As many as 80% of all contracts expired amid management and register shambles
The Nelson Mandela Bay Municipality’s lease management system is in such a shambles that about 80% of all contracts have expired, costing the metro millions of rands in potential revenue.
A lack of staff capacity and an unreliable lease register are, among other reasons, to blame for the mess which has been dragging on for years.
The situation is further exacerbated by the fact that leases are handled by two different departments, making it difficult to properly align the municipality’s processes.
And although a policy to manage the leases of buildings and land was drafted, it was never approved by the council and implemented.
This was revealed in a report to the municipal public accounts committee (Mpac), which met yesterday.
The problem with leases has plagued the city for years, prompting it to purchase a land information system, an exercise which cost ratepayers about R80-million.
When the contract with the service provider ended, the city became embroiled in a battle with the firm over the ownership of the intellectual property.
The Integrated Land Information System (Ilis) is not operating, but the municipality wants an assessment done to determine if it can reinstate it.
In a report, acting executive director of corporate services Vuyo Zitumane wrote that 75% of leases managed by her department had expired, while 85% of those managed by the human settlements department had lapsed.
“The current method of operation does not deliver meaningful strategies and socioeconomic developmental goals to property management,” the report said.
“The risk of non-compliance in general and especially with accounting standards, therefore, cannot be averted.
“If the situation is not rectified soon, the municipality will earn an audit qualification from the auditor-general when the next audit is conducted.”
The report lists the reasons for having no proper strategy in place to handle leases, which include that the immovable asset register is unreliable.
It states that the municipality is losing revenue because lease agreements are not timeously renewed.
The exact amount of how much the metro is losing every year is not known, apparently because the system is so disorganised.
However, it is estimated to be in the region of R20-million, according to the metro’s political head of budget and treasury, Retief Odendaal.
Zitumane’s report said: “[There is] no standard operating practice for lease management [and] there is no monitoring and evaluation of lease management procedures.
“The asset register is unreliable and there are serious challenges with the quality, quantity and integrity of critical data relating to the municipal leases handed over by the previous service provider.
“The key to future success lies in the centralisation of the lease management function for the [municipality] into a single unit under the corporate services directorate to maintain uniformity and ensure that a standard operating practice is applied and managed consistently.”
Councillors at the Mpac meeting noted the proposed lease management strategy and process plan drawn up by Zitumane’s department.