The eThekwini full council held at the Durban ICC.
Image: Sibonelo Ngcobo / Independent Newspapers
Councillors have granted the eThekwini Municipality the go-ahead to negotiate with the business rescue practitioners and bondholders of Urban Lime Prop SA (PTY) Ltd to purchase the Durban Chambers and Durban Club place buildings, estimated at R120 million.
The matter was approved at a council meeting on Thursday, where the property development company is undergoing a business rescue process, according to the municipality, which has accumulated substantial municipal debt.
The buildings, which are currently not in use, are strategically located near the Durban City Hall, where the city is leasing two other high-rise buildings.
In a report presented to the council, the municipality stated that this presented a timely and strategically aligned opportunity to acquire the buildings.
The report stated that the deal could offer a practical solution to the long-standing challenges in securing compliant, cost-effective, and permanent office accommodation rather than relying on leased properties.
The report stated that the proposed acquisition will meet two key objectives:
- The recovery of significant outstanding municipal debt.
- The reduction of long-term leasing costs through the ownership of suitable accommodation assets.
The city estimates it will have to spend R10 million in total to repair the fire detection system, get an electricity compliance certificate, and repair the air conditioning and lifts.
Cyril Xaba, eThekwini mayor, said the city must carefully evaluate the deal and not buy something that will not deliver potential benefits.
Xaba said the council's directive is to prioritise insourced services as a cost-saving mechanism and that this acquisition was described as a significant advancement in addressing the current challenges associated with municipal offices operating from leased premises that are no longer compliant with prevailing building standards.
During an Executive Committee meeting (Exco), several councillors spoke about the issue. Themba Mvubu, EFF Exco member, said the emphasis should be on the acquisition of the building to benefit the city and save costs.
DA Exco member Andre Beetge said the city should not jump into the deal without conducting due diligence. He said at face value, it appears to be a good proposition and that the municipality should be wary not to put itself into a problem where millions are spent on further renovations.
“We must not buy an asset that requires money to fix. We did this in the past, and we do not want white elephants,” he said.
Mdu Nkosi, an IFP Exco member, said he welcomed the move because in most of the buildings that the municipality was renting, there were challenges.
Nkosi mentioned that one of the buildings used by councillors has roof leaks, cockroach infestations, and pigeons entering the ceilings.
According to Nkosi, the municipality will save money if it goes this route and avoids paying exorbitant rental fees.
"Officials cannot do anything, but if we do have our buildings, we will be able to maintain them. This will be a motivation to the municipal employees who are having challenges in their workspaces. You have visitors who enter some offices and find that they are poorly maintained and buckets collecting water from leaking roofs,” he said.
Nkosenhle Madlala, the ANC Exco whip, said that for years, councillors have been vocal about the municipality paying exorbitant amounts for the rental of office space.
“At a council meeting, a councillor did the math on how much we were spending per year on rentals while we could be owning the building. This process takes us a step closer to ownership,” he said.
zainul.dawood@inl.co.za