MUNICIPAL FINANCIAL
SUSTAINABILITY OF CURRENT SPATIAL
GROWTH PATTERNS
MUNICIPAL FINANCIAL SUSTAINABILITY OF CURRENT SPATIAL
GROWTH PATTERNS
th September
Draft(26
Final
Report (26th2013)
September 2013)
Draft Final Report
Contact Details
Contact
Nick Graham and Katie Gull
PDG
Physical address
Ubunye House, 1st floor, 70 Rosmead Avenue, Kenilworth, Cape Town, 7708
Telephone
(021) 671 1402
Facsimile
(021) 671 1409
Cell phone
083 262 1028 / 079 879 0796
E-mail
nick@pdg.co.za / katie@pdg.co.za
Contact
Barbara Southworth and Janine Loubser
City Think Space
Physical address
24 Waterkant Street, Cape Town, 7000
Telephone
(021) 418 2200
Facsimile
087 231 3871
E-mail
barbara@citythinkspace.com / janine@citythinkspace.com
EXECUTIVE SUMMARY
Objective of the study
This specialist study to inform the Provincial Spatial Development Framework (PSDF)
was commissioned by the Department of Environmental Affairs and Development
Planning to investigate the impact of current spatial growth patterns on municipal
sustainability in concrete and quantifiable terms. While provincial spatial policy has
promoted the principles of urban compaction, integration and densification, our
cities and towns continue to sprawl peripherally. Although the reasons are complex,
it is often a result of decisions based on short-term gains, be they political, economic,
or pragmatic.
This study counteracts this short term view with a longer term perspective on what this
development does to overall municipal financial sustainability, as well as other nonfinancial impacts. It provides sound economic and financial evidence to support the
spatial principles and provide weight to spatial plans in the decision making process.
Methodology
Seven case study municipalities were selected based on geographical spread and
the degree to which they can be considered ‘typical’ of their municipal category,
and are given in the table below.
Table i: Case study municipalities
Category
Selected WC municipality
A
City of Cape Town
B1
Stellenbosch; George
B2
Saldanha Bay; Overstrand
B3
Theewaterskloof; Beaufort West
The financial impact assessment involved the application of the Municipal Services
Financial Model (MSFM) to determine municipal financial sustainability of two
alternative spatial growth patterns: business-as-usual (BAU) and a compact scenario.
The MSFM projects the infrastructure requirements and associated revenue and
expenditure over a 10 year timeframe, using a calibrated baseline situation. The
baseline position was developed from municipal documents and interviews with
officials, while the future projections were based on municipal targets and a number
of other growth assumptions. The critical assumptions regarded the form and density
of residential development, and changes to capital and operating unit costs under
the two spatial growth scenarios. The results from each of the case studies were
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
aggregated to project the results for each municipal category and then for the
province as a whole.
Transport is both impacted by, and has the potential to impact on, spatial growth
patterns. However, as most urban transport is not a municipal responsibility, these
impacts cannot be assessed using the MSFM. The greatest transport impacts are on
costs to households, and a transport model was used to quantify the potential
impact on household transport costs, as well as the potential impacts on carbon
emissions from transport.
The non-financial evaluation sought to assess the impact on productive, heritage,
scenic and biodiversity landscapes. A historical analysis was undertaken to identify
the growth areas in each of the major towns within the case study municipality, and
to evaluate these against the planning intentions of the municipalities and the urban
edge. Future development applications were also assessed in relation to their
location and potential effects on the loss of non-developed land. Protected areas,
current biodiversity status, ecological support areas as well as areas of prime
agricultural activity and irrigated land were overlaid onto the developemnt plans. To
assess the extent to which new development facilitates integration and accessibility,
the location of proposed growth areas and housing developments were evaluated
in relation to distances from with town centres and industrial or other economic core
areas.
Findings
The overall aggregate results for the financial assessment are shown in the table
below.
Table ii: Aggregate financial modelling results for the Western Cape
Measure
BAU
Compact
Difference
%
Improvement
Total capital investment required over 10 years (R million)
City of Cape Town
B1s
B2s
B3s
Total for Western Cape
106,877
88,095
18,782
18%
8,598
7,281
1,317
15%
14,824
12,688
2,136
14%
13,951
11,837
2,115
15%
144,250
119,900
24,350
17%
-12,836
-2,720
17%
Sum of net operating position over 10 years
City of Cape Town
-15,556
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
B1s
B2s
B3s
Total for Western Cape
-2,628
-2,017
-611
23%
-2,372
-1,792
-580
24%
-3,394
-2,569
-825
24%
-23,950
-19,214
-4,737
20%
A general finding is that the capital available to fund new infrastructure for growth
and the rehabilitation of existing infrastructure fall far short of the calculated capital
requirements. The current spatial growth patterns increase this capital funding gap.
The total capital cost of the current spatial growth patterns (BAU) over the next 10
years is projected to be R24 billion, or an additional 17%, when compared with an
alternative, compact spatial form. The dominance of the City of Cape Town, and
hence the significance of spatial form in this municipality, is clear from the results,
with 77% of the savings coming from this municipality alone. The percentage savings
in capital cost decreases with decreasing municipal size.
Another key finding from the financial assessment is that the case study municipalities
are all vulnerable on their operating accounts, and that interventions will have to be
undertaken to sustain the financial viability of municipalities, even without further
spatial growth. The cumulative net position is shown to be negative for all municipal
categories, but this can be improved with densification. The improvement in the
province as a whole is estimated to be 20%, with the largest possible improvement
being seen in the smaller B2 and B3 municipalities, whose operating accounts are
highly sensitive to expenditure increases. Expenditure increases due to more costly
services are usually not matched by an equivalent match in property rate or tariff
increases, as these are politically contested charges. The modelling suggests that
rates and tariff increases of up to 4% above inflation would be required annually in
order for the BAU situation to regain financial sustainability. If these increases were
approved, there would be a degree of inequity in that the higher average rate or
tariff to all users would be used to fund the additional cost created by peripheral
development.
With substantial limitations on the ability to increase municipal revenues, the
implication of continuing urban sprawl in the province is that both capital and
operating costs for municipalities will increase, without an adequate increase in
revenues to cover these costs. Municipal financial viability will deteriorate at an ever
increasing rate over time.
Even more significant than the impact on municipal financial viability are the nonfinancial impacts on the environment and the urban poor. While the municipal cost
implications of sprawl may be most obvious in larger towns and the City of Cape
Town, the greater impacts in smaller municipalities may be the loss of biodiversity,
cultural, scenic and heritage landscapes.
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
The non-financial impact assessment found that housing projects continue to be
primarily located on the periphery. Urban edges are often delineated to
accommodate this peripheral development rather than encouraging densification
and brownfield development. As a result, the loss of agricultural land and scenic
value is consistent in most towns. The loss of biodiversity and agricultural land is more
significant at a rural and provincial scale, through the continuous conversion of
productive land and ecological corridors as a result of gated communities and
estates within these areas. A key to the future viability of agriculture and food
security will be the proximity of production to markets and so any viable agricultural
land close to settlements should be considered as highly significant and protected
accordingly. The Impacts on threatened biodiversity areas are greater in areas
outside of the urban edge.
Sprawling growth patterns have different implications for rural versus urban areas. In
the urban context locational proximity and accessibility to economic opportunities
are not considered and thus undermined. In addition, integration of various income
groups is not being promoted due to opposing peripheral developments,
segregated by security and gated complexes.
Across the province, the affordability of public transport is a significant problem with
a high proportion of people unable to afford public transport. They are thereby
trapped in space, unable to seek employment, establish a means of livelihood or
access education and training opportunities. If current settlement patterns persist,
households will pay even greater proportions of their income on transport than they
do at present, and will thus continue to contribute to poverty and marginalisation.
The transport modelling results show that low income households in Cape Town could
be spending 18% more in the sprawl scenario than in the compact form, while the
impact in smaller municipalities is far smaller. This is because the potential for modal
shifts and the travel distances are greater in Cape Town. For carbon emissions, the
trend is reversed, where the emission difference between the two scenarios is 25% in
the case of Cape Town and increases to a worst case of 61% for Beaufort West. This
trend is directly related to the greater modal split in Cape Town, while other
municipalities will be dependent on cars and taxis for some time to come, resulting in
greater percentage emission increases with increases in travel distances. The
aggregate provincial impact is that the BAU results in 33% more carbon emissions
than a more compact spatial growth pattern.
Conclusion
This study has provided quantitative evidence that the current spatial patterns are
not sustainable for municipalities and are detrimental to the environment and the
urban poor. It is evident that the organization of economic activities and
infrastructure in space fundamentally impacts
on the viability of these activities,
people’s access to opportunity and the natural environment. Continuing the current
delivery model of isolated housing projects on the periphery of settlements will
exacerbate the financial vulnerability of municipalities. The separation of social
groups through peripheral development not only fragments our urban landscapes,
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
but also ultimately undermines the progression towards more sustainable livelihood
opportunities
The continued lack of integration, compaction and densification in urban areas in
the Western Cape has potentially serious negative consequences for municipal
finance, for household livelihoods and for the environment. It is therefore
recommended that the principles of densification, compaction and accessibility
contained in the PSDF be implemented. In addition, the PSDF needs to provide the
principles and tools to enable municipalities to enforce more efficient and
sustainable spatial growth patterns
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
Contents
1.
INTRODUCTION.............................................................................................................. 1
1.1
Background ................................................................................................................ 1
1.2
Motivation for this study ............................................................................................ 1
2.
THE COST OF SPRAWL IN SOUTH AFRICA ................................................................... 2
2.1
International evidence ............................................................................................. 3
2.2
Identifying Costs ......................................................................................................... 5
2.3
Non-financial impacts ............................................................................................... 9
3.
METHODOLOGY .......................................................................................................... 13
3.1
Case study selection ............................................................................................... 13
3.2
Financial modelling .................................................................................................13
3.3
Transport modelling .................................................................................................14
3.4
Rationale for Increased Costs of Sprawl ............................................................... 15
3.5
Data gathering ........................................................................................................15
3.5
Insights during data collection process ................................................................ 16
3.6
Methodology for non-financial impact assessment ...........................................17
4.
MUNICIPAL FINANCIAL SUSTAINABILITY .................................................................... 20
4.1
Overview ...................................................................................................................20
4.2
Case study results.....................................................................................................25
4.3
Public transport implications ..................................................................................34
4.4
Sensitivity to household and economic growth rates ........................................35
4.5
The provincial financial sustainability picture ......................................................36
5.
NON-FINANCIAL IMPACT ASSESSMENT .................................................................... 38
5.1
Overarching trends..................................................................................................38
5.2
Case study results.....................................................................................................38
5.3
Provincial implications ............................................................................................. 54
6.
DISCUSSION ................................................................................................................. 56
7.
CONCLUSION .............................................................................................................. 58
8.
REFERENCES ................................................................................................................. 60
9.
APPENDICES ................................................................................................................ 63
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List of Figures
Figure 1: Racial Distribution Patterns in Cape Town based on 2011 Census (Firth 2013)
.................................................................................................................................................... 2
Figure 2 Projected total capital and recurrent costs for six South African metros under
two growth scenarios (R million) 2010-2050 (PDG et al, 2012) .......................................... 3
Figure 3: % reduction in costs as a result of ‘smart growth’ development scenarios
from case studies featured in Smart Growth America (2013) ........................................... 4
Figure 4: Infrastructure components of an urban water and sanitation system ............ 6
Figure 5: Typical municipal operating account analysis by service .............................. 21
Figure 6: Capital finance available for total Western Cape municipal capital
expenditure ............................................................................................................................ 23
Figure 7: Savings on capital expenditure due to compaction by sector for the City of
Cape Town ............................................................................................................................. 25
Figure 8: Cumulative improvement in operating account position by sector due to
compaction for the City of Cape Town............................................................................. 26
Figure 9: Savings on capital expenditure due to compaction by sector for George . 27
Figure 10: Cumulative improvement in operating account position by sector due to
compaction for George ....................................................................................................... 27
Figure 11: Savings on capital expenditure due to compaction by sector for
Stellenbosch ........................................................................................................................... 28
Figure 12: Cumulative improvement in operating account position by sector due to
compaction for Stellenbosch .............................................................................................. 28
Figure 13: Savings on capital expenditure due to compaction by sector for Saldanha
Bay ........................................................................................................................................... 29
Figure 14: Cumulative improvement in operating account position by sector due to
compaction for Saldanha Bay ............................................................................................ 30
Figure 15: Savings on capital expenditure due to compaction by sector for
Overstrand .............................................................................................................................. 31
Figure 16: Cumulative improvement in operating account position by sector due to
compaction for Overstrand ................................................................................................. 31
Figure 17: Savings on capital expenditure due to compaction by sector for
Theewaterskloof ..................................................................................................................... 32
Figure 18: Cumulative improvement in operating account position by sector due to
compaction for Theewaterskloof ........................................................................................ 33
Figure 19: Savings on capital expenditure due to compaction by sector for Beaufort
West ......................................................................................................................................... 33
Figure 20: Cumulative improvement in operating account position by sector due to
compaction for Beaufort West ............................................................................................ 34
Figure 21: Stellenbosch: future growth ............................................................................... 38
Figure 22: Stellenbosch: integration and accessibility...................................................... 40
Figure 23: Stellenbosch: direction of growth and future expansion............................... 40
Figure 24: George: integration and accessibility .............................................................. 42
Figure 25: George: direction of growth and future expansion ....................................... 42
Figure 26: George: integration and accessibility .............................................................. 43
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
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Figure 27: Saldanha & Vredenburg: direction of growth and future expansion .......... 44
Figure 28: Saldanha & Vredenburg: integration and accessibility................................. 45
Figure 29: Greater Hermanus: direction of growth and future expansion .................... 46
Figure 30: Greater Hermanus: integration and accessibility ........................................... 47
Figure 31: Caledon: direction of growth and future expansion ..................................... 48
Figure 32: Caledon: integration and accessibility ............................................................ 49
Figure 33: Beaufort West: direction of growth & future expansion ................................. 50
Figure 34: Beaufort West: integration and accessibility ................................................... 51
Figure 35: City of Cape Town: integration and accessibility ........................................... 52
Figure 36: City of Cape Town: direction of growth & future expansion ........................ 53
Figure 37: Distribution of Gated Developments located outside the urban edge per
local municipality (based on Spocter survey of 2010) ..................................................... 55
List of Tables
Table 1: Evidence of infrastructural efficiency associated with compact growth
development scenarios .......................................................................................................... 5
Table 2: Percentage of monthly household income spent on public transport, 2001 .. 8
Table 3: Carbon footprint per capita per annum ............................................................ 11
Table 4: Case study municipalities ...................................................................................... 13
Table 5: Capital and operating cost impacts of sprawl on municipal services ........... 15
Table 6: Relative municipal household growth rates: inter-Census and modelled ..... 16
Table 7: Towns selected for non-financial impact assessment ....................................... 18
Table 8: Operating impact of compact spatial growth in comparison with current
growth patterns ..................................................................................................................... 22
Table 9: Capital impact of compact spatial growth in comparison with current
growth patterns ..................................................................................................................... 23
Table 10: Differences in transport impacts between the two scenarios ....................... 24
Table 11: Sensitivity analysis on economic and household growth rates...................... 35
Table 12: Aggregate financial modelling results for the Western Cape ....................... 37
Table 13: George Municipality ............................................................................................ 64
Table 14: Theewaterskloof Municipality.............................................................................. 64
Table 15: Overstrand Municipality....................................................................................... 64
Table 16: Saldanha Bay Municipality .................................................................................. 64
Table 17: Beaufort West Municipality .................................................................................. 65
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
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1.
INTRODUCTION
1.1
Background
The Provincial Spatial Development Framework (PSDF) is currently being reviewed by
the Department of Environmental Affairs and Development Planning. This study is
intended to inform the First Draft PSDF due for public comment in October 2013 and
finalisation in 2014. In July 2013 PDG, in association with City Think Space, was
appointed to assist the Department to undertake this PSDF specialist study.
1.2
Motivation for this study
While sprawling urban areas give city dwellers more living space, they require costly
investments in transport, water, sewage and energy infrastructure and greatly
increase dependency on private automobiles (Bahl et al, 2013).
This study shows the impact of undesirable spatial growth patterns on municipal
sustainability in concrete and quantifiable terms. While provincial spatial policy has
promoted the principles of urban compaction, integration and densification, our
cities and towns continue to sprawl peripherally. Although the reasons are complex,
it is often a result of decisions based on short-term gains, be they political, economic
(short-term employment), or bureaucratic (expediency of greenfield development).
This study counteracts this short term view with a longer term perspective on what
this development does to overall municipal financial sustainability. It provides sound
economic and financial evidence to support the spatial principles and provide
weight to spatial plans in the decision making process.
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
1
2.
THE COST OF SPRAWL IN SOUTH AFRICA
Urban sprawl can be defined as low-density, leapfrog development characterised
by unlimited outward expansion (Burchell et al, 2002). On the other hand, compact
or controlled urban growth limits a significant share of development to alreadydeveloped areas. The National Development plan states that “urban sprawl should
be contained and possibly reversed as denser forms of development are more
efficient in terms of land usage, infrastructure cost and environmental protection”(
National Planning Commission, 2011:285). For example, re-development or infill
development is encouraged, along with the clustering of residential developments
and creating more walkable neighbourhoods (Smart Growth America, 2013).
South African cities are characterised by low densities, inequitable land distribution
patterns and relatively high carbon emissions (Bertaud, 2009; PDG et al, 2012). This is
attributable to the apartheid spatial planning which displaced human settlements
(especially for the poor) to the urban periphery (Lemon, 1991). This spatial
segregation was further entrenched with the post-1994 low-cost housing projects,
which continue to be built on the outskirts of towns and cities (Mtantato, 2012).
Figure 1: Racial Distribution Patterns in Cape Town based on 2011 Census (Firth 2013)
Urban growth patterns are driven largely by the capital investment decisions
associated with housing developments. The FCC report (PDG et al, 2012) suggests
that the reason the compact city has not developed in response to market forces, is
because of the lack of incentives for low-income housing development and the fact
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
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that the subsidy mechanism is primarily fixed per housing unit. This means that it does
not favour the development of better-located areas of land where the costs are
higher.
Spatial decisions are driven by short term capital constraints rather than the longterm costs of these spatial decisions. The operating costs are often externalized and
it is the households who carry the true cost burden.
The FCC report analysed the economic and fiscal costs of inefficient land-use
patterns by modelling urban sprawl and compact development growth projections
of a hypothetical city in South Africa. The findings showed an additional 7% in
recurrent costs and a 2.1% in capital costs for the urban sprawl growth development
scenario.
Figure 2 Projected total capital and recurrent costs for six South African metros under two growth
scenarios (R million) 2010-2050 (PDG et al, 2012)
The report reveals that low-income houses are exposed to the largest negative
impact on household budgets and that there is a 24% difference in recurrent
expenditure after ten years (PDG et al, 2012).
2.1
International evidence
A recent study comprising of numerous case studies1 in the United States assessed
the impact of two spatial scenarios on municipal budgets (Smart Growth America,
2013) (Figure 3). The compact or smart growth development scenario consisted of
densely located buildings, better connected streets, a greater mix of home
typologies and further transportation options. The overall results showed that smart
growth development saves an average of 38% on upfront costs for the new
construction of roads, sewers, water lines and other infrastructure. In addition, the
Methodologies differed from project to project in addition to the exact nature of the
development projects and proposed growth projections
1
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study revealed that this development pattern saves an average of 10% on service
delivery costs (including police, ambulance and fire services).
Figure 3: % reduction in costs as a result of ‘smart growth’ development scenarios from case
studies featured in Smart Growth America (2013)
In addition to the financial cost implications, Ewing et al’s three year study of urban
sprawl in 83 metropolitan areas in the USA concluded that “People living in more
sprawling regions tend to drive greater distances, own more cars, breathe more
polluted air, face a greater risk of traffic fatalities and walk and use transit less”
(Ewing et al, 2002:5).
The implications of fringe development compared to compact development were
assessed to ascertain the financial sustainability of Australian cities (Trubka et al,
2010). The study disclosed a 63% increase in initial capital costs and a 50% increase
in transport related costs for fringe development.
There are numerous studies that compare the costs of different spatial development
patterns. Although there is a significant degree of economic, demographic and
methodological variation across these studies, Table 1 shows that there is overriding
evidence that compact growth promotes infrastructural efficiency (Bartholomew et
al, 2009).
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Table 1: Evidence of infrastructural efficiency associated with compact growth development scenarios
Study/Region
Denver Regional Council
West Palm Beach, Florida
Change in density
Cost savings
2,000 to 4,100 persons per
square mile
2.21 to 2.86 housing
units/acre
80% on infrastructure
($4.3 billion over 25 years)
60% on transportation capital costs
($886 million)
$3 billion on infrastructure costs over
20 years
8-48% on household level
expenditure
15% on water, road, and sewer
systems over 25 years
$37.6 billion in infrastructure costs
over 23 years
$10.6 billion in costs for new
infrastructure over 30 years
Twin Cities
2.1 - 5.3 housing units/acre
Kansas
60-200% increase in density
South Carolina
Salt Lake City
38% less land
Austin
2% less land for development
Central Valley
3 to 6 dwelling units per acre
$1.2 billion on public infrastructure
Source: Synthesis of Bartholomew2 et al, 2009
2.2
Identifying Costs
The studies are based on the assumption that compact growth scenarios require less
infrastructure which results in lower upfront capital costs and reduced long-term
operation and maintenance costs. Since compact growth patterns reduce
distances, it follows that the costs of services, which are reliant on distance (vehicles
and mobile facilities) are also reduced. However, some costs, such as land, may
increase with urban compaction.
2.2.1
Land and housing
The relationship between land price and urban spatial form is difficult to quantify
accurately. Aside from the general rule that the value of land decreases as one
moves away from urban centres, the land price will vary according to zoning,
proximity to services and amenities, relative scarcity and multiple other factors.
There is a danger that the rigid enforcement of an urban development limit (urban
‘edge’) can push up land prices and exclude the poor from access to the city.
Increased land costs also increase the cost of infrastructure because of the land
taken up by the infrastructure and servitudes required for access to the
infrastructure.
There is a direct relationship between land price, density, housing typology and
housing cost. Where land prices are high, the unit cost of housing per area is
reduced, where permissible, through densification in the form of multi-story units.
However, multi-story units are more costly to construct than single-story units and the
Studies undertaken in U.S. metropolitan areas between 1989 and 2003 estimating impacts of
different development patterns
2
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research undertaken by PDG et al (2012) showed that the increase in housing costs
due to multiple storey units far outweighs the reduction in land cost per unit through
densification.
2.2.2
Engineering infrastructure
Sustainable Cities International (2012) explains that infrastructure that is linear in
nature is influenced by the urban form. For example, as a town expands and
occupies more land, the linear infrastructure will follow this new growth area.
Modelling growth projections in Calgary, the IBI Group (2009) incorporated linear
infrastructure such as roads, transit services and wastewater distribution and
collections pipes in the study since these were considered to be influenced by
alternative growth patterns. As an example, when modelling the cost of road
networks under a sprawled and compact scenario, the difference in length of new
roads needed (lane-km) was used as a basis for comparison and a unit cost was
applied to each scenario (IBI Group, 2009). Similarly, the difference in service area
was used when comparing the cost of water and wastewater distribution costs.
An important distinction must be made between bulk, connector and internal
infrastructure. The diagram below illustrates the components in each of these
categories using the example of water and sanitation networks.
DIAGRAMATIC ILLUSTRATION OF THE COMPONENTS
OF AN URBAN WATER SERVICES SYSTEM
Distribution infrastructure
Resource
development
Bulk
infrastructure
Connector
infrastructure
Internal
infrastructure
Distribution
reservoir
Water treatment
works
River
Internal
pipe network
To other
settlements
Dam
Pumping
station
Connector
pipeline
Bulk water
pipeline
Wastewater
treatment
works
Other collectors
Sewerage
Treated effluent
outfall
Outfall sewer
Collector sewer
Figure 4: Infrastructure components of an urban water and sanitation system
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
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The cost of bulk infrastructure cost is driven by volume considerations and its position
in space is often determined by geophysical or resource locations. In general the
bulk infrastructure cost is spatially neutral, although site-specific variations may
occur. Water and wastewater treatment facilities generally increase their capacity
in response to population growth, but not urban form. Internal infrastructure cost is
driven by settlement layout and service standards. Two suburbs with similar densities,
housing typologies and service levels, one located in the urban core and the other
on the periphery, will have the same internal infrastructure costs. Internal
infrastructure cost reduces with increased density due to shorter network lengths per
unit and shared services. The component of engineering infrastructure that is most
directly affected by spatial form is the connector infrastructure, which connects bulk
and internal infrastructure. Sprawling urban spatial patterns will have longer
connector infrastructure lengths than compact patterns.
2.2.3
Public services infrastructure
Public services which are related to a threshold also need to be incorporated
(Sustainable Cities International, 2012). For example, emergency services, such as fire
departments, perform within a response time threshold. As a city or town expands,
more fire service facilities would need to be provided so that they can ensure the
minimum time response. In the same way, there is also often a cap on the distance
children should travel to school and provisions need to be made when cities
expand.
However it is important to distinguish between public infrastructure that relates to
population growth rather than the change in urban form. Public services which
operate on a per capita approach (for example police services) do not relate to
urban form and should be adjusted by a different logic when modelling costs.
2.2.4
Public transport infrastructure
The relevance for this study is that spatial patterns have a direct impact on both the
expenditure and revenue sides of public transport operations. Firstly, the capital
costs of public transport systems are higher in a low density layout due to longer
network lengths and increased numbers of stations or interchanges. Secondly, the
operating costs of the service are increased with increased trip lengths and travel
times. Thirdly, low density spatial arrangements compromise the overall viability of
the system because insufficient numbers of passengers can easily access the
systems, and therefore ridership and fare revenue is lower in a sprawl situation. The
low density of South Africa’s major cities threatens to make public transport
unviable. Mass transportation depends on a significant volume and high frequency
of users, for example according to the National Rail Plan in Mtantato (2012),
passenger numbers of 20 000-30 000 per hour are required for the rail transport
system to be viable.
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This argument assumes that a municipality would implement and operate a public
transport system in a low density spatial growth pattern. This is debateable given the
marginal viability of these systems in low density contexts, in which case the status
quo will persist, the capital investment will be saved and operating costs will increase
for households. In a recent survey, Bloomberg3 (2013) discovered that out of 60
countries, South African’s spend the largest proportion of their annual personal
income on fuel each year at 4.6%. The table below shows how the poorest
households spent the highest proportion of their disposable income on public
transport – almost 50% of the lowest income bracket spends more than 20% of their
income on transport.
Table 2: Percentage of monthly household income spent on public transport, 2001
Monthly income bracket
0%
1-5%
6-10%
11-20%
>20%
< 500
20.8
0
24.5
5.8
49
501-1000
14.1
33.5
20.9
13.2
18.3
1001-3000
15.1
28.8
24
22
10.1
3001-6000
32.5
35.4
18.6
10.7
2.8
>6000
68.8
23.8
5.4
1.9
0
Source: DoT (2003) in Mtantato (2013)
The nexus of public transport viability and spatial form raises the question of whether
spatial form drives the need and viability of public transport, or whether public
transport can alter spatial form. While this debate is beyond the scope of this study,
the answer is probably a bit of both. However, in large urban centres, public
transport interventions have the potential to increase urban efficiency (reduce
overall cost) and reduce the carbon footprint of the municipality. “It is arguable
that investment in public transport infrastructure has the biggest impact, by a
considerable margin, of any capital investment, on the transformation of city
structure aimed at promoting higher densities and on the cost efficiency of cities.”
(PDG, 2011:8)
2.2.5
Cost incidence and financial ‘actors
It is necessary to be aware of who is responsible for funding the infrastructure when
investigating costs. Often the capital expenditure is funded by national or provincial
government, but the operating expenditure falls directly to the municipality or
consumer, accommodated through tariffs, rates and taxes. Costs should be
considered on three primary levels: consumer, city and state level. In PDG et al
(2012), the relationship between the three tiers of costs, state subsidies, city rates and
3
http://bloom.bg/1eZzcVl
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tariff policies were incorporated into the operating costs to determine who pays for
the services and how they accrue to the different financial actors.
2.3
Non-financial impacts
Bahl et al (2013) warns that while industrialised countries may have the resources to
indulge in “wasteful sprawling of urban regions, developing countries need to learn
quickly to avoid costly decisions when land and water is relatively cheap, green
technologies are unknown and global warming is a scientific curiosity.”
Low densities and emptiness poses a big challenge for sustainable development
and since sustainability is dependent on energy and resource conservation, a
“resource-frugal” city is compact and vertical with high population densities that
permit the efficient utilisation of public transport.
UN Habitat (2004) emphasises the tendency for urban densities to decrease with
population growth. This suggests the continuation of sprawling urban development
patterns, inevitably resulting in the transformation of agricultural or natural land to
accommodate this urban growth. Sprawl is also associated with increasing pressure
on natural resources, degradation of farmland, lack of services and high commuting
needs, resulting in socio-spatial fragmentation and reducing access to opportunities
and services.
According to De Noronha Vaz et al (2012), an additional problem inherent in the
uncontrolled growth of cities is the threat to fragile cultural and ecological heritage
assets. This could ultimately escalate to permanent and irreversible damage as a
result of factors such as environmental depletion and landscape decay. UN Habitat
confirms this threat by recognising that urban sprawl has caused considerable
damage to ecologically sensitive areas in various cities (UN Habitat, 2010).
It is clear that the non-financial impacts of land-use decisions on future growth and
development must be assessed based on the consideration of all of the following
elements.
2.3.1
Carbon emissions
Suburban sprawl in the United States is dependent on cheap fuel prices, which
supports the mobility of society. Eberhard (2009) estimates that residents of sprawling
cities drive three to four times more than residents in compact cities. PDG et al
(2013) modeled two spatial growth scenarios for South Africa and found that
transport required in a compact city growth scenario emitted 22% less carbon
emissions than that of sprawled growth over 10 years. This was due to the shorter
travelling distances and more efficient public transport options.
The population densities of South African cities are much lower than some
international cities, and therefore yield high carbon emissions per capita.
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Table 3: Carbon footprint per capita per annum
Johannesburg
Cape Town
eThekwini
Tshwane
Population density (people/hectare)
20.9
12
14
9.5
Average
commuting
time
(minutes/capita/commuter trip)
52
50
45
60
Carbon footprint
(tons CO2/capita/year)
7
8
6
9
Source: PDG et al (2013)
2.3.2
Heritage, Culture & Scenic Landscapes
According to UN Habitat (2004) unsustainable patterns of low-density sprawling
development often lead to negative impacts on the scenic and cultural heritage
value of rural landscapes. It is evident that incremental erosion and fragmentation
of these landscapes not only give rise to visual cluttering and the loss of rural
authenticity and character, but also damage unique settlement morphologies and
local sense of place. It is therefore critical that major urban growth steers away from
fragile areas and natural heritage sites and that the extension of urban areas be
close to existing developed areas and infrastructure. The unique cultural landscapes
of the Western Cape underpin many aspects of the regional economy, especially
important to the tourism and service economies. In many instances, the most
significant features of the Western Cape cultural landscape are those most
threatened by inappropriate development. The historic character and quality of
small towns is tied strongly to their relationship with their agricultural contexts and the
erosion of these relationships is widespread across the Western Cape.
2.3.3
Productive & Ecological Landscapes
The threat to fragile resource and agricultural assets is cited by De Noronha Vaz et al
(2012) as a significant risk inherent in the uncontrolled growth of settlements. Any
losses of these assets ultimately escalate to permanent and irreversible damage as a
result of factors such as environmental depletion and landscape decay. Human
survival is also entirely dependent on the delivery of ecosystem services, where the
maintenance of these ecosystems and their supporting ‘ecological infrastructure’ is
a key socio-economic imperative.
These imperatives are recognised in South Africa via the National Environment
Management Act (NEMA), which sets out the need for executing informed decisionmaking with regards to biodiversity and natural resource management. South
African legislation therefore acknowledges the importance of these natural
resources and the role that they play in providing citizens with clean air, clean water,
soil in which to grow food and the pollinators that are needed to produce food.
Completely natural areas, such as wilderness and conservation areas, are also
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considered important not only because of the role they play in keeping resources
such as water clean, but also because of their role in general human well-being
(e.g. spiritual or cultural significance).
Furthermore, the legislation also calls for the delineation of spatial planning
categories via identifying Critical Biodiversity Areas (CBA) and Ecological Support
Areas (ESA). CBA’s refer to terrestrial and aquatic areas that must be safeguarded in
their natural state, as they are critical for conserving biodiversity patterns and
corridors as well as maintaining ecosystem functioning. ESA’s are supporting zones or
areas that must be safeguarded in order to prevent degradation of CBA’s or
formally Protected Areas.
The natural landscape is becoming a ‘scarce resource’ and while sprawl
development continues to convert large areas to asphalt, concrete, and structures,
the altering of our landscapes reduces the biological productivity and habitat value
of the land. Although there will always be tradeoffs to accommodate human needs,
McElfish (2007) reinforces that any conversion of open lands to developed uses
impairs the prior environmental values, and that sprawl development does so at an
even higher rate of land conversion per unit of development, ultimately undermining
the effectiveness of ecological performance. Because of our total dependence on
natural systems for food and
water, it is essential that land-use decisions are guided
by biodiversity considerations and the maintenance of healthy functioning
ecosystems, now and in the future, as this is the essence of sustainable
development.
2.3.4
Integration & Accessibility
Non-financial impacts of sprawl can also be measured against the increase or
decrease in levels of socio-spatial integration and access to opportunities. The
prevailing sprawl model of development drastically separates different housing
markets from one another, as well as separating job areas from residential areas
(McElfish, 2007). These characteristics of sprawl mean that locating new affordable
homes near jobs is difficult, and sprawl consequently reduces the availability of jobs
for those in urban areas that lack reliable transport options. This spatial dislocation
has impacts on poor households; continuously marginalised by distance and
transport costs.
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3.
METHODOLOGY
3.1
Case study selection
The study derives an aggregate picture of municipal sustainability in the province
through the use of case study municipalities. The approach is based on the
acknowledgement that there are different types of municipalities in the Western
Cape with different economic characteristics and spatial imperatives. The study
therefore selected the one metropolitan municipality in the Western Cape, as well
as two municipalities in each of the other three4 Municipal Infrastructure Investment
Framework (MIIF) categories (DBSA, 2011). The case study municipalities were
selected based on geographical spread and the degree to which they can be
considered ‘typical’ of their category, and are given in the table below.
Table 4: Case study municipalities
Category
Definitions
Selected WC municipality
A
Metropolitan municipality
City of Cape Town
B1
The 19 local municipalities with the largest
budgets
Stellenbosch; George
B2
Municipalities with a large town as core
Saldanha Bay; Overstrand
B3
Municipalities with relatively small population
and significant proportion of urban population
but with no large town as core
Theewaterskloof; Beaufort West
3.2
Financial modelling
The methodology employed uses the Municipal Services Financial Model (MSFM) to
determine municipal financial sustainability of two alternative spatial growth
patterns, business-as-usual (BAU) and compact. The MSFM is a complex MS Excel
based spreadsheet tool that projects the infrastructure requirements and associated
revenue and expenditure over a 10 year timeframe, using a calibrated baseline
situation. The scenarios can only be modelled by considering the full suite of
municipal activities, including expenditure on service obligations and revenue from
various sources. The focus of the model is the municipal provision of engineering
services i.e. water, sanitation, electricity, roads and solid waste. However, public
services are included, as are all the other functions that a municipality undertakes
There are no B4 municipalities in the Western Cape. District municipalities were omitted from
the study because they do not provide urban services on any significant scale in the Western
Cape.
4
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(governance, administration, planning and development), although these latter
functions are not considered spatially dependent.
Each of the case study models was populated with the most accurate infrastructure
and financial information as possible to define the baseline. This baseline was then
projected forward under two spatial growth scenarios: dispersed and compact.
Since the model is a spatial, the two scenarios were achieved through the variation
of unit cost information and development typologies. The rationale for the selection
of the cost factors is provided in Section 3.4 below, and the factors themselves are
provided in Appendix B.
The methodology employed to aggregate the case study findings up to the
provincial level involved treating the case study municipalities as ‘typical’ of their
municipal category (i.e. B1, B2 or B3). A model was set up for each of the categories
and populated with the baseline information being the sum of the municipalities in
each categories (e.g. for population, budgets, service levels, etc.) and using the
parameters that were used for the two typical case studies (or an average of the
two where these differed). The overall results for the Western Cape were calculated
by adding the results from the three aggregate models to those of the City of Cape
Town.
3.3
Transport modelling
The MSFM models public transport in a very general way, based on municipal
planned capital expenditure and operating surpluses or deficits. In reality, most
Western Cape municipalities do not undertake any public transport functions. Even
in the City of Cape Town, the city is only responsible for a portion of the cost of the
Integrated Rapid Transit (IRT) system, and has no involvement in the private sector
bus service (Golden Arrow), the commuter rail (Metrorail) and the minibus taxi
operations. Although the devolution of the public transport function to the City of
Cape Town is likely to impact significantly on the municipal financial sustainability,
there are too many uncertainties (institutional arrangements, subsidy levels, routes,
fare levels, etc.) to model this impact with any accuracy. The impacts on the
municipality have therefore been assessed qualitatively, and with reference to other
research on this issue.
However, the most significant impact of transport networks in alternative spatial
growth patterns is potentially to households, in terms of cost and time, and to the
environment in terms of increased carbon emissions. This study attempted to
quantify these impacts through two measures: average percentage of poor
household income spent on transport; and CO2 emissions from all modes of
passenger transport. A separate model was developed for this purpose that used
the population projections from the MSFM, and assumed modal shifts and trip length
changes to quantify these impacts for the BAU and compact scenarios in each
case study municipality. The key transport model assumptions are also provided in
Appendix B.
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3.4
Rationale for Increased Costs of Sprawl
The cost variables that have been applied to model the two alternative spatial
growth scenarios are based on local and international literature where possible (see
discussion in Section 1). Where values could not be determined, estimates have
been used. The services to which the variables have been applied are listed in Table
5, together with a description on the impact of sprawl on the capital and operating
costs of that service. The specific values applied to each component are given in
Appendix B.
Table 5: Capital and operating cost impacts of sprawl on municipal services
Functions
Capital impact
Operating impact
Housing
Cheaper land and units – single
residential favoured over medium
density or in-situ upgrading
-
Water & Sanitation
Longer
connector
network.
Internal
infrastructure
cost
increase due to low density
housing typology
Higher
maintenance
cost
associated with longer network
Electricity
Longer connector network and
more sub-stations
Higher
maintenance
cost
associated with longer network
Solid Waste
More transfer stations
Higher collection costs due to
transport distance and time
Roads & Stormwater
More higher-order roads
Higher
maintenance
cost
associated with increased road
length
Public Services
More facilities triggered due to
distance thresholds
More staff
services
Longer networks (or no viability)
Higher operating expenditure
and less ridership, resulting in
large household or subsidy
impact
Transport
3.5
cost
or
mobile
Data gathering
Site visits were undertaken to each of the case study municipalities to gather data
for the modelling and for the non-financial impact assessment. Officials from the
planning, finance, and engineering departments were interviewed and data gaps
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were followed up telephonically. The list of officials interviewed in each municipality
is provided in Appendix A.
DISCLAIMER:
The information gathered from municipal officials for this study was used
primarily to define the starting position in the base year. The future projections
have been based on growth factors specific to this study and have not been
ratified or approved by municipal officials in any way.
3.5
Insights during data collection process
Two important insights were gained through the data collection and analysis process
that have bearing on the outputs of this study:
3.5.1
Inconsistency in relative household growth rates
Within many of the municipalities there was a surprising lack of agreement on future
household growth projections. In some cases these were provided in the Spatial
Development Frameworks, but these would sometimes differ with those provided by
engineering or housing departments. Where projections did exist, the majority were
produced prior to the publishing of the 2011 Census results and diverge from the
inter-Census trends.
An interesting dynamic in the Western Cape, that possibly differentiates it from other
provinces, is that the average inter-Census household growth rate in all of the
smaller municipalities (with the exception of Theewaterskloof) was higher that of the
City of Cape Town (see Table 6).
These two dynamics, inconsistent internal household projections and divergence
from the Census trends, presented a challenge in determining household projections
for the modelling. The household growth figures that have been selected for each of
the case study, together with the rationale therefore, are presented in Table 6.
Table 6: Relative municipal household growth rates: inter-Census and modelled
Municipality
Inter-census
household
growth rate
Average
growth
rate
used in model
City of Cape Town
2.60%
1.82%
Stellenbosch
2.75%
2.95%
Comments on figure selected for
model
Growth rate taken from Cape Town
2013-2032 Land Use Model Report,
SPUD 3 July 2013
Growth rate determined by
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Stellenbosch Infrastructure Task Team
George
3.64%
2.10%
SDF figures
Overstrand
3.79%
3.79%
Inter-census growth rate
Saldanha Bay
3.50%
3.50%
Inter-census growth rate
Theewaterskloof
1.55%
1.73%
Housing Sector Plan rate of 4%
reduced to relate closer to the intercensus growth rate
Beaufort West
2.90%
2.90%
Inter-census growth rate
Provincial
2.63%
N/A
3.5.2
Housing demand figures are universally inflated
Estimates of the housing demand were obtained from municipal documents (IDPs,
SDFs, and Housing Sector Plans) or directly from officials and compared with the
Census 2011 figures for households living in inadequate accommodation (informal
dwellings, backyard dwellings and traditional dwellings). Even when overcrowding is
added to estimate latent demand, the conclusion was reached that housing
demand is inflated in most, if not all municipalities. This is especially true when
housing demand is estimated from waiting lists. It is acknowledged that there are
perverse financial incentives attached to overestimating housing demand, but this
has negative consequences in that it puts pressure on land use management to
approve undesirable development simply to ensure ‘delivery’ and reduce the
inflated ‘backlog’. This is not to deny that there is a critical shortage of low income
housing in the province, but merely states that there is no standardised and rigorous
approach to quantifying and defining this demand.
The approach that has been taken in this study is to generally use the Census 2011
figures for housing type, but where municipalities have undertaken their own counts
of informal dwellings or backyard shacks, these figures have been used in
preference to the Census figures.
3.6
Methodology for non-financial impact assessment
In addition to the financial assessment method, a non-financial assessment of the
impacts on productive, heritage, scenic and biodiversity landscapes was
undertaken. The impact of current growth patterns with regards to integration and
accessibility was also mapped. This qualitative analysis aimed at evaluating the
impacts of urban growth on resources in relation to the stated PSDF objectives and
principles and was performed for each of the selected case study municipalities as
identified in Table 7. However, it is important to note that the City of Cape Town
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model is a special case, which will require more investigation and engagement and
was therefore not assessed due to the complex nature of current and future
development patterns for the region.
The non-financial assessment aimed to provide a nuanced understanding of the
direction of growth within the major urban centres of each case study municipality.
Although the viability of the municipality as a whole was assessed, the financial
assessment with regards to growth parameters was only applied to urban areas
within municipalities. This rationale, as well as the limited investigation timeframe and
scope of the study, thus called for a directed focus on the primary town within each
area. The table below indicates which towns were selected per municipality:
Table 7: Towns selected for non-financial impact assessment
Selected WC municipality
Non-financial Assessment Town Case Study
B1 – Stellenbosch
Stellenbosch
B1 – George
George
B2 - Saldanha Bay
Saldanha & Vredenburg
B2 - Overstrand
Greater Hermanus
B3 – Theewaterskloof
Caledon
B3 - Beaufort West
Beaufort West
As a point of departure, an historical analysis of growth over a period of ±10 years
was undertaken for each town based on historical imagery from Google Earth.
Major recent growth areas were highlighted on an aerial base of each case study
town. Discussions with municipal planning officials followed as part of the datagathering process, where these identified areas were reviewed with regard to
current and future planning intentions and their potential impacts on the surrounding
rural landscape. Significant future development applications were also discussed in
relation to their location and potential effects on loss of non-developed land.
Protected areas, current biodiversity status, ecological support areas as well as
areas of prime agricultural activity and irrigated land were identified via the PSDF
GIS database. The local Spatial Development Framework (SDF) for each municipality
was simultaneously assessed through synthesizing the proposed areas for future
growth together with the key findings from the municipal discussion sessions. A
mapping process followed where the GIS data was overlaid with data derived from
the local SDF’s. The identified new growth areas, together with the urban edges
identified within each SDF were compiled to analyse and compare the relationship
between the location of new growth and the location of ecological and agricultural
assets. New developments were also categorized according to the nature of the
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development with regards to affordability and location in relation to commercial
and industrial activity.
Key conclusions were based on the derived projections of possible future urban
expansion and encroachment into the surrounding scenic, cultural and agricultural
landscapes, as well as the promotion of integration and accessibility of these
developments.
To assess the extent to which new development is facilitating integration and
accessibility, the location of proposed growth areas and housing developments
were evaluated in relation to distances from with town centers and industrial or other
economic core areas. Radii of 1-2km from these key destinations were demarcated
to highlight the traveling distances imposed on communities that would be located
within these new development areas. While it is a crude measure, it does highlight
the extent to which poor communities are often ‘trapped in space’ unable to afford
the costs involved in reaching higher order social services, employment
opportunities and retail.
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4.
MUNICIPAL FINANCIAL SUSTAINABILITY
4.1
Overview
The focus of this study is on how spatial growth patterns impact on municipal
financial sustainability. Municipal financial sustainability is defined as the on-going
ability of the municipality to cover both the on-going cost of service provision and
the capital requirements for future growth and renewal of existing infrastructure. The
impact of spatial growth patterns has been assessed in terms of how it impacts on
the net operating account of the municipality (and hence its ability to build up
capital reserves or borrow), as well as the overall capital expenditure required.
The high-level findings in this regard are first presented, after which the general
impact on the operating and capital accounts is discussed, followed by an
individual assessment on the services impacted in each case study municipality. The
transport impacts are also examined. The section then concludes with a discussion
on the aggregate impact of spatial growth patterns on the various categories of
municipality and the province as a whole.
4.1.1
Overall impact on municipal operating account
A significant finding is that the operating accounts of all the case study
municipalities are extremely vulnerable. The projections show the operating
accounts declining into deficit rapidly and continuing to do so over the ten year
period. This is based on the following assumptions:

services will be operated and maintained at the optimum level;

revenue collection rates continue unchanged; and

borrowing is maximised up to a prudential limit to fund the capital account.
In reality, municipalities cannot run at the levels of deficit indicated in the model, so
interventions will have to be undertaken to sustain the financial viability of
municipalities even without further spatial growth.
The figure below shows the net operating account projection of a typical Western
Cape (or any South African) municipality, divided by service. In other words, this is
the net surplus or loss that is made on each service after all expenditure and
revenue (including the equitable share subsidy) has been allocated to the services.
The rates and general line refers to all services that the municipality provides that are
not paid for directly, and includes roads, stormwater, public services, governance,
administration, planning and development. It shows that municipalities typically
break even (or make a small loss) on sanitation and solid waste, but make a surplus
on water supply and a large surplus on electricity, which cross subsidises the losses
made on the rates and general account.
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Annual surplus/shortfall per service
150
100
50
R millions
-50
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
-100
-150
-200
-250
-300
-350
Water Supply
Sanitation
Solid Waste
Rates and general
Electricity
Figure 5: Typical municipal operating account analysis by service
The trends in this graph are driven by two factors: the ability to recover costs (or cost
plus a surplus) through tariffs and the increases or decreases in expenditure by
service. Assuming operating grant funding is relatively stable, revenue side
interventions are constrained by ability and willingness to pay and are beyond the
scope of this project. However, the expenditure side is directly impacted on by
spatial form. Thus, if revenues are relatively capped (and charged at a standard unit
rate across the municipality), then spatial growth that increases municipal
expenditure on services will result in greater operating account deficits.
A further important point to note in relation to the figure above is that in all the case
studies investigated, none of these are able to cover the non-utility services functions
through property rates. In addition to the cross-subsidy into this account by the utility
services, there is also inherent cross subsidy by ratepayers to those who do not pay
rates. If the development that is being promoted is not likely to result in property
rates revenue generation, then it these ongoing expenses to the municipality should
be minimized. If the development is going to generate rates revenue, then one
needs to assess whether the property rate level is sufficient to cover the actual costs
(particularly if these are higher than the average due to sprawl), as well as allow for
a cross-subsidy. The general finding is that property rate levels are often insufficient
to cover these costs. Therefore, generalized statements that property rates revenue
from high income developments is a net benefit to the municipality have to be
interrogated.
As expected,
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Table 8 shows that the current spatial growth patterns negatively affect the
municipal operating account, while a compact growth pattern has the potential to
improve the net operating position by between 3% and 21%.
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Table 8: Operating impact of compact spatial growth in comparison with current growth patterns
Total improvement in net
operating position through
compaction over 10 years
(R million)
Cape Town
% improvement in net
operating position
through compaction
over 10 years
2,729
18%
George
114
10%
Stellenbosch
175
21%
Saldanha
182
17%
Overstrand
122
15%
Theewaterskloof
21
3%
Beaufort West
51
9%
The 18% improvement for the City of Cape Town results in a saving of R2.7 billion over
10 years, while the saving for smaller municipalities is substantially less. It is important
to note that 10 years is a relatively short timeframe to assess the impact of spatial
growth, and the differences are only felt at the margins5. The cost savings projected
in this modelling would continue to increase over time as the two spatial growth
scenarios diverge.
4.1.2 Overall impact on municipal capital account
For all municipalities, the theoretical capital expenditure that is required to reduce
infrastructure backlogs, satisfy demand for new infrastructure and provide for
renewal of existing infrastructure is far higher than the available funding. This is a
consistent finding across the case study municipalities and has also been raised in
every round of the Municipal Infrastructure Investment Framework (DBSA, 2011) and
elsewhere (FFC, 2012). The figure below shows the available capital finance in
relation to the overall capital expenditure requirement for the province as a whole in
the BAU scenario. The municipal funding gap varies between 14% and 37% of the
overall capital required.
i.e. only the growth areas operate at increased costs, while existing areas retain the same
cost profiles.
5
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Figure 6: Capital finance available for total Western Cape municipal capital expenditure
This capital constraint is not driven primarily by spatial growth patterns, but is an
existing pressure that municipalities face, and has an impact on how development
decisions are taken. In particular, decisions that minimise up-front investment (at the
expense of longer term operating cost) are favoured. This issue also highlights the
need to minimise any unnecessary capital expenditure, as is expected to be the
case for perpetuating the current spatial growth patterns.
The results of the analysis are presented in Table 9 and indicate that a more
compact urban form can reduce capital requirements by 12-24% over 10 years. At
the two extremes, this represents an average saving of R1.9 billion per annum for the
City of Cape Town and R14 million per annum for Beaufort West.
Table 9: Capital impact of compact spatial growth in comparison with current growth patterns
% reduction in capital
through compaction
Total capital saved (R
million/annum)
Cape Town
18%
1,878
George
24%
74
Stellenbosch
12%
48
Saldanha
14%
41
Overstrand
13%
40
Theewaterskloof
19%
27
Beaufort West
16%
14
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The percentage capital reduction that is achievable is similar between all the case
study municipalities because of the type of infrastructure that space impacts upon
(connector infrastructure) is similar for all municipalities and a consistent set of
assumptions was used.
4.1.3 High-level transport impacts
This section reports only the quantitative transport impacts that have been
modelled, specifically the impact on low income household expenditure and
carbon emissions from passenger transport. The results in Table 10 show two
interesting trends. For low income households in Cape Town, the percentage
expenditure on transport could be 18% higher in the sprawl scenario than in the
compact form, but for the smallest municipalities the difference is only 1% or less. This
is because the potential for modal shifts and the travel distances are greater in
Cape Town, while transport options are limited (and is likely to continue relatively
unchanged for 10 years) and the travel distances in small municipalities are
minimally affected by sprawl6. For carbon emissions, the trend is reversed, where the
emission difference between the two scenarios is 25% in the case of Cape Town and
increases to 61% for Beaufort West. This trend is directly related to the modal split and
the fact that in Cape Town there are already rail, bus and IRT services that will
expand in both scenarios. The other municipalities will be dependent on cars and
taxis for some time to come, and hence any increase in travel distance has a
marked effect on carbon emissions.
Table 10: Differences in transport impacts between the two scenarios
Difference in average low
income household
expenditure on transport
Difference in carbon
emissions from
transport
Cape Town
18%
25%
George
5%
41%
Stellenbosch
2%
43%
Saldanha
3%
48%
Overstrand
1%
46%
Theewaterskloof
1.0%
46%
Beaufort West
0.4%
61%
For example, the average travel distance in Caledon may be 1.5km. Doubling this distance
is not going to affect costs significantly, whereas the average travel distance in Cape Town
may be 15km, and a proportional increase to this will definitely increase costs.
6
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4.2
Case study results
Cape Town
The City of Cape Town is by far the largest municipality and urban area in the
province, with 64% of the total provincial population and 70% of the urban
population. Its impact on the overall results is therefore substantial. The physical limits
to spatial growth in Cape, the history of urban sprawl, and the scale of proposed
future development also mean that this study is of greatest significance to the City
of Cape Town.
The capital finance constraints mentioned above are most acute in the case of
Cape Town, with the projected capital required at around R10 billion per annum,
but the current capital budgets only being around R6 billion. The compact spatial
growth scenario would cost 18% less than the BAU scenario, amounting to R18.8
billion over 10 years. An analysis of where the costs savings lie, given in Figure 7,
shows that there are savings in all sectors, but the largest of these is in the public
services, electricity, solid waste and housing sectors. The savings on housing relates
to a preference given to incremental upgrading over single residential housing
delivery. The limited savings on roads is due to the fact that a large portion of the
required capital is for rehabilitation of Cape Town’s extensive road network, and
new roads form a relatively small proportion of the total.
Figure 7: Savings on capital expenditure due to compaction by sector for the City of Cape Town
On the operating account, the cumulative net position over 10 years is 18% better in
the compact scenario than in the BAU scenario. The analysis in Figure 8 shows that
the net position on solid waste is the most improved, while the position on electricity
is slightly worse. This is due to the assumptions around average electricity
consumption by housing typology. For example, higher density residential units
consume less electricity than single residential units, and incrementally upgraded
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informal settlements consume more than new low income single residential units. This
has a negative impact for city finances because of the operating surplus that is
currently being made from electricity. The lower improvement for Rates and General
is again related to the roads costs, with operating costs for the additional road
length being relatively minor compared with that of the existing network. Public
services costs are, however, more expensive in the BAU scenario.
Figure 8: Cumulative improvement in operating account position by sector due to
compaction for the City of Cape Town
George
For George the total capital saving is estimated at R740 million over 10 years – 24%
lower than the BAU scenario. The capital account differences show a strikingly
different pattern to that of Cape Town (Figure 9). While the capital saving is marginal
for water, sanitation and roads, it is approximately 50%-60% for public services,
electricity and solid waste. In the compact scenario, the capital costs for land and
housing are cumulatively more than 20% higher than the BAU scenario, indicating
the higher capital cost of higher density housing solutions on well-located land.
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Figure 9: Savings on capital expenditure due to compaction by sector for George
The operating account (Figure 10) shows the greatest net improvement due to
compaction on the sanitation account, while electricity shows a net decline for the
same reasons as described above.
Figure 10: Cumulative improvement in operating account position by sector due to
compaction for George
Stellenbosch
Similarly to George, the Stellenbosch case study shows that compaction has the
greatest capital benefit for public services, followed by electricity, while the benefits
for the other sectors are more marginal (Figure 11). Again, the impact of opting for a
greater proportion of medium density low cost housing solutions manifests as a
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negative cost difference. The total capital saving for Stellenbosch due to
compaction is estimated at R480 million, or 12% less than the BAU scenario.
Figure 11: Savings on capital expenditure due to compaction by sector for Stellenbosch
The cumulative net operating account for the compact scenario is 21% better than
that of the BAU scenario for Stellenbosch. The breakdown of operating position by
services (Figure 12) shows the familiar pattern of maximum difference in sanitation,
then solid waste, then water supply. The electricity difference is only slightly negative
for Stellenbosch.
Figure 12: Cumulative improvement in operating account position by sector due to
compaction for Stellenbosch
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Saldanha Bay
The overall capital savings for Saldanha Bay due to compaction is estimated at R410
million, or 14% less that the current spatial growth pattern. The pattern of the capital
savings by service (Figure 13) is very similar to that of George, with savings on public
services, solid waste and electricity capital costs of greater than 50%. As above, land
and housing is more capital intensive in the compact scenario.
Figure 13: Savings on capital expenditure due to compaction by sector for Saldanha Bay
The results of the operating account analysis by service (Figure 14) are skewed by an
anomaly in the water supply figures. In the BAU scenario, the water supply operating
account declines to make a slight loss over 10 years, but in the compact scenario
this is turned around to make a slight surplus. This marginal difference above and
below the break-even point distorts the results. Nevertheless, the other results are
similar, with solid waste showing a 42% difference, Rates and General and Sanitation
a 9% and 8% difference respectively, and the electricity account performs the same
in both scenarios. The overall operating account improvement due to compaction
in Saldanha Bay is R181 million, or 17% better than the BAU scenario.
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Figure 14: Cumulative improvement in operating account position by sector due to
compaction for Saldanha Bay
Overstrand
A familiar pattern of capital savings emerges for Overstrand (Figure 15), with a total
savings of R400 million over 10 years, or 13% less than the BAU scenario. Public
services show the greatest cost reduction due to the increase in facilities triggered
by spatial thresholds, with land and housing showing a capital cost increase due to
the typology selected. A significant cost saving is also reflected on electricity
infrastructure. Officials at Overstrand have pointed out the peculiarity of the
municipality being a collection of nearly contiguous coastal settlements. In order to
realise efficiencies of service provision and unlock future growth nodes, some
degree of physical growth is being encouraged to join neighbouring settlements.
This unique feature of the municipal spatial layout has not been factored into these
results.
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Figure 15: Savings on capital expenditure due to compaction by sector for Overstrand
The greatest difference on the net operating postion for Overstrand occurs on the
sanitation account, followed by solid waste. Rates and General and water supply
show similar improvements of just over 4% each. The electricity account position
decreases by 0.5% in the compact scenario. The overall improvement in operating
position is 15% over 10 years. As for the capital account, any operating efficiencies
created through the linking of adjacent settlements has not been accounted for
and may mean that the net operating positions for the two scenarios are closer than
what is calcualted here.
Figure 16: Cumulative improvement in operating account position by sector due to
compaction for Overstrand
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Theewaterskloof
The capital account results for Theewaterskloof show that the current spatial patterns
could cost R210 million (19%) more than a more compact growth pattern. This highlevel result does not account for the fact that the urban areas in Theewaterskloof
are spread across multiple small towns, and hence the relative difference between
the two scenarios may be exaggerated. All services show capital savings, with the
greatest being for public services and electricity.
Figure 17: Savings on capital expenditure due to compaction by sector for Theewaterskloof
Regarding the operating account differences, a variable pattern emerges, as
shown in Figure 18. The sanitation, solid waste and rates and general account
positions are only slightly improved. Theewaterskloof is the only case study that
shows no difference in the water operating account. While the dense scenario
projects reduced connector infrastructure operating costs, it also projects lower
overall consumption due to housing typology (e.g. fewer gardens to water in higher
density housing). This is a similar reason as to why the electricity account shows a net
decline in the compact scenario. Of all the case studies, Theewaterskloof shows the
lowest net improvement in the operating account of only 3.4%. A large part of the
reason for this is the seemingly large surpluses that the municipality makes on
electricity and water, which means the revenue stream, is relatively strong and the
net position is less affected by expenditure side impacts.
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Figure 18: Cumulative improvement in operating account position by sector due to
compaction for Theewaterskloof
Beaufort West
The Beaufort West capital savings profile is similar to many of the others discussed
above, with all services showing capital savings, except for land and housing, which
shows a slight capital cost increase in the compact scenario. The total capital
savings over 10 years is estimated at R140 million, which represents a 16%
improvement on current spatial growth patterns.
Figure 19: Savings on capital expenditure due to compaction by sector for Beaufort West
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The operating account differences shown in Figure 20 are also fairly typical, with the
greatest improvement being calculated for solid waste. More modest improvements
are expected for rates and general, water supply and sanitation, while electricity
shows the familiar negative trend due to lower total consumption. The total
improvement in the operating account for Beaufort West due to compaction is only
R48 million, or 4.8%, over 10 years.
Figure 20: Cumulative improvement in operating account position by sector due to
compaction for Beaufort West
4.3
Public transport implications
George currently runs a municipal bus service and Stellenbosch is considering a
similar service in the medium term. However, the expansion of these services is too
uncertain to draw any substantive conclusions as to how they would be affected by
alternative spatial growth patterns. The other municipalities are unlikely to
implement, or require, an inter-urban public transport system in the period being
considered. This discussion is therefore limited to the impact of public transport
interventions on the municipal financial sustainability of the City of Cape Town.
Current capital investment in the Cape Town IRT is around R1 billion per annum,
funded by the Public Transport Infrastructure Grant (PTIG), and is likely to continue at
similar levels for the next 10 years (PDG, 2011). The City of Cape Town IRT business
plan shows a current net cost to the city of approximately R200 million per year. This
is currently the only significant public transport operating cost to the city, but in
addition to this is the national subsidy for the IRT operations, which is approximately
R150 million per annum (City of Cape Town, 2012). National government also
subsidises passenger rail to the level of approximately R1 500 million per annum and
the private sector bus service (via the provincial government) to the level of
approximately R600 million per annum (PDG, 2011). Given the trend towards
devolution of the public transport function to the City of Cape Town, the implication
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is that the City will gain control over more of the public transport services and also
the current subsidies, However, there is a great risk to the City that the level of
national subsidy may decrease in future, but the city will continue to be obliged to
provide the services, with the result that either the fares will increase, or the
additional cost will have to be covered by the ratepayers.
The City of Cape Town is thus financially vulnerable, and to an increasing extent into
the future, to any factors that either increase the cost, or decrease the viability of
the public transport system. This issue is heightened further if a standardised fare
system is introduced that does not account for increased travel distances for certain
trips. For these reasons, the pattern of spatial growth should be of particular concern
to the City. To some extent this is being addressed through the City SSDF and the
densification policy, but this needs to be implemented and closely monitored to
mitigate the financial risks involved.
4.4
Sensitivity to household and economic growth rates
As part of the terms of reference, the study was required to investigate the effects of
variation in economic growth rates and household growth rates on municipal
financial viability in the context of alternative spatial growth patterns. A sensitivity
analysis was undertaken by varying the economic and household growth rates up
and down by 2% below the modelled figures. The results are presented in Table 11
below. Positive figures indicate where compaction is more beneficial (or sprawl is
worse), while negative figures indicate less difference between the two scenarios.
Table 11: Sensitivity analysis on economic and household growth rates
Econ+2%
Capital
Econ-2%
Demog +2%
Demog-2%
% reduction in capital through compaction
Cape Town
-1.7%
0.9%
2.2%
George
5.2%
-6.2%
-8.3%
6.5%
Stellenbosch
1.3%
-1.1%
0.1%
-0.1%
Saldanha
1.1%
-1.0%
-0.3%
0.4%
Overstrand
2.4%
-2.3%
-2.0%
2.2%
Theewaterskloof
29.1%
26.6%
26.0%
27.2%
Beaufort West
0.1%
-0.1%
0.8%
-2.1%
Operating
-4.0%
% improvement in net operating position through compaction
over 10 years
Cape Town
38%
-6%
-3%
314%
George
3%
-2%
0%
-2%
Stellenbosch
21%
-6%
-5%
31%
Saldanha
-25%
14%
-3%
8%
Overstrand
11%
-4%
-2%
6%
Theewaterskloof
75%
74%
75%
75%
Beaufort West
1%
-1%
0%
-2%
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The results show that positive economic growth decreases the net capital benefit of
compaction in Cape Town because the positive growth results in less demand for
low income housing. For all other municipalities positive economic growth increases
the capita benefit as infrastructure is rolled out more cheaply and sustainably.
Negative economic growth conversely decreases the benefit because less
infrastructure is required and thus the expenditure does not diverge as rapidly.
Positive demographic growth increases the capital benefit of compaction in Cape
Town because the demand for residential infrastructure on the periphery pushes the
capital costs up in the sprawl scenario. The municipalities that have high
demographic growth rates in the baseline scenarios (George, Overstrand and
Saldanha Bay) have the opposite trend where reduced demographic growth
decreases the capital benefit of compaction.
Certain municipalities, Theewaterskloof and George in particular, are highly sensitive
to these variations, while others like Beaufort West, Stellenbosch and Saldanha Bay
are relatively insensitive to variation. The reason for this is not clearly understood and
requires further investigation.
On the operating account, higher economic growth is expectedly more beneficial
to all municipalities, except for Saldanha Bay. This may be due to the fact that
Saldanha Bay receives much of its revenue from non-residential consumers, and it is
therefore less affected by the impacts of sprawl on the operating account. A lower
demographic growth of -2% lowers Cape Town’s average growth rate to below
zero. This has a dramatic impact on the net operating account, as the sprawl
scenario produces a negative net position, while the compact scenario shows a net
operating surplus. This is driven largely by the slower growth of low income
households that require subsidisation. This is a general trend, but with a less significant
impact for the other municipalities, except for George and Beaufort West, where the
impact is slightly reduced with low demographic growth.
4.5
The provincial financial sustainability picture
The total impact of current spatial growth patterns on municipal financial
sustainability in the Western Cape has been calculated by adding up the results
from the three aggregate models and the City of Cape Town model. The
methodology employed will invariably result in some inaccuracy because of the
variability in the municipalities within each category. This is particularly true of the B3
municipalities, of which there are 15 of varying topography, climatic region,
population and economic base. In contrast, there are only 3 B1 municipalities, with
the only one not modelled, Drakenstein, being very similar to Stellenbosch.
An analysis of the results should therefore focus on the overall provincial picture, and
not necessarily on the category results. The results are presented in Table 12, below.
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Table 12: Aggregate financial modelling results for the Western Cape
Measure
BAU
Compact
Difference
%
Improvement
Total capital investment required over 10 years (R million)
City of Cape Town
B1s
B2s
B3s
Total for Western Cape
106,877
88,095
18,782
18%
8,598
7,281
1,317
15%
14,824
12,688
2,136
14%
13,951
11,837
2,115
15%
144,250
119,900
24,350
17%
-15,556
-12,836
-2,720
17%
-2,628
-2,017
-611
23%
-2,372
-1,792
-580
24%
-3,394
-2,569
-825
24%
-23,950
-19,214
-4,737
20%
Sum of net operating position over 10 years
City of Cape Town
B1s
B2s
B3s
Total for Western Cape
The total capital cost of the current spatial growth patterns (BAU) over the next 10
years is projected to be R24 billion, or 17%, when compared with an alternative,
compact spatial form. The dominance of the City of Cape Town, and hence the
significance of spatial form in this municipality, is clear from the results, with 77% of
the savings coming from this municipality alone. The percentage savings in capital
cost decreases with decreasing municipal size.
On the operating account, the cumulative net position is shown to be negative for
all municipal categories, but this can be improved with densification. The
improvement in the province as a whole is estimated to be 20%, with the largest
possible improvement being seen in the smaller B2 and B3 municipalities, whose
operating accounts are highly sensitive to expenditure increases.
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5.
NON-FINANCIAL IMPACT ASSESSMENT
5.1
Overarching trends

Housing projects primarily located on the periphery

Urban edges delineated to accommodate peripheral development rather
than encouraging densification and brownfield development

Loss of agricultural land and scenic value consistent in most towns

Impacts on threatened biodiversity areas are greater in areas outside of the
urban edge through resort and estate development pressures in these prime
tourism areas

Locational proximity and accessibility to economic opportunities are not
considered and thus undermined

Integration of various income groups are not promoted due to opposing
peripheral developments, segregated by security and gated constructions
5.2
Case study results
5.2.1
Stellenbosch
Figure 21: Stellenbosch: future growth
The Stellenbosch municipality lies at the core of the Cape Winelands region –
currently the primary wine-growing region in the country. The Cape Winelands is an
area of fertile valleys high in scenic and heritage significance, of which its famous
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vineyards are earmarked for declaration as a World Heritage Site. The combination
of mountain scenery, rural landscapes, colonial architecture and wine routes make
this area a prime tourism destination of critical importance to the economy of the
region. However, these assets are currently under threat due to the fragmented
manner in which leapfrogging development is occurring. The relationship between
urban development and the surrounding scenic landscapes is one of the key issues
relating to the location of future urban growth for the municipality. Achieving a
balance between supporting growth and the preservation of these key functional
and scenic elements of the landscape are fundamental to local spatial planning
decision-making processes.
Through the delineation of Special Conservation & Heritage areas for towns such as
Stellenbosch and Franschhoek and specific provisions for these areas within the
respective zoning schemes, urban heritage has to a certain degree been well
conserved. Although the rural landscapes of Jonkershoek Valley, Idas Valley and
Dwars River Valley have also been designated as Heritage Overlay Zones, the
encroachment of high-end peripheral developments is threatening the scenic value
of these areas. The continuous demand for golf estates and other developments on
the periphery of town, such as Welgevonden and De Bosch, as well as the influx of
workers into low-income areas such as Kayamandi, are likely to continue this urban
development trend resulting in further loss of productive and scenic land.
According to the municipality, a proposal for a by-pass route from Technopark
through the Devon Valley region has been considered due to severe congestion
issues within the town. However, this is likely to precipitate the loss of high value
agricultural land including productive wine farms in the Devon Valley area. Future
residential development applications in outlying areas such as Vlottenburg and
Koelenhof could also lead to the extension of town along major routes – resulting in
the growing together of urban areas (See Figure 22 for new growth and expansion
areas).
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Figure 22: Stellenbosch: integration and accessibility
Figure 23: Stellenbosch: direction of growth and future expansion
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Current spatial growth patterns in Stellenbosch are not promoting integration and
accessibility. Although available vacant land within the urban core is limited,
developments are continuing to take place at opposing ends of town. New lowincome residential developments are proposed in locations ranging from at least
2km from the centre of town, in areas where minimal economic opportunities exist.
New higher income developments such as De Zalze, Welgevonden & Mt Simon
Estate are mostly situated on the edge of town, often as far as 3km from the central
business district, characterised by sterile residential development with minimal to no
diversification of socio-economic activities. Although high and low income housing
developments are often located in close proximity to each other (due to mostly
being situated in peripheral locations), social integration is nevertheless undermined
due to the secluded nature of gated security complex-type high-income estates
that are predominantly private vehicular-orientated. Physical segregation between
different income groups is consequently heightened while accessibility to economic
opportunities and social facilities are unceasingly minimised.
5.2.2
George
The town of George is situated along the N2 Garden Route between the Outeniqua
Mountains and the coast. This well-known tourism route traverses a series of estuaries,
lakes and forests of scenic value stretching along the coast from Mossel Bay to
Plettenberg Bay. The mountain passes of this region linking the coast with the interior
date back to the 1800s and are of major scenic and heritage significance of which
the Montagu and Robinson Pass are situated in close proximity to George.
Tourism based economic activity in George is supported by visitors travelling to these
surrounding scenic landscapes and taking part in the associated activities. However,
lifestyle resorts and golf estates have become exceedingly popular due to the
success of developments such as Fancourt and Herolds Bay Oubaai Golf Estate.
While these developments support the local tourism industry they bring exclusive and
often sterilising uses into areas of high scenic and biodiversity value. There is
continued demand for new lifestyle estates, which are more often than not
contradictory to the current development principles as set out in the George SDF.
These developments (as indicated on the maps below) include:

Lagoon bay - initially proposed as a golf estate but now an agricultural estate awaiting constitutional court approval due to major impacts on water supply

Skimmelskraal – a development consisting of the consolidation of properties
between 2 major rivers which, if approved, will ultimately lead to urban
development right through to Mosselbay

A non-residential application to the south of the N2 – for which the urban edge
has been adjusted to accommodate

Kraaibos estate which also required the extension of the urban edge
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Figure 24: George: integration and accessibility
Figure 25: George: direction of growth and future expansion
New residential development within the urban edge (as identified in the SDF) will
lead to some losses in critical biodiversity networks. However, the SDF indicates that
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growth will be directed to the south, based on the pull factors of the airport as well
as the extensive growth of low-income developments in these areas. This will lead to
encroachment onto biodiversity and coastal scenic areas, and although this is seen
as a process of urban restructuring, higher levels of segregation will result due to the
vast disparity between this new development region and current location of
economic and industrial activity.
At the same time new low-income residential development within the urban edge
continues to be located at least 2km away from current industrial economic activity,
with the commercial centre of George located even further away (at least 5km
from Thembalethu). Implications of these spatial disparities for the poorer
communities of George include excessive travel costs, limited access to higher order
social services such as hospitals, courts and tertiary education as well as the stifling
livelihood prospects.
Figure 26: George: integration and accessibility
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5.2.3
Saldanha Bay Vredenburg
Figure 27: Saldanha & Vredenburg: direction of growth and future expansion
Although development in the Saldanha Bay region (as proposed within the local
SDF) does not seem to pose major threats to current biodiversity or agricultural
activity, the containment of future development will be challenged due to the
expansion prospects associated with the Saldanha Industrial Development Zone
(IDZ). The majority of development pressures within the municipality are taking place
along the vulnerable coastline, where impacts of sprawl are not being considered
with regards to climate change risks or the scenic value of these landscapes. The
delineation of the coastal setback line is underway, but development continues to
be located in vulnerable coastal areas.
Within the urban centre of Saldanha, the SDF has allocated new residential
development in areas where minimal impact on ecological support networks will be
affected. The SDF notes that the determination of the final urban edge is subject to
site-specific visual and environmental assessments and detailed site development
plans. However, due to recent emphasis on the development of the Saldanha Bay
IDZ, future encroachment into the surrounding critical biodiversity area and
agricultural land must be anticipated.
The allocation of the new growth area to the south of Vredenburg, to support the
development of the Saldanha-Vredenburg corridor, has already led to loss of scenic
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landscapes as is the case with the West Coast Mall7. Further development will have
to be handled with particular care due to the location of a critical biodiversity
corridor situated between the two towns. These proposed developments must also
take place in a more integrated manner to avoid the segregation of residential
development with economic opportunity areas (as has been the case with the
southern expansion of Louwville). The location of new industries, such as the new IDZ
development and other primary commercial employment opportunities such as the
Vredenburg Mall have not been located in areas of optimal accessibility.
Figure 28: Saldanha & Vredenburg: integration and accessibility
The IDZ and surrounding industrial activity is located at least 2km from current
residential locations and while the SDF provides for lower income development to
the West of the IDZ, poorer communities are still situated at the opposite end of town
in Diazville. Similarly, the Vredenburg Mall, which has also impacted on scenic
landscapes, has fragmented the commercial and investment energy of the town, is
difficult and dangerous to access from Louwville and is situated more than 1km
away from the central business and services district reducing opportunities for linked
trips and reduced travel costs. This has implications not only on constrained travelling
patterns but also on the socio-economic viability of the region. Future integration of
The full impact and implications of this mall are assessed as part of the PSDF Specialist Study
on the Impact of Commercial and Office Decentralisation.
7
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these areas, with linkages to residential and social opportunities, will have to be
considered, while providing for diversified and accessible economic opportunities.
5.2.4
Greater Hermanus
Linear development patterns have resulted in the consolidation of Hawston,
Vermont, Onrus, Sandbaai and Hermanus to create a distinctive urban pattern
characterised by coastal settlements, historic fishing areas, harbours and the
modern addition of lifestyle estates along the northern edge of the coastal strip. The
greater Hermanus region is rich in biodiversity, boasting various nature reserves,
lagoons and estuaries. Although the urban edge for the greater Hermanus area
generally conforms to the conservation and protection of these areas, the local SDF
proposes future expansion of development to be situated within the private nature
reserve between Hawston and Vermont. This will not only have implications on the
ecological functioning of the area but will also negatively impact on tourismorientated activities in this area. The further expansion of Hawston and Fisherhaven
will also lead to loss of biodiversity, encroaching onto the sensitive boundary of the
Botriver Lagoon.
Figure 29: Greater Hermanus: direction of growth and future expansion
The Overstrand Municipality is unique in that the settlement is constrained into a
ribbon formation – enveloped by the coast to the south and the mountains to the
north. The SDF proclaims this by envisioning development to take place in the form
of a nodal-orientated coastal corridor. The SDF identifies a hierarchy of nodes and
settlements, with development patterns being clearly defined based on empirical
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
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determined growth potential and the principles of comparative advantage while
considering the prerequisite of sustainable development.
The SDF proposes concentrating development within a series of nodes along the
coastal ribbon. It is essential, given the ecological value of the coastal landscape
that these nodes are contained within clearly defined areas.
The distribution of services are currently concentrated around the Hermanus CBD
and industrial precinct, while new lower income housing developments proposed
are to be situated at least 2km away from these economic opportunities. Existing low
income settlements at Zwelihle and Hawston are not aligned with existing local
economic and industrial cores, posing challenges for accessibility with distances
exceeding 1km, and without access to subsidised public transport.
Higher income holiday resorts and housing estates are generally located in areas
that are not efficiently serviced by social facilities and retail activities.
Figure 30: Greater Hermanus: integration and accessibility
5.2.5
Caledon
The town of Caledon plays a key role as an agricultural centre within the Overberg
district. The town not only provides administrative services to the surrounding farm
inhabitants, but also provides recreational and commercial activities for locals and
visitors. The development of the casino has led to an influx of estate development
applications, the most recent being for the development of an 18-hole golf course
and 531 residential units to the east of the casino.
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Figure 31: Caledon: direction of growth and future expansion
A major mall has also been built on the edge of town along the N2, its positioning as
an edge of centre mall tied into the Main Street of the town supports integration
and linked trips, the hallmarks of successful and sustainable retail, in contrast to the
more inaccessible decentralised malls that are the norm in similar towns in the
Western Cape. The proposal for a flight park to be located within the Caledon
Nature Reserve (see Map for location) will have detrimental effects on this key
biodiversity area, and could also lead to further urban encroachment into the Klein
Swartberg Conservancy.
The spatial disparities between high income and middle to low income
developments are most noticeable in the case of Caledon, where RDP housing
continues to be built on the southern edge of town, buffered to the north by the
industrial area and the river constraining easy access to economic opportunities
such as the casino or commercial core. The SDF proposes future urban expansion
within this southern region, where development will be limited to low to middle
income residential activities and some industrial growth. This growth pattern will not
only impact on the productivity of surrounding agricultural areas, but will also
reinforce patterns of socio-spatial segregation within the urban footprint.
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
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Figure 32: Caledon: integration and accessibility
5.2.6
Beaufort West
The SDF proposes future growth in Beaufort West on the western and eastern edges
of town. The development to the east has been characterised as low-density middle
to high-income residential development, whereas the expansion of RDP housing will
take place in the western region. This not only further reinforces socio-spatial
segregation, but also limits the accessibility of key economic activities and
community facilities.
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Figure 33: Beaufort West: direction of growth & future expansion
Although these developments will not have significant impacts on the surrounding
rural landscape, possible future expansion into ecological support areas and
agricultural land could take place if containment and urban infill is not actively
promoted. The proposed alignment of the N1 by-pass along the western slopes of
town will encroach into the National Karoo Park. According to the Central Karoo IDP
(2011) approximately 7000 vehicles pass through Beaufort West per day during offpeak season and this figure doubles during peak season. The economic impact that
this by-pass will have on the town centre must therefore also be considered, as
accessibility to the associated opportunities will be undermined even further.
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Figure 34: Beaufort West: integration and accessibility
5.2.7
City of Cape Town
Cape Town’s Spatial Development Framework confirms the City’s commitment to a
more compact urban form and applies an urban edge to manage outward growth.
Consequentially the SDF priortises future growth in Cape Town within the urban
edge. However, it is inevitable that the urban edge will need to be amended when
land inside the edge is fully developed. Three possible directions for the long term
growth of the city have been investigated in 2009 Growth Options Study, namely: to
the north; to the north-east; and to the east, which are also areas of prime
agrcultural production and activity. Although the identification of land for this future
growth has taken into consideration protecting significant biodiversity, agricultural
and cultural landscapes, pressure on these critical resources are likely to persist.
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Figure 35: City of Cape Town: integration and accessibility
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Figure 36: City of Cape Town: direction of growth & future expansion
Maximising the city’s future economic growth is dependent on maintaining a close
relationship between new economic activities and further development of the
transportation network. It is also important that future growth is developed in a
manner that considers the optimisation of accessibility to econommic opportunities,
not only through diverse land uses but also through affordable transportation
options. Current locations proposed for future development, such as Wescape, are
not ideally aligned with the transportation network or the location of economic and
social services, and although these types of developments often provide for the
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integration of various activities, accessibility at a municipal scale has not
considered.
5.3
been
Provincial implications
The loss of biodiversity and agricultural land is more significant at a rural and
provincial scale, through the continuous conversion of productive land and
ecological corridors through gated communities and estates within these areas. A
key to the future viability of agriculture and food security will be the proximity of
production to markets and so any viable agricultural land close to settlements
should be considered as highly significant and protected accordingly. Provincial
policy cautions that authorisation of developments outside the urban edge brings
“... the province closer to irreparable harm” (Western Cape Provincial Government
2005a: 46).
A recent study by Spocter (2013), focussed on the Western Cape, identified 21
gated communities situated outside of the urban edge, of which 17 were
developed. These developments are mostly characterised as space-intensive
security estates that accommodate residential and amenity facilities such as golf,
equestrian, hiking or watersport activities. These exclusive, standalone
developments, which have transformed the land and land uses where they are
located, form distinctive islands of exclusive habitation in agricultural areas.
The study found that almost a quarter of these developments are situated in the
Stellenbosch region and one third in the George and Knysna region – which are also
known as primary tourist attraction areas due to the high scenic value of the rural
landscapes. The location of these gated developments is important in that it
impacts on various features in the rural landscape such as proximity to the coast,
natural or agricultural resources, as well as cultural and scenic landscapes (Spocter,
2013).
Sprawling growth patterns have different implications for rural versus urban areas. It is
important to distinguish between these landscapes when discussing provincial
impacts of sprawling growth patterns. In the urban context current growth patterns
tend to be located on the periphery of settlements. This undermines accessibility to
economic opportunities and social integration at a municipal and town scale.
Across the province, the affordability of public transport is a significant problem with
a high proportion of people unable to afford a bus or taxi fare and therefore
condemned to walking as their sole means of transport. When the location of
settlements for the poor is considered in this light, many communities are trapped in
space, unable to seek employment, establish a means of livelihood or access
education and training opportunities. If current settlement patterns persist, more
communities will be similarly trapped and condemned to poverty and
marginalisation.
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Figure 37: Distribution of Gated Developments located outside the urban edge per
local municipality (based on Spocter survey of 2010)
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
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6. DISCUSSION
An objective analysis has to conclude the space is not a primary driver of municipal
financial sustainability. The key drivers can be identified through a sensitivity analysis
and are: economic growth, demographic growth, the bulk price of electricity, and
the national subsidy framework. However, these are not variables that the
municipality has control over. On the other hand, the results presented above have
shown that spatial growth patterns do negatively impact on municipal finance and
can be controlled by the municipality in a significant way.
The motivation for this study arose out of the need to counteract short term decisionmaking with an assessment and appreciation of the longer term financial and nonfinancial impacts of the current spatial growth patterns. In order to make this link,
one needs to appreciate the various forces that are at play that drive the status
quo, how these impact on municipal financial sustainability, and what can be done
to address the situation. These drivers can be summarised to be:
Land on the periphery is cheap
This driver is better understood when one appreciates the capital constraint on
municipalities illustrated above, but also relates to the fixed housing subsidy
quantum and the profit motive of the private sector. However, this study has shown
that the total capital cost is greater than the land itself, but is not felt because it is
not borne by the same authority. Municipalities are often the bearers of this
additional capital cost, with the modelling showing that a sprawling spatial pattern
can add between 13% and 24% to the municipal capital budget over 10 years. For
example, land and housing may be purchased through the national housing
subsidy, but bulk and connector infrastructure cost for low income housing must be
borne by the municipality. Although in theory this is covered by the MIG grant, or the
USDG in the case of Cape Town, the municipality must still prioritise this limited
resource between the competing demands for infrastructure investment. A similar
situation exists where private development takes place, although in theory the bulk
and connector costs are provided directly or indirectly through a development
charge to cover this cost. However, development charges have been applied
inconsistently and inadequately in municipalities and are not recovering the full cost
of this infrastructure. Current policy initiatives are underway at national, provincial
and local level to revise and enforce development charge, which should result in
the full costs of peripheral development being borne by the developer (whether
public or private).
Operating cost burden is externalised.
The findings of the study show the current growth pattern places an operating cost
burden on the municipality through the provision of more costly services. This has the
potential to impact the cumulative net operating position by 3 to 21%. This is usually
not matched by an equivalent match in property rate or tariff increases, as these
are politically contested charges. The modelling suggests that in order for the BAU
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
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situation to regain financial sustainability, rates and tariff increases of up to 4% above
inflation would be required. If these increases were approved, there would be a
degree of inequity in that the higher average rate or tariff to all users would be used
to fund the additional cost created by peripheral development. As a spatially
differentiated tariff is not administratively viable or desirable, the two choices for the
municipality in this regard are to approve higher than inflation rate and tariff
increases to fund sprawling growth, or not to approve development that increases
the average cost of service provision.
It is not only the municipality that faces an increased operating cost burden. A
general finding from the non-financial spatial assessment of integration and
accessibility is that proximity and accessibility to economic opportunities are not
considered and thus undermined, resulting in a transport cost impact on households,
and poor households in particular. This impact is even greater, in percentage terms,
than the impact on municipalities. The indirect link to municipal sustainability is that
households that spend large proportion of their income on transport are less likely to
be able to afford municipal services.
The transport impact is exacerbated in larger cities, where travel distances are
larger, but this can be mitigated to some extent by the provision of public transport.
Public transport provision, and associated spatial planning and urban design that
promote densification and accessibility, has great potential to improve the cost
efficiency of cities. However, this requires significant amounts of up-front capital
investment. Fortunately this capital ‘leap of faith’ has been catalysed by national
government through the Public Transport Infrastructure Grant.
However, operating subsidies are not mode neutral and are also poorly targeted at
present. With the devolution of the public transport function in Cape Town, and the
introduction of public transport networks in George and potentially Stellenbosch,
these municipalities will be more heavily impacted if the current spatial growth
patterns are allowed to persist. The significant operating risk of adequate fare
recovery needs to be mitigated through reduction of cost and maximisation of
ridership. This is directly related to densification and planning of public transport
routes along dense activity corridors.
Environmental impact is not quantified
In addition to operating costs, environmental costs are also externalised. These
externalities are not captured in the short term capital decisions that drive spatial
form.
They may be noted at development application stage, through
environmental impact assessments, traffic impact assessments or other studies, but
are not easily quantifiable. Although many of these impacts need to be mitigated at
the construction stage, the long term impacts cannot be fully captured in the
development cost. However, the current debates around carbon taxation may lead
to some monetary payment for increasing carbon footprint through development. It
is not inconceivable that municipalities may be held accountable for their carbon
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footprint and will therefore be financially incentivised to consider the environmental
impact more closely.
Land on the periphery is available
Land on the periphery of towns is attractive to develop because it is vacant and of
sufficient size to promote economies of scale. But just because land is available,
should it be developed? This question needs to be answered by considering the
multiple non-financial impacts are not adequately factored into the development
planning decision-making process.
The non-financial impact assessment has illustrated that the loss of agricultural land
and scenic value consistent in most towns. The impacts on threatened biodiversity
areas are greater in areas outside of the urban edge through resort and estate
development pressures in these prime tourism areas. How does one quantify the
heritage and cultural value of a landscape? When non-financial factors are
weighed up against market forces and are deemed to be more important than
development, then there is a clear and definite role for land use regulation – most
importantly the enforcement of the urban edge.
Development on the periphery is easier
Developers experience more bureaucratic delays in developing infill or brownfield
sites than greenfield peripheral development. Objections to the development and
NIMBYism are also more likely if development occurs in built-up areas. These
concerns need to be weighed up against the many negative impacts of greenfield
development. Specifically, the case studies revealed a clear trend that social
integration of various income groups are not promoted due to opposing peripheral
developments, segregated by security and gated constructions. Again the interest
of the developer (ease of development) needs to be balanced against broader
social interests of integration, cohesion, safety and security.
7. CONCLUSION
What do current spatial growth patterns mean for municipal financial sustainability?
The analysis of municipal finances in the Western Cape, through the lens of the
seven case studies, has shown that municipal finances are highly vulnerable and
that interventions will have to be undertaken to sustain the financial viability of
municipalities, even without further spatial growth.
With substantial limitations on the ability to increase municipal revenues, the
implication of continuing urban sprawl in the province is that both capital and
operating costs for municipalities will increase, without an adequate increase in
revenues to cover these costs. Municipal financial viability will deteriorate at an ever
increasing rate over time, as the average cost of providing services increases.
.
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Even more significant than the impact on municipal financial viability are the nonfinancial impacts on the environment and the urban poor. While the municipal cost
implications of sprawl may be most obvious in larger towns and the City of Cape
Town, the greater impacts in smaller municipalities may be the loss of biodiversity,
cultural, scenic and heritage landscapes.
Financial efficiency can be ensured in relation to the provision
of infrastructure and
all other facilities and services through compact and walkable urban forms.
Compact settlements save people time and money as travel distances are shorter
and cheaper and opportunities, public and private facilities and institutions are
more accessible where thresholds are also enough to support them.
It is evident that the organization of economic activities and infrastructure in space
fundamentally impacts on the viability of these activities, people’s access to
opportunity and the natural environment. Continuing the currently delivery model of
isolated housing projects on the periphery of settlements will thus exacerbate the
financial sustainability of municipalities, where the impact of this separation of social
groups through peripheral development not only fragments our urban landscapes,
but also ultimately undermines the progression towards more sustainable livelihood
opportunities.
What are the implications for the PSDF?
This study has provided quantitative evidence that the current spatial patterns are
not sustainable for municipalities and are detrimental to the environment and the
urban poor. It therefore strongly motivates that the principles of densification,
compaction and accessibility contained in the PSDF be implemented. The financial
and non-financial trade-offs that are usually implicit in spatial planning decisions
have been made explicit.
While the results may not be accurate enough for decision-making purposes around
specific developments in individual municipalities, this study at least raises awareness
of all the factors that need to be considered for more prudent long-term decisionmaking and proposes a methodology for calculating the impact on municipal
finances.
The PSDF provides the principles and tools that are required to counteract the
negative current spatial growth trends in the Western Cape. The PSDF must a) raise
awareness regarding the longer term and non-financial factors that need to be
considered in spatial decision-making b) protect biodiversity, agricultural, scenic
and heritage areas, whose value is often not quantifiable or tangible, against purely
market forces, c) represent the interest of marginalised citizens who would otherwise
be financially and socially prejudiced through unregulated development.
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8.
REFERENCES
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Development, Sprawl and Infrastructure Costs Briefing Paper 9 in The Best Stimulus for
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Bertaud, A (2009) Note on spatial issues in Urban South Africa. Unpublished research
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Available
at:
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September 2013.
Burchell, R., et al. “The Costs of Sprawl—2000.” Transportation Research Board.
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Central Karoo District Municipality (CKDM) (2011). IDP Review - Draft for the Central
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City of Cape Town Municipality (2012). Cape Town Spatial Development Framework
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City of Cape Town (2012) 2012 MyCiTi Business Plan: Phases 1A, 1B and N2 Express of
Cape Town’s MyCiTi IRT system. September 2012. Unpublished report submitted to
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at:
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De Noronha Vaz, E.; Cabral, P.; Caetano, M.; Nijkamp, P.; Painho, M. (2012). Urban
heritage endangerment at the interface of future cities and past heritage: A spatial
vulnerability assessment. Habitat International 36(2), 287-294.
Department of Environmental Affairs and Development Planning (DEADP) (2013).
Environmental Management Framework for the Greater Saldanha Bay Area - Draft
Environmental Management Framework February 2013. Published In Partnership with
the National Department Of Environmental Affairs.
Department of Environmental Affairs and Tourism (2008). A National Framework for
Sustainable Development in South Africa.
Development Bank of Southern Africa (2011) The Municipal Infrastructure Investment
Framework (MIIF 7) for South Africa: Round 7 (2009 – 2010): A capital investment
perspective. DBSA, Midrand.
Eberhard, W., 2009. Sprawl 101: How Sprawl Hurts Us All. EBERHARD ARCHITECTS LLC,
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Ewing, R, R Pendall and D Chen (2002) Measuring Sprawl and its Impact. Smart
Growth America, Washington DC.
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Public Hearings. Unpublished report produced for the Local Government Fiscal
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George Municipality (2013). Spatial Development Framework – March 2013 Final
Draft. Prepared by George Municipality Planning Department, assisted by Setplan in
association with ODA.
IBI Group., 2009. The implications of alternative growth patterns on infrastructure
costs: City of Calgary
Lemon, A (1991) The apartheid city in Lemon (Ed) Homes Apart: South Africa’s
Segregated Cities, Paul Chapman Publishing, London, pp 1-25.
Maree, K.S. and Vromans, D.C. 2010. The Biodiversity Sector Plan for the Saldanha
Bay, Bergrivier, Cederberg and Matzikama Municipalities: Supporting land-use
planning and decision-making in Critical Biodiversity Areas and Ecological Support
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Planning Project. Kirstenbosch.
McElfish, J. M. (2007). Ten Things Wrong With Sprawl. Environmental Law Institute –
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Transport and Human Settlements in the Submission for the 2012/13 Division of
Revenue Technical Report. Financial and Fiscal Commission
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November 2011. The Presidency, Pretoria.
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Smart Growth America., 2013. Building Better Budgets: A National Examination of the
Fiscal Smart Growth Development. Washington
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9.
APPENDICES
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APPENDIX A: CASE STUDY MUNICIPALITY CONTACTS
Table 13: George Municipality
Name
Position
Stiaan Carstens
Directorate of Planning & Human
Settlements
Leon Wallace and Le-anne Maksella
Finance Department
Johan Moller
Electrical
Thys de Beer
Housing
Marius Swart
Civil Engineering Services
Wessel Roberston
Solid Waste
Table 14: Theewaterskloof Municipality
Name
Position
Elizabeth de Kock
Manager: Town planning
Lester Parnell
Technical Services
Roseline Myburgh
Technical Officer: Wastewater
Juzhel Colyn
Finance
Table 15: Overstrand Municipality
Name
Position
Riaan Kuchar
Senior Manager : Town Planning &
Property Administration Overstrand
Santie Reyneke-Naude
Director: Finance
Hanre Blignaut
Technical Services
Mike Bartman
Stephen Muller
Deputy Director: Operational
Services, Directorate: Community
Services
Director of Infrastructure and
Planning
Table 16: Saldanha Bay Municipality
Name
Position
Lindsey Gaffley
Spatial Planning
Relton van Neel
Manager: Human Settlements
Junius Minnaar
Water
Jeremy Jarvis
Roads
Johan du Plessis
Electricity
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Rene Toesie
Waste
Stefan Vorster
CFO
Table 17: Beaufort West Municipality
Name
Position
Jafta Booysen
Finance
Mr. Lewellyn Lakay
Department of Corporate Services
Roelof Van Staden
Electricity Services
Louw Smit
Director: Engineering Services
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APPENDIX B: SCENARIO FACTORS
Capital Cost Factors
Housing
Factor
Current
Dense
Rationale
New low income housing
% single formal
40%
10%
% medium density
10%
25%
% incremental
50%
65%
0%
20%
Estimated figure to represent the general trend
of densification
50%
Estimated figure based on policy shift to
encourage in situ upgrading, assuming that
50% of settlements cannot be upgraded in situ
Estimated percentages based on a policy shift
to a more diversified housing delivery
programme, i.e. more serviced sites and higher
density units and less single formal units
New high income housing
% medium density
% in-situ upgrading of informal
settlements
10%
Water Supply
Factor
Change in connector unit cost
% of B&C cost that is connector
Current
1
14%
Dense
Rationale
0.2
Estimated factor based on greater proportion
of infill development requiring less connector
infrastructure. Does not account for increased
costs of retro-fitting brownfields sites.
14%
Based on DCoG Municipal Summary Guide
Costing Workbook - value of distribution
pipelines as % of overall cost. Assumed
constant for both cases.
Sanitation
Factor
Change in connector unit cost
% of B&C cost that is connector
Current
1
27%
Dense
Rationale
0.2
Estimated factor based on greater proportion
of infill development requiring less connector
infrastructure. Does not account for increased
costs of retro-fitting brownfields sites.
27%
Based on DCoG Municipal Summary Guide
Costing Workbook - value of distribution
pipelines as % of overall cost. Assumed
constant for both cases.
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Electricity
Factor
Change in connector unit cost
Current
1
Dense
0.2
Rationale
Estimated factor based on greater proportion
of infill development requiring less connector
infrastructure. Does not account for increased
costs of retro-fitting brownfields sites.
Solid Waste
Factor
Increase in % waste through
transfer stations
Current
20%
Dense
0%
Rationale
Estimated figure given that expansion will
lead to increased waste transfer
Roads and stormwater
Factor
Current
Dense
Rationale
Unit length increase as % of CU growth
District distributor
10%
7%
From Calgary study (IBI Group, 2009)
District collector
25%
20%
From Calgary study (IBI Group, 2009)
Public Services
Factor
Current
Dense
Rationale
Increase in community Services,
libraries & health facilities
1.5
0.5
Estimated figures based on the assumption
that increased sprawl will increase facilities
that have distance thresholds, while
compaction means that existing facilities
can be more efficiently utilised.
Increase in sports & recreation
and public safety facilities
1.5
0.5
As above, but these facilities are less
affected by space than those above
Operating Cost Factors
Water Supply
Factor
Increase in average connector
network operating cost
Current
Dense
Rationale
50%
-50%
Estimated figures based on the assumption
that sprawl results in increasing average unit
operating costs (more dispersed networks),
while densification reduces the average
cost.
10%
10%
Estimated figures
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
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Sanitation
Factor
Increase in average connector
network op cost
Current
Dense
Rationale
50%
-50%
Estimated figures based on the assumption
that sprawl results in increasing average unit
operating costs (more dispersed networks),
while densification reduces the average
cost.
15%
15%
Estimated figures
Electricity
Factor
Current
Dense
Increase in average distribution
network op cost
Rationale
No significant difference
Solid Waste
Factor
Increase in average collection
costs
Current
25%
Dense
-10%
Rationale
Increased distances mean more op costs
(fuel, vehicle maintenance, staff time).
Increase in transfer station op cost
automatically accounted for if more waste
is passing through
Roads and stormwater
Operating cost of additional road length is automatically accounted for.
Public Services
Factor
Increase in average operating
costs
Current
25%
Dense
-10%
Rationale
The need for more facilities means more
staff and other op costs. Mobile services
may be required for libraries and health,
and this would be the equivalent of more
staff at fixed facilities.
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
69
Transport
Factor
BAU
Dense
Private
3%
-5%
Rail
-1%
3%
Bus
12%
17%
Taxi
0%
-5%
Private
7%
-5%
Rail
1%
0%
Bus
3%
10%
Taxi
0%
-5%
Change in modal Splits for City of Cape Town
Change in modal Splits for all other municipalities
Increase in average trip length over 10 years
Private
20%
-5%
Rail
20%
-5%
Bus
20%
-5%
Taxi
20%
-5%
Walk
10%
-5%
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Municipal Financial Sustainability of Current Spatial Patterns (Draft - September 2013)
70