Foreshore bids’ ‘wasted’ millions will spook investors, developers warn Cape Town

The City of Cape Town’s decision to scrap its multibillion-rand Foreshore project sends a "disturbing" message to local and international investors, says a forum of property developers in the Western Cape.

City manager Lungelo Mbandazayo announced earlier this week that the project, which was meant to also tackle unfinished highways on the foreshore and to develop housing in the area, had been cancelled.

This came after the city’s decision to name Mitchell du Plessis Associates as the preferred bidder for the project was challenged, with some saying the company — one of the six bidders — did not meet the city’s original bid criteria.

Mbandazayo said after receiving legal advice, the city concluded that a lack of sufficient clarity in the request for proposals documentation rendered the criteria vague.

Deon van Zyl, chairman of the Western Cape Property Development Forum, said all the proposals entailed multibillion-rand investment in Cape Town.

The winning bidder would have  been required to complete unfinished sections of the freeway‚ over 3 000 market-related residential units, and some 450 affordable homes.

The ambitious project would have cost of the city an estimated R8.3bn at 2017 prices‚ with construction scheduled to commence in 2020 taking  at least 10 years to complete. 

"We are very perturbed by the message this sends to the investor community, particularly as many of our members have spent vast amounts of time and money putting together extremely comprehensive and thoroughly researched bids," said Van Zyl.

"Anyone who visited the exhibition of the six projects that were put on display at the Civic Centre in the CBD would have appreciated the time and effort that was invested by the various bidders to conceptualise, research and present their ideas. The combined value of the proposals submitted represented tens of millions of rand based on professional time and production costs."

Van Zyl said the forum was not interested in who won the bid. "We are interested in bids being awarded, in investment being made and that development takes place. We were also interested to see an effective public-private partnership established that would, among other things, deliver much-needed affordable accommodation in the central city."

Van Zyl added: "This will now not take place in the case of the Foreshore Freeway Development, unless of course the City decides to go out on proposal call again."

Mbandazayo said procurement processes had to be compliant with the rule of law, in particular with section 217 of the Constitution, which governed public procurement.

"There must be no doubt about the integrity of these processes and, as such, I have decided to cancel the RFP [request for proposals]."

"Furthermore, the economic outlook for the country has become significantly weaker since the issuing of the RFP two years ago. This change, with the additional burdens that the city, its ratepayers and residents are facing, cannot be ignored.

"The city is, therefore, reconsidering the future of this project, and we will communicate further once a decision has been made," said Mbandazayo.

phakathib@businesslive.co.za