ANNEXURE TO ITEM C - Future Cape Townfuturecapetown.com/wp-content/uploads/2014/02/C...annexure a...

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ANNEXURE A

ANNEXURE TO ITEM C 48/01/14

REPORT To EXECUTIVE MAYOR

CONFIDENTIAL mY Df WE fDWIf IISlJ£U SASOAN ISTAD liAPSTAI

1. ITEM NUMBER: To be Inselted by Executive Support

2. SUBJECT

REVIEW IN TERMS OF SECTION 78 OF THE SYSTEMS ACT: CAPE TOWN STADIUM

ONDERWERP (LSUC0683)

HERSIENING INGEVOLGE ARTIKEL 78 VAN DIE WET OP MUNISIPALE STELSELS: KAAPSTAD-STADION

ISIHLOKO (LSUC0683)

UPHENGULULO NGOKUNGQINELANA NECANDELO 78 NOMTHETHO OLAWULA IINKQUBO: ISTEDIYAM SASEKAPA

3. STRATEGIC INTENT

r8l - Opportunity City • Strategic objectives 1.1 and 1.5

- Specific program area 1.1:

4. PURPOSE

o 1.1(b) - Specific program area 1.5:

o 1.5(a)

This report seeks authority to commence with a review in terms of Section 78(1) of the Local Government: Municipal Systems Act to determine a sustainable and a suitable management model for the Cape Town Stadium.

5. FOR DECISiON BY

Executive Mayor

Delegation 10.9: To authorize an assessment in terms of Section 78( 1) of the Systems Act when the municipality has to decide on a mechanism for the provision of municipal services.

Sect"" 78 Cape Town Stadium as at13 September 2012 [August 2012)

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... 6. EXECUTIVE SUMMARY

In terms of Section 77 of the Systems Act, the City must review and decide on the appropriate mechanism to provide a municipal service if an existing service is to be significantly upgraded, extended or improved. The City wishes to assess different management models for the Cape Town Stadium. In order to achieve this an assessment in terms of Section 78(1) needs to be undertaken.

7. RECOMMENDATIONS

Delegated: for decision by the Executive Mayor:

a) Recommended that a Section 78(1) assessment be undertaken in order to determine an appropriate mechanism to provide a management model for the Stadium

b) The Acting Director: Cape Town Stadium & Green Point Park be authorised to conduct the assessment.

AANBEVELINGS

Gedelegeer: vir besluitneming deur die uitvoerende burgemeester:

a) Aanbeveel dat 'n artikel 78(1)-assessering onderneem word om 'n gepaste meganisme vir die verskaffing van 'n bestuursmodel vir die stadion te bepaal

b) Die waarnemende direkteur: Kaapstad-stadion en Groenpunt-park gemagtig word om die assessering te doen.

ISINDULULO

Sigunyazisiwe: isiGgibo sesikaSodolophu wesiGgeba:

a) Kundululwe ukuba makwenziwe uvavanyo ngokweCandelo 78(1) ukwenzela ukufumanisa indlela efanelekileyo yesicwangciso solawulo IweStediyam

b) Makugunyaziswe Umlawuli oBambeleyo woLawulo IweStediyam saseKapa nePaki yase-Green Point ukuba enze uvavanyo.

8. DISCUSSION/CONTENTS

This is the body of the report in which the background and purpose is expanded on. The following sub-headings should be used:

8.1. Constitutjonal and Policy Implications

The Cape Town Stadium was commissioned in December 2009. The City advertised inviting companies to tender for the management of the Cape Town Stadium.

SSOC was appointed in February 2009 to manage the Cape Town Stadium on a Management Contract for the duration of the 2010 FIFA World Cup. The Management Contract's end date was 31 October 2010,

Sect~n 78 Cape Town Sladium as at 13 September 2012 [August 20121

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after which SSOC was to lease the Cape Town Stadium from the City of Cape Town.

Due to a number of reasons (set out in the report that served before Council on 27 October 2010), SSOC was not prepared to enter into the envisaged Lease Agreement.

Council resolved at its meeting on 31 October 2010 inter alia as follows:

"CIC 11/10/10 CAPE TOWN STADIUM AND GREEN POINT URBAN PARK : REVIEW AND RESCIND RESOLUTION TO ENTER INTO LONG TERM LEASE AND PROPOSED OPERATOR EXIT STRATEGY

RESOLVED that:

(c) subject an exit agreement being signed between the City and SSOC, the Council resolution of 3 December 2008 under item C21/12/08 for the City to enter into a 30 year lease with the SSOC, be reviewed and rescinded

(g) the City Manager's intention to employ, in terms of the City's Supply Chain Management Policy, the services of Business Analysts to review the Stadium business plan and business opportunities, be supported

As per resolution (g), the City appointed IRM (International Risk Mitigation Consultants) to research and develop a sustainable and suitable management model for the Cape Town Stadium and Green Point Park.

This resulted in 3 models that were found to be finanCially sustainable and with an acceptable risk profile:

(a) Model 1

• City as Operator • With Anchor Tenants

(b) Model5A

• Public Private Partnership • Including Anchor Tenants

(c) Model5B

• Municipal Entity • Including Anchor Tenants

SectOn 78 Cape Town Stadium as al13 Seplember 2012 {August 2012J

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... To further assess and conclude this process of determining a sustainable long term management model, it is necessary to do this in terms of Section 78( 1) of the Municipal Systems Act.

8.2. Sustainabilitv Implications

Does the activity in this report have any sustainability implications for the City?

8.3. Legal Implications

No 0 Yes I8l

In terms of Section 77 of the Systems Act, the City must review and decide on the appropriate mechanism to provide a municipal service if an existing service is to be significantly upgraded, extended or improved.

To achieve this, an assessment in terms of Section 78(1) of the Systems Act must be undertaken.

The exercise will include an assessment of:

• Direct and indirect costs and benefits associated with the project if the service is provided through an intemal mechanism;

• The City's capacity and potential future capacity to furnish the skills expertise and resources necessary for the provision of the service through and internal mechanism;

• The extent to which the re-organisation of the City's administration could be utilised;

• The likely impact on devebpment, job creation and employment patterns in the municipality;

• The views of organised labour, and

• Developing trends.

At the conclusion of this initial assessment, Council must either decide on the appropriate internal mechanism or explore the possibility of providing the service through an external mechanism.

8.4. Staff Implications

Does your report impact on staff resources, budget, grading, remuneration, allowances, designation, job description, location or your organisational structure?

No 0

Yes I8l

Pending the outcome of this process, staff could be displaced.

Sectiol178 Cape Town Stadium as at t3 September 2012 {August 2012\

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8.5. Risk Implications

Detailed Risk Implications have been submitted directly to the Chief Risk Officer.

8.6. Other Services Consulted

City of Cape Town Administration Shareholders and Contract Management: (Mr R. Wootton - 0214002701)

City of Cape Town Administration Finance: Budgets: (Mr. Johan Steyl- 021 4002070)

Tygerberg Administration Transportation & Traffic: (Mr R Eathen - 021 4872354)

FOR FURTHER DETAILS CONTACT:

NAME CONTACT NUMBERS E-MAIL ADDRESS DIRECTORATE SIGNATURE: DIRECTOR

EXECUnv MARKETING Mr Anton Groenewald

'/

Mr Lesley de Reuck 0214170103/04 Leslev.deReuckl!llcaoetown.OOv.za Tourism, Events & Marketitlg

-f c/

Comment:

Section 78 Cape Town Stadium as al13 September 2012 (August 20121

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LEGAL COMPLIANCE

NAME

TEL

DATE I ) - 12" -12

MAYORAL COMMITTEE MEMBER (Author to obtain signature before submission to Executive Support)

NAME £&cY/ f~,yt?YtJdp DATE 17/1!J7/t(J/2

~ ,

AcnrJG- EXE UTIVE MAYOR

DATE

Section 78 Cape Town Sladium asat t3 September 2012 (August 2012)

[;!( REPORT COMPLIANT WITH THE PROVISIONS OF COUNCIL'S DELEGATIONS, POLICIES, BY-LAws AND !lll LEGISLATION RELATING TO THE MA TIER

UNDER CONSIDERATION.

o NON-CoMPLIANT

Comment:

.----Ct'-.;ert"l~f''''e'"'d---;;a;-;;s:-rle=:g'''a''-II'''y;-;;c;-;;o:=m""'p'''l"',a:=nT.t:-- '/. yv)

Based on the contents of the report

COMMENT:

~APPROVED C3 NOTED

o REFUSEO

o REFERRED BAcK

COMMENT:

016

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REPORT TO EXECUTIVE MAYOR em OF WE mIIllSllEIP SAS(UP' I STAD lA'PSTAD

1 ITEM NUMBER: C 17107/13

2 RECORD OF PUBLIC COMMENTARY SUBMITTED TO THE CITY OF CAPE TOWN ON THE CAPE TOWN STADIUM BUSINESS PLAN

LSUD2617

The Executive Director elaborated on the matter in detail.

Arising out of the foregoing Cllr B Schafer proposed that with the percentage of support received there was an opportunity of going to the press on such matter. She also drew attention to the positive support received from the two major ratepayer associations for that area.

The Executive Director: Tourism, Events and Marketing recommended the drafting of a press statement for release that same day.

Cllr G Pascoe mentioned that when making the necessary press statement such press statement should be managed carefully in view of objections received but so far had not been included as consideration was being given to the proposals received. Cllr G Pascoe also took cognizance of the ED's concem regarding the limited public commentary response.

Nevertheless members were of the firm opinion that in view of the positive percentage received from those that had participated in the public commentary the ED's recommendation should be supported by way of a press statement

3 RECOMMENDATION FROM THE TOURISM, EVENTS AND MARKETING PORTFOLIO COMMITTEE (TEVMAR 191106/13): 06.06.2013

a) That the record of public participation and the attachments of the actual submissions be noted;

b) That the record of support of all the respondents be noted, of which:

i) 65% supported the findings of the business plan,

B fu..

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NAME

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ii) 67% understood the financial implications to the City should it choose not to pursue a third-party arrangement and,

iii) 63% supported the City should it choose to pursue a third-party arrangement;

c) That the Executive Director: TOUrism, Events and Marketing be authorized to engage with organized labour and organized business in order to gamer their commentary prior to officially closing the public participation process, having received no official comment from either of the foregoing during the open public comment period.

COMMENT:

DATE l" -eL - )0 \~

DATE

I!lI APPROVED

• NOTED

i / Ii!iI REFUSED

I?f ;-: C I:;' !!iii REFERRED BACK ----~~+!-------------

COMMENT:

2

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AFRIKAANS AND XHOSA TRANSLATIONS

REKORD VAN OPENBARE KOMMENTAAR AAN DIE STAD KAAPSTAD OOR DIE SAKEPLAN VIR DIE KAAPSTAD-STADION

AANBEVELING VAN DIE PORTEFEUWEKOMITEE OOR TOERISME, GELEENTHEDE EN BEMARKING (TEVMAR 191106/13): 06.06.2013

(a) Oat daar kennis geneem word van die rekord van openbare deelname en die bylaes met die vverklike voorleggings;

(b) Oat daar kennis geneem word van die rekord van steun van al die respondente, van wie:

i) 65% die bevindinge van die sakeplan steun, ii) 67% die finansi~le implikasies vir die Stad begryp, sou hy teen 'n

derdeparty-r~ling besluit, en iii) 63% die Stad steun, sou hy op 'n derdeparty-re~ling besluit;

(e) Oat die uitvoerende direkteur: toerisme, geleenthede en bemarking gemagtig word om met georganiseerde arbeid en georganiseerde besigheid in gesprek te tree ten einde hul kommentaar te verkry voor die openbaredeelnameproses amptelik gesluit word, aangesien geen amptelike kommentaar van enige een van die voormelde verkry is gedurende die cop openbarekommentaar-tydperk nie.

IINKCUKACHA ZOLUVO LOLUNTU EZlNGENISWE KWISIXEKO SASEKAPA NGOKUMALUNGA NESICWANGCISO SOKUQHUTYWA KOMSEBENZI KWlSTEDIYAM SASEKAPA

ISINDULULO SEKOMITI YEMICIMBI YEZOQOQOSHO, IMISITHO NOKUZAZISA (TEVMAR 191106/13): 06.06.2013

(a) Ukuba makuqwalaselwe inkeukaeha yentatho-nxaxheba yoluntu nezihlomelo zezingeniso ezingqalileyo;

(b) Ukuba makuqwalaselwe inkcukaeha yenkxaso yabo bonke abo baphenduleyo, apho:

i) Abangama-65% baye baxhasa iziphumo zesicwangciso sOkuQhutywa komsebenzi,

ii) Abangama-67% baye bayiqonda imiphumela engezimali kwisiXeko ukuba siye sakhetha ukuba singaluthathi ulungiselelo Iweqela lesithathu, kwakhona

iii) Ama-63% baye baxhasa isiXeko ukuba siye sakhetha ukulithatha ulungiselelo Iweqela lesithathu;

(e) UMlawuli wesiGqeba kwezoKhenketho, iMisitho nokuZazisa makanikezelwe igunya lokubandakanya abemanyano zabasebenzi neyezoshishino ukuze kufumeneke uluvo lwabo phambi kokuba kuvalwe ngokusesikweni kwenkqubo yentatho-nxaxheba yoluntu njengoko kungakhenge kufumaneke uluvo olusesikweni kule mibutho ngexesha lentatho-nxaxheba yoluntu evulelekileyo.

1320

LC B3b4jl ..

REPORT To TOURISM, EVENTS AND MARKETING

PORTFOLIO COMMITIEE REPORT To EXECUTIVE MAYOR

CITY IIf CAPE l1WlI J ISl1RI! SA$£u,N. I ST.&lJ IeUI'SUIL

1. ITEM NUMBER: Support TEVMAR 19/06/13

2. SUBJECT

RECORD OF PUBLIC COMMENTARY SUBMITTED TO THE CITY ON THE CAPE TOWN STADIUM BUSINESS PLAN

ONDERWERP

REKORD VAN OPENBARE KOMMENTAAR AAN DIE STAD KAAPSTAD OOR DIE SAKE PLAN VIR DIE KAAPSTAD-STADION

ISIHLOKO

IINKCUKACHA ZOLUVO LOLUNTU EZINGENISWE KWISIXEKO SASEKAPA NGOKUMALUNGA NESICWANGCISO SOKUQHUTYWA KOMSEBENZI KWISTEDIYAM SASEKAPA

LSU 02617

3. STRA TEGIC INTENT

I25l Inclusive City Objective 4.1: Ensure responsiveness by creating an environment where citizens can be communicated with and be responded to.

4. PURPOSE

Well-run City Objective 5.1: government.

Ensure a transparent and corruption-free

The purpose of the report is to record the total number of comments received from the public through the written public participation process which closed on 31 March 2013.

The second purpose of the report is to record on aggregate the nature of the comments that was made by all the submissions.

Public Comments Cape Town Stadium ,lI.G V2 [March 2013!

Page 1 of 8

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5. FOR NOTING BY / FOR DECISION BY

rg) This report is for consideration/decision by:

• The Portfolio Committee; • The Executive Mayor;

6. EXECUTIVE SUMMARY

I. As part of the Section 78 prOcess, the City is requested to demonstrate as part of the section 78 (1) and 78 (2) that it garnered the views of the public, organized labour and organised business and interested and affected resident and ratepayers associations.

ii. As part of this compliance step, the directorate is able to demonstrate that with the initiation of the process on 6th December 2012, till 31 March 2013, it received a total of 154 submissions. 3 of the submissions did not relate to the public issue, 3 were business proposals, and 3 were unclear. The three unclears have been included as they responded to the questionnaire and the call for public comment. Thus only 145 respondents have been included. The public participation process was largely directed via 4 mechanisms. The first was the publication of the Cape Town Stadium Business plan of 48 pages. The second was the publication of an executive summary of 16 pages and the third process was through a 4 page insert as a special Contact newsletter which was included in all the community newspapers in the city. A fourth and final mechanism was the use of email through [email protected], which allowed residents to communicate directly.

iii. Of all of the respondents;

• 65% supported the findings of the business plan; • 67% understood the financial implications to the city if it chooses to not

pursue a 3rd party arrangement and • 63% supported the city's wish to pursue a 3rd party arrangement.

!v. Of aii ihe respofldents;

• 33% did not support the findings of the business plan;

Pl1Di(C Cc:mmentz Cape ':~wr, St~c:'J~, ;',13 \/2 [f.'iard; 70:3)

P(]ge 2 of 8

1323

....

• 31% understood the financial implications to the city if it chooses to not pursue a third party arrangement (these subsequently either proposed demolition, or suggested the city find a 3'd party tenant but that the city maintains and looks after the asset in perpetuity) and

• 34% did not support the city's wish to pursue a 3rd party arrangement.

v. 44 or 30% of the respondents supported the commercialisation of the stadium with no further encroachment on the urban parle

vi. 27 or 19% supported the conversion of the stadium into an indoor mUlti-use arena, including but not limited to a church, casino, education centre, arts and crafts market, sports arena (tennis, volleyball, badminton, indoor football, etc.) with any and all of the above permutations.

vii. 30 or 21% of the respondents supported demolition, with two proposing a lawsuit against FIFA.

viii. 10 or 7% of the respondents supported donating Cape Town Stadium to WPRFU with one respondent oppOSing the option to move WPRFU.

ix. 5 or 3.4% of the respondents supported the Green Points Resident and Ratepayers Association position which is included under pOints 3 and 5 above.

x. 3 respondents tabled effectively some form of "public debenture" or "ordinary share issue" in which people (the broader public) elects to purchase seats annually in advance of the events taking place for fees from R800 to R2 500 per annum. This will be used to offset operating costs and pay for events to come to Cape Town Stadium. This was not included in the above analysis

xi. 3 respondents submitted personal business plans for the city's consideration. This was not included in the above analysis.

7. RECOMMENDATIONS

Deleoated: for decision by the Executive Mayor

It is recommended that:

a) The record of public participation and the attachments of the actual submissions be noted;

b) The record of support of al/ of the respondents of which 65% supported the findings of the business plan, 67% understood the financial implications to the City if it chooses not to pursue a third-party arrangement and 63% supported the City's wish to pursue a third-party arrangement, be noted;

Public Col':lme:1~s Cape Town Stadium AG V2 ii..1a~cr, 2013;

Page 30t8

1324

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c) The Executive Director: Tourism, Events and Marketing be authorised to engage with organised labour and organised business in order to garner their commentary before officially closing the public participation process as no official comment was received from either organisations during the open public comment period.

AANBEVELINGS

Gedelegeer: vir besluitneming deur die uitvoerende burgemeester

Daar word aanbeveel dat:

a) Daar kennis geneem word van die rekord van openbare deelname en die bylaes met die werklike voorleggings;

b) Daar kennis geneem word van die rekord van steun van al die respondente van wie 65% die bevindinge van die sakeplan gesteun het, 67% die finansieHe implikasies vir die Stad begryp het, sou hy kies om nie 'n derdeparty-re~ling uit te oefen nie, en 63% die Stad se keuse om 'n derdeparty-reeling uit te oefen;

c) Die uitvoerende direkteur: toerisme, geleenthede en bemarking gemagtig word om met georganiseerde arbeid en georganiseerde besigheid in gesprek tree ten einde hul kommentaar te verkry voor die openbaredeelnameproses amptelik gesluit word, aangesien geen amptelike kommentaar van een van hierdie organisasies verkry is gedurende die oop openbarekommentaartydperk nie.

,Dl.!b!ic Comrlen!s C3;:''2 IOV:!"": Siad!um .'~,G V2 :~,1<.~rj' ?"J;~)

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IZINDULULO

Zigunyazisiwe: Isiggibo sesikaSodolophu wesiGgeba:

Kundululwe ukuba:

a) Makuqwalselwe inkcukacha engentatho-nxaxheba YOluntu nezihlomelo ezingeengxelo ezingenisiweyo ezingqalileyo;

b) Makuqwalaselwe inkcukacha yenkxaso yabo bonke abo baphenduleyo apho ama-65% aye axhasa iziphumo zesicwangciso sokuqhutywa komsebenzi, ama-67% aye ayiqonda imiphumela engezimali ejoliswe kwisiXeko ukuba sikhetha ukuba singaluthathi ulungiselelo Iweqela lesithathu kwakhona ama-63% aye ayixhasa injongo yesiXeko yokuqhuba ulungiselelo Iweqela lesithathu

c) UMlawuli wesiGqeba kwezoKhenketho, iMisitho nokuZazisa makanikezelwe igunya lokubandakanya abemanyano zabasebenzi neyezoshishino ukuze kufumeneke uluvo Iwabo phambi kokuba kuvalwe ngokusesikweni kwenkqubo yentatho-nxaxheba yoluntu njengoko kungakhenge kufumaneke uluvo olusesikweni kule mibutho ngexesha lentatho-nxaxheba yoluntu evulelekileyo.

8. DISCUSSION/CONTENTS

8.1. Constitutional and Policy Implications

None.

8.2. Sustainabilitv Implications

Does the activity in this report have any sustainability No /gj Yes 0 implications for the City?

8.3. Legal Implications

Section 78 of the Systems Act requires that Council demonstrates compliance with the processes of which one is public participation and that adequate attempts have been made to comply with the intent and requirements of the law.

i'LJbiic (',.()mmp.nt~ Cape "io'.};';', Ctadium .A.G V2 't.;arcr, '~·O<·jl

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B.4. Staff Implications

Does your report impact on staff resources. budget, grading, remuneration, allowances, designation, job description. location or your organisational structure? No [gJ

Yes 0

B.S. Risk Implications

None.

B.S. Other Services Consulted

None.

PF.lge 6 of 8

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ANNEXURES

• Annexure 1 • Table of Comments • Annexure 2 • Copy of Comments submitted

FOR FURTHER DETAILS CONTACT:

NAME Anton Groenewald CONTACT NUMBERS (021) 400·3295 E·MAIL ADDRESS Anton.Groenewalq@(;<metown.aov.za DIRECTORATE Tourism Events and Marketil1l! FilE REF No 2f217f'J:" /' ) I SIGNATURE: EXECUTIVE DIRECTOR: ~ D !,..Lyf TOURISM, EVENTS AND MARKETING

V

Comment:

EXECUTI R: TOURISM, EVENTS AND MARKETING: ANTON GROENEWAlD

NAME

DATE ;lg. s- .. 1.0 I ~

LEGAL COMPLIANCE

NAME

TEL

DATE

_ SOIrcth yell-) ~I

ce.t :-._lpO Slt<+-l.

30. os. 2.0013

Public Comments Cape Town Stadium AG V1

~REPORT COMPLIANT WITH THE PROVISIONS OF

COUNCIL'S DELEGATIONS. POLICIES. By-LAwS AND ALL LEGISLATION RELATING TO THE MATTER

UNDER CONSIDERATION.

o NON-COMPLIANT

Comment:

eel tiiied as legaliy cOllipiiallt. Based on the contents of the report.

t9

Page 7 of B

1328

~ V~,_ [A<r IN') MAYORAL COMMITTEE MEMBER: TOURISM,

EVENTS AND MARKETING CllR. GRANT PASCOE

NAME [R~£Sr <;'ON'" [IJS( R~

DATE 30 I os I}O 1.3

-,

" ,,' .::/ ,.:"/ (;k T ",',; ) EXECUTIVE MAYOR

COMMENT:

kJ ApPROVED

lEI NOTED

151 REFUSED

IJ l:. !?ci-; [ifl REFERRED BACK ----~{~~----------------

Public Comments Cape Town Stadium AG V1,

;i·,;;.;rr.r. :lei i.~,]

COMMENT:

Page 8 of 8

1329

CAPE METRO REGION

... 317 Voortrekker Road, Goodwood, 7459

Ii] 31, Goodwood, 7460

Annexure C

'Ir (021) 597 1300

<51 (021) 591 0394

INDEPENDENT MUNICIPAL AND ALLIED TRADE UNION Social transformation throUCh sustainable Local Government

~ [email protected] IMATU I. an authorised financial aervlcH provider

Our Ref No.: EBlpa/COCT

Your Ref. No.:

Enquiries: E.BRUWER

26 September 2013

Mr Anton Groenewald Executive Director: Tourism, Events and Marketing

Sir

ORGANISED LABOUR MEETING: CAPE TOWN STADIUM

We refer to your letter dated 5 September 2013 and the subsequent presentation on 19 September 2013.

We have in the meantime studied the proposed business plan handed to our representative.

We wish at the outset to emphatically state that this is not seen as consultation as envisaged in Section 78 of the Systems Act, read with the requirements of the Labour Relations Act.

lMATU thus reserves all the rights of our members in this regard, Our interest, obviously is to protect our members' job security and to ensure compliance with the statutory framework.

lMATU's fIrst choice would thus be to maintain the stadium as a Municipal entity and to ensure that our members' contracts of employment continue on no less favourable terms. (Table 21 seems to address these issues and ensures a turnaround in the cash flow of the stadium).

The above is only initial comments, and as indicated, our members' rights are reserved pending developments.

REGIONAL MANAGER

CC: REGIONAL CHAIRPERSON CHAIRMAN - LABOUR COMMl1TEE

WORKING TOGETHER FOR YOU

1330

CAPE METRO REGION

Ii> 317 Voortrekker Road. GoodWood. 7459

@ 31. Goodwood. 7460

iii (021) 597 1300

Iii (021) 5910394

"!l [email protected]

Our Ref No.: EBipaICOCT

Your Ref. No.:

Enquiries: E.BRllWER

16 October 2013

The City Manager City of Cape Town

"JART OF ANNEXURE C

INDEPENDENT MUNICIPAL AND ALLIED TRADE UNION Social transformation through sustainable Local Government

IMATU Is an authorised financial services provider

ATTENTION: MR R. FALKEN

Per e-mail

Sir

CAPE TOWN STADIUM: REVIEW ITO SECTION 78(1) OF THE MUNICIPAL SYSTEMS ACT

We refer to the abovementioned matter and your letter dated 9 October 2013.

We note the content of your letter.

We however wish to advise that IMATU did respond on 25 October 2012 whilst you mention in your letter that no comments were received from Labour.

In addition, please note that in our letter of 26 September 2013 we specifically refer to the option in "Table 21» as a favoured option.

We have had no response from the employer in this regard and thus we flnd the request for comment by 18 October strange.

We are in the process of scheduling a meeting with our members to obtain their input after which we will again communicate with you in this regard.

In the meantime we await your response as eluded to above.


1331

2.

We once again reserve all the rights of our members in this regard.

Yours ~rce,reJy

REGIONAL MANAGER

CC: M. SEBEZO R. SMIT C.HAGEN


1332

ANNEXURE 0

....

South African Municipal Workers' Union

SAMWU Cape Metro Branch Trade Union House 8 Beverley Street Atbloot, 7764

18/10/2013

The Collective Bargaining Officer 12 Hertzog Boulevard CapeTown 8001

Attention Mr. Roger FalkeD.

Dear Sir

CAPE METRO BRANCH Tel. No.: 021 - 697 - I J47/8 Fax No.: 021 -697 - 0420 Email: ~lall!C\..yjsakaasaJ1l\\"lt.om ... .n

Web Site: hupJ/www samwu,org.laI

SAMWU Cape Metro Branch POBox49 Alhlone 7764

SAMWU 'S RESPONSE ON THE ON THE CAPE TOWN STADUIM SECTION 78 PROCESSES:

After attempting to deal with the document during this week we could not complete our task. Further to this the documentation that was supposed to have been sent to us never arrived in our office. We would ask you for an extension on our submissions until next Friday (25 110 I , 13), but if not possible our position will be the following:

That the Staduim remains in the hands of the City of Cape Town That the City should allow for business to take place in and around the Staduim so that it can sustain itself. (Rezoning to be done) That it should not be outsourced to private companies.

We also believe that this matter should have been an item for discussion at the Bargaining Forum.

Your cooperation will highly be appreciated in this matter.

Yours faithfully,

S.M. Yisaka For Regional Secretary

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Director CT Stadium

L de Reuck

Senior Secretary

T8

Man. Programme Support& Coordination

Manager

T15 T17

I Project

• • • Admin .

T10

SPO 3x Clerk Clerk 1 Finance 1's

T14 T5 T5 I •

Head: SPO: Facility

Safety& Tech .info Man.

Security Systems Greenpoint

T14 T14 T14

I I Student Student

Senior 3x Technician Workers

T12 T2

• Snr Snr Superintend Superintend ent. ent. Infra. Infra.

Facility T14 Main. T14

I • 2xSenior 2xSenior

Tech. Tech. Assistants Assistants

T9 T9

Programme Manager

T17

Project Admin T10.

PO: PO: SPO: Events Events

Events log. log.

T14 T10-T13 T10-T13

I SPO

Marketing& Communications

T14

Programme Manager

T17

SPO Commercialization

T15

Project Admin.

T10

Visitor Servo Coordinator

T11

6x Guest Relations Officers

T7

» z z m >< c ::0 m m

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ANNEXURE F

RISK ASSESSMENT

The following key risk criteria were identified (Addendum D illustrating the detailed risk assessment per criteria):

Governance

• legal compliance and structure;

• Control over assets

Financial

• Scale and management of financial risk;

• MFMA and MSA compliance; • Asset replacement costs and warranties I guarantees;

• Economic environment;

• Profitability; • CAPEX and aPEX availability

Operations

• Ability to execute operational plans;

• Repairs and maintenance (asset preservation).

General Elements of Risk

• legal, reputational and environmental risk;

• Competitive stadium business environment.

Events and Hospitality

• CT Stadium and Green Point Urban Park event initiation and execution;

• Ability to develop and implement hospitality models.

Marketing and Communications

• Integrated marketing and communications plan.

Commercialisation

• Secure anchor tenants;

• Secure sponsors I suppliers; • Develop and deliver optimum hospitality model.

Brand

• Development, delivery and protection;

• Reputational risk management.

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Protection of cocr interests and assets.

Protecting equitable access and ensuring communitycentred decision making.

Operational transparency to the cocr Council.

Inflexibility and added burden of MFMAcompliance.

Ability to combine private and public management advantages.

City resources required to service stadium.

Governance ~ m -< :0 (fJ ;;r;;:;

o :0 -l m :0 »

"'0 » ~ o 11 » Z Z m x c :0 m "T1

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City retains full control of operations and finances.

Financial risk, including running costs is carried by the City.

Under funding of Repairs and Maintenance which results in a lack of asset preservation.

The availability of financial means to commercialise the stadium.

Cost of event day municipal support can be managed more effectively.

Cost of obtaining specialist management.

Financial

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Event day, event delivery, operational and cost containment experience.

S~lIs development for city staff within scarce s~lIs market.

Familiarity with original technical development framework & CoCT suppliers

Administrative independence from the CoCT.

Operations

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General Elements of Risk

Indepent operators are focussed on maximising their financial incentives within contract not stadium.

Risk of sudden termination or excessive contract renegotiation demands.

Reputational Risk· Risk by association with the Operator.

Long standing partners/suppliers of the independent operator will be preferred.

Need for compliance with Govemment and MFMA legislative requirements.

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Events and Hospitality

Anchor tenant provides event base and access to the corporate market

Flexibility to engage in commercial activities.

Protection of the Stadium and CoCT Event Policy.

Increase of revenue due to concentration on revenue generating events and building the events calendar.

CoCT ability to bid for strategic events as a host city.

Ability and connection to I everage off metro partnerships.

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Marketingfoeus on Cape Town Stadium and place marketing.

Joint leveraging and co-operation between CoCT and CT Stadium in order to save costs.

Media exposure through number of events.

Expertise drawn from the industry.

Consistent and united PH function.

Marketing and Communications

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Credibilty and expert ability to sell commercial program.

Ability to capitalise on the CoCT buying power and customerbase for sales and marketing.

CoCT Ability to draw on various in·house services.

Ability to formalise long term lease agreement with anchor tenants.

Highest commercial retum may not be realised.

Anchor Tenant dictate the stadium events (incl Training which may Disruptl.

Commercial

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Align th cape Town Stadium with City of Cape Town place marketing.

Brand equity and values.

Branded as a multi-purpose stadium.

Expertise in stadium brand building.

Brand created by default.

Brand dilution.

Brand

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ANNEXURE G

FINANCIAL MODELLING PRINCIPLES

During the financial modelling process for the different management models, the following principles are applied:

• Naming rights sold for R20 million per annum. Only achievable for models 1, 5(a) and 5(b). R10 million for models 2 and 3. Not achievable for model 4.

• Founding partner income only included from 2014 for models 1, 5(a) and 5(b). Half accrued for models 2 and 3. Not achievable for model 4.

• CAPEX with a 20 year repayment period at time +2% interest. CAPEX for corporate hospitality suites and kitchens only required if a premium anchor tenant is secured. OPEX is provided by the City in all models.

• Interest payments are included in profit and loss, but not capital repayments. • Event day City services within the stadium paid for by the event organiser,

outside the stadium by the operator. • Normal City services paid for by the operator, overhead allocation by the City of

Cape Town (CCT) has been eliminated in all models. • Premium anchor tenant takes occupation from 2015 where attainable. This date

will be adapted due to the late start of this process. • Operational expenditure and event day expenditure estimated using current

levels. • Football and concerts pay a 10".4. fee on ticket sales for the use of the Cape Town

Stadium. • All catering is outsourced for the first 3-years. Private catering will be insourced

from 2015. • Beverage sales and distribution will be done by the operator.

Discussion of the Advantages and Disadvantages, Financial Viability Models and its Timeline applicable for each of the models:

Please note that the timeline has shifted due to the time lapse in starting time of process, but principles and duration will stay the same.

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CITY AS OPERATOR WITH ANCHOR TENANT: MODEL 1 IN RISK ASSESSMENT SCHEDULE

Major Components of Income Major Components of Expenditure

• Naming Rights • Founding partner income • Pouring rights • Commission on ticket sales • Event and catering income • Anchor tenant rentals • Hospitality income

900000000

800000000

700000 000

600000 000

• Repairs and maintenance • Salaries and wages • Operational expenditure • Interest • Amount paid to equalise anchor tenant

revenues

./ II Income

./ ./ ~

• Expenditure

7~

~----500000 000

400000 000

300000 000

200000 000

HIOOOO 000

Breakeven Pol

·100000 000

---- ---./""

./ - Net Income for thl

• City

;;r " 20t[ 2013

___ M _____________ ., __ II Breakeven Point

Advantages

• Budgeting, funding and financial accountability centrally controlled by City;

• Protection of City's interest remains primary consideration of Stadium Management;

• 100% transparency regarding operations and finances that may not be present in an independent I anchor tenant I operator scenario;

• Stadium Management Policy, subject to business feasibility, will promote equal access to use and a spread of event organisers and sporting codes will remain a strategiC consideration;

• Quick access to CAPEX and OPEX; • Fully compliant with MFMA; • This model will maximise revenue to the City

that can be obtained from the asset; • Stadium lifecycle would be protected by strict

compliance with maintenance reqUirements; • Stadium management personnel familiar with

Disadvantages

Operational Business inflexibility due to MFMA and MSA; City remains fully responsible for the cost of the Cape Town Stadium and Green Point Park; City's restrictive and financial operating environment impacts on required hard-nosed profit incentive environment to operate a business; Potential of increased deviation reports; City exposed to higher amount of business risk; Lengthy service provider and lead times; Compliance with MFMA could result in additional administrative costs; Inability to utilise preferred suppliers without a tender process; Lack of specialised stadium management expertise in some areas i.e. Stadium commercialisation, food and beverage exploitation in fully commercialised stadium

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original technical development of the Cape Town Stadium;

• City builds up internal expertise in a management field where there is a local skills shortage;

• Reduction of reputational risk exposure; • City of Cape Town able to protect the

balance of the event calendar to ensure social objectives are also met;

• Anchor tenant will provide automatic access to market for hospitality sales;

• C~y of Cape Town and Cape Town Stadium brands protected;

• High level of control over service delivery; • City and anchor tenants able to bid for events

as a host city; • Ability to draw on in-house services; • Aligned stadium and City and Cape Town

leveraging and marketing strategies; • High level of governmental interdepartmental

cooperation.

....

environment; Potential impact of change to the political environment within council and senior executive structures on the management and operation of the stadium; Impact of Cape Town Stadium financial model if event day municipal support service cost need full recovery from event organisers; Potential excessive commercial demands on City by Anchor Tenant Impact on Cape Town; Stadium revenues by under-performing Anchor Tenant(s); Potential impact on commercial return due to Legislative constraints, slow speed of decision making and possible political interference; Anchor Tenant could dictate event and operational direction to maximise self-serving opportunities; Potential budget restrictions to implement marketing strategies due to City's other priorities

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ANCHOR TENANT AS OPERATOR WITH TECHNICAL OVERSIGHT: MODEL 3 IN RISK SUMMARY SCHEDULE

Financial Principals

• 20% of ticket revenue paid to CCT; • Anchor tenant occupation in 2015; • No continuation of ancillary business after operator takes control • City provides for OPEX and CAPEX funding

Major Components of Income

• Naming rights; • Founding partner income; • Pouring rights; • Commission on ticket sales; • Event and catering income; • Anchor tenant rentals; • Hospitality income;

Major Components of Expenditure

• Repairs and maintenance; • Salaries and wages; • Operational expenditure; • Interest; • Amount paid to equalise anchor tenant

revenues.

Portion attributed to the City was calculated as follows

• Total net loss for the first four years until the operation becomes profitable; • 20% of ticket sales for the remainder of the period;

• CAPEX provided by City.

1000000000 ,..----------------------------

800000000 r--------------------------------------------~~~

600000 000 r------------------------------------::o..-::.,.."'---------

400000000 r--------------------= ..... -"-----------------------

moooooo r---~~~------------------------

• Expenditure

Net Income for the

Ii,tv

I :~~;:;:;::~:_:::'~~~====::=:::==::::=:====:~====:~:::= Breakeven Point -~r _ 2012 lOll 2014 2015 2016 2017 2018 2019 lOlO 2021 2022 2023 2024 2011 2026 2027 2028 2029 2030 2DlI 2032 20ll

.moooooo 1---------------------------------

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Advantages

• Day to day management and financial administration responsibility outsourced;

• Anchor tenant operator has more operational flexibility due to not being bound by MFMA I MSA;

• Operating overheads passed onto the anchor tenant;

• More stable events calendar; • Advanced expertise in commercial

negotiations and modeling; • Lease based on commercial principles, not

influence by legislative I political constraints; • Aggressive marketing and brand

development through associated partners and sponsors can be implemented.

Disadvantages

Self-centred interest of sporting code (anchor tenant I operator) flows into stadium govemance and management operations; Governance and management control by the CCT is given up; Protection of CCT strategic and financial interests becomes secondary to operator; Achieved operational surpluses will be ploughed back into the sport code with a resultant degradation of the primary stadium asset; Professional sporting code (anchor tenant) will argue for all income attributable to Stadium through the sale of naming rights; City could lose control of critical lifecycle maintenance programme; Equal accessibility rights of event organisers, other sporting codes and community organisations are compromised by scheduling and first right demands of anchor tenant stadium operator; Cost risk associated with the deployment of the event day municipal support services; Potential reputational risk to the City if serious challenges I shortcomings occur at the Stadium; Little motivation to the anchor tenant to drive non-bowl events; Less able to ensure the City's brand is protected; Loss of commercial control over the Cape Town Stadium by the City; Anchor tenant will support and focus on a specific code; No interaction with the City's place and destin alion strategy; Cape Town Stadium will only be aligned w~h one specific sport brand.

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PUBLIC PRIVATE PARTNERSHIP AS OPERATOR WITH ANCHOR TENANTS:

MODEL SA IN RISK SCHEDULE SUMMARY


• City underwrites operational costs until implementation; • City provides for full CAPEX requirements; • Shares available for allocation to key stakeholders; • Upward revenue adjustment to the City expected on allocation of shares.

Operator Profit and Loss was Calculated Using


• Nam ing rights; • Founding partner income; • Pouring rights; • Commission on ticket sales; • Event. catering and hospitality income; • Anchor tenant rental



revenues.

Portion Attributable to the City was Calculated Using

• Total net loss for the first four years funded by the City until the operation becomes profitable;

• City will retain their percentage of profits as the shares will be exchanged for revenue contributed by the anchor tenants.

TIme and Financial Model

900~000 r-----------------------------------------------------------~OOOOOO ~----------------------------------------------------_,~--

~~OOO ~----------------------------------------------~~----~~

~~OOO ~--------------------------------------_,~--~~~-----

500~~ f-----------------------------------":7''-~";;J'''--------------

400~OOO f-------------------------~~O::"'"......:::'-------------------

300000000 r------------::::;;;;;::~:::!5~..::::::....----------------------------------

200000000 1-----71'-<------------------------------------------

Expenditure

:J~::~:::::~;;~~===::~::=::::~~.Netlncome 100000 000

Breakeven Brealceven

lOll 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Point

·100000000 '-------------------------------------------

L-_______________________________________________________ e

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Advantages Disadvantages

• Works independently and outside of local • government constraints;

• Not constrained by salary levels and board • fees as determined for a ME - can attract the best people; •

• Successfully tried and tested in a stadium management environment in the USA and Australia;

• The ability to take immediate business • driven decisions at the required level;

• Budgeting, funding and financial. accountability will be the contractual responsibility of the new business vehicle;

• City still retains a significant measure of influence over the management of a strategic asset through the service delivery agreement and the memorandum of incorporation;

• Transfer of substantial business and financial risk from the City to the public private partnership;

• Minimum levels of required "secondment" of municipal official support;

• Benefit of access to specialist and experienced stadium management;

• Budgeting, funding and financial accountability will be the contractual responsibility of the new business vehicle;

• The City is able to minimise the impact of lis financial obligations towards the Cape Town Stadium.

Works independently and outside of local government constraints; Extensive process for setting up (between 2 -3 years); City has not direct influence in the operations outside of the requirements of the service delivery agreement - so City may take reputational risk; No local proven public private partnership model for stadium management; and National Treasury consultation is required.

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MUNICIPAL ENTITY WITH ANCHOR TENANTS: MODEL 58 IN RISK SUMMARY SCHEDULE


• CCT underwrites all operational costs until implementation; • City provides for full CAPEX requirements; • Equity available to be allocated to key operational stakeholders; • Upward revenue adjustment to the City expected on allocation of equity.

Operator Profit and Loss was Calculated Using


• Naming rights; • Founding partner income; • Pouring rights; • Commission on ticket sales; • Event and catering income; • Anchor tenant rentals.



revenues.

Portion Attributable to the City was Calculated Using

• Total net loss for the first four years funded by the City until the operation becomes profitable;

• 100% allocation of profit or loss to the City pending negotiations with key stakeholders and equity allocation.

Timeline and Financial Model

900000000 ;------------------------------

800000000 ~--------------------------~'--

700000000 ~-----------------------~"'--_:;; .... Expenditure

~oooooo ~-------------------------------------~~-~~~-----

500000000 i------------------"7"c..-'7"c..-------400000000 r-------------~~~~~~-----------

300000000 r-----::::;;;::::=::::!S::;::;...:::::.-----------------200000000 r----~~------------------------

Net Income

Breakeven

·100000000 ~-----------------------------Point

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I

Advantages Disadvantages

• Tried and tested formula in CCT - CTICC; • • Reputational risk to the City is minimised; • City retains effective control over a •

strategic asset; • • ME enjoys a level of MFMA relaxation; • City can, within limitations, contain

expenditure levels through setting salary • levels and board fees;

• City rnanages relationship through service delivery agreement for operations and • through non-participating observers for governance issues;

• Relatively easy establishment after statutory processes completed;

• Minim urn levels of required 'secondmenr of muniCipal official support;

• Benefit of access to specialist and experienced stadium management.

No transference of business and financial risk; The costs of MFMA compliance; Operations constrained by the objectives of local government as stipulated in the LG legislation; Administrative burdens of MFMA for City replicated in ME (e.g. SCM, audit by office of the Auditor-General, etc.); Additional costs that would not be borne If the operations were done internally to the City (board fees, separate administration, additional audit fees, etc.).

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