Not a day goes by without one hearing of some municipal crisis somewhere in the country. These range from banal but extremely annoying stories of billing crises, lack of budgetary control and bloated bureaucracies to the horror story unfolding in Emfuleni, where total collapse of the municipality as a functional entity has unleashed a tsunami of raw sewage flowing unabated along the streets and through the buildings, as it makes its way to the nearest river.
Then there was the international headline-grabbing story of Day Zero as Cape Town faced the very real possibility of simply running out of water, and the disturbingly frequent violent confrontation on the streets as communities protest against lack of service delivery, or as striking municipal workers demand salary increases that have no bearing on productivity or affordability.
In short, our municipalities are in crisis, but the implications are yet to be felt by every citizen of this country.
One response has been the migration of people, typically in the middle- to upper-income bracket, into residential estates. The growth of these enclaves of relative calm and tranquillity has been in direct response to the rate of collapse of the municipalities as functional entities.
So, what are the implications of this to both residents and owners of real estate in residential estates? Are homeowners associations (HOAs), bodies corporate (BCs) and managing agents (MAs) increasingly replicating the role once fulfilled by municipalities? As these roles change, what of the liability landscape that is emerging? What are the risks that lie invisible, but lurk ever present to trustees as they fulfil their fiduciary role, but without financial compensation to offset potential personal liability?
To answer these questions, we need to dig a little deeper into the mechanisms hard-wired in our constitutional democracy. Our constitution creates three distinct tiers of government, each with its unique responsibilities. These can be thought of as a two-storey building where the ground floor is municipal, the first floor is provincial, and the top floor is national government. Structurally, the whole thing is held together by the pillars of the ground floor, so we can think of municipalities as being the foundation of our democracy in a functional sense. They are the deliverers of basic services such as water, sanitation, electricity, transport and recreation. If enough pillars fail, then the whole house comes tumbling down.
But here is where the dilemma lies, because some of those services are originally generated by national government, with the municipal tier being but a channel of delivery. Think of security that is provided by the SAPS, and water that is provided by the Department of Water and Sanitation (DWS). When there is a mismatch between national and municipal levels of government, such as we had in the Day Zero crisis of Cape Town, then local authorities are woefully unprepared to provide the service. They simply do not have the institutional capacity to do the long-term strategic planning, and to then implement those plans at the local level. That strategic planning imperative is a national one, not a municipal one, but clearly each tier has an input into that process.
Municipal planners must inform national planners what the future trajectories are, decades before they manifest as a reality, so that national planners can design bulk infrastructure to meet those needs. It must be remembered that the planning and execution of bulk infrastructure – such as water supply or electricity generation – takes a long time from the initial request being made to the final delivery of that service. In the case of water and energy projects, this is typically two decades, so clearly municipalities are ill equipped to do this, and only national authorities can. This takes us back to the constitution, because the devil is always in the detail. Our national constitution also defines spheres of government. These are different to tiers of government. To best understand this, we can think of a cake made up of three layers. The lower is municipal, the middle is provincial and the upper is national. Now we think of slices of that cake, each cutting through the horizontal structures.
Each slice of that cake is a sphere of government and here is where it becomes a nightmare. The constitution has a specific provision known as the Cooperative Governance Clause, which prevents one branch of government, ‘interfering’ with another in the execution of its business. It is because of the existence of this clause that national departments such as DWS are reluctant to intervene in the affairs of a municipality. This was cited most vociferously by Minister Nomvula Mokonyane during the build-up to the last elections when she was asked why she had not intervened in the growing sewage problem, which was at that time not yet a full-blown national crisis. This logically means that government departments are unable to execute their regulatory role – to which we will return later.
Therefore, we can safely say that our municipalities are falling like dominoes, and one of the causes of that failure is the current interpretation of responsibilities arising from the Cooperative Governance Clause. There are other causes of failure too, most notably the appointment of technically incompetent but politically connected cadres, who are immune from any form of prosecution and can thus never be held legally accountable for their actions.
The net result of this is that about 20% of all municipalities are now dysfunctional to the point at which they are simply unable to deliver the most basic of services, but around 60% of all municipalities are distressed in some form or other. This is where it impacts residential estates, because this trend is growing, with little evidence to suggest that things are likely to get any better in the foreseeable future.
So, what are the implications for residential estates? More importantly, as residential estates increasingly replicate the de facto function of municipalities, what does this mean for the owners, residents, managers, directors and trustees?
The first aspect to consider is that the current trend in municipal failure is in fact empirical evidence of state failure. States don’t suddenly fail. They fail incrementally, as subsystems within that state fail. But here is where it gets interesting, because as one subsystem fails, society typically responds to create an alternative. When the postal services failed, people simply switched to courier services. When the SAPS failed, people simply employed private security companies to protect their assets and loved ones. When the SABC failed, people increasingly migrated across to pay-to-view cable networks. When SAA failed, other airlines grew to meet the demand. When municipalities fail us, we move into residential estates where privately funded service providers replicate those services.
All these adjustments by society mask the underlying pathology that the state is failing, and so we continue our daily business oblivious to the real issue – state failure. This happens suddenly when the collective responses by society are unable to provide alternatives, typically when the tax base collapses, leaving the state unable to sustain itself financially. This is where we are today.
Logically, therefore, we need to consider that, unless the ship gets turned around, state failure is the end destination. This means that the trend towards residential estate living will continue and probably accelerate, but the implication is that an island of tranquillity floating on a turbulent sea of growing social discontent will eventually be unsustainable. This is a sobering thought.