SAPOA Property Review: Asset management of government properties – Time for a reboot?

Social-housing

The purpose of this article is to delve deeper into the nature of asset management of government’s vast fixed property portfolio. The aim is to clarify, predominantly for the private-sector reader, where government asset management finds its genesis, and how effective asset management in government could form a central solution to some of the pertinent issues facing us today, such as the continued need for housing and spatial redress

GIAMA: A big step in the right direction

The Government Immovable Asset Management Act (GIAMA) was promulgated in 2007 by the national government (Act No. 19 of 2007), and was made applicable to national government and provinces. Local authorities, in anticipation, also followed its guidelines and prescripts to a large degree. The purpose of GIAMA was, in part, to “provide for a uniform framework for the management of an immovable asset that is held or used by a national or provincial department; to ensure the coordination of the use of an immovable asset within the service delivery objectives of a national or provincial government…”.

GIAMA was intended as an act that could lever the vast government-owned property portfolio to the benefit of society, and this was an admirable and powerful intention. It was meant to herald a complete change in how government managed its property assets. GIAMA was an acknowledgement that it owned tremendous quantities of land and property assets throughout all three spheres of government, and that it had a responsibility to the public to implement effective asset management practices. Prior to the promulgation of GIAMA, each province already had its own provincial land administration legislation, but these acts mostly set out the authorisations and administrative procedures within each province for the buying and selling of property, and did not venture into the realm of asset management.

Why is it, then, that nearly 13 years after the promulgation of GIAMA, government still struggles to find meaningful ways to bring vast amounts of unused or underutilised property into service for the benefit of the people? To dive into this, we must evaluate what custodianship and usership looks like within government. 

Custodians and users

GIAMA defines the relevant National Minister, and the Premier at provincial level, as the custodians of government property within those respective spheres of government. Practically, this custodial role is delegated to either the Minister/MEC or the Director General/HOD of the Department of Public Works of both the national government and provincial governments. Public Works therefore fulfils the function of Custodian.

A User Department (User) is broadly defined as any department that utilises property for the execution of its duties. Users are required to compile and submit annually a User Asset Management Plan (UAMP) to both the Treasury and the Custodian, and custodians are meant to compile and collate these UAMPs and provide strategic direction through a Custodial  asset Management Plan (CAMP), annually to their respective Treasury. 

In effect, Users request the use of government property from the Custodian, who allocates that property to the use of the User. It is required by GIAMA that both the User and the Custodian ensure that the properties under their use or control are utilised effectively and efficiently.

On a practical level, the quality of the process of UAMP and CAMP compilation and submission has been improving steadily over the past decade. However, to what extent is this exercise in legislative compliance with GIAMA really achieving meaningful and effective government asset management of immovable assets? To provide guidance, we can briefly turn to the mandates of the different spheres of government.

Government mandates

The three spheres of government derive their mandates from Schedules 4 and 5 of the Constitution of the Republic of South Africa (1996).

When the government is faced with property decisions falling neatly into an existing, established mandate, things generally work well. As an example, provincial governments have as part of their mandated responsibility the building and construction of schools and hospitals. Therefore, school and hospital sites are routinely acquired, zoned and built without much issue (further than usual prudence, as can be expected from government supply chain management processes) by the provincial government. The same example could be extended to national government in terms of a defence facility, for instance, or to local government in terms of a recreational community park.

However, it is when properties do not clearly fit a mandated purpose where most problems start to arise. Some of the main scenarios are listed below:

  • The property having never been allocated to a User (for example, a vacant piece of government land);
  • The property having been allocated but being under-utilised by the User (for example, what was once a thriving clinic in a community is now barely visited, because residents visit a more modern government clinic in the adjacent town, or have switched to private clinics);
  • The property having been allocated to a User, but the Custodian (or the public) disagrees with the appropriateness of its use (for example, a bowling club may have a lease on city land that is in a prime position for inclusionary housing. The city department feels it’s fulfilling its User responsibility, and the club has a valid legal lease, yet the public sentiment is that the use is inappropriate in terms of current service-delivery priorities. This is the same argument that can be related to the ongoing debate around Cape Town’s numerous golf clubs leasing city land in prime locations suitable to affordable/inclusionary housing);
  • The property having been relinquished from the User back to the Custodian because it is no longer needed (for example, Conradie Hospital, GF Jooste Hospital or Athlone Power Station); or
  • The Custodian deeming an unallocated property, or a relinquished property, fit for disposal (for example, in light of an infrastructure budget deficit, the Custodian may decide to dispose of surplus property to realise capital to cross-subsidise capital shortfalls elsewhere). 

The scenarios above raise challenging process questions, such as:

  • How does the transition of the property from User to Custodian occur in the event
    that the property is relinquished by the User back to the Custodian?
  • Once the property is relinquished, what process is followed in order to deem the
    property surplus?
  • Once a property is deemed surplus, who makes the decision around the disposal
    criteria. Do they have the authority to do so, and do they have the political will
    to see it through? For example, should the property be sold outright or leased out
    – and if so, what conditions (if any) should be placed on the property’s disposal
    to market?

If you’ve ever driven by government land laying fallow, or a derelict or disused government site, it is likely indicative of the government having been unable to answer one or more of these questions. Alternatively, it could be the result of internal disagreement within government about what is in the common good. Sadly, this disagreement about what is of best use often leads to the perverse outcome of government land and buildings laying vacant and exposed for too long, and becoming scourges of social ills in the communities in which they are situated.

GIAMA is an important piece of legislation – one that provides a foundation from which the various spheres of government can answer these questions. However, it is imperative that detailed procedures that are fair and objective, and measured against the most urgent social requirements to determine the allocation and disposal of land, are put into use and consistently applied. In the absence of GIAMA Regulations, however, the spheres of government need to build their own standardised processes to deal with issues of asset allocation, relinquishment, reallocations and disposals of surplus properties. It is in the quality and implementation of these processes that the difference lies. 

Concluding thoughts

Since the promulgation of GIAMA in 2007, two major housing-related legislative developments have taken place: the Social Housing Act in 2008, and the Spatial Planning and Land Use Management Act (SPLUMA) in 2013.

In my view, the Social Housing Framework is currently government’s best chance of delivering decent housing at scale in well-located areas. I’ve expressed my view of the social housing legislative framework being the most viable secondary market system for rental housing at present (refer to page 14 of the February/March issue of Property Review).

GIAMA (in Section 5(1)(f)(iii)) speaks to the consideration of land reform in any intention to dispose of state land. This interpretation of land reform around the time of GIAMA’s promulgation had a narrow definition centred around land restitution. I believe that when GIAMA is looked at in conjunction with SPLUMA and the Social Housing Act, the “reformation” of land needs to take a broader definition, inclusive of the provision of affordable inclusionary housing.

Spatial redress through social housing therefore has the unique opportunity of becoming a central feature of government asset management, a feature hitherto not adequately connected in legislation as it should be. In this respect, the time for GIAMA 2.0 has come