1.1 Corporate Information
1.1.1 Structure
The Johannesburg Development Agency is an initiative of the City of Johannesburg Metropolitan Council (CJMC), and has been established as a Proprietary Limited Company (Pty Ltd). The Company was registered on 7 March 2001, with registration number 2001/005101/07.
1.1. 2 Shareholders
The JDA has two founding shareholders - the CJMC and the Johannesburg Inner City Business Coalition (JICBC). The share capital of the company is divided into 105 shares - 100 'A' class shares, and 5 'B' class shares. The difference between the two classes is that holders of 'B' class shares are not entitled to receive any dividends. The CJMC holds 100% of the 'A' class shares, and the JICBC holds 100% of the 'B' class shares. In terms of the Shareholders Agreement, the JICBC is entitled to subscribe for up to 26% of the 'A' class shares. In this event, the company will cancel all 'B' class shares. In addition, the JDA can review its shareholders arrangements in future, and may approach other key stakeholders and offer the opportunity to take up minority shareholdings.
The Gauteng Provincial Government (GPG) is a key stakeholder in Johannesburg's regeneration efforts, and a major source of development finance to the JDA. While not a shareholder, GPG may nominate a member of the Board of Directors.
1.1.3 Board Of Directors
The Founding Board of Directors will comprise a small number of high-calibre available individuals (probably no more than five people) who bring their professional expertise and passion for developing Johannesburg to the JDA. It can be expanded later to bring in other high-merit members. Recruitment of Board members will be finalised in May/April 2001. Directors will be paid (on a basis of time spent/meetings attended or work done) in recognition of the issue of accountability and ultimate risk. This ensures consistency with other GJMC utility companies and Council policies on the remuneration of non-executive directors.
The Board has executive responsibility to manage the activities of the JDA, within the overall policy frameworks established by GJMC. This includes the appointment, remuneration, training, and dismissal of its employees. The Board appoints the Chief Executive Officer, and key senior positions in the JDA. Senior staff members are incentivised through performance bonuses set against agreed targets and objectives. The Chairperson of the Board has the additional responsibilities of maintaining high-level and strategic working relationships with the Council and other government departments.
1.2 Vision, Mission and Values
1.2.1 Vision
The JDA will drive developments that significantly contribute to achieving Johannesburg's potential as the African World Class City - a city of prosperity, excellent quality of life and a wealth of cultural and economic opportunity.
1.2.2 Mission
The Mission of the JDA is to initiate, promote and implement activities that lead to increased economic development for the City of Johannesburg.
To achieve its mission the JDA will:
- Promote economic development for the City (in the form of jobs and wealth creation) as its prime objective
- Use City assets as inputs (especially under-utilised assets)
- Use City leverage as inputs (especially powers and finance)
- Create a formal link to the private sector to facilitate the establishment of Public-Private Partnerships
- Respond to private sector preferences that necessitate the creation of a separate entity for sustained and/or increased partnership and involvement
1.2.3 Values
The key values that inform the work and approach of the JDA are:
- Accountability to its shareholders, Board and key stakeholders
- Innovation and creativity, promoting an environment of fast-track decision-making and broader financial leverage, within which projects are planned, led, managed and implemented.
- Responsiveness to market forces, operating where it can make a difference, in locales and sectors where shareholders and their partners have a concentration of assets and expertise.
- Results-driven and customer-focused with a 'user friendly' approach
- Seeking to empower through progressive procurement and work practices
1.3 History
International experience over the past twenty years shows that cities are actively pursuing growth strategies through development agencies and joint coalitions between the municipality, local business leaders, developers and other relevant stakeholders. These new structures and coalitions are part of the new urban renaissance, which has at its heart the view that local economic growth is to the benefit of all.
The logic of this position is as follows:
- A healthy local tax base is necessary to maintain the public services and infrastructure upon which the city's residents and local economy rely;
- The creation of a healthy tax base in turn requires rising land values, business prosperity and investment
- To attract private investment, a city must offer a supportive and predictable business climate, together with incentives that encourage both local and mobile investors
- An increasing volume of private investment boosts this cycle again, resulting in rising land values, a stronger tax base, better services and a better business climate.
It is inherent to this logic that a city must actively be involved in creating the conditions for growth. One form of this active involvement is the creation of particular agencies and instruments to initiate, facilitate and encourage growth.
The need for a specialised agency to encourage and promote local economic development in Johannesburg (and in its Inner City in particular) was identified over five years ago in the Inner City Economic Development Strategy (1996). This institutional gap was confirmed by subsequent studies and policy positions, including:
- The Greater Johannesburg Strategic Metropolitan Development Framework (1998) which identified the Inner City as one of 10 Priority Intervention Zones (PIZs)
- The Inner City Spatial and Economic Framework (1999)
- The City Centre Development Framework (2000)
Design work on the Johannesburg Development Agency began in March 2000, and its establishment was approved at the City Council's Transformation Lekgotla in October 2000, and the subsequent meeting of the JICBC Executive Committee. The City Council Mayoral Committee confirmed the establishment of the JDA in January 2001.
1.4 Business Organisation
1.4.1 Structure, Personnel and Technical Capacity
The business organisation, structure and main functions of the JDA are shown in the diagrams attached to this plan (see Annexe One).
The main feature of the JDA's organisation is its focused structure. It has a core of staff and functions common to all its development activities. Its project and programme related activities are located as special operational units. While the JDA's current activities relate to inner city development, it has the scope to extend its operations into other areas according to direction from its shareholders and Board, and the availability of development finance. This arrangement allows the JDA to assemble high-quality human resources to drive projects, and equally important, to disassemble such teams on project completion.
The JDA has a tight personnel component - only 15 staff in total, although the staff complement will be determined by the JDA's project portfolio from time to time. The roles of specific staff are set out in Annexe 3, which provides descriptions of the position purpose, key accountabilities, decision making, accountability, communication, position measures and inputs.
In terms of this, the following applies:
- The Chief Executive Officer will direct and manage the Johannesburg Development Agency, ensuring that it is able to efficiently and effectively achieve its set objectives and goals. This ensures that the JDA functions as the lead delivery agency for the regeneration of strategic areas of the City of Johannesburg
- The Development Finance Director will be responsible to bring investment finance into the JDA activities and projects, to create and enhance employment and investment opportunities within the City of Johannesburg
- The Finance Manager will be responsible to manage and administer the financial department within the JDA so that the JDA's financial position is reported accurately and the Finances run efficiently and effectively
- The Marketing and Communications Manager will be responsible to advise and manage all marketing and communications matters of the JDA so that the JDA receives good publicity and maintains a good image
- The Marketing and Communications Administrator will be responsible to administer and co-ordinate all marketing and communications matters of the JDA so that an effective administration service is provided to the Marketing and Communications Manager
- Project Managers will be responsible to plan, direct and co-ordinate the construction activities of all projects to ensure that goals and objectives of the projects are accomplished within specified time, resources and to agreed performance levels
- Project Administrators will be responsible to manage and co-ordinate the administration relating to regeneration projects of the JDA so that an effective administration service is provided to the project managers
- The Contracts Manager will be responsible to oversee and provide the JDA with human resources, office management and systems, contract and procurement services, so that the JDA receives the required support services to function effectively
- The PAs to the CEO and Development Finance Director will be responsible to perform administrative duties and organise appointments so that a secretarial and administrative service is provided to the CEO and DFD
- The Receptionist will be responsible to staff and maintain the reception area, receive and refer callers or visitors to the appropriate people in the JDA, so that the JDA reception area is run efficiently and effectively
Specific JDA line functions (which include accounting, asset database maintenance and JDA website) will be outsourced.
In addition, the JDA will be able to use technical expertise from the CJMC and other organisations via service level, agency and other agreements. It will also have access to an outsourced pool of technical assistance/specialists on a term contract basis. This will enable the JDA to put together 'fit-to-purpose' project teams. Specialist areas could include:
- Planning/Architecture/Urban Design · Legal
- Quantity Surveying · Marketing/PR/Communications
- Transport Planning · Finance and Accounting
- Property Management and Development · Environment
- Cultural, Heritage and Creative Industries specialists
This pool will comprise a pre-qualified list of contractors in each of the listed areas, drawn up against progressive procurement principles as well as technical merit. The pre-qualified list will be reviewed annually. The JDA has the power to appoint pre-qualified contractors for any work without having to go through a full-fledged tendering process each time a service is needed
1.4.2 Project Management Mechanisms
The JDA's organisational architecture has been chosen for a specific purpose. By establishing major projects under specific management mechanisms, the JDA can exercise a tight managerial span of control and ensure performance against project delivery targets.
Each project can then be considered in its own financial space, limiting risk for the JDA, its Founding Shareholders and other investors. In addition, the motivation to make development and financial returns on these projects is more clearly defined, with the JDA equally motivated with its public and private sector partners.
In certain instances, the JDA will establish as subsidiaries SPVs to manage project specific financial risk and through which investors in specific projects could take equity positions. Two such vehicles have been established (with participation of the GPG) for the JDA's existing high profile Special Activity Precincts - - the Newtown and Constitution Hill Development Companies. These are created to act like private sector mechanisms, but with a public sector motive. They do not have an independent staff complement, but are 'shell companies' managed by the JDA, located within the JDA, through which additional public or private sector finance can be leveraged and risk contained.
Projects of the JDA are managed according to a defined project management system which limits risk at each project stage and ensures that projects meet their objectives within time and on budget by passing through project "gates" at the end of each stage. Project stages include:
- Proposal stage, through which a project is initiated
- Initial investigation stage, which is a preliminary investigation into project feasibility, strategic fit, stakeholder profiles, political and commercial risk, etc
- Detailed investigation stage, in which detailed feasibilities and planning are undertaken and a final decision to proceed or not is taken
- Development stage, in which the project is implemented
- Trial stage, in which the project is tested
- Handover stage, during which stage the project is commissioned and handed over
- Post-implementation Review, during which stage the project is reviewed, lessons learnt and the project closed.
The JDA manages a number of projects across strategic areas determined by the City. Portfolio Management systems enable the management of a number of projects to ensure a balance of risk (such as financial, resource and political) and resources across the projects.
1.4.3 Human Resource Management
Details of the JDA's Human Resource Plan and Management are set out in Annexe 3, the JDA's Human Resource Policies and Procedures Manual.
Given the nature of the JDA, its Human Resource Management System has been designed to ensure that employees can be managed on a one-on-one and personal basis, whilst ensuring that policies and procedures exist to guide both managers and employees in their actions and which provide a common basis for the management of discipline, grievances and appeals, in a form which is readily accessible, practical and accurate. In the management of its resources, the JDA will endeavour to cultivate an environment where:
- Communication, whether initiated by management or the employees, is respected, and the right to express problems and views is valued
- Fair practices and procedures are communicated to and practised by all concerned
- All applicable labour legislation is complied with.
The Human Resources Manual has been designed to provide clarity to both managers and employees on the key human resources and labour relations issues that need to be addressed during the employment cycle. Three phases of the employment cycle have been defined as Entry, Duration and Exit. The human resources and labour relations issues that may need to be handled in each of these stages are detailed in the Human Resources Manual.
It is recognised that over time the Human Resources Manual may require further content based on the changing employee and managerial needs of the organisation. At present the manual is aimed at ensuring that best practice prevails in the management of employees based on the current JDA context.
The JDA's Human Resource Policies and Procedures covers the broad areas of:
- Entry into the employment of the JDA
The Johannesburg Development Agency's recruitment and selection policy is designed to find and recruit suitably skilled people who will contribute to the achievement of the JDA's strategic and operational requirements. The implementation of the recruitment and selection process will be non-discriminatory and comply with the spirit and letter of the Employment Equity Act. Applicants for a particular job will get an equal opportunity to compete for the job.
- The duration of employment with the JDA
This covers remuneration policies, employment equity policies (currently a framework and guiding policy that will govern an Employment Equity Plan to be developed by the CEO once the JDA is functioning), training and development policies, and labour relations policies.
- Exiting the employment of the JDA.
1.5 Products and Services
As the focus for city policies on developing its target areas, the JDA and its partners will deliver a range of projects and programmes aimed at creating jobs and wealth for Johannesburg and its citizens. These activities are the 'products and services' of the JDA. The 'product' of the JDA will be the successful delivery of a project against its defined plan and objectives. The 'service' provided by the JDA will be the effective management of its programme of projects. The JDA will add value by linking efforts, integrating services to projects and programmes and, thereby, achieving true efficiencies.
1.5.1 Development Project and Programme Roles
The JDA's project and programme development roles include:
- Project packaging, facilitation, management and leadership, including formation of public and/or private partnerships for large scale projects
- Establishing project management mechanisms (including Special Purpose Vehicles and/or associated companies) to carry out specific projects, limit risk and meet project financiers' requirements
- Acting as developer on catalyst projects, to be either sold on or held within the JDA's portfolio to provide income streams
- Marketing, promotion and communication for projects, sectors and locales
- Co-ordination of public, private and civil society elements
- Provision of venture capital and development finance, and taking return on investment commensurate with risk
- Acting as agency on behalf of CJMC, the Gauteng Provincial Government and other stakeholders to provide developmental, transactional and asset management services
1.5.2 Project and Programme Selection
JDA projects and programmes were selected on the basis of three priority categories:
Policy and Strategy Support. The present (and future) selected projects must fit into the policy and strategy frameworks that guide the JDA's activities. The foremost of these is iGoli 2010 and the City Development Plan, the action framework for the transformation of Johannesburg into a world-class city. Others include the City Economic Development Strategy, the Strategic Metropolitan Development Framework, Local Integrated Development Planning processes, and the City Centre Development Framework.
Continuity. The CJMC has led certain development initiatives in the JDA target area. In addition, significant conceptual, planning and development arrangements have already been invested in high profile projects including Greater Newtown and Constitution Hill. These projects are close to take-off point, requiring a development coordination and management agent to take them through to completion. The JDA will act as this agent, and provide continuity in the development process.
Partnership. The JDA will only be involved in projects that are in broad alignment with the goals and aspirations of its key shareholders, partners and donors. Given the importance of the private sector in inner city regeneration, the JDA has been designed to form an ideal delivery vehicle for public-private partnerships that can provide significant financial leverage.
1.5.3 Project and Programme Groups
The JDA's initial project portfolio and programmes fall into four defined groups:
- Special Activity Precincts: The development of the precincts at Constitution Hill and Greater Newtown will be flagships of the JDA's project programme in terms of their national and international profile, levels of public and private investment, and contribution to boosting confidence and image in the City Centre.
- Urban Regeneration Projects: The widespread recognition of the need to revitalise the Inner City is evident in the recent production of the Inner City Spatial Development Framework (1999) and the City Centre Framework (2000). Both frameworks call for coordinated implementation, led by catalytic projects and targeted interventions. The JDA is above all the implementing agent to ensure that there is follow-through on priority actions identified in these frameworks.
- Financial Instruments: The JDA will utilise a range of financial instruments to support its project and business enterprise activities. These include:
- Harnessing existing streams of discretionary financial support from Government departments and agencies (including Department of Trade and Industry, Industrial Development Corporation, and Khula Finance)
- Tax increment financing. The JDA will investigate the use of this mechanism, which is widely used to support urban development agencies in the USA. The premise is that the agency's efforts will bring about improvements in land and property values, and hence rates produced to the city. Districts are designated where the mechanism applies, and a portion of the increase in rates collected in those districts is passed on as revenue funding for the agency's development activities.
- Joint Venture Development Fund. This instrument has strong potential to lever private sector investment into the JDA's target areas to encourage entrepreneurial development and create projects that stimulate the property market and rates base, develop enterprises and create jobs. Initial discussions with the business representatives have indicated a high level of interest and commitment for such an initiative.
- Support Programmes: The JDA will implement a range of programme activities that provide support projects and help create a more developmental environment for investment in its target area. These include project marketing, public and community relations; strengthening the development environment and business support; encouraging environmentally sustainable development
The projects and programmes of the JDA will be detailed in an annual workplan, in line with the business plan that will be adopted by the JDA Board. This mechanism ensures that GJMC has the opportunity to influence JDA annual programmes, and ensures oversight and accountability on performance.
1.6 Core Competencies
The core competencies of the JDA are as follows:
- Implementation of strategic economic development projects, in an integrated and sustainable fashion
- Development of Special Activity Precincts as tight-focus, high-impact geographically limited projects
- Assembly of high calibre teams, with strong project management skills and leadership, to carry out strategic impact projects and programmes
- Asset development, management and acquisition, allowing the JDA to take a stake in the developments it facilitates and to plan for maximising return on those assets in the medium and longer term
- Coordinating public, private and civic resources and contributions into project and programmes
- Marketing, promotion, public and community relations in support of its project portfolio
- Creating an investment environment that is understandable, predictable and competitive, by assisting with the establishment of City Improvement Districts and ensuring bye-law enforcement by the CJMC.
The JDA will have the skills and capacity to carry out these core competencies, including:
- Strategic and development planning
- Development and investment finance structuring
- Project management
- Marketing and public relations
- Contract and procurement management
- Systems, data and information technology management