REDEVELOPMENT PROPOSAL ON THE CARDS FOR VIRGINIA AIRPORT.
EThekwini Municipality has received an unsolicited proposal from Seaworld Investment Holdings (Pty) Ltd recommending the redevelopment of the Virginia Airport site into a mixed-use development.
The development will comprise commercial, hotel, upmarket residential, offices, leisure and related developments. Total capital outlay for the project is R6.1 billion.The Municipality is not required to fund the development and will only offer its services and expertise in the implementation of bulk infrastructure and services.
The proposal also states that SeaWorld Investment Holdings (Pty) Ltd would source funding and develop a brand new airport, five times the size of Virginia Airport in Scottburgh.
This proposal has been treated strictly in line with the provisions of legislations and policies governing Supply Chain Management (SCM) in this country. It has also been circulated on print media and City’s website for comments and input by members of the public, National Treasury, Provincial Treasury and the Auditor General of South Africa as directed by relevant legislation.
Once the City receives input and comments, a decision whether or not to accept the unsolicited proposal will be made.
In terms of Section 33 of the Municipal Financial Management Act (MFMA), Section 37 of the eThekwini SCM policy and in accordance with Section 21A of the Municipal Systems Act, the Municipality is considering the proposal for the redevelopment of the Virginia Airport site.
The Virginia Airport site is currently leased to operators for both business and recreational aviation. When the lease expired in October 2011 the City resolved to undertake a feasibility study to investigate alternative and optimal use of the site to advance the economic development aspirations of the City and grow the rates base. The Council resolution among other things included “to consider the extension of the lease by a period not exceeding 10 years”. Considering an extension is not similar to a commitment to extend. Therefore, no commitment was made and the City is not reneging on any agreement. While considering an extension the City also decided to embark on a feasibility study to ascertain options for optimal use of the Virginia Airport site.
The study concluded that the site was no longer suitable to be utilised as an airport for a variety of reasons including that the City was no longer benefitting financial returns from that use.
Plans have been made to relocate commercial flight operators to King Shaka International Airport with the flight school operators relocating to Scottburgh.
The City wishes to state that the City and operators have met three times since the Council resolution of 2014 was made. This is contrary to reports that have surfaced which indicate that no consultation has taken place.This is factually incorrect. As a matter of fact the City and operators have agreed on the mechanisms to ensure a continuous and regular engagement until the project is concluded.Seaworld’s proposal was also communicated to the Virginia Airport operators.
The other critical point is that the City has made an offer of a new three year lease to Virginia Airport operators or completion of the relocation programme, whichever comes first. The fact is that no operator will be removed from Virginia until such time that all arrangements to relocate them have been finalised. This once again demonstrates the City’s commitment to a cordial working relationship with Virginia Airport operators and commitment to support the aviation industry.
At present the Virginia Airport site does not generate rates income for the City. Therefore, the relocation of the airport activities to either King Shaka Airport and/or Scottsburgh site will clear a way for the redevelopment of the site into a facility that can generate an annual rate income for the City. The site is currently generating revenue from landing fees.
The proposal from the study has been assessed by a technical task team as taken in the Full Council’s resolution which consists of officials from SCM, Development Planning and Environment and Management Unit and the Office of the Deputy City Manager for Economic Development and Planning.
The outcome of the assessment demonstrated that the proposal satisfies the minimum requirements in terms of Section 37 (2) of the SCM Regulations. These clauses relate to the legality of the proposal in terms of procurement regulations as follows:
•The product or service will be exceptionally beneficial to or have exceptional cost advantages for the municipality or municipal entity;
•The person who made the bid is the sole provider of the product or service and
•The reasons for not going through the normal bidding processes are found to be sound by the Accounting Officer.
The proposal’s attractive features include that eThekwini would receive an equity value of 10 percent shares in Seaworld City. EThekwini would also benefit from increased rates and taxes from the proposed redeveloped land use of the Virginia site.