1. 1 Urban Settlements Development Grant USDG Policy Framework Workshop 6 April 2011

2. 2 PRESENTATION OUTLINE USDG POLICY FRAMEWORK 1. Built Environment Context 2. Approach & Objectives 3. Built Env. Performance Plan & Intermediate Results Indicators 4. Eligibility & Participation 5. Funding & Financial Arrangements 6. Institutional Arrangements DISCUSSION ON USDG POLICY FRAMEWORK WAY FORWARD 1. Assessment and Evaluation Process USDG Panel National Treasury Process 2. Payment Schedule

3. 3 TERMINOLOGY IN RESPECT OF USDG Human Settlements Urban Settlements Built Environment Infrastructure Development Built Environment Performance Plan – BEPP

4. 4 HUMAN SETTLEMENTS Human Settlements - well managed entities in which economic growth and social development are in balance with the carrying capacity of the natural systems on which they depend for their existence and result in sustainable development, wealth creation and poverty alleviation and equity (Housing Code). There is a continuum of settlements from rural to urban. The USDG relates to urban human settlements.

5. 5 URBAN SETTLEMENTS 9.City of Matlosana 10.Drakenstein 11.Emalahleni 12.George 13.Govan Mbeki 14.Mafikeng 15.Madibeng 16.Matjhabeng 17.Mbombela 18.Mogale 19.City 20.Msunduzi 21.Newcastle / Umtshezi 22.Polokwane 23.Potchefstroom 24.Rustenburg 25.Stellenbosch 26.Sol Plaatjie 27.Steve Tshwete 28.uMhlathuze 8 Metro’s +

6. 6 BUILT ENVIRONEMNT Built Environment – refers to the human production of space within the context of urban settlements including infrastructure that supports services required for quality living, both from the social and economic perspectives. The built environment includes infrastructure services, housing, public transport and land use management practices. It also includes community facilities, such as sports fields, arts and recreational facilities, community halls and other social infrastructure that are as critical to building resilient, cohesive, safe and healthy communities.

7. 7 INFRASTRUCTURE DEVELOPMENT Infrastructure Development includes addressing the development of new services, upgrading, rehabilitation, and where necessary replacement. While it is a direct response to the constitutional rights of access to basic services, it also provides for economic growth. It is a key source of revenue for Cities % Towns.

8. 8 BUILT ENV. PERFORMANCE PLAN - BEPP Built Environment Performance Plan – refers to the plan that a city compiles and submits to national government in respect of the USDG procedure, the content of which is focused on the approach of the city in managing its built environment to contribute to the national outcome of integrated infrastructure planning and performance.

9. 9 “ Sustainable Human Settlements and Improved the Quality of Household Life” Consolidation of funding a key issue for realisation of the human settlements mandate The provision of Bulk and Link Infrastructure continues to be a matter plaguing the optimum performance of the human settlements sector 1. BUILT ENVIRONMENT CONTEXT

10. 10 MIG Cities was established to promote integrated planning and funding of the urban built environment agenda in the large cities. Cabinet decision in December 2010 that USDG be established, and funding be allocated from the HSDG and the disestablished MIG Cities grant. USDG intends to integrate the release of well located land to the function of planning and funding of the built environment. 1. BUILT ENVIRONMENT CONTEXT

11. 11 “Additional” R 21 billion for human settlements function over the MTEF allocated directly to Cities & Towns USDG will augment and support grant allocations from provinces to municipalities under the HSDG; it must also support integration of HSDG projects into mainstream city development. Should compel improvement in development planning and also improve inter-governmental co-ordination (all 3 spheres) of development. 2. INTENT OF USDG

12. 12 USDG aims to encourage cities to be proactive developers of infrastructure by mobilising domestic capital while at the same time addressing and re-dressing the location of development. It should compel Cities and Towns to manage their capital expenditures in an integrated manner, across all services in good locations and covering the lifespan of projects (development, M&R, upgrading, rehabilitation, replacement). 2. INTENT OF USDG

13. 13 USDG should address PRO POOR BIAS INCLUDING ECONOMIC GROWTH 1.economic growth, and at the same time 2.inequality and poverty alleviation and eradication Not either or, but both: USDG focus should be biased towards lowering the costs incurred by poorer households in accessing serviced urban land with secure tenure. 2. INTENT OF USDG

14. 14 3. GUIDING PRINCIPLES 1.Cities & Towns to lead management of Built Environment 2.Recognise & support capacity in Cities & Towns 3.Reflect balance between poverty alleviation and economic growth in capital expenditure 4.National fiscal support must provide an outcomes-focused supplement to capital budgets of Cities & Towns 5.Cities & Towns must account for performance of built environment

15. 15 BEPP SUBMISSION FORMAT Human Settlements Development Plan to be addendum to BEPP Submission for alignment and integration of Housing / Human Settlements into mainstream city development – Spatial integration – Increase densities – Development of Public Transport – Location of land, Zoning and Land Use as tools

16. 16 3. Composition of the BEPP Panel The BEPP Panel will consist of the members currently serving on the Human Settlement Basic Services Task Team and others as per the TOR (Annexure C) 6.Department of Water 7.Department of Energy 8.Department of Transport 9.Department of Environment 10.National Treasury 1.National Dept of Human Settlements, 2.Dept of Cooperative Governance 3.National Dept of Sports and Recreation 4.Respective Prov Dept’s of Human Settlements 5.Respective Prov Dept’s of Co-operative Governance + Two to three experts selected by consensus of the Panel

17. 17 3. Assessment Process The BEPP Panel will receive the first drafts of the USDG BEPP’s submitted by the 8 Metro’s seven (7) days prior to the assessment thereof. In addition the review of the 1 st drafts will take place as part of the Annual Budget Reviews conducted by National Treasury with delegated municipalities (Benchmarking) Evaluation criteria (Intermediate Results Indicators) will be used for assessment

18. 18 3. Evaluation Criteria Intermediate Results Indicators 1.DORA or 1.draft for discussion today

19. 19 3. BEPP Submission dates & procedures First Draft BEP  Submission of 1 st draft  Consultation with Metro’s  Panel workshop and review plans  Alignment of Benchmarking for budgets and evaluation for USDG. Second Draft BEP  Submission of 2 nd draft  Panel review plans Final BEP  Submission of final BEP Dates Submit by 31 March 6 April 2011 18 to 21 April 2011 4 to 9 May 2011 23 may 2011 6 to 15 June 2011 24 June 2011

20. 20 4. Eligibility & Participation 8 Cities & 20 Towns Alignment with Human Settlements Accreditation AND demands facing urban settlements Meet USDG grant conditions – DORA Reporting and M&E – Section 71 Reports (amended)

21. 21 Report on performance against the targets provided for in the BEPP Intermediate Results Indicators and in conjunction with the reporting requirements of MFMA Section 71: “The accounting officer of a municipality must by no later than 10 working days after the end of each month submit to the mayor of the municipality and the relevant provincial treasury a statement in prescribed format on the state of the municipality’s budget reflecting the following particulars for that month and for the financial year up to the end of that month” and Section 72: “The accounting officer of a municipality must by 25 January of each year—(a) assess the performance of the municipality during the first half of the financial year, submit a report on such assessment to—(i) the mayor of the municipality; (ii) the National Treasury; and (iii) the relevant provincial treasury” Reporting Requirements, M & E

22. 22 Reporting Requirements, M & E Municipalities must comply with reporting requirements as per DORA Section 9 (1) & Section 11 (2) The flow of the first instalment depends on the submission and approval of BEPP including agreed Intermediate Results Indicators; The flow of the 2 nd, 3 rd instalments will be conditional upon submission and approval of signed-off quarterly reports

23. 23 5. RATIONALISATION OF GRANTS Rationalisation of various sector specific funding streams to promote more effective planning and implementation of the built environment by Cities and Towns 1. Water Services Projects 2. Community Based Public Works Programme 3. Local Economic Development Fund 4. Urban Transport Fund 5. Building for Sport and Recreation Programme MIG-Cities USDG + ? NDPG; INEP MIG

24. 24 Grant purpose: Supplements the capital revenues of selected Cities & Towns to support the national human settlements development outcome – Sustainable Human Settlements & Improved Quality of Household Life Flow of Funds Schedule 4 – allocation to municipalities to supplement the funding of functions from municipal budgetsSchedule 4 – allocation to municipalities to supplement the funding of functions from municipal budgets Directly from NDHS to Cities & TownsDirectly from NDHS to Cities & Towns 3 payments as per Payment Schedule3 payments as per Payment Schedule (HSDG continues to flow as normal until Level 3 Accreditation) 5. USDG GRANT FRAMEWORK

25. 25 Delivery Agreements (USDG specific) will be political commitment to reflect Grant Framework / DORA. Capacity Support from National (and World Bank) provided with funding Link to institutionalised budgeting and reporting process convened by National Treasury for all Departments 6. INSTITUTIONAL ARRANGEMENTS

26. 26 DISCUSSION

27. 27 WAY FORWARD Assessment and Evaluation Process – USDG Panel, May 2011 – National Treasury Process – Benchmarking, May 2011 Payment Schedule – First payment 7 July 2011 – Second payment11 Nov 2011 – Third payment17 Feb 2012

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