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Tsela Tshweu Consortium partnership
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Tsela Tshweu Consortium partnership

The City of Tshwane signed a public-private partnership contract for the construction of its new headquarters, Tshwane House, with the executives of Tsela Tshweu on 17 April 2015.

Tshwane House, a modern, forward-looking municipal centre, will bring local government closer to its people, and is the first step in rejuvenating the inner city. The City remains on track to move into the building in December 2016.

Tshwane House fact sheet

The remaking of South Africa’s capital city is about intervening decisively in the creation of a modern urban fabric premised on the principles of achieving spatial justice, spatial sustainability, spatial resilience, spatial quality and spatial efficiency. The core objective in remaking of the capital city is to forge a new identity. This calls for the mobilisation of other spheres of government, residents, civil society and the private sector in order to concretise the process that will lead to the shared development of the capital city as envisioned in Tshwane Vision 2055.

However, this spatial reconfiguration of Tshwane will have to balance competing needs: (1) becoming a capital city with global status and (2) being a national symbol that is responsive to the local developmental needs of our citizens.

Therefore, the City’s infrastructure investment is premised on identified economic nodes to lead to the attainment of a better quality of life for all in Tshwane. This will integrate a service-based divided city in a sustainable and environment-sensitive manner. Thus, our nodal development approach supported by new urbanism principles will anchor the City of Tshwane’s spatial transformation perspective and is key to how spatial transformation will eventually be experienced by the residents of Tshwane. The new Tshwane House complex project is therefore a CBD regeneration project that will not only achieve massive cost effectiveness and productivity goals for the City of Tshwane’s service delivery management, but also generate economic redevelopment outcomes for the CBD in particular, and for the whole city generally.

A part of the Munitoria building was destroyed by fire in March 1997. This block was never rebuilt. As a result the staff of Munitoria were scattered in the inner city. The building contained inadequate space regimes, was not environmentally conducive and was not socially cohesive.

Tshwane House will provide serviced head office accommodation for 25 years (excluding the construction period of 24 months) to City of Tshwane staff .The scope of the project entails the demolition of the old “inferior” Munitoria, a complete new design, construction, financing and other defined services including operations and facilities management.

The mechanism to deliver the project proposed the appointment of a suitably qualified private party who, through a PPP agreement with the City of Tshwane, could provide serviced head office accommodation including the following:

  • - design
  • - construction
  • - refurbishment
  • - relocation services
  • - facilities management (hard and soft services)
  • - financing
  • - life cycle capex management
  • - demolition

The project is set to meet the following strategic priorities of the City of Tshwane:

  • - Economic growth and development;
  • - Enhancement of effective service delivery capacity, management and implementation of the City of Tshwane’s institutional obligations;
  • - Management of the physical integration of Tshwane and improvement in the quality and viability of the urban and rural environment;
  • - Accessibility, availability and affordability of essential services and facilities;
  • - Achievement of a range of the City of Tshwane objectives, such as the promotion of job creation, SMME development, private sector participation and BBBEE; and
  • - Private sector investment in major capital projects in Tshwane.

1. The City of Tshwane has concluded its TVR3 submission to Treasury (Treasury Views and Recommendations Number 3) to prove that it meets all key elements in terms of Section 33 requirements and the PPP statutory requirements as supported by National Treasury’s Views and Recommendations.

2. The City has complied with the public participation process and the project team responded to three comments received.

3. The total capital expenditure (overnight cost) of Tshwane House as set out in the final financial model at financial close is R1 034 242 757. The gross lettable area (GLA) of the building is 37 062m2. The gross building area (GBA) of the proposed building is 75 520 m2, including the basement. The building includes the following key elements:

a. Grade A office accommodation for 1 589 Council staff;

b. Up to 1 300 parking bays over two levels;

c. Cohesive working conditions conducive to interaction with the public;

d. A standalone Council Chamber with 250 seats (could be maximised to 350), with associated meeting rooms and communication booths;

e. Optimum space for the executive and staff;

f. A Green Star 5 building;

g. Social facilities including space for a restaurant, canteen and health care facility;

h. Support facilities including archive, storage and printing facilities.

4. The above GLA and GBA of the building will cost respectively R27 906 and R13 695 per square metre. The proposed building is comparable to two similar PPP projects and commercial buildings.

5.

6. The PPP project will entail facilities management (operations, maintenance and life cycle replacement) of the building for a period of 25 years.

7. The total cost of the project for the 25 years, including the construction, operations, maintenance and life cycle replacement, equates to a net present value of R1 920 789 640 excluding VAT (say R2 billion).

8. The fast-tracked completion of construction of the project and full occupancy are expected by December 2016.

9. As of 17 April, construction of the foundation is underway as can be seen from the two piling rigs on site, which will complete about 25 pilings per day.

FACTS:

The procurement process that has unfolded to date is shown to have compliance with the prescribed statutory process

a. Registration of the project as a PPP with National Treasury occurred in November 2004.

b. Transaction Advisor was appointed in June 2005.

c. The project feasibility study was completed in December 2005.

d. Public consultation (60 days) in terms of the feasibility study report commenced on 19 December 2005.

e. National Treasury’s views and recommendation in respect of the feasibility study (TVR:I) were issued in January 2006.

f. National Treasury’s views and recommendation in respect of the request for pre-qualification (TVR:IIA) were issued in February 2006.

g. National Treasury’s views and recommendations in respect of the request for proposals (TVR:IIA) were issued in September 2008.

h. RFP invitations were sent to the three pre-qualified bidders in 23 September 2008.

i. National Treasury’s views and recommendation in respect of the value-for-money report (TVR:IIB) were issued in April 2011.

j. A private party (preferred bidder) and reserve bidder were appointed on 14 April 2011.

k. Public consultation (60 days) in relation to the advertised draft contract commenced on 3 March 2014, and closed on 4 May 2014 after an extension period.

l. The project team responded to comments by 20 October 2014.

m. National Treasury’s views and recommendation in respect of the value-for-money report (TVR:III) were issued on 26 November 2014.

n. A Special Mayoral Committee resolved on 1 December 2014 to recommend to Council the approval of the PPP agreement and its schedules and to authorise the Accounting Officer to sign the PPP agreement on behalf of the City at financial close, then expected as early as mid-December 2014.

o. The special Council meeting on 3 December 2014 found that the contract and its schedules were not loaded on the City of Tshwane SharePoint system for consideration.

p. The special Council meeting on 10 December 2014 was held with resolutions to be finalised. The quorum indicated that the body was in favour of the recommendations to approve the PPP agreement and its schedules.

q. A final meeting of Council to acknowledge full availability and uploading of the PPP agreement and schedules was held on 26 February 2015, effectively confirming the approval of the PPP.

r. Financial close was successfully achieved on 13 March 2015.

s. The final run of the contractual model as a condition for financial close confirmed that the annual unitary payment cap of R117 million in 2006 terms was precisely met, in other words, that the PPP agreement successfully met the affordability threshold mandated by Council in 2006.​

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