-ROLE OF LAND POLICY IN FINANCING URBAN DEVELOPMENT – CITY OF JOHANNESBURG -ROLE OF LAND POLICY IN FINANCING URBAN DEVELOPMENT – 21.03.2017 1

CITY FINANCES NO KEY PERFORMANCE AREA KEY PERFORMANCE TARGET 1 Current ratio Above 1:1 2 Solvency ratio Above 2:1 3 DEBT TO REVENUE RATIO BELOW 45% 4 Remuneration to Expenditure ratio Below 30% 5 Maintenance to PPE ratio 8% 6 INTEREST TO EXPENDITURE RATIO BELOW 7% 7 Net operating margin Above 15% 8 Cash cover 45 days 2

CITY FINANCES

CITY FINANCES

TRANSIT ORIENTED DEVELOPMENT

INTENSIFICATION OF USE

DETAILED PLANNING

MARKET ANALYSIS MIXED USE RESIDENTIAL OPTIMAL

INFRASTRUCTURE DEFICITS Item Cost Major Quantity* Unit Description Roads R 23,742,189.73 52,760.42 m2 Total road extension area Sewer R 297,570.24 815.00 m Supply, laying and bedding of uPVC pipes (total length) Stormwater R 6,148,537.62 8,167.50 Supply, laying and bedding of Class 100D pipes (total length) Water R 176,911.17 265.00 Total R 30,365,208.76 Contigencies 10% R 3,036,520.88 R 33,401,729.64 Disbursements 15% R 5,010,259.45 R 38,411,989.08 ELECTRICAL COST ESTIMATE - EXTERNAL SERVICES   New Substation Upgrade 88 kV Cable Network Upgrade TOTAL km Rate/km Total SCENARIO 1: R 150,000,000.00 10.00 R 10,000,000.00 R 100,000,000.00 R 250,000,000.00 SCENARIO 2: R 285 million ($21 million)

STRUCTURE

VIABILITY Phase 1 2 3 Stabilization Year 2019 2022 2025 Market Value of New Development 3,153,797,774 7,198,014,369 12,321,195,247 Additional Tax Revenue Over Existing Base 10,569,163 27,730,568 49,470,497 Incremental Tax Available for New Bonds 17,161,405 21,739,929 Bond Tranche Sizing 78,900,000 128,200,000 162,400,000 TOTAL BOND CAPACITY MIXED USE R 369,500,000

VIABILITY Phase 1 2 3 Stabilization Year 2019 2022 2025 Market Value of New Development 4,510,417,404 10,294,271,102 17,621,210,195 Additional Tax Revenue Over Existing Base 7,005,379 19,596,828 35,547,575 Incremental Tax Available for New Bonds 12,591,450 15,950,746 Bond Tranche Sizing 52,300,000 94,100,000 119,100,000 TOTAL BOND CAPACITY RESIDENTIAL R 265,500,000

VIABILITY Phase 1 2 3 Stabilization Year 2019 2022 2025 Market Value of New Development 3,547,072,774 8,095,598,585 13,857,634,300 Additional Tax Revenue Over Existing Base 6,611,227 18,697,243 34,007,710 Incremental Tax Available for New Bonds 12,086,016 15,310,467 Bond Tranche Sizing 49,400,000 90,300,000 114,400,000 TOTAL BOND CAPACITY OPTIMAL MIX R 228,200,000

NEXT STEPS… Resolve accounting treatment – off balance sheet – at worst limited exposure. Cost engineer infrastructure cost + look at other LVC, i.e. bulk contributions Investor prospectus + test market appetite Security instruments Draft legal agreements – servicing agreement + escrow account Developer agreements – race against time Seed the establishment of the SPV with proven execution capability Sponsor capital raising

CITY OF JOHANNESBURG DEVELOPMENT PLANNING YONDELA SILIMELA 10th Floor, A Block, Metropolitan Centre, No 158 Civic Boulevard, Braamfontein, Johannesburg, Gauteng Province, South Africa http://www.joburg.org.za/ http://www.corridorsoffreedom.co.za/ YONDELA SILIMELA yondelas@joburg.org.za