I I TA 3760 PHI: Metro Urban Services for the Poor Project I I I 1

The Final Report of the Urban Services for the Poor Project (MMUSP) I is presented in three volumes. The main report is further divided into three parts; Part I-The Project Study; Part II - The Proposed Strategy and Part Ill - Proposed Pilot I Projects. Part 1 reviews the current conditions affecting shelter in the NCR and beyond, the findings of the social surveys carried out in depressed areas and the general policy environment in land, housing, infrastructure, capacity building, institutions, urban I development, planning law, funding, etc. Part II begins by proposing improvements to a range of policy recommendations, presents the major elements of the long term Strategy, makes detailed forecasts of housing need and investment requirements, I prepares the financial structure and a detailed plan for the first five-year period. Part I1 concludes with proposals for marketing the Strategy among the LGUs. Part Ill details the proposed Pilot Project LGUs, and the three pilot project sites. Part Ill I concludes with a project justification, including environmental, social and poverty impact and economic and financial analysis. I 1 I I I I I 1 I

i I Final Report 0 Volume 1 I TA 3760 PHI: Metro Manila Urban Services for the Poor Project

Preface

List of AbbreviationslAcronyms

List of Appendices

EXECUTIVE SUMMARY

PART 1: BACKGROUND TO THE STRATEGY

Chapter 1 Urban Development & Efforts to Eradicate Slums 1.1 Introduction 1 1.2 International Context 2 1.2.1 Cities Alliance 1.2.2 AD6 & Cities Alliance 1.2.3 The UN and Urban poverty

1.3 Regional Framework 5 1.3.1 The Roles of Regions Ill and IV 1.3.2 . Accessibility to Metro Manila

1.4 Donor Assistance 11 1.5 AD6 Urban Strategy 13 I.6 Lessons Learned 16 1.6.1 Upgrading and Relocation 1.6.2 Minor Role of the Private Sector in Housing for the Urban Poor 1.6.3 Policy and Investment Framework 1.6.4 Clear and Simple Institutional Responsibilities 1.6.5 Community and Local Government Participation 1.6.6 LGU Support and Participation 1B.7 Cost Recovery 1.6.8 Monitoring and Feedback

I.7 Selected Best Practices 19 1.7.1 Local Multi-Sectoral Committees for the Socialized Housing Program 1.7.2 Code of Policies of Community-Based Organizations (CBOs) Governing House Construction and Estate Management 1.7.3 Marikina Settlements Code

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1.7.4 Migration Information Center of I Muntinlupa 1.7.5 Center of Excellence of I Marikina Chapter 2 Current Slum Area Conditions 1 2.1 Summary of Findings 22 2.2 Key Issues and Conclusions 38

I Chapter 3 Policy Environment 3.1 Government Plans and Policies 40 I 3.2 Policy Issues 44 3.2.1 Land Market Rationalization 3.2.2 Shelter Delivery Systems I 3.2.3 Housing and Infrastructure Affordability 3.2.4 Urban Planning and Management 3.2.5 Private Sector Participation i 3.2.6 Infrastructure and Environment 3.2.7 Institutional Environment 3.2.8 Community and NGO Participation 3.2.9 Micro-Finance I 3.2.10 LGU Revenues 3.2.11 Electronic Governance 3.2.12 Financial Environment I 3.2.13 Legal Environment I PART 2 THE PROPOSED STRATEGY Proposed Policy Framework for the Chapter 4 I Long-Term Strategy 4.1 Rationale 62 4.2 Vision 65 I 4.3 Scope 66 4.4 Major Elements of the 15-Year Strategy 66 I 4.5 Logical Framework 69 4.6 Existing Paths to Housing and Tenure 78 1 4.6.1 Public Sector Housing 4.6.2 Private Sector Housing 4.6.3 The Community Land Trust : Path to I Affordable Land Tenure and Housing Chapter 5 Strategy: Policy Recommendations

1 5.1 Adopt a Holistic approach to Shelter which 1 Integrates Housing, Access to Social

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Services, Generation of Livelihood and I Employment 83

5.2 Strengthen Institutional Framework 84 I 5.2.1 At the National Level 5.2.2 At the Local Level

1 5.3 Enhance LGU, NGO and CBO Capacities 86 I 5.4 Improve Social Services Delivery 88 5.5 Establish Information System 89 I 5.6 Increase Private Sector Participation 91 5.6.1 Financing 5.6.2 Physical Improvement I Provision of Employment and Micro- 5.6.3 Financing Schemes

1 5.7 Develop New Approaches to Infrastructure & Environment 94 5.7.1 Infrastructure Development 1 5.7.2 Promote Environment Conscious Site Planning I 5.8 Improve Land Management 98 5.8.1 Land Administration 5.8.2 Land Valuation I 5.8.3 Land Regulation 5.8.4 Proclamation Planning 5.8.5 Improve Land Use by Re-Parcellation/Land Readjustment SchemedGuided Land I DevelopmenVLand Sharing Techniques/Community Land Trust 1 5.9 Summary of Recommended Policies 100

Chapter 6 Housing Need And I Resource Requirements

6.1 Overall Housing Needs to Eradicate Slums I by 2017 112 6.1.1 Structure of the Assessment 6.1.2 Results of the Assessment for the Overall 1 Strategy Period from 2002 to 201 7 6.2 Investment Requirements to Meet These I Needs 118 1

1 Final Report Volume 1 iv I TA 3760 PHI: Metro Manila Urban Services for the Poor Project

Chapter 7 Implementation Of The Strategy

7. I Detailed 2000-2007 Program 123 7.2 Priorities and Phasing of Required 125 Investments 7.2.1 Transfer of Land 7.2.2 Infrastructure Investment 7.2.3 Low-Income Communities and the Banks

7.3 Potential Economic Benefits 129 7.4 Financial Structure 129 7.5 Sources of Finance 130 7.6 Use of Subsidies 136 7.6.1 Current Situation 7.6.2 Use of Capital Subsidies and Vouchers 7.6.3 Proposed Approach

7.7 Co-Financing Proposals 138 7.7.1 Japanese Bilateral Assistance 7.7.2 Other Co-Financing Options 7.7.3 Parallel Financing Options

7.8 Cost Recovery 140 7.8.1 Informal Settlements on Private Land 7.8.2 Informal Settlements on government Land

7.9 Revolving Fund 142 7.9.1 Objectives of the Revolving Fund 7.9.2 Structure of Revolving Fund Management 7.9.3 Potential Sources of Funding 7.9.4 Sustainability of the Revolving Fund 7.9.5 Scaled Up Interventions 7.9.6 Reporting 7.9.7 NGO/CLT Revolving Fund

7.10 Stakeholder and Institutional 145 Responsibilities 7.10.1 National Government 7.10.2 The Local Government Unit 7.10.3 Community-Based Organization 7.10.4 Non-GovernmentalOrganization 7.10.5 Private Sector

7.11 Project Implementation 147 7.10.1 Technical arrangements 7.10.2 Financial Arrangements

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7.12 Promoting the Strategy Among MM LGUs 164 I 7.12.1 Introduction 7.12.2 Process of Adoption 7.12.3 Benefits to Participating LGUs: I Components of the resource Assistance Package 7.12.4 Projects Eligible for Financing I 7.12.5 Participation of Non-Metro Manila LGUs 7.12.6 Forms of LGU Initiatives 7.12.7 Intra-LGU Coordination Current LGU Initiatives and the 15-Year I 7.12.8 Strategy 7,.12.9 Capacity to Meet Future Housing Needs 7.12.10 Recommended Areas for LGU Action I Possible LGU activities under a No-Project 7.12.11 Assumption Supporting LGUs under a Worst Case I 7.12.12 Scenario Supporting LGUs under a Best Case I 7.12.13 Scenario 7.13 Legal Agenda 184 7.13.1 Provision of Stronger and More Detailed 1 Legal Basis for Other Land Development Schemes 7.13.2 Legal Issues Generated by Land Allocation I and Disposition in areas covered by Presidential Proclamations 7.13.3 Legal Issues in Land Titling and Land 1 Registration 7.13.4 Reviewing the Status 7.13.5 Review UDHA Provisions for Appropriate Remedial Legislation I 7.13.6 Legal Framework for the Creation of the CLT as well as Trust Agreements covering Housing Finance I 7.13.7 Formulation of Local Housing Code providing among others for the Local Housing Boards I 7.13.8 Legal Measures to Resolve the Issue of Recalcitrants in the CMP Project Sites I PART 3 THE PROPOSED PILOT PROJECTS

I Chapter 8 Profiles of the Pilot LGUs

8.1 Rationale for Pilot Projects 190 I 8.2 Objectives and scope 19g I

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I 8.3 Profile of Muntinlupa 191 8.3.1 Background 8.3.2 Housing Sector Policies I 8.3.3 Socio-Economic Profile

8.4 Profile of Taguig Municipality 198 I 8.4.1 Background 8.4.2 Housing Sector Policies I 8.4.3 Socio-Economic Profile 8.5 Profile of Caloocan 207 I 8.5.1 Background 8.5.2 Housing Sector Policies I 8.5.3 Socio-Economic Profile Chapter 9 Pilot Project Components

I 9.1 Introduction 217

9.2 NBP Site, Muntinlupa 217 I 9.2.1 Site Development Social Services and Community 9.2.2 Development I 9.2.3 Employment and Livelihood Generation 9.2.4 Micro-Credit 9.2.5 Capacity Building I 9.2.6 GIS 9.3 BHlT Zone, Taguig 241 9.3.1 Site Development I Social Services and Community 9.3.2 Development 9.3.3 Employment and Livelihood Generation I 9.3.4 Micro-Credit 9.3.5 Capacity Building I 9.3.6 GIS 9.4 TALA Site, Caloocan 262 9.4.1 Site Development 1 Social Services and Community 9.4.2 Development 9.4.3 Employment and Livelihood Generation I 9.4.4 Micro-Credit 9.4.5 Capacity Building I 9.4.6 GIS I 9.5 Pilot Project Cost Estimates 282

I Final Report Volume 1 vii I I TA 3760 PHI: Metro Manila Urban Services for the Poor Project I I 9.6 Financing Plan 285 9.7 Flow of Funds 286 9.7.1 Loan to LGUs I 9.7.2 Loan to MFlslThrift banks 9.7.3 Loan Repayment

i 9.8 Proposed Lending and On-Lending Terms 288 9.9 Financing 29 1 I 9.9.1 Land Cost 9.9.2 Infrastructure Costs 9.9.3 Housing Construction Costs I LGU O&M Costs, Public Facilities and 9.9.4 Consulting Services i 9.10' Affordability Considerations 292 9.1 1 LGU Contribution and Borrowing Capacity I Chapter 10 Project Justification I 10.1 NBP Site, Muntinlupa 296 10.1.1 Initial Environmental Impact 10.1.2 Social Impact I 10.1.3 Poverty Impact

10.2 BHlT Site, Taguig 312 I 10.2.1 Initial Environmental Impact 10.22 Social Impact I 10.2.3 Poverty Impact 10.3 TALA Site, Caloocan 329 I 10.3.I Initial Environmental Impact 10.3.2 Social Impact I 10.3.3 Poverty Impact 10.4 Economic and Financial Analysis 345 10.4.1 Economic Analysis 1: 10.4.2 Financial analysis

10.5 Project Risks 350 I 10.6 Loan Conditions 351 10.6.1 Implementation Schedule 10.6.2 Project Supervision and Reporting I Requirements 10.6.3 Project Accounts, Audits and Reports I

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10.7 Benefit Monitoring 351

Chapter 11 Technical Assistance

11.1 Home-ownership for Sustainable and 356 Dynamic Communities

11.2 Guidelines for the Formulation of the Local 362 Shelter Plan for the Urban Poor

11.3 Capacity Building Component of the 370 MMUSP Project

11.4 Project Management Office Operation 38 I

11.5 Developing a Metro-Wide Informal Settler 389 Information System

11.6 Urban Electronic Governance 395

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Final Report 0 Volume 1 ix I TA 3760 PHI: Metro Manila Urban Services for the Poor Project i 1 I I AAGR Average Annual Growth Rate ADB Asian Development Bank I AISAR Allowable Impervious Surface Area Ratio AITECH Accreditation of Innovative Technologies for Housing I ALI Ayala Land, Inc. AMANOVA Alliance of Urban Poor in Novaliches-Consultative Body I APD Area for Priority Development APE Anti Poverty Information Service I APR Annual Percentage Rates APT Asset Privatization Trust I AQ Coping with Adversity i ARM Area Resource Management AS0 Absentee Structural Owner I AUSAID Australian Agency for International Development AUV Auxiliary Utility Vehicle 1 AWDR Average Weighted Deposit Rate BCDA Bases Conversion Development Authority I BHlT Bonifacio Housing and Information Technology BHL Maximum height allowed for structures or floors expressed as I number of floors or storeys BIR Bureau of Internal Revenue I BLGF Bureau of Local Government Finance BOT Build-Operate-Transfer 1 BP 220 Subdivision Guidelines CA Community Association I CALA Cavite-Laguna I

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I CARP Comprehensive Agrarian Reform Program CBD Central Business District I CBO Community Based Organization CCPSP Coordinating Council for Private Sector Participation I CDC City Development Council CDP Comprehensive Development Plan I CHA Community Housing Association I CHB Concrete Hollow Block CHD Community Health Development 1 CHR Commission on Human Rights CISFA Comprehensive and Integrated Shelter Financing Act 1 CLASP Community Land Acquisition Program CLT Community Land Trust 1 CLUP Comprehensive Land Use Plan CMMTC Citra Metro Manila Tollways Corporation 1 CMP Community Mortgage Program COA Commission on Audit I COLC Community Organization Learning Centers COPE Community Organization of the Philippines Enterprise I COSLAP Commission on Settlements on Land Problems CPDO City Planning and Development Office I CPH Census on Population and Households i CREBA Chamber of Real Estate and Builders Association CRUP Corporate Response to Urban Poverty I DAEP Depressed Area Electrification Program DBM Department of Budget I DBP Development Bank of the Philippines DENR Department of Environment and Natural Resources 1 DF Development Fund I DHUD Department on Housing and Urban Development

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DlLG Department of Interior and Local Government DOE Department of Energy DOF Department of Finance DOJ Department of Justice DOTC Department of Transportation and Communication DPUCP Development of Poor Urban Communities Project DPWH Department of Public Works and Highways DSOP Dike-Side Organization of Punta DSS Decision Support System

DSWD , Department of Social Welfare and Development DTI Department of Trade and Industry ECC Environmental Compliance Certificate EDF Economic Development Fund EFCOS Effective Flood Control Operational System EG Electronic Governance EHD Environmental Health and Development ElRR Economic Internal Rate of Return EO Executive Order

EO 72 Framework for the Preparation & Implementation of Comprehensive Land Use Plan EO 90 Creation of Housing and Urban Development Coordinating Council EO 159 Declaring Mass Housing as a Centerpiece Program of the Estrada Administration & Constituting the Philippine Commission on Mass Housing EO 184 Socialized Housing One-stop Processing Centers (SHOPCs, 1994) EO 216 Further Strengthening EO 90

EO 258 Prescribing Time Standards in the Issuance of Permits for ‘Housing Projects EO 364 Creation of National Commission on Savings EOCC Economic Opportunity Cost of Capital EPIRA Electric Power Industry Report Act

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EQ Emotional Quotient ERC Energy Regulatory Commission ESA Environmental Sensitive Areas EU European Union FAR Floor Area Ratio FCO Floor Clean Out FDA Foundation for Development Alternatives FDUP Foundation for the Development of the Urban Poor FlES Family Income and Expenditure Survey FlRR Financial Internal Rate of Return GAP Graduated Amortization Payments GD Gutter Drain GFI Government Financial Institution GI Galvanized Iron GIS Geographic Information System GLD Guided Land Development GNP Gross National Product GOP Government of the Philippines GPS Global Positioning System GSIS Government Service Insurance System

HA Hectare

HDI Human Development Index HDMF Home Development Mutual Fund also known as Pag-IBIG HDPE High-Density Polyethylene HGC Home Guaranty Corporation HH Household HLURB Housing and Land Use Regulatory Board HOA Homeowners Association HRB High Rise Building HUDCC Housing and Urban Development Coordinating Council

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I IATFGI Inter Agency Task Force on Geographic Information Systems ICC Investment Coordination Council I ICT Information and Communications Technologies IF1 International Financial Institution 1 IPP Independent Power Producer IRA Internal Revenue Allotment I IRA Internal Revenue Allotment 1 IRR Implementing Rules and Regulation IRRl International Rice Research Institute I lSlS Informal Settler Information System ISP Information System Plan 1 IT Information Technology IT-SEZ Information Technology-Special Economic Zone I IQ Intelligence Quotient JCPC Joint Congressional Power Commission 1 JlCA Japan International Cooperation Agency KALAHI Kapit-bisig Laban sa Kahirapan 1 KWH Kilo Watt Hour LAMP Land Administration and Management Project I LBP Land Bank of the Philippines LCF League of Corporate Foundations I LDCs Local Development Councils I LGC Local Government Code (RA 7160) LGU Local Government Unit I LGUGC Local Government Unit Guarantee Corporation LHB Local Housing Board I LiAC Local Inter-Agency Committee LIBOR London Inter-Bank Offering Rate I LIT Land Investment Trust 1 LMB Land Management Bureau

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I LOCREV Estimated Annual Local Revenue LPCD Liters Per Capital Per Day I LRA Land Registration Authority LRT Light Rail Transit 1 LSP Local Shelter Plan LUP Land Use Plan I LWUA Land Water Utilities Administration 1 MAQISDP Metro Manila Air Quality Improvement Sector Development Program MBMP Municipal Base Mapping Project I MDF Municipal Development Fund MDP Master Development Plan I ME0 Municipal Engineering Office MERALCO Manila Electric Company I MFIs Micro Finance Institutions MHS Ministry of Human Settlements 1 MIFUND Mortgage Re-investment Fund MIS Management Information System 1 MLD Million Liters per Day MMDA Metro Manila Development Authority I MMRDP Metro Manila Regional Development Plan MMUSP Metro Manila Urban Services for the Poor 1 MMUTIS Metro Manila Urban Transport Information System I MOA Memorandum of Agreement MOOE Maintenance Operating and Overhead Expenses I MOU Memorandum of Understanding MPDO Municipal Planning Development Office I MRATF Muntinlupa Resettlement and Anti-squatting Task Force MRB Medium Rise Building I MRF Materials Recovery Facility MSG I Multi-Sectoral Groups

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MSO Marikina Settlements Office MTPDP Medium Term Philippine Development Plan MW Megawatts MWCl Manila Water Company, Inc. MWLS Multi-Window Lending System MWSl Maynilad Water Services MWSS Metropolitan Waterworks Sewerage System

NABIGLA-PO HOA Nagkakaisang Bigkis-Lakas ng Pasacola Dulo Homeowners Association, Inc. NAMRIA National Mapping and Resource Information Authority NAPC National Anti-Poverty Commission NAPOCOR/NPC National Power Corporation NBC Net Borrowing Capacity NBP New Bilibid Prison NCR National Capita I Region NCSO National Census Statistics Office (former NSO) NEDA National Economic Development Authority NGA National Government Agency NGC National Government Center NGO Non-Government Organization NHA National Housing Authority NHMFC National Home Mortgage Finance Corporation NLEX NLUC National Land Use Code NPL Non-Performing Loan NPV Net Present Value NRW Non-revenue Water NSCB National Statistical Coordination Board NSO National Statistics Office NSP National Shelter Program

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I NUDHFP National Urban Development and Housing Framework Plan O&M Operation & Maintenance I OLO Outstanding Loan Obligations OPEN Online Procedures Enhancement for Civil Applications I OSHDP Organization of Socialized Housing Developers of the Philippines I PADCO Planning and Development Collaborative Corporation, Inc. PAKSA-LUPA National Alliance of Urban Poor Organizations for Urban Land Reform I PBSP Philippine Business for Social Progress I PCMC Philippine Commission on Mass Housing PCUP Presidential Commission on Urban Poor

I PD ' Presidential Decree PD 1067 Philippine Water Code I PD 1529 Property Registration Decree (1978) PDF Project Development Fund 1 PEA Public Estates Authority 1 PECCO Philippine Ecumenical Committee for Community Organization PESO Productivity and Employment Services Office I PHlLARlS Philippine Land Registration Information System PHILCOS Philippine Community Organizers Society I PH ILSSA Partnership for Philippine Support Service Agencies, Inc. PHPF Philippine Homeless Peoples Federation I PIDFUND Philippine Infrastructure Development Fund PI0 Public Information Office 1 PLDT Philippine Long Distance Telephone Company PLO Percentage of Land Occupancy I PMlS Personnel Management information System PMO Project Management Office i PNCC Philippine National Construction Corporation I PNP Philippine National Police

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I PNR Philippine National Railway POS Philippine Organizations I PPA Power Price Adjustment PPP Public Private Partnership I PREMRP Pasig River Environmental Management & Rehabilitation Project 1 PRRC Pasig River Rehabilitation Commission PSALM Power Sector Assets and Liabilities Management Corporation I PSP Private Sector Participation PUD Planned Units for Development I PWD Person with Disabilities RA Republic Act I RA 6969 Toxic Substances and Hazardous and Nuclear Waste Control Act RA 7279 Urban Development and Housing Act of 1992

I RA 7835 Comprehensive & Integrated Shelter & Urban Development Financing Act 1994 I RA 7924 Basic Charter of MMDA RA 8368 Repealing the Anti-Squatting law of 1997 I RA 8425 Social Reform and Poverty Alleviation Act RA 8501 Housing Loan Condonation Act of 1998 I RA 8749 Clean Air Act RA 8792 Electronic Commerce Act I RA 9003 Ecological Solid Waste Management Act of 2000 RA 9136 Electric Power Industry Reform Act i RAT Rapid Assessment Team I RDC Regional Development Council RIMSS Road Information Management Support System I RIA Rapid Land Use Assessment ROD Register of Deeds I RORB Return On Rate Base ROW Right of Way I

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RPT Real Property Tax SD Shower Drain SDI Slum Dwellers International SEC Security Exchange Commission SEP Socio-Economic Profile SERF Shadow Exchange Rate Factor SHDA Subdivision and Housing Developers Association, Inc.

SHELTER Synchronizing and Harnessing Local Efforts for Sustainable Shelter Forum SHOPCOM Socialized Housing Program Committee SHZs Socialized Housing Zones SlDA Swedish International Development Agency SIR Slum Improvement and Resettlement SLEX SMS Short Messaging System SONA State of the Nation Address SPEX Shell Philippines Exploration SRA Social Reform Agenda sss Social Security System SSTRIMM Small Scale Traffic Improvement Measures for Metro Manila STEC Science and Technology Education Center SWOT Strengths-Weaknesses-Opportunities-Threat SWRF Shadow Wage Rate Factor TA Technical Assistance TAHAC Hansenites Association TBP Traffic Bottleneck Points

TCT Details of the Title

TDR Transfer of Development TEF Toilet Exhaust Fan TESDA Technology Education and Skills Development Authority

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TLRC . Technology and Livelihood Resource Center TMSG Taguig Multi-Sectoral Group TOR Terms of Reference TRANSCO National Transmission Company TRO Temporary Restraining Order TWG Technical Working Group UDD Urban Development Department UDHA Urban Development and Housing Act (RA 7279) UHLP Unified Home Lending Program UN United Nations UNCED United Nations Conference on Environment and Development UNDP United Nations Development Program UNHO Urban Nutrition and Health Project UPAO Urban Poor Affairs Office UPC Urban Poor Colloquium URA Urban Redevelopment Area USAID United States Agency for International Development VMSDFI Vincentian Missionaries Social Development Foundation, Inc. WACC Weighted Average Cost of Capital WB World Bank WCED World Commission on Environment and Development WESM Wholesale Electrification Program ZIP Zonal Improvement Program

- - - Final Report Volume 1 xx I TA 3760 PHI: Metro Manila Urban Services for the Poor Project I i I 1 Appendix Title A Socio-Economic Analysis

I A-I Depressed Settlements in Metro Manila A-2 Household Case Studies A-3 Methodology for Housing Surveys i A4 Survey Questionnaires A-5 List of Barangays Covered by the Surveys

I 6 Community Participation 1 C Institutional Profile of Micro-Finance Institution D Current GIS State in Metro Manila LGUs

I E Rapid Review of GIS Use in Cities Outside Metro Manila

F Assessment of Affordability and Availability of Urban I Infrastructure Provision for Socialized Housing Projects in Metro Manila

I G Community Mortgage Program 1 H Working Paper on Estate Management I Financial Review of Selected Cities and Calculation of I Borrowing Capacities 1 J Capacity Building Program K Case Studies on NGO and CBO Experiences in Socialized 1 Housing Projects L Case Studies on Community Participation in Local I Governance M GIS Implementation Plans

I M-I GIS Training Report M-2 Informal Settlers Maps of the 17 Metro Manila LGUs I

1 Final Report 0 Volume 1 xxi I TA 3760 PHI: Metro Manila Urban Services for the Poor Project I 1 I I 0 Legal Framework for MMUSP 0-1 Draft Executive Order Creating the Metro Manila Urban Services for the Poor Commission I 0-2 An Annotated Model Local Housing Code P Guidelines for the Formulation of a Local Shelter Plan for I the Urban Poor I Q Details of Cost Estimates and Financing Plan R Housing and Settlements Initiatives of the Metro Manila 1 LGUs S Site Development Plans for the Projects

I T Social Development Action Plans for the Pilot Projects U Institutional Profile of the Development Bank of the I Philippines I V Institutional Profile of Home Guarantee Corporation W Methodology for Conducting Economic and Financial I Analyses of Subprojects X Highlights of the Consultation Workshops Conducted by the 1 Project I Y Glossary of Terms 1 I I I

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I PART 1 BACKGROUND TO THE STRATEGY

1 1. Rationale and Vision

Metro Manila has joined the small group of megacities worldwide with populations I over 10 million. In fact the total population of the continuous urban area is considerably larger if urban expansion to the north and south is included. Growth rates ’in these adjacent areas are now much higher than those in NCR. Metro Manila displays many contrasting images, notably of high rise high income housing next to I bad slum conditions, modem mass transit and para transit, state of the art shopping malls and traditional family stores. In addition there is the all - pervasive experience of pollution, air, water and ground. There are some 3.5 million people living in I depressed areas in hundreds of locations, many small, and half a million of these are living in danger zones along rivers and railways, etc. This backlog of poor quality of life, and in many cases danger to life, forms the primary challenge for the present I Project. The team’s socio - economic surveys of depressed areas revealed familiar indicators of slum conditions, for example an average household size of 6.98 compared to an NCR figure of 4.62 and a mean monthly household income of 1 PhP6,900 compared to NCR’s income at the poverty line of some PhP18,OOO and a mean figure in danger areas of only PhP7,750. Data collected showed the enduring character of depressed settlements, with a mean average period of residence of 19.2 1 years with at least a quarter of residents having lived in their current house for over two generations.

To address the complicated technical, cultural and financial issues involved in I improving the depressed areas (many of which are small and scattered), within the designated period of 15 years, the present PPTA began an assistance program to HUDCC and LGUs in Metro Manila in January 2002. The present work builds on a I quarter century of initiatives in the NCR designed to reduce poverty by improving shelter conditions, including slum upgrading, sites and services, public housing and resettlement policies. Many of the lessons learnt are being applied in the present I project, including changes in thinking in the housing sector such as increased involvement of the private sector, increased community involvement in all stages of housing provision, innovative finance mechanisms, etc. Underlying the team’s 1 approach is the recognition that the majority of housing is provided by individual households, and that direct and indirect support mechanisms need to be targeted on I these owner builders. There are several reasons why the proposed 15-year Strategy should begin now, i.e. slum improvement is high on the political agenda; the emergence of the new Department of Housing is imminent; there is a considerable body of experience on I the subject of slums; the introduction of GIS will enable LGUs to calculate demand I for housing more accurately and the Philippines has recently joined the world wide

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Cities Alliance, which is in turn looking to NCR for demonstration projects in its goal of getting rid of slums by 2020.

Based on an analysis of the major problem areas of the NCR shelter sector, including problems of land shortage, inappropriate public housing, insufficient affordability, continuing poverty, lack of good governance and limited borrowing capacity, the long term vision which should guide the Strategy is as follows;

“A Slum -Free Metropolis by the year 2017, with shelter options available for all low- income households”

2. Objectives

Based on this Statement, the Project objectives are as follows:

Assist GOP formulate a phased metropolitan-wide 15-year Strategy for slum improvement and urban upgrading in Metro Manila; Initiate a process for formulating LGU-level integrated urban development interventions in support of the Strategy; and Prepare a package of high priority investment projects for possible future funding under an ADB loan.

Objectives are used in the Logical Framework focus on:

Promotion of holistic approach to shelter public private partnerships for housing and infrastructure Innovative approaches to housing finance Incremental provision of infrastructure Sustainable and preventative environmental management Improved levels of service in delivery of utilities, social services and shelter Effectively operating land market Innovative land development mechanisms Increases in economic activity Use of GIS as an analytical tool Enhanced efficiency and transparency of local government operations

These objectives have been carefully prepared to reflect both national and regional objectives. Thus, the National Urban Development and Housing Framework (NUDHF) 1999-2004 acts as the framework for the Philippines Shelter Plan, the Medium Term Philippine Development Plan (MTPDP 2001-2004) and the National Urban Policy Agenda (NUPA), have all been carefully screened to act as a guide for the Strategy. In addition, careful coordination has been maintained with the Bank’s Urban Development Strategy. At the regional level, the growth policies for Regions Ill and IV have been taken into account as alternative growth centers to the NCR with a consequent impact on resettlement policy. It becomes clear that housing for the urban poor is indeed a priority of GOP. In the devolution of shelter services, the policies have also defined the responsibilities of the LGUs, NGOs and POs in local shelter planning and project implementation. The policies also focus on obstacles in the land market and a call for more private sector participation in housing and in related services, as well as incentives to attract private business to do its share in low-income shelter delivery.

Final Report 0 Volume 1 xxiv I TA 3760 PHI: Metro Manila Urban Services for the Poor Project I I 3. Lessons Learned and Implications on the Strategy In the mid-l970s, the government first began to recognize the high social and - economic costs of relocating poor urban families to the outskirts of Metro Manila. In I response to this, in 1977-1988, the government housing program focused on comprehensive slum upgrading as well as the sites and services approach. Notable among the projects then was the Tondo ForeshoreIDagat-Dagatan Development I Project. Poor cost recovery, major problems in reblocking and high overhead costs led the NHA to abandon the slum upgrading approach during the Aquino 1 Administration. The high costs of acquiring expropriated housing sites at the fair market values led the NHA to focus on the construction of medium and high-rise public housing to resettle slum dwellers. Current resettlement activities involve mostly ‘in-city’ I relocation to medium-rise buildings, row houses and/or serviced plots.

Until now, private developers and NGOs have produced very little affordable housing I for the urban poor. Some of the private developers have benefited from government financing through loans from the HDMF. A few developers have been contracted by NGOs independently or jointly with urban poor communities to develop sites and/or I build a small number of houses. Clearly, better forms of involvement of the private sector in housing the urban poor are needed. 1 A.key lesson to be drawn from experience is that any public sector response to the problems of slums must be based on a coherent and achievable long-term framework for policy and investment. The framework should include a rational land I use policy to make land available for low-income housing and have for its basis, a well-targeted housing finance and subsidy system that can boost private sector confidence and generate greater investment in the housing sector. The framework should provide specific targets and action plans for all 17 cities and municipalities in 1 Metro Manila to achieve the overall goal of eradicating slums over the next 15 years.

Previous efforts in addressing slums have underlined the need for clear and simple I institutional arrangements in the planning and implementation of slum improvement activities. Current programs involve numerous agencies at various government levels 1 that only add to the complexity and costs of their implementation. Previous experiences also stressed the need to increase community and local government participation in resolving slum-related problems. Collaboration, inclusion, I communication and participation will be the basis of the approach. In addition, resident participation will reinforce community values and help build human and social capital for long-term sustainability. It will enable the development of creative partnerships with local institutions that can provide access to opportunities and I facilitate productive partnerships with businesses and other private sector organizations.

I Many of the LGUs have problems in implementing the UDHA because they lack the necessary capacity to undertake housing activities on a significant scale. LGU capacity building and strengthening is required in order for them to effectively 1 implement housing programs and to pursue joint venture schemes with the private sector as part of a continuing Strategy. The focus is to get the LGUs and the private I

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sector to more actively cooperate in the production of housing for low-income I households.

While significant improvement in cost recovery will be difficult, the basic starting point I is clear: slum dweller beneficiaries must obtain the services they want; be educated on the value of what they get; and be convinced of the need to pay for the services they received. A simple, transparent and easily enforceable collection system is I required to respond to the different needs, capacities and characteristics of the intended beneficiaries. 1 Finally, there is a need to establish an effective system of evaluating the performance of socialized housing projects: one that is capable of monitoring the performance of a project against intended targets and objectives. For this purpose, the MMUSP Project is recommending a GIs-based monitoring system called lnformal Settlers lnformation I System (ISIS), which will draw on the local data set that will be collected using the I proposed Guidelines for the Formulation of A Local Shelter Plan for the Urban Poor. 4. Strategy Approach

1 The Strategy Approach took the following into consideration:

0 lessons from previous similar practices and policies; I the need for a clear institutional structure for its effective implementation; and 0 ensuring that the Strategy is grounded on a realistic financial strategy that I considered other demands on the LGU finances. More directly, the approach proceeded to:

I 0 project housing needs and costs, the availability of land and investment needs for the first five years, and then for the remaining 10-year period of the Strategy, on a city by city basis; 1 0 identify housing supply routes; 0 assess possible social, economic and environmental impacts of the Strategy; 0 draw up a set of indicators within the logical framework for the purpose of I evaluating the performance of the Strategy; and 0 incorporate the Strategy in a web-based format that will make it a "'live" document that lends itself easily to information dissemination as well as to I feedback and improvement over time. I PART II LONGTERMSTRATEGY I 5. Strategy Components The 15-Year Strategy for Metro Manila is anchored on the following policy objectives: I a) Adopt a holistic approach to shelter by integrating the provision of housing and basic services (roads, water, power, drainage, sewerage and garbage disposal) 1 with improving access to social services (health, education, sports and recreation,

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and protective services), and generating livelihood and employment I opportunities. I b) Improve land management by : 0 setting up pilot one-stop-shop centers for land regulation and administration;

0 conducting an evaluation of methods of land valuation in an effort to I standardize the approaches; 0 restricting access to rights-of-way and danger areas;

0 regularizing pre and post-proclamation planning activities; I 0 exploring the feasibility of using the land development techniques such as land readjustment, guided land development, land sharing and particularly, community land trust (CLT), which is being recommended by the MMUSP I project as a new approach that acquires and holds land for the benefit of a community, and provides secure; and 0 explore new forms of tenure and other forms of partnership and affordable I access to land and housing over a long-term period. c) Strengthen the institutional framework at the national, regional and local levels I by: preparing HUDCC or the proposed DHUD or the proposed MMUSP I Commission to implement the Strategy; 0 improving the mechanism of coordination between HUDCC and MMDA; 0 aligning with on-going efforts of DlLG and the donor sector directed at enhancing institutional efficiency; I 0 providing stronger participation of the business sector in the institutional framework; 0 assisting LGUs in coming up with the enabling ordinances creating special I bodies particularly Local Housing Boards; 0 strengthening the role of the UPAO in shelter planning; and 0 increasing the capability of the LGUs in land use planning and shelter I planning. I d) Enhance the capacities of LGUs, NGOs and CBOs in shelter delivery by: 0 providing technical assistance and financial support; and I 0 documenting and disseminating best practices among LGUs; e) Encourage private sector participation by fostering joint venture and partnership activities between the corporate sector and the informal settlers in the areas of housing development, financing, neighborhood revitalization, provision of I employment and micro-financing.

9 Improve social service delivery by exploring tripartite partnerships- LGUs-Civic I Groups-Private Corporate Sector- to bring about efficient and expanded delivery of these services.

I g) Emphasize incremental investment approaches to infrastructure development and incorporate environmental facilities and services in site planning in order to I

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address pollution control and bring about effective solid waste management, I drainage and flood mitigation.

h) Establish ICT/GIS-based Information Systems to aid local decision-making 1 especially with respect to land and housing site selection, improvement of the local revenue base and making transactions more efficient and transparent.

I i) Formulate the legal agenda in support of the 15-year Strategy by: establishing the legal bases of various land development schemes; I 0 addressing land titling and land registration problems; reviewing the status of APDs, delineating the upgraded areas and subsequently, delisting these from the APD status; I 0 studying the applicability in the Philippines of the CLT; and 0 assisting the LGUs in drafting the ordinances for creating Local Housing Boards and in codifying ordinances related to socialized housing and urban I poor settlements management. 6. Housing Needs and Resource Requirements

I The determination of the future housing needs for households living in Metro Manila’s depressed or slum areas is based on the number of housing units required to:

I 0 Respond to new household formation; 0 Reduce overcrowding; 0 Resettle households currently living in danger areas and public utility zones; I and 0 Address the obsolescence of existing units located in upgradeable slums. I The quantification of housing need, coupled with the ability and willingness of households to pay for better infrastructure and housing, will determine the effective demand. To eradicate slums by year 2017, the MMUSP Project, using a I spreadsheet-based Housing Needs Assessment Model, identified a total of 595,960 new housing units to be built within the 15-year period. The housing needs include, under resettlement 245,478 units, upgrading by replacing 194,893 units and I improvement of 155,589 units during the same period. These new and upgraded housing will also address the expected increase of some 750,000 inhabitants from now and until 2017. This is based on the projected average I annual population increase of roughly 1.27 percent. With the assumption that there will be a modest decrease of 6 percent in household size (from 6.98 to 6.58), there will be a total of 146,000 new households or approximately 10,000 households per 1 year.

Within the first five-year period, a total of 240,000 housing units will need to be built I or improved. The estimated number of new housing units to be built within both the resettlement and upgraded areas is approximately 150,000units. Resettlement alone will require the construction of close to 84,000 units and the development of 673 I hectares of land. In slum upgrading, the number of replacement houses to be built will be around 65,000 units while the number of existing units to be improved will be I around 90,000.

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Estimates of the investment requirements to meet the identified housing needs have been based on the assumption that all households living in slum areas will live in acceptable housing by the end of the 15-Year Strategy. Costing for housing needs is divided into those for resettlement areas, and those for housing renewal and improvement. The average cost of a resettlement unit in the base year of 2002 is PhP370, 000 for a typical plot and housing unit size of 45 square meters. This cost includes the price of land (PhP1,900 per gross square meter), infrastructure (based on an average cost of PhP700 per gross square meter) and housing construction (based on an average cost of PhP3,500 per square meter of floor area). Taking into consideration modest increases due to inflation, a unit of this kind will cost PhP502,OOO over the course of the fifteen-year period.

For housing renewal and improvement, the average cost of an acceptable housing unit is estimated at PhP259,OOO in year 2002 and over the course of the Strategy could reach PhP325,OOO. These were computed on the base year prices of land (PhP1,IOO per gross square meter of site for both partially and fully upgraded areas), infrastructure (based on an average combined cost of PhP670 per square meter of site), and housing construction (PhP3,OOO per square meter of construction).

The overall cost for Metro Manila to meet the housing needs for the 15-year period for new housing and upgraded units is estimated at US$8.6 billion. For the first five- year period, the estimated cost is US$2.698 billion, 31.4 percent of the total 15-year costs. For the three pilot projects recommended by the MMUSP-NBP in Muntinlupa, Tala in Caloocan and BHlT in Taguig, the estimated cost is US$174.3 million.

7. Source of Funds

The main sources of funds for the 15-Year Strategy for Slum Eradication in Metro Manila would be

Revolving Fund - This fund will be established to sustain the liquidity of the LGUs and ensure successful implementation of the 15-year Strategy. The fund will provide bridge financing while the proceeds of the mortgage loans are not yet released. It will also be used to leverage and raise additional funds from the public and private sectors. The fund will only finance infrastructure cost, maintenance of infrastructure that is already in place, and for debt servicing. The fund will be governed by a board composed of representatives from the LGUs, the NGOs, the national government agencies and others as needed. The Project Management Office (PMO) which will be created to oversee the implementation of the 15-year Strategy will manage the fund and ensure that socialized housing programs are carried out in a timely and effective manner.

It is proposed that GOP passes on the central government land to LGUs on a 50 year lease basis, thus releasing the beneficiaries of high loan repayments and interest rates;

LGU Commitments - The Local Government Code stipulates that 20 percent of their total annual revenues (including the IRA- Internal Revenue Allotment) be transferred to a Development Fund. The MMUSP Project recommends that at

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least 20 percent of the Development Fund be allocated to finance the 15-year Strategy in their respective localities.

d) Participating MFls and thrift banks will finance the purchase of private land and finance the home mortgages to beneficiaries either directly or through a CBO.

Proceeds of a loan release obtained by the beneficiary from participating MFls or Thrift Banks. The amount allocated as repayment of the serviced plot will form part of the revolving fund; 0 Ground rents or rent on the leased land that will be charged to the household beneficiaries; 0 Savings that will be generated by the beneficiaries as equity contribution to the land purchase; 0 Sale of LGU lands and properties;

0 Bond flotation; 0 Private sector/Joint venture arrangements; and Other ODA sources.

The coordinated combination and leveraging of the financial contributions for these elements will be essential for success. Any delays in the provision of funds will have serious cost implications on other aspects of the project. The implications of delays in the contribution of funds will have serious cost implications on other aspects of the Project.

8. Priorities

The suggested procedures for project formulation at the local level are shown in Chapter 7. 12. There are naturally different priorities and different conditions on the ground which will affect the main city by city projections shown in Chapter 6. For example, some LGUs are likely to give priority to clearing danger zones (e.g., Valenzuela and Manila, and some LGUs such as Pateros and Makati City), may be able to deal with their slum problem within the first few years. Other cities are judged to be less prepared, such as Malabon, Manila, Pasay and San Juan.

9. Use of Subsidies

Housing subsidies cannot be provided on a small scale without considerable cost to society and to the efficient use of scarce financial resources. Interest rate subsidies by far provide the largest amount of subsidy in the housing sector. Unfortunately these do not always reach those most in need and inevitably cause serious distortions in the housing finance market that prevent any serious participation by private banks in the financing of housing for the poor.

These are typically targeted to the most needy through a means test, transparent to the public and private policy makers, and designed to avoid distortions in local credit markets. They are aimed at creating incentives for increased participation by private banks in the low income housing market are now indications that GOP is considering the use of capital subsidies and vouchers instead of interest rates as amore effective mechanism to target its housing subsidies to the poor.

The guiding principles of the proposed subsidy approach are as follows:

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Making maximum use of non-cash subsidies; Focusing on subsidy retention rather than recapture by using the Community Land Trust approach; Increasing the scale and overall amount of the NHA resettlement subsidy; 0 Converting the CMP subsidy from a long term interest rate subsidy to an up- front, voucher type, capital subsidy; and 0 Provide an effective rental voucher subsidy.

10. Promoting the Strategy

In line with GOP’s policy of promoting local autonomy and initiative, it is not axiomatic that the LGUs have to accept the MMUSP Strategy. However, one of the Project‘s most important functions is to serve as an advocate for the Strategy’s adoption. The process of adoption of the Strategy can be described in five steps:

0 Step 1- Establish the Relevance of the Strategy: Determine whether or not the Strategy is relevant to the overall program of development. 0 Step 2- Magnitude of the Problem: This task should determine the magnitude of the urban poverty situation in terms of land market, social services, infrastructure and livelihood requirements 0 Step 3- Financial Requirements: The LGU estimates financial requirements of its urban poor shelter program and determines the LGU’s finance resource gaps, if any. 0 Step 4- Request for Resource Assistance: If by now the LGU considers its urban poor shelter program a priority, it should now seriously consider financing options. 0 Step 5- Request for Loan Assistance: With the package of assistance approved, the LGU now formally applies for a loan from the MMUSP loan fund. I The loan assistance will cover the cost of major infrastructure components associated with implementation of the Strategy. I It is proposed that the application for loan stage should be on a competitive basis. However, technical assistance will be offered to those LGUs who were unsuccessful i in their bid. 11. Legal Agenda

Legal issues are currently affecting the delivery of urban services for the poor. The a following is a list of concerns which should form part of a legal agenda with specific reference to the Strategy:

I 0 Improvement of existing implementation procedures in land development schemes; 0 Legal issues generated by land allocation and disposition in areas covered by i Presidential Proclamation (i.e., Welfareville, Mandaluyong); 0 Legal issues in land titling and land regulation; 0 Review of the status of the APDs preparatory to appropriate legal action; I 0 Review of UDHA provision for appropriate remedial legislation; 0 Formulation of Local Housing Code providing among others, for the Local I Housing Boards

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PART 111 PILOT PROJECTS

12. Rationale/Objectives

The Project is focused on helping poor households living in Metro Manila slums to obtain decent, affordable shelter as an essential step in alleviating their poverty. Poverty today is increasingly seen as exclusion, with the poor being defined as those who do not have the means to participate in community activities or to attain the generally accepted standard of living enjoyed by non - poor households. Decision makers must recognize the area’s need to accommodate the urban poor in locations near their work, recognizing that slum dwellers are productive urban citizens with a stake in the future if their city. To continue thinking of depressed housing areas as just temporary accommodation for the poor only worsens their economic situation by preventing or discouraging them from investing in the future of their neighborhoods. The three pilot projects have been designed to build on the strengths of their situation and residents and to leverage the maximum amount of private sector participation and investment in their development.

The principle objective of the pilot projects is to provide a package of high priority investments for possible funding by an ADB loan. They have been designed to provide highly visible and comprehensive approaches to helping the urban poor. Success for this objective requires the establishment of highly collaborative working relationships among national agencies, local governments, banks, community groups, NGOs and private developers.

13. Project Components

Three pilot projects are proposed following the approach embodied in the 15-Year Strategy. The following provides a brief description of each and the highlights of the proposed conceptual development plans. This section ends with a summary of the project costs and proposed funding scheme:

New Bilibid Prison (NBP) Site, Muntinlupa City - This is an “in-city” resettlement project in Barangay Poblacion of Muntinlupa City. The project site, which is covered by a Presidential Proclamation, is 50 hectares of the 400 hectares of the DOJ property. The area is unoccupied and has no on-site infrastructure. The conceptual approach is to create a viable, low-income community that respects the environment and has the inherent potential to develop into an attractive community. The proposed housing types will provide a variety of housing options-serviced plots, “Habitat for Humanity model” row housing units and terraced housing-for households having different income levels and needs. There will be a total of 7,000 housing units broken down into: 530 serviced plots, 2070 row housing units and 4,400 terraced housing. Basic services will be provided, including roads, drainage, water supply, power supply, and sewerage. Following the holistic approach to shelter that integrates housing with social services, livelihood and employment, the houses will be built around elementary schools, day care and health care centers, community parks, multi- purpose recreational facilities, police/fire precincts and a commercial livelihood center. Target beneficiaries are the slum dwellers who are currently living within Muntinlupa along the PNR south rail.

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BHIT Zone, Taguig - The BHlT Zone is a slum reblocking, urban renewal and tenurial assistance project in the three Barangays of Santo Nino, Palar and Wild Cat adjacent to the Ventronix Compound, American Memorial Park and . Executive Order 70 declared 35 hectares of the BHlT Zone as a socialized housing site for qualified occupants and beneficiaries. Roughly 63 hectares of the BHlT Zone are currently occupied by informal settlers. The pilot project consists of land tenure for the entire 63 hectares and infrastructure upgrading for the 50-hectare portion of this area located west of C- 5. The area has been occupied in part for 20 years. Current estimates put the number of informal settlers at 7,000 households, 5,000 of whom reside in the western section of the zone. The road network is well developed but with mainly narrow, unpaved roads in the western portion. The area to the east of C-5 is served primarily by concreted roadways. The standard of housing is variable but substantial, most of which are built out of cement hollow blocks.

The relocation of the majority of informal settlers living on the site is not a practical approach because of the substantial financial, economic, political and social costs involved. The conceptual approach for the BHlT Zone is based on the idea that the occupied area of the site is considered as an “IT-poverty alleviation village” and that its upgrading be undertaken in collaboration with the development of the adjacent IT Park. The approach would provide a genuine example of how modem technology and economic development can be used to assist the upgrading and economic development of a low-income neighborhood. There will be little new house construction on the site to be upgraded although some households will have to be relocated due to poor location. Efforts will be exerted to relocate them within the site. The new BHlT community upgrading will include full infrastructure development which includes improvement of roads, drainage, water supply, power supply, sewerage and garbage disposal. Social infrastructure to be included is comprised of schools, health care and day care centers, market relocation, security and a multi-purpose recreation facility.

Tala, Caloocan City - The Tala pilot project is an urban renewal, on-site upgrading and land tenurial assistance project. This is located in Barangays 186, 187 and 188 of Caloocan City near the North Caloocan City Hall, Barangay Silang Resettlement Site, Tala Leprosarium and Victoria Wave Ecozone. RA 7999 of 1995 declared 120 hectares of the Tala Estate as alienable and disposable, and converted these to housing. The proposed housing and site development project will cover the 70 hectares administered by NHA, the 50 hectares under the supervision of the DOH and an additional 29 hectares from the Asset Privatization Trust.

The conceptual approach will include the provision of land tenure and basic infrastructure, construction of bridges to the new Civic Center, provision of livelihood support, development of a new center and image for the community and some private sector improvement of housing. Particular attention will be given to regenerating the main city street center in order to provide a new image and sense of place to the community. Development of this center will involve creating one-way traffic around the proposed business center area, widening the main street to allow for a pedestrian mall, developing a small commercial unit on vacant land at one end of the street and encouraging small developer - built shops with residential units on the second floors. In addition, the development of

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the existing Tala Leprosarium into a world class facility for research in health and communicable diseases is one long-term option for this site. Similarly, social infrastructure will be built to service the social service requirements of the community and a local cooperative - Sikap Development Cooperative, Inc. -will be the focal point for the generation of livelihood in the area.

For each pilot project, apart from site development there are other components covering livelihood and employment generation, micro-credit, institutional development, capacity building, GIS and technical assistance

14. Cost Estimates and Sources of Finance

The total cost of the three pilot projects is US$174.3 million: US$78.5 million for NBP, Muntinlupa; US$48.3 million for BHIT, Taguig; and US42.0 million for Tala, Caloocan plus consulting services amounting to US$ 42.0 million. Given the current fiscal constraints on GOP, it is proposed that DBP will borrow from official co- financiers (ADB, European Union, CIDA, AusAid, etc.) with GOP providing the foreign exchange risk guarantee. DBP will, in turn, provide wholesale loans to LGUs to finance the site development and other infrastructure costs and to thrift banks or micro-finance institutions, which will then on - lend to individuals.

15. Co-Financing

There are a number of opportunities for co-financing using grants or soft loans.

Japan Bank for International Cooperation (JBIC) has shown interest in the low- income housing sector and is interested in pooling its funds with ADB. JBIC is likely to offer grant TAs for MMUSP Project, particularly for capacity building of participating institutions and NGOs. It may also consider extending grants to finance some of the poorest of the poor beneficiaries who do not access to the banks for borrowing. There are other bilateral assistance programs from Europe which are likely to be interested in capacity building efforts.

I Given the magnitude of the MMUSP Project, the World Bank has shown interest in a parallel financing arrangement alongside ADB. The World Bank has investment loans for a wide range of activities aimed at creating the physical and social infrastructure I necessary for poverty alleviation and sustainable development. I 16. Project Institutional Arrangements On the basis that DHUD will have been created by mid-2003, the organization tasked with implementing the pilot projects and all other projects relating to MMUSP will I consist of a Steering Committee (SC); HUDCCINCR and DBP as Executing Agencies (EA); a Project Management Office (PMO); and Project Implementation Units (PIU) at the local level.

1 a) MMUSP Steering Commitfee (SC’ will provide overall guidance and direction regarding the implementation of the pilot projects and all MMUSP-related projects. It will also coordinate the implementation of the policy framework I supporting the MMUSP. The committee composition includes representatives I

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from HLURB, NHA, HGC, DOF, DPWH and other government departments, I League of Cities/Municipalities, and NGOs/CBOs.

b) HUDCC/NCR Office and DBP to serve as €As - HUDCC will have various roles I in the Project including capacity building, policy formulation and implementation and institutional development. As one of the two EAs, DBP will borrow from official co-financiers with GOP providing the foreign risk guarantee. DBP will I provide wholesale loans to LGUs for site development and infrastructure costs, and to qualified thrift banks and micro-finance institutions that will do on-lending 1 to end-users or housing beneficiaries. c) MMUSP Project Management Office (PMO); attached to the HUDCC / NCR office, the PMO will serve as the Secretariat of the SC and will implement all decisions made by the SC. It will have review, monitoring, evaluation, I coordinating and technical functions and will provide overall supervision of MMUSP projects. Under the PMO will be three divisions; Technical Support; 1 Resource Mobilization, and Administration. d) Project Implementation Units (PW) The LGU will be the main implementing agency. To carry out this task, there will be a PIU at the lower level, with a main I role to identify and implement the pilot projects and all other MMUSP-related projects forming part of the 15-year Strategy. The PIU will be attached to the LGU-UPAO and will be headed by the head of UPAO. The PIU will have four I divisions; Engineering, Administration and Finance, Community Relations and Training Development, and GIs. 1 In the event that the pending bill on the DHUD is not approved by mid-2003, an MMUSP Commission is recommended to undertake the overall management of the 15-year Strategy, the pilot projects and all other MMUSP- related projects.

1 17. Cost Recovery

Strategy interventions include both resettlement and upgrading activities on I government and private land. Each of these four basic solutions requires a slightly different cost recovery approach due to the ownership of the land and the degree of beneficiary organizations. Currently, GOP is promoting the application of usufruct or 1 simply “use rights” for both resettlement and upgrading projects. While usufruct may have a possible impact on short-term affordability by removing the cost of land, it only I postpones the resolution of the land’s ownership. For informal settlements on private land under the Strategy approach, the LGU will negotiate with private landowners to obtain the lowest possible price for the land. 1 LGUs are anticipated to use their legal and financial powers in order to encourage landowners to sell their land at a reasonable price, thereby lowering the cost of land and providing a significant non-cash subsidy for the poor.

I For informal settlements on government land, the Strategy proposes that the national agencies administering government land will transfer the land to the LGUs through usufruct agreement. The LGUs will engage a lease to buy agreement with CA/CLT in I order to recover the non-cash price of the land and all of the cost of infrastructure. I For resettlement areas, cost recovery procedures on both private and public land will

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be somewhat similar. Greater emphasis will be placed on individual ownership of I land given that no community organization exists at the time of its development. Cost of land and infrastructure will be made to the LGU, which will convey the repayments I for the land to the treasury. 18. Economic and Financial Analysis

I a) Economic Analysis The estimated costs and incremental benefits of all sub-projects were valued at their 1 economic prices. Financial capital costs and 0 and M costs were converted to economic costs using appropriate shadow price adjustment factors. The results of I the analysis are shown below:. 0 Low income housing upgrading and resettlement- The base case for all three sub projects ranges between 14-29.2 percent, which exceed the ADB's 12 percent economic opportunity cost of capital (EOCC). Investment in low- I income upgrading and resettlement sub projects is therefore considered justified.

I 0 Water supply - The benefits are based on resource cost savings of the beneficiaries having access to piped water systems rather than purchasing water from private vendors. The base cases of all three sub-projects are I significantly high ranging from 19.9-39.9 percent. I b) Financial Analysis Financial analysis was carried out for the water supply and electricity component of the sub-projects because the Financing Plan of the sub-projects assumes that the 1 private companies operating in the sub-project areas will finance the infrastructure costs.

The Weighted Average Cost of Capital (WACC) of the Project is 4.07 percent. All I water supply and electricity supply sub-projects have FIRRS over and above the WACC. Therefore, the sub-projects investment is considered sustainable.

I 0 Water Supply- While the base case in Caloocan is 23.5 percent, the base cases of Muntinlupa and Taguig are 1.6 and 3 percent, respectively, which . are below the WACC of 4.07 percent. I 0 Electricity- The base cases of Muntinlupa (NBP Site) and Taguig (BHIT Site) are 5.2 percent and 7.3 percent, respectively. The projects are above the WACC and marginally below the minimum threshold of 12 percent, hence, 1 considered justified. 0 Housing Loans- The housing loan, using a medium-sized plot and housing construction, is likely to be attractive to the upper 40 percent of the I beneficiaries. It has an FlRR of 12.6 percent, which is above the WACC (meaning above the minimum threshold). Hence, it is a viable sub-project to the participating institutions indicating willingness to participate in this sub- I project. I

1 Final Report 0 Volume 1 xxxvi I I TA 3760 PHI: Metro Manila Urban Services for the Poor Project I I 19. Social Impact To examine the benefits of the proposed pilot projects, the Project collected data through a review of secondary data, selected sample survey (i.e., city, barangay, and 1 household level) across Metro Manila, and consultations with stakeholders. The following summarizes the benefits that will be derived from the pilot projects in the I three cities; a) Improved health benefits that reduce illness in the house, in the neighborhood, and in the city. These savings amount to US$595 dollars for the NBP Site, I US756 for the BHlT Site, and US665 for the Tala Site:

0 reduction in incidence of diseases (i.e. , water-borne diseases), 0 increased savings in terms of fewer days of absence from work, loss of I school days, reduced medical costs, and ability to engage in employment and other productive activities.

I b) Labor and cost savings, increased available time for engaging in productive activities, and elimination of the burden of water collection;

I c) Generation of additional savings for households from the proposed Savings Mobilization Scheme; and I d) Improved Quality of Life from improved housing space that result in reduced overcrowding, enhanced sense of social and economic participation, better health, reduced threat to property and lives; enhanced prospects of education I and employment; e) Improved security, access to transportation and communication, and enhanced value of property in and around the community from site development.

I Women and children are expected to benefit from the projects by reducing risk of diseases, reducing household workloads; therefore, increasing available time for t engaging in income-generating activities. There are other benefits, namely:

I a) Resettlement of households from railway lines will benefit PNR in terms of expansion of network, improved service, and improved revenue; b) Clearing the creeks will allow Muntinlupa to develop the waterfront and use it for I income generating activities 20. Poverty Impact

I The Project will result in numerous opportunities for increase in incomes, thereby reducing the incidence and the depth of poverty prevalent in the community.

I a) Benefits generated by project construction- The proposed housing development on the NBP site will create significant semi-skilled and unskilled employment for construction-related work over the five-year period. This will definitely require skills I available at present such as carpentry, masonry, plumbing, painting and electrical work. I

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I b) Employment generated for the poor- Secure tenure resulting from the proposed projects will have a direct impact on reducing poverty by helping to increase I household income and productivity through home-based work. 0 Sub-contracting of export products and services; 0 Vending/wholesaling/retailing; .I 0 Manpower services; 0 Transport services; 0 Rental units; and I 0 Room rental.

Benefits attributed to increased income from construction industry, I manpower/transport services and micro enterprises amount to US$1,600 per household per year in NBP site; US$1,576 in BHlT site and US$529 in Tala. I c) Increased property value d) Savings Mobilization Schemes

I 21. Project Risks I The primary areas of risk are as follows: The technical and physical capability in completing the MMUSP within a short I period of 15 years. Availability of alternative land to resettle population living in danger zones; I Land tenure issues Willingness of the private landowners to sell their land;

I Reaching an agreement on the sale price of private land;

Willingness and the bureaucracy of the government in transferring the I government land for implementation; I Willingness of squatters to move into new sites in the case of resettlements; Management capability of the LGUs to implement the MMUSP. I I I I

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BACKGROUND TO THE STRATEGY CHAPTER 1

Urban Development and Efforts to Eradicate Slums TA 3760-PHI: Metro Manila Urban Services for the Poor Project

CHAPTER 1. URBAN DEVELOPMENT AND EFFORTS TO ERADICATE SLUMS

1.I Introduction\

Metro Manila has joined the small group of mega cities worldwide with populations over 10 million. In fact, the total population of the Metro Manila extended urban area is considerably larger if urban expansion to the north and south are included. During the past decade, the population growth rate of Metro Manila has slowed to just over 1 per cent per year, while much higher growth rates are occurring in the adjoining regions of Southern Tagalog and Central Luzon.

Metro Manila displays many contrasting images, notably of high-rise high income housing next to bad slum conditions, modern mass rail transit and paratransit, and state of the art shopping malls contrasted with traditional informal sector shops. In addition, there is the all-pervasive image of pollution in land, air and water, which forms a main concern to this Project. There are some 3.5 million residents living in depressed neighborhoods in hundreds of locations across the NCR. This backlog of poor quality of life, and in many cases danger to life, forms the primary challenge for the present Project. The deplorable situation continues to affect the general efficiency of the economy of the National Capital Region (NCR).

To address the complex technical, cultural and financial issues involved in improving the depressed areas, HUDCC has been working with assistance by a consultancy team funded by the Asian Development Bank (ADB) under the Metro Manila Urban Services for the Poor (MMUSP) technical assistance prepare a 15-year Strategy for slum eradication throughout Metro Manila. The Project has developed three pilot projects in Muntinlupa, Caloocan and Taguig that will demonstrate the application of appropriate policies and techniques. The formulation of the Strategy is an ambitious undertaking and will depend on the coordinated approach of a wide range of stakeholders. The team’s work has been greatly helped by the introduction of a comprehensive geographic information system (GIs), which among other benefits has allowed the team to map informal settlements, vacant land and other important components of the housing market.

The present Project builds on a quarter century of initiatives in Metro Manila designed to reduce urban poverty including slum upgrading, sites and services, resettlement, medium rise public housing, rental housing, etc. Many of the lessons learned from those approaches are applied in the present Project, which also reflects changes in the housing sector. Underlying the team’s approach is the recognition that the great majority of housing is provided by individual households, and that direct and indirect support mechanisms need to be targeted on these households.

The Project’s three main objectives are as follows:

0 Assist the Government of the Philippines formulate a phased, metropolitan - wide 15 -year Strategy for slum improvement and urban upgrading in Metro Manila;

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0 Initiate a process for formulating LGU - level integrated urban development interventions in support of the Strategy; and 0 Prepare a package of high priority investment projects for possible funding under an ADB loan.

1.2 International Context

The United Nations Center for Human Settlements (UNCHS) has estimated that between 25 to 50 percent of urban residents in most developing countries live in informal settlements without basic facilities, services and security of tenure. In Metro Manila alone, nearly 40 percent of the population lives in squatter colonies. Identified contributing factors to this state are poor urban management, failed policies, weak institutions, and inadequate management of land, housing and infrastructure systems.

1.2.1 Cities Alliance

Putting the situation in context, by 2020 one in two people in Asia will be living in the cities. Because of the magnitude of the problem and the need for a concerted approach in dealing with urban poverty, the World Bank and UNCHS launched the Cities Alliance (CA) in May 1999. CA is an international partnership of bilateral and multilateral agencies and associations of local authorities, which includes countries such as the USA, UK, Japan, Canada, Germany, France, Italy, Netherlands, Norway and Sweden. Its objectives are as follows:

0 Building political will and action for scaling up slum upgrading and city development strategies: 0 Acting as an effective clearinghouse to distill and share knowledge; and 0 Incubating model programs and best practices for moving to citywide and nationwide scales of action.

The Cities Alliance is described as follows: “CA seeks to expand the level of resources reaching the urban poor by improving the coherence of efforts among ongoing urban programs, by catalyzing partners’ efforts in ways that go beyond their individual programs, and by more directly linking grant-funded urban development cooperation with investment follow-up for maximum development impact”’.

Institutionally, the organizational structure of Cities Alliance includes a Consultative Group (CG), a Policy Advisory Board (PAB) and a Secretariat. The CG, made up of financial contributors to the Cities Alliance Trust and heads of international associations of cities and local authorities, is a global public policy forum where experiences can be shared and where agreements can be reached regarding policy issues. The PA6 gives guidance to the CG on key strategic and policy issues, and supports the implementation of the CA programs. PAB is made up of urban experts in each region, representatives from NGOs and CBOs, and the private sector. The Secretariat, which is based in the Washington, DC office of the World Bank,

’ Technical Assistance for Promoting Poverty Reduction Through Participation in the Cities Alliance; AD6 (January 2002).

Final Report 0 Volume 1 2 PART I:BACKGROUND TO THE STRATEGY 1 a TA 3760-PHI: Metro Manila Urban Services for the Poor Project I manages the day-to-day operations. Cities Alliance has two priority programs: City Development Strategy (CDS) and Cities Without Slums (CWS). The focus of CDS is the launching of a process I whereby stakeholders collectively come up with a city-level urban strategy with prioritized programs, projects and activities that will address urban poverty reduction. CDS is being implemented in 70 cities worldwide including 50 in Asia. The main a features of the CDS process are in Box 1 below.

Box 1 i Main Features of the CDS Process

Stakeholder participation - CDS becomes a mechanism for building up the t stakeholders’ willingness to work together within a mutually beneficial environment. Building civic capacifies and capabilities - CDS becomes an instrument for building the capacities of stakeholders for good governance. Changing the nature of thinking about development - CDS encourages people to think strategically in new ways about the development of their cities. I Addressing the complexity of development - CDS becomes an instrument for a coordinated strategic approach. A collective vision and strategy - CDS promotes the generation of a collective vision which stakeholders can commit to and channel their resources. Defined pfiorifies and action plans - CDS assists stakeholders in determining their development priorities and guides them in formulating and implementing appropriate action plans. Defined roles and responsibilities for stakeholders - CDS helps clarify roles and stakeholders’ responsibilities towards each other with the view of changing dependency attitudes and behavior. Povefiy reduction focus - CDS mainly focuses on formulating strategies to attain urban poverty reduction, which interlinks enterprise development, settlement upgrading, crime abatement and skill development. ‘I Reduced lending risks and improved investment climate. Cities Without Slums (CWS), on the other hand, promotes upgrading of low-income settlements. This program is being implemented in eleven countries, which include those in Asia like Cambodia, India, Indonesia and Vietnam. CWS aims to strengthen the links between private and public sector investments. As in the case of Vietnam, for example, the slum upgrading strategy includes infrastructure, security of tenure, access to credit and, improved standards and norms to encourage innovation.

1.2.2 ADB and Cities Alliance iI The ADB has recently launched a regional technical assistance that is geared towards promoting poverty reduction through participation in the Cities Alliance. The II objectives of the regional TA are as follows:

0 Promote improved urban management; 0 Strengthen the impact of urban poverty reduction interventions; and 0 Enhance networking and cooperation among rapidly urbanizing cities in the Asia-Pacific Region.

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By its participation, ADB aims to enhance the efficiency and impact of its urban sector program since the outputs of the technical assistance will assist ADB in documenting best practices in the region, help provide feedback and formulate policy advice to developing member countries, improve project design, and contribute to economic and sector research. Moreover, participation will put ADB at the forefront of Cities Alliance initiatives in the Asia-Pacific Region; will provide a means to pilot test CDS, urban poverty mapping and slum upgrading programs; incubate models and innovations; and support efforts to expand and replicate these initiatives on a city and nationwide scale in its lending operations.

1.2.3 The UN and Urban Poverty

Last September 2000, the General Assembly of the United Nations adopted a resolution entitled “United Nations Millennium Declaration”. The UN in this historic document reaffirmed its commitment to the following eight development goals:

Eradicate extreme poverty and hunger Achieve universal primary education Promote gender equality and empower women Reduce child mortality Improve maternal health Combat HIV/AIDS, malaria and other diseases Ensure environmental sustainability and Develop a global partnership for development.

Like the Cities Alliance initiatives, the UN also has poverty eradication as one of its centerpiece programs. Its goal is to halve by the year 2015, the proportion of the world’s population whose income is less than one dollar a day and the proportion of people who suffer from hunger, and by the same date, to halve the proportion of people who are unable to reach or to afford safe drinking water. In pursuance of this goal, the following strategies are being promoted: ensure support for country-led economic and social initiatives that focus on poverty reduction; strengthen capabilities to provide basic social services; and assist capacity-building for poverty assessment, monitoring and planning.

Also included among the specific UN Millennium goals is that by year 2020, a significant improvement in the lives of at least 100 million slum dwellers has been achieved as proposed in the “Cities without Slums” initiative of the Cities Alliance. For the furtherance of this goal, the following strategies are being put forward: ensure support from the international community for the provision of basic social services such as safe water and sanitation to the urban poor; ensure the development of integrated and participatory approaches to urban environmental planning and management; and ensure good urban governance and planning by forging public- private partnerships.

Aside from CWS, the UN has also joined other development partners in major initiatives such as the Global Campaign for Secure Tenure which aims by year 2015 to attain progress in the worldwide drive to provide adequate shelter for all with secure tenure and access to basic services in every community, and the Global Campaign on Urban Governance which calls for greater collaboration and consensus

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building among all major stakeholders - government communities, private sector and I the NGOs.

With the various multilateral and bilateral organizations coming together to join hands I with country leaders in the undertaking of a better coordinated approach to eradicating urban poverty and slum settlements, the developing world can expect to see in the years ahead the tangible effects of these initiatives as more and more I people begin to enjoy living in well-constructed homes in a safe and healthy environment that can adequately provide its residents with basic social services for a the enhancement of one' s well-being, learning and personal growth. 1.3 Regional Framework

II 1.3.1 The Roles of Regions 111 and IV

Understanding the urban growth and development of Metro Manila or the National I Capital Region (NCR) will entail looking at the metropolis in relation to the growth of the two regions closest to it - Central Luzon and Southern Tagalog (Regions Ill and IV). Table 1.1 below gives a clearer picture of how these regions are growing relative I to the NCR.

Table 1.1 I Annual Average Growth Rate of Population (%) NCR vs. Regions 111 and IV, 1980-2000 1 Region 1980-1990 1990-1995 1995-2000 I NCR 2.98 3.30 1.06 Reg Ill - C. Luzon 2.58 2.12 3.20 I With the exception of the ARMM (Autonomous Region of Muslim Mindanao), Region IV and Region Ill are the 2"d and 3rdfastest growing regions in the country. As shown above, based on the year 2000 census data, NCR is experiencing a decelerating rate I of growth in population compared to the two other regions. In absolute numbers, Region IV with 11.8 million has outstripped the NCR with 9.9 million people as of May 2000. This makes Region IV the most populated region of the country. Region Ill I follows closely with 8.0 million people. Regions Ill and IV are also among the most economically progressive in the Philippines.

1 Regions Ill and IV have been absorbing the overspill of population from Metro Manila and at the same time, have served as catchment areas for migrants coming from other parts of the country. Regions Ill and IV are where the unskilled to highly skilled t labor find jobs, where middle and high-income groups are encouraged to settle or buy second homes because of the presence of good subdivisions, schools and health facilities, and where entrepreneurs are willing to engage in business because of the sheer size of the market. The unskilled find work as construction workers, 1 drivers of utility vehicles and vendors of basic necessities especially food, clothing I and other durable goods. The skilled supervisor and manager fill the manpower

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requirements of large establishments that are into the manufacturing of products such as electronics, automobiles and chemicals or absorbed by the service sector such as banking, wholesale and retail trade.

Other than their advantageous position of being close to Metro Manila, there were government policies, regional development frameworks as well as large existing and planned transport projects that influenced the rate of growth of Regions Ill and IV. The government’s industrial dispersal policy, which has existed since the time of the late President Ferdinand Marcos, has largely benefited Southern Tagalog particularly the provinces of Cavite, Laguna and Batangas within the CALABARZON (Cavite- Laguna-Batangas-RizaI-Quezon) sub-region of Region IV. It is in this sub-region where large industrial estates and export processing zones preferred to locate because of the available infrastructure, the national and local locational incentives given by the Philippine Economic Zone Authority (PEZA) and the LGUs, and the proximity to Metro Manila, being the seat of government and the financial center of the country. With industrial development, residential subdivisions, large shopping centers and educational institutions followed suit, which contributed further to its growth.

On a spatial dimension, the continuing rise in population growth in the CALABARZON sub-region and the success of the industrial dispersal strategy have given rise to a rapid increase in the level of urbanization particularly in identified growth centers. The Regional Physical Framework Plan for Southern Tagalog, 1993- 2023 proposed an integrated system of growth centers. At the top of the urban hierarchy is the regional growth center where the largest and most complex types of industries, commercial and service establishments and communication network are found. Supporting the regional growth center are secondary urban centers, which perform specialized functions but have smaller areas of influence than the regional growth center. The regional growth center in Region IV is Batangas City which has a large industrial and commercial base, a modern containerized international port, % strong land, sea and communications links with the rest of the country.

A smaller grouping of municipalities within the CALABARZON sub-region is called Metro CALA. This is made up of thirteen cities and municipalities in the provinces of Cavite and Laguna which are nearest to Metro Manila (see Figure 1.1). On the Cavite side, the seven LGUs include Dasmarinas, Carmona, General Mariano Alvarez, Imus, General Trias, Slang and Trece Martires City. In Laguna, the 6 LGUs include Calamba City, Binan, Cabuyao, Los Banos, San Pedro and Sta. Rosa. A 1999 World Bank project recommended a Cluster Land Management and Development Strategy, 2000-2015 for Metro CALA which defined a bi-nodal spatial structure where Dasmarinas in Cavite and Calamba in Laguna are the identified two major urban centers.

Although the trend in planning is away from identifying a hierarchy of settlements, the designation of the above urban centers considered strategic location and comparative resource advantages. These two areas will be at the crossroads of large infrastructure and environmental projects. This “peri-urban” strategy has since been accepted by Region IV and is now the basis of the planning, implementation and monitoring of development projects in Metro CAM.

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1 TA 3760-PHI: Metro Manila Urban Services for the Poor Project I I 1.3.2 Accessibility to Metro Manila Aside from a development framework for Metro CAM, the 1999 World Bank project also recommended a transport strategy to further improve the link between Metro I CAM and Metro Manila as well as the construction of primary east-west arterial roads that will improve the connection between the provinces of Cavite and Laguna. A major part of the transport recommendation is the construction of a bus way, which is a bus-dedicated road linking Bacoor and lmus with Dasmarinas in Cavite. This is an interim phase to secure the road right-of-way for the eventual construction of the extension of the LRT 1 (light rail transit). Presently, LRT 1 runs from Caloocan City to Pasay City. This will be extended from Pasay City to Bacoor and lmus in Cavite and eventually connect to Dasmarinas. Dasmarinas is one of the nodes or major urban centers identified in the development framework for Metro CALA. Currently, the feasibility study preparation for the bus way is on-going while for the LRT 1 extension to Bacoor and Imus, on-going activities includes ECC application, ROW acquisition and issuances of notices to affected owners. The funding source is SNC II Lavalin. Moreover, there are other planned transport projects identified in the Metro Manila Urban Transportation Integration Study (MMUTIS): Medium-Term Investment Plan, 2001-2004 which will impact Region IV. Included in these is the South Rail or Manila- Calamba Commuter Service project of the DOTC, which will run from Manila to Calamba, Laguna (51.65 kms.) and Carmona, Cavite (4.7 kms.). Calamba is another major urban center identified in the Metro CALA development framework. The project will rehabilitate and upgrade the PNR commuter line and will put in place a system with an initial capacity of 350,000 passengers daily. Construction is targeted to start in 2003. Negotiations for the transfer of informal settlers along the railroad tracks are on-going. What may cause a delay in the implementation of the project is the high cost of resettlement.

Based on the Regional Development Plan and the Regional Physical Framework Plan for Region Ill, the region is expected to become a major transshipment hub in the ASEAN region, given the advantage of having superior infrastructure in the Subic Bay Special Economic and Freeport Zone (SEFZ) and the Clark SEFP. Both were formerly the largest US military bases in Asia. Subic in Olongapo City in Zambales, Clark in San Fernando, Pampanga and Malolos in Bulacan are the identified major urban centers in Region Ill (see Figure 1.2). Bulacan is the province just outside Metro Manila. On the spatial framework for Bulacan, the area from Meycauayan to Malolos represents the major urban center in the province. This is an urban conurbation experiencing rapid urban growth and development because of its proximity to the metropolis. Malolos is identified as a major industrial center for medium and large-scale industries.

In Region Ill, there are also large infrastructure projects that will influence the growth of the region. One of the major transport projects is the Manila-Clark Commuter Rail System or the North Rail Section one project of the DOTC. This will provide a 100-km rapid rail connection from Fort Bonifacio in Metro Manila to the former Clark US airbase in the province of Pampanga. For Section 1, this will involve a 40.2 km line from Caloocan City to Calumpit, Bulacan with 4 stations at Valenzuela, Marilao, Bocaue and Malolos. Once completed, this is expected to encourage the further dispersal of the Metro Manila population towards Central Luzon. The project has

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been approved by NEDA-ICC and GOP funding will be requested. Commencement of the construction is 2003. ROW acquisition is on-going with the census and tagging of squatter settlements presently underway.

In addition to the mass transit project, there is also a planned North Luzon Tollways project (C5 northern part) which will link Metro Manila to Bulacan in Central Luzon. This will extend C5 for another 34.84 km going north of Metro Manila. The updating of the detailed engineering design is on-going and ROW acquisition will begin shortly. The construction phase is scheduled for 2003.

With the mass transit systems and tollway road extensions to be put in place in Regions Ill and IV, these will further enhance the accessibility of these regions to Metro Manila. With rapid transit, this will make residing outside Metro Manila more attractive because of the lower cost of living, the availability of more affordable and spacious housing packages and better environmental quality while at the same time, making journey to work to Metro Manila more convenient. Because of the economic progress experienced in Regions Ill and IV, there will also be a time when jobs are more readily available in these regions, thereby, no longer requiring residential location within Metro Manila. With these twin developments, we expect the demand in Metro Manila for socialized housing for the urban poor and the pressure on Metro Manila’s economic resources for housing to eventually decline.

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1.4 Donor Assistance

The ADB Urban Secfor Sfrafegy (July 1999) mentions among its findings that in housing the poor, indirect support such as developing affordable and sustainable housing credit, improving land transfer mechanisms, making land use controls effective, and legalizing informal settlements are more likely to improve access to land and shelter for the poor rather than direct housing interventions.

It further added that for a project to be successful, community involvement in project preparation is very important and that public-private partnerships can be an effective means of making access to land and shelter more affordable. The document also made note that local governments, being at the forefront of delivering infrastructure and services, need capacity building as well as improvement in their financial management in the specific areas of revenue generation and budgeting.

In the World Bank Report entitled “Philippines: Filipino Reporf Card on Pro-Poor Services” (May 2007), one of the more significant findings is that government housing assistance programs are barely reaching the urban poor. Those that have benefited most are the wealthy and urban households. The reasons for the exclusion of the poor are: lack of awareness of government housing schemes; lack of knowledge on how to get government housing assistance; eligibility requirements for accessing a housing loan; and high transaction costs.

In the light of these findings, international donor agencies have extended various technical assistances to the Government of the Philippines along the lines mentioned above. The Developmenf of Poor Urban Communities Projecf (DPUCP) of the ADB, which is currently in its preparation stage, has for its objectives the following: to improve access of poor urban communities to secure land tenure, affordable shelter, basic municipal infrastructure services, community facilities and credit; and to assist in the decentralization of shelter sector activities and to strengthen the role and capacity of LGUs to meet their shelter sector responsibilities as set out in the Local Government Code.

A further initiative of the AD6 is through its project called Strategic private Sector Partnership for Urban Poverty Reduction (STEP-UP) in Metro Manila with funding from the Japan Fund for Poverty Reduction (JFPR). This is in line with the Medium- Term Philippine Development Plan 1999-2004 which focuses on poverty reduction through the delivery of basic social services and a program of urban sector reforms. Under JFPR, ADB administers grants from the Japanese government, the aims of which are as follows:

to improve the quality of life and living conditions of poor urban communities through the development and implementation of an on-site integrated urban upgrading model. This is now on-going in Payatas, Quezon City; to demonstrate an integrated relocation program for communities affected by national government projects as in Muntinlupa City with informal settlers to be dislocated by the PNR South Rail Project; and 0 to pilot a strategic role for private sectorkorporate involvement in urban poverty reduction with the Philippine Business for Social Progress (PBSP) as implementing agency.

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In the Payatas STEP-UP project, there are five components: the bridge financing revolving fund for the purchase of a 3.2 hectare site; a site development and housing construction improvement fund to cover the civil works (road systems and sewerage) and a program of individual loans for housing construction or improvement; a livelihood and microfinance program which will serve as a supplemental fund to an existing program; community-based health insurance program; and a non-formal education and training program. The implementing agency is an NGO named Vincentian Missionaries Social Development Foundation Inc. which works very closely with a community-based organization (CBO) called Golden Shower Homeowners’ Association.

In the Muntinlupa STEP-UP project, the major components include sustainable revolving funds for land acquisition, site development, housing construction, livelihood and enterprise development. The implementing NGO is the Muntinlupa Development Foundation which works in partnership with the community associations. MDF is also supported in this endeavor by the Ayala Foundation and PBSP.

In the ADB-JFPR funded STEP-UP project “Corporate Response to Urban Poverty” has objectives as follows: to promote demonstrable business sector involvement in integrated poverty reduction programs through a focused strategic framework; to create a strong multi-sectoral coalition capable of advocating urban poverty programs and policies; and to undertake an integrated urban poverty reduction program which is designed to improve the living conditions of 5,823 urban poor households in 23 communities in 9 Metro Manila cities/rnunicipalities. PBSP will be the implementing unit.

The World Bank and AusAid has also launched a 15-20 year commitment to the Philippine government under the Land Administration and Management Program (LAMP) which seeks to alleviate poverty by improving the security of land tenure and to sustain economic growth by fostering efficient land markets in rural and urban areas. Expected outputs will be focused on improvements in land titling, land records management, land valuation, land laws and in the institutional structure.

Efforts at attaining an integration of slum improvement within the broader context of urban development are demonstrated in the ADB technical assistance to the Pasig River Rehabilitation Commission (PRRC). The Pasig River Environmental Management and Rehabilifafion Project has the following primary objectives: to revitalize and redevelop poorly serviced and run-down urban areas under a comprehensive urban renewal program; to facilitate the security of tenure for all families living along the river; to undertake an appropriate and humane resettlement program for squatters living in danger areas along the Pasig River and its tributaries; to ensure that the shelter programs for the urban poor are designed on the basis of appropriate and affordable standards; to improve basic infrastructure within blighted areas to ensure environmentally sustainable liquid and solid waste disposal and adequate drainage.

In the areas of planning and institutional development, AusAid also provided the Philippine government technical assistance which saw the formulation of the Guidelines for the Application of the Strategic Planning Process to the Preparation of

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the CLUP. Strategic planning incorporated the multi-stakeholder consultative process I in land use planning. Strategic planning has been defined as a continuous and systematic process during which people and organizations (community/stakeholders) make decisions about future outcomes, how these are to be achieved, and how their I success is to be measured and evaluated.

As a preparatory step to the creation of the Department of Housing and Urban 1 Development (DHUD), the ADB gave technical assistance via the project entitled "Institutional Strengthening of the Housing and Urban Development Sector". The project undertook SWOT (Strengths-Weaknesses-Opportunities-Threats) analysis I and came up with these major findings: government has weak steering functions, particularly in urban development planning and management; sectoral performance monitoring is deficient; urban planning system and urban development coordination are weak causing duplication and overlapping of functions; financing, production and I delivery of housing services are highly centralized; capacity of LGUs to assume the implementation of the housing program is inadequate.

I The study defined the role of future DHUD as the institutional leader in policy and plan formulation and in the overall management of the urban development process. I The major recommendations of the institutional study may be summarized as follows: 0 Privatize housing finance over the long-term. Focus government functions on subsidies for the poor. I Improve targeting of subsidies. 0 Rationalize the participation of government agencies. 0 Have a stronger role for HUDCC in reforming housing finance. I 0 Government should get out of housing production over the long-term. Chapter 1.6 demonstrates that the donor agencies, especially over the last three to I four years, have prioritized the assistance to the housing and urban development sector of the Philippines. This is rightly so since the concentration of the poverty group particularly in the metropolis is found in this sector. With the forthcoming creation of the DHUD, which will effectively decentralize shelter delivery, we look I forward to accelerating the pace at which government addresses the housing needs I of the marginalized sector of society. 1.5 ADB Urban Strategy

I Clear guidance on the policies to be incorporated in the present project is given by the ADB's 1999 Urban Sector Strategy. The Strategy notes that, "unlike other traditional sectors, the urban sector, encompassing several sub sectors, is a complex s development arena that includes cross-cutting themes as broad as poverty reduction, quality of life, gender and development and urban governance. Further, while measures to improve the extent, management and operation of urban services I benefit both local and national economies, urban areas are also exposed to external forces over which they have very little control. The Strategy must, therefore, be viewed as a responsive, flexible framework that can evolve to meet the varied I demands of the urban sector." I

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The Bank‘s recommendations highlight the operational objectives of the Urban Sector Strategy as follows:

0 Maximizing the economic efficiency of urban areas; 0 Reducing urban poverty; 0 Improving quality of life; and 0 Achieving more sustainable forms of urban development.

These objectives are to be achieved through the promotion of urban sector policies for:

0 Encouraging good governance;

0 Improving urban management; 0 Mobilizing financial resources; Reducing urban poverty; and 0 Addressing urban development sub-sectors (water supply, sanitation, and solid waste management, land management, transport and housing)

The 15-year Strategy for Slum Improvement and Urban Upgrading addresses these broad policies and objectives, which form the starting point for identifying policy- related performance indicators.

The present Project reflects many of the Urban Strategy’s recommended policies. These are further discussed in Table 1.2 below.

Table 1.2 Relevance of ADB Urban Sector Policies to the Strategy

0 Accountability; performance ind i ca to IS are recommended in several areas of the Strategy 0 Participation; growing demands by interest groups in being involved in policy development are reflected in proposals for community empowerment (see Chapter 4) 0 Predictability; improving the procedures for city 1. Promoting urban administration is particularly vital where as in MM urban governance; i.e., areas are growing faster than the available institutional the four capacity. principles of. Transparency; the Project has placed emphasis on this accountability, in the recommendations on accelerated land transactions. participation, 0 Coordination; this is of particular importance in predictability and transparency recommendations on inter - city coordination regarding Strategy implementation 0 Community participation; a wide variety of recommendations are made on participation; see Chapter 5 for example. b Private sector involvement; again, various forms of private sector involvement are recommended; see Chapter 5 for example.

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1 2. Mobilizing 0 Various policies underlie the Project's approach to Financial finance mobilization, including; sustainability of Resources resources, (e.g. maximum cost recovery), market - based pricing of services, use of revolving funds, 1 etc.

I Under this policy, the Bank include three themes: 0 Institutional strengthening. This sub sector is the subject of many recommendations, e.g. proposals for training / capacity building, proposals for strengthening 1 the administrative system, etc. 3. Policies for 0 Urban land management. The Project makes many Improving Urban policy recommendations in the related areas of land I Management markets, accelerating the delivery of serviced land, improved planning methodologies for low income areas, etc. Urban environmental management. the Project's 1 designs for pilot projects take careful account of environmental impacts through policies to manage solid I waste, achieve effective drainage, etc. A detailed poverty impact statement is included in Chapter 10. At the same time, recommendations in many I components of the Strategy reinforce the need to reduce the impact of severe and absolute poverty by direct actions such as individual rationing. Various policy priorities are shown under Urban Housing in the I Banks Urban Strategy; examples of the relevance to the Project are as follows; Legal and regulatory reforms; Various areas for legal I reforms are outlined, e.g., use of traditional building materials, allowance for mixed land uses, legal base for 4. Policies for new settlements procedures, etc. Reducing Urban Minimal use of cross subsidies to subsidize high value I Poverty land. Private sectorparticipation in the provision of shelter is stressed throughout the Project, in particular the leading i role in housing played by the individual owner - builder. Leveraging financial resources is another important component; e.g., the role of micro-credit organizations. Restructuring public housing institutions is addressed in I the form of recommendations on the strengthening of Housing Boards / UPAOs to better deal with the needs of low income households. i Support to innovative low-income housing; the Project addresses innovations in several forms, for example the introduction of the Community Land Trust, and new i designs for medium-rise public housing. i

p-

Final Report 0 Volume 1 15 I PART 1: BACKGROUND TO THE STRATEGY 8 I TA 3760-PHI: Metro Manila Urban Services for the Poor Project 1 I 1.6 Lessons Learned Over the past twenty-five years, Metro Manila has experienced a wide range of initiatives to reduce urban poverty through the improvement of shelter conditions for I households living in slums. The experience and lessons learned from these efforts were obtained from programs that included slum upgrading, sites and services, resettlement, medium-rise public housing and mortgage financing. Many of the I lessons learned from each of these approaches have been incorporated into subsequent policies, institutional arrangements, implementing strategies, operational I processes and local development initiatives. 1.6.1 Upgrading and Relocation

In the mid-I970s, the government first began to recognize the high social and economic costs of relocating poor urban families to the outskirts of Metro Manila. In response, it initiated the Slum Improvement and Resettlement (SIR) or Zonal Improvement Program (ZIP). Based on Presidential Decree 1517, which made expropriation of idle privately owned land legally justifiable for mass housing purposes, 64 sites were initially declared as ZIP sites of which some 30 were actually upgraded.

Four World Bank loans between ,1977 and 1988 encouraged this comprehensive slum upgrading and sites and services approach, the largest example of which was the Tondo Foreshore/Dagat-Dagatan Development Project. Poor cost recovery, major problems in reblocking upgrading areas and high overhead costs led the NHA, which had acted as the main implementer of the ZIP and SIR projects, to abandon the slum upgrading approach during the Aquino administration. The high costs of acquiring expropriated housing sites at the fair market values required by law further led the NHA to focus on the construction of medium and high-rise public housing to resettle slum dwellers.

Resettlement of informal settlers in Metro Manila has long been a policy of both the national and local governments. Under the Marcos and Aquino administrations, it was mostly carried out by the NHA and then, under Ramos, expanded to other agencies such as the Public Estates Authority (PEA) and Department of public works and Highways (DPWH).

Common problems encountered in attempting to resettle informal settlers included the absence of viable livelihood opportunities following relocation, inadequate provision of basic services (especially schools and health facilities), poor cost recovery due to poorly designed and erratic collection practices by government agencies and the absence of clear rules and contracts concerning tenurial rights. Current resettlement activities involve mostly in-city relocation to medium rise buildings, row houses and/or serviced plots. These lessons have been taken into account in making assumptions on the future programs of urban upgrading and relocating.

1.6.2 Minor Role of Private Sector in Housing for the Urban Poor

Until now, private developers and/or NGOs have produced little affordable housing for the urban poor. The Home Guaranty Corporation (HGC) has provided interim

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funding to cooperative housing associations or housing cooperatives for land I acquisition, site improvement and house construction. Under this approach, the cooperative associations act as project managers, producers and housing developers with the savings of the cooperative members used to provide the I necessary equity for a loan.

For their part, private developers have produced only a few social housing projects, I some of which have benefited from government financing through loans from the Home Development Mutual Fund (HDMF). A few developers have been contracted by NGOs independently or jointly with urban poor communities to develop sites and/or build a small number of houses. Very few developers, however, have I produced social housing on a regular basis. Cleady better forms of involvement of the private sector in low-cost housing are needed.*

I 1.6.3 Policy and Investment Framework

A key lesson to be drawn from the experience to date is that any public sector I response to the problem of slums must be based on a coherent and achievable long- term framework for policy and investment. This framework must be able to address the effects of rapidly rising land prices while at the same time producing the I necessary conditions and opportunities for the production and improvement of housing affordable to slum dwelling households. It should include a rational land use policy to make land available for low-income housing and the basis for a well- I targeted housing finance and subsidy system that can boost private sector confidence and generate greater investment in the housing sector. The framework should provide specific targets and action plans for all 17 municipalities in Metro I Manila to achieve the overall goal of eradicating slums over the next fifteen years. 1.6.4 Clear and Simple Institutional Responsibilities

I Previous efforts in addressing slums have underlined the need for clear and simple institutional arrangements in the planning and implementation of slum improvement activities. Current programs involve numerous agencies at various government levels I that only add to the complexity and costs of their implementation. I 1.6.5 Community and Local Government Participation Previous experiences also stressed the need to increase community and local government participation in resolving slum related problems. Residents must be i involved in setting the goals and strategies for the future of their neighborhoods. The process requires the community to become aware of both its assets and problems and to tailor development strategies that are unique to its situation. Collaboration, I inclusion, communication and participation will be the basis of the approach. In addition, resident participation will reinforce community values and help build human and social capital for long-term sustainability. It will enable the development I of creative partnerships with local institutions that can provide access to opportunities and facilitate productive partnerships with businesses and other private sector I organizations. i See.Chapter 3.6 and 4.7

Final Report 0 Volume 1 17 I PART I:BACKGROUND TO THE STRATEGY 1 I TA 3760-PHI: Metro Manila Urban Services for the Poor Project 1 I 1.6.6 LGU Support and Participation The LGC, UDHA 'and the Comprehensive and Integrated Shelter Financing Act (CISFA) have all mandated local governments to be the primary institutions involved 1 with the provision of low cost housing and the resettlement of informal settlers in their localities. The acts have made local governments the frontline units for the provision of basic services and socialized housing programs for the poor that were previously 1 the responsibility of national agencies. Current programs include those for resettlement assistance and local housing as defined by RA 7835 or CISFA. Local governments do not have to implement these 1 programs by themselves. They can be joint ventures with the private sector or NHA. Basic services and facilities to be provided with these projects include potable water, power and electricity, sewerage facilities, adequate solid waste systems and access I to primary roads and transportation facilities.

Many of the LGUs have problems in implementing UDHA because they lack the I necessary capacity to undertake housing activities on a significant scale. LGU capacity building and strengthening is required in order for them to implement housing programs and to pursue joint venture schemes with the private sector as part I of a continuing strategy. The focus would be placed not only on addressing the housing needs of a greater number of beneficiaries with limited financial resources but also on getting LGUs and the private sector to more actively cooperate in the I production of housing for low income households. The current Project has been designed to help achieve this cooperation in the pilot project LGUs. I 1.6.7 Cost Recovery Cost recovery problems have plagued virtually all of the government's housing programs for the urban poor in Metro Manila. In almost all cases the mechanisms I and procedures for the recovery of costs have been poorly designed and implemented, and have created very little rationale for people to pay and little or no trust in the proper transmission of payments. Collection of payments by community- I based cooperatives has ended up in failure due to the lack of trust.

While significant improvement in cost recovery will be difficult, the basic starting point a is clear; slum dweller beneficiaries must obtain the services they want, be educated on the value of what they get, and be convinced of the need to pay for the services they receive. Beneficiaries should be properly identified at the time of project 1 preparation and pursued with appropriate education about their responsibility in paying for the cost of the services they receive.

A simple, transparent and easily enforceable collection system that has sufficient I flexibility to respond to the different needs, capacities and characteristics of the intended beneficiaries is required. Pre-saving by the beneficiaries should be built into project and program design as a means of familiarizing beneficiaries with the need to I make regular payments. I 1

Final Report 0 Volume 1 I PART 1: BACKGROUND TO THE STRATEGY I I TA 3760-PHI: Metro Manila Urban Services for the Poor Project 1 I 1.6.8 Monitoring and Feedback Finally there is a need to establish an effective instrument for evaluating the performance of social housing projects; one that is capable of monitoring the I performance of a project against intended targets and objectives.

Indicators to be used in the evaluation should be clear, easily understood and I updateable on a regular basis. They are likely to be related to cost recovery, improvements in tenure, shelter conditions, health, community environmental i conditions and resource mobilization. The resulting monitoring and feedback mechanism should also allow for information to be used in a timely manner to improve project implementation and to inform the community. Training in a GIS/web-based approach has been instituted by the Project I to help achieve this goal.

I 1.7 Selected Best Practices

In the drafting of the 15-Year Strategy for Slum Eradication, best practices surveyed I in Metro Manila were taken into consideration. Included in this section under best practices are emerging innovative models for planning and implementing socialized housing programs, community initiatives to attain full upgrading of settlements and I improvement of neighborhood quality, legislative reform to strengthen the legal framework for implementing socialized housing, LGU-initiated measures to stem the tide of in-migration into Metro Manila cities and municipalities and creative solutions I to capacity building of various stakeholders especially the CBOs and LGUs. 1.7.1 Local Multi-Sectoral Committees for the Socialized Housing Program

I The importance of these committees is that they provided the CBOs and the NGOs the opportunity to participate in decision-making with respect to socialized housing. The committee gave official representation to the urban poor so that the people’s I needs can be properly articulated and addressed by the LGUs and also gave the NGOs the proper venue for advocating for the needed reforms in the system.

I A few LGUs have constituted multi-sectoral committees to deal with the planning and implementation of housing programs for the urban poor. Notable among these are the Las Pinas Inter-Agency Committee on Housing (LPIACH) and the ShoPCom I (Socialized Housing Program Committee) of Muntinlupa. Created by an executive order of the local executive, these committees commonly include representatives from the National Housing Authority (NHA), NGOs like the Muntinlupa Development 1 Foundation (MDF) and the Philippine Business for Social Progress (PBSP), urban poor coalition, CMP coalition and the various department heads of the city government involved in delivering shelter services to the urban poor. In most cases, the City Mayor chairs the Committee and the UPAO serves as secretariat of the I committee.

The basic task of these committees is to assist the local government address the I increasing demand for socialized housing programs and projects for the city’s poor I constituents. Within the committee, there are sub-groups for service delivery,

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organizational development, networking, information management, advocacy, I research and development. With the constitution of multi-sectoral Local Housing Boards (LHBs), it is logically expected that the committees on socialized housing will be absorbed by the LHBs and the latter will benefit since the committees will bring I with them the knowledge and experience acquired through the years in planning and implementing socialized housing programs. I 1.7.2 Code of Policies of Community-Based Organizations (CBOs) Governing House Construction and Estate Management I Although in its initial stages and still requiring substantial refinement, more mature CBOs have taken the initiative to formulate their own Code of Policies that govern their members within socialized housing sites. The NGOs deserve credit since these organizations provided technical assistance to the CBOs. One example is the Code I of Policies of a CBO called “Maninindigang Gabay ng lnspiradong Kapatiran Neighborhood Association” from Barangay Santa Lucia, Novaliches, Quezon City. The drafting of the Code was assisted by the Foundation for Development I Alternatives (FDA).

Some features of the Code include provisions on easements, building and back I fence heights, and firewalls as well as estate management rules on the use of open spaces, roads and alleyways, allowable scale of commercial activities and care of domestic pets. The benefits that may be derived from formulating and enforcing the I CBO’s Code of Policies cannot be underestimated.since the rules and regulations embodied in the Code assist in guaranteeing that the upgraded and the newly resettled areas no longer deteriorate into slums once security of tenure is obtained. The enforcement of the Code ensures orderliness in the communities and also helps I bring about harmonious relations among neighbors. I 1.7.3 Marikina Settlements Code Marikina is presently the only LGU in Metro Manila that has taken the initiative to codify all its local ordinances and legal issuances that have to do with socialized I housing. The importance of codifying all regulations pertinent to housing and the management of on-site slum upgrading and off-site resettlement is that at a glance, all city/municipal ordinances impacting such settlements will be incorporated in one I document for easy reference.

By codifying, all potential conflicts in some socialized housing ordinances can be 1 identified and resolution of such can be embodied in the amendments to be incorporated in the Code. It also clearly identifies responsibilities for the enforcement of the Code, which in the case of Marikina, fall on the Marikina Settlements Office. Regarding estate management, the Code becomes a valuable tool inasmuch as it 1 prescribes rules and regulations that ensure order and sustainability of the community. The MMUSP project has drafted a model ordinance on the local settlements code for the consideration and eventual adoption of the rest of the LGUs I in Metro Manila. 1 I

Final Report Volume 1 20 I PART I:BACKGROUND TO THE STRATEGY 1 ~~ I TA 3760-PHI: Metro Manila Urban Services for the Poor Project I I 1.7.4 Migration Information Center (MIC) of Muntinlupa Established in 1998, the MIC installed a system of gathering data for the following purposes: to help policymakers, planners and program implementors in policy and I program development particularly on the number, characteristics, needs and origin of in-migrants; to assist new residents in making initial adjustment to their new environment and provide them with the necessary services and facilities; and to have I the means to monitor and abate the influx of squatters to the city. The MIC operates through a 4-stage reporting system: the 1st stage involves a registration of all in- migrants to the city; the 2nd stage includes the regular reporting to the barangay I council of the status of registration of in-migrants; the 3rd stage is the submission of monthly reports to the City Planning and Development Office (CPDO), which is the overall coordinator of all activities of the MIC; and the last stage involves the submission of quarterly and annual reports of relevant findings to the legislative and I executive bodies of the local government for proper action of the LGUs.

This initiative is Muntinlupa’s response to the pervasive problem besetting the entire I Metro Manila and other cities in the country, which is the “re-invasion” of areas previously cleared of slum dwellers (e.g., river easements and other danger areas, and rights of way reserved for utilities and government infrastructure) and similar I invasions of vacant government lands and idle private lands. This system is unique to Muntinlupa and may be one of the best solutions to controlling the entry of new informal settlers in an effort to prevent the further worsening of the squatting problem I of citiedm un ici pal i ties. 1.7.5 Center of Excellence (CENTEX) of Marikina

I The creation of CENTEX introduced a new concept in local governance which facilitates learning toward change and improvement of standards and taste of the client’s outlook and attitude. It runs a variety of programs which include: urban I governance and institutional development; prosperity building; resource mobilization and management; public health, safety and security; environmental management; arts, culture, tourism and special activities; infrastructure and facilities development I and maintenance.

For the CBOs, it runs an orientation program on the Community Mortgage Program 1 and it provides training in leadership skills, team dynamics for community making, and community organizing. It also offers values education touching on topics like parenting, gender and development, and intimacy. For the government 1 administrators, it undertakes seminars on public service excellence, legislative advocacy, managing an LGU, communication, planning and management. For government employees, topics covered in the seminars/training courses include basic organizational orientation, communication, performance evaluation, clerical I development, occupational safety, computer-aided visual production, and advanced managerial course. CENTEX, as a model institution, is founded on Marikina’s philosophy that society through the government has the responsibility to create the I environment in which a person realizes his dreams for himself, for his own community and country, and consequently, recognizes his potentials to achieve his I aspirations. I

Final Report Volume 1 21 I PART 1: BACKGROUND TO THE STRATEGY I I I I I I I CHAPTER 2 I I I Current Slum Area I Conditions I I I I I I I I I I 1 1 TA 3760 - PHI: Metro Manila Urban Services for the Poor Project I

CHAPTER 2. 1 CURRENT SLUM AREA CONDITIONS I AND RATIONALE FOR STRATEGIC ACTION Like most other metropolitan regions in Asia, Manila displays strong economic disparities: well-planned formal areas are frequently surrounded by large areas of I very poorly serviced informal sefflements characterized by the presence of shacks, slums, and shanties. I According to an NHA report, in the early 1980s, one out of four Metro Manila residents was a squatter. Today, over one-third of the Metro Manila's population lives in squatter settlements. These squatter areas, better known as "depressed" settlements, match the typical characteristics of slums in other parts of the world: I incremental construction, variation of building-types, high level of street activity, and inadequate physical and social infrastructure. The LGUs in Metro Manila are struggling to address the vast numbers of under-serviced settlements of the urban I poor. Catalyzed by President Arroyo's "war on poverty," many new initiatives are being undertaken. Among them, the medium rise building (MRB) is being given serious consideration to achieve higher densities, given the shortage and high price I of land.

Densification can certainly accommodate more people, but it is also associated with 0 a proportionally greater demand for physical infrastructure and social services: (water, electricity, sewage and sanitation, schools, hospitals, community centers, etc.) Housing is a pmss that incorporates the social and economic aspects of I development, an opportunity for communities to improve their lot, an important component of human development Unfortunately, an integrated approach to housing that extends beyond the mere physical aspects of shelter provision seems to be I lacking. I 2.1 Findings from the Socio-Economic Survey As part of the detailed socioeconomic analysis for the MMUSP project, three surveys were carried out one each at the city, barangay, and household levels (see Appendix I A3, for details of the survey methodology). The following section summarizes the results of the socioeconomic analysis.

I 2.1.1 Demography

Population Gmwth Rate: Depressed settlements recorded a high growth rate I at 4.4 percent annually, nearly twice the overall average for Metro Manila. Household Size: The average household size in depressed settlements is I 6.75, significantly larger than the average for Metro Manila (4.62) or the Philippines overall (5.0). Resettled households recorded an average size of 5.9, smaller than that for squatter households at 7.1. Housing projects need to take into consideration this factor, an 18-25 sq.m. unit typically provided in I MRBs is highly inadequate as a residential unit for seven persons (see Figure I 2.1).

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Table 2.1 I income Sources (Cornparatiwe Data from APE and HH Survey) 1 1 Data Income Source I % of IIIncome I %of % HHs 1 Median I Mean 11 I I Income 1 1 Source I Income Salatv I 47.4% I I Total Entrepreneurial ' 24.5% ' ' Wages 81 % Activity i Net share of 0.7% Non-cash 2% crops, etc. 1 Family 1 1.3% l-IA27.9% 2500 1 II Sustenance I II I 35.3% 2708

However, it is critical to understand that even though the median household income I recorded is higher than the poverty line, the share per capita is PhP2,503 (for an average household size of 6.75). This figure is PhP960 lower than the share per capita for the "average" household in Metro Manila (comprising of 4.62 members 1 earning PhP18,001.38 per month which is the poverty line for Metro Manila). If the current poverty line were to be based on a per capita basis: and that the allocation per person should be equal to what they would get if the household size were 4.62, I the poverty threshold should in fad be PhP23,376 for a household of 6.75 members. Based on this new per capita poverty threshold, the incidence of poverty in depressed areas is in fad much higher, at 75 percent This has serious implications I on the selection of beneficiaries for government subsidies. Among the various subgroups within depressed settlements, households in danger a zones are the worst off: the survey recorded their median monthly household income as PhP7,750, far below the poverty linmsed on both household and per capita 'consumption levels (see Table 2.2).

I Tabte 2.2 Household Monthly Incomes, I Based On Housing Characteristics

I monthly lncome Housing Status - __ - I median mean ___ - ___ ------__ 1 Resettled CMP/RH 18000 27625 2 Resettled MRBs 16600 17096 I 3 Squatter Overall 17080 25440 4 Squatter Danger Zones 7750 10589 I Overall Der>ressedSettlements 16900 24768 1 I assuming equal portions per individual, regardless of whether helshe is an adult or child.

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I 0 fconomic Sustenance and Impm~mnt:MRBs provide little or no space for households to conduct income-generating activities. As mentioned earlier, these activities (even if a source of secondary income) are critical for the I survival of urban poor families living on the threshold of poverty.

0 Amortization Payments: Monthly mortgage payment for MRBs amount up to I 10 percent of the total household expenditure, unaffordable to urban poor households. As a result, families often end up defaulting on their payments, although not without good reason: in addition to paying more than three times I what a typical CMP beneficiary pays, these beneficiaries have to live in a house a third the size without any scope for expansion and defying their lifestyle, and that too without a secondary source of income. The resulting low repayment rate not only hinders the cost recovery, and hence replicability, of I housing projects but also questions the very basis of housing "assistance" being provided to the urban poor.

I Space Standards: - MRBs with loft spaces within units have a floor to floor height of 4.9 meters, about one meter in excess of the regular norm (of 2.8 to 3.2 I meters). For a fivestov structure wifhout an elevator, this implies that the person owning a house on the top floor, in fact has to climb 20.5 meters (an equivalent of seven stories) to reach his house. This breaks the I minimum standard rule of "G+4"(ground plus four) without elevator. - Units with lofts have a clearance height of barely 2.2 meters (6 feet), both I at the lower and upper levels. The standard clearance should be 2.5 meters at the bare minimum.

- Units with a carpet area of 18 sq.m. are often called two-bedroom units. I The "rooms" inside are in fact barely six sq.m., the size of a reasonably sized bathroom in a "regulaf house. Barely large enough to fit a single bed, and lacking in natural light or ventilation, these resemble "dens" or I "study" areas; they do not meet the basic requirements for a "bedroom". The unit size is adequate only for a family of two-three (two adults and one young child). Considering the average size of urban poor families I (five to seven), clearly these units seem to be inappropriate in terms of the design layout.

I Construction Qualify:The quality of construction in these building is extremely poor, and low maintenance is evident from the paint (peeling off in less than two years of completion), leaking roofs, and blocked drains. Furthermore, with I little or no sense of community organization among these beneficiaries, a shared responsibility/ initiative is completely lacking. I I

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1 TA 3760 - PHI: Metro Manila Urban Services for the Poor Project I .. 1 Targeting the Poor

0 Specific needs of individual households are not adequately considered in the design of housing solutions. Targeting needs to be based on both income and I preferences. Preferences include lifestyle, location, social services etc. There is also a wide income range among beneficiaries in relation to the housing packages offered. NHA has a graduated amortization payments system, but I in order to better target subsidies, incomes need to be tracked on a more regular basis.

I 0 A difFicult yet critical aspect of housing the urban poor is the ability to distinguish between deserving candidates and squatting syndicates. A database of socialized housing beneficiaries needs to be set up, possibly as part of a GIS exercise that is updated regularly to track incomes and mobility, I which excludes the syndicates while still including the poor. I Inclusion of Other Sub-groups into Socialized Housing Programs

0 The target group for depressed areas is typically home-owners. However, many of the homeless are renters and sharers. Housing policy needs to be I more inclusive by targeting all these subgroups, which can then be categorized by income and other characteristics to better suit individual needs. This, in fact, would serve to enrich the design, and allow for a more I variable mix of people to live together.

Increase in population by ”natural” gmwth is not clearly built into the housing I plans. This seems to be an increasing problem: young adults marry and have offspring at a relatively early age, then move into an apartment-type arrangement in the parents’ house. These families are not typically accounted for under Socialized Housing programs. Beneficiary selection criteria should I address this issue by carefully considering household size and family characteristics.

I Similarly, some level of consistency is needed regarding the definition of “familf and “household”. The data gathered in the surveys indicates a clear tendency to count extended households as two or more “households” rather I than “families”. This leads to inamrate growth rates and demand projections.

Housing plans need to be more sensitive to the needs of disabled citizens I and women. Appropriate facilities to meet their needs should be included in the design and planning of housing projects. I Community ParriCipation and Sense of Ownership The CBOs are often inadequately organized, internally as well as in terms of their . I effective participation/networks/linkages with other stakeholders. There is an apparent disconnect between LGUs, MGAs, MGOs, and CBOs which hampers their participation in the overall development processes.

I Theoretically, community participation is high in the Philippines, but in fact few I resources are allocated to solicit active local participation. For instance,

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by the NHA follows very precisely the bare minimum standards set forth in the I BPZO'. Furthermore, the fact that a few sample models are being used as templates for entire settlements indicates a poorly conceived one-size-fits-all I approach. 0 Built housing, in the form of medium rise and high-rise housing projects, is likely to miss the real target population. It is too expensive, i.e. unaffordable' I for the target beneficiaries, and prone to gentrification. In addition, MRBs are expensive to build, costing at least 56 times the cost of row housing. Besides being a heavy upfront cost for the government (implementing) agency, they I will require higher long-term subsidies if the scheme is to be affordable to the intended low income groups.

I 0 From a socio-economic standpoint it is critical to understand that housing for low-income families is almost never complete without a good mix of other uses. Sari-sari stores, work sheds for skilled labor, etc. are an important I ingredient of low-income settlements. This mix of uses generates income that, even if only supplemental to the primary income, is critical for households living on the threshold of poverty. Hence, housing projects for these low- income families should have an integrated approach geared towards mixed 1 land use and urban development.

I Affordability and Willingness to fay

0 Both, cost and appropriateness of design have implications on willingness to I pay for housing. Urban poor households living in depressed areas typically allocate a very small amount of money for housing (for rent or maintenance). In contrast, the beneficiaries of MR5 units end up having to pay about nine to ten percent. The norwillingness to pay is evident from the repayment rate I among MRB residents, which was seen to be extremely low in the surveys. Repayment, in turn, has direct implications on cost recovery and replicability I of such housing projects. 0 In general, beneficiaries of MRB projects seemed unhappy with their units: they wee too small, or too expensive, or poorly constructed, or not I "expandable". As a result, people are not willing to pay what they would otherwise have paid for something that met their needdpreferences. I I

7 The BP220, outlining the minimum standards for housing, was established in the 1980s with I the intent to lower standards so as to enable "formalization" or irregular settlements of the urban poor. These standards were not meant to Serve as design guidelines as they are currently being used by the NHA for new housing projects, much less muttistoned construction. I * Mortgage payments for MRB units amount to an average of 9-10 percent of household monthly income. In comparison to the corresponding average of 0-3 percent for urban poor I households, this is very high.

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consultation is often defined loosely as ”three meetings” with the I beneficiaries/ communities. Another example is the representation of NGOs/CBOs at the City Planning office, which consists of two representatives citywide - one for NGOs and another for CBOs. In other words, the I supporting institutional framework for community participation is still very weak in the country.

I 0 A common problem faced by LGUs is that once the beneficiaries get the house, they begin to default on their amortization payments. Instilling “values” along with a sense of ownership can go a long way in making beneficiaries more responsible. It is important to treat communities as “partners”, not just I beneficiaries. Active community participation in local decision-making through self-help efforts or other matching-fund arrangements in revitalization programs can contribute significantly towards reducing delinquency in I payments, better estate management, and improved environment and quality of life. Grameen Bank in Bangladesh provides a good case example.

I 0 Often the beneficiary selection process does not account for compatibility among different communities when grouping them together. For instance, families from many different settlements are brought together to live in a I single MRB. As is evident from this study, this leads to social isolation. Many resettled families expressed their dissatisfaction With the level of community organization, and the lack of resolve to work together to address common I problems.

I 2.2 Key Directions MRBs as a solution for housing the poor are not a new phenomenon in the Philippines. The government has been experimenting with this approach for over two I decades now, with little success however. More recently, as land prices have continued to soar and informal settlements to proliferate, HUDCC has once more turned to MRBs (to conserve land) and to minimumast resettlement, both of which I threaten heavy future costs for LGUs.’ I This analysis points clearly to some key directions, which are summarized below: 0 Address the housing needs of depressed households in danger zones first I since they are the poorest, and live under the worst conditions. 0 Prioritize upgrading over resettlement, since security of tenure encourages higher investment on housing, minimizing government responsibility /funding; I and best utilizes the equity on already existing housing.

0 MRBs should be the last option for resettlement for three reasons: high I investment and greater subsidies required from the government; physical design and layout inappropriate for needs of urban poor households; lower willingness to pay on part of the beneficiaries and therefore, poor cost I recovery or replicability. I “A Strategy To Fight Poverty: Philippines,”World Bank, March 9996.

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I 0 MRBs need to be redesigned in accordance with the above-mentioned issues. in addition, renters (relatively short-term) might be better suited as the I target beneficiaries of MRB units rather than owners. The government, as a "facilitator" of housing should work more closely with potential beneficiaries, to accurately assess their current conditions, needs I and preference, and devise practical and affordable housing solutions. I I I I I I I I I I I I I I

Final Report 0 Volume 1 39 I PART 1 THE PROJECT STUDY I CHAPTER 3

Policy Environment TA 3760 - PHI: Metro Manila Urban Services for the Poor Project

CHAPTER 3. I POLICY, INSTITUTIONAL AND FINANCIAL ENVIRONMENT I This Chapter summarizes the main issues and policies affecting the conditions of Metro Manila and the development of the long term Strategy. For a more detailed I analysis, please refer to the Interim Report. I 3.1 Government Plans and Policies 3.1.1 National Urban Development and Housing Framework (NUDHF), I 1999 - 2004 The framework for the Philippine Shelter Plan is the National Urban Development and Housing Framework: 1999 - 2004. This was prepared by the Housing and Urban Development Coordinating Council (HUDCC) with ADB assistance to address complex housing and urban development issues. The legal basis for the formulation of the framework was Republic Act 7279, otherwise known as the Urban Development and Housing Act of 1992. The NUDHF has adopted the following objectives:

0 Ensure that land is available for housing;

0 Ensure that residential infrastructure is provided to recognized housing development areas; 0 Support housing finance systems; and

0 Provide mortgage guarantees. I Also contained in the NUDHF are the following themes: Urban growth, integration and metropolitanization 0 Urban land resource management; I 0 Urban environmental management; 0 Physical and social infrastructure;

0 Housing and regulations; and 1 0 Urbanization, governance and management. The preparation of the NUDHF follows a succession of policy interventions by 1 government. President Ramos called for a framework for urban policies in 1993 that was to follow the Medium-Term Philippine Development Plan, 1993-1998. The resulting NUDHF was then updated by the publication by NEDA of the National Urban Policy Agenda (NUPA) in 2000. These strategic plans went in parallel with a I close interest by successive Presidents in housing and urban policy, from the Marcos era down to the present use of Presidential Proclamations. There were also landmark laws enacted, dominated by the Local Government Code of 1991 (LGC) and the I Urban Development and Housing Act of 1992 (UDHA). A comprehensive analysis of the legal framework for housing is shown in Appendix 0.

I The Government has long recognized the inevitability of continuing urbanization in Metro Manila but has not yet put in place the adequate policies and programs I needed for the mega-city to manage its population growth. The NUDHF Framework

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sought to remedy this gap. As mentioned earlier, about a third of the households in Metro Manila have substandard living conditions. Considering that housing conditions are closely linked with wider “quality of life” issues, increased efforts are needed in establishing housing policies and strategies that will take into account the broader issues.

The important policy statements in the NUDHF most relevant to the 15-Year Slum Eradication and Urban Upgrading Strategy for Metro Manila are as follows:

Urban Land Resource Management, which is designed to ensure that affordable land is available when needed for urban development by:

0 Providing incentives to bring idle land into use; 0 Reforming the land valuation system; 0 Ensuring legal titles exist for all land transactions; and 0 Providing incentives to update urban land use plans.

Urban Environmental Management, which is designed to achieve sustainable development through reversing environmental degradation by:

0 Providing economic incentives to ensure good performance in environmental management; 0 Implementing integrated waste management system; and 0 Protecting natural reserves from encroachment.

Physical and Social lnfmsfructure, which is designed to increase the involvement of the private sector in infrastructure provision by:

0 Encouraging private and community sectors to provide their own infrastructure to reduce cost to government; 0 Developing user charges; and 0 Modernizing existing facilities to take precedence over new construction.

Housing and Regulations, which is designed to address the housing needs of the underprivileged and homeless segments of society by:

0 Identifying public resources to meet housing needs of the lowest 30 percent of urban income earners; Designing policies to ensure that all elements of Philippine society, notably the private sector, non-government organizations (NGOs) and local government units (LGUs) are mobilized to meet housing needs; 0 Identifying new sources of funds to support the sector; and 0 Increasing the number of options available to residents in solving their housing problems.

3.1.2 Medium-Term Philippine Development Plan, 2001 -2004

The current policy framework for housing is embodied in the Medium-Term Philippine Development Plan (MTPDP), 2001-2004. Although the framework addresses all categories of housing (socialized, economic and open), the major thrust of the

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framework is to address the housing needs of the bottom 40 percent of the population who live in informal slums/shelter conditions. The primary aim is to provide these households with affordable socialized housing through efficient production of housing units for ownership or rental and supported by a sustainable housing finance scheme.

In support of the above policy directions for the informal settlers within the housing sector, the following strategies were developed:

0 MTPDP proposal in making the housing market more efficient by having incentives to induce private sector-led innovative low-cost housing technology, reducing the time needed to process building permits, development of appropriate housing and subdivision standards, and supporting the enactment of the National Land Use Code and the Land Title Insurance Bill.

0 Creating a sustainable housing finance system including the passage of the Securitization Bill, development of a private secondary mortgage institution, and more efficient use of subsidies and incentives.

Accelerating assistance and provision of security of tenure for the informal sector including high priority assistance to those in danger areas, continuation of major housing programs (CMP, LTAP, GLAD), in-city relocation with the provision of basic social services in the resettlement sites, and promotion of more efficient rental markets with private sector participation.

Strengthening the shelter delivery system and accelerating the localization of housing and development efforts. This will involve among others stronger . cooperation among housing institutions, capacity building for LGUs and creating local housing boards to take care of housing the underprivileged and homeless within the respective territorial jurisdiction of the local governments.

The MTPDP recognizes that socialized housing without subsidy is inaccessible to the majority of the poor. Government now recognizes that, given the enormous scale of demand for slum eradication and despite the good efforts of the current housing program, after grant of tenure, individual self-help approaches will dominate paths to housing, especially by the urban poor in Metro Manila where land costs are high.

For other social services supporting housing, the MTPDP’s policy direction guarantees delivery of basic social services such as health, education and social welfare to the most vulnerable and disadvantageous sectors of the economy which include the urban poor. On the part of the LGUs, the MTPDP’s policy pronouncement states that the capability of local governments to effectively deliver devolved social ’ services will be strengthened.

3.1.3 National Urban Policy Agenda (NUPA)

On the provision of shelter for the underprivileged and homeless, the NUPA includes the following policy pronouncements:

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In order to remove obstacles that deter the land market from becoming more efficient and to encourage the private sector participation in housing development, the policy is to increase the supply of urban land through various means including land banking and identifying land for urban expansion; removing obstacles to land registration and titling; utilizing idle government land; and providing infrastructure required for housing and urban expansion.

0 Encourage LGUs to implement squatter resettlement as provided for in the Urban Development and Housing Act (UDHA). This policy places the primary responsibility of relocating the homeless and underprivileged to LGUs and at the same time ensures that appropriate programs of assistance are extended.

0 In the policy module of the NUPA on Metro Manila, the policy states that additional measures should be identified including additional incentives for the private sector participation in socialized housing development. Hopefully, this policy will lead to an increase in the supply of both owner-occupied as well as rental socialized housing units.

0 On other basic services supporting housing like solid waste disposal, security and fire protection, and recreational services to name a few, the policy statement encourages an increase in the role of the NGOs and POs in the delivery of basic services. The intent of this policy is to encourage local participation in infrastructure planning and project implementation.

3.1.4 The National Anti-Poverty Action Agenda (NAPAA) and Social Reform Agenda (SRA)

Two other agenda documents express concern for enhancing the access of the poor to services that will address their basic needs. The National Anti-Poverty Action Agenda aims to have a more effective and efficient delivery of public goods and basic services as well as to follow a more focused targeting of benefit for the poorest members of society. In the area of shelter, the Agenda focuses on providing options for the urban poor either to build decent, self-sustaining communities within the urban centers or to relocate out-of-city in an environment where rural entrepreneurship is being promoted.

The Social Reform Agenda has broader concerns beyond housing and is worth repeating here. The primary objective of the Social Reform Agenda is to ensure that poor Filipino families are able to meet their minimum basic needs. The minimum basic needs have been defined to include health, food and nutrition, water and environmental sanitation, income security, shelter and decent housing, peace and order, education and functional literacy, participation in governance, family care and psycho-social integrity.

3.1.5 Synthesis

In conclusion, from a review of the above policy environment, it becomes clear that housing for the urban poor is indeed a priority of the national government. In the devolution of shelter services, the policies have also defined the responsibilities of the LGUs, NGOs and POs in local shelter planning and project implementation. The

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policies also take note of the obstacles encountered in the efficient operation of the I land market, which put the poor in a disadvantageous position, and the need to overcome such obstacles. Finally, the policies call for more private sector participation in housing and in other related services as well as the need to design a the proper incentives for private business to do its share in shelter delivery. In recognition of these policy pronouncements, the above major points were carried forward in the various policy proposals contained in the proposed MMUSP policy I framework.

I 3.2 Policy Issues i 3.2.1 Land Market Rationalization Lack of access to land is undeniably the biggest constraint to the delivery of affordable shelter in Metro Manila. The shortage of affordable land for housing is one reason why low and even moderate-income households are forced to live in I unauthorized slums. The situation results not only from the mismatch between supply and demand, but also from a number of other administrative, political, cultural and 1 regulatory issues that include: Weak land administration arising from the involvement of multiple agencies with no overall mechanism for resolving conflicting interests; 1 Outdated land administration laws, some of which do not comply with recent land use legislation; Rigid and unresponsive land classification systems that do not meet the € needs of modern urban growth; Different land valuation systems and methodologies, some of which have been contested in court bringing about long delays in the implementation of I government programs and projects; Deficiencies in the land transfer process (e.g. multiple titles overlap); and e The large number of permits needed to commence land management. A major initiative to improve land administration is the LAMP Project which will address many of the issues mentioned above'. A pilot project is being opened in Quezon City where it is estimated that about 80 percent of plots are covered only by U tax declarations.

Building on the success of the Community Mortgage Program (CMP), a number of I other land development models, such as Guided Land Development, Land Sharing, Land Banking, Land Readjustment and Community Land Trusts are worth considering as part of the strategy to eradicate slums in Metro Manila. For example, 1 the Community Land Trust (CLT) is an innovative and effective approach that is now being used extensively in the United States and other Western countries to keep land and housing within major cities affordable to low-income groups. The establishment I of the CLT is fully compatible with the current CMP program and could be used to help keep housing areas within Metro Manila affordable to low-income households while at the same time allowing for their full development and improvement (For I details see Section 4.3.3.The size of the community-owned land under the CLT I 1 see Chapter 1.4 (Donor Assistance)

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would provide valuable collateral to obtain a large size loan from a bank that could be used to finance micro-enterprises and home improvement within the community. Land sharing and readjustment are other methods that could be applied in an innovative manner to the many small scale slum areas that exist in Metro Manila. Guided land development could be used to develop appropriate resettlement sites. Most of these land acquisition and disposition strategies have been authorized under Presidential Decree 1517. The best application andlor mix of development schemes to apply to specific sites will be included in pilot project development.

3.2.2 Shelter Delivery Systems

The informal sector is the primary source of affordable housing for the poor in Metro Manila. High land prices effectively discourage the production of formal private sector housing for these households, a situation that is unlikely to change in the near future. In addition, the limited resources for government housing programs and financial institutions are unable to meet the demand for shelter by the poor. The result is that most poor households are obliged to find housing in informal housing areas and urban slums that subsequently become the objects of relocation or neglect.

Given this situation, government housing efforts in Metro Manila have focused on the relocation and resettlement of slum dwelling households in public housing units and on providing a limited amount of housing finance for land tenure, site development and home improvement. Therefore, it is likely that owner-built housing, small-scale government resettlement projects, and renting will continue to provide the three main paths to housing for poor households living in Metro Manila. Strengthening owner- builders and small-scale contractors to build better housing is one of the main concerns of the Strategy in terms of the delivery of affordable shelter.

3.2.3 Housing and Infrastructure Affordability

The rapidly rising price of land within Metro Manila makes it increasingly difficult to provide affordable housing for low and even moderate-income households. The problem of escalating land prices, however, is one that is common to many modem cities undergoing high rates of real estate speculation and development. There is, in fact, a growing contradiction between the will to combat poverty through pro-poor housing policies and the desire to establish a neo-liberal, market-based economy, which, through its short-term effects, tends to exclude the poorest residents from affordable access to land and housing. This contradiction is clearly evident in Metro Manila. Under these circumstances, simply freeing up the land market will not produce land that is affordable to low-income households. Given the need to house low-income workers within the city, and preferably in close proximity to their work, certain residential areas need to be protected from excessive real estate speculation and kept affordable to the poor.

The high costs of government built housing present another major challenge to housing affordability for the poor. Most of the current public housing packages are not affordable to their intended beneficiaries without a considerable amount of subsidy. Large amounts of the government subsidies tied to interest rates for loans to formally employed workers does not really help the genuinely poor living in slums who desperately need some form of subsidy simply to improve the basic conditions under which they live.

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Most poor households build their own housing unit at little cost. The owner-builder approach to housing provides the most affordable housing option for the poor. Measures will be developed as part of the Strategy to help maximize the benefits of this approach while reducing costs and improving the overall quality of construction.

3.2.4 Urban Planning and Management

The conventional approach to urban land use planning and management relies on controls such as zoning, density limits and building height restrictions. The approach confuses the role of planning, which is to stimulate desired forms of development, with zoning, which is to prevent unwanted development. More recently, the planning emphasis has been placed on a policy-driven and performance-based approach that guides development through a set of general land management policies. These policies are designed to address key concerns such as the creation of livable urban areas, maintenance of open space, optimization of public infrastructure, and conservation of environmental resources. This approach was applied in Metro CALA made up of selected cities and municipalities in Cavite and Laguna, which are located at the urban fringe of Metro Manila. This approach has been recommended only for highly urbanized areas.

Requirements for the successful implementation of this approach include:

0 Strengthening of the participatory process; 0 Enhancement of the technical capacities of the LGU officers and personnel involved in the implementation of the CLUP and zoning ordinances; and Dissemination of information to obtain community support and to enable residents to perform “quality checks” on all developments.

The implementation of this planning approach is fully compatible with community development and slum upgrading at the LGU level.

Another recent development is the HLURB’s initiative to apply strategic planning in the preparation of the CLUP. Through a technical assistance grant from AusAid, guidelines were formulated; under these guidelines, strategic planning incorporated the multi-stakeholder consultative process in land use planning. Strategic planning has been defined in the guidelines as a continuous and systematic process during which people and organizations (community/stakeholders) make decisions about future outcomes, how these are to be achieved, and how their success is to be measured and evaluated.

To further move ahead in urban planning, this is the best time to review HLURB’s physical planning standards being used for sectoral and infrastructure planning particularly for health, education, spdrts and recreation, protective services, etc., especially when these are used in planning for support facilities in the metropolitan and other highly urbanized areas. It is also the best time to formulate specific planning guidelines for shelter planning for cities/municipalities which is focused only on socialized housing and will be based on locally collected data. This local data base will also enhance the proposed MMUSP urban poor mapping which uses GIS technology.

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In recognition of these planning gaps, the MMUSP Project has drafted guidelines for local shelter planning which is being recommended for pilot testing in two areas in Metro Manila. (Refer to Appendix P for the draft guidelines). Technical assistance proposals have also been drawn up for both shelter planning and GIs-ISIS (Informal Settlers Information System) to further strengthen the application of urban planning to urban poor housing in the highly urbanized sections of the country. (Refer to Chapter 12 for the TA proposals.)

3.2.5 Private Sector Participation

Owner builder housing in slum areas provides the majority of housing for poor households living in Metro Manila. Formal private developers build very few units affordable to the poor. Private sector participation in the development of public infrastructure is supported by R.A. No. 7718, which authorizes private sector financing, construction, operation and maintenance of public infrastructure projects. Formal private sector companies can build and transfer major civil works that include secondary roads, drainage supply, sewer networks, land formation, filling, flood control and reclamation. Small-scale contractors and community groups can build small-scale civil works including tertiary infrastructure for footpaths and drainage works, site preparation, septic tanks and small social facilities. The community can also be involved with on-site garbage collection services that are linked to privatized city-level solid waste management and disposal. Finally, partnership arrangements with private landowners and developers have been used to make land available for housing low and moderate income households.

While public private partnerships are not a universal solution to increased formal private sector involvement in the eradication of Metro Manila slums, they can be useful in stimulating private sector efforts to improve shelter conditions for the poor. By turning government into a co-stakeholder with the private sector, many of the legal and institutional constraints to increased formal, private sector participation can be identified and addressed. The private sector builder networks have had influence on government housing policy; the Chamber of Real Estate and Builders Association, the Subdivision and Housing Developers Association, LRA and the Organization of Socialized Housing Developers of the Philippines. Public private housing partnerships can help reduce much of the unnecessary uncertainty, difficulty and delay in the regulatory process by making public sector partners more clearly aware of the problems encountered in this process.

3.2.6 Infrastructure and Environment

Metro Manila suffers from a host of environmental problems that are rooted in rapid population growth, high population density, limited investment in infrastructure and environmental protection, and inadequate institutional capacity and budget for managing infrastructure and environment. Infrastructure and environmental quality are linked, in that infrastructure deficiencies often result in environmental quality decline. The same linkage also exists between infrastructure provision and urban planning and management.

In Metro Manila, there is much to be done in infrastructure provision and environmental planning. The devolution of functions and responsibilities from the national government to the LGUs has resulted in an apparent lack of planning

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a coordination regarding these facilities that cut across LGU boundaries. Pursuant to Section 17 of the Local Government Code, Metro Manila LGUs shall endeavor to be self-reliant in the provision of infrastructure such as roads and bridges, water supply systems, flood control, drainage and sewerage, solid waste disposal system, 1 communication and transportation facilities, and support to social infrastructure and services.

I The implementation of many infrastructure projects for the last two years was hampered by the limitation of public funds. In view of this, the government continued to increasingly rely on the participation of the private sector in implementing 3 infrastructure projects. Steps are continuously being undertaken to create a more liberalized, deregulated, and competitive environment in the infrastructure sector. ’I Air, water, noise and land pollution are a danger to health, particularly to the poor who spend much of their working lives in direct contact with such pollutants and who may live in heavily polluted parts of the city. The MMUSP metro-wide cities survey 1 shows that three infrastructure sub-sectors need substantial improvement - namely water supply, sewerage and sanitation, and drainage. (See separate section in the Social Survey in Chapter 2). The respondents feel that with the other services, they I are either sufficient or they get by with what they get. 3.2.7 Institutional Environment

I Lessons have been learned and performance gaps identified in the institutional capabilities of the urban development and housing sector. These have been discussed in previous documents, notably the MTPDP (1999-2004), the NUDHF I (1999-2002), the ADB TA 3476 and the ongoing Philippine Urban Forum. These have also been presented in several workshops and summits on housing as well as in the policy and legislative agenda of the leagues of LGUs, particularly the League I of Cities and the League of Provinces2. d At the National and NCR Levels It has been identified that HUDCC is confronted with the following problems:

a. The need to strengthen HUDCC’s central coordinating role in I implementing the strategy

There is a widespread perception that HUDCC has not effectively performed its I coordinating function, owing largely to the fact that it is coordinating relatively large and influential departments that do not feel accountable to a mere coordinating body. As a result, horizontal and vertical linkages with the housing agencies, MMDA and 1 LGUs are weak and there are overlaps or conflicts in policies and programs of the shelter agencies and among the donors. I I (PBSP: “Towards Livable Cities in the Twentieth Century”; League of Provinces Policy I Agenda).

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I b. Low private sector participation in socialized housing Private sector participation has revolved chiefly around the participation of housing and subdivision developers to the exclusion of other industries or businesses. Also, it I has focused mainly on the 20 percent the balanced housing embodied in the UDHA. However, this has proven unrealistic and compliance has been nominal, I characterized in many cases by circumvention and compromises. c. Non-maximization of NGO participation I NGOs participate in meetings and other venues for decision-making as mandated in the Constitution and the UDHA. However, their contributions have not gained enough recognition in terms of low-cost technologies, financing, credit and collection I schemes, enterprise projects, etc. These should be valuated and inputted into the overall impact indicators of the national shelter program.

I 0 At the Local Level While most of the cities of Metro.Manila have a Local Housing Board or its equivalent as necessitated by the Local Government Code (LGC) of 1991 and the UDHA, these 1 LHBs have only been recently constituted in a few LGUs and are not yet equipped with the necessary skills in shelter planning. The scope of their understanding and work in socialized housing also has not been defined. The spirit of the UDHA is to I ensure the effective implementation of a socialized housing scheme, but this has not been effectively carried out by the LGUs. Part of this may be attributed to the lack of know-how; but it may also be traced to the absence of a strong oversight from the I HUDCC for its implementation. This in turn may be traced to the weak mandate of HUDCC, as noted above. a The UPAOs likewise have very limited skills in shelter planning. In many cases, as shown in interviews conducted, the focus of their work ends with the inventory and demography of legitimate urban poor residents and land available for socialized a housing. Strategic coordination with the City Planning Office, Engineering Office and MIS/GIS offices is lacking.

There is a noticeable lack of skills in urban and land use planning, even at the city I planning level. Planning has focused mainly on the physical and zonal. In some cases there is a discrepancy between master plans and land use plans. GIs-based planning for purposes other than physical, such as tracking the delivery of basic I services, taxation, or infrastructure development, is not common. I 3.2.8 Community and NGO Participation In theory, community participation is high in the Philippines. In fact, local participation solicits few responses “consultation” being defined loosely as “three meetings” with I the beneficiaries/ communities. The typical representation of NGOs/CBOs at the LGU Multi-Sectoral Committees for Socialized Housing, which generally consists of two representatives per city-one for NGOs and another for CBOs-provides another example of the low level of contact with the community. In other words, the 1 supporting institutional framework for community participation is still very weak in the I country.

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I As a result, gaps remain in the following areas which need to be rectified to facilitate I a more active NGO-CBO-LGU dialogue: 0 Lack of multi-sectoral groups for the NGOs and CBOs to come together with other sectors (government and private) to discuss the people’s agenda; 0 Lack of updated training material to respond to changing needs; I 0 Lack of consistent funding support to continue provision of basic services; and I 0 Lack of documentation or dissemination of best practices and lessons learned NGOs, as key stakeholders in the development process, undertake a wide variety of I roles that include, among others: 0 Bridge financing (for land acquisition, housing and livelihood);

0 Capacity building of CBOs (in undertaking leadership roles, and I organizational and financial management); 0 Developing innovative models in a variety of sectors (such as savings mobilization, CMP origination, housing loans using labor as counterpart I contribution, and so on); and 0 Facilitating joint decision- Box 2 making activities among LGUs Definition of Micro-finance I and CBOs. Micro-finance is the provision of a broad range Even the limited application of these of financial services such as deposits loans, functions had a significant impact on payment, services, money transfers, and I the quality of life for the urban poor, insurance to poor and low-income households, and need to be further strengthened. and their micro-enterprises. Three types of The Strategy includes Social sources provide micro-finance services: a Development Action Plans (see Formal institutions, such as banks and Chapter 9.1.3,9.2.3, 9.3.3) that: development aid organizations; 0 Semi-formal institutions such as NGOs; and Informal sources such as money lenders and I Strengthen these roles by shopkeepers . building capacity through train- Institutional micro-finance is defined to include the-trainer programs in the micro-finance services provided by both formal I above-mentioned areas; and semi-formal institutions. Micro-finance 0 Facilitate the formation of multi- institutions are defined as those whose major sectoral coalitions; and business is the provision of micro-finance I 0 Expand the reach of the NGOs services. to cover a wider spectrum of urban poor communities across Metro Manila. Source: ADB 2000. Finance for the Poor: Micro-finance I Development Strategy. p.2 3.2.9 Micro-Finance 11

I In just two decades, micro-finance programs in the Philippines have become very . popular among organizations addressing the basic needs of the urban and rural poor in the country. The tiered network that has developed among local lending I institutions, NGOs, the government, and international organizations including multinational and bilateral development aid organizations have contributed to the I recent surge in the number of clients serviced by the micro-finance institutions. It also

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paved the way to diversification of services, financing mechanisms, and more I promising opportunities for adjusting program structures and improving outreach. The provision of shelter finance being proposed by MMUSP Project is one of the consequences of the network’s initiatives. Programs are underway to develop I effective poverty alleviation strategies, using micro-finance as the avenue.

In Metro Manila, there are several organizations that operate as micro-finance I institutions, most of which maintain “resource centers” in the target pilot areas. The Project conducted interviews and analysis of three micro-finance initiatives in I operation to illustrate specific aspects of the micro-finance industry in Metro Manila. MFls have frequently observed that many micro-credit clients operate home-based enterprises, and investments in housing improvements basically came from funds I allocated for their income-generating businesses. Clients borrow for income- generation purposes, yet side tract the funds into housing improvements, adding a room for commercial use or altering part of the living space into a shop in order to develop or expand the space needed for income generation. Clients also improve the I productivity of their enterprises, particularly food processing and selling activities through the provision of infrastructure such as improvement of kitchens, paving a mud floor for wider work space and better storage space for inventories. Those MFls, I therefore, that have expanded their services to include loans for housing improvements have in effect provided their clients with more flexible credit, allowing their clients to decide on the best use of available resources, depending on which is 1 the more urgent need. I At present, the Project is faced with two financial challenges: Housing-related loan products that are not yet developed, namely land acquisition and infrastructure provision for informal settlers. While most I housing micro-finance institutions have acquired considerable expertise in administering home improvement loans, none has ventured into new products I for land acquisition and infrastructure provision; and 0 Reaching those from within the Project‘s target population that do not have the capacity to pay socialized housing amortization payments. It will be difficult for limited income clients to be able afford to pay the large financial I debt necessary to acquire shelter. Thus, the development of appropriate financial schemes that will meet the shelter needs of this population group are I certainly the greatest challenges facing the Project today. Based on the success of micro-finance institutions nationally, it appears that inequity , in access to credit is the constraint of the poor and not the cost of money. Housing I loans should inevitably be complemented with micro-finance for livelihood projects to improve affordability. Those MFls that have centers in Taguig, Muntinlupa and Caloocan can be tapped to originate loans both for the construction of new housing I units and for house improvement. I I

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Three MFls have been earlier identified to service the pilot areas.3 Present products I . - and services of these MFls, with their corresponding terms and conditions, are i tabulated in Table 3.2 below. Table 3.2 i Summary of Products and Services by MFls TSPl Opportunity Micro- People-Based Alternative Development Corp. finance Bank (OMB) Development Initiatives, I Inc. (PDI) Kabuhayan Program: Group Loans: Proyektong Katuparan:

1 provides loans for micro 0 loan for a group of 0 provides small loans to projects to groups of 30 to 35 women with groups of 8 to 15 men women made up of 20 to businesses; and women; 30 members; 1 0 initial loan size of 0 loan size ranges from 0 loan size range from PhP4T payable PhPlT to PhP4T; PhP3T to PhPl5T payable within 3 months; within 6 to 12 months 0 each borrower is granted I 0 clients with good an increase of PhP2T records will per loan cycle; eventually qualify for Individual loans 0 compulsory savings i scheme called Capital Build Up to serve as SAKBAYAN Lending Program: Individual Loans: clients' seed fund after , 1 they graduate from the 0 loans to groups of tricycle 0 businessmen in lending program drivers (6 members); need of additional cap i.taI; I 0 loan size from PhP55T to PhP70T payable within 30 0 loans range from I to 36 months PhP3OT to PhPl5OT Individual Loan Assistance Savings: Program: Reryular savinqs - initial I 0 loan for business . deposit of PhP500 expansion of small Special savinqs - initial businesses with at least 5 deposit of PhPlOOT for 6 workers; months; interest may be 1 withdrawn monthly * 0 loan size range from PhP20T to PhP400T payable within 12 to 24 I months 1 I Other MFls not included in this report may be requested to participate through accreditation 1 with DBP and HGC.

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Ip___ _p ____1___-

3.2.10 LGU Revenues

The LGU revenues come from regular sources as well as the share of Internal Revenue Allotment (IRA) from the Bureau of Internal Revenue.

The main regular sources of income include the following:

a. Real property tax; b. Business tax and license fees; c. Property transfer tax; d. Fees from entertainment centers (cinemas); and e. Building permit fees.

Real property taxes are levied by valuing the market price of all properties and then applying a percentage to arrive at assessment levels to which a tax rate is applied. The percentage applied for the computation of the assessment level is lower for residential properties compared to commercial properties. Residential properties below PhP175,OOO are exempt from property tax.

Although the basis of property valuation refers to market values, it is doubtful whether the correct market value is in fact assessed. That is to say, some of the elements that impact the market value of land are not free to impact prices per se. The size of non- performing loans (NPL) in the mortgage portfolio continues to flow such that properties that could be auctioned are not. This keeps off the market real property that would normally impact land prices and, therefore, the valuation of tax assessments on properties in markets affected by high NPLs and contemporaneously high loan portfolio delinquencies. With NPLs hoarding a potentially large supply of auctionable real property, what is now considered the “market price” for land is a dubious reference.

LGU Financial Performance and Capacity

The objective of assessing the finances of the pilot LGUs is to determine their existing and future financial capability, the extent of their individual borrowing capacities and the level of equity that each can provide to the MMUSPP. The evaluation of the financial capability of the pilot LGUs covers three years past performance from 1999 to 2001 and a fifteen-year projection of the income and expenditures from 2002 until 2016. The financial performance of participating LGUs is discussed in detail in Appendix I. A summary of their Income and Expenditure Statements is shown in Table 3.3.

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efficiency is as high as 85 per~ent.~The collections from medium and high-income 1 households are as high as 90-92 percent. The LGUs’ share of the Internal Revenue Collections is justified by the large revenues collected by the Bureau of Internal Revenue on account of duties and taxes of imported motor vehicles, fuel, and vehicle 1 spare parts. I Projected Local Government Borrowing Capacity The borrowing capacities of Muntinlupa, Taguig and Caloocan for the next 15 years were calculated and the methodology used for the calculation is shown in Appendix I. I The summary of the borrowing capacity for year 2003 is shown in Table 3.4.

Table 3.4 1 Borrowing Capacities of City Governments in 2003 I (in PhP Millions) I

Muntinlupa 716 175 260 144 I Caloocan 1.206 41 1 396 132

I The borrowing capacity of LGUs is limited by section 324(b) of the Local Government Code, which mandates that debt service should not exceed 20 percent of regular income of the LGU. The borrowing capacity has been calculated using the formula I adopted by the Bureau of Local Government Finance. The limited borrowing capacities of LGUs therefore require that the MMUSP Financing Plan be designed so that the LGUs are not the borrowers of most of the I costly sector investments. * I 0 Proposed Policy framework for LGU Financing Driven by the increasing demand by LGUs to finance housing needs of the urban informal settlers, the MMUSP proposes a policy framework that will: 1) improve 1 financing and production capacities; and 2) develop financing strategies. 1 The framework recommends the following courses of action: a. Develop approaches to use public housing funds to leverage private sector investment; I b. Explore possibilities of using sin taxes for socialized housing; c. Encourage co-financing from multi-lateral agencies; d. Involve NGOs with bilateral grants to channel some funds to housing; and I e. Provide incentives to private banks. I 5 For details, see Appendix I

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A rapid assessment of the state of GIS in selected cities outside Metro Manila was I commissioned. The selected cities were recipients of foreign-funded projects that introduced GIS in the LGU. It was found that LGUs that were recipients of GIS I facilities and who succeeded in having sustained GIS operations have: 0 their originally GIs-trained staff still with the office; 0 their GIS facility formally housed within an organic office or department; I 0 found specific applications for GIS technology; and a specific and recognized set of policies and procedures for GIS application I development. LGUs with Official Development Assistance projects that introduced GIS have sustained GIS operations over the years when the LGU applied their knowledge to I align their resources with the city’s policies to improve services and products, thereby gaining support. I 3.2.1 2 Financial Environment The LGUs are no longer confined to sourcing their requirements from the traditional sources such as local revenues, grants and transfers from the national government, I loans from the government-owned financial institutions (GFls) and from the Municipal Development Fund (MDF). The LGC allows LGUs to incur indebtedness without prior clearance from the national government as long as the borrowing is within the I capacity of the LGUs. i 0 Project Funding by the Formal Sector Government financial institutions (GFls), the Land Bank and the Development Bank of the Philippines (DBP), have been key credit providers of LGUs’ short to I intermediate finance requirements. However, the perceived structural risks of working with the LGUs prompted DBP to be cautious in lending to LGUs; while the Land Bank I gave emphasis to rural development. The Municipal Development Fund (MDF) is a revolving fund created to consolidate the borrowing and grant system from multilateral lending sources. The revolving fund is available to LGUs to fund their socio economic development programs. The MDF i is administered by the Department of Finance and plays the role of a monitoring unit and project accounting support for foreign funds directed to LGUs.

1 Second and third tier banks, the banking sector that was initially targeted to deliver retail and commercial financing as part of the intermediation, have limited capacity in the area of retail lending to low income homeowners. LGUs have, in the past, been I serviced primarily by GFls, so that private banks have limited knowledge of municipal lending. I With the entry of the Local Government Unit Guaranty Corporation (LGUGC), private banks’ attitude toward LGU financing has changed. LGUGC is a private credit guarantee institution majority owned at 51 percent by participating members of the Bankers Association of the Philippines (BAP) with the rest of the shares held by the I DBP. It aims to mobilize the resources of private sector institutions and facilitates I LGUs’ access to debt financing where credit opportunities are currently limited, thus

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providing LGUs with the opportunity to borrow against their current and anticipated I funds.

I 0 Project Funding by the Informal Sector At present, credit is limited in scope in the informal sector. There are five basic types I of credit schemes that are available: a. “Paluwagan” is a community-based method of pooling savings from which contributors receive pooled amounts by turns. Each group operates I Paluwagan differently although some general features can be observed. This scheme does not provide loans, and require interest on the principal amount. A member can change his place in the sequence of receiving the amounts I due him/her by informal swap arrangements with another member. b. NGO supported micro credit programs for livelihood projects. Interest rates range from one to three percent per month. c. Community Mortgage Program (CMP) allows informal settlers to buy homes 1 by pooling resources. d. ‘‘Five-six” lending schemes provide loans as well as in-kind credit. Individuals run the schemes by word-of-mouth. There is no formal documentation I available to comment on the level of credit accumulated by this method, or how deep into informal sector it reaches. I Even with those available credit methods, households finance the upgrading of home and community from many other sources. These include individual and group savings, small loans from neighbors, windfall earnings, and fabrication of their own I building materials, barter arrangements and remittances from family members living abroad. These funding sources share a common problem. They trickle in unevenly and often slowly because they remain unconnected to formal institutions and markets. The overall result is that much of the improvements in the informal sector 1 environment in cities come unevenly and slowly. I 3.2.13 Legal Environment The Constitution includes comprehensive State policies thai manifest the country’s I strong concern for the basic needs of the poor. It mandates: 0 A continuing program of urban land reform and lousing which makes available “at affordable cost decent housing and basic services to I underprivileged and homeless citizens in urban centers and resettlement areas,” 0 Promotion of adequate employment opportunities to urban poor, and I 0 Respecting the rights of small property owners. It states that the “urban or rural poor dwellers shall not be evicted nor their dwellings I demolished except in accordance with law and in a just and humane manner;” and “no resettlement of urban or rural dwellers shall be undertaken without adequate consultation with them and the communities where they are to be relocated”.

I The Urban Development and Housing Act or UDHA (Republic Act No. 7279) is a I milestone legislation that translates the constitutional provision on urban

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development and housing into specific provisions. The policy objectives of this law I are wide-ranging, from uplifting the conditions of the urban poor by making decent housing/basic services available at affordable cost, to ensuring an equitable land tenure system. It also has provisions on the rational use and development of urban I land and on improving the capability of LGUs to undertake urban development and housing programs.

I The UDHA also consolidates land development schemes such as land sharing, and land readjustment, together with various land acquisition and disposition strategies. It allows for ten different modes to acquire land for socialized housing. These are: il donation, land swapping, community mortgage, land assembly, land banking, joint venture agreement, negotiated purchase, expropriation, transfer to NHA, and Presidential Proclamations. While these schemes have been tried, experience indicates that their implementation has been fraught with legal and administrative I difficulties, which will be addressed in the Strategy proposal.

HLURB’s document on Processing and Approval of Subdivision Plans, also known as 1 the BP220, sets forth minimum standards for the development of economic and socialized housing projects in urban and rural. areas. The intention is to “make available adequate housing for the average and low-income earners.” Recently, the I Secretary of Housing signed the revisions to the BP220, putting them into full effect. 1 3.2.14 Summary A summary of current issues affecting which need to be addressed in the I development of the Strategy is shown in Table 3.5. Table 3.5 1 Summary of Strategy Issues Shelter lnstiiutional Planning Community Infrastructure ICT/GIS Legal Agenda

1 Participation Escalating Weak mandate Newly Inadequate Need to MetroLGUs Manilahave Legal basis of land prices and capability of created documentatio emphasize land I and lack of HUDCC to socialized n of best incremental varying development capacities tenure. implement the housing practices and investment schemes such strategy. bodies need failure cases approach with regard to as land sharing Weak horizontal technical of community computerizati and land re- and vertical assistance to lead to component are participation on of LGU adjustment I linkages with the make them growth of not likely to in local Systems; needs to be Sustainability housing more ” established. agencies and effedive in markets. as basis for of ICT/GIS LGUs, shelter advocacy by initiatives. respectively. delivety. different I stakeholders Limited Weak capability Lack or Need to Significant areas Need to Building for sourcesData sets, and There are legal government of implementers insufficient publicize of land are create multi- design hindrances to resources for and other knowledge, good LGU required for sectoral group capacities formats are the disposition I housing the stakeholders to implementati experience of resettlement of as a venue for requires upfront not of certain public poor. implement the on, and land households. NGOICBO to investment standardized; land. Legal Strategy. coordination management participate in which maybe issues unaffordable for LGU of schemes in local Performance concerning land environmenta various governance low income control and communities Indicators I l planning. countries. must be ownership need present in to be clarified. any ICT/GIS I design. I

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I Table 3.5 (cont.) Summary of Strategy Issues

I Institutional Infrastructure ICTIGIS Legal Agenda Shelter Management ---I-- :ull cost E- Private sector Need to vlany LGUs FUll-COSt 9t local level: The LAMP ecovery is next Governance interest in strengthen the lave yet to I recovery is project is o impossible implementati Local special working on iunding or co- capacity of stablish their next to bodies, or low-income on and the many of the financing CBOs to espective Local impossible development :ommunities for software and issues in land socialized effectively Housing Boards for low- councils are and hardware management housing and manage (LHB) and income either not icquisition, investments being related projects upgraded :edify I communities convened, weak nfrastructure are costly. addressed in has yet to be communities srdinances. for land, or perform levelopment the present developed. acquisltlon, nominal ind housing project, with infrastructure functions. :onstruction. development similar I and housina objectives. An efficient The legality of Poor quality Low private There is no information some land owner- sector coordinated sharing or management builder participation in framework for I making a households exchange schemes that housing in socialized mechanism is may be slum areas housing. standardbed living in slums. applicable to the will continue NGO land valuation Little formal not present Philippines such to be the participation (in system. private among MM LGUs, thus as the use of primary housing) is not developer I production of development Community source of maximized. Land Trusts shelter for housing for low- movements are in across (CLTs), have yei low-income income boundaries to be households. households. are not established. 1 inputted in the I Upgraded areas Building for 15-Year Pre- Many LGUs are continue to be design Strategy vs. 3- proclamation still cautious under APD capacities year ten of planning is about private- status. Thus requires elected officials. needed to public I they remain greater allow for the partnerships as under Urban investment various a resource ,and Reform up-front stakeholders mobilization and continue to which may to plan for the mode. new land be covered by I be the Rent Control prohibitive parcels. Law. for low income communities I Several land Oppottunities for Little At NGO level: development private sector coordination Lack of funding projects can patticipationin among support to be tested on the economic providers of enable NGOs to the ground, development of low income continue I with HUDCC low-income housing for enhancing the and the communities the poor. capabilities of LGUs. exist. I CBOS. I 1 I

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Table 3.5 (cont.) I Summary of Strategy Issues I Private Sector ICTlGlS Legal Agenda The Community Land Trust approach is used extensively in the USA and urban areas and could be

communities. In

I I I I I

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CHAPTER 4. PROPOSED POLICY FRAMEWORK FOR THE LONG-TERM STRATEGY

4.1 Rationale

Metro Manila’s slum conditions are endemic throughout the built-up areas and in urgent need of action. Aside from this, there are a number of reasons why the 15- year Strategy for Slum Eradication and Urban Upgrading in Metro Manila should begin now.

Slum improvement is high on the political agenda as witnessed by the number of Presidential Proclamations being issued (see Table 4.1). Some 440 hectares of land are covered with existing Presidential Proclamation Issuances in NCR and is composed of a wide variety of property size. These were declared in 2001 and will benefit some 55,000 families. Proposed issuances already forwarded to the Office of the Executive Secretary or with complete CSW cover about 450 hectares (Table 4.lb and Table 4.1~). Proposed Presidential Issuances in various stages of processing amount to 231 hectares;

The new DHUD is imminent and will form a suitable coordinating body for the new Strategy;

Coordination between the DHUD and LGUs, and between cities/municipalities will be critical to the success of the long-term Strategy;

There is a considerable body of experience dealing with slum upgrading which can take the form of lessons learned in developing the Strategy;

The advent of new GIS capabilities provided by the MMUSP Project will allow cities to calculate demand and supply in their areas more accurately;

There is increasing interest in supporting the housing and urban development sector among the international donor community; and

The Philippines has presently joined the worldwide Cities Alliance with a key objective of getting rid of slums by the year 2020.

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Table 4.la Presidential Proclamations and Issuances for NCR Being Evaluated by HUDCC' As of 25 November 2002

of Description No. Status of CSW Area (has) 1 Beneficiaries 1. Welfareville, Mandaluyong EO No. 47 signed on 26 October Welfareville Property by Constructing Medium Rise 116.00 9,000 families 2001 Buildina PP No. 96 signed on 03 September 2. Parola, Tondo, Manila 10,000 families 2001 3. GSlS Property, Sampaloc, Manila No. 71 signed on 11 February families EO located in Pureza, Quintana, Ampil, and De dios 300 2002 Streets, Sampaloc, Manila 4. GSlS Propertv. Parola. Tondo. Manila 10.90 7.000 families EO 108 signed on 04 June 2002 5. BASECO. Port Area, Manila PP No. 145 signed on 18 January 52.00 5,000 families as Bataan Shipyard and Engineering Company 2002 (BASECO) Port Area, City of Manila 6. NAPOCOR Property, Muntinlupa EO No. 68 signed on 20 January 2,000 families Siiio Bagong Silang, Sucat, Muntinlupa 2002 PP No. 234 signed on 12 7. National Bilibid Prison. Muntinlupa 50.00 3,500 families September 2002 PP No. 255 signed on 12 8. North Bay Boulevard, 2.00 2,000 families 1 September 2002 9. MlAA Properties, Pasay Cty located in Merville, Don Carlos, Maricaban and Bo. 10.30 3,300 families PP No. 144 signed on 20 July 2001 Pilipino Put01 10. MlAA Employees Housing Project, Merville, PP No. 95 signed on 03 September 2.29 1,000 families Pasav I 2001 Presidential Memo to NHA dated 12 1,300 families II. Bgy. Pineda, Pasig March 2001 & EO No. 116 signed on 15 August 12. Camp Claudio Camp Atienza, Paranaque 460 families and Quezon City 2002 PP 6 signed on 15 February 13. Bgy Escopa, Cubao. Quezon City 1,800 families No. 200 1 No. 58 signed on 05 December 14. NAPOCOR Property in Siiio Pajo, Quezon City 1.60 300 families EO I 2001 MO No. 76 signed on 23 15. TELOF Property, Pugad Baboy, Valenzuela 2.00 1 350 families SeDtember 2002 16. DOTC Maritime Communications Project Site, PP No. 133 signed on 10 5.48 500 families Lower Bicutan, Taguig I December 2001 No. 70 signed on 11 February 17. BCDA Properties, Taguig 120.00 6,800 families EO 2002 proposed AFP Off-Base Housing with PP No. 284 signed on 08 18. AFP Officers Village, Fort Bonifacio, Taguig 37.00 mixed-use November 2002 compound; unoccupied 54,610 TOTAL 435.28 hectares families

1 Data sourced from HUDCC

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Table 4.1b Proposed Presidential Issuances Already Forwarded to the Office of the Executive Secretary

8 No. of Description Status of CSW Area (has) Beneficiaries forwarded to the OP Legal on 10 I 1. Brgy. Libis, Quezon City 0.37 100 families October 2002 Proposed EO held in abeyance in view of Supreme Court decision. 40,000 2. Payatas Estate, Quezon City 407.00 For immediate resolution by the Office of the Solicitor General Awaiting Exemption Clearance from 3. Western Bicutan (Amendment to MO 119) 16.00 1s700 DAR (returned to HUDCC) 423.37 41,800 families TOTAL hectares

Table 4.lc Proposed Presidential Issuances with Complete CSW for Transmittal to the Office of the Executive Secretary

~~~ ~ of Description Area (has) No. Status of CSW Beneficiaries 1. Santolan, Pasig City 17.00 2,000 families I for submission to the OES I 2. Libingan ng mga Bayani, Taguig 2,500families I pending with the DENR Secretary

~~ I TOTAL I 27.00 hectares 4,500 families I I

Table 4.ld Proposed Presidential Issuances In Various Stages of Process

of Description No. Status of CSW I Area (has) I Beneficiaries DOH and DPWH have already 1. Civic Center, Camarin, Caloocan City I 10.00 1,200 families endorsed the proposed proclamation Ongoing coordination/consultation 2. DSWD Property, Camarin, Caloocan Clty 10.00 2,000 families with DSWD (property administration)

3. Brgy. San Lorenzo, Makati City 0.66 130 families Ongoing CSW

4. Sunflower Compound Olandes Brgy. IV-C, 2.50 100 families Has a pending with the DENR Marikina City case PoPutting Bato, Navotas I 3.2 600 families For CSW 1 6. Sto. Nino Decul Desac, Paranaque 1 7.80 1,000 families Subject of reversion suits Awaiting Presidential approval of the proposed Memorandum Order directing MMDA to undertake the awarding/disposition of the NAPICO property to qualified beneficiaries; for CMP

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Table 4.ld (cont’d) Proposed Presidential Issuances

No. of Description Status of CSW Area (has) Beneficiaries Still in the Drocess of securing DENR endorsement/commeis. 8. Phase VIII, North Fairview, Quezon City 64.00 3’000families This is allegedly occupied by professional squatting syndicate. Ongoing coordination/consultation 78.00 14,000families 1 9. UP Diliman, Quezon City 1 1 I with UP officials I 10. MWSS Property, North FaiM’ew, Quezon Clty 2.40 500 families Awaiting MWSS endorsement

11. MWSS Property, Matandang Balara, Quezon Awaiting MWSS and DPWH 2.00 200 families Citv endorsement (Santolan Road, Brgy. Valencia, Quezon I In the process of securing DENR, 1 0.35 I DPWH and DOH endorsements In the process of securing DENR 13. Abra St., Bag0 Bantay, Quezon City 0.05 1 30 families 1 and DPWH endorsements FTI is offering an alternative relocation site in Brgy. Molino, 14. FTI Complex, Bicutan, Taguig 4.00 800 families Cavite (3 has). FTI reiterated the need of the Privatization Council approval. Referred to NHMFC for CMP. DBP 15. Sitio Pinalagad, Malinta, Valenzuela 4.20 550 families is willing to dispose the property to occupants through CMP. I TOTAL I z::s I 29,410 families I

Data submitted by the LGU suggest that there are about 3,130 hectares of vacant land throughout Metro Manila. These were derived from current land use maps that did not distinguish between government or private lands. However, less than half of these vacant lands are owned by the national government. Few are available for socialized housing as most have not been proclaimed for socialized housing purposes.

4.2 Vision

Chapter 3 has illustrated the major problem areas in the Metro Manila shelter sector; problems of land shortage, inappropriate public housing, insufficient affordability, continuing poverty, lack of good governance and, last but not least, limited borrowing capacity. Set against this, some might conclude that any vision statement is premature; the team here is more optimistic. Based on a review of the shelter sector overall, it is concluded that the following statement should guide the Strategy:

Box 3 Vision Statement A slum-free Metropolis by the year 2027, with shelter options available for all low-income households

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4.3 Scope

The Project scope is wide therefore, requiring on an immediate basis the development of working relationships with the public and private sectors, national agencies and the 17 LGUs in Metro Manila. The Strategy must, at the minimum, have the following attributes:

it must be grounded on a realistic financial strategy which takes account of other calls on finance; it must take account of lessons of previous similar practices and policies; it should identify housing supply routes it should incorporate projections of housing needs and costs, availability of land and investment needs for the first 5 years, and the remaining 10-year period of the Strategy, on a city by city basis; there needs to be a clear institutional structure for the implementation of the Strategy; there needs to be an appropriate set of indicators of Strategy performance and analysis of its impacts; and The Strategy needs to be incorporated in a web-based format that will make it a “live” document, easily distributed to stakeholders and open to comment and additions during its lifespan.

Major Elements of the 15-Year Strategy

In support of the long-term goal of the Strategy to have a slum-free metropolis by the year 2017, the major approach and components of the Strategy are as follows:

The application of a holistic or total development approach to shelter

In shelter planning for the urban poor, the total or holistic approach is applied. The approach aims to build sustainable communities by addressing the housing needs of the underprivileged and homeless, equipping the settlements with adequate social services (education, health and social welfare) and, providing employment and livelihood opportunities that will lift the people out of urban poverty.

In this holistic or total approach, the LGUs’ role is vital especially in the areas of shelter planning, provision of municipal infrastructure and in the monitoring of the implementation of the local shelter plans. HUDCC/DHUD will provide the policy framework supporting the Strategy for slum eradication and will aversee the overall implementation of the 15-year Strategy in Metro Manila. The enhanced participation of the private sector (private developers, corporate foundations and NGOs) is encouraged in the areas of house construction, job generation, enterprise development, and to some extent, social service delivery under joint venture schemes with LGUs.

The use of a two-pronged approach to housing the urban poor

For informal settlements on non-hazardous areas, slum upgrading or the “as-is where-is” approach is adopted wherein the beneficiaries are given land tenure and maximum opportunity to do incremental housing over time. The approach observes

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maximum retention of structures when re-blocking in recognition of the investments already put in place by the people on their houses. Infrastructure improvements will be made which include road widening, alleyways and pathways installation, construction of multipurpose centers and other community facilities, development of parks and playgrounds when sufficient areas is available and, improvements in drainage and sewerage. All of these will have to be done in compliance with the minimum design standards as prescribed in the amended IRR of BP 220. This approach’will apply for both private and government occupied lands.

For informal settlements on hazardous areas like waterways, esferos and railroad tracks as well as those on road rights-of-way for major government infrastructure projects, “in-city“ resettlement will be resorted to unless there is no land (nationaVlocal government or private) available for this purpose. In such cases, the informal settlers will be resettled in areas outside the city/municipality where decent housing is affordable and where access to social services, employment, livelihood as well as utilities and transportation is present (See Figured. 1 and 1.2).

0 Allocation of additional budgets to “receivingyyLGUs

Receiving LGUs should be provided with additional budget by the national government and/or sending LGUs to cover the social service delivery cost for the incoming settlers that will be borne by the host cities/municipalities.

0 The effective integration of socialized housing zones with the rest of the urban development

In the upgrading or development of new socialized housing zones, there should be concerted effort from the national government shelter agencies, the LGUs, the communities, and/or assisting NGOs to design the zones to be more compatible in physical character to the other urban land uses within their vicinity. On a non-physical perspective, the upgraded or new settlements should be able to more effectively blend with the neighborhood through mutually beneficial economic relations (e.g., buyer-seller; subcontracting, outsourcing, wholesaler-retailer), as well as through harmonious community relations such as acceptance into membership in some neighborhood, civic and/or church organizations already existing in the area.

0 The setting up of a workable estate management system

Learning from past government housing initiatives, a good estate management system will have to be put in place in order to build sustainable communities. The estate management system will embody rules and regulations designed to delineate allowable and prohibited activities on site, to ensure that the environmental quality of the community is preserved and to define the community relations that will instill the pride of place among the residents. .

The installation of a good collection system to ensure cost recovery

The sustainability of any government initiative to fully address the housing needs of the urban poor will depend not only on the accurate assessment of the affordability of the housing packages to the intended beneficiaries but also largely on the system in place which will efficiently collect what housing obligations are due. With the proper

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collection procedures, public housing funds can be circulated back to the system, thus, further enhancing the reach of the socialized housing program of the government.

There are other themes which underlie the wider view of shelter. Examples are as follows:

0 Use of market - based approaches

Market - based approaches in the form of corporatization, contracting out, leasing and privatization are becoming increasingly common in urban areas in the Philippines. Examples include water supply and distribution, public transport, markets and solid waste management. The benefits of these approaches can be seen in the form of more efficient, cost effective services, reduced tariffs, better use of resources and access to private financial resources. The emphasis on demand management puts greater emphasis for benchmarking and performance monitoring.

Improve procedures for public participation

More effective methods for public participation are needed in decision - making in areas such as land transfer and phasing of infrastructure. This will usually require iterative processes of plan making, project implementation, etc using focus groups, environmental pressure groups, business associations, NGOs, CBOs religious groups and other stakeholders. Again there are strong linkages with NGO and CBO capacity building programs.

0 Improve urban land markets

There is a great need to improve the operations of urban land markets, especially in Metro Manila where land prices dominate housing costs. Land transfer procedures (cadastral mapping, land titling, registration and storage) are priority areas for achieving more transparent and more efficient transactions. Other areas are land regulations/deregulation, innovations in tenure, delivery of serviced land, land development techniques which can favor the poor (including land pooling, guided land development, land sharing, etc,) spatial planning, land valuation improvements and reforms which allow land to be used as collateral.

0 Incremental infrastructure investment

Such investment is important in reducing the costs of construction of infrastructure. In essence the infrastructure investment program is phased to meet the income flow to the individual or corporate investor. The principle would be used for example in road construction, whereby the road is marked out in line with the eventual width but is only partly made up, and / or only padly surfaced. The same principle is relevant in house construction, whereby the owner builder has enough initial funds to allow construction of one level, but has to wait several years to accumulate enough savings to add more floors.

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0 Consider direct and indirect approaches to address poverty;

The “trickle down” view of poverty relief has had some success but cannot be relied upon for creating significant economic development growth. Alternative scenarios combine economic, social and physical components towards achieving an improved quality of life. Policies to adopt could include improved access to credit, strengthening gender equity by empowering women through equal access to education, health, jobs and credit. Thus it is necessary to develop a combination of these direct approaches and indirect approaches, designed to include explicit anti - poverty growth strategies.

4.5 Logical Framework

A summary of the issues identified in the Interim Report is shown at the conclusion of Chapter 3, (Table 3.1). The logical framework shown in Table 4.2 is based on these issues and related Project objectives to outputs. Whenever possible measurement of key outputs is quantifiable but in some cases a qualitative assessment is needed. The performance indications and outputs of the framework are used as an input in formulating the policy recommendations in Chapter 5. Thus there is a continuous connection between issues, objectives, outputs and activities.

There is also a natural link between the logical framework and the Project Performance Monitoring System (PPMS) required to monitor Project outputs (see Chapter 10.7). In summary, once objectives have been identified and a commitment from stakeholders obtained, a detailed schedule of indicators can be prepared. The Bank’s Cities Data Book approach can be shown as a comprehensive use of urban indicators for a city administration to adapt as necessary’.

Table 4.2 Logical Framework

GOAL

Slum-free metropolis 100 % of urban poor Shelter monitoring system National and LGU by the year 201 7 households given decent setup at DHUD and LGU commitment to socialized housing, social services, levels housing and sufficient employment and livelihood in resources devoted to the upgraded and resettlement program areas Risk: sudden shift in priorities on the part of nationaUlocal governments; No clear- cut subsidy program to support the 15-year strategy; high cost of financing (local or external)

* Urban Indicators for Managing Cities, ADB, 2001.

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OBJECTIVE Better integrated programs - Monitoring will be done by Adequate resources for Assist national and housing, social services, the UPAO for both shelter capacity building for the local governments to employment/livelihoodon a planning and UPAO; There is adopt an effective settlement basis, which should implementation; commitment and political holistic approach to be largely phvsicallv verifiable, will on the part of shelter (i.e., site development phasing nationall LGU executives completed, community facilities HUDCC-PMO monitoring to follow this approach. in place and people have jobs system will also be and livelihood.) involved in tracking these Risk: lack of developments and making understanding of how to adjustments when implement the approach necessary. on the part of the front- line departments of the LGUs. __ SHELTER

OBJECTIVE

Successful Work on three pilot sub Sub-Project records and private sector financing implementation of pilot projects 100% completed by Project evaluations; LGU from banks, developers sub-projects catalyzes 2007; residents in place and financial and activity etc. is adequate to meet implementation of long- satisfied; all other LGUs reporting; NGO reports needs of subprojects. term strategy undertaking similar schemes and evaluations Land and resettlement based on Subproject issues are resolved. approaches

OUTPUTS

Use of incremental On-site technical assistance NHA activity reports; LGU is able to identify construction techniques provided to minimum of 30 Project evaluations; private developer for owner-builders in three pilot owner-builder survey on partnership. LGU signs subprojects by NHA and benefits from technical contracts for small - private sector builders. assistance in construction; scale infrastructure installation with Training in small scale Approved building permit community support construction provided to applications. resident youth and construction workers in pilot subprojects

Training for LGU officials in shelter planning

Public private At least 3 public private Project progress reports; partnerships for partnerships for small-scale subproject evaluations LGU is able to identify housing and mixed commercial/ residential private developer for infrastructure development established and partnership. LGU signs implemented in each sub- contracts for small-scale project. Partnerships between infrastructure installation LGU and local subproject with community communities for infrastructure improvement developed and tested incentive schemes for slum improvement

PSP agreements

Minimum of five CLTs developed by 2007

Innovative approaches UPAOs active in all three sub- CLT and bank records and Lenders and borrowers to housing finance projects. Local Shelter Plans reports. Monitoring of yilling to use micro- developed to roll out micro-credit schemes on finance for housing Techniques and lessons regular basis learned for subprojects.

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Improved local CLTs able to obtain line of UPAO reports. Project Plans incorporating the planning; credit from private bank for on- Reports. Local Shelter 15-year strategy non-specific guidance lending to residents for home Plans developed. needed on shelter improvement. Micro-finance of planning for the poor housing improvement tried in all three subprojects

ENVIRONMENT 8 INFRASTRUCTUURE

OBJECTIVE

Sustainable preventive Amount of land, water, other DENR annual reports on Risk: Lack of environmental . natural resources maintained status of environment in effectiveness of ECC management at a sustainable level (e.g. MM cities procedures. zoned for residential development)

Development that does Conduct of infrastructure not deplete non- campaigns replaceable resources Inventory of waterkanitation facilities in slum areas

Strengthening of anti-squatting measures

OUTPUTS

Improved community Reduction of flooding risk Tracking of frequency and Differing focus and environmental within the communw (e.g. depth of flooding in the priorities within the conditions reduction from 1 to 3 to 1 to 5 flood prone areas of the LGUlLCE years flooding risk) community by LGU and relevant line agency

Increased police and fire Tracking of crime, law Need for continuing protection services in the enforcement, and fire budget for community; reduction in call statistics for the implementation and outs community monitoring

Reduction of environment Tracking of Community related illness among residents health statistics regarding environment-related illnesses

Improved basic Provision of safe, affordable MWSS tracking the Risk: Water availability services for community water supply 70 percent number or percentage of may constrain water coverage now to 90 percent in households with individual supply 2007, connections useable,

Provision of safe reliable MERALCO track the Risk: Large investment power supply to all community number or percentage of required for residents households with individual implementation service

Provision of paved and lighted LGU tracking the length or Risk: Annual 0 and M access to 70 percent of percentage of paved and budgets and personnel properties on-site by 2004. lighted roadways and needed to preserve footpaths value and function

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-LAND

OBJECTIVE

Land available to all Increase in share of Use of lSlS program income groups by year households able to afford developed by this Project. 2017 shelter from 60 percent now to 80 percent by 2007.

OUTPUTS

Effectively operating Reduction of 30 percent in Measurement of Assumed that full land market transaction time by 2007 productivlty in land transparency is based on one-stop approach, transactions carried out by demonstrated regarding i.e. cadastral survey, tiling, LGUlUPAO records entry, title and local planning policies etc., other legal documents brought together under one roof in each LGU

Transactions processed more Productivity of transactions Assumed that task to quickly, with time limit targets monitored by coordinate with LAMP HUDCClDHUD project activities. Model procedures replicated among MM LGUs by 2007

Approved land use maps in GIS format

Equitable land prices LGUs using a common land HUDCClDHUDmonitor Risk: distortion in land across MM valuation system directed at use of procedures and valuation continues for providing socialized housing enforcement design of political or personal sites internationally recognized reasons. valuation systems and monitoring of evaluation procedures carried out by HUDCClDHUD

Innovative land Benchmarking of pilot projects Clty planners and development in land development including HUDCClDHUD agree on mechanisms community land trusts, land pilot sites and also monitor regularization, land sharing, success of Pilot projects guided land development, etc. over years 1 and 2.

Restructured CMP Restructured CMP approach Evolution of pilot tests and Risk: Repetition of past designed to reduce cost and projects by LGUs/UPAOs failures in systems create individual and community capital through doubling of CMP membership by 2007

INSTITUTIONAL

OBJECTIVE

Commitment of Sufficient adequately qualified Regular progress reports Commitment is sustained adequate LGU services staff, policy guidelines and (annual) and other reports by resources made (manpower and financial support available by on implementation available as needed financial) for housing 2005; focused on the LGUs in and support services. place

OUTPUTS

Adequate LGU 90% of designated staff Progress reports on Potential risk to better- resources position field by 2004. Along implementation of Project, managed cities processing with policy guidelines and incorporating outputs of administration financial support, focused on MIS, ISIS, DHUD and from low government the LGUs others as relevant. salaries;

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Strengthened roles of Strengthened roles of NGOs Progress reports on The mid term review of NGOs and CBOs sufficient to enhance stafiing andother the ADB TA will be capabilities of CBOs in each resources of NGOs and important in judging the LGU; (in areas of estate CBOs in each LGU. level of success management, community volunteerism for construction and maintenance of infrastructure)

Strengthening of Strengthened or new Progress reports on actual Each organization individual and inter- UPAOs/Housing Boards in performance of LGU. evaluates each organizational capaclty each LGU (by end 2003) Regular meetings held performance as a housing - related among the housing and separate organization agencies at LGU level housing-related agencies and as part of the and of other special bodies organizational system in each LGU

Multi-sectoral agreements on poor housing

Effective ownership of DHUD’s role as implementing DHUD annual reports Risk: possible further Strategy by both and coordinating body to be showing delivery of delay in the creation of organizations and other effective by end 2003 vis a vis measurable outputs such DHUD stakeholders other national and local as policies implemented, organizations number of houses constructed or upgraded.

Effective local special Fully operational Development Flow of TA to local special Risk: Possible overlap of bodies Councils, UPAOs, Local bodies. Annual and functions, at least in Housing Boards and GIS units quarterly reports. early stages of Strategy. provided with technical assistance, by 2004

Cost savings and better public services offered by LGUs and other stakeholders

Effective participation NGOs able to support work of Flow of funds to NGOs for of NGOS and CBOs and vice versa (from CBO capabillty building meaningful contribution mid-2003) of NGOs and CBOs Continuous participation of Number of NGOs and NGOs and CBOs in Local CBOs who are active Housing Boards or multi- members of LHBs or multi- sectoral coalitions sectoral coalitions

SOCIAL SERVICES

OBJECTNE

Healthy, safe and Overall improvement in health Annual reports by social physically fii residents and quallty of life, departments, surveys of the upgraded or recommended by rates of carried out by variety of resettled communities diseases, availability of stakeholders resources, literacy, crime rates, etc.

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all social services: Healthy and physically w-percent decrease in MM US PP proposed health fit residents of the morbidity rates (incidence of management information LGU prioritizes the social upgraded or resettled disease); percent decrease in system (MIS) will install services needed by the communities able to mortality rates as measures of baseline info and targeted upgraded or return to labor force. a healthier community; periodically collect health resettled communities data to measure project S~orts& Recreation -also performance. Presence of support from leads to better health and less NGOs, civic groups and drug problem - percent Same as health above; the private corporate I decrease in cardio-vascular For monitoring drug use - sector. diseases I respiratory gather data from local drug illnesses; lower incidence of watch groups (ex., Bantay Risk: Insufficientfunding drug addiction and drug- Bayan, Mamamayan laban given for social services 1 related crimes sa Droga) which will limit what the system can do;

More literate population Education- percent increase in Data to be supplied by Risk: Uncoordinated enrollment in daycare centers LGU Social Services implementation of the 1 and elementary schools; Department for daycare projects by the various enrollment; City Division of LGU departments Schools will supply (UPAO, Social Services, elementary enrollment Engineering, Health I data Services). Improved peace and Protective services - percent order condition. decrease in crime rate Police precinct collates crime statistics, by type of 1 crime LNELIHOOD AND EMPLOYMENT

I OBJECTIVE

Significant increase in Creation of jobs in various Collection of data by NSO, economic activty by sectors, both direct and LGU, NGOs etc. I 2007 indirect, resulting from investments by projection

Start up of new businesses in I Project area. OUTPUT

Sustainable EmDlovment - number of new Monitoring to be done by Well-targeted and well I economicflivelihood jobs created and the UPAO assisted by the designed training target levels for 2004 corresponding value of salaries NGOs conducting the programs; good job and wages; percent decrease training, doing networking matching; availability of in unemployment rate; percent and providing the micro financing and markets for I increase in household income finance; periodic products of micro- level household socio-economic enterprises, which will surveys to measure render the Employment improvements in and Livelihood Program employment and income sustainable. 1 of household members

Number of partnership Risks: lack of markets; I agreements high cost of financing Livelihood - number and types of new businesses generated (micro-enterprises, I subcontracting, etc); volume & value of gross sales I

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FINANCE

OBJECTIVE

Sustainable Finance

OUTPUT

Beneficiaries access to Expenditures are within budget Annual reports of PMOSl Risk: Inflation becomes affordable housing for Pilot Projects and Strategy Plus and City Finance significant. funds Offices Number of housing beneficiaries taking out Bank reports, NGOlCA Banks/M F Is have housing loan from micro reports adequate low cost funds finance institutions to sustain long term requirement

Banks have different lending guidelines for low-income borrowers as against regular individual borrowers.

Efficient LGU financial Possible funding sources for Evaluation of cost and Funds are sufficient to resource mobilization housing will have been tapped benefits to the LGU and to finish project other stakeholders LGUs able to implement site construction within the budget Budget report Cost are as projected

Rating system of LGUs Favorable conditions set such as those of the for private sector LGUGC participation

Leveraged use of Integrated MM Development Annual reports from City Risk: The smaller loans private resources vis-a- Plan Surveys of private sector Finance Officers, Line required by these vis limited public funds projects by national agencies Agencies households are much and LGUs less profitable to commercial financial Sustained interest of Low/moderate income institutions than larger commercial and households are able to avail of Bank reports, BSP reports, loans. The extra work of financial institutions to mortgage loans not just from NGOICNLGU records lending to low/moderate- lend to lowlmoderate- MFls but from low-interest income households (i.e. income households borrowing cost providers. in documenting self- particularly for employed income) mortgages. compounds the problem of small loan size.

Beneficiaries improved Beneficiaries are able to pay Bank Records; NGO, CA Beneficiaries are given affordability the loans on time thus enabling LGU reports additional livelihood LGUs and investors to recover credits to enhance costs and investments income

Sustained interest of Lowlmoderate income Bank reports, BSP report, Risk: The small loans commercial and households are able to avail of NGOICNLGU records required by these financial institutions to mortgage loans not just from households are much lend to lowlmoderate- MFls but from low-interest less profitable to income households, borrowing cost providers commercial financial particularly for institutions than larger mortgages loans. The extra work of lending to low and moderate income households (i.e. in documenting self- employed income) compounds the problem of small loan size.

Final Report 0 Volume 1 75 PART 1: THE PROPOSED STRATEGY I 1 TA 3760 - PHI: Metro Manila Urban Services for the Poor Project I More incentives to LGUs and the national GoP monitoring system of Favorable climate for private sector government are relieved of the the Private ssGor private sector participation burden of financing some of Participation participation is in place. 1 socialized housing. Private sector takes a more pro-active role in providing shelter at reasonable margins of profit

I Efficient LGU and Bank Default rate is negligible and LGU and bank records Effective monitoring operations will not negatively affect the system by the LGU and program by the bank is in place. I GEOGRAPHIC INFORMATION SYSTEM I OBJECTIVE GIS used as an 30 percent annual increase in Informal Settler GIS facility costly; UPAO analytical tool by number of LGUs with UPAO Information System personnel not technology HUDCCIMM-LGUS personnel using I contributing oriented I to lSlS dataset OUTPUT

MM Informal Settlers Establish of GIS equipment Project Reports MM I monitored in growth, and facilities in all 17 LGUlHUDCClMMDA characteristics and CPDOlUPAOs by 2007 Semi-annual lSlS movement meetings 1 E-GOVERNANCE OBJECTIVE

Enhance the efficiency Automated LGUllCTlGlS Customer satisfaction LGUs recognize ICT as a I and transparency of Systems installed survey conducted by a vital tool for local government third-party development. systems, processes and transactions Risk: Degree of public I disclosure of generated information.

OUTPUT

I Document local Detailed capacity and needs Joint HUDCC-PMO and MM LGUs have varying government systems, assessment LGU Monitoring degree of automation processes and Committee development. transactions and 1 determine appropriate Risk: Varying ICT Information and knowledge level of LGU Communications personnel may vary Technology (ICT) and degree of development. 1 interventions Formulate LGU MM LGU Information Joint HUDCC-PMO and MM LGUs recognize the information exchange Exchange established LGU Monitoring need for sharing of Mechanisms to Presence of E-Governance Committee information I facilitate the flow of Plan for MM LGUs information between Risk: LGUs willingness LGUs and the to invest funds and community, between devote personnel to 1 LGUs themselves and administer the system on between LGUs and their side I NGAs. I

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LP

Installed Implementation committee already installed systems and have different a. Inter-Active LGU Website for LGU Project formats and will likewise customers accessible via Implementation Committee be different from those Internet who will just start LGU Proiect installation of svstems. b. MM Portal for LGU ImplemeAtationCommittee Risk: Frequency of Information Exchange updating information on accessible via Internet Joint HUDCC-PMO and LGU Monitoring the Websitelportal and Interactive websites Committee dedicated personnel to respond to inquiries

LEGAL FRAMEWORK

OBJECTIVE

Preparation of comprehensive Legal Framework for Strategy

OUTPUT Legal basis for innovative land Monitoring legal initiatives management schemes such as carried out, as relevant, by the use of Community Land HUDCCIDHUD, HLURB, Trusts established. MMUSP, DOJ, LRA. etc.

Assistance to LGUs in drafting LGU - related legislation of ordinances related to up to date and easily housing and urban settlements accessible management

Clarification of status of APD APD status clarified and upgraded areas up to date

More effective land LGU - related legislation management by LGUs/Local up to date and easily Housing Boards; accessible

More capable CBOs and Doubling of advocacy NGOs as advocacy groups for casesby2005 the urban poor

OVERALL INPUTS Land Resources $73.7 M Project implementation Consultants are progress reports competent

Civil Works $99.7 M Project accounts Local contractors are competent

Equipment and $I.OM Counterpart budget is Vehicles available

Consultants $4.1 M Counterpart staff are available

Micro-credit for $4.2 M Livelihood and Employment

Allocation for Social $4.2 M Services

SalarieslOthers $2.4 M

Final Report 0 Volume 1 77 PART 1: THE PROPOSED STRATEGY I TA 3760 - PHI: Metro Manila Urban Services for the Poor Project I I 4.6 Existing Paths to Housing and Land Tenure Existing paths to affordable housing for poor households in Metro Manila inevitably begin with a long of period of residence in depressed housing areas or slums. These I slum areas provide inexpensive urban land, rudimentary infrastructure and basic, affordable housing that is generally financed by owner-builders through their own resources. Slum areas provide the primary path to housing for some three and a half I million people or roughly a third of Metro Manila’s population.

Government efforts in Metro Manila’s low-income housing sector, therefore, have I focused more on redressing the problems of this large slum dwelling population than on developing a range of affordable, legal housing options for the poor aimed at preventing the proliferation of future slums. In this sense, the government‘s approach I to the problem has been more reactive rather than proactive. There are currently five national government agencies, four government financial institutions, and several private sector developers (such as the Organization of Social I Housing Developers) involved in the production of socialized, economic and open market housing for low and moderate income households in Metro Manila. During the 18-month period from July 1999 to March 2001, a total of 30,919 formal housing units I were being built by the government and these developers ’. The distribution of units between public and private sector housing providers was roughly equal with 16,168 I units being built by the government and 14,751 by private sector builders. 4.6.1 Public Sector Housing I The NHA and National Home Mortgage Finance Corporation (NHMFC) are primarily responsible for developing projects to benefit low-income households. The NHA was responsible for roughly three-quarters of the government housing output during the I above-referenced 21-month period with 12,720 units in 43 separate projects targeted to low income groups. These projects included 13 projects for medium-rise buildings producing 4,587 units, 16 slum upgrading projects with 6,046 plots, 11 Land Tenure Assistance projects covering 1,918 plots, two sites and services projects with 69 I plots and one core housing project with 100 units/plots. The overwhelming emphasis of these projects was on developing new housing options for households that were I already living in Metro Manila slums. During the same 21-month period, the NHMFC was funding a total of 2,809 units in 38 projects, the HDMF 357 units in three projects and the HGC 282 units in two I projects. The total number of low-income housing units/plots being funded by public sector finance institutions was 3,448. I 4.6.2 Private Sector Housing Private real estate developers are the key actors in the construction of formal housing. There are some 1,500 registered developers including about 10 large firms I capable of building 500 units per year and many small developers building around 10 to 20 units per year. While private sector developers during the period were involved I in the development of some 91 projects and 14,020 units in Metro Manila, only about Based on a HUDCC internal document entitled the “List of On-going Projects Nationwide”as I of March 2001.

~

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nine percent of these projects and 11 percent of the units (i.e. 1,597 units) were I developed to benefit low-income households through the provision of either socialized or economic housing.

I Housing need requirements projected for the implementation of the Strategy estimate the number of housing units required to meet the needs of households living in depressed housing areas or slums is estimated to be around 41,000 units or roughly I 60,000 units over a similar 18-month period. This is roughly double the number being produced. I Resettlement, relocation and slum upgrading programs as part of the socialized housing approach comprise a large part of the government’s effort and need for new land. The amount of land generated for socialized housing over a three-year period from 1994 to 1997 was 1,777 hectares or about 296 hectares per year. Government I land acquisition in 1999 was roughly 101 hectares. The cost of this land was PhP1,017 million or about PhP10,OOO per square meter indicating the need to acquire roughly 130 hectares per year simply to resettle households living in the non- ‘I upgradeable danger and public utility zones.

The government is currently implementing three community based housing programs I that will play an important role in implementing the %-year Strategy. These include: slum upgrading; Land Tenure Assistance Program, which offers each beneficiary I household about PhP14,OOO; and the CMP. 4.6.3 . The Community Land Trust Path to I Affordable Land Tenure and Housing Given the current situation, it is important to address the ongoing situation of Metro Manila’s slums not only as an extremely difficult, long-standing problem, but also as an opportunity to establish affordable housing options for the poor in areas that are I well located for their employment. Given the general shortage of land available in the Metro Manila area for housing the poor, the 1Syear Strategy has proposed that resettlement efforts focus on households living in dangerous and/or public utility I zones and that the remaining slum areas be upgraded. According to RA 7279 the slum upgrading approach should be used whenever possible.

I Slum upgrading in Metro Manila to meet the needs of the Strategy will require considerable coordination among existing stakeholders and programs. It will also require new approaches aimed at achieving an equitable and sustainable long-term I solution to the problem The Strategy has proposed using the CMP approach to create Community Land Trusts that will guide the upgrading efforts in slum areas, guarantee its financial stability and ensure the long term affordability of housing to I the poor by maintaining ownership of the land and removing any real estate speculation on the land. Government subsidies would be given for the land and remain with the community to serve both present and future residents of the I community. A CLT is a private non-profit, corporation with resident membership that is created to acquire and hold land for the benefit of a community and to provide secure affordable I access to land and housing for community residents now and in the future. I

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I The distinctive characteristics of CLTs include:

I 0 their commitment to community governance and control over its future; 0 protection of the community’s long-term interest through community ownership of the land and individual ownership of houses with the terms and arrangements between the CLT and homeowners defined by a long-term land I lease; 0 protection of the long term affordability of housing; 0 focus on implementing an ongoing development program;

I 0 flexibility; and 0 initiative to provide greater community control over land and housing I ownership Figure 4.1 and 4.2 show the CLT Approach and the Paths to Housing. I I I I I I I I I I I I

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I I

1 PART 2

I THE PROPOSED STRATEGY CHAPTER 5

Strategy : Policy Recommendations TA 3760 - PHI: Metro Manila Urban Services for the Poor Project

CHAPTER 5 STRATEGY POLICY RECOMMENDATIONS

The following policy recommendations are based on the assessments stated under Policy Environment (Chapter 3) and are aimed at attaining a holistic approach to shelter.

5.1 Adopt a Holistic Approach to Shelter which Integrates Housing, Access to Social Services, Generation of Employment and Livelihood Opportunities

Focus group discussions with the Federation of Presidents of community-based organizations (CBOs) or community associations who have either been beneficiaries of the Community Mortgage Program (CMP) or presently queuing to borrow from CMP brought to light the following vital information:

0 Slum upgrading and resettlement, which involves civil works such as construction and/or improvement of the roads, sewerage and drainage system, are not as a matter of practice always accompanied by the construction of community facilities like day care centers, multi-purpose halls and basketball courts. One reason for this is the lack of proper synchronization of priorities across the different departments at the local level. A depressed area, for example, which has been earmarked for upgrading by the UPAO in a given year, may not be included in the priorities of the Social Services and Engineering Departments of the city/municipality for the succeeding years. Added to this is the perennial lack of funds to meet an ever-growing demand for social services.

0 For associations that have already taken up CMP loans, field information revealed that some of the communities are not able to pay the amortization of their loans because of insufficient household disposable income. If no mitigation measures are put in place, this may mean the following: for the households, eventual foreclosure of their homes; and for the local and national governments that have financed the shelter projects, this may translate to the government's inability to meet its loan obligations. If the problem becomes pervasive, this may lead to the eventual collapse of the entire Socialized Housing Program. This points to the need for income augmentation schemes to accompany housing provision.

In the light of these problems and gaps in shelter planning and delivery, the MMUSP Project proposes a holistic approach that integrates the following three major elements per settlement:

0 Socialized housing and basic services (roads, alleyways and pathways, water, power, sewerage, drainage and garbage disposal);

0 Access to social services and facilities (health, education, sports and recreation, and protective services); and

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0 Generation of employment and livelihood to ensure the sustainability of the I shelter program.

In this connection, the MMUSPP Project recommends a set of guidelines for local 1 shelter planning which will institutionalize the above approach at the local level (Refer to Appendix P for the draft guidelines). A Technical Assistance Proposal has also been drawn up so that the Guidelines for the Formulation of Local Shelter Plans for I the Urban Poor (LSP) can be pilot-tested for eventual adoption by all LGUs in Metro Manila. The proposed MMUSP pilot projects in Muntinlupa, Caloocan and Taguig I described in Chapter 8 of the DFR already follows this proposed holistic approach. 5.2 Strengthen Institutional Framework

1 After consultation with stakeholders, it is recommended that the MMUSP be lodged with the HUDCC rather than the MMDA because of its more extensive experience in leading and coordinating housing and urban development projects. As the I coordinating body for the National Shelter Program, it has the mandate and the experience to generate support for the Strategy from the housing and private sectors. Another consideration is the imminent creation of a Department of Housing and Urban Development which largely is a transformation of HUDCC into a stronger housing body. However, HUDCC needs to be more effective

With the proposed DHUD as Executing Agency, the MMUSP Project will be operated from a Project Management Office that will work under the National Capital Region Office and supported by national, private, and civil society agencies/organizations with a stake in urban development.

At the local level, the MMUSP will be implemented by the LGUs, which for purposes of this Project will be known as the Project Implementation Units. It will be run by the Urban Poor Affairs Office or its equivalent. The UPAO will be strongly supported by the Local Housing Board, or its equivalent, in direction-setting and policy-making.

Specific to the MMUSP Project, the following are priority recommendations to strengthen the institutional framework:

5.2.1 At the National Level

I.Prepare the HUDCC or the proposed DHUD to implement the Strategy by:

0 strengthening its policy, supporting and coordinating mandate as embodied in the proposed bill for a Department of Housing and Urban Development; defining its role and relationships with the NEDA, MMDA and the LGUs; and 0 conducting reforms in the housing sector, also as embodied in the bill.

At the National Level, a Strategic Planning Workshop involving HUDCC, other shelter and funding agencies are needed. This should result in a common strategic plan that defines programs, priorities, thrusts, resource requirements and personnel capabilities. It is hoped that the proposed DHUD will be able to facilitate this process.

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At the Regional (NCR) Level, the following are recommended:

Implementation of metropolitan planning that will consider the geo-political relationship of the city with the rest of the metropolis. While all the cities engage in planning exercises, too often plans are parochial in nature and fail. This exercise could be jointly led by the DHUD and the MMDA. The fact that the mayors will make up the RDC opens avenues for greater metropolitan- based planning and inter-local relationships; Use of GIS as decision-making and shelter planning tool; and 0 Inter-local cooperation as a result of a metropolitan-oriented planning.

2. Strengthen the mechanisms of coordination between HUDCC and MMDA, especially in light of the recent Executive Order making the MMDA the Regional Development Council for the National Capital Region. Such move would facilitate inter-local cooperation and metropolis-oriented planning and project implementation.

The NUDHF enunciates eight policies specific to Metro Manila because of its unique position in the country’s political and economic affairs. These policies address:

a. existing land supply and infrastructure; b. density controls; c. urban services and infrastructure; d. disaster mitigation principles; e. the competition, interconnectivity and complementanties with companies and agencies; f. urban physical environment; g. traffic implementation and physical construction; and h. Metropolitan management, planning and implementation.

These policies have not been implemented well because of lack of an effective coordinative mechanism acceptable to the LGUs and the poor application of laws. Support mechanisms and systems of incentives and disincentives must, therefore, be installed. As the Framework notes, “Metro Manila’s problems can only be solved by an incremental application of existing rules, laws, and regulation.” Hopefully this will be addressed by the new RDC.

3. Align the institutional strengthening aspect of the Project which needs to take into account the ongoing efforts of the DlLG and the donor sector LGU performance in service delivery. This would put the project within the context of the LGUs’ commitment to excellence and give it greater legitimacy.

4. Provide for a stronger participation of the business sector in the institutional framework. Specifically, review Section 18 of the UDHA to achieve a more realistic participation of the private sector, rather than compel it to comply with the 20 percent provision. It might be more feasible to encourage their participation in site and services development which is what LGUs and CMP beneficiaries put low priority on.

In this light, the Project needs to take into account the ongoing PBSP Corporate Response to Poverty (CRUP) Program which attempts to commit private sector resources to urban poverty programs in a more focused and targeted manner. Originally intended as a project for six barangays, it has been expanded to cover 21

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barangays. It is recommended that stronger ties with the League of Corporate I Foundations be made to mobilize resources in the business sector'. 1 5.2.2 At the Local Level' 1. Assist the LGUs to form and convene the special bodies, particularly the Local Housing Boards (LHBs), by providing models and legal bases for creating such I bodies. The MMUSP Project has recommended a model ordinance for the creation of LHBs. (refer to Appendix 0-2.) The cities of Muntinlupa, Las Pinas, and Mandaluyong have created housing boards or their equivalents which other cities can I learn from. It is recommended that the MMUSP be executed by the LHB or its equivalent and implemented by the UPAO with strong support from other departments. Likewise, assist the LGUs come up with enabling ordinances for the creation of needed special bodies. Efforts towards this end have been made by the 1 Congress of CMP Originators, League of Provinces, and HUDCC itself.

2. Strengthen the role of the UPAO, particularly in shelter or settlements planning. I Guidelines for shelter planning are included in Appendix P and a TA for Local Shelter Planning is recommended in this report. The UPAOs coordination with city planning, engineering, and GIS has to be enhanced, and its role in the total development of the I city must be seen as organic rather than peripheral implementation of this Project. It is recommended that the Project be executed by the LHB and implemented by the UPAO. Expanding the role of UPAO is expected to level to an effective delivery of J shelter services. Adequate budgetary support and an appropriate capacity building program for some critical staff of UPAO are necessary to implement this approach. 1 3. Ensure the multi-sectoral composition of the housing boards so as to create a wider base of ownership, and consequently involvement. A major success factor in the program of Muntinlupa, for example, is the multi-sectoral composition of its I socialized housing committee (ShopComs). 4. Strengthen the LGU capabilities for land use and shelter planning through formal I training courses and workshops. I 5.3 Enhance LGU, NGO and CBO Capacities Given the current NGO/CBO engagement with LGUs in local governance, the I following strategic directions/interventions were identified: Provision of funding supporC for the operations of the Multi-Sectoral 1 Groups (MSGs) MSGs and NGOs/POs should have financial support for basic operations (such as coordination, bookkeeping, supplies, communications) and capacity building. Specific 1 training/technical assistances include: Secretariat Management, Team Building, Consensus Building, Policy Advocacy, Assessment and Strategic Planning.

I 1 The League recently committed PhPl.3 billion to the government as the business sector's contribution to the government's poverty alleviation program. I 2 further discussed in Section 9.1.6, 9.2.6, 9.3.6 (Capacity Building of Relevant Organizations)

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Funding support can either come from the LGU through budgetary allocation (i.e. Quezon City Local Housing Board and Muntinlupa SHOPCOM) or grants from large j.

Continuous capacity building for relevant organizations

The long-term government housing program should make capacity building for NGOs and CBOs an integral component of the program with grant support. This should be treated as investment rather than cost. The current "good" or higher repayment performance of the CMP is due heavily to the built-in social preparation of the communities. Interventions include a combination of formal or on-the-job training, and exchangekross-visits.

More detailed attention is to be given to the training needs at the local level where the Project will operate (refer to Table 5.1). The following training needs were identified during interviews and discussions as well as an assessment of current performance3.

Table 5.1 Training Needs Identified for Different Sectors

Sectors Training Needs Identified

LGUs 0 Preparation of Local Shelter Plans, Formulator of Settlements Code, Use of GIS for Decision Making and Shelter Planning Participatory Planning Public-Private Joint Ventures Environment and Solid Waste Management Land Use Planning Development Finance Project Management

Community Organizing for CMP Approaches to Housing for the Poor Low-Cost Housing Technologies Public-Private Joint Ventures Appreciation of GIS as a Planning Tool Enterprise Development Disaster Mitigation Project Management Conflict Management Credit and Collection Tools

Leadership DevelopmenVDevelopment of Second Liners Membership Development Systems Installation (Financial, Projects, Organizational, Communications) Team Building Assessment and Planning Para-Legal Interpretation of Technical Plans Advocacy Understanding the Bureaucracy

See Appendix J for detailed discussion on the Capacity Building Program

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Documentation of Best Practices and Learning Exchange among LGUs

This can be done through forum, dialogues, and exchanges. Key successes and best practices are illustrated by the Quezon City and Muntinlupa cases while the Taguig case demonstrates the constraints and challenges of community participation in local governance4.

0 Provision of technical assistance to progressive LGUs

LGUs must be encouraged to organize multi-sectoral coalitions such as the SHOPCOM or TMSG that can then develop into Local Housing Boards. The MSG should be headed by the LGU - Office of the Mayor, UPAO, or MPDO - to facilitate institutionalization and sustainability in the event of the NGO phase-out.

Entrepreneurship and enterprise development and management

This should be a major area of focus for NGOs. In addition to making linkages with institutions such as the UP Institute for Small Scale Industries and AIM, it is recommended that the Project consider entering into training program arrangements with the business sector. Support fund grants to do research and piloting of self-help schemes such as community-business partnership for product and services contracting.

5.4 Improve Social Services Delivery

Human Development Services and Social Protection (services including education, health, shelter, water and electricity; social protection and security from violence for basic sectors through social welfare and assistance, safety nets, social insurance and legal reforms) stands out as one of the components of the Social Reform and Poverty Alleviation Act (RA 8425). In view of building sustainable communities, the Project needs to take into account improvement in the delivery of social services. Packages exemplified in the Social Development Action Plans of the Pilot Subprojects include health, education, sports, recreation, and protective services.

Although LGUs will continue to bear a significant portion of the costs, there are several unique approaches towards improving access of the urban poor to these basic services that can be explored such as tripartite partnerships (e.g. LGUs, civic groups, and the private corporate sector) that have proved to bring about more efficient and expanded delivery of these services. Appendix L (Case Studies of Community Participation in Local Governance) cites examples of cases where the NGOs serve as the major link in the forging of the public-private partnership. Private sector involvement is further discussed in Section 5.6 in Chapter 5.

4 See Appendix K for Case Studies of NGO and CBO Experiences in Socialized Housing Projects and Appendix L for Case Studies on Community Participation in Local Governance

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5.5 Establish Information Systems

The application of GIS to settlements planning will enable the LGUs to plot and set up the databases concerning the following:

0 An inventory of available land (locallnational) for socialized housing;

0 The physical characteristics of existing settlement sites as well as the socio- economic profile of each community;

0 The boundaries and other information regarding the Areas for Priority Development (APDs); 0 Densification of settlements over time; and 0 Informal dwellers in dangerous or hazardous areas etc.

The databases can be used to aid local government decisions relevant to:

Land banking for future housing needs; Land conversion from one use to residential use for informal settlers; Choosing the best sites for socialized housing taking into consideration physical characteristics such as flood-prone areas, presence of fault lines, accessibility to major transport routes and transport facilities, proximity to primary social service facilities like high schools, hospitals as well as public markets and other commercial centers; and Determining the probable impact of large infrastructure projects (e.g., new roads, reclamation civil works, mass railway systems, transport terminals, airports and seaports) on the settlements.

The use of available Information and Communications Technology (ICT) undoubtedly will improve capacities of LGUs in planning and delivery of basic services. Moreover, the use ICT could improve and expand revenue base and make transactions more efficient and transparent.

In the context of the MMUSP Project, the use of ICT is covered by a much broader scope of Electronic Governance (E-Gov) for Local Governments. E-Gov is the application of appropriate ICT in the furtherance of good governance. It is a mode by which local government operations become more efficient, transparent and responsive.

As in many approaches to management, E-Gov takes on a process whereby human resources, both the decision makers, users and clientele are given the utmost consideration in the planning and implementation stages. Thus, ICT hardware and software are coupled with Organizational Development to restructure local bureaucracy in the light of automation and Social Marketing campaigns to prepare and inform the users and the clients of the benefits5.

Therefore, establishing an automated information system is one of the components of E-Gov that will utilize ICT on two key areas of application:

5 See Chapter 7.1 1; Technical Assistance Proposal Urban Electronic Governance (UE-Gov): The Establishment of Information and Communications Technology and Geographic Information System for Metro Manila Local Governments.

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1. LGU Systems (Real Property Tax, Business and License Permit, Payroll, 1 Personnel Management, Financial Management, Legislative Tracking, among others); and

8 2. Geographic Information System (GIS) with specific applications such as the Informal Settlers Information System6. i The convergence of these two applications will mean the establishment of a Management information System (MIS), wherein data generated are further processed for planning and decision making purposes. Another step forward is I making available to the public LGU information via the Internet, through its own website. Refer to Appendix M for GIS Implementation Plans and Appendix M-I for a report on GIS Training that has been conducted by MMUSP.

1 Parallel to the efforts of the LGUs, the MMDA and Key Shelter Agencies particularly the HUDCC should also gear up for support mechanisms such as providing accurate and timely data, technical assistance for individual LGU and Metro-wide planning and I should serve as the hub or portal of all information generated by the LGUs. I 0 Assessment of LGU ICTlGlS Capacities To determine where the Metro Manila LGUs are in terms of ICT/GIS, thereis a need to conduct a detailed and timely assessment at the onset and at regular intervals 1 during the project implementation. Various initiatives are on-going at the LGU and NGA levels, and the technology continuously develops. Even an assessment six months prior will not be an accurate basis for technology inputs and costing 1 purposes. Standardize LGU Data Sources and Collection

I In general, the data available at the LGUs are two years old, particularly those related to urban poor and informal settlers. LGUs generate their own data while NGAs have their own means of acquiring information. The best sources of data are e ideally those from the LGUs. However, it appears that there is insufficient capacity, either technically or financially, to conduct surveys and other data gathering methods.

6 There is a need to rationalize data generation with an end view of establishing standard data sources and collection processes as follows: E 1. A Performance Indicator System that shall prescribe the data needs is set; 2. Source or origins of data are identified (e.g. CPDO, UPAO, NSO, etc.); 3. The LGUs are trained on scientific ways to conduct survey and data collection 1 and that funds be allocated for this purpose; and 4. A policy on public disclosure of LGU information that will provide among others, officially disclosed information, is established. All of these shall be done in 1 consultation with the LGUs. I I See Technical Assistance Proposal Informal Settlers Information System in Chapter 11.5

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I 0 Metro Manila E-Governance Framework The phase of implementation in establishing automated information systems will largely depend on the current capacities of the individual LGUs. However, there is a a need to come up with a set of minimum requirements for ICT/GIS presence and application at the LGU level. With the minimum requirements, the cost of implementation may be shared across LGUs and duplication of efforts may be 1 avoided as well. This shall be contained in the E-Governance Framework to be crafted by LGUs and MMDA.

I 0 Investment Recovery and Sustainability in ICTlGlS For sustainability and future upgrade of ICT/GIS systems, the LGUs should be able I to recover their investments on software and hardware requirements. A business model for recovery and sustainability should be prepared for each LGU. It would be an advantage for the LGUs if they can entice private sector investments in ICTIGIS, particularly those that require regular data from LGUs. Likewise, the concerned I national agencies. will have to determine their support structure investments and 1 recovery schemes. 0 Project Portal

It is essential that Metro Manila LGUs and concerned national agencies be apprised I of what is happening with regards to the Project and other information that will show the progress of LGUs. I The MMDA in consultation with the LGUs and other concerned agencies will develop a web-based portal that will link and show relevant information on the Project and the progress of individual LGUs based on the set Performance Indicator System. This I will serve as a monitoring tool for the PMO. The portal will be hosted and maintained, by the MMDA.

I 5.6 Increase Private Sector Participation

Escalating land prices and understandable reluctance by formal private sector I developers to undertake the risk of building housing for the poor make it likely that the owner-builder path to housing, often built on “discounted” land, will continue to dominate the shelter delivery system for the poor. As a result, the most promising I area for increased private sector participation lies in the economic development of existing slum areas. I Economic growth is a key factor in the success of anti-poverty strategies. The poor represent an important element of the urban labor force. They make substantial contributions to total productivity and to the competitiveness of the labor market. In I order to effectively perform these functions, they need a viable and affordable place in which to live that is close to their source of employment.

The formal private sector can play a crucial role in promoting economic development 1 within Metro Manila slums. The pursuit of programs to strengthen corporate social I responsibility will create openings for increased business sector involvement in

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helping to resolve the problems of the urban poor through mutually beneficial and sustainable efforts. PBSP, for example, has already initiated several activities that are having real beneficial effects. Private sector business should be encouraged and interested in supporting activities that:

Connect the resident labor force within existing slums to the mainstream job market; Create access for residents to effective training and job-placement programs that will lead to genuinely marketable skills and stable employment in the future; Address personal and other barriers, such as the lack of child care and transport, that are likely to impede progress toward individual and neighborhood self- sufficiency; Establish the community as a competitive business location; Provide entrepreneurship training and ongoing technical assistance to small businesses; and Maximize opportunities for employment, service provision by residents and career training related to the physical improvements undertaken as part of the slum upgrading process.

Strong interaction and coordination is required between private sector groups and key government agencies such as the Department of Social Welfare, Urban Poor Commission and National Anti-Poverty Commission. The continued strengthening of the League of Corporate Foundations will create opportunities for responsive corporations to address urban poor issues and for working with low-income communities. Similarly, the Philippine Philanthropic Steering Committee has initiated a series of pilot activities that promote corporate response to urban poverty through PBSP, CENTEX (Ayala Foundation) and school building projects with the help of Coca Cola. The success of these early, ongoing activities will have a positive impact on the generation of joint venture and partnership activities between the corporate sector and slum areas in the future.

The wide range of potential partnerships provides the most promising means to increase private sector participation in integrated urban development that benefits the poor. The most common forms of partnership relate to land, finance and housing production.

5.6.1 Financing

Public private partnerships related to finance are quickly becoming the most interesting and dynamic types of partnership. The use of mortgage securitization in housing finance packages, for example, allows housing delivery to occur at more affordable interest rates, while at the same time providing secured long-term debt for financial institutions and profitability for private sector developers involved in building low income housing.

Mortgage indemnity schemes can be used to cover against default during the early period of a loan. Working capital guarantees can be offered to developers and to finance institutions to enable low income families to secure take out financing. Subsidized loans can be made to non-profit organizations involved in the development of rental housing for low-income households.

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To enable housing finance and technical assistance to reach local communities, the I public sector can also act as an enabling body through the provision of technical and financial support to local initiatives; special legislation can provide the necessary 1 seed money and resources required to establish innovative programs. 5.6.2 Physical Improvement I Partnerships related to on-site physical improvements are based on the recognition that the provision of housing is not only a means to meet the need for adequate shelter, but also a way to generate employment and business activity. Different forms 1 of partnership can be developed from participatory planning processes that involve the administration, citizens, NGOs and the local businesses community. Interdepartmental teams can be created to develop an interdisciplinary approach to slum improvement and to “fast-track neighborhood revitalization by avoiding many of 1 the ordinary bureaucratic delays. In addition, working in partnerships will facilitate the development of cost sharing formulas for the financing and cost recovery of i infrastructure. The creation of joint venture projects with the private sector in order to build starter homes is an approach that is commonly used in countries with a young population 1 that is experiencing problems in obtaining affordable housing. These starter homes would be built on serviced plots, with purchasers given free sets of plans to demonstrate how their houses could be expanded incrementally. The local a government can provide grants to pay trainees from the community to work with contractors during slum upgrading process and then use this experience to eventually obtain regular employment.

I 5.6.3 Provision of Employment and Micro-Financing Schemes

PBSP members continue to make corporate contributions for social development 1 through its NCR Area Resource Management Program and, more recently, its Corporate Response to Urban Poverty (CRUP) Pr~gram.~Their contributions include the building of classrooms and multipurpose centers, feeding programs, provision of I computers and computer laboratories, health services enterprise, production and marketing support, manpower development and the like. a Member companies who have expressed initial support to the ADB-assisted CRUP project are enumerated in Table 5.2. 1 I 1 1

~ ~~ I 7 discussed in Section 5.2

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Table 5.2 I PBSP Member Companies Supporting CRUP Program Company Names Type of Support

1 CRUP Mercury Drug 0 water system MERALCO 0 Depressed Area Electrification Program (DAEP) ABS-CBN 0 micro-credit 1 Bayer 0 Men in Baygon Petron 0 disaster mitigation I environment Philip Morris 0 feeding program

I Adopt-a- PLDT Community Nestle Fort Bonifacio IBM i Citibank 0 providing jobs, manpower San Miguel training, enterprise support, basic First Philippine infrastructure and basic services. Holdings I Mi rant Phils. ING Bank Eauitable-PCI Bank 1 Planters Bank

The possibility of encouraging such companies to invest in the Project sites is worth I looking into as these private investors have openly expressed willingness to obtain and train local manpower. However, this would have to be seen in terms of feasibility of business operations and the investment climate provided by the LGU. Based on I PBSP’s experience, the LGU needs to improve unfavorable business conditions (such as unpredictable business policies, bureaucracy, red tape, and graft and 1 corruption). As previously noted, it is recommended that the Project also solicit the support of the League of Corporate Foundations. The League counts among its members the 1 foundations created by the country’s biggest corporations. Involving the League in the MMUSP will very likely facilitate a more focused and targeted business sector participation, as the foundations can influence the kind of involvement that their i parent corporations should go into.

1 5.7 Develop New Approaches to Infrastructure and Environment 5.7.1 Infrastructure Development

I The Government’s approach to low-income households and informal settlers has been embodied in the National Shelter Program (NSP) established by Executive Order 90. The NSP aims to provide affordable housing units to the lowest 30 percent I of the population and to increase private sector participation in the financing and production of housing for low-income families. The objectives of the NSP are to be i achieved through four major activities: development of resettled areas; 1

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0 direct production of new housing units; assistance in the acquisition of secure tenure; and 0 extension of developmental financing and mortgage insurance/guarantees.

To support the implementation of. the NSP, the MTPDP earmarked 80 percent of government housing investments to be directed towards the construction of socialized housing.

Despite these efforts, the demand for shelter among poor households in Metro Manila continues to be much greater than ongoing government housing and finance programs can address. Policies related to residential land and housing finance clearly need to be improved. To start, there is an obvious need to address the growing land market problems in Metro Manila. Previous housing studies have indicated that the current land market is one of the most dysfunctional in the world, the cost of land alone generally exceeding normal standards for housing affordability. The escalating price of land has created a growing gap between available urban housing packages and the limited incomes of even median income families. Under these conditions, virtually the only housing option for poor has been to settle in Metro Manila slums.

The sheer magnitude of the problem, not unlike that found in many other countries, requires that the government use its resources as wisely as possible. It implies that less emphasis be placed on direct government production of public housing units and more attention given to the use of government funds to leverage greater private sector investment in housing and neighborhood improvement activities including support to owner-builder that benefit the poor. New approaches to financing are required that can include converging various funding sources, developing pooled financing and others.

0 Emphasize Incremental Investment Approaches to Infrastructure Provision

One of the key components of shelter provision is the implementation of site improvement and provision of on-site and off-site municipal services. Site improvement may be taken to mean as the construction of new roads and drainage system and installation of new power lines and water service pipelines for new housing sites and resettlement areas. For blighted and poorly accessed areas, this may mean road widening for better access, expansion or upgrading of the drainage and sewer systems, improving the solid waste collection and traffic system or upgrading the service levels of power and water supply.

The conventional approach to infrastructure development is to unitize the aggregate costs of the on-site infrastructure component such as roads, alleyways, drainage and sewer systems, soil erosion and flood control structures, and open space improvements to the number of housing units built. This cost is then added on to the cost of the land and the housing units and is paid upfront by the beneficiaries as cash equity or through the financing or implementing agencies which will be reimbursed later through the beneficiaries’ loan takeouts or equity payments.

In most cases, installation of on-site and off-site structures for utility services and their component costs are assumed by the utility companies like MERALCO for

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electricity, the MWSS concessionaires for water supply and PLDT or Bayantel for fixed line communication service. These investments are recovered through user charges, which are regulated by government regulatory agencies. The setting up of transport-related facilities is usually private sector-led while the local government units do garbage collection and river and street cleanup. National government agencies as well as local government units provide funds for off-site access roads and thoroughfares, major drainage and flood control structures, solid waste disposal, and major transportation systems and structures, which are usually transboundary.

0 Develop Incentives for LGUs Active in Infrastructure Provision for the Urban Poor

The LGUs are now prioritizing and assuming the development cost of infrastructure projects, physical upgrading of blighted areas, and the delivery of basic services in low-income communities. Property owners who enter into the CMP are given exemption from payment of real property tax and capital gains tax. This is the current trend in many of the Metro Manila LGUs that are actively pursuing resettlement and housing for the urban poop.

The LGUs are able to uplift the living standards of the low-income communities and improve the physical conditions of the blighted areas normally set in government land parcels with frozen land values. This is despite the fact that the LGUs have not been able to collect real property taxes from these government assets for decades. With secured land tenure, the urban poor are now encouraged to pursue the continuous improvement of their homes and become active constituents of the cities and municipalities. In effect, investments in infrastructure provision for informal settlers’ communities are recovered in the overall taxation system.

0 Resource Mobilization as Key to Limited Public Funds

As government endeavors to meet the ever-increasing demand for shelter provision for the urban poor, the funds allotted for these capital expenditures are diminishing. Government has now to explore ways to achieve its goal without going bankrupt in the course of fulfilling its duties.

Three strategy areas are now being promoted to augment government‘s meager resources for infrastructure provision:

0 The Government is now pushing further the primacy of the private sector in the provision of infrastructure that supports growth and urban renewal in depressed communities. This will enable the government to devote greater amount of resources for basic services and rural infrastructure that are socially and economically desirable but may not be financially viable for the private sector. 0 The Government is beginning to appreciate the merits of partnering with NGOs involved in shelter and urban development. NGOs perform a crucial role in promoting “self-help” within the ranks of the urban poor sector. Especially in the areas requiring technical knowledge and approaches, these low-income

Refer to Appendix F (Assessment of Affordability and Availability of Urban Infrastructure Provision for Socialized Housing Projects in Metro Manila).

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communities can benefit from the wealth of experience and skills of NGOs and development groups. The LGUs are establishing a hierarchy of basic infrastructure and municipal services that are in sync with the organizational maturity of HOAs and CAs. To some extent, this guarantees the proper management of infrastructure installed in low-income communities. This also helps slow down the expenses of government and accommodate more communities relying on government assistance.

In the light of these strategies, it is important to establish a hierarchy of infrastructure needs that will provide the cue to government, NGOs and the private sector in which areas and in what manner they can complement in this endeavor. The emphasis will be in the timing of assistance from government, NGOs and private sector realizing that one could follow or in some instances run parallel to each other's efforts.

Admittedly, it is vital that all infrastructure components be put in place once settlers are relocated. However, development assistance should be tailored to and paced according to the capability of urban poor communities to mature both financially and socially. A concerted effort of this sort is critical and must learn from the experiences of the past.

5.7.2 Promote Environment-ConsciousSite Planning

Under the Local Government Code, LGUs are nominated as the organizations responsible for barring new squatters, but funding for this activity is often insufficient. The Project is designed to take into consideration improvement of water supply, sewerage and sanitation, and drainage.

The following environmental facilities are needed for inclusion in the site planning process:

Pollution control

Considered as landmark legislation on environment, the Clean Air Act (RA 8749) was passed in Congress in 1999. This law provided strict monitoring and policy enforcement particularly in the elimination of emissions of carbon dioxide, carbon monoxide, nitrates and smoke from transportation vehicles and industrial plants. This Act outlaws incineration as a form of solid waste disposal. The challenge now is the consistent and effective implementation and enforcement of this Act across all parts of the country.

The proposed Clean Water Act should now address the protection of waterways from human waste products and oxygen depletion especially in the provision of housing infrastructure where water and sanitation systems are often compromised. As noted earlier, wastewater treatment in the Metropolis is limited at best to the customary use of individual septic tanks at the household level. Another area of growing concern is the effect of residentialhrban encroachment into inland watersheds and waterways, coastal areas, and wetlands. Water pollution is negatively effecting the populations of fish in traditional fisheries.

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I 0 Solid waste management Land pollution is directly related to solid waste disposal systems in the metropolis. With the growing volume of solid waste, the MMDA should find an effective and long- I term solution to solid waste disposal other than landfill dumping sites. The recycling plant piloted by the MMDA should be studied further for adoption in other parts of Metro Manila. A recycling plant or a materials recovery facility in each city would I force the issue that an efficient solid waste management should really start at the household level and that the idea of recycling should really be strongly promoted at the users’ level. This development would also contribute to additional revenues for I the cities. Currently, no solid waste collection fees are charged to the public. New methods of revenue generation might spur collection and disposal improvements. Charging the I manufacturing industry a tax for the solid waste caused by their packaging would be a good way to generate revenue and discourage excessive packaging.

I The solid waste problem has been relegated to the availability of a sanitary landfill, when in fact a city-wide conspicuous and well-publicized campaign to promote the reduction, reuse and recycling of solid waste is equally essential to solving the I problem. Solutions to the solid wastes disposal problem will benefit the, poor, in particular, those clearly coming into contact with waste at dump sites, etc. I Unless the MMDA provides for an efficient and permanent solution to solid waste disposal, solid waste will remain the most pressing environmental problem I confronting Metro Manila. 0 Drainage and Flood Mitigation I Loan assistance packages, such as from the government of Japan; which is particularly focused on rehabilitating the Effective Flood Control and Operation System (EFCOS), a group of financial and development researchers from the European Union (EU) states has uncovered that the Philippine government has been I spending billions of pesos for the Metro Manila’s anti-flood projects without economic value. The research group said that the DPWH in NCR implements the anti-flood 1 projects, but has not succeeded in establishing a concrete resolution. The Project recommends the inclusion of complementary engineering (e.g. channels, dikes, pumping stations, inland drainage, etc.) and non-engineering measures (e.9. I zoning, removal of encroachments, watershed management, flood forecasting, etc.) to be undertaken to mitigate flooding in Metro Manila and in other major river basins I and systems. I 5.8 Improve Land Management The following section follows directly from Section 5.2 of this Chapter with some elaboration of issues and proposals. It is assumed that HUDCC will take the lead in I research and capacity building activities, assisted in the short-term by Project staff. I

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5.8.1 Land Administration

Land costs are often the largest share of housing development in Metro Manila and thus any moves to reduce the price of land will benefit low income groups in particular. The potential for doing so can arise from changing the land supply / demand ratio, from reducing the costs of land transfer, from changes in land regulations and from the use of specific land development mechanisms.

Currently, as noted, there is a major demand-supply gap as land is held off the market for one reason or another. There is no consistent information on what areas of land are unoccupied or occupied illegally in Metro Manila. However with the introduction of GIS under the present Project, it should be possible to fill that information gap. While LGUs can benefit by having a larger land bank than they had thought, they can also benefit through a higher potential for property and idleeland taxation.

Concerning deficiencies in the processes of land transfers, it is recommended that HUDCC and the Project team evaluate how the poor will benefit from pilot one-stop shop centers for land registration and administration and how the poor will benefit. This will be based on ongoing work by the LAMP team. In addition, the Project team will investigate the efficiency in to decide on methods of cooperation as circulation of project findings among the 17 cities. HUDCC would also examine the operations of the informal land market to see if there are semi-formal land tenure arrangements which could assist local residents in advance of gaining formal land tenure.

5.8.2 Land Valuation

HUDCC should undertake an evaluation of the methods of land valuation used by LGUs, national agencies and others. At present, valuation is carried out on a zonal basis with each LGU producing its own figures. HUDCC will examine the feasibility of introducing standard methods which are applicable to all. If not feasible, the possibility of having standard approaches to valuation in all socialized housing sites will be examined.

5.8.3 Land Regulation

First, there needs to be a more predominant introduction of mixed use zoning with a socialized housing component. The Project contribution will be to assist in detailed discussions of the issues involved and demonstration of a pilot mixed use zone in one or two selected areas of the NCR. It will be important to have the experience of NGOs and other community-level experts in the development of mixed use zones with residential areas for the urban poor. Other parallel improvements in the development control process should be examined, in particular the use of planning gain techniques, in which developers provide on or off-site facilities to a development scheme for free, in exchange for planning permissions. Another technique to be examined for relevance to the NCR is the use of land use class orders in which planning permission is waived if the change of use is only minor.

Another proposed activity is research into alternative methods of restricting access to rights of way and other potentially dangerous areas. These areas are high priority for relocation but unless preventative measures are taken the vacated land will be

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occupied again. The other approach to the problem is that of policing the area to be protected. Under the Local Government Code, LGUs are nominated as the organizations responsible for barring new squatters, but funding for this activity is often insufficient.

5.8.4 Proclamation Planning

The new Proclamation activities involve the handing over of 25-year Certificate of Lot Awards to the squatter population. There is a range of pre and post-Proclamation planning activities carried out by HUDCC. It is recommended that these activities be regularized, particularly as leadership will be taken over from HUDCC by the LGUs. Activities would include planning for support land uses such as health, education and community land uses, as well as incorporation of planning proposals into CLUPs. 'I 5.8.5 Improve Land Use by Re-Parcellation / Land Readjustment Schemes/ Guided Land Development/ Land Sharing Techniques and Community Land Trusts'

The objective of these feasibility studies is to carry out a rapid assessment of the suitability of the several land development techniques" nominated for use in Metro Manila. Indicative sites in selected cities will be identified from GIS data. Consultations with LGUs on potential sites will be carried out and, if the technique is considered to be suitable, a possible program of similar schemes will be prepared.

5.9 Summary of Recommended Policies

The Philippine Government is expected to start implementation of the Strategy even before any technical assistance from multilateral and bilateral institutions is received. Some key activities such as policy studies, benchmarking and institutional strengthening have in fact been initiated by the HUDCC and some LGUs of Metro Manila. Thus, as indicated, the Strategy's implementation schedule starts at year 2003.

Most technical inputs accessed through the Fund (referred to as the Revolving Fund in Chapter 7.9) are expected to end within the first five years of the Strategy's implementation. However, except for a few, the implementation, evaluation and design- updates of activities subject of those inputs will continue through the next fifteen years of the Strategy period. Only the following activities are expected to be completed within the first five years of the Strategy period:

1. Strengthening mandates of HUDCC and initial organizational assistance to the Proposed Department of Housing and Urban Development (DHUD). 2. Assessment of state of e-governance among Metro Manila LGUs and the determination of a Metro Manila e-governance framework. 3. Testing, design and installation of shelter planning techniques. 4. Settling disputes involving R.O.W of utility companies.

Refer to Appendix N Case Study on Community Land Trust I0 These techniques were mentioned under the Urban Land Reform Act of 1978.

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I !I I I 1 I 1 CHAPTER 6 1 I Housing Need and 1 Resource Requirements I I I I I I i I I 1 I TA 3760 - PHI: Metro Manila Urban Services for the Poor Project

CHAPTER 6. HOUSING NEEDS AND RESOURCE REQUIREMENTS

6.1 Overall Housing Needs to Eradicate Slums by 2017

The determination of future housing needs for households living in Metro Manila’s depressed housing or slum areas is based on the number of housing units required to:

0 Respond to new household formation; Reduce overcrowding; Resettle households currently living in danger and public utility zones; and Address the obsolescence of existing units located in upgradeable slums.

The quantification of housing need, coupled with the ability and willingness of households to pay for better infrastructure and housing, will determine the effective demand. The following analysis has been used to determine the basic housing needs and required investments for each of Metro Manila’s 17 LGUs over the next 15 years.

Based on recent population data and on the April 2000 LGU data for depressed housing areas, some 3.4 million people, or roughly 34.6 percent of the overall Metro Manila population, were estimated to be living in slums in the year 2000’. They were lodged in some 515,000 households with an overall average household size of 6.98 members2. Quezon City had the largest depressed housing population with close to . 1.1 million people living in 141,000 households. This slum dwelling population included slightly more than half of Quezon City’s overall population. At the same time, Pateros had the smallest number of slum dwellers with only about 21,000 people living in 3,500 households. Makati City and Taguig had the smallest percentage of slum dwellers with roughly 10 and 11 percent of their respective populations. Navotas and Mandaluyong had the highest proportion of slum dwellers with more than 60 percent each.

These basic data have provided the starting point for this initial determination of housing need.

6.1.1 Structure of the Assessment

A simple, spreadsheet-based Housing Needs Assessment Model3 was used to calculate the magnitude of future housing need for slum area households and the

~ ~ 1 Based on HUDCC’s compilation of data on the “Magnitude of Informal Settlers in Metro Manila as of April 11, 2000. The numbers are different from those presented in the Interim Report due to double counting in HUDCC’s figures discovered during the GIS training. Only the data submitted by the LGUs are now being used in the assessment. In addition, the period of the Strategy has been reduced from 17 to 15 years. Based on the results of the MMUSP Barangay Survey and confirmed in the Household Survey 3 The Model is based on an enhanced spreadsheet version of a much earlier MS-DOS model developed by Robert Nathan Associates for USAID. PADCO’s spreadsheet version of the model has been used in several countries in the development of land and housing strategies.

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required investments to achieve a slum-free Metro Manila by the year 2017. Box 4 describes the basic assumptions used in making the assessment. The sensitivity of assessment results to the quality of data requires that it be continually updated and verified. At this point, the results presented in the assessment provide a sufficiently accurate determination of the overall housing need and investment requirements for the proposed Strategy.

Box 4 Data and Assumption for the Assessment of Housing Needs

The overall population data for LGUs in Metro Manila was obtained from NSO population projections based on 1995 Census results;

The average household size for depressed housing areas in each LGU was obtained from the results of the Project‘s Barangay Survey and substantiated by the results of the Household Case Studies. Household sizes from the Barangay Survey were higher than overall LGU averages from 1 the Census. It is anticipated that the high household sizes will decrease somewhat over the course of the Strategy due to the improved housing opportunities;

The number of households living in the various depressed housing areas was obtained from the April 11, 2000 compilation of LGU data on informal settlements;

All new housing units will be inhabited by only one household;

The annual population growth rates for households living in depressed housing areas were considered to be roughly equivalent to the overall growth rates of the LGUs. The actual growth rates for informal settlements were difficult to determine due to the lack of data. Many of these areas are well established with limited potential for growth;

The definitions of “upgradeable’ and “non-upgradeable” dwellings are defined as follows. Non- upgradeable units are those units located along creeks and waterways, the north and south railroad lines, the Pasig River, within road and utility rights-of-way and on land for government facilities. All of the households living in these areas will need to be resettled. Upgradeable units are defined as those located on government and private lands, in tourism areas, on designated housing sites and within APDs. The majority of these areas will be upgraded with only minimal resettlement;

The number of households per housing unit was estimated from existing data and results from the Project surveys; a modest reduction in the number of households per housing unit (i.e. From 1.1 to 1.07) will be sought over the first five years of the strategy;

The annual replacement of upgradeable units was based on an average useful building life of 30 yeas; the short building life takes into account the need to replace units built of temporary materials;

The annual replacement of non-upgradeable units was based on resettling all of the households living in danger and utility zones during the Strategy’s 15-year period; an average rate 01 i replacement of 6.7 percent per year was used in the calculations; The land conversion rate per resettled housing unit includes an average plot size of around 45 square meters (based on BP 220 requirements and a mix of detached and row housing) and I allowances for circulation, open space and community facilities; the total amount of area unit has been set at 80 rn2.

The percentage of replacement units requiring new plots includes the resettlement units of all I households living in the danger and utility zones, plus a small percentage of households needing to be resettled from upgradeable areas. I

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6.1.2 Results of the Assessment I For the Overall Strategy Period from 2002 to 2017

Results from the assessment indicate that the population of Metro Manila’s existing I slum areas will increase by some 750,000 inhabitants from now until the end of the Strategy in 2017. The projected population increase is based on an average annual growth rate of roughly 1.27 percent. Assuming a modest six percent reduction in the 1 average household size (i.e. from 6.98 to 6.58), a total of 146,000 new households or roughly 10,000 new households per year will be formed. The majority of these new households will be the result of natural growth within the existing slums. The greatest I number of new households during the Strategy period will occur in Muntinlupa (29,500 new households), Las Pinas (27,800 households), Taguig (31,950 households), Caloocan (23,950 households) and Quezon City (22,350 households).

I Several LGUs in Metro Manila are projected by the NSO to have negative population growth over the next few years. These include: Pasay City, Makati City, Pateros, Manila, San Juan and Mandaluyong. LGUs projected to have low growth rates I include: Navotas and Quezon City. Moderate rates of growth, ranging from one to three percent per year, are projected for Paranaque, Caloocan, Valenzuela, Malabon, Pasig City and Marikina. Muntinlupa, Las Pinas and Taguig are projected I to have the highest growth rates of four percent or more. The actual rates of population growth for the depressed housing areas are likely to change over the course of the Strategy. More precise and updated data will help improve the 1 accuracy of the assessment and keep its findings up-to-date. A total of some 96,500 housing units, or roughly 21 percent of the estimated 470,000 I housing units in the depressed housing or slum areas, are considered in the assessment to be “non-upgradeable” due to their location in danger and utility zones4. All of the households living in these units will need to be resettled. The remaining 372,000 units or 79 percent are considered to be “upgradeable”. It is I assumed that most of the households living in upgradeable areas will not be resettled. a A 6.7 percent annual replacement rate for non-upgradeable units was applied to each LGU in order to resettle all of the households in non-upgradeable housing units by the end of the Strategy. A total of 106,000 households or 20 percent of slum I dwelling households will need to be resettled by the end of the Strategy. In addition, a 3.5 percent annual replacement rate was applied to upgradeable units based on an average life span for these informal housing units of 30 years. Some 195,000 units I will need to be rebuilt over the course of the Strategy with only a small proportion built on newly developed sites. The overwhelming majority will be rebuilt in the 1 upgraded areas. i 4 There are no accurate LGU data on the number of housing units in the categories of informal settlements (e.9. wateways, government land, private land etc.) used in the April 1 2000 compilation. Data from the Project surveys also were not able to determine the number of housing units according to these categories. The numbers used in the assessment are best I estimates based on field observations during the surveys.

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Table 6.1 Number of Households Living in Different Categories of Depressed Housing Areas Non-Upgradeable Areas

Pasay City 3,804 0 0 0 120 3,924 Paranaque 4,677 261 71 1 0 0 5,649 Muntinlupa 778 1,216 0 0 1,412 3,406 Las Pinas 5,401 0 0 0 0 5,401 Makati City 906 1,936 0 894 0 3,736 Pateros 0 0 0 924 0 924 Taguig 961 1,441 144 467 0 3,013 Caloocan 5,985 1,200 3,126 0 899 11,210 Valenzuela 313 6,790 0 0 1,278 8,381 Malabon 61 1 4,000 85 0 0 4,696 Navotas 10,450 0 8,580 0 0 19,030 Manila 12,807 5,168 378 2,212 0 20,565 San Juan 100 0 0 576 500 1,176 Mandaluyong 616 0 332 248 902 2,098 Quezon City 0 0 0 3,179 1,728 4,907 Pasig City 1,443 0 464 1,231 3,400 6,538 Marikina 889 0 426 0 117 1,432 Total 49,741 22,012 14,246 9,731 10,356 106,086

Table 6.2 Number of Households Living in Different Categories of Depressed Housing Areas Upgradeable Areas

Pasay City 0 8,683 5,650 0 15,176 29,509 Paranaque 13,759 4,229 0 142 659 18,789 Muntinlupa 1,500 29,799 0 0 0 31,299 Las Pinas 9,105 10,851 0 0 0 19,956 Makati City 2,424 730 0 0 0 3,154 Pateros 0 2,578 0 0 0 2,578 Taguig 7,882 3,934 0 0 1,645 13,461 Caloocan 35,895 7,861 0 0 0 43,756 Valenzuela 287 6,036 0 0 1,200 7,523 Malabon 4,020 3,745 0 0 ‘0 7,765 Navotas 0 0 0 0 0 0 Manila 26,640 1,431 0 0 0 28,071 San Juan 9,714 3,660 0 0 0 13,374 Mandaluyong 1,486 808 0 20,991 0 23,285 Quezon City 85,864 0 0 45,736 4,280 135,880 Pasig City 1,846 1,264 0 0 0 3,110 Marikina 2,460 24,438 0 0 0 26,898 Total 202,882 110,047 5,650 66,869 22,960 408,408

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Table 6.3 Percentage of Households Living in Different Categories of Depressed Housing Areas (Non-Upgradeable Areas)

Pasay City 11.4 Paranaque 19.1 1.I 2.9 0.0 0.0 23.1 Muntinlupa 2.2 3.5 0.0 0.0 4.1 9.8 Las Pinas 21.3 0.0 0.0 0.0 0.0 21.3 Makati City 13.1 28.1 0.0 13.0 0.0 54.2 Pateros 0.0 0.0 0.0 26.4 0.0 26.4 Taguig 5.8 8.7 0.9 2.8 0.0 18.3 Caloocan 10.9 2.2 5.7 0.0 1.6 20.4 Valenzuela 2.0 42.7 0.0 0.0 8.0 52.7 Malabon 4.9 32.1 0.7 0.0 0.0 37.7 Navotas 54.9 0.0 45.1 0.0 0.0 100.0 Manila 26.3 10.6 0.8 4.5 0.0 42.3 San Juan 0.7 0.0 0.0 4.0 3.4 8.1 Mandaluyong 2.4 0.0 1.3 1.o 3.6 8.3 Quezon City 0.0 0.0 0.0 2.3 1.2 3.5 Pasig City 15.0 0.0 4.8 12.8 35.2 67.8 Marikina 3.1 0.0 1.5 0.0 0.4 5.1 Total 9.7 4.3 2.8 1.9 2.0 20.6

Table 6.4 Percentage of Households Living in Different Categories of Depressed Housing Areas (Upgradeable Areas)

Pasay City 0.0 26.0 16.9 0.0 45.4 88.3 Paran aq ue 56.3 17.3 0.0 0.6 2.7 76.9 MuntinI upa 4.3 85.9 0.0 0.0 0.0 90.2 Las Pinas 35.9 42.8 0.0 0.0 0.0 78.7 Makati City 35.2 10.6 0.0 0.0 0.0 45.8 Pateros 0.0 73.6. 0.0 0.0 0.0 73.6 Taguig 47.8 23.9 0.0 0.0 10.0 81.7 Caloocan 65.3 14.3 0.0 0.0 0.0 79.6 Valenzuela 1.8 38.0 0.0 0.0 7.5 47.3 Malabon 32.3 30.1 0.0 0.0 0.0 62.3 Navotas 0.0 0.0 0.0 0.0 0.0 0.0 Manila 54.8 2.9 0.0 0.0 0.0 57.7 San Juan 66.8 25.2 0.0 0.0 0.0 91.9 Mandaluyong 5.9 3.2 0.0 82.7 0.0 91.7 Quezon City 61 .O 0.0 0.0 32.5 3.0 96.5 Pasig City 19.1 13.1 0.0 0.0 0.0 32.2 Marikina 8.7 86.3 0.0 0.0 0.0 94.9 Total 39.4 21.4 1.I 13.0 4.5 79.4

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In terms of overcrowding, the average number of households per housing unit was I estimated to be 1.lo5. A reduction of 2.5 percent in this ratio is targeted as part of the Strategy. Given that all new housing will have only one household per unit, the proposed reduction in crowding from 1.I to 1.07 households per housing unit will 1 require an additional 3,350 units, or about 225 units per year. Manila and Quezon City together will require almost all of these additional units. I The total number of replacement units, for both resettled slum dwellers and dilapidated houses in upgradeable areas, will be around 291,000 units or roughly € 20,000 units per year. Assuming an average of 80 square meters of land per housing unit (including both plot and public areas for roads, open space and facilities), the total amount of newly a developed land required to implement the 15-year Strategy will be close to 1967 hectares. Las Pinas (252 hectares), Muntinlupa (253 hectares), Quezon City (232 hectares) and Caloocan (272 hectares) will have the greatest need for newly developed sites for resettlement. Together, these four LGUs will require more than I half the new land needed to implement the strategy. The remaining 13 LGUs will require an average of some 33 hectares for new site development. Pateros, Makati I and San Juan will actually need less than 10 hectares each. Table 6.5 summarizes the 15-year requirements to meet the needs of the Strategy. While the results of the assessment are clearly ambitious, i.e. building and/or 1 improving close to 600,000 housing units, they can be achieved. Tables 6.1 to 6.4 respectively show the April 2000 distribution by number and percentage of I households living in depressed housing areas by LGU and category. Several LGUs, such as Makati City, Pateros and San Juan, should have relatively little difficulty in eradicating their slums within the next 15 years. However, Muntinlupa, Las Pinas, Caloocan and Quezon City will each need to find a I considerable amount of land on which to resettle about 30,000 households each in their areas. Other LGUs will need to focus their activities on slum area upgrading and on the replacement and improvement of housing units within these areas. LGUs with I more than 80 percent of their total housing needs to be met through upgrading include Pasay City, Mandaluyong, Quezon City and San Juan. The LGU focus in these areas will be on the provision of infrastructure. Most of the housing I replacement and improvement in the upgraded areas will be financed and implemented by owner-builders. I 1 I

~~~ The doubling up of households in depressed housing areas is very difficult to determine 1 since most of the houses in these areas are not counted. Based on experience from the household surveys, an average of 1 .I0 households per housing unit was adopted for this i initial assessment of housing needs.

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Table 6.5 I Fifteen-Year Strategy Requirements I

I Pasay City 41 5,121 14,084 11,243 30,448 Paranaque 120 14,978 8,967 7,159 31,104 Muntinlupa 253 31,566 14,938 11,925 58,429 I Las Pinas 252 31,500 9,524 7,604 48,628 Makati 28 3,448 1,505 1,202 6,155 Pateros 7 906 1,230 982 3,118 Taguig 141 17,619 6,425 5,129 29,173 1 Caloocan 272 33,979 20,884 16,672 71,535 Valenzuela 123 15,435 3,591 2,866 21,892 Malabon 61 7,659 3,706 2,959 14,324 1 Navotas 170 21,006 0 0 21,006 Manila 89 11,120 13,398 10,696 35,214 San Juan -12 -1,535 6,383 5,096 9,944 I Mandaluyong 24 3,004 11,113 8,872 22,989 Quezon City 232 28,943 64,823 51,750 145,516 Pasig City 73 9,083 1,484 1,185 11,752 I Marikina 93 11,646 12,838 10,249 34,733 I Total 1.967 245.478 194.893 155.589 595.960

I 6.2 Investment Requirements to Meet These Needs Estimations of the investments required to meet the identified housing needs have been based on the assumption that all households living in slum areas will be housed 1 in acceptable housing by the end of the 15-year Strategy. Different cost estimations for resettlement and for housing renewal and improvement in the upgraded areas have been used to determine the basic levels of investment for the Strategy. The I assessment’s estimated levels of investment by LGU and for Metro Manila as a whole provide useful indications of the amount of financing required for implementing I the Strategy. The overall on-site investments required to meet the estimated housing needs are shown for each LGU and for Metro Manila in Table 6.5. The results are based on an I estimated average cost of acceptable housing in both resettlement and upgraded areas.

For resettlement areas, the average cost of land, infrastructure and construction for I each new housing unit was determined for a typical plot and housing unit size of roughly 45 square meters. The average cost for resettlement units in the base year 2002 is estimated to be PhP370,OOO. This cost includes the price of land (based on 1 an average price of PhP1900 per gross square meter of site), infrastructure (based I on an average cost of PhP700 per gross square meter of site) and housing

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construction (based on an average cost of PhP3500 per square meter of floor area). The average cost of this basic housing unit over the course of the fifteen-year Strategy, taking into consideration modest cost increases due to inflation, was estimated to be PhP502,OOO. While resettlement housing will require the immediate construction of a livable unit, parts of the house and its finishing can be developed on an incremental basis. The effective application of government subsidies, such as the NHA land subsidy for resettlement, will help make this housing solution more affordable to the lowest income groups. The end of the Strategy anticipates that all households will be living in fully acceptable housing.

For housing renewal and improvement in the upgraded areas, the base year cost included the purchase of land (based on a combined average land price of PhPl,lOO per gross square meter of site for both partially and fully upgraded areas), provision of infrastructure (based on an average combined cost of PhP670 per gross square meter of site) and construction or improvement of the housing unit (based on an average of PhP3000 per square meter of construction). The average cost of an acceptable housing unit is estimated to be around PhP259,OOO in year 2002 and PhP325,OOO over the course of the strategy.

The overall cost to meet the assessed housing need for the full 15-year period of the strategy, for both new housing and upgraded units, was estimated to be around US$8.6 billion. This cost does not include any additional low-income housing initiatives that are not related to the implementation of the Strategy.

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CHAPTER 7

Implementation of the Strategy I TA 3760 - PHI: Metro Manila Urban Services for the Poor Project i

CHAPTER 7. I IMPLEMENTATION OF THE STRATEGY I 7.1 Detailed 2002-2007 Program

I Following on from the detailed calculations of housing need and investments in Chapter 6,an assessment has also been used to help outline a basic five-year program for each of the LGUs in response to the Strategy. The results of the I assessment are shown in Table 7.1.During this first five-year period, a total of 240,000housing units will need to be built or improved across Metro Manila. The estimated number of new housing units to be built within both the resettlement and I upgraded areas is roughly 150,000 units. Resettlement alone will require the construction of close to 84,000housing units and the development of 675 hectares of land. The number of replacement houses to be built in the upgraded slum areas will be around 65,000units, while the number of existing units to be improved during the I first five years will be around 90,000units.

1 Table 7.1 I First Five-Year Strategy Requirements

Pasay City 19 2,329 4,695 6,509 13,533 I Paranaque 41 5,116 2, 989 4,145 12,250 Muntinlupa 75 9,374 4,979 6,904 21,257 I Las Pinas 72 8,961 3,173 4,402 16,536 Makati 10 1,278 502 696 2,476 Pateros 3 367 41 0 569 1,346 1 Taguig 41 5,171 2,142 2,969 10,282 Caloocan 92 11,485 6,961 9,652 28,098 I Valenzuela 41 5,121 1,197 1,659 7,977 Malabon 22 2,709 1,235 1,713 5,657 Navotas 59 7,344 0 0 7,344 I Manila 35 4,395 4, 466 6,192 15,053 San Juan -3 -325 2,128 2,950 4,753 Mandaluyong 12 1,476 3,704 5,136 10,316 1 Quezon City 96 11,947 21,608 29,960 63,515 Pasig City 25 3,121 495 686 4,302 I Marikina 33 4,090 4,279 5,933 14,302 I Total 673 83,959 64,963 90,075 238,997 I

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Quezon City will have by far the most ambitious program. It will include the I construction or improvement of some 64,000 units. Roughly 47 percent of these units will be improved in the upgraded areas, while another 34 percent will involve replacement units in the same areas. The remaining 19 percent will be resettlement. 1 Even though the percentage of resettlement in the overall effort to be made is small, the 12,000 households to be resettled in Quezon City is largest resettlement effort among the 17 LGUs and will require close to 100 hectares of newly serviced land. 1 Caloocan will have an equally large resettlement program to undertake. While Navotas’ entire program will involve resettlement, San Juan’s program is likely to be focused almost exclusively on neighborhood upgrading. Pateros appears to have the I smallest program to implement for only about 1,350 households. The implementation of the proposed pilot subprojects will require a considerable amount of attention and effort from Muntinlupa, Taguig and Caloocan. Assuming that I the New Bilibid subproject in Muntinlupa will benefit some 7,000 households, this effort will fulfill about 75 percent of the resettlement need over the first five-year period. Muntinlupa will need to find additional land and financing to resettle another I 2,400 households if it is to meet its target. At the same time, another 12,000 units will need to be rebuilt or improved within upgraded areas during this first five-year phase of the Strategy. During the 15-year period of the Strategy, Muntinlupa needs to I resettle a total of 31,500 households and develop more 253 hectares of land for these households. It is essential that the Muntinlupa LGU begins to plan for this I activity. Additional land from within the NBP site may be needed for this purpose. The pilot subproject in Caloocan will help the Tala community to improve the environment and their economic situation. With a population of approximately 6,000 I households, the proposed pilot subproject will directly address about 36 percent of the upgrading requirements for the first five-year period of the Strategy. Similarly, the pilot subproject in Taguig will benefit some 7,000 residents through a neighborhood upgrading and development of the IT Park as much as it will address some 60 I percent of the upgrading requirements for the first five-year period of the Strategy.

Table 7.2 presents an estimate of the current land requirements and available land I for the first-five year period of the Strategy. LGUs that have a greater need for land than what they can find within their own boundaries may have to coordinate with other LGUs to resolve any problems. It may be possible, for example, to resettle I some of the informal settlers in Taguig, provided that the LGU was agreed and adequate compensation could be arranged. 1 I I I l

Final Report 0 Volume 1 124 I PART 2: THE PROPOSED STRATEGY ‘I I TA 3760 - PHI: Metro Manila Urban Services for the Poor Project I I Table 7.2 Estimate of Land Availability for Urban Poor Households, I Metro Manila LGUs (2000-2017)' I I Las Pinas 31 3 157 252 Makati 16 8 28 I Malabon 39 22 61 Mandaluyong 31 16 24 Manila 5 3 89 I Mari ki na 128 64 93 Muntinlupa 306 153 253 Navotas - - 170 I Paranaque 96 48 120 Pasay - 41 Pasig 112 56 73 (1 7) I Pateros 7 4 7 (3) Quezon City 195 98 232 (1 35) San Juan - - - - I Taguig 833 423 141 282 Valenzuela 236 133 123 10 Total 3,531 1,883 1,979 (96) I Assumed percent of generated lots that will be made available: 60% I Assumed percent of vacant lands that will be made available: 50% 7.2 Priorities and Phasing of Required Investments

i The prioritization and phasing of investments will differ for each LGU based on the Strategy it has adopted to eradicate slums by the year 2017. Implementation of the pilot sub-projects will be a top priority for the LGUs of Muntinlupa, Taguig and I Caloocan. These pilot projects will incorporate about 40 percent of the combined programs of these cities for the first five-year period of the Strategy. Other LGUs such as Valenzuela and Manila are likely to begin by addressing the problem of I slums located along the railroad lines, the removal of which will allow the improvement of rail traffic across Metro Manila with substantial economic benefit to the entire area. Some LGUs, such as Pateros and Makati City, should be able to I resolve virtually all the slum problem within the first several years of the Strategy.

I ' Definition of technical terms used in this section will be found in the Glossary of Terms refers to the difference between the Land that may actually be made available and the Land 1 Requirement.

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The first step for each Strategy approach, whether it involves the resettlement of I households or the upgrading of existing neighborhoods, will require the adequate preparation of slum area communities to participate in the proposed projects. This effort will need a considerable and concentrated effort by the LGUs and key NGOs. I It is also important that slum area communities be involved in planning of the subprojects from the very start and that they be willing to make a substantial contribution to its financing; Once a community has made this commitment and has I formally organized itself to participate in the subproject, negotiations concerning the acquisition of the land and tenure can begin with either public or private landowners (see Section 7.2.2 of Chapter 7).

1 7.2.1 Transfer of Land

The actual purchase or transfer of the land will begin once the above-mentioned I actions have been carried out. In some cases, the LGU and/or NGO will help the community association (or land trust) to negotiate with the private landlord to obtain the best possible price. They may even provide bridge financing for the purchase of I land based on priorities and the availability of funds.

In the case of government land, it is suggested that the national agency 1 administering the land (e.9. HUDCC in the case of Proclamation Sites) convey the land to the LGU under a long-term usufruct agreement. This will immediately allow the LGU to begin to lease the land to the community or to make arrangements for its I sale based on prior agreements with national agency. Funds will be recovered through a system of ground rents, which will include charges for both land and infrastructure. The LGU, being responsible for the infrastructure and much closer to I the people, will have the best opportunity of recovering the rents. For private land, the LGU will work with private landlords and the communities to establish a payment formula that will be acceptable to both. A ground rent will be I charged to the resident households using a community organization or land trust as the intermediary. The initial payments during the implementation of the infrastructure improvements will be made for the purchase of the land. The objective will be to I recover the cost of the land as quickly as possible, or within a period of not more than five years. I 7.2.2 Infrastructure Investment

The installation and financing of infrastructure will begin once the land tenure issues I have been addressed and the necessary technical studies completed. The first step will be to clearly identify the public or private nature of the particular infrastructure goods and services to be provided. The creation of sustainable institutional arrangements for the provision of infrastructure requires that three main issues be 1 addressed: there must be incentives for infrastructure and urban service providers to maintain their services and keep them up-to-date; technical and service level options must meet the demands and affordability of the low-income residents; and close 1 working arrangements must be established between the utility companies, community populations and the LGUs.

1 Different formulas for the provision of secondary, tertiary and on-plot infrastructure I will be developed in order to minimize costs, involve residents in construction and

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ensure community ownership and maintenance of the infrastructure once it is in I place. Within this context, infrastructure costs will be recovered as soon as possible in order to replenish an LGU revolving fund for infrastructure. Such a revolving fund I will be essential to increase the availability of LGU funds to implement the Strategy. 7.2.3 Low-Income Communities and the Banks 1 Considerable intermediation will be required from the participating NGOs to bridge the gap that currently exists between low-income communities and the private banks. These efforts will require working closely with specific slum communities and I potential banks. They are likely to require a considerable amount of time to put in place and should be adequately financed by the NGOs. Once bank loans have been obtained, they can be used to pay for part of the land, infrastructure and housing I construction as determined by the financial situations of the beneficiaries. Given the magnitude of the 15 year-investment necessary to implement the Strategy, it is important that the maximum amount of funds recovered from the beneficiaries be I reinvested into the implementation of the Strategy. The establishment of strict accounting practices and effective revolving funds at the LGU level will be essential to sustain an adequate amount of liquidity in the financial framework of the Strategy 1 and to ensure the continuation of its implementation; (see Chapter 7.10). Any delays in recovering costs and re-injecting these funds into the system will delay project I implementation and the ultimate achievement of the Strategy. I I I I 1 1 I I I

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I TA 3760 - PHI: Metro Manila Urban Services for the Poor Project I I 7.3 Potential Economic Benefits Roughly a third of Metro Manila's population lives in informal settlements or slums. Implementation of a long-term Strategy to eradicate these slums and to improve the I livelihood and living conditions of this segment of the metropolitan population will provide a substantial amount of economic benefit at both the macro and micro levels.

I Some 20 percent or roughly 106,000 households live in danger or utility zones and will need to be resettled. The resettlement of informal settlers away from railway lines will allow the PNR to dramatically improve its commuter service and the transport of I goods. Both of these improvements will have a considerable impact on the financial viability of the railroad and on the economic growth of Metro Manila. It will produce a considerable reduction in commuter travel time to work, traffic congestion and urban pollution, all of which will have a positive impact on the economy and health of the I general population. In addition, land values and property tax revenues in the outlying areas serviced by the railroad will increase.

I At the local level, the resettlement of households living in danger zones will provide these households with secure tenure, basic infrastructure and acceptable housing. Most of all, having title to land will encourage beneficiary households to save and 1 invest in their housing. It also will allow low income households to build private rental units and to significantly increase both property and rental values.

I For upgraded areas, the installation of basic infrastructure and services will improve the living and environmental condition of the households that are currently living in sub-standard areas. The general lack of adequate toilets, drainage systems, I sewerage, water supply, and solid waste collection and disposal in these areas will be addressed. The lack of adequate access within slum areas that currently curtails the movement of people and goods, and cripples the economic potential of these areas will be resolved, It should be noted that the improvement and greater stability I in community infrastructure and services will have a multiplier effect by allowing small-scale employment generation, home-based work for women.

I Improvements in the drainage systems will reduce the severity of flooding that regularly ruins both homes and business, thereby provoking substantial economic loss within the community. There will also be significant improvements in health and 1 productivity along with the related reduction in the costs of health care. Absences due to sickness will be reduced and production will be increased due the more regular attendance of employees and the improved education of the school age I children.

I 7.4 Financial Structure

The financial structure of the both the overall Strategy and pilot sub projects is I relatively clear. Land, infrastructure, housing construction, capacity building, livelihood and employment, and social services are the major elements of the Strategy to be financed. Their implementation will involve a range of components and activities to be funded by different public and private sector participants. The I coordinated combination and leveraging of the financial contributions for these I elements will be essential to success. The LGUs will be the lead agencies in

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implementing the Strategy and in managing the necessary resettlement and I upgrading efforts in their respective areas. The Development Bank of the Philippines (DBP) will be the borrower. The DBP will re-lend the funds to the participating thrift I banks and micro-f inance institutions. The LGUs will borrow from the DBP to finance both the on and off-site infrastructure costs for roads, drainage, sewerage, solid waste and community facilities. Some part I of these infrastructure activities may be contracted to the communities for implementation and/or direct financing. The annual investments that the LGUs are able to make will include both the allocation of funds from the Development Fund and I from borrowings based from borrowing capacity as specified by the law. The resulting investment amounts have been calculated for the three pilot project LGUs and included as part of the financial analysis. Funds invested in infrastructure will be recovered through the payment of ground rents by the beneficiary communities. I Portions of these rents may also include payments for the cost of land. The costs recovered by LGUs for the provision of infrastructure will be re-invested into the I Strategy through use of a revolving fund managed by the LGUs. Housing loans will be obtained from the participating banks and micro-finance institutions. The participating banks will lend to beneficiaries either directly or through I a community association acting as intermediary.

The utility companies are expected to invest their own funds in providing water, I power and communications for both resettlement and upgrading sites. Strong commitments, close coordination and advanced planning will be required to ensure the timely provision of these services. Part or all of the utility costs can be provided I through regular agency budgeting and their on-going programs to assist the poor (e.g. the Bayan Tubig program of MWSI). However, scaling up the Strategy will likely require the utility companies to borrow additional funds. Such borrowings will have to be planned well in advance. It is important that the utility companies commit to the I Strategy from the beginning and that they work closely with the LGUs in the Strategy’s implementation. The costs of infrastructure for these utilities will be recovered through metered tariffs and user fees. Some adjustment to these fees may I be required in order to provide adequate incentives for the utility companies to treat the upgrading and resettlement sites within the Strategy as a corporate priority.

I The financial structure of the Project requires the timely intervention and financial contribution from each of the public and private sector participants in the Project. Any delays in the provision of funds will have serious cost implications on other aspects of I the Project. Such cost implications will reduce the affordability of the proposed solutions and erode general confidence in the pilot projects and in the overall I Strategy. I 7.5 Sources of Finance The 15-year strategy for eradicating slums needs significantly high investments. The financing sources will need to use a Revolving Fund type of mechanism to generate the type of funds that are required for an investment of this magnitude over a 15-year I period (see Section 7.9 of Chapter 7). I

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Table 7.3 shows the summary of LGU affordability to participate in the infrastructure investment. The key factor in the affordability analysis is the revolving fund type of mechanism where at least 80 percent of the investment comes back to the LGUs through the cost recovery mechanism.

Table 7.3 LGU Contribution and Borrowing Capacity (Figures in Peso Millions)

Pateros 110 Valenzuela 605 Malabon 468 Navotas 445 a9 la 27 36 371 410 Manila 2,080 San Juan 711 Pasig City 126 25 5 a 10 42 412 Marikina 453 91 ia a 10 a5 1,262

Next, the costs of land, infrastructure and house construction for the 17 cities in the first five years were calculated and are summarized in Table 7.4.

The total cost of the five-year investment is estimated at US$2,698 million equivalent, comprising US$291 million in foreign exchange costs, and US$2,407 million in local currency (Table 7.5). These cost estimates include physical and price contingencies of US$526 million.

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Table 7.4 Proposed Five-Year LandAnfrastructure and Housing Costs for 17 Cities in Metro Manila

Pasay City 1,688 2,015 6,405 128 6 338 Paranaque 4,808 1,027 1,889 4,724 94 4 205 Muntinlupa 3,559 1,382 3,344 8,285 166 8 276 Las Pinas 2,609 1,501 2,619 6,729 135 6 300 Makati 1,439 674 375 2,488 50 2 135 Pateros 21 9 110 201 530 11 0 22 Taguig 2,840 887 1,632 5,359 107 5 177 Caloocan 4,104 2,284 4,339 10,727 215 10 457 Valenzuela 1,137 605 1,248 2,990 60 3 121 Malabon 843 468 868 2,179 44 2 94 Navotas 878 410 1,152 2,440 49 2 82 Manila 8,825 2,080 2,205 13,110 262 12 416 San Juan 1,508 71 1 681 2,900 58 3 142 Mandaluyong 2,429 1,067 1,541 5,037 101 5 21 3 Quezon City 12,305 6,460 9,593 28,358 567 26 1292 Pasig City 74 1 412 670 1,823 36 2 82 Mariki na 2,563 1,262 2,196 6,021 120 5 252 Total 50,509 23,028 36,568 1 10,105 2,202 100 4606

Notes: (1)New houses include resettlement units and houses completely rebuilt within upgraded areas. (2)Upgraded houses include units improved to acceptable standards within upgraded areas. (3)Land cost includes the necessary purchase of public and private land for resettlement and upgraded areas. The estimated average land cost per gross square meter was PhP 1,900for resettlement sites. PhP 800 for partially upgraded areas and PhP 1,200for fully upgraded areas. The costs take into consideration that 40 percent of the households living in depressed housing areas are living on government land. (4) Infrastructure costs were estimated to be PhP 700 per gross square meter for resettlement and fully upgraded sites and PhP 500 for partially upgraded sites (5)Average housing unit costs were estimated to be PhP 3,500 per square meter of built area for resettlement units and PhP 3,000 per square meter for upgraded units. While it is assumed that houses will be completed over the five year period, initial cost savings can be achieved by building core units and then undertaking incremental expansion and improvement over the projected period. (6) It is assumed that the LGU will contribute 100 percent of the infrastructure cost for roads, drainage, sewerage, solid waste and community facilities and the power companies will finance 100 percent costs for electricity.

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t

Table 7.5 Proposed Five Year Project Costs in 17 Cities in Metro Manila

costs I. Investment Costs

Land Cost 50,509 50,509 1,010 - 1,010 - 44

Infrastructure Costs: 18,422 4,606 23,028 368 92 46 1 20 20

Cost of Housing Construction 29,254 7,314 36,568 585 146 731 20 32

Total Land and Construction Costs 98,185 11,920 110,105 1,964 238 2,202 11 support costs: NGO community organizing subcontracts 340 340 7 7 0 Consulting services & project administration 307 307 6 6 100 0 Detailed engineering designs & supervision 2,763 691 3,454 55 14 69 20 3

Total Support Costs . 3,103 998 4,101 62 20 82 Total Investment Costs 101,288 12,918 114,206 2,026 258 2,284 11 11. Recurrent Costs

Operation & maintenance 1,382 345 1,727 28 7 35 20 1

TOTAL BASELINE COSTS 102,670 13,263 115,933 2,053 265 2,319 11 100 Contingencies:

Physical contingencies 10,043 1,259 11,302 201 25 226 11

Price contingencies 16,031 1,005 17,036 321 20 34 1 6 Interest during construction 1,603 1,603 32 32 100 TOTAL PROJECT COSTS 128,744 17,131 145,874 2,575 343 2,917 12 Percentage- 88 12 100 88 12 100

Notes: (1). Engineering design and supervision is estimated at 15 percent of infrastructure costs. (2). Physical contingencies are estimated at 10 percent on land, infrastructureand house construction costs, and 5 percent of support costs.

Considering the magnitude of the investment in the MMUSP during the 15-year Project implementation phases, the financing institutions will have to use a revolving fund type of concept to ease the liquidity requirement for project implementation, (see Appendix Q, Tables Q6QA16).

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There are a number of on-going slum upgrading and resettlement projects in Metro Manila, which are mostly at micro level. The sources of financing include CMPs, Thrift Banks, MFls, etc. For a large project like the MMUSP, the financial institutions need to have the necessary institutional capacity to handle an investment of this magnitude and also have the necessary funds for disbursements at the right time.

A financing plan for the five-year period has been developed which give an indication as to who would be the main financing sources for the MMUSP (see Table 7.6).

In summary, the main sources of finance would come from the following sources:

0 It is proposed that the Government passes on the central government land3 to LGUs on a 50-year lease basis. This relieves the beneficiaries of high loan repayments and interest rates; 0 Participating MFls and thrift banks will finance the purchase of private land and finance the home mortgages to beneficiaries either directly or through a community based organization; 0 Infrastructure costs will be financed by the LGUs’ own equity and proceeds from borrowings with DBP. A revolving fund mechanism is the key to infrastructure investment over the 15-year period. Under the revolving fund mechanism, infrastructure costs recovered from the beneficiaries will be reinvested in the roll- out phases; and 0 Water and power utilities operators will finance their respective utility infrastructure out of their own funds or from borrowings from commercial banks;

Currently, under on-going programs, the following sources of financing are available. The beneficiaries are encouraged to participate under current methods of financing although these financing institutions have limited lending capacities.

0 CMP: The interest rates are as low as six percent. The CMP lending is subsidized. Those beneficiaries who could access this type of financing are encouraged to do so; 0 Thrift Banks: There are thrift banks operating in Metro Manila. The lending terms are lower compared to MFls. The loan recovery rates are high because of the closeness to the beneficiaries; 0 MFk: The lending terms are relatively higher than thrift or commercial banks. The loan recovery rates are high.

Central government and LGU land is approximately 40 percent of total land cost. The balance 60 percent belongs to private landowners.

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Table 7.6 Proposed Project Financing Plan for 17 Cities in Metro Manila (In Philippine Peso Millions)

Land CostslBeneficiaries 21,380 20,204 4,546 4,379 50,509 1,010 35 infrastructure InfrastructurelLGU 13,422 4,606 18,028 361 12 Water supply 8, power 5,000 5,000 100 3 House construction 17,173 8,626 5,485 5,284 36,560 731 25 *art services NGO subcontracts 340 340 7 Consulting services 307 307 6 0 Engineering designs 8 supervision - 2,013 750 - 691 - 3,454 69 2 Operation & maintenance lLGU 1,007 375 345 1,727 35 1 Total Baseline Costs 17,173 16,442 30,006 6,125 647 5,642 20,204 10,031 9,663 115,933 2,319 Physical contingencies 1,717 1,493 3,001 556 32 512 2,020 1,003 966 11,302 226 8 Price contingencies 2,524 2,416 4,409 900 95 829 2,969 1,474 1,420 17,036 341 12 Interest during construction 434 412 758 1,603 32 1

Total Financing - Peso Millions 21848 20764 38 ,174 7sL---- 774 L-p2pI6983 25193 12508 12050, 145,874 2,917 100 Total Financing - US$ Millions 437 415 763 152 15 140 504 250 241 2,917 .Percent age 15 14 26 5 1 5 17 9 8 100 . Notes: (1) Approximately 40 percent of land cost is for government owned land. (2) Land subsidies will include discounts in the place of government land according to criteria established for the strategy. Housing subsidies will involve vouchers to the lowest income groups (i.e., roughly 20 percent of slum households).

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7.6 Use of Subsidies

Housing subsidies cannot be provided on a broad scale without considerable cost to society and to the efficient use of scarce financial resources. Subsidies are justified only if they succeed in providing social benefits that clearly exceed their costs. The alleviation of poverty conditions for some 3.5 million people through the achievement of a slum-free Metro Manila by the year 2017 is certainly an objective that merits and requires an effective application of government subsidy. Both ongoing subsidy initiatives and new approaches should be tailored to have a strong, positive impact on the implementation of the Strategy.

7.6.1 Current Situation

The present housing finance system in the Philippines already provides a significant amount of subsidies that are both explicit and implicit. For example, total housing sector subsidies in 1995 were PhP25.4 billion or 1.3 percent of GNP. Current subsidies include: interest rate subsidies, guarantees, tax exemptions, resettlement costs, straight grants and foregone administrative costs. Interest rate subsidies by far provide the largest amount of subsidy in the sector. Unfortunately, these do not always reach those most in need and inevitably causes serious distortions in the housing finance market that prevent any serious participation by private banks in the financing of housing for the poor. The potential lack of private sector interest in financing the housing construction element of the Strategy will be a major constraint to overcome for its effective implementation.

The major problems inherent with interest rate subsidies have led many countries to change their subsidy approach to one time, lump sum capital grants made to targeted, qualified households for the acquisition of owner-occupied housing. These capital grants are generally voucher-based and coupled with mortgage financing from private banks. These are typically:

a targeted to the most needy households through a means test; a transparent to the public and to policy makers; a funded from budgetary appropriations; a designed to avoid distortions in local credit markets; a aimed at creating incentives for increased participation by private banks in the low income housing market; and a designed to encourage risk sharing by the borrower, government and private financing agency.

7.6.2 Use of Capital Subsidies and Vouchers

There are now indications that the Philippine government is considering the use of capital subsidies and vouchers instead of interest rates as a more effective mechanism to target its housing subsidies to the poor. The design of any new subsidy approach should be compatible with the needs of the Strategy.

The subsidy of land costs in the NHA resettlement programs has been a much smaller, but still important source of subsidy in the housing sector. The resettlement subsidy for the 1993 to 1995 period was roughly PhP1.3 billion or about five percent of the total subsidy for housing. The amount of the average resettlement subsidy was

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roughly PhP55,OOO per unit without including any under pricing of the land. Given an average plot size of roughly 40 square meters, the subsidy per square meter of plot was PhPl,375.

The CMP is currently the government’s most effective program for the purchase of land by low-income communities. The program provides an interest rate subsidy of more than 6 percent for strictly controlled loan amounts that are now growing out of date. While the subsidy per unit is significant, the restrictions on the amounts to be borrowed have created serious problems for potential beneficiaries by making it more difficult for them to come up with the remaining funds to purchase the land. This situation will only worsen as the price for land and housing in Metro Manila continues to escalate.

7.6.3 Proposed Approach

The proposed subsidy approach for the Strategy is focused on reducing the cost of land and housing to low-income communities in the most effective and sustainable manner. It relies to a great extent on non-cash discounts applied to the price of government land and on cross-subsidies within low-income communities to lower the price of private land for the most needy. The basic intention of the approach is to reduce the need for ever-growing amounts of government subsidy as the price of land and housing in Metro Manila continues to rise. In principal, equity concerns dictate that the same approach should be used in dealing with qualified beneficiaries living on either government or private land. A form of cross-subsidy at the LGU level may be one way that some of the funds received from payments for government land could be used to help subsidize the purchase of privately owned land. Those LGUs without significant government land would require greater access to NHA subsidies for land.

~ ~~ Box 5 Proposed Subsidy Approach: Guiding Principles

The guiding principles for the proposed subsidy approach to support the Strategy are to:

Make maximum use of non-cash subsidies including discounts on the price of government land, reductions in the price of private land as a result of LGUAandowner negotiations, project-based cross-subsidies resulting from differential plot pricing, transfer of full charges for trunk line infrastructure to adjacent non-poor and commercial beneficiaries; reductions in building fees and taxes for slum area residents and small-scale builders; and provision of on-site technical assistance, administrative support and training programs for the improvement of low-income communities;

Focus on subsidy retention rather than recapture by using the CLT approach to “lock in” subsidies for upgrading and resettlement areas and to allow the subsidies for the land to benefit one household after another without any additional funds by guaranteeing the permanent affordability of the land;

Increase the scale and overall amount of the NHA resettlement subsidy in order to address the needs of the large number of households to be resettled as part of the Strategy;

Convert the subsidy in the CMP program from a long-term interest rate subsidy to an upfront voucher-type, capital subsidy to be used in conjunction with mortgage loan from a bank;

Provide an effective rental voucher subsidy that will encourage individual low-income house owners in both resettlement and upgraded slum areas to add rental units to their properties; and

Reduce some of the need for subsidies by encouraging greater competition in the provision Of infrastructure andsewices that will lower their costs.

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Given that poor urban communities, and not just individual households, are the primary target of the Strategy, it is suggested that subsidies provided by the government be attached to the land and used to ensure its affordability. For government land, the subsidy would essentially involve "no-cost" discounts in the price of land charged to the beneficiary communities through the Community Land Trust. The amount of subsidy given to the Trust would be based on specific criteria, which among others could include:

1. the age of the settlement and average length of residence of its inhabitants; 2. the percentage of disadvantaged households living in the community as indicated by government means tests; and 3. the amount of savings made by the community prior to the purchase of the land.

Subsidies made for the purchase of the land by discounting its price and by reducing or eliminating the costs of property transfer, registration etc. would remain with the Land Trust and not provide a windfall benefit to individual households when they sell their house. In exchange for this government subsidy and the ability to own affordable housing with secure and mortgageable tenure, individual households would have to agree to a formula for selling their house that did not include the added value of the land. (For more details on the Trust Concept, see Chapter 4.7).

Subsidies for the resettlement component of the Strategy will be voucher-based and tied to a minimum savings requirement. Beneficiaries will need to deposit 5 percent of the total housing cost in a private bank willing to make them a loan for their housing. Qualified beneficiaries who have achieved this savings requirement will receive a one-time capital grant from the government, which together with the 5 percent savings will provide a 25 percent down payment for their housing. The voucher will be tied to a mortgage loan at market interest rates and given to the private bank for redemption when the loan is signed.

7.7 Co-Financing Proposals

The cost of the 15-year investment is estimated at US$8.6 billion. The foreign loans will flow for project investment through the Development Bank of Philippines and then to the participating micro finance institutions and thrift banks. Financing is needed for infrastructure works, purchase of private land and home mortgages amounting to approximately US$4.7 billion. The revolving fund concept will eventually reduce the foreign and local financing requirements by about 50 percent, causing the foreign loan provision to be approximately US$1.76 billion over the 15-year period. It is assumed that the ADB will finance approximately one-third of this foreign funding requirement (US$590million) over the 15-year period. The balance two-thirds would have to be raised from co-financing and parallel financing options.

7.7.1 The ADB Loan

It is projected that some US$174 million will be needed to finance the required infrastructure and housing unit costs of the three pilot projects. Of the total amount, US$56.2 million representing 32 percent will be sourced from ADB as a loan. The loan is expected to have a fixed repayment period of 30 years including a grace

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period of six years. It will be made on a floating-rate basis and may be converted to a fixed rate in the future on request by the borrower which has been identified to be the Development Bank of the Philippines (see Appendix U for the institutional profile of DBP). The ADB interest rate will be based on LIBOR as the cost base rate plus a fixed spread equal to ADB’s basic lending spread prevailing at the time of loan signing. A commitment charge of 0.75 percent and front-end fee of 1 percent will be applied. The government will assume the foreign exchange risk, and normally the related cost will be passed on to the final beneficiary.

The DBP will re-lend the funds to the Local Government Units to finance both the on and off-site infrastructure costs for roads, drainage, sewerage, solid waste and community facilities. Portion of the ADB loan will also be re-lent by DBP to micro finance institutions and thrift banks. These participating banks will loan to beneficiaries either directly or through a community association acting as intermediary to finance the construction of housing units.

The balance of US$118.1 or 68 percent of project cost will be sourced from fraction of the development funds of the different Local Government Units, savings of potential beneficiaries, utility operators, government agencies and from co-financing using either grants or soft-loans. The co-financing options are as follows:

7.7.2 Japanese Bilateral Assistance

Given the historical relations between the two countries, Japanese bilateral assistance is a key component. As the beneficiaries are the low-income households and the objective of the project is to eradicate slums, assistance for this project is likely to rank as a priority item to the Japanese Government. The Japanese bilateral assistance is seen as an important source for the MMUSP.

The Japanese Government through the Japan Bank for International Cooperation (JBIC) has shown interest in the low income, housing sector. It is interested in pooling its funds with the ADB. The soft loan terms including low interest rates, long repayment period and grace period would be useful for the ambitious project under consideration. JBIC is likely to offer grant TAs for MMUSP particularly for capacity building of participating institutions and NGOs. It may also consider extending grants to finance some of the poorest of the poor beneficiaries who do not have access to banks for borrowing.

7.7.3 Other Co-Financing Options

There are a number of bilateral assistance programs in the Philippines, including the European Union, SIDA, Norwegian assistance through NORAD, French assistance, and Spanish assistance.

These sources are likely to be interested in capacity building efforts. As the NGOs would play a crucial role in the Project, it may be possible to work out some NGO grants from the abovementioned sources.

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exercise their legal and financial powers (e.g., threat of expropriation, extension of tax incentives, etc.) in order to encourage landowners to sell their land at a reasonable price. The result of this negotiating process will be to lower the cost of land and to provide a significant non-cash subsidy to the poor. .

Prior to the purchase of the land, the participating the LGUs and NGOs will work closely with the Community Associations/Land Trusts (CA/CLT) to prepare them for their role in the development of their community, paying for the land and infrastructure and borrowing from banks. In some cases, the NGOs may also serve as guarantors or cosigners for loans made to the CA/CLT.

The CA/CLTs will be legal entities with formal Boards of Directors, resident membership and elected management. For slum area upgrading projects, the size and organization of the CA/CLT will be based on the existing administrative “blocks” or “groups” within the community. Once the CA/CLT obtains ownership of the land, it will be able to use the title to its sizeable parcel of land as collateral in order to obtain a line of credit from a private bank. The CA/CLT will also be required to establish a strong savings record with the bank and/or to accumulate a large down payment amount for the purchase of the land and payment of the infrastructure. The CA/CLT will be expected to use its savings, cash and government subsidies to accumulate a down payment of roughly 25 percent of the cost of the land and infrastructure.

It is also assumed that no interest charges will be imposed on payments to the LGU for land or infrastructure. Assuming a land cost of PhP9OO per gross square meter of site after any government subsidy has been applied, and an infrastructure cost of PhP700, upgrading areas with an average density of 150 households per hectare will be able to complete the payments for both the land and infrastructure within a five year period based on an average monthly household payment (or ground rent) of PhP1500. A five-year period would cover the amount of time required for project start-up, land registration and the installation of infrastructure. The ground rents collected from households after the five-year period will be used by the CA/CLT to pay for additional infrastructure improvement; maintenance and other community based capital investments. At this point, the CLT will also begin to act as a Community Development Corporation.

7.8.2 Informal Settlements on Government Land

Under the proposed Strategy approach, the national agencies administering government land will transfer the land to the LGUs through a usufruct agreement. The LGUs will engage a lease to buy agreement with CNCLT in order to recover the non-subsidized cost of the land and all of the cost of infrastructure. The CLT will determine the amount of payment from each resident household that will enable it to meet its overall repayment needs. Neighborhood peer pressure and the threat of eviction by the CA/CLT will encourage individual households to make payments to the CA/CLT in a timely manner.

The subsidy for land, which essentially involves a discount in its selling price, will vary by community. It will be based on the: (1) average length of residence of inhabitants within the area of the CAICLT; (2) percentage of disadvantaged households in the community as verified by government means tests; and (3) amount of pre-purchase savings made by the CA/CLT for the purchase of land. .

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I CA/CLT payments for the land and infrastructure would be benchmarked to an agreed upon schedule for repayment. Payments in advance of the schedule would obtain an additional write down in the cost of land that would be commensurate with I the reduction in administration costs and the added value of money due to early payments. In this way, the CA/CLT would receive full benefit for accelerating its I repayments. It is anticipated that the cost of the land and initial infrastructure will be paid within a period of five years. Government subsidy will be used to accelerate ownership by 1 offering incentives for early payment based on reduction in government administrative costs and the higher value of repayments due to early recovery.

Once repayments for the land and initial infrastructure have been completed by the 1 CA/CLT, the ground rents or lease payments made to the CA/CLT by resident households will continue and be put into a revolving fund to be used for maintenance, property acquisition and other necessary capital expenditures by the CLT/CA (e.g., .I the purchase of property within the CA/CLT area as right of first refusal or to be converted into community run rental units etc.).

1 Resettlement Areas

Cost recovery procedures for housing resettlement on both public and private land I will be somewhat similar. Greater emphasis will be placed on individual ownership of land given that no community organizations exist on site at the time of its development. Costs for land and infrastructure will be made to the LGU which will I convey the repayments for the land to the Treasury. The MMUSP proposal for the NBP Proclamation area in Muntinlupa included house types with 3 to 6 units per plot. A form of small-scale condominium ownership of the land could be offered that will I be more affordable to the inhabitants and more likely be able to recover the costs. Housing Construction Costs

a These costs will be engaged by the individual beneficiaries and repaid according to the conditions of their loans. It is expected that micro-finance will play an increasingly 1 important role in financing these costs. LGU Operation and Maintenance (0 & M) Costs i Operation and Maintenance costs will be recovered through the overall property taxes. The possibility of establishing a community maintenance fund as part of the cost for land and infrastructure will be considered. Beneficiaries may be required to I contribute to this fund prior to the installation of infrastructure works.

I 7.9 Revolving Fund The cost of the three pilot subprojects is estimated at US$173.2 million. The MMUSP Project is designed to cover all 17 cities in Metro Manila. The. project cost for the five- I year period is estimated at US$2.9 billion. The 15-year Project is estimated at 1 US$8.6 billion. A question arises as to how funds are going to be raised to effectively

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narrow the revenue- expenditure gap or resource mismatch that is expected to affect I the LGUs once the MMUSP implementation phase starts. The revolving fund concept is the key solution to this question.

I 7.9.1 Objectives of the Revolving Fund

The revolving fund aims to sustain the liquidity of LGUs and ensure successful I implementation of the 15-year Strategy. The fund will provide bridge financing while the proceeds of mortgage loans are not yet released. The fund will also be used to leverage and raise additional funds both from the public and private sectors. The I fund will be available only to finance infrastructure costs; maintenance of the infrastructure that are already in place; and debt service. I 7.9.2 Structure of Revolving Fund Management The revolving fund will be governed by a board comprising (i) members of the LGU; (ii) non-government organizations; (iii) national government agency; and (vi) others, I as needed.

The revolving fund will maintain a special bank account. The policies governing I disbursements from the revolving fund will be formulated by the governing board. The governing board will also provide policy directions consistent with the broader development agenda, ensure timely and appropriate coordination of stakeholders, I monitor and evaluate the Project, ensure dissemination of information, and adopt the necessary policy measures, program adjustments, and budget reforms. Funds will flow to the revolving fund, in conjunction with appropriate reporting and audit 1 procedures. The Project PMO will be responsible for managing the funds and ensuring that the related support programs are implemented in a timely and effective manner. I Operational details for the revolving fund will be devised by the PMO subject to approval by the Board.

I 7.9.3 Potential Sources of Funding The Local Government Code stipulates that 20 percent of the total annual local revenues (including the IRA), should be transferred to a Development Fund (DF). I Almost all LGUs have recurrent surpluses3. Therefore, a modest amount is transferred annually to the Development Fund. It is proposed that the participating LGUs commit a percentage of the annual Development Fund allocation for the 1 MMUSP. At the Workshops held in each of the participating LGUs, they verbally committed to allocate 20 to 40 percent of the Development Fund transfer for the MMUSP. Table 7.7 below shows the potential funds available for MMUSP coming I from the Development Funds of the three pilot LGUs. The same can be calculated for the remaining LGUs. 1. Borrowings from the MMUSP fund; 1 2. Proceeds of loan release obtained by the beneficiary from participating MFls or thrift banks. The amount allocated as repayment of the serviced plot will form part of the revolving fund; I 3. Ground rents that will be charged to beneficiaries; 1 Recurrent surplus is equal to total revenues minus the recurrent expenses.

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4. Savings that will be raised by the beneficiaries as equity contribution to the land I purchase; 5. Some LGUs propose to sell some land from their land stock and utilize the cash to finance the infrastructure under the MMUSP4; i 6. Alternative financing schemes can be explored by the LGU. The municipal bond market is a potential financial source; and I 7. Other ODA sources. Table 7.7 Available Funds for MMUSP I by Allocating 20% of DF to the Revolving Fund (in PhP million) I Year Taguig Muntinlupa Caloocan 2003 8,673 21.103 45.057 2004 9,974 241269 51 181 5 2005 11,470 27,909 59,587 1 2006 13,190 32,095 68,525 I 2007 15.169 36.909 78.804 Table 7.8 Available for MMUSP 1 by Allocating Portions of DF to the Revolving Fund (in PhP million)

I Year Taguig (40%) Muntinlupa Caloocan (30%) (30%) 2003 17,346 31,655 67,585 I 2004 19,948 36,403 77,723 2005 22,940 41,863 89,381 2006 26,381 48,143 102,788 1 2007 30,338 55,364 1 18,206 1 7.9.4 Sustainability of the Revolving Fund

After MMUSP funds are fully disbursed, the revolving funds will continue to be 1 managed by the board and expanded to the extent possible to surrounding urban poor communities located within the LGU. Through education, training, and the strengthening of community associations under the MMUSP project, longer-term I sustainability will be guaranteed. I 7.9.5 Scaled Up Interventions

1 Taguig LGU proposes to sell a part of its land in Heritage Park for approximately PhP 750 million and invest in the MMUSP. The proceeds from the land sale and the DF allocation will 1 be adequate to finance the infrastructure under the MMUSP Five-Year Plan.

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Learnings from the MMUSP Project will lead to larger interventions in the Philippines. I The MMUSP will provide lessons on urban development programs, specifically in the management and social preparation of families. Success stories can be echoed and I replicated in other urban sector development projects. 7.9.6 Reporting I The PMO will submit a quarterly report on the receipts and disbursements from the Revolving Fund to the Board. The report will include a description of the sources of receipts and disbursement requirements incurred during the reporting period. I Recommended solutions will be identified to address variances in the report (budget vs. actual figures). COA audits will be undertaken at the end of each year. I 7.9.7 NGOlCLT Revolving Fund A separate revolving fund may be maintained by the NGOICLT or CA to supplement I loans being released by MFls and thrift banks. 1 7.10 Stakeholder and Institutional Responsibilities The major stakeholders in this 15-year Strategy are: the national government, local government units (LGU), the community-based organization (CBO), the non- I governmental organizations (NGO) and the private sector. Each of these has roles to play and corresponding responsibilities.

1 7.10.1 National Government

The National Government, specifically the Housing and Urban Development I Coordinating Council (HUDCC) serves as the Project Executing Agency (PEA), along with DBP. In addition, HUDCC would act as the Project Management Office (PMO), I again organized jointly with DBP. The main tasks of the PMO are as follows: Set overall policy directions for slum eradication in Metro Manila; 0 Promote inter-local cooperation and coordinate shelter planning activities of I LGUs; 0 Screen and endorse for approval to the NEDA-ICC all LGU shelter proposals and loan applications; 0 Coordinate activities of all shelter agencies as well as the work of donor I institutions; Provide oversight and technical assistance to LGUs particularly in the area of 1 capacity building; 0 Monitor the implementation of the 15-Year Strategy by being the GIS Center which consolidates LGU level datasets on informal settlers collected through the Informal Settlers Information System (ISIS) and the local Household I Socio-Economic Surveys being recommended by the MMUSP project. This will lead to the development of a metro-wide database that is linked to the I GIs-based urban poor mapping technology; 1 Note: Their role in Project Implementation is shown in Chapter 7.1 1.

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Commission researches and documentation of best practices, and conduct experience sharing sessions among LGUs and CBOs; Disseminate information by the distribution of IEC materials and through the internet by opening and maintaining a web page on the Strategy; and Prepare required reports on the implementation of the strategy for the executive and legislatives branches of government. Act as Secretariat to the Steering Committee. Implement all decisions made by the Steering Committee (i.e. assistance packages). Initiate and manage all contracts of the Project in accordance with guidelines provided by the Steering Committee. Provide technical support to the LGU Project Implementing Units (Plus). Coordinate with concerned financial institutions in connection with project implementation.

7.10.2 The Local Government Unit (LGU)

The Local Government Unit (LGU) will among other roles incorporate the Project lmplementing Unit (flu). As such, it is expected to:

Adopt the holistic approach to shelter which integrates housing with the provision of social services and the generation of livelihood/employment opportunities; Provide adequate internal funds and/or access external funding support for its Local Shelter Plan; Strengthen LGU’s capacity for shelter planning; Create Local Housing Boards for a more effective implementation of socialized housing programs; Provide the private sector with more opportunities to be involved in housing and even in the delivery of social services through partnerships and other joint venture arrangements; Undertake capacity building for its technical staff particularly those in the Urban Poor Affairs Office (UPAO) and the City/Municipal Planning and Development Office (CPDO/MPDO) as well as for CBOs undergoing slum upgrading or resettlement; Provide basic infrastructure in settlements that have been prioritized in the LGU’s shelter plan; and Promote partnerships between informal dwellers and NGOs/private corporations in the areas of livelihood and employment.

Community-Based Organization (CBO)

The community-based organization (CBO) is the beneficiary of the Strategy and as such is expected to:

Extend cooperation and actively participate in the multi-sectoral bodies (e.g., socialized housing committees and the Local Housing Boards) constituted for the socialized housing program .particularly in the assessment of housing needs, infrastructure requirements, deliberations on issues on affordability, estate management and livelihood;

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0 Contribute counterpart funds to housing loans to constitute the equity portion I drawn from the community’s savings mobilization scheme; 0 Provide sweat equity in the site development of the settlements;. 0 Participate in the capacity building initiatives of the LGUs; and I 0 Strengthen the linkages with the NGOs, corporate donors and the private business sector particularly in the aspect of skills and entrepreneurial training, 1 small business development, outsourcing opportunities and job placement. 7.1 0.4 Non-Governmental Organization (NGO) I The Non-Governmental Organization (NGO) will continue to perform various roles - CMP originator, provider of bridge financing, institutional capacity builder, advocate for policy and structural reforms, vital link for networking and building i partnerships, innovator and model builder. In relation to the Strategy, it is anticipated that NGOs will:

0 Be involved in the multi-sectoral committees on socialized housing or in the I Local Housing Boards; 0 Provide technical and financial assistance to CBOs; 0 Take the lead in linking the CBOs with the private sector and other institutions 1 that can assist in their economic upliftment; 0 Continue to assist the CBOs in accessing the housing loan funds under the 1 CMP; and 0 Cooperate with the LGUs in the area of capacity building by sharing their technical know-how and resources.

I 7.10.5 Private Sector

It is expected that in the implementation of the Strategy, the private sector will have I wider involvement in the following way:

0 Design innovative and affordable solutions to housing the urban poor; I 0 Be responsive to potential joint venture arrangements with the LGUs like in the area of social services, e.g. , operation of government hospitals/medical centers, and construction of schools and day care centers; I 0 Provide technical and financial support to CBOs; and 0 Open opportunities for the employment of informal settlers in their I organizations. 7.1 1 Project Implementation

I 7.1 1.I Organizational Setup I Project Implementing Agencies In order to have Project implementing agencies operating as soon as possible, (in the case of the Strategy so that fund raising can begin quickly) it is recommended that a I two stage introduction of implementing measures is undertaken. Thus, if no decision is made on the introduction of DHUD by mid - 2003, are MMUSP Commission I should be established to take on the overall management of the Strategy and Pilot

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I TA 3760 - PHI: Metro Manila Urban Services for the Poor Project I I MMUSP Steering Committee Overall guidance and direction on the implementation of the Project will be the responsibility of the MMUSP Steering Committee. The Committee would have I representatives from, inter alia, HLURB, NHA, HGC, DOF, DPWH and other government departments, agencies, NGOs, Leagues of Cities and Municipalities. Most important, given its high level role, would it be the coordination of actions and I provisions of direct links with those institutions and individuals responsible for implementing policy. The Committee is likely to meet quarterly. 'I Project Executing Agencies As noted in Chapter 7.10, the Project Executing Agencies will be located in the offices of HUDCC (NCR Regional Office) and DBP. HUDCC will have various roles I in the Project components including capacity building, policy making and implementation and institutional development. Since HUDCC has little experience of project management, a technical assistance team is proposed to work with the I Executing Agency and the proposed PMO for a three-year period. I MMUSP Project Management Office Project Management Offices will also be located in HUDCC's NCR offices and DBP. I The work tasks for each PMO will be based on the tasks outlined in Chapter 7.10. 0 Assist LGUs prepare Programs of Action; 0 Supervise the implementation of activities; 1 0 Coordinate with all agencies concerned; 0 Coordinate with all LGUs; and I 0 Provide overall supervision of the project. The PMO would recruit the following expertise as part of a TA Project (see Chapter 11). I I I I I I I

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Table 7.9 I Project Management Office Staff and their Functions

-~~ ~ I PMO Staff Scope of Responsibilities Concerns to be Addressed B Urban +/she shall ensure that the Technical Environmental impact analysis Planning and Norking Group meets regularly and 0 Engineering support Development performs its functions, in accordance Shelter planning I Specialist Nith guidelines issued by the Steering Site planning Committee

0 Community He/she shall supervise all training ~ NGO and CBO concerns, including training, at I Development operations, including the annual the field or project site level Specialist evaluation of the training program as 0 Livelihood development and micro-finance well as the annual meeting of the 0 Social preparation of communities 'trainers forum". Helshe shall be 0 Planning for social service facilities. I responsible for all networking activities with NGOs and CBOs. Finance To handle the identification of technical Financial and economic evaluation of the Specialist resources needed. projects I 0 Financial packaging of projects 0 Private sector participation in socialized housing 0 Piloting Community Land Trusts (CLTs) Coordinating with Micro-finance Institutions and I the Conduit Bank Cost recovery. Local The Local Governance Specialist shall Strengthening the LDC, LHB, UPAO and other Governance serve as liaison between the PMO and organs of the LGU handling urban poor I Specialist the Plus (which is based in the concerns participating local government) and Policy formulation (other than zoning and also with the Offices of the Mayor, the shelter plan preparation) at the local level. Vice Mayor and the Sanggunian Executive Director: The Executive Director shall I member under whose Committee the provide over-all supervision over the Project Project is supervised Management Office. In addition heishe shall: Be directly responsible for the regular meeting I of the Steering Committee and shall maintain close communication with the Head Steering Committee. Ensure that the Agenda for all meetings of the I Steering Committee are in order. 0 Brief all members of the on the status of the Project, during its every meeting. Prepare and submit all reports to the Head I Steering Committee. 0 Ensure that all decisions of the Steering Committee are effectively carried out. 0 Regularly update the heads of concerned I agencies in the region, as well as the Mayors of all Metro Manila LGUs, (whether or not they are participants in the Project), on the Project's status. I 0 Perform other duties that the Steering Committee requests, in relation to the implementation of the Project. Shall handle all administrative matters Handle all requests for bids of offers for I 0 Chief Administrative of the Project, including financial services, in connection with the Project's Officer management of the PMOSfunds implementation. Assist in the evaluation of bids and the selection I of the best offer. I

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The PMO/Consultant team will be assisted by associates who shall be seconded by I the HUDCC/DHUD to the PMO on a full-time basis. The secondment shall be subject to a selection process to ensure that the staff is qualified for the job.

I The long term work program for the PMO is shown in Table 7.10 and the team skills needed is shown in Table 7.11. I PMOS will be divided into three groups; a) Technical Support; b) Resource Mobilization and c) Administrative Assistance, as shown in Figure 7.2. The Technical Group would provide assistance to the LGUs and PlOs, particularly to those dealing I with the development of community involvement, training and micro finance, serve as Secretariat to the Steering Committee and ensure that all decisions of the Committee are implemented. The PMO will be responsible for the monitoring and evaluation of Project activities, including consultants hired by HUDCC and others. The Resource I Management Group will provide technical support, particularly in its resource mobilization tasks and negotiations with resource institutions. The Administration Group will focus on purchasing, contracting, financial management and staff hiring. I The PMO as a whole will assist in the competitive bidding process. Staff for the PMO is likely to be a combination of secondments (e.g. from HUDCC) as well as I consultants. Project Implementing Units I Plus will have a major role in identifying and implementing sub projects at the city level, with or without relevant local plans to act as a focal point for technical, management, finance, community relations and GIS sub sectors. The organizational I structure of the PIU is shown in Figure 7.3 and the Five-year Pilot Project Implementation Schedule is shown in Table 7.12. The Implementation Schedule takes into account the required minimum period to implement each activity, considering that LGUs have other function to fulfill. The I Implementation Schedule actually extends to 3 % years on the average per each pilot LGU. The holistic approach to shelter requires that substantial attention should be given equally to social .preparation, post-implementation activities and technical I assistance. Details of the likely staff needs as well as of charge rates per man month are shown in Table 7.11.

I Plus would be attached to UPAOs wherever possible. At the LGU level, a Project Implementing Unit (PIU) will be formed to manage the implementation of the MMUSP Sub-Projects in compliance to the MMUSP 15-year Strategy. This shall be lodged at I the LGU Urban Poor Affairs Office (UPAO), which is headed by the UPAO Chief. The UPAO Chief will head the Project Implementation Units (PIU) under which are four Divisions, namely, Engineering, Administration and Finance, Community 1 Relations and Training Development, and the Geographic Information System or GIS (Refer to Figure 7.3).

The Engineering Division will employ two Municipal Engineers, one for planning and I design and one for construction. The Community Relations and Training Development Relation will employ one Social Worker/Community Development Specialist and Training Specialist. The Administration and Finance Division will I employ one Administrative Head and one Finance SpecialistlBudget Officer. The GIS Division will have one GIS Specialist, possibly one of the trainee of the MMUSP I

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GIS Training on the Informal Settlers Information System (ISIS). (Refer to Table 7.1 1 I for the description of the functions of each division). Overall, there will be eight people comprising the minimum staff for the PIU.

I The proposed personnel of the PIU for the MMUSP Sub-projects can be regular employees of the LGU-UPAO or hired directly on a project-basis. As such, this will form part of the counterpart contribution of the LGU in the implementation of the I MMUSP Pilot Projects (Refer to right-most column of Table 7.11 showing estimated personnel cost per man-month). I Local Government Units The LGUs will support the main project implementing agencies. They will be principally responsible for 1) undertaking shelter sector related functions including 1 beneficiary registration, census tagging, surveys, and others; 2) providing the on-site and off-site development and servicing requirements; and 3) obtaining the funds 1 necessary for the timely implementation of the project. The LGUs will serve as the over-all coordinator of all project-related activities. Their functions will include (a) providing assistance to other agencies and committees; and i (b) coordinating with public utilities, private contractors, thrift banks, micro finance institutions, NGOs, POs and others which might be implementing the different sub- I project components. Non-Government Organizations and Peoples’ Organizations I Involvement of the NGOs and POs is critical. They will help in the social preparation of the beneficiaries and ensure that their applications are processed properly. Intensive consultations with the peoples’ organizations in the communities and non- u government organizations (NGOs) will be conducted to cover all the support services required to guarantee success of the project.

In coordination with LGUs, NGOs will also assist in the socio-economic surveys of I the sub-project communities. They can also provide community organizing services and trainings to beneficiaries prior to and during resettlement. These NGOs can also I be tapped by thrift banks and MFls to assist in the collection of housing loans. POs may also establish schemes such as community savings to provide counterpart funds for the purchase of a lot and for the provision of other community infrastructure 1 and utilities. I I I I

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Table 7.11 MMUSP Project Implementing Unit (LGU-UPAO)

I Counterpart Cost’ Section Staff Complement j Function Equivalent

Overall Coordination UPAO Chief (1) Coordinate with the MMUSP-PMO and TWG, LCE, SBlSPlLDC progress of all proposed and P20,823 x man-months on-going project activities Coordinate with appropriate national agencies housing projects, and primary offsite infrastructure proposed under MMUSP Advocate for local legislation benefiting the social housing sector and the MMUSP project Advocate for streamlining LGU operational systems and procedures to make services more focused on poverty alleviation and for services to becbme more accessible to the poor Review and coordinate MMUSP projects with the local development plans of the LGU Assure that the approved project packages ate implemented according to plans Monitor all project activities and check compliance with MMUSP overall strategy Ensure that funds Committed by the LGU are provided for I Mobilize and coordinate team in the preparation of bids and proposals Engineering Municipal Engineer (11 for I Coordinate with concerned national agencies requirements on licenses, permits, and P19,251 x man-months Planning and-Design ’ clearances related to the social housing projects Coordinate with the LGU Planning Office all housing and infrastructure plans to be proposed Prepare technical plans and conduct pre-englneering SeWiCeS for the officeheam Coordinate with PMO consultantslspecialists matters that would require technical assistance on planning and design With the team, assist in the preparation of bids and proposals Municipal Engineer (1) for Coordinate with DPWH major offsite and primary infrastructure projects under the MMUSP P19,251x man-months Construction project and other LGU related infrastructure plans Coordinate with the LGU Engineering Office all housing and infrastructure projects to be implemented including maintenance requirements Coordinate with PMO consultants/specialistsmatters that would require technical assistance on construction and operations Oversee construction activities and field operation during implementation of social housing projects With the team, assist in the preparation of bids and proposals

- ’ Effective Year 2001, P20,823 shall apply to Step 1 Grade24 employees, while P19,251 shall apply to Grade22 employees; 20 percent premium over basic pay shall not apply in accordance with Sec. 2.1.1 of CSC-DBM Joint Circular No. 99-7, dated December 29, 1999. Applicable o casua! and contractual personnel including those seconded to Foreign-Assisted Projects (FAPs) whose salaries are paid out of lump-sum appropriations or project funds. Higher steps within a grade may apply.

Final Report Volume 1 155 PART 2: THE PROPOSED STRATEGY Table 7.1 I (cont'd) MMUSP Project Implementing Unit

' Counterpart Cost' I Ea u ivalent ~~ ~.. Community Relations Social Worker/Community Update and classify master list of urban poor beneficiaries on a regular basis P19.251 x man-months and Training Development Specialist (1) Establish market linkages for products and services provided by the urban poor communities Development Institutionalize stakeholder consultations and people participation in MMUSP activities Institutionalize representation of urban poor groups in LGU and barangay assemblies and in decision-making bodies Conduct training needs assessment in urban poor communities Identify and pursue technical assistance for urban poor communities With the team, assist in the preparation of bids and proposals Training Specialist (1) Initiate technical assistance on shelter planning particularly infrastructure provision to P19,251 x man-months POdNGOs Spearhead and coordinate training and other capacity building activities with PMO and LGU including resources and technical assistance Establish human resource facility and trainers' pool attuned to the training needs of urban poor clientele With the team, assist in the preparation of bids and proposals Administration and Administrative Head (1) P19,251 x man-months Finance Finance SpecialistlBudget Coordinate budgetary requirements of projects with LGU and PMO for new housing or house P19,251 x man-months Officer (1) upgrading Coordinate with conduit banks and MFls matters concerning financing for eligible borrowers for new house construction, house upgrading or micro-enterprise Together with the engineering personnel prepare the funds requirement for land acquisition and interim financing should the LGU be tapped as fund source Advocate for revenue generating and budget maximization schemes in MMUSP activities Advocate for transparency in the budget utilization process With the team, assist in the preparation of bids and proposals GIS GIS Specialist (1) Establish and maintain a reliable GIS system in the PIU both for hardware and software P19,251 x man-months Act as overseer of the lSlS and promote its use to other LGU departments Develop other vector and raster data needed to effectively plan for shelter and services for the urban poor Prepare budget for improvement or expansion of system Coordinate with PMO any technical assistance requirements With the team, provide map-based information for the preparation of bids and proposals Coordinate with other LGUs and National Agencies matters regarding info and data-sharing

Effective Year 2001, P20,823 shall apply to Step 1 Grade24 employees, while P19,251 shall apply to Grade22 employees; 20 percent premium over basic pay shall not apply in accordance with Sec. 2.1.1 of CSC-DBM Joint Circular No. 99-7, dated December 29, 1999. Applicable o casual and contractual personnel including those seconded to Foreign-Assisted Projects (FAPs) whose salaries are paid out of lump-sum appropriations or project funds. Higher steps within a grade may apply.

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7.1 1.2 Financial Arrangements

Development Bank of the Philippines (DBP)

Development Bank of the Philippines (DBP) will borrow from the official co-financiers, with the Government of the Philippines providing the foreign exchange risk guarantee. DBP will in turn provide wholesale loans to: 1) LGUs to finance the site development and other infrastructure costs; and 2) qualified thrift banks or micro finance institutions to on-lend to beneficiaries for land acquisition or housing construction or land and house purchase and for micro-enterprise activities.

DBP will create a group that will be responsible for the MMUSP funds. The group will administer the housing loans approved in favor of the LGUs and the thrift banks of MFls. It will ensure timely release of funds, supervise the credit requirements of both the LGUs and the banks/MFls, and adopt necessary policy measures for the expedient repayment of the loans.

Micro Finance Institutions and Thrift Banks

MMUSP Funds will flow from DBP to MFls or thrift banks. MFIs and thrift banks will borrow from DBP to on-lend to the beneficiaries. These beneficiaries are those endorsed by the LGUs and given clearance as to compliance with the guidelines set by the LGU or the community organization. The banks and MFls will screen the loan applicants; assess their credit-worthiness and award loans to those who make their criteria. They will make certain that the loan proceeds will be remitted to the LGU for payment of serviced plots, and to the private sector developer for payment of the housing units. Loan proceeds intended to upgrade existing units will be given direct to the beneficiaries.

The banks and MFls will collect payments from the borrowers and make appropriate measures to avoid default. Related support programs such as community information and education campaign, training, exchanges, and the strengthening of community structures will be implemented by MFls and thrift banks to ensure long term sustainability. If needed, assistance and expertise from the GOP and other NGOs will be tapped.

Home Guarantee Corporation

The Home Guarantee Corporation will guaranty the payment of the beneficiaries to the MFls and thrift banks, in case of default. It will accredit the MFls and thrift banks to make sure that these institutions have effective and efficient credit guidelines and procedures.

HGC will cover socialized housing loans intended for acquisition of lot or existing house and lot; and repair and improvement or expansion of an existing dwelling unit up to 100 percent of appraised value at a cost of not less than one-half of one percent of outstanding principal obligation.

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7.12.3 Benefits to Participating LGUs: Components of the Resource Assistance Package

For the interested LGU, participating in the Strategy’s implementation means access to:

a loan package customized to finance the implementation of an LGU’s Local Shelter Plan and Socialized Housing Program; technical assistance packagels, designed to strengthen the capacity of an LGU to meet the technical, management and institutional needs associated with the implementation of the aforementioned program; financial advisory services, to ensure that the decision to opt for a particular financing mode is backed by the proper mix of pragmatic and expert analysis; and networking services. The latter will be useful for LGU project components (see discussion below) that may not qualify for MMUSP Fund financing but are worth presenting to other interested grant or loan institutions. Networking support also applies to linking the LGUs to specific institutions that carry out training, cross- visits and technical exchanges on matters that are not within the ambit of MMUSP’s design.

The mix of technical assistance and advisory services that may be offered to an LGU may vary depending upon its specific needs, as defined by the program of action which it submits for consideration by the PMU, and level of staff and management expertise.

Step 7: Relevance to the LGUs

The Strategy provides more than sixty activity-clusters that the LGU may want to review as a guide to deciding on the relevance of the Strategy to its own program of action (see Chapter 5.9). Each activity-cluster addresses a specific strategic issue or concern that may be familiar to the LGU officials. Understandably, the urgency of these concerns vary among Metro Manila LGUs. Many concerns are already being addressed; many others however, still need to be addressed in a systematic manner. In its early stages, the Project Management Unit (PMU) will organize events to explain the Strategy before local officials.

Step 2: Determining the Magnitude of the Problem

A critical task in determining the magnitude of the problem is to assess the LGU’s availability of vacant land. Here it can be greatly assisted by the availability of GIS mapping of land within its boundaries (see Figure 7.5).

Also, the determination of the magnitude of the problem would be easier if the LGU had a Shelter Plan following the MMUSP Proposed Guidelines for the Formulation of . Local Shelter Plan (see Appendix P), or at the very least, a comprehensive profile of its urban poor, particularly its informal-settler communities. Based on that profile, the growth of those communities needs to be calculated. Those projections will then allow the LGU to estimate the land, social services, infrastructure and institutional or

Final Report 0 Volume 1 165 PART 2: THE PROPOSED STRATEGY apping Informal Settlers r Metro Manila rhis map was produced by CPDOhlPDOIUPAO or variants from UPAO) officers from Metrro Manila. ing local knowledge and official records areas were mapped ing thematic maps of Metro Manila. This preliminary map It undergo continuous revision to reflect the trrue nature 1I informal settlers and vacant land in the city. As part of he lSlS envisaged. the city level information like this to a Metro Manila Informal

Informal semers Global Chy- Cantested Area by Makati and T'douio

urce: CPDOIMPDOIUPAO Metro Manila LGUs (2002). te to users: this map is subject to updates and revisions.

I Figure 7.0 Informal Settlers Map Matrro Manila I 0 1 Kilometers

1 inmrmai settler mformation systems

Office of the Presldent Housing and Urban Development Coordinating Council Asian Development Bank Planning and Development Collaborativelnternatlonal Inc. Maunsell Phlllpplnes Inc. METRO MANILA URBAN SERVICES FOR THE POOR PROJECT (TA 3780 PHIL) - - Phlllpplne BuslneSs for Social Pqress TA 3760 - PHI: Metro Manila Urban Services for the Poor Project

organizational requirements of its programs. In addition, it will need to establish the economic development packages (livelihood generation, skills development, enterprise promotion and others) suited to those communities. An assessment of the LGU’s current initiatives will be an important input to the process. Should the LGU desire, PMU-based specialists may be called upon to help in the assessment process. To avail itself of such assistance, a formal letter-request from the local chief executive will be necessary.

The land issue will be accorded some emphasis. In its appraisal of the current situation, the LGU determines whether or not there is enough land for its urban poor shelter program. To do so, they inevitably have to consider various options available: land readjustment, land sharing, land banking, CMP, direct purchase, expropriation and others.

Step 3: Financial Requirements

The physical and technical requirements, once determined, are then accounted and organized into components. This will allow the LGU’s finance team to identify appropriate financing packages for each component (or sub-component, as the case may be), based on the “least-cost” principle. Thus some components may lend themselves better to private sector participation, others to bond financing and yet others to pure private sector venture. NGOs may be allowed to look at components that they may be interested in. Finally, it will allow both the LGU and the MMUSP finance teams to focus on those components that can best be financed through the MMUSP Fund. To do all these, expert financial advice may be needed, especially when preparing for presentations on alternative financing schemes (corresponding to each component) before the local chief executive or the Sanggunian. The Project needs to be ready to provide some financial advisory assistance.

Step 4: The Request for Assistance

A request for assistance would contain:

A formal Letter from the Chief Executive expressing the LGU’s willingness to participate in the implementation of the Strategy and thereby, seeking assistance from the MMUSP; 0 Sanggunian Resolution endorsing the expression of interest and request for assistance; .. If a loan assistance is to be sought, a copy of the Sanggunian Ordinance authorizing the loan, and stating the purpose for which it is being sought; and A detailed Program of Action for Strategy Implementation, based on the results of the financial and technical assessment.

Step 5: Accessing the MMUSP Fund

Because the Fund will be limited, not all Metro Manila LGUs may have access to it. A competitive system shall be applied when evaluating applications to the Fund (and its attached components of technical and advisory assistance services). Requests for two types of assistance are anticipated:

Requests that include an application for loan and technical assistance; and

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0 Requests that include an application for loan assistance only.

Requests of the first type will be evaluated on the basis of two sets of factors. These are: (a) factors indicative of an LGU’s sincere intentions to carry out the Strategy and (b) factors that demonstrate the financial viability of both the LGU and the proposed package of projects. The former shall focus on indicators that measure an LGUs:

0 commitment to improving the plight of the urban poor; commitment to mobilizing financial resources for the purpose; and 0 commitment to transparency and accountability in the allocation and use of public resources.

The viability factors on the other hand shall focus on the following:

LGU borrowing capacity; agreement to an IRA intercept; growth of non-IRA revenues; and cost recovery schemes in place.

Requests of the second type shall focus on:

0 commitment to improving the plight of the urban poor; 0 commitment to mobilizing financial resources for the purpose; 0 commitment to transparency and accountability in the allocation and use of public resources; and cost recovery schemes in place.

Invitations to apply for assistance under the MMUSP will be issued every six months over the first three years of the Project period. The applications shall be evaluated by batch. The period between each call for application shall be used to assist interested LGUs prepare for their respective applications. LGUs not successful in competing for a round of funds will be offered technical assistance to help them prepare a better application at a future date.

Once approved, an application for a loan is indorsed to the conduit bank for processing and detailed credit evaluation. The technical assistance component of the approved application on the other hand, shall be subject of a detailed Technical Assistance Delivery Program (TADP) which will be prepared jointly by the PMO representatives and the LGU staff. The TADP shall identify the resource requirements of the technical assistance package as well as the implementation schedules and cost schedules.

7.12.4 Projects Eligible for Financing

The Fund may be used to finance project packages determined by the PIU with guidance from the PMO, to be directly supportive of the Strategy. A project package refers to a combination of complementary activities or projects designed to achieve a single objective. The evaluation process will include the determination that the project package is indeed supportive of the Strategy. These include the construction of infrastructure and social services facilities to be located in urban poor upgrading project sites, initial capital for micro-lending or micro-enterprise initiatives, complementary

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projects of micro-finance Institutions and thrift banks and others that may be identified by the PIU.

7.12.5 Participation of Non-Metro Manila LGUs

Metro Manila LGUs may, as part of their shelter plans enter into agreements with non- Metro Manila LGUs to jointly implement relocation projects. Under these arrangements, participating Metro Manila LGUs may include among its packages for possible funding, relocation projects outside of Metro Manila.

7.12.6 Focus of LGU Initiatives

The local government units of Metro Manila (LGU) are expected to continue focusing on slum eradication in privately owned lots. Notwithstanding the creation of the Department of Housing and Urban Development (DHUD), the National Housing Authority (NHA) will continue coordinating with LGUs for similar efforts involving government-owned property. LGUs are also expected to coordinate with key national government agencies on the relocation of informal settlers, especially those occupying danger zones and properties designated for government projects.

7.12.7 Inter-LGU Coordination

Inter-LGU coordination concerning the management of informal settler populations is expected to intensify. Table 7.13 below shows'examples of inter-LGU concerns in Metro Manila. Table 7.13 Inter-LGU Coordination in Urban Poor Housing

Concerned LGUs Subiect ~ ~~~~~ San Juan-Taytay (Rizal) Re-configure the Taytay relocation site and possible increase of families to be relocated to the site. How Taytay can benefit from the arrangement. Muntinlupa-Other LGUs through Planning of part of the former Bilibid Prison into a which the Philippine National relocation site for informal settlers currently Railways (PNR) track passes. occupying PNR property. How Muntinlupa can gain from the relocation. t 1 Malabon-Navotas Planning and development of 12-hectare property located in Navotas, purchased by the City of Malabon, for its future relocation projects. Caloocan City- Other LGUs with Planning of the North Caloocan sector which has , large populations of informal large tracts of national government properties

~ settlers occupying national used for relocating informal settlers from other government properties or Metro Manila LGUs. How can Caloocan City gain danger zones. (Manila, Malabon, from relocation projects of the NHA. Navotas).

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I 7.12.8 Current LGU Initiatives and the 15-Year Strategy The LGUs have been implementing programs and projects for the urban poor over the last five to seven years and the Strategy must take these into consideration as it I identifies new ones. Many, if not all LGU programs, complement the Strategy and blend neatly into most of the activities programmed under it. Table 7.14 lists on- going and planned LGU initiatives that need to be incorporated into the Strategy. I The list is based on an assessment of Metro Manila’s LGU initiatives in urban poor housing and community development. i The second column shows the extent of informal settlements in the LGU and may serve as a guide for locating priority activities and programs under the Strategy. The third column shows the scarcity of land available for slum upgrading purposes. It is possible that in all but three of the LGUs in Metro Manila, the LGUs will have reached I their capacity to accommodate new informal settler families even during the first few years of the Strategy period. The negative values refer to the approximated land area needed to meet the requirements of the urban poor. The estimates are taken I from the following section.

As noted earlier, in some cases, it may be feasible for an LGU such as Quezon City € with a deficit of 526 hectares to come to an arrangement with a neighboring “supplier” LGU such as Taguig (282 hectares) whereby households in danger zones relocate to Taguig. In this scenario, a question arising is how much should the deficit I LGU pay the surplus LGU for resettlement cost. i a I I I a I 1 1

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Table 7.14 Initial ProgramlProject Focus of Strategy at LGU Level Based on On-going Initiatives

~ ~ Land Magnitude Remaining LGU after 15- Initial ProgramlProject Focus of Strategy at LGU Level (Settlers) year Plan (hectares) ;aloocan City 306,177 427 Site planning and resource mobilization for the North Caloocan Area. Organizational and technical strengthening of UPAO and CPDO in site planning and management. Training in customized engineering designs for the local engineering and city planning and development offices. Start with water utilities, sewerage systems and roads. In coordination with NHA, try to organize CLT formations for selected sites. -as Pinas 80,000 -194 Technical strengthening of UPAO, CPDO and Engineering Offices in site planning and development. Design and implement land readjustment projects. Makati 52,505 -25 Take the lead in getting the large business organizations to contribute to the slum-upgrading program. Malabon 105,045 -39 Site planning and resource mobilization for 12-hectare (former-fishpond) property purchased by the city. Joint planning with NHA for relocation of informal settlers of North Bay ROW. Design and implement land readjustment projects. Mandaluyong 92,440 -1 76 Site planning and resource mobilization for 24 -hectare site designated for socialized housing. Extensive advocacy work to break the impasse on the disposition of the Welfareville property. UPAO strengthening, to cope with the magnitude of the Welfareville project. Design and implement land readjustment projects. Manila 679,170 -86 Manila has some large concentrations of informal settlers occupying danger areas or zones (railroad tracks) and government project sites. It must intensively coordinate with NHA to clear these sites. Strengthen USO, focus on management of urban poor issues. Introduce CMP. Effective link-up with NHA to push needed projects for informal settlements in government-owned lands. Design and implementation of land readjustment projects. Mariki na 124,470 -1 33 Complete its slum upgrading programs. Evaluate the City’s experience in slum upgrading and management of informal settlers’, draw lessons from it and share these with other Metro Manila LGUs. Muntinlupa 103,559 -1 96 Site planning and resource mobilization for 50 -hectare site for socialized housing. Design of mechanisms for effective LGU-NGA coordination. Strengthening UPAO and engineering offices, on estate management, land readjustment and design of infrastructure facilities for urban poor areas. Design and implementation of land readjustment projects.

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Table 7.14 (Cont’d) Initial ProgramlProject Focus of Strategy at LGU Level Based on On-going Initiatives

1 Land Remaining LGU Initial ProgramlProject Focus of Strategy at LGU Level (Settlers)

Navotas 0 Site planning and resource mobilization for 8 -hectare site purchased for mixed socialized-low cost housing. 0 Effective link-up with NHA to push needed projects for informal settlements in government-owned lands. 0 Design and implementation of land readjustment projects. Paranaque 84,000 0 Site planning for lands purchased and expropriated. 0 Design and implementation of land readjustment projects. 0 Design management plan for its properties and ways of leveraging these for urban poor projects, e.g. land swaps. Pasay 80,000 0 Preparation of Comprehensive City Housing Program. 0 Strengthening CPDO and UPAO for plan implementation. Resource mobilization for plan implementation. Pasig 57,780 -27 0 Organizational strengthening of UPAO offices. 0 Management of financial and land resources already available to the City for its urban poor housing programs. Pateros 33,608 Design ways to help finance its Direct Negotiation Program (DNP) to hasten the transfer of land to informal settlerslurban 3poor. Quezon City Comprehensive housing plan for the urban poor. Focus on both financial, institutional and physical (housing, infrastructure, social services) aspects of housing for the urban poor. Establish a coordinating body to guide the efforts of the various housing committees, units, projects, programs, etC. in Quezon City, dealing with national government land. Strengthen its CPDC housing division and UPAO. Desion and imolement land readiustment Droiects. San Juan 32,362 0 Second Master Planning for the existing Taytay relocation site, to accommodate new relocatees. Taguig 51,411 Business plan for its land resources, to leverage for more resources for urban poor housing and site development. 8 Strengthening of the Local Housing Office to cope with its coordinative work. Valenzuela Strengthen UPAO to effectively manage its “Bridge Financing Project” which is aimed at encouraging private owners to transfer land to informal settlers. 0 Business plan for its land resources (generated through land banking), to leverage for more resources for urban poor housing and site development. 0 Site planning for lands acquired from private owners, for in-city relocation.

7.12.9 Capacity to Meet Future Housing Needs

Table 7.15 presents an estimate of the 15-year Strategy’s requirements. In all, about 2,000 hectares of land will be needed to accommodate resettlers, new households and to reduce densification of some current occupied lands.

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Table 7.15 1 15-Year Strategy Requirements Metro Manila I (July, 2002) I

Caloocan City 272 33,979 20,884 16,672 71,535 I Las Pinas 252 31,500 9,524 7,604 48,628 Makati 28 3,448 1,505 1,202 6,155 Malabon 61 7,659 3,706 2,959 14,324 I Mandaluyong 24 3,004 11,113 8,872 22,989 Manila 89 11,120 13,398 10,696 35,214 Marikina 93 11,646 12,838 10,249 34,733 I Muntinlupa 253 31,564 14,938 11,925 58,427 Navotas 170 21,006 21,006 Paranaque 120 14,978 8,967 7,159 31,104 1 Pasay 41 5,121 14,084 11,243 30,448 Pasig 73 9,083 1,484 1,185 11,752 Pateros 7 906 1,230 982 3,118 I Quezon City 232 28,943 64,823 51,750 14551 6 San Juan 6,383 5,096 9,944 Taguig 141 17,619 6,425 5,129 29,173 I Valenzuela 123 15,435 3,591 2,866 21,892 1 Total 1,979 247,011 194,893 155.589 595,958

Table 7.16 presents an estimate of land that may be generated from (a) maximizing I land use, (b) acquisition of vacant private land and (c) release of public land for urban poor housing. Metro Manila wide, a deficit is indicated, meaning, the land occupied by informal settlers is already congested. However, on an LGU-to-LGU basis, some I appear to have more space than others. Valenzuela, Taguig and Caloocan, in particular can still generate lots from among the lands occupied by informal settlers. A rapid assessment made shows that there are about 2,300 hectares of vacant land I in Metro Manila, some of which may be open for socialized housing. Land use maximization is in fact being done by LGUs through re-blocking and re-adjustment. I Some have been successful enough to even "generate lots". I I

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Table 7.16 1 Estimate of Land Available for the Urban Poor Metro Manila Local Governments I As of April, 2000 I

1 Caloocan City 31 1,980 79,927 1,703 966 240 Las Pinas 129,115 34,944 80 -98 313 Makati 22,520 26,675 51 -5 16 1 Malabon 61,188 37,004 172 31 8 Mandaluyong 167,419 15,085 46 -167 31 Manila 21 5,305 157,734 475 5- I Manki na 171,071 9,108 116 -104 128 Muntinlupa 165,259 17,984 123 -96 306 Navotas 155,285 181 I Paranaque 111,982 33,668 72 -85 112 Pasay 154,922 20,601 35 -163 - Pasig 27,306 57,404 74 -10 113 I Pateros 15,648 5,609 36 7 0.39 Quezon City 1,081,127 39,060 995 -391 195 San Juan 129,327 11,372 2 -160 - I Taguig 44,825 10,033 150 67 753 Valenzuela 34,154 38,050 407 150 86 1 Total 2,843,149 749,541 4,718 -54 2,301 Notes: I Number of informal settlers refer to population. Land area all in hectares. A comparison of the 15-year Strategy’s Land requirements against an estimate of available land is presented in Table 7.17. The comparison shows that fourteen of the I seventeen Metro Manila LGUs will need to find relocation sites for their informal settlers. On the whole, Metro Manila will run out of land by the last phases of the Strategy. This is based on the assumption that 60 percent of the land generated from land use maximization and 50 percent of available vacant land will be used to a provide housing space for the informal settlers. I I I

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Table 7.17 Comparison of Land Availability vs Land Requirement By LGU, Metro Manila (As of July, 2002)

Caloocan City 272 699 427 Las Pinas 252 58 -1 94 Makati 28 3 -25 Malabon 61 22 -39 Mandaluyong 24 -1 52 -1 76 Manila 89 3 -86 Marikina 93 -40 -1 33 Muntinlupa 253 57 -1 96 Navotas 170 - -1 70 Paranaque 120 -29 -149 Pasay 41 -163 -204 Pasig 73 46 -27 Pateros 7 4 -3 Quezon City 232 -294 -526 San Juan - -1 60 -160 Taguig 141 416 275 Valenzuela 123 133 10 Total 1,979 607 -1,372 Assumed percent of generated lots that will be made available: 60.00% Assumed percent of vacant land that will be made available: 50.00%

7.12.10 Recommended Areas for LGU Action

LGU action on the concerns of the urban poor, particularly the informal settlers, although commendable appears to be inadequate against the Strategy’s requirement. Nevertheless, the creativity (and diversity) with which they have addressed the issues, and the experience are the strong bases for saying that Metro Manila LGUs are, on the whole, in a position to carry out the Strategy. Individually however, there appears to be unevenness in the capacities of Metro Manila LGUs to carry out urban upgrading programs on an extensive and sustained basis. Table 7.18 below summarizes the estimate of the different levels of preparedness of the 17 LGUs.

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7.12.1 1 Possible LGU Activities Under A No-Project Assumption

What happens if a “Strategy Implementation Project” does not materialize‘*? What kind of scenarios would one expect? Af worst, the LGUs (outside of the three project sites) continue what they have been doing (refer to Chapter 7.7 discussing current LGU initiatives in Metro Manila). At best they attempt to implement the Strategy on their own. The Pilot LGUs are likely to implement the Strategy on their own, riding on the successes of their. respective experiences.

This section summarizes what may be done to support the LGUs in bofh the worsf and besf scenarios but without a “Project” to support the Strategy’s implementation. Two assumptions stay: (a) that HUDCC is the “lead agency” for the Strategy and (b) the Pilot projects are implemented.

7.12.12 Supporting LGUs Under a Worst Case Scenario

The best that HUDCC can do is to shepherd independent LGU initiatives into the framework provided by the Strategy. The following activities may achieve that objective:

Extensive coordinative work through sharing sessions. The rich experience of LGUs in the provision of socialized housing can serve as basis for further planning. These events could be used as venues for sharing the outcomes of the pilot projects; Developing capacity-building modules in partnership with such institutions as the Local Government Academy (LGA), the Development Academy of the Philippines (DAP) and perhaps some private institutions that deal with governance issues; Encouraging local and foreign institutions to finance LGU training programs on a counter-parting basis; Advocating for the adoption of new methods of delivering services to the urban poor, including socialized housing and the development of livelihood opportunities in their communities; Introducing new financing schemes (e.g. MFI take-outs), or building on experience (e.g. direct conditional purchases). This may be done through participatory assessments, with the aim of broadening the range of options available to LGU staffs; Encouraging private owners to voluntarily offer occupied lots for sale to their occupants through CMP, direct purchase or other forms of conveyance under fair terms; and Encouraging inter-LGU initiatives for such purposes as relocation projects, especially for IS living in danger zones or areas and infrastructure development involving adjoining sites.

12 Among some development workers, this may be a case where the Strategy or the Plan implementation is “not Projectized”,which is preferred over the “Project” approach. The latter makes it difficult for the affected LGU, or for that matter the national government agency, to adjust after financial support is withdrawn. The “non-Projectized” activity blends with the assisted agency’s own tasks.

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7.12.13 Supporting LGUs Under Best Case Scenario

Pilot LGUs

By the end of the Project, the Pilot LGUs shall have established their organizational capacity to plan and manage its own site development projects. They shall also have established “revolving funds” which it can use for the new sites. A cascade of activities could consist of the following: Identifying communities with concentrations of urban poor and informal settlers; Holding community planning exercises for sites with concentrations of urban poor and informal settlers; . Prioritizing urban poor sites for community development or urban upgrading work; Conducting community assessment and profiling in preparation for site planning; Drafting site plans for the next communities to be upgraded; Conducting capacity building exercises for NGOs, CBOs and staff to be involved in the community upgrading project; Evaluating the community upgrading plan, to determine its financial resource requirements; Working for the Sanggunian approval of the Plan and budget (from the “revolving fund”); and Release of funds and implementation of the next site upgrading project.

Non-Pilot LGUs

It may take some time before the other LGUs catch up with the pilot sites. Table 7.19 below shows a probable trajectory for this category of LGUs.

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Table 7.19 a Possible Activities of Non-Pilot LGUs I a I I 1 I I I I 1 Negotiation with landowner Shelter component I Land readjustment and development s Completing the transaction"

I l3To access funds for community assessment activity, relocation of families living along danger areas, etc. and technical assistance for site planning l4To discuss concerns of urban poor and informal settlers, in the hope of generating support I from the well-off barangays. The events should serve as forums for showcasing the pilot fzoject sites. Those concerned with IS and urban poor concerns, to generate support for the program. Again, these events should serve as opportunities for showcasing the pilot project sites. 1 '' Priority given to barangays with concentrations of IS and urban poor. This should ensure that barangay resources are channeled to address the concerns of the urban poor. l7This document consolidates all community assessment activities undertaken so far. '*May be done incrementally I Examples are: assisting the community organizations complete its CMP requirements, completing purchase agreements between a community organization and the landowner I under a direct purchase agreement.

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I 7.13 Legal Agenda Recommendations from various sectors were generated by the discussion and consensus in the consultation workshops conducted by the Project. The following lists I the concerns necessary to be included in the legal agenda to be submitted for further detailed study and possibly, adoption and implementation by the concerned agencies2'.

I 7.13.1 Provision of Stronger and More Detailed Legal Basis for Other Land Development Schemes I As early as 1978, land development schemes such as land re-adjustment, together with various land acquisition and disposition strategies for land development purposes had already been authorized by Presidential Decree 1517, the Urban Land Reform Act. I Decades earlier, many of these strategies have been in practice, although they may have been referred to by names different from those they are now legally or technically known. For instance, donation and land exchange among government agencies to suit their respective needs for development have been practiced by the concerned I agencies. Land banking or even land assembly have also been already undertaken, although not referred to by their present nomenclatures nor in the more deliberate and I systematic manner they are now proposed to be undertaken. Fourteen years after President Marcos adopted by Decree the Urban Land Reform Program, the UDHA was enacted in 1992. It incorporated the land development i schemes recognized in the earlier law, and consolidated other Box 6 existing schemes. For instance, Land Development Schemes: 1 the modes of acquiring lands for socialized housing now include Areas Needing Additional Legal the following, namely: donation, Authorization 1 land swapping, community 1. Improvement of existing implementation mortgage, land assembly, land procedure of the land development schemes, which banking, joint venture agreement, have proven to be unworkable or found fraught with legal and administrative difficulties; 1 negotiated . purchase, expropriation, transfer to the 2. To enact the remedial legislation, there is need to National Housing Authority or review the actual experience in land developmeni NHA, and Presidential schemes as practiced by their pmtitnplementers, I Proclamation. Some of these, in namely the various line departments of government (more particularly, the Department of Environment and fact, are approaches to land Natural Resources, the Department of Agrarian Reform, development, such as community and the National Housing Authority and the Metropolitan I mortgage and joint venture. Manila Development Authority whose predecessor undertook a pilot Land Readjustment Project in Quezon Box 6 lists areas that will need City); and LGUs which have applied these schemes in their development projects; and I some form of additional legal authorization. For as long these 3. The adoption of a mix of these development will not involve deviation from or schemes, to respond to the unique conditions of specific I violation of existing laws, there are sites and particular needs of the national or local no anticipated serious legal government units. 1 problems in providing the legal *' Appendix 0 details the review conducted for Legal Framework, including proposed legal I agenda.

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authority for their application. Activities are now ongoing to explore improvements in the I scheme and/or in their implementation, which could be effected through mere executive issuances.

I 7.13.2 Legal Issues Generated by Land Allocation and Disposition in Areas Covered by Presidential Proclamation

I A number of issues (some of which are not strictly legal but administrative and technical in nature) have arisen in the course of implementing Presidential Proclamations allocating public lands for socialized housing. Having identified these problems (many I are common and recurring) in the course of the preparation of the implementation scheme for the three proposed project sites has been a first useful step toward ensuring I that these loopholes are plugged and their deficiencies rectified. The weaknessedgaps identifiedpoint to the following needs:

0 Reconcile the areas described in the Proclamation, (usually referred to only by I the names of their areas and their size) in relation to the actual project site for housing the intended beneficiaries. The difficulties arise from the following circumstances, among others: lack of actual cadastral survey of the proclaimed I area thus requiring additional steps to be undertaken before the Proclamation could be implemented; unauthorized expansion of the area originally intended to benefit their bona fide occupants, where the premature leakage of information I about the Proclamation has caused an "invasion" of the area by new settlers. Most, if not all of these settlers are generally either unqualified or disqualified I from being beneficiaries of socialized housing. 0 Explicitly identify the agency or body to be made responsible for implementing the Proclamation to avoid possible conflicts of authority with existing agencies, I which may have already been vested with responsibility over the area, or have actually been exercising the functions being vested in the new organization or I task force. 0 Pinpoint the financial responsibility and funding sources for carrying out the Proclamation. This requires determining the total cost of the land to be acquired; firming up the basis for the proposed assessment of the land; and determining I the recipient of the payment and the agency to be responsible for making the payment.

i Reconcile the qualifications of the occupants in the area declared-by the Proclamation as the intended beneficiaries, vis-a-vis those legally authorized to benefit from the land to ensure that they are consistent with existing legislation I and other laws.

0 Formulate other legal and financial instruments for implementing the I Proclamation such as regulations detailing the substantive and procedural requirements for carrying out the Proclamation. Memoranda of Agreement with I the associations of beneficiaries may also be necessary. I

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7.13.3 Legal Issues in Land Titling and Land Registration

Land titling is a crucial activity in land development and housing which, unfortunately, is riddled with problems, legal and non-legal. These range from the inadequate coverage of the land registration system where, huge areas of the country remain outside of the Torrens title system; lack of or inadequate documentation of land transactions; unregistered transactions; cumbersome process involved in land titling; lack of or inadequate upgrading of administrative and technical capabilities of the implementers; the various violations that the system has inadvertently allowed such as overlapping titles arising from land grabbing or land usurpation that have eroded the Torrens title system.

A reliable land titling system which clearly identifies the title holder or land owner, and registers all transactions affecting the property, (including encumbrances thereon) will expedite the land development activities and go a long way in ensuring the implementation of the country's housing and urban development program.

There is a need to zero in on observed legal problems in land titling attendant to the provision of land and housing sen/ices. Legal documentation will vary depending on the land tenure involved, of which there is a gradation, such as usufruct, lease with or without option to buy, absolute sale or transfer of fee simple title; and on the affected beneficiaries, namely: individual, group or community or communal.

7.1 3.4 Reviewing the Status of the APDs or the Areas for Priority Development Preparatory to Appropriate Legal Action.

The laws involved in the designation of the Areas for Priority Development (APDs) and the Urban Land Reform Zones (ULRZs) are the Urban Land Reform Act (P.D. 1517) and its companion laws freezing the land value (P.D. 1640) and the rent (PD 1642) of the over 200 sites declared as ULRZs and APDs. Initial study shows that these companion laws may be considered as in the nature of "emergency" legislation, which should have a terminal date coinciding with the date when their objectives shall have been achieved. It will be noted that P.D. 1517 was implemented through Presidential Proclamations and therefore, amendments to them can be in the form of Proclamations too.

There strong reason for lifting the Proclamation declaring them as APDs such as possible deviation from the constitutional requirement of the equal protection of the laws clause. This is because the laws provide different treatment of groups of landowners, homeowners and tenants when the distinction between them (one group being benefited while other groups are not) no longer exists, that is, that their special treatment as APDs can no longer be justified.

Taking the appropriate steps in the direction identified above acquires greater urgency in the light of the following:

1. Aside from benefits granted by P.D. 1640 and P.D. 1642 to occupants of the APDs, (such as the freezing of land values and rental rates), the UDHA provide them with an array of additional benefits. These are: priority in all government projects initiated pursuant to UDHA; entitlement to the following support services: land surveys and titling at minimal cost; liberal terms on credit facilities and housing loans and 100

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percent deduction from every homebuyers gross income tax of all interest payments on loans incurred for the construction or purchase of the homebuyers house. Other benefits are exemption from the payment of documentary stamp tax, registration fees, and others fees for the issuance of transfer certificate of titles or TCTS.

APDs are also entitled to the following basic services: potable water, power and electricity and an adequate power distribution system; sewerage facilities and an efficient and adequate solid waste disposal system; access to primary roads and transportation facilities. Many other additional benefits aside from the above have also been granted by some LGUs in ordinances enacted on the subject of housing and settlement.

2. Many more informal sefflements have mushroomed in the past three decades, where grinding poverty has spawned more blighted villages. These groups are in dire need for assistance from the government, unable as they are to help themselves. Social justice now demands that those who, in the past, were in similar situations but who have since then been rehabilitated and have improved not only their physical and financial situation should no longer be included among those benefiting from substantial government assistance.

7.13.5 Review of UDHA Provisions for Appropriate Remedial Legislation

UDHA turned 10 years old in the year 2002 calling for a comprehensive review of the extent to which it has achieved its objectives. Initial observations made by some national and local government implementers have not been very positive, pointing many of its provisions that have remained un-enforced or have had only token application. Among these are the functions and responsibilities of both line departments and LGUs some of the outputs of which have remained undelivered. While the NUDHF has been produced covering in two phases almost a ten-year period; the socialized housing strategy has been Box 7 adopted in various forms; and the Improvements to UDHA: procedural requirements for relocation For Review of the urban poor observed to a large extent, implementation of the law 1. Provisions which need further clarification and elaboration in the form of detailed implementing leaves much to be desired. A good rub and regulations for them to be better number of provisions have remained operationalized (ex. various forms of land "intentions waiting to be fulfilled. development techniques); Specific aspects that require comprehensive review to introduce 2. Those which may need to be deleted because they have weakened other mandatory provisions improvements to the UDHA are (ex. - some options in implementing the balanced enumerated in Box 7. housing development.); and

Insofar as the revival of the urban land 3. Those which involves fund support to the UDHA (ex. - to what extent have they actually been reform program is concerned, it can be generated and what difficulties have been met in said that the program is at present tapping them.) being implemented to a limited extent and not in accordance wifh PO 151 7, PD 207 6 and RA 7279 combined. This will, however, require detailed study on which features of the mentioned law should be revived or activated prior to coming up with a comprehensive legislation on the subject

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matter. In this regard, there are legal issues affecting APDs and ULRZs, for instance, 1 which need to be resolved.

7.1 3.6 Legal Framework for the Creation of the Community Land Trust (CLT) as I Well as Trust Agreements Covering Housing Finance.

The introduction in the Philippines of the CLT concept has been brought about by the 1 following needs to which the CLT has responded in jurisdictions where they have been adopted:

I 0 Gain control over local land use and reduce absentee ownership; 0 Provide affordable housing for lower income groups residents; 0 Promote resident ownership; I 0 Keep housing affordable for future residents; 0 Capture the value of public investment for long term community benefit; and e 0 Build a strong base for community organization. At present, some, if not all of these benefits are derived from a number of schemes adopted by the country. For instance, the provision of affordable housing is the objective of the Balanced Socialized Housing Development, the CMP, and the use of MRBS. The I limitation of the number of lots to be made available to citizens and the disqualification of homeowners from absentee ownership, many NGOs and CBOs participate actively in I housing provision to ensure building a strong base for community action. The unique features of a CLT as a private, non-profit organization aimed at providing a secure, affordable access to land and housing for community members are: the I separation of ownership of land and housing and how these are structured and controlled.

I The procedure generally observed by the CLTs is that they acquire vacant land and develop housing or other structures on it. At other times, they acquire both land and buildings together. The land is held permanently by the land trust for the benefit of the I community while buildings or improvements can be owned by their users. The CLT sells homes but leases the land through a long-term renewable lease. When the homeowners decide to move out of their homes, the land lease requires that the I home be sold either back to the CLT or to another low-income household for an affordable price.

I The organizational structure, (membership organization and Board structure) financing (payment of taxes for the land and the improvements, authorization of mortgages, etc.) and the technical assistance needed would require further study to determine the legal I requirements for adoption in the Philippines. The concept appears promising as an additional option available to the private sector.

1 Legal precedent may be found in the Land Investment Trust (LIT) introduced in the seventies by the Ministry of Human Settlements. The experience of the LIT will need to be reviewed for the learning experience that it can input, including the legal, technical 1 and administrative prerequisites for the successful operation of the CLT. I

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Prior to adoption of the CLT, the following, among others have to be the organization or I reorganization required to implement the CLT and whether the enacting charter of the home financing agencies to undertake this scheme allows this: the involvement of other government agencies such as the DoF; the legal, financial, administrative and technical I requirements for launching the proposal, including the time frame involved.

The compatibildy of this scheme with existing financial strategies and the I responsiveness and impact of this financial arrangement to the problems facing the uhan poor in Metro Manila will also have to be reviewed. The MMUSP Project has packaged a technical assistance proposal, the objective of which is to determine the I utility of the CLT in the Philippines (see Chapter 11). 7.13.7 Formulation of Local Housing Code Providing Among Others, I for the Local Housing Boards There are existing precedents for the formulation of the Local Housing Code (also called Local Settlements Code) dating back to the seventies. One of these is the Land I Resources Management Code prepared by an inter-agency group spearheaded by the then Human Settlements Commission. Its focus has been on local planning and in its . context, the provision of urban services including housing. More recent local model I codes involve the provision of such services as Solid Waste Management.

Some modifications may have to be made because the project site is Metro Manila I whose LGUs are differently situated. This metropolis had its own charter and governing body, the MMDA, and has the authority to formulate model codes to cover a number of areas of concerns such as land development and the provision of housing and other I services. It will be useful if the LGU Housing Code will be formulated in close coordination with the MMDA and other affected national and regional agencies. I On the matter of the proposed Housing Board, it will be noted that the LGC created Local School Boards and Local Health Boards. The creation of Local Housing Boards for Metro Manila may be undertaken through a Metropolitan Manila Resolution issued by the MMDA Council containing guidelines for the enactment of local ordinances. I Legal authority for the latter is provided by the General Welfare clause in the LGC:

"Local government units shall have the power and authority to establish an organization I that shall be responsible for the efficient and effective implementation of their development plans, program objectives and priorities." (Section 18) I 7.1 3.8 Legal Measures to Resolve the Issue of Recalcitrants in the Community Mortgage Program (CMP) Project Sites I Consolidated Circular No, CMP-010 of the National Home Mortgage Finance Corporation entitled Consolidated lmplementhg Guidelines for the Community Mortgage Program dated November 22, 1995, series of 1995, have substantive and procedural requirements to ensure compliance with the CMP. This embodies I provisions to cover cases of violations of existing laws (par. 15.3) as well as penalties (paragraph 17) to be imposed. Where experience and actual implementation of the CMP have shown these to be inadequate, the NHMFC could issue amendatory I Circulars to respond to the identified problems such as recalcitrant participants. I

189 I Final Report 0 Volume 1 PART 2: THE PROPOSED STRATEGY I