KNYSNA MUNICIPALITY PUBLIC-PRIVATE PARTNERSHIP POWERING GAP HOUSING DELIVERY

In an environment where public sector budgets are increasingly constrained, municipalities are compelled to explore innovative and sustainable approaches to service delivery, particularly in the housing sector. Knysna Municipality has responded decisively by adopting a forwardthinking Public-Private Partnership (PPP) model that aims to accelerate housing delivery, optimise resource utilisation, and promote long-term community sustainability.

This initiative underscores a paradigm shift from traditional procurement methods, embracing a collaborative framework that harnesses private sector investment and expertise to address critical housing needs.

A Strategic Approach to Inclusive Housing

The development on Erf 3339 exemplifies this strategic shift. Through a formal Service Level Agreement (SLA), the municipality appointed KRMS Consulting as the Transaction Advisor, tasked with overseeing the realisation of this innovative project. The development will feature a diverse mix of housing types, including freehold stands targeted at middle-income earners, as well as townhouses and flats designed for lower-income households.

What makes this project particularly notable is its entirely private funding model. Unlike conventional governmentfunded housing projects, this

development leverages private sector capital, thereby reducing the financial burden on municipal resources while ensuring rapid and high-quality delivery.

“This project is about restoring dignity and offering real opportunities to those who often fall through the cracks,” said Neil Louw, Member of the Mayoral Committee (MMC) for Integrated Human Settlements. “Our lower- to middle-income residents, including teachers, nurses, municipal staff, and young professionals, deserve the chance to own homes in well-located communities. This development is designed with them in mind.”

Addressing GAP Housing

The initiative directly responds to the persistent demand for GAP Housing - residential options for individuals earning between R3 501 and R22 000, who qualify for government subsidies but find themselves unable to secure traditional mortgage finance. By harnessing private sector funding and expertise, the municipality aims to bridge this gap, providing affordable, well-located housing solutions that foster community stability and economic participation.

Importantly, this approach aligns with the provisions of the Municipal Finance Management Act (MFMA), 2003 (Act 56 of 2003), ensuring financial accountability and regulatory compliance throughout all phases of development.

The Advantages of a PPP Model in Housing Delivery

Traditional procurement processes often struggle with delays, cost overruns, and inefficient delivery, hampering the realisation of housing projects. The PPP model adopted by Knysna Municipality seeks to mitigate these issues by transferring key risks - such as project costs, delivery timelines, and operational responsibilities, to private developers. This strategic risk transfer ensures that the project progresses more swiftly, remains within budget, and adheres to the highest quality standards.

This approach ensures that housing delivery is both faster and more costeffective, with the added benefit of quality assurance. The development is structured over a two-year construction period, followed by a five-year operational management phase, which guarantees ongoing maintenance, functionality, and community value.

Role of KRMS Consulting and Community Engagement in ensuring excellence from start to finish

KRMS Consulting will play a pivotal role in ensuring the project's success, leveraging its expertise to manage costs, quality, scope, and timelines effectively. Their responsibilities extend to risk mitigation, stakeholder engagement, and ensuring compliance with procurement regulations. Their strategic oversight ensures transparency, regulatory compliance, and efficient coordination among contractors, financiers, and community representatives.

An important facet of the project is its focus on employment creation through the Expanded Public Works Programme (EPWP), aligning economic development with social upliftment. Community involvement and communication are integral to fostering local support and ensuring that residents are kept informed and engaged throughout the development process.

Current Status and Next Steps

Following a thorough feasibility assessment, the project has progressed into its Best and Final Offer (BAFO) stage. A Request for Quotation (RFQ) will soon be issued to select preferred bidders who will formalise the PPP agreement. The private developer will assume responsibility for all development activities, including marketing, sales, bank approvals, FLISP subsidy applications, bond registrations, and property transfers, ensuring streamlined processes and accountability.

A Vision for Sustainable Communities

This development represents more than an infrastructure project, it embodies an investment in people, community resilience, and economic vitality. By providing quality, affordable homes for middle-income families, the initiative aims to facilitate asset ownership, wealth creation, and intergenerational stability.

“Our goal is to bridge the gap in housing by offering real, practical solutions,” Louw emphasised. “Middle-class families are the backbone of our economy, and they deserve to live in decent, affordable homes close to their workplaces and schools. This PPP project helps make that a reality.”

Moreover, the project will stimulate the local economy through the inclusion of local contractors and suppliers, fostering job creation and supporting small and medium enterprises. It exemplifies how innovative partnerships can deliver impactful, sustainable outcomessetting a precedent for future municipal housing initiatives.

Looking Forward…

Drawing on successful models such as the Gautrain PPP, the Erf 3339 development aims to set a new standard in local governmentled housing projects - combining transparency, efficiency, and community benefit. As the project advances, the municipality’s Housing Directorate remains committed to close collaboration with all stakeholders, ensuring that the development not only provides homes but also contributes to the creation of resilient, vibrant communities. “This project is about more than bricks and mortar, it’s about building lives, fostering pride, and creating a legacy of inclusive growth for generations to come” concluded Louw.