nexus
While the Series’ immediate practical value for
between IH and LVC. And not just focus, but to policymakers and City officials was undeniable,
move as swiftly as possible from ideology to the the softer and longer-term value of nudging
logistics of applying IH in Cape Town. This meant polarized sides towards a middle ground where
thrashing out questions around how IH would they could meaningfully engage with one anoth-
affect the specifics of Cape Town’s property er’s challenges, roles, and needs could arguably
end up being even more important for the ulti-
BOX 6 mate success of any IH policy that may emerge.
IH CONTRIBUTION OPTIONS This is because IH is a long-term proposition,
and mutual understanding and open channels
UNDER CONSIDERATION of communication between stakeholders as this
unfolds over time could make the difference in
In Cape Town, the main contribution options currently being consid- implementing what is an inherently complex
ered (and explored in the feasibility study) are: process that will not succeed without cooperation
between numerous institutions and individuals.
On-site contribution: Where affordable units are built on-site as
part of the market-related development. “Parties that had never spoken to each other
were speaking — not necessarily in agreement,
Off-site contribution: Where affordable units are built off-site in but there were conversations, and positive alle-
well-located areas identified by the City giances were formed,” says Deon van Zyl, Chair
of the Western Cape Property Developer Forum
Fees in lieu: Where the developer makes a cash contribution to the (WCPDF), a volunteer organization whose mem-
value of the required affordable units. Such funds would be ring-
bership includes the full spectrum of property
fenced for the development of affordable housing in well-located
development-related professionals and contrac-
areas.
tors. “We’re not averse,” van Zyl adds, “we just
need to understand the impact [of IH] on risk.”
1 2 – L A N D VA L U E C A P T U R E P R OGR A MME: CA S E S TU DYRob McGaffin agrees, pointing to an excessively
FEASIBILITY complicated land production process in which
Indeed, if there is one thing that South African land acquisition, onerous design specifications,
developers cannot tolerate, it is additional risk. and processes around infrastructure and devel-
“Costs imposed on development in this country opment rights can result in a two- to four-year
are astronomical, and the regulatory burden is timeframe to “get a piece of land to the point
at times an impossible cauldron of hoops and where you can put a brick on the ground.”
obstacles to build even the simplest thing,” says To ensure that whatever IH policy it develops
Carel Kleynhans, director of property develop- has grappled with these issues, the CoCT in May
ment at iThemba Property19, who attended one of 2020 initiated a feasibility study. Picking up where
the Dialogue Series sessions. the Dialogue Series and the City’s September
In this context, the additional risk resulting from 2018 Concept Note on Inclusionary Housing left
the lack of an IH policy or a bad policy, can not off22, the study is being conducted from August
only increase costs, but in fact kill project viability, 2020 to May 2021. An established international
which is the last thing anyone wants. “The private best practice for successful IH programs, the
sector already is not developing as many resi- feasibility study is examining which incentives
dential units as needed, so you don’t want a pol- are most attractive to developers, analysing the
icy with requirements so onerous that developers implications of granting those incentives, calcu-
decide not to develop,” explains the City’s Eddy. lating how different proportions of IH will affect
Ensuring that IH doesn’t kill a developer’s return project feasibility, and also considering various
on investment means understanding how the in- spatial dimensions (property markets in different
centives offered — things like additional air rights geographic areas) and affordability targeting
(i.e., greater density), rezoning (e.g., from rural to (what proportion of contributions will target which
urban), fast-tracking approvals processes, and income groups).
reducing existing development contributions, “[If] the incentives aren’t attractive enough, you
among others — will offset developers’ costs, might end up with developers not wanting to use
particularly those attached to the under-market those additional rights that trigger the require-
rate units. That is, the incentives must be tailored ment of including affordable housing. We have
to local property market realities. The fact is the to understand the economics so we can target
redevelopment market is not as lucrative as many the policy effectively and generate the units at the
people assume, meaning there is not a lot of end of the day,” asserts Eddy.
room for error in the calculations. Key to ensuring While getting the numbers right is clearly
IH doesn’t kill a developer’s return on investment important, many stakeholders caution against
is a clear understanding of the IH requirements overworking the policy’s technical aspects. “One
at the time of land acquisition, such that the cost of the biggest problems is they are trying to make
of IH components are factored into land it all encompassing. It should be one page long.
Incentives must purchasing price. An IH planning con- Simple, simple, simple,” says Burls, who thinks
be tailored to dition introduced further down the line the policy should make IH a condition of devel-
opment approval, put the onus on developers to
local property (i.e., at the land-use application stage)
poses the risk of eroding a developer’s prove why they cannot include it, and leave the
market realities. return on investment, and thus adding details to be thrashed out in practice.
to existing concerns about the cost of doing Whatever comes out of this process, no one
business, especially in Cape Town, where land disputes the need for a policy, the value of
prices are so high and the bureaucratic process which may be as much about ideology as it is
is notoriously slow20. the technical details. This is seen in the CoJ’s IH
“It’s not like there’s this bottomless pit of money policy, which, whatever one may think of it, has
in expensive units that can be scooped off and been a pivot point. “It’s essentially asserted in an
put into the affordable units. The margins are ex- incredible way the ability and responsibility of the
tremely slim, especially at moment,” Kleynhans City of Johannesburg to say ‘This is something we
remarks, noting that the situation in Cape Town is should and can say, and we are going to start as-
even more extreme21. serting ourselves in this realm, and here’s the first
A Risky B usiness – 13Above:
way in which we’re doing it’,” affirms Kleynhans. Johannesburg, the politicians23 took a brave
At DAG’s 2015 Change This point about the municipality taking and choice to say ‘let’s go on a limb and try’,” says
by Design Workshop civic
asserting ownership highlights another issue that
leaders and residents
the CoJ’s Weakley. “We had the [political] support
will affect the fate of IH: what bureaucrats refer
from Woodstock & Salt to be able to say everyone agrees on the need
River designed a set of
to as its “institutionalization”, and what DAG calls for IH and the concept and idea — we are never
inclusive principles for
“building the culture”.
their neighbourhoods. going to get anywhere unless we try.”
Photo by Paul Grendon. “A policy of this nature is a practice, and that
practice has to become institutionalized. That
means you have people who buy into it [and] un- SHARING IS CARING
derstand how it works,” says DAG’s Rourke, who Back at the Fulcrum — the City’s denial of addi-
explains that building a culture around a new tional density rights and a global pandemic not-
policy means anchoring the policy withstanding — masked workers have returned
At the end of the day, into the City itself — both up into to site, where, brick by brick, a second storey is
all Capetonians who the political administration, but also emerging.
claim to care about down to the most junior official who In thinking about how to “embed” whatever
transformation, equality, sits with the development appli- IH policy is developed and how to manage the
and social justice need to cation. That is, building the knowl- human relationships that really are at the centre
find it within themselves to edge, understanding, and appreci- of this process, it becomes clear that as much as
make more space in their ation of IH so it becomes a standard City departments need to embrace and own the
practice. “What you really want is a policy, so do Capetonians at large. “At the end
neighbourhoods for others. culture of IH, not just the mechanics. of day, it’s going to live or die by local authorities
And that’s something that has to be embedded. wanting to embrace it or not. When I say local
But how do you embed these things?” authorities, I’m also talking about the communi-
Many stakeholders say that the key to em- ties, because at the moment, a local government
bedding IH is to jump in and start doing it. “In politician’s biggest fear is the NIMBY anti-vote,”
says van Zyl.
1 4 – L A N D VA L U E C A P T U R E P R OGR A MME: CA S E S TU DYThis is an enormously important point. Because “I think the average person has no idea how
even though you would be hard pressed to find complicit they are with the housing problem. I’ve
a South African who would openly deny the need seen civil society in poor, rich, and middle-class
for more affordable housing in good urban loca- areas, mobilizing different stand-in arguments
tions, it becomes a different conversation when to stop any and all building in ‘their’ backyard,”
those units are placed on that person’s street, or notes Julian Sendin, a spatial planner and former
when the existence of an inclusionary housing IH researcher at NU, an organisation which fun-
policy affects their land values (see Box 3). damentally is pro-development, so long as that
Namon Freeman, a senior policy specialist at development is balanced and inclusive. Sendin
Grounded Solutions Network (GSN) and technical explains how even the lack of affordable housing
expert for an IH technical workshop organized can be weaponized to prevent an apartment
by DAG in 2019, identifies two major barriers to block being built — not because those objecting
the success of an IH policy in Cape Town. “One, is actually support affordable housing, but rather to
getting people on the far left to compromise and prevent any additional development in their area.
understand that financial feasibility is necessary. Catherine Stone, an urban planner and Direc-
The other piece will be getting the more con- tor of Spatial Planning in the Western Cape Pro-
servative constituents to allow density changes vincial Department of Environmental Affairs and
through. In more affluent neighbourhoods, or Planning, which is currently drafting a provincial
where they have no interest in seeing affordable policy framework on IH, agrees. “Citizens need to
housing or more diverse residents, that will be be vocal about what they want, but also gener-
the biggest issue,” Freeman says. ous in how they engage with proposed develop-
The NIMBY vote is not just about being anti-di- ments and more welcoming of change. That is
versity or anti-affordable housing or precious the nature of cities: areas are going to become
about one’s view of the mountain; there are also more dense. If we’re fighting around the quality
cultural heritage-related reasons for objecting to of the development versus whether there can be
development that can be seen as a Trojan Horse new development, our energy is better spent.”
opening the gates to gentrification. However, at
the end of the day, all Capetonians who claim to
care about transformation, equality, and social NO SILVER BULLETS
justice need to find it within themselves to make Without a doubt, whatever IH policy the CoCT
more space in their neighbourhoods for others. produces, it will be criticized. People will say that
it will ruin the property market and development
(even though without a thriving property market,
there is no IH). Others will claim it will hurt the prof-
BOX 7 it margins of residential property developers, and
DEFINING AFFORDABILITY: thus fuel gentrification in the city’s few existing
WHO WILL BENEFIT? affordable areas. That is, IH requirements could
push developers to lean further into the luxury
It is widely acknowledged that IH does not provide housing for the residential market, resulting in less mid-range
very poor, but rather is a way to provide an affordable housing op- accommodation, which is already inadequate,
tion in well-located areas that can be used by the “upper gap mar- and thus placing additional pressure on the few
ket”; that is, middle-class working households with fully employed neighbourhoods where it can still be found. (That
people (e.g., teachers, policemen, service industry workers, etc.) said, the luxury market in Cape Town is already
oversupplied, and unlikely to present a tempting
The CoCT is currently investigating the impact of different approach- alternative in the current economic climate).
es to defining “affordability”. Although the target market is still being Other concerns will be around the City’s ability
defined by the feasibility analysis, it is likely that the City will use to manage what will be a complex program nec-
a “standard definition” of affordability across the City, based on a
essarily involving numerous departments and
possible monthly household income ofmanagement of buildings going forward? And “It could be the thin edge of the wedge to open
who gets allocated these things?” asks McGaffin up that space [to find solutions] for the affordable
(see Box 4). On that latter point, still others will housing problem,” says McGaffin.
criticize IH’s limitations in terms of the number of A vociferous proponent of mainstreaming
units it can produce and who it will serve (Box 7). affordable housing who has expressed reserva-
The City’s Eddy is acutely aware of all of these tions about the limited quantum IH can produce,
potential pitfalls and perceived shortcomings. McGaffin agrees that working through the issues
“This is not a silver bullet for the larger affordable around IH could help advance the affordable
housing crisis in the city in any way, shape, or housing conversation. “Any form of affordable
form,” she acknowledges. housing has to deal with a lot of these issues,
But the takeaway here is that focusing on the so if some of them are addressed through this
hurdles perhaps misses the point in this early process, it could be applicable more broadly.”
stage of the game. “IH has never And this is critical, because progress in ad-
“That is the nature of been about the numbers. It’s not a dressing key issues — bottlenecks around
cities: areas are going to large-scale housing delivery pro- efficiencies and regulations, land prices, and
become more dense. If gram. It’s about leveraging the ca- questions of management and institutional-
pacity of the private sector, testing ization — could reduce skittishness about the
we’re fighting around the models, starting to provide some affordable housing space, which, despite being
quality of the development mitigation against displacement as the country’s largest residential property market,
versus whether there can a result of gentrification, and build- remains neglected by formal developers. This
be new development, our ing a fairer society,” says Stone, shift is crucial, as the public sector will increasing-
energy is better spent.” adding that there will always be ly be unable to provide for this market. “The reality
excuses not to start something new. is government is going to have less money to put
“But if we don’t start, we will never learn how to into housing, so we need to be creative around
improve the model to make it more efficient and how we bring more housing online, and every
cost effective.” mechanism we can enable is worth it,” says Eddy.
Joburg’s Weakley agrees. With criticism of CoJ’s Freeman agrees, noting that solving housing
policy coming at his department from all sides, affordability issues requires multiple strategies,
he is the calm in the eye of the storm, advocating and that IH is one tool that should be considered
openness to experimentation and flexibility. “We in cities with strong development markets, but it
are refining our understanding as we go. Techni- is long term by nature. In other words, like most
calities come up all the time,” he says, mention- worthwhile endeavours, the real benefits of IH
ing how just that week he met with developers take time to manifest. Given the COVID-related
over whether balcony areas were included in IH economic downturn upon us, the cyclical nature
calculations. of IH must be recognized and understood. That
The other point all IH proponents make is that is, the political will to adopt IH policies typically
nothing done in this space is wasted. “The evi- grows in market upticks, but the resulting pol-
dence base we’re creating [will help] the City to icies often don’t go into effect until the end of
understand the housing market better, to make those growth cycles. When the market inevitably
sure our general policy approaches are better cools, an IH policy can get scapegoated for that
targeted and will benefit other planned strategic slowdown. Meaning it is the City’s job to help
work on affordable housing provision,” says Eddy, stakeholders understand the intent and impact of
referring to the City’s need to support equitable the policy, and allow it the time it needs to show
development more generally. results. “Inclusionary housing policies are a long-
While even its most rabid proponents would term strategy — the market has to have time to
never claim that IH can fix South Africa’s larger adapt,” Freeman says, adding, “But now is al-
affordable housing problem, it is one potentially ways a better time than later to put one in effect”.
powerful tool that municipal governments can
wield to start integrating South African cities. It is
Far right:
also unique in that it requires the private sector to
Photo from the DAG
archives. meaningfully engage with the formal affordable
market, which has yet to happen in South Africa.
1 6 – L A N D VA L U E C A P T U R E P R OGR A MME: CA S E S TU DY17
18
CHAPTER 3
CONCLUSION &
DISCUSSION POINTS
When possible, aspire Dedicate municipal
to simplicity in policy resources over the
• Demystify the numbers through an easy to long term for proper
understand calculator that all stakeholders can implementation
utilize
• Need regularly obtained public data around
the housing market to be able to track positive
and negative consequences of this and other
policies
Increase the value • Need human resources to ensure stewardship
to be captured and of IH stock and developer compliance over the
shared long term
– Requires reliable City database and
• More efficient planning approvals/processes management of this
& expediting of process would increase
developers’ profits, and therefore ability to
contribute to IH.
– Increased efficiencies could also reduce
the holding costs (an important factor Management
that determines the viability of any private institution for AH
development project), and enhance the
• Initially draw on Social Housing Institution (SHI)
feasibility/likelihood of securing IH within
experience and expertise around allocation,
private development projects for market rate
management of stock, and how to keep stock
residential units
affordable in perpetuity
– Assist or encourage more commercial
developers to enter the Social Housing
Left: development space
In September 2017, Ndifuna Ukwazi objected • Explore creation of smaller non-profit, publicly-
to “The Vogue” development on the grounds funded entities to manage stock (so that
of its unaffordability for 90% of Capetonians.
This kind of exclusive development continues developers know don’t have to worry about
to entrench spatial apartheid in Cape Town, off-take)
where access for black and coloured people
remains an issue.
19Public land & cost of Role of National
land government
• Consider creative use of in-lieu fee contribution • Clarify that IH falls under land-use policy, not
to fund the packaging (i.e., dealing with housing
infrastructure issues, development rights, title – Discussion around where IH should sit:
deed restrictions, etc.) of public land parcels for Human Settlements, Planning, and/or National
affordable housing of all kinds Treasury’s Cities Support Programme (CSP)
• State (province) can bring more public land to the • National government can provide guidance
party on the institutional arrangements for the
– Review the existing municipal and provincial IH policy development process, including
legislative frameworks that require the disposal the potential role and expectations of the
of public assets (land in particular) based on departments involved
maximising a site’s economic value at the • Where things are working, introduce more widely
expense of its potential social value. & standardize
• State entities (Transnet, etc.) are another source • Financial underwriting of risk
to explore – Consider reforms to legislation around landlord
• Change legislation requiring state to get highest and renter rights to reduce risk around
price for land affordable rental stock.
The importance of Role of Provincial
investing properly in government
pre-policy engagement • Approve provincial policy (framework or
processes guidelines) that requires (or at least encourages)
municipalities to have IH policies
• Given the high average number of objections both • Bring land to the party
pre and post development in Cape Town, this • Streamlining development processes under
investment could actually save money Provincial control
– Health, education, and social facilities need to
be adequate and supportive of IH development
Engagement with civil
society
• Dialogues with civics to discuss densification, get
Use learnings from IH to
buy in for “neighbourhood vision” and medium- “mainstream” affordable
density development. housing for commercial
• Engage environmental lobby in these issues,
which directly impact urban sprawl.
property developers
20 – L A N D VA L U E C A P T U R E P R OGR AMME: CA S E S TU DYYou can also read
