Yasmin Bilal
Affordable housing arrangements in Phoenix have been declared unlawful and unconstitutional, following a ruling by the Special Tribunal.
The case centres on three companies involved in eThekwini Metropolitan Municipality’s Human Settlements Infill Housing Programme.
The Special Investigating Unit (SIU) has welcomed the judgment after its investigation found that the companies collectively benefited by about R29.1 million.
Woodglaze Trading, Madupha Business Enterprise and Ready Homes were appointed to develop homes under the programme.
The project was intended to provide affordable homes for first-time buyers from lower- and middle-income groups.
It dates back to a 2000 municipal decision to use vacant sites in Phoenix for affordable housing.
In 2002, eThekwini advertised for service providers to develop 130 sites within two years.
The SIU investigation found that Madupha Business Enterprise and Ready Homes were later appointed without the required public procurement process. They were not considered or recommended through the municipality’s Bid Evaluation Committee or Bid Adjudication Committee.
The investigation also found that Woodglaze Trading’s continued participation was not subjected to the required procurement process.
The SIU traced 18 properties sold by the municipality to the three companies and later sold to third parties.
It found that some properties were sold to people who were not approved beneficiaries. Some may also not have been first-time homebuyers or within the relevant subsidy income band.
Other sites were used for developments outside the programme, including business parks and shops.
The investigation found that some properties were later sold for millions of rand after being bought from the municipality at far lower prices.
In one case, a stand at 155 Canehaven Drive was sold to Woodglaze for R21,090. It was later sold to an unapproved beneficiary for R9.54 million.
The SIU calculated Woodglaze’s benefit at R25,321,099. Madupha Business Enterprise benefited by R2,256,894, while Ready Homes benefited by R1,563,428.
The Tribunal declared the arrangements used to appoint the three companies unlawful and constitutionally invalid.
However, it did not order the companies to repay the money immediately.
The companies may complete dwellings that had already been started when the judgment was handed down. They may also sell completed homes in line with the law.
They are prohibited from starting construction of new homes under the invalid arrangements.
If eThekwini wants to continue with the housing programme, it must follow a lawful procurement process that complies with the Constitution, the Municipal Finance Management Act and its own supply chain rules.
The SIU said the ruling reinforces the need to protect public resources and ensure that municipal contracts comply with constitutional procurement requirements.