DAG: Research on package of incentives for emerging developers/ contractors to scale up the delivery of medium density affordable rental units in township economy

Development Action Group
Opportunity closing date: 
Friday, 4 June, 2021
Opportunity type: 
Call for proposals

Proposal call for research that examine and recommend the ideal package of incentives for emerging developers/contractors to scale up the delivery of medium density affordable rental units in township economy.

  1. Introduction

Established in 1986, Development Action Group (DAG) is a leading non-profit, non-governmental organisation working throughout South Africa to fight poverty and inequality and promoting integrated urban development. DAG enables communities to lead their own development by enhancing their capacity and resourcefulness, in partnership with the public sector and other stakeholders. Over the last 35 years, DAG has gone through several iterations on how to position itself in the urban sector.
DAG currently is organised in four interdependent programmatic areas, derived from our Theory of Change:

  1. Delivery of affordable housing: that works collaboratively with homeowners, contractors, and developers in order to deliver affordable housing.
  2. Informal settlements and backyards: This programme supports various informal settlements and backyard groups across the Western Cape in order to realise housing and land rights
  3. Reimagining Neighborhoods: the focuses on enabling community capacity and active citizenry in order to unlock and land, budget transparency and housing opportunities.
  4. Urban land tools: that focuses on facilitating and enabling new policy directions relating to Land Value Capture and urban land reform.

Each of the programmes is involved in specific advocacy and learning. The programmes are generally oriented towards community-based organisations and citizen groupings.

  1. Research objectives

DAG is seeking the services of experienced built environment proffessionals with land use planning expertise to conduct research that examine and recommend the ideal package of incentives for emerging developers/ contractors to scale up the delivery of medium density affordable rental units in Township economy. The research is focused on Cape Town based townships within three different planning districts (i.e., Litter Park, Deflt and Langa). As part of the study, research/ studies undertaken in other parts of the city will have to be considered especially in terms of assessing a range of appropriate incentives/mechanisms, building plan typologies and establishing the commonalities and or differences in application.
This research work forms part of the evidence-based research activities to improve knowledge and understanding on how best can the local government leverage land value increments associated with public infrastructure investments and or land use regulatory changes. The research output is expected to become a resource to the local policy makers and development practitioners in South Africa.
The selected firm/consultant will be responsible for evaluating the extent to which the current micro rental units developers can benefit from the the City’s efforts to encourage development of small-scale rental market micro units by way of (i) amending the Zoning Scheme in areas where the City would like to encourage development of small-scale rental market; (ii) Introducing developer costs cutting measures whereby building plans for small scale rental units are prioritized and building plan fees are not charged; (iii) Developing a menu of proto typical building plans for small scale rental units from which an owner could choose and submit with a site plan for approval to the City in terms of the National Building Regulations.
Background to the proposed research project
In 2019/ 20 the City of Cape Town conducted a desktop research study on small scale rental units in Khayelitsha. The research acknowledged that the emerging small-scale developers were making an important contribution towards solving the housing crisis in Cape Town and the country in General. Equally important is an acknowledgement of the challenges and constraints faced by the emerging developers in their quest to deliver affordable housing units to the residents of Khayelitsha
The local initiatives by the small-scale developers have since been identified as an important process that can be regularised and or standardised so that it can help to fulfil the City’s developmental objectives of densification and compact City. As a result, a set of practical interventions were identified and submitted to the council for approval.
In 2020 the local council approved a set of recommendations identified as necessary to create an enabling environment for small-scale developers to develop affordable micro rental units at scale. The local council is fully supportive of the idea that small scale rental market is an important housing sector with potential to supply affordable rental accommodation at scale. There is clear commitment and understanding that the City must take the practical steps needed to create an enabling environment that support this important sector. The city intends to create an enabling environment in several ways or processes that include:

  • Initiating the process to amend the Zoning Scheme in areas where the City would like to encourage development of small-scale rental market. The amendment of the zoning scheme would either through creating an overlay zone or introducing small scale rental units as an additional use within the SR2: Incremental Housing zone
  • Developing a menu of proto typical building plans for small scale rental units from which an owner could choose and submit with a site plan for approval to the City in terms of the National Building Regulations.
  • Introducing developer costs cutting measures whereby building plans for small scale rental units are prioritized and building plan fees are not charged, on condition that the property rates and services payments for the site in question are up to date.
  • Applying for USDG funding to increase the infrastructural service capacity on a phased basis in areas where the City wishes to encourage this form of development.
  • Establishing a establish a list of accredited small scale local building contractors using existing private sector structures, i.e., Master Builders Association
  • Petition the Central Government to consider making housing subsidies available to individual property owners who develop small scale rental units on their properties on the same basis as the current social housing subsidies or a variation thereof.
  • Facilitating the establishment of a list of accredited registered credit providers interested in financing small scale rental unit developments on individual properties like uMastandi.
  • Engaging the traditional financing houses to raise the possibility of them financing the roll out of this programme.
  • Initiating an outreach programme in the form of a series of comprehensive workshop sessions aimed at creating awareness of the benefits of small-scale rental units.

Source of funding
This research will be funded jointly by DAG and BFDW under the current expenditure and income plan as indicated in the agreement A-ZAF-2018-0405.

  1. Key questions

The research is guided by a several questions that include but not limited to following questions:

  1. To what extent does the notion of facilitating the delivery of affordable rental units through creating an overlay zone or introducing small scale rental units as an additional use within the SR2: Incremental Housing zone, contributes towards increased delivery of affordable micro rental units in township economy?
  2. What is the nature and scope of new demands or pressures that micro rental units potentially create/contribute to (e.g. bulk and social infrastructure)?
  3. What is the most practical and realistic upper limits/thresholds to be considered in terms of appropriate densities for the target areas where the overlay zone and SR2 zoning would be applied?
  4. What are the pros and cons of the use of both the overlay zone and SR2 zoning for the purposes of facilitating the delivery of affordable rental units
  5. How the UDZ fiscal incentives to encourage redevelopment is currently applied? What are the possible implications of using the same instrument in the current Khayelitsha context?
  6. What is the nature and or scope of developer costs incurred throughout the process of delivering the affordable micro rental units? To what extent candoes the selected local government intervention contributes towards the average construction costs?
  7. To what extent does the land use regulatory intervention is going to be practical incentive for the current and prospective developers to direct their investments in the areas where the City would like to encourage development of small-scale rental market
  8. Should the local government intervention be limited to single unit typology? Is there demand for other housing units’ sizes applicable to a broad range of household sizes especially those in need of 2 bedroomed apartments?
  9. If the one third income rule was to be applied, to what extent is the rental price going to be considered affordable to average tenants already occupying or likely to reside in these units? Is the average price per square metre for the units turn out to be reasonable and fair value if compared to those in other parts of the city? And How big is the difference.

Research Design and Methodology

For the research to address the objectives outlined above, a minimum of the following methodological steps will be necessary:

  1. Comprehensive and in-depth desktop research and analysis
  2. Interviews with key microdevelopers and other stakeholders
  3. At least on presentation or dialogue with key stakeholders to share findings on completion of research output

Timetable

The proposal to this ToR should be submitted by 04 June 2021
The research will commence in July 2021 and conclude by October 2021.

  1. Expected Results

DAG needs the project completed within 3 months. The research output is to be: 

  1. Inception report: The inception report (approx. 3-5 pages) shall provide a feedback on how the objectives, questions and issues as described in the TOR can be achieved within the research timeframe. Suggestions can be made to supplement or restrict the TOR, but will be done in consultation with DAG.

For the inception report we suggest the following structure:

  1. Key data of the research project: Name, duration of the research project, date of the report etc.
  2. Feedback/amendment to the TOR: Are all parts of the TOR clear to the research team? Is the focus of the research clearly defined? Suggestions for amendments of the TOR are presented (in a form so that the principal can accept or disagree).
  3. Current status of the preparation: Composition of the research team (qualifications, allocation of tasks, who is team leader/coordinator?), estimated timetable and work days for the research team. Report about identified problems and risks.
  4. Research design and methodology: Report about the chosen qualitative and/or quantitative methods and further steps on how to implement them in the analysis (selection of samples, strategies for analyses and collecting data, further specific research questions, hypothesis on outcomes and impacts, description of the planned contacts and visits with explanation). Measures to be taken to get adequate information for research analysis.
  5.  Tools for data collection and data analysis (e.g. presentation of questionnaires)

The final report: which shall be written in English (20 pages + annexures) and has – as a minimum - to include the following contents:

  1. Executive summary: a tightly drafted, to-the-point, free-standing document (about 2 pages), including the key issues of the research, main analytical points, conclusions, lessons learnt and recommendations.

  2. Introduction: purpose of the research, research scope and key questions. Short description of the townships evaluated and the overall structure of the report.

  3. Research design/methodology.  

  4. Key results/findings: with regard to the questions pointed out in the TOR/inception report

  5. Conclusions based on evidence and analysis.

  6. Recommendations regarding ideal package of incentives for emerging developers/ contractors to scale up the delivery of medium density affordable rental units in Township economy.

  1. Organised and catalogued annexures and raw data:, which will not count toward the 20 page count

  2. A high level PowerPoint presentation: Outlining the findings and recommendations

Key Evaluator Qualifications
Submissions will be assessed on the strength of the proposal itself and on the experience of the organisation, consortium or individual.
Specific considerations with regard to the proposal would be:

  • Appropriateness of the methodology proposed
  • Cost effectiveness
  • Timeframe

Specific considerations with regard to the experience of the proposer would be:

  • Professional experience in the field of land, housing and urban development
  • Experience in the NGO sector
  • Research experience on land use planning and development management issues
  • The proposal will be adjudicated on a combination of the technical and financial proposal. The weighting will be based on 70% technical and 30% financial proposal.

Contents of the offer
A submission must, at a minimum, include the following elements:

  • A general overview of the organisation/ consortium, including details of the team leading the research i.e. CVs of all researchers involved
  • A one-page narrative outlining the firm’s strengths and distinguishing skills or capabilities as they might relate to the set objectives in this RFP and the annexed consultant research briefing document.
  • Outline of the planned research process
  • Brief explanation and justification of the methods to be used
  • A complete financial proposal and cost structure that includes both the fee and any incidental costs such as transport, accommodation, taxes, fees and costs of workshops done as part of the research, etc.
  • Contactable references

Payment
50% of the contract value on receipt of an acceptable first draft report and the balance on acceptance of the final report
Submission of Proposal
Hard copy to the DAG office at 101 Lower Main Road, Observatory, 7925 or via email to @[email protected].
Please direct any queries to DAG’s Programme Manager, Helen Rourke on 021 4487886.

Location: 
Western Cape

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