Developing a National Informal Settlements Upgrading Strategy for the Philippines FINAL REPORT

Transcription

1 Developing a National Informal Settlements Upgrading Strategy for the Philippines

2 Developing a National Informal Settlements Upgrading Strategy of the Philippines TABLE OF CONTENTS EXECUTIVE SUMMARY 1 INTRODUCTION A Rapidly Urbanizing Philippines Urbanization and the Pervasiveness of Informal Settlements in the Philippines Addressing Climate Change and Disaster Risks Purpose and Structure of the Report 2 2 COMPREHENSIVE SECTOR ASSESSMENT: KEY FINDINGS AND RECOMMENDATIONS Informal Settlements in the Philippines: Trends and Patterns Sector Assessment The Beginnings of a Reform Strategy 9 3 THE NATIONAL INFORMAL SETTLEMENTS UPGRADING STRATEGY OF THE PHILIPPINES: ROADMAP TO TRANSFORMATION 3.1 The Vision: The Informal Settler Families of Tomorrow The Mission Statement: Enabling the ISF s Envisioned Transformation Guiding Principles: Shepherding Actions Toward the Vision The Strategic Objectives: What Will be Achieved for the ISFs by When? The Strategies: Pathways to ISF Transformation The Strategic Action Plan: Blueprint for Operationalizing NISUS 17 4 THE NISUS INVESTMENT REQUIREMENTS, Production Programs Mortgage Finance Requirements 28 5 IMPLEMENTATION MODALITIES 31 APPENDICES 1 Comprehensive Assessment Report 2 The Regional Consultation Workshop for Visayas 3 The Regional Consultation Workshop for Mindanao 4 The Regional Consultation Workshop for Luzon 5 NISUS National Forum 6 NISUS Website Development Page vi 11 Page i

3 Developing a National Informal Settlements Upgrading Strategy of the Philippines LIST OF TABLES 1 The NISUS Strategic Objectives 14 2 The NISUS Strategic Action Plan, Summary of Indicative Investment Program, Indicative Investment Program Low Estimate (Current Prices) 22 5 Indicative Investment Program, High Estimate (Current Prices) 23 6 Assumptions Used to Estimate Investment Requirements New Housing Units 26 7 Assumptions Used to Estimate Investment Requirements Relocation and Upgrading 27 8 Mortgage Finance Requirements, High and Low Options (Current Price) 29 9 The NISUS Strategic Action Plan: Short-, Medium-, and Long-Term Actions The NISUS Policy and Institutional Reform Matrix Preliminary Results and Monitoring Framework for NISUS 39 LIST OF BOXES 1 A Rapidly Urbanizing Philippines 4 2 Legal Framework for Informal Settlement Upgrading in the Philippines 6 3 Inefficiencies of Housing Subsidies 7 4 Key Lessons Learned from Past Informal Settlements or Slum Upgrading 11 Page ii

4 Developing a National Informal Settlements Upgrading Strategy of the Philippines ACRONYMS ADB APDs BIR BSP CA CALABARZON CAS CBDRRM CBHM CCA CCC CDP CDS CLUP CMP CMS CODI CoP CPH CSOs CWS DBM DePED DENR DILG DIP DOH DOJ DOLE DPUCSP DPWH DSWD ELA FAIR FTR GDP GIS GIZ Asian Development Bank Areas for Priority Development Bureau of Internal Revenue Bangko Sentral ng Pilipinas Cities Alliance Cavite, Laguna, Batangas, Rizal and Quezon Country Assistance Strategy Community-Based Disaster Risk Reduction Management Capacity Building for Housing Microfinance Climate Change Adaptation Climate Change Commission Comprehensive Development Plans City Development Strategies Comprehensive Land Use Plans Community Mortgage Program Content Management System Community Organizations Development Institute Community of Practice Census of Population and Housing Civil Society Organizations Cities Without Slums Department of Budget and Management Department of Education Department of Environment and Natural Resources Department of Interior and Local Government Detailed Implementation Plan Department of Health Department of Justice Department of Labor and Employment Development of Poor Urban Communities Sector Project Department of Public Works and Highways Department of Social Welfare and Development Executive Legislative Agenda Fair, affordable, innovative and responsive File Transfer Protocol Gross Domestic Product Geographical Information System Deutsche Gesellschaft für Internationale Zusammenarbeit Page iii

5 Developing a National Informal Settlements Upgrading Strategy of the Philippines GoP GSS HDMF HPFP HUDCC HUDCC-PMT JSDF IADB ICT IS ISFs KIP KSP LCP LGC LGU LMB LRA LSP M&E MFIs MMDA MOU MTPDP NAPC NCR NDRRMC NEDA NGAs NGC NGOs NHA NMES NPLs NSCB NSDF NSO NSUS NUDHF OSHDP PAC The Government of the Philippines Global Strategy for Shelter Home Development Mutual Fund Homeless People s Federation of the Philippines Housing and Urban Development Coordinating Council HUDCC Project Management Team Japan Social Development Fund Inter-American Development Bank Information Communication Technology Informal Settlements Informal Settler Families Kampung Improvement Program Knowledge Sharing Plan League of Cities in the Philippines Local Government Code Local Government Unit Land Management Bureau Land Registration Authority Local Shelter Plan Monitoring & Evaluation Microfinance Institutions Metro Manila Development Authority Memorandum of Understanding Medium Term Philippine Development Plan National Anti-Poverty Commission National Capital Region National Disaster Risk Reduction Management Commission National Economic Development Authority National Government Agencies National Government Corporation Non-Government Organizations National Housing Authority NISUS Monitoring and Evaluation System Non-Performing Loans National Statistical Coordination Board National Slum Dwellers Federation National Statistics Office National Informal Settlements Upgrading Strategy National Urban Development Housing Framework Organization of Socialized Housing Developers of the Philippines Project Advisory Committee Page iv

6 Developing a National Informal Settlements Upgrading Strategy of the Philippines PCFC PCUP PDP PMES Pos PPP Center SCC SEHAB SHFC SWS TA TCR ToR TTP UPSURGE UN-Habitat UUPCRS WB WFP People s Credit and Finance Organization Philippine Commission for the Urban Poor Philippines Development Plan Project Monitoring and Evaluation System Private Organizations Public-Private Partnership Center Special Conditions of Contract São Paulo Municipal Housing Secretariat Social Housing Finance Corporation Social Weather Station Technical Assistance Task Completion Report Terms of Reference Technology Transfer Plan Urban Partnerships for Sustainable Upliftment, Renewal, Governance and Empowerment United Nation Human Settlements Programme Upscaling Urban Poor Community Renewal Scheme World Bank Work and Financial Plan Page v

7 EXECUTIVE SUMMARY In accordance with the contract between GHK Consulting Ltd, United Kingdom (the Consultants) and the Housing and Urban Development Coordinating Council (HUDCC) covering the provision of consulting services on the Developing a National Informal Settlements Upgrading Strategy (NISUS) for the Philippines Project (or the Project), this strategic plan, also known as the NISUS, was prepared with the funding and technical support of the Cities Alliance and the World Bank. The proliferation of informal settlements in the Philippines has become a phenomenon associated with rapid urbanization. With rapid urbanization came unprecedented surges in the demand for housing and basic services in many cities, particularly the key drivers of the economy. Many local governments, while trying, have been unable to meet the increased demand given the accelerated pace warranted. The majority of informal settler families (ISFs) live in chronic urban poverty, confronted by physical, economic, social, legal and environmental risks on a day-to-day basis. They have limited or no access to security of tenure, capital, social networks, environmental safety and legal security. This situation is exacerbated by the Philippines being singled out as one of the most disaster prone in the world, ranking among the top 10 countries most likely to be affected by climate change due to its geographic location. Its metropolitan centers particularly Metro Manila with its dense and rapidly growing population are increasingly vulnerable to the threats of natural disasters. To facilitate the achievement of a multisectoral and multistakeholders consensus on how NISUS can effectively and efficiently address the challenges posed by ISFs, thematic, sectoral, and regional consultations were conducted in Luzon, Visayas and Mindanao from August 2013 to June The NISUS takes off from the major finding of a comprehensive assessment report (CAR) earlier undertaken as part of the Project. The key rationale for NISUS is that it will be instrumental in instituting the major corrections urgently needed to the government s housing program for informal settler families (ISFs). The current programs for informal settlers, whether undertaken by the government, civil society, people s organizations or the private sector, are all too small in relation to the need. Most of the interventions, especially those of government, need to be scaled up to tackle the problems of ISFs. The future program must be built on lessons learned from past interventions, and focus accordingly on communities. People must be put the driving seat to allow them to decide their own futures. This means supporting those who in reality are the risk takers, potential entrepreneurs, and tomorrow s middle class those willing to uproot themselves from rural complacency and poverty in search of better opportunities and wealth. In the next 10 years, NISUS will serve as the overarching strategy of the Philippine Government for upgrading informal settlements particularly those in the danger areas. It will underpin all efforts and interventions for on-site and off-site upgrading, targeted subsidies, and partnership arrangements among the various stakeholder groups concerned. The National Informal Settlements Upgrading Strategy, or NISUS for short. is the Philippine Government s response to the challenges posed by rapid urbanization and climate change. NISUS was formulated using a highly participatory approach designed to facilitate the achievement of a multisectoral and multistakeholders consensus on how NISUS can effectively and efficiently address the challenges posed by ISFs. The key rationale for NISUS is that it will be instrumental to instituting major corrections to the government s housing program for ISFs to achieve the scale warranted by the magnitude of the problem. In the next 10 years, it will serve as the overarching strategy of the Philippine Government for upgrading informal settlements particularly those in the danger areas. Page vi

8 The NISUS 2025 vision statement is ISFs transformed into formal urban residents in resilient, vibrant, and connected communities. This vision statement was discussed and agreed with the stakeholders during the meetings and regional consultations. Informal settlements are essentially a staging ground for people moving to the city or for people who are temporarily in trouble, a place where they can live cheaply in the interim, until they establish themselves. In the long-term, most informal settlers aim to find a better place to live. NISUS envisions most if not all ISFs finding such a secure and better place to live in resilient communities that are able to withstand climate change and natural disasters, vibrant communities animated with socio-economic dynamism and quality urban infrastructure and services, and connected communities that are linked by transport and telecommunication to employment, sources of livelihood, the urban economy, and the rest of the city. The NISUS mission is a profound commitment to a more dignified life for at least one million ISFs by 2025 through secure and better quality housing, improved physical infrastructure and social services, and greater access to jobs, transport, capital, and livelihood. A life of dignity is a life of pride and self-respect. NISUS will work towards providing at least one million ISFs with a life of more dignity by The target of one million ISF entails the delivery of quality housing, improved infrastructure and social services, and greater access to jobs, transport, capital and livelihood to an average of 100,000 ISFs annually for 10 years. This represents a big leap from the current 30,000 delivered by the various government housing programs every year but the stakeholders agreed that significantly more ISFs must be targeted in order to achieve the scale that will make a difference. Accompanying the mission are guiding principles for how the objectives, strategies and actions will be formulated and implemented. During the thematic, sectoral and regional consulations, a problem analysis of the informal settlements in the Philippines was conducted to define the core problem, its effects, and its causes. The objectives of NISUS address the three main causes of the huge demand-supply gap that exists in affordable ISF housing. The first objective which relates to inadequate planning and production is: upgrading, relocation and incremental, affordable new homes for sale and rent. The targets for this objective are: ISFs living in danger areas rehoused in vibrant, resilient and connected communities; ISFs on public and private land live in fully upgraded communities and inclusive cities; and annual demand for affordable socialized housing met through viable public-private-people partnerships. The second objective which addresses the inadequacy of financing for affordable ISF housing is: market-based housing and microfinance and targeted subsidies for ISFs. The targets for this objective are: a national financing facility for urban renewal and ISF housing capitalized and fully functional by 2016; The agreed Vision 2025 is ISFs transformed into formal urban residents in resilient, vibrant, and connected communities. The agreed Mission is a profound commitment to a more dignified life for at least one million ISFs by 2025 through secure and better quality housing, improved physical infrastructure and social services, and greater access to jobs, transport, capital, and livelihood. The objectives of NISUS are as follows: (1) upgrading, relocation and incremental, affordable new homes for sale and rent, (2) market-based housing and microfinance and targeted subsidies for ISFs, and (3) strengthened sector governance, organizational, staff and resource capacity at the local and national levels. Page vii

9 targeted housing subsidy program for ISFs designed, funded and operationalized by 2025; at least 20% of MFIs engaged in housing microfinance for ISFs by 2025; and at least 20% of ISF housing finance comes from commercial and thrift banks by The third and last objective which deals with the weak sector capacity overall is: strengthened sector governance, organizational, staff and resource capacity at the local and national levels. The targets are: at least 40% of cities are implementing city-wide urban renewal, upgrading, housing programs and have approved strategic urban development plans by 2025; strengthened and fully equipped HUDCC providing sector leadership, monitoring and training in strategic urban planning and development, urban renewal, and ISF socialized housing by 2017; strengthened NHA as government s housing production, IS upgrading and related training arm; SHFC as an autonomous corporation financing urban renewal and ISF housing; and DILG capacitated to support cities urban renewal and ISF housing programs by 2020; and capacity of people s organizations, community-based organizations and homeowners associations to engage in urban renewal and ISF housing developed by Strategies have been prepared, discussed and agreed with the stakeholders to support each of the three NISUS objectives. Five strategies will help achieve the first objective of upgrading, relocation and incremental affordable new homes for sale and rent. They include: guiding future land development within the context of strategic city-wide planning and climate change adaptation and disaster risk reduction and management (CCA/DRRM); adopting informal settlements upgrading with alternativesecure tenure mechanisms within an urban renewal, CCA/DRRM, and income generating framework; resettling people more selectively with appropriate compensation and choice in sustainable new towns; engagaging the private sector and civil society to produce and manage affordable new homes to ISFs, and encouraging a fully functioning private rental market. A strategic city-wide planning provides more scope for ISF communities to be recognized for their contributions to the city and the local economy. Urban renewal is a program of land redevelopment in areas of moderate to high density urban land use and usually entails revitalization and investment often combined with small and big business incentives. NISUS will look to local governments to lead the efforts on Five strategies will support the NISUS objective of upgrading, relocation and incremental affordable new homes for sale and rent. They are predicated on the LGUs taking the lead in strategic city-wide urban planning, urban renewal, and ISF housing through viable partnerhips with the private sector, civil society and people s organizations. The key approach to ISF housing will be on-site upgrading and when necessary, resettling people selectively to viable new towns connected to jobs, employment, transport and livelihood. Page viii

10 urban renewal, strategic and city-wide planning and ISF housing and will encourage partnership agreements with the private sector, civil society and people s organizations in order to scale up production. Four strategies will help achieve the second objective of market-based housing finance and microfinance and targeted subsidies for ISFs. They include: shifting more to the market for ISF housing finance to facilitate guarantees, securitization, private sector participation in financing and cost recovery; expanding the role of microfinance and community finance in urban renewal and ISF housing; targeting subsidies to those in need based on household incomes; and providing appropriate funding for urban renewal and ISF housing. Four strategies aimed at achieving market-based housing finance and microfinance and targeted subsidies for ISFs will be implemented. A national facility for urban renewal and ISF will be launched and operationalized. Toward this end, a national facility for urban renewal and ISF housing finance will be established and operationalized. The last five strategies will support the third objective of strengthened sector governance, organizational staff, and resource capacity at the local and national levels. They include: improving the capacity of LGUs as the lead agencies for urban renewal and ISF housing; improving sector governance; enhancing sector leadership, wider vision and improved skills for urban development and ISF housing at the national level; setting-up, operationalizing and building capacity for appropriate data collection, mapping, knowledge management, and monitoring systems; and building the capacity of people s organization, community-based organizations, and homeowners associations to engage more in ISF housing. The NISUS strategic action plan details the tasks assigned to each strategy, the agencies and organizations involved, as well as the time frame for implementation. The Consultants have proposed that NISUS be implemented through a 10-year program, consisting of 3 projects. Each project will be implemented in 3-4 years, may overlap, and will have the following components: (i) an investment component to prepare and implement IS upgrading and new towns through LGU stand alone or PPPP projects; (ii) a housing finance and microfinance/community finance component; (iii) a policy and institutional reform component; and (iv) a capacity development component. The priority actions comprising the critical path have been identified as follows: Guide future land development within the context of strategic citywide development, climate change adaptation (CCA) and disaster risk reduction management (DRRM) where each city prepares a Five strategies will help achieve the fifth objective of strengthened sector governance, organizational staff, and resource capacity at the local and national levels. A strategic action plan has been agreed and prepared to speed up the NISUS implementation. The Consultants have recommended that a 10- year implementation program be launched, consisting of 3 shorterterm projects. The priority actions comprising the critical path to implementing NISUS have been identified. Page ix

11 strategic plan that identifies strategic infrastructure requirements and urban renewal areas. Adopt informal settlements upgrading with secure tenure within an urban renewal framework as a national program where each city develops and implements an urban renewal approach incorporating informal settlements upgrading and income and employment generation programs Design and direct subsidies to those in need according to household incomes adopt capital subsides for both IFS upgrading and new affordable housing programs to lower loan to value ratios, and eliminate interest rate subsides as government IFS housing finance moves towards the market. Adopt negotiable rights-based instruments as alternatives to titles to accelerate secure tenure and facilitate access to housing finance for ISFs. Reinforce the role of local governments as the lead and agencies for urban renewal and IFS housing through building capacity to undertake city-wide strategic planning, urban renewal, CCA/DRRM, informal settlements upgrading, estate management and PPPs; and the design and implementation of a competitive system of funding for local government s access to finance for urban renewal and ISF housing based on performance. Build capacity of civil society NGOs, CBOs, Homeowners Associations, Cooperatives, MFIs, etc to engage in ISF housing, including microfinance and estate management, and to work with local governments to enforce laws and against illegal land occupation and construction. Enhance sector leadership by strengthening capacity of HUDCC, DILG and KSAs to plan, design and implement strategic urban development and ISF housing. A policy and institutional reform matrix identifying actions requiring legislative and executive measures has been formulated to support the implementation of NISUS. A preliminary results and monitoring framework based on the proposed NISUS has been prepared for the overall program. This will be reviewed as the program design progresses further and one for each project will also be produced to facilitate periodic performance monitoring and evaluation. A communication plan will also be prepared and implemented. Toward this, the NISUS website has been developed and will be launched. The NISUS website will also feed into other popular social networks (Facebook, Tweeter, and LinkedIn). Preparations for the NISUS policy and institutional reform matrix, results and monitoring framework, and an effective communication plan have been initiated. Page x

12 Developing a National Informal Settlements Upgrading Strategy of the Philippines 1 INTRODUCTION 1.1 A Rapidly Urbanizing Philippines The Philippines is one of the most rapidly urbanizing countries in Asia. This trend reflects the cumulative aftermath of years of sustained high rates of natural population growth and considerable rural-to-urban migration. Urbanization in the Philippines has since the 1950s been driven by Metro Manila, which is also known as the National Capital Region (NCR). In addition to Metro Manila, there are 5 metropolitan areas in the Philippines with a population of at least 750,000. They are Metro Cebu in the Central Visayas region with a population of 2.3 million; Metro Davao in southern Mindanao, with 2 million; Metro Cagayan de Oro, with 1.1 million; Metro Angeles in Central Luzon with 0.97 million; and Metro Iloilo-Guimaras, with 0.79 million. Together, these urban agglomerations contribute 80% of the Philippines total economic ouput or Gross Domestic Product (GDP). 1.2 Urbanization and the Pervasiveness of Informal Settlements in the Philippines The proliferation of informal settlements in the Philippines has become a phenomenon associated with big cities and expanding urban centers. From the early 1970s to more recent years, estimates of the number of informal settlers in the country have varied, ranging from as low as 470,000 families to as high as 2.5 million families. Current estimates using the broader definition used by the National Housing Authority (NHA) in coordination with local governments place the number of informal settlement families at about 1.5 million or about 15% of the Philippines total urban population.yet, this estimate still pales in comparison to the numbers indicated by global studies which report that about 30% to 60% of the urban population in the developing world live in informal settlements. Informal settlements upgrading in the Philippines has become a formidable challenge one that can only be initiated with a more accurate and up-to-date system of estimating the number of informal settler families to properly determine the scope and magnitude of the problem. Many informal settler families (ISFs) live in chronic urban poverty, confronted by physical, economic, social, legal and environmental risks on a day-to-day basis. They have limited or no access to security of tenure, capital, social networks, environmental safety and legal security. The private sector, on the other hand, has estimated that a housing backlog of 1.3 million exists and 12.4 million housing units will be needed by 2030, given the pace of urbanization in the country and current demand-supply trends and analyses. Clearly, as in other developing countries, the pervasiveness of informal settlements in the Philippines can be traced to low income, unrealistic and inadequate urban planning, lack of serviced land, a dearth in affordable socialized housing, and a dysfunctional legal system. 1 In Metro Manila, Cebu, Davao and other emerging urban centers, informal settlements stand in stark contrast to the gated and exclusive communities inhabited by the rich with access to all the amenities and conveniences of a comfortable life. Informal settlers live in sprawling slums that do not meet the most basic needs, or worseare used as dumping grounds for hazardous wastes, and where they are oftentimes continually exposed to serious health risks. 1.3 Addressing Climate Change and Disaster Risks The Philippine archipelago has been singled out as one of the most disaster prone in the world, ranking among the top 10 countries most likely to be affected by climate change due to its geographic location. Its metropolitan centers particularly Metro Manila with its dense and rapidly growing population are increasingly vulnerable to the threats of natural disasters. The Philippines is ranked third in the world in terms of vulnerability to tropical cyclone occurrence. An average of 20 typhoons traverses the country 1 For further reading on this topic, see Edésio Fernandes Regularization of Informal Settlements in Latin America. In Policy Focus Report Series. Cambridge, USA: Lincoln Institute of Land Policy. Page 1

13 Developing a National Informal Settlements Upgrading Strategy of the Philippines yearly, causing physical and economic devastation. Climate change has induced more severe droughts during El Niño episodes while triggering massive flooding during La Niña. Many cities are exposed to more than one natural hazard but Metro Manila is the largest urban agglomeration in the world at high risk of cyclones, floods and earthquakes. Metro Davao, a coastal city, is also potentially exposed to same risks. 2 Given the expected frequency of natural disasters in the Philippines and their consequent tremendous negative impacts on, and damages to, the housing sector, climate change adaptation (CCA) and disaster risk mitigation and management (DRRM) will have to play a pivotal role in addressing the plight of the country s millions of informal settlers. 1.4 Purpose and Structure of the Report In accordance with the contract between GHK Consulting Ltd, United Kingdom (the Consultants) and the Housing and Urban Development Coordinating Council (HUDCC) covering the provision of consulting services on the Developing a National Informal Settlements Upgrading Strategy for the Philippines Project (or the Project), this Final Report containing the National Informal Settlements Upgrading Strategy (NISUS), was prepared with the funding and technical support of the Cities Alliance and the World Bank. The NISUS is the culminating output of Phase 3 of the Project. Phase 1 was conducted by HUDCC and focused on the project preparatory activities. HUDCC engaged the Consultants to help implement Phases 2 and 3. In Phase 2, the Consultants undertook a comprehensive assessment of informal settlements in the Philippines including their pattern and trends and an evaluation of major government programs and identification of relevant lessons learned from local and international experience. Based on the findings of Phase 2, the Consultants facilitated the preparation of the NISUS which is being presented in this report. Throughout the process, a highly participatory and consensus building approach using thematic, sectoral and regional consultations with the stakeholders was adopted. The NISUS has eight key elements. It starts with a synopsis of the Comprehensive Assessment Report (CAR) undertaken in Phase 2 its key findings and recommendations. A vision statement a brief inspirational statement of the desired end state for the informal settlers in the Philippines over the 10- year period follows. The third element is the mission statement for the sector on what it will do to achieve the desired end state. The mission statement is accompanied by a set of guiding principles for the behavior and actions of sector stakeholders to achieve the vision. The fourth element sets the objectives the specifics of how much will be achieved by when. These are the concrete, measurable results to be accomplished by the initiatives. The fifth element defines the strategies, the hows of achieving the objectives. The sixth element, the strategic action plan, contains the changes that will happen and who will do what by when to make it happen. The seventh and eight elements of the plan are the investment requirements and the implementation modality comprising the work plan, results and monitoring framework and the communication plan. The results and monitoring framework will serve as the foundation for the periodic review of progress towards meeting the objectives and strategies. The communication plan outlines the mechanisms by which the NISUS will be disseminated to the stakeholders, and their comments and feedbacks received. 2 Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat World Urbanization Prospects The 2011 Revision: Highlights. New York: United Nations. Page 2

14 Developing a National Informal Settlements Upgrading Strategy of the Philippines 2 COMPREHENSIVE SECTOR ASSESSMENT: KEY FINDINGS AND RECOMMENDATIONS In Phase 2, a comprehensive assessment report (the CAR) was prepared by the Consultants to diagnose and obtain an in-depth understanding of the diverse conditions, complex issues, opportunities, risks, and formal and informal governance structures of informal settlement communities. A highly participatory approach combined with the relevant desk research to achieving consensus on the nature, causes and consequences of informal settlements in the Philippines was used. At the start of Phase 2, thematic consultations involving the project stakeholders were conducted to identify trends and patterns, as well as the problems and associated causes and consequences, in the following areas of informal settlement upgrading: (i) citywide urban planning and low income housing; (ii) sustainable housing finance; (iii) socialized and pro-poor housing delivery systems; (iv) institutional strengthening and capacity development; and (v) social and economic development. 3 In these thematic consultations, the lessons learned from Asia and Latin America were discussed, particularly those from Brazil where the first step taken by the country s successful and UN-Habitat awarded housing program was to effectively integrate city urban planning with urban upgrading. Effective institutions such as publicprivate-people partnerships; the emerging 4Ps of urban upgrading; and community-driven approaches to scaling up urban upgrading such as those applied by the Community Organization Development Institutions (CODI) program in Thailand and other countries, were also distinguished. The thematic consultations were followed by sectoral and regional consultations to discuss and affirm the results of the comprehensive assessment. In addition, the Consultants reviewed government programs and projects targeting informal settler families (ISFs) and others prepared and implemented by the private sector, nongovernmental organizations (NGOs), and people s organizations. The complete and unabridged version of the CAR including the proceedings of the thematic, sectoral and regional consultations held are in Appendix 1 of this report. The ensuing paragraphs discuss the CAR s key findings and recommendations which were used to anchor the preparation of thenisus Informal Settlements in the Philippines: Trends and Patterns Informal settlements in the Philippines have become pervasive but estimates do not reflect this reality... Informal settlements is the generic term used in the developing world for areas where groups of housing units have been illegally constructed and where housing does not comply with planning and building regulations to enable a decent quality of life.the name implies that these settlements subsist outside the existing and legal regulatory framework. Due to their inherent "non-legal" status, informal settlements lack adequate services and infrastructure. An often used name for informal settlements is slum settlements. Slums are residential areas that are physically and socially deteriorated, making a decent quality of life impossible. Hence, many distinguish a slum settlement as referring to the condition of a settlement, while an informal settlement refers to the legal position of the settlements. For the purpose of NISUS, the UN-Habitat definition of informal settlements has been applied. In essence, informal settlements have been defined as those that cannot provide one of the following basic living characteristics: The United Nations Human Settlement Programme (UN-Habitat) defines informal settlements as areas where groups of housing units have been constructed on land that the occupantshave no legal claim to, and where housing is not in compliance with current planning and building regulations. 3 In these workshops, HUDCC and the Consultants conducted a problem tree analysis to identify the major related problems and constraints associated with each thematic area and to visualize the cause-effect relationships in a diagram resulting in a problem tree. The problem tree analysis is a diagnostic tool that is central to many forms of program and project planning. Key stakeholder groups identified by HUDCC and the Consultants through a stakeholder analysis participated in the problem tree analysis. Page 3

15 Developing a National Informal Settlements Upgrading Strategy of the Philippines Durable housing of a permanent nature that protects against extreme climate conditions. Sufficient living space, which means not more than three people sharing the same room. Easy access to safe water in sufficient amounts at an affordable price. Access to adequate sanitation in the form of a private or public toilet shared by a reasonable number of people. Security of tenure that prevents forced evictions. The proliferation of informal settlements in the Philippines has become a phenomenon associated with big cities and expanding urban centers. From the early 1970s to more recent years, estimates of the number of informal settlers in the country have varied, ranging from as low as 470,000 families to as high as 2.5 million families. The estimates depend on who is conducting the study. Statistical bodies use the census of population and housing and strictly define informal settlements as households occupying rent-free lots without the consent of the owners. The National Housing Authority, on the other hand, works with local government units (LGUs) to support a broader definition that includes: lots without the consent of the owners, danger areas along river banks, railways, under the bridge and others, areas designated for government infrastructure projects, protected/forest areas, except for indigenous people, areas for priority development, if applicable, and other government/public lands or facilities not intended for human habitation. Current estimates using the broader definition place the number of informal settlement families at about 1.5 million or about 15% of the Philippines total urban population. Yet, this still seems to be significantly lower than those indicated by global studies which report that about 30% to 60% of the population in many cities in the developing world live in informal settlements. The estimate also fails to account for the increase in informal settler families arising from the annual increase in urban population naturally through birth or because of in-migration. The challenge of informal settlements upgrading in the Philippines, thus, starts with the need for a more accurate and up-to-date system of estimating the number of informal settler families to properly determine the scope and magnitude of the problem. Informal settlements in the Philippines reflect the cities inability to cope with rapid urbanization which is spurring economic growth... Economic development models emphasize the need for predominantly rural economies to structurally transform to industrial economies in order to achieve steady and sustained growth. The offshoot for developing Asia including the Philippines is rapid urbanization a process by which large numbers of people have become spatially concentrated in cities where they focus on non-agricultural activities. Cities are described as the engines of national prosperity. They serve as venues for where new forms of economic activities and economic organizations evolve and gain higher values. The Philippine economy, over the last decades, has managed to transition from being predominantly rural to being more industrially diverse and service-oriented. By 2012, agriculture s share of the total economic output or gross domestic product (GDP) had shrunk 11%, while the industry and services sectors contributed 89%. A rapid pace of urbanization has accompanied this economic transformation of the Philippines with millions of Filipinos migrating from farmlands to cities each year, particularly to Metro Manila, which with its estimated 11.5 million urban residents, has become one of the world s largest urban agglomerations (Box 1). Box 1. A Rapidly Urbanizing Philippines The Philippines had the highest level of urbanization among its neighboring Asian countries up until mid- to late 2000, with 30.3% to 48% of its total population residing in urban areas. By 2015, nearly half of its entire population is projected to become urbanites. Its average annual rate of urbanization, which was considered the fastest in the Asia region from 1960 up to the mid-1990s, ranged from 3.79% to 5.04%. Page 4

16 Developing a National Informal Settlements Upgrading Strategy of the Philippines Metro Manila continues to be the primary driver of the Philippine economy, accounting for 32% of the country s GDP. Also known as the National Capital Region (NCR) of the Philippines and home to 25% of its total urban population, it is the country s financial, commercial, social, cultural, and educational center and the seat of the National Government. It is also the national gateway for most trade and commerce in the Philippines, contributing about 36% to the country s GDP, ensuring its continued urban primacy in the country. It is the preferred destination of the majority of migrants from rural areas nationwide, consequently overburdening the local governments involvedand exacerbating the congestion which has already long been felt in the area. The cities adjacent to Metro Manila, such as Antipolo and Lucena in the CALABARZON region and Angeles and Olongapo cities in the Central Luzon region, extend its urban reach futher to the north and the south. This Metro Manila extended urban region (EUR) accounts for 62% of the Philippines GDP. The Metro Manila EUR with Cebu, Lapu- Lapu and Mandaue cities in the Central Visayas region; Bacolod and Iloilo cities in Western Visayas; and Davao and Cagayan de Oro cities in the southern and northern Mindanao regions produce 80% of total GDP. Informal settlements have become vivid manifestations of the deepening and widening urban poverty, particularly in the highly urbanized cities of the Philippines... With rapid urbanization came unprecedented surges in the demand for housing and basic services in many cities, particularly the key drivers of the economy. Many local governments, while trying, have been unable to meet the increased demand given the accelerated pace warranted. The result has been a sustained, enormous demand-supply gap, manifested by the proliferation of informal or slum settlements which have become intertwined with a deepening urban poverty. This is because for the most part, while not all ISFs are poor, a large number of them are among the poorest in the cities, tyically comprising the three bottom deciles of the Philippine income distribution. Paradoxically, while the more urbanized regions and provinces such as Metro Manila, Bulacan, Pampanga, Cavite, Laguna and Rizal have much lower poverty incidences ranging from 3.1% to 7.6% compared to 34.1% to 46.9% in the predominantly rural regions of Mindanao the multiplicity of vulnerabilities and deprivation affecting millions of ISFs residing in these cities cannot be ignored. The absolute number of poor and undernourished families in the highly urbanized cities of the Philippines will likely continue to increase in the future, as the share of urban areas in overall poverty and malnutrition. Hence, generally, the locus of poverty will move to the cities, a process which has been recognized as the urbanization of poverty. Beyond income poverty, ISFs in the Philippines live in poor quality housing, lack public and private services, and integrate poorly into the broader communities and opportunities. Informal settlers also score far lower on human development indicators than other urban residents. They have more health problems, and have limited access to capital, education, social services, and livelihood and employment. In Metro Manila, Cebu, Davao and other emerging urban centers, informal settlements stand in stark contrast to the gated and exclusive communities inhabited by the rich with access to all the amenities and conveniences of a comfortable life. Informal settlers live in sprawling In addition to income poverty, informal settlers confront on a daily basis social and economic exclusion, as well as exposure to health risks and life threatening conditions. slums that do not meet the most basic needs, or worse are used as dumping grounds for hazardous wastes, and where they are oftentimes continually exposed to serious health risks. Informal settlements in the Philippines are located in the urban areas, mostly in the highly urbanized cities. Most informal settlements can be found in danger areas and privately owned lands. The need for climate change resilience prompts priority action for informal settlements in the danger zones. Page 5

17 Developing a National Informal Settlements Upgrading Strategy of the Philippines 2.2 Sector Assessment The Local Government Code of 1991 (LGC) devolved to the local governments the efficient and effective delivery of basic services, including socialized housing, to its constituents. The Urban Development and Housing Act (UDHA), also enacted in 1991, tasked the local government units (LGUs) or the National Housing Authority (NHA), as the primary government agency responsible for providing housing to the underprivileged and homeless, to cooperate with private developers and other concerned agencies in socialized housing. Socialized housing as defined by UDHA refers to housing programs and projects covering houses and lots, or lots only, undertaken by the Government or the private sector for the underprivileged and homeless citizens. It encompasses sites and services development, long-term financing, liberalized terms on interest payments, and other benefits. In addition, UDHA stipulates that socialized housing shall be provided with: (i) potable water, (ii) power and electricity and an adequate power distribution system, (iii) sewerage facilities and an efficient and adequate solid waste disposal system; and (iv) access to primary roads and transportation facilities. The provision of other basic services and facilities such as health, education, communication, security, recreation, relief and welfare shall be planned and shall be given priority by the local government units and concerned agencies. To the extent feasible, socialized housing and resettlement projects shall be located near areas where employment opportunities are accessible. On-site development is to be implemented whenever possible in order to ensure the minimum movement of occupants in blighted lands and slum areas. Box 2. Legal Framework for Informal Settlement Upgrading in the Philippines The Local Government Code of 1991 and the Urban Development Housing Act define the cornerstone for implementing socialized housing in the Philippines. Other important, albeit a bit outdated, legislations support financing and planning. There are other relevant legislations. The Comprehensive and Integrated Shelter Financing Act of 1994 increased the paid up capital of the National Home Mortgage Finance Corporation (NHMFC) and the Home Guaranty Corporation (HGC) to ensure continuous funding support to vigorously implement the government's programs for urban and rural housing, resettlement, the development of sites and services, and the renewal of blighted areas. It increased the capability of lowincome groups to acquire decent and low-cost housing units through the introduction of amortization subsidies, development financing and cash flow guaranty. There is also, among others, Batas Pambansa 220 (BP 220) which, in part, prescribes the minimum allowable standards and technical requirements for socialized housing. Past and ongoing government housing programs have concentrated on the relocation of informal settlers, construction of new houses, and subsidized lending focusing on houses money and not people... Past government housing programs, however, have largely focused on the relocation of informal settlers, construction of new houses for the fortunate few, and subsidized lending which often benefited the more affluent rather than the urban poor. But, over the past few years there has been a sign of change and substantial resources have been made available to the sector. However, government is struggling to effectively disburse this money to improve the plight of the informal settlers. The Asian Development Bank (ADB) funded Development of the Urban Poor Communities Project (DPUCSP) demonstrated that public private partnerships for new informal settler housing and housing microfinance offer solutions, but a component involving local government borrowing failed to scale-up. The government s approach has led to a policy of massive relocation of entire communities to distant locations, often against the wishes of the inhabitants and their inevitable loss of income as a consequence. Moreoever, about PhP42 billion has been spent by the national government on relocating 227,000 families from 2001 to 2013 with an average cost of about PhP185,000 per unit. But this has meant the demolition of existing houses and their replacement by new units, one for one, hence, not a single Page 6

18 Developing a National Informal Settlements Upgrading Strategy of the Philippines additional unit has been added to the housing stock to arrest the backlog or meet new demand. In contrast some 212,000 families have been assisted more modestly under slum upgrading programs at a much less cost of nearly PhP8 billion 153,000 families under the Community Mortgage Program (CMP) for an average cost of PhP52,000 per family, and 59,000 families under the program of the National Housing Authority (NHA) for an average cost of PhP1,300 per family. Both these NHA and CMP programs mainly adddress tenure regularization and the provision of basic services of informal settlers and usually lack affordable connectivity to places of employment and income and livelihood opportunities. The housing finance system has encouraged some private developers to build more affordable housing but unfortunately not for the informal settlers... Interventions through the housing finance system have also failed to cater to the informal settlers. The now defunct Unified Home Lending Program (UHLP) of the NHMFC, despite the earlier rhetoric, never really benefited informal settlers, although it encouraged some private developers to move down market and build houses more affordable to the lower-middle income group largely for those in the 30th to 60th percentiles of the household income distribution for the NCR. Lending under the end-user program of the Home Mutual Development Fund (also known as the Pag-IBIG Fund) has cost the fund almost PhP318 billion to finance 556,000 housing units from 2001 to 2013 (Box 3). This reflects an average of PhP545,000 per unit which is clearly Box 3. Inefficiencies of Housing Subsidies The universal interest rate subsidies, guarantees and amortization support have seriously distorted the low-middle income housing finance market and have meant that the private banking sector could not be involved in such financing in a big way, if at all. Furthermore, the subsidies set a bad example, such that people become dependent upon them. To provide a subsidy for the entire duration of year mortgage loan is self defeating, and unfortunately implies that the beneficiaries will remain poor over the duration of repayment period the only justification for the continuing subsidy. And repayment periods beyond 20 years make very little difference to loan affordability. Furthermore, evidence shows that many of these subsidized loans went to the better off. The massive relocation of informal settlers to distant locations, destroying the existing housing stock and replacing them with new units, has cost the Government a staggering Php42 billion in the last 12 years. In contrast, slum upgrading programs have cost much less at just nearly Php 8 billion for almost the same number of beneficiaries. beyond the affordable limits of many informal settlers. Furthermore, the collateral and other documentary requirements of HDMF financing were too difficult and costly for the informal settler families to qualify. Private developers, too, have failed to reach the informal settlers since many consider housing for the poor to be a non-profitable segment of the market. Many of them perceive they will be unable to build and sell house and lot packages for at most PhP450,000 the socialized housing price ceiling. Nevertheless, this package appears to be affordable by many whose incomes are at or below those belonging to the 30th percentile of the 2012 household income distribution for Metro Manila, but not by those living in the regions. In fact, the socialized housing price ceiling is affordable by those in the 10th percentile of the 2012 household income distribution for Metro Manila under the following lending terms: 6% interest, 25-year repayment period, 10% down payment. BUT this is not the case for those living in the regions. There have been changes to the Community Mortgage Program (CMP) incorporating basic infrastructure improvements with tenure regularization under Phase 1, and there is a local government supported CMP. The program, however, has so far originated, approved, and implemented relatively few projects. Furthermore, the Social Housing Finance Corporation (SHFC) has recently introduced its high density housing (HDH) loans program to provide in-city, near city or near site housing comprising multi-storey buildings for relocated informal settlers in the NCR. But the resulting high cost of each unit has prompted the adoption of highly concessional terms to make the loan entitlements affordable for a package of up to PhP450,000 per family. Page 7

19 Developing a National Informal Settlements Upgrading Strategy of the Philippines Many socialized housing programs involving local governments have so far not prospered... Many local governments have failed to respond to the challenges of the informal settlers and instead have looked to the central government to lead and sometimes, even to relinquish their socialized housing responsibilities under the LGC and the UDHA. Without the full commitment of city governments, action on informal settlements will continue to be a piecemeal venture, rather than an all embracing strategic program. Many local governments seem reluctant to allocate resources to the housing sector, except perhaps for their own employee housing a questionable use of local tax payers money. Others look to non-government organizations for help, largely for resettlement housing. But many local governments just do not have the resources for such a program or prefer to spend money on other programs, including those that generate income for the authority. Expenditure figures show that most cities only allocate the mandatory 15% of their internal revenue allotments for development projects, and most of these relate to drainage improvements, road rehabilitation and perhaps administrative buildings of the city. Major capital development expenditures in the cities are usually made by national government agencies or the private sector. City planning and housing policy remain uncoordinated, both at the national and local levels. Despite the requirement for the preparation of a City Land Use Plan (CLUP) and a City Development Plan (CDP) by each local government, most planning in the Philippines lacks a strategic direction and a long-term vision. Too often boiler plate plans are produced, while the horizon for the CDPs is too short, seldom incorporating strategic thinking and often ending as a wish list of unfunded investment projects. Even the considerable growth of Metro Manila and its extended urban area has taken place without a guiding strategic or structure plan, and with little thought about future primary infrastructure, Enforcement of the laws against squatting has also been weak. Countless new structures are regularly built, many in danger areas and in some cases on land already cleared once before. Weak capacity within the local governments, an unwillingness of officials to act, and a tolerance, often for political reasons has made enforcement nearly impossible. But there have been some good examples where communities have been called upon to monitor and report all new construction activities to the city government who check that they have the required permits. public transport or an appropriate city form. This makes it difficult to adequately plan the spatial growth of cities, making it hard to determine the location of future new residential areas. In reality, the private developers are driving the future spatial growth of cities by developing land which they own or buy. Often this lacks strategic infrastructure or public transport requirements. currently follows, rather than leads development. Public infrastructure Innovative programs involving NGOs, local governments and the private sector are ongoing but they are not of the scale required to make a significant difference... There have been a number of housing projects developed through the Gawad Kalinga program adopting partnerships and using grant funds from private companies under their corporate social responsibility programs. Often this housing is built on land donated by local government. In a number of cases the program has benefited families relocated from danger areas, although in others some new housing has been built for the poor from informal settlements, albeit on a small scale. Other programs such as STEP- UP of the Philippine Business for Social Progress (PBSP), and Habitat for Humanity schemes have been undertaken, sometimes as one-off projects in partnerships with local governments and communities. Cost recovery under these programs, however, has been minimal, and most rely on donations or grant funds to continue. And because they are not mainstreamed, they have benefited only a lucky few. The Asian Coalition for Community Action (ACCA) approach to slum upgrading is promising because it has shown that it can be scaled-up. However, the approach needs to be more tailored to the Philippines and its local governance system; its financing approaches more carefully reviewed to be understood and assessed for future replication. Page 8

20 Developing a National Informal Settlements Upgrading Strategy of the Philippines At the national front, more urban development sector leadership, coordination and focus is urgently required... The Housing and Urban Development Coordinating Council (HUDCC), as the nation s highest policy making and coordinating body for the housing and urban development sectors, lacks effective leadership in the urban development sector. Its focus has always been on shelter, and this has been at the expense of its role in integrating urban development policies and plans with those for housing. It has never really taken the lead policy role in the urban development sector. Yet, HUDCC is responsible under the law for the formulation of plans and policies for both housing and urban development; development and supervision of innovative programs and projects for tenure security, urban renewal and other support services; provision of overall administration and supervision to the key shelter agencies (KSAs); and provision of technical assistance to the local governments on the delivery of housing and urban development services and providing support to the general public on appropriate information on housing and related referrals. Besides the KSAs, a number of other public agencies are involved in land development, urban renewal, and urban poor matters, including the Department of the Interior and Local Government (DILG), Department of Environment and Natural Resources (DENR), Department of Public Works and Highways (DPWH), Department of Transportation and Communication (DOTC), National Economic Development Authority, the Department of Finance (DOF), Department of Social Welfare Development (DSWD), Metro Manila Development Authority (MMDA), Philippine Reclamation Authority (PRA), the Bases Conversion Development Authority (BCDA) Group, the National Anti- Poverty Commission (NAPC) and the Presidential Commission for the Urban Poor (PCUP). Each one has been or is involved in programs for informal settlers for projects within specific geographical areas. But their programs and projects are often not coordinated or monitored by HUDCC. HUDCC should be a more all embracing urban policy and coordinating agency. 2.3 The Beginnings of a Reform Strategy A major correction to, and redirection of, the government s housing program is needed... The current programs for informal settlers, whether undertaken by the government, civil society, communities or the private sector, are small in relation to the need. All interventions, especially those of government need to be scaled up, once and for all, to tackle the problems of informal settlements. Government must encourage the creation of an enabling policy environment that allows people the opportunity to transform from informal settlers into active participants of the urban economy, and for the potential beneficiaries to fully accept and assume the responsibilities that go with this change. Given the resources available, and with the right direction and prioritization, it will be possible to make a difference. The future program must be built on lessons learned from past interventions, and focus accordingly on communities and put people in the driving seat to allow them decide their own futures. This means supporting those who in reality are the risk takers, potential entrepreneurs, and tomorrow s middle class those willing to uproot themselves from rural complacency and poverty in search of better opportunities and wealth. The above implies adopting the following principles: The reform strategy must be built on lessons learned from past interventions, and focus accordingly on communities and put people and the local governments firmly in the driving seat. It should also supportthose who in reality are the risk takers, potential entrepreneurs, and tomorrow s middle class those willing to uproot themselves from rural complacency and poverty in search of better opportunities and wealth. Accept that people matter informal settlers must be the decision makers. Page 9

21 Developing a National Informal Settlements Upgrading Strategy of the Philippines Adopt strategic city planning with a long-term vision that sets the spatial pattern for future growth and enables cities to plan primary infrastructure in advance of land development. Move to the market where new housing construction is the responsibility of private developers, and rental housing is provided by private individuals or civil society; and where housing finance, whether government or the private sector, is market related. Provide subsidies only for the needy target the subsidies to those only in need rather than applying them universally. Leveraging resources use public funds to encourage further investment from the private sector, civil society and individuals in housing. Devolve decision making where decision making is devolved to the lowest level of governance as possible, following the principle of subsidiarity Integrate upgrading with urban renewal where policies for informal settlers are seen as part of a wider, city-wide urban renewal/regeneration program. Implement through partnerships where urban renewal is implemented through partnerships of the private sector, communities, people s organizations, civil society, and national and local government. The directions of change and reform that could be pursued by government include: a return to informal settlements upgrading within an urban renewal/regeneration framework, urban development and housing to occur guided by long term spatial planning and guidelines by the national or local governments, government not to build houses but only demonstrate model schemes; only those actually living in the danger zone to be relocated, not the whole informal settlement, rationalized and effectively targeted capital subsidies, rights-based alternatives for informal settlers living on government property such as land lease under renewable year leases with options to purchase at any time, or usufruct arrangements, adopting more market-based approaches to housing finance and production, microfinance and community finance as reliable alternatives in the provision of housing and infrastructure for informal settlements, exploring the possibility of privatizing SHFC by selling initially say 51%-60% of its shares to the private banking sector, perhaps encouraging a similar ownership structure to that of the Local Government Unit Guarantee Corporation (LGUGC), strengthening the capacity of HUDCC to lead and provide a wider vision for urban development and housing in the Philippines, and enabling local governments to lead through a sustainable urban renewal performance fund and local, area-specific urban renewal or regeneration partnerships. Page 10

22 Developing a National Informal Settlements Upgrading Strategy of the Philippines 3 THE NATIONAL INFORMAL SETTLEMENTS UPGRADING STRATEGY OF THE PHILIPINES: ROADMAP TO TRANSFORMATION The CAR paved the way for formulating the NISUS under Phase 3 of the Project. Highlighting the key findings and recommendations of the CAR, the Consultants working closely with HUDCC prepared the draft NISUS. In formulating the draft NISUS, lessons learned from international and local experience as summarized in the CAR were carefully considered (Box 4). Box 4. Key Lessons Learned from Past Informal Settlements or Slum Upgrading Achieving a city without slums begins with a shared understanding and acceptance that slums and their residents are an integral part of the city and the urban economy and as such, they have a right to the city and its services. A demand-driven approach that is focused on the informal settlers needs, priorities and affordable limits rather than a supply-driven approach that focuses on the mass delivery of houses and buildings is necessary to achieve a sustainable and replicable informal settlements upgrading program. Building and planning standards must support an incremental approach and recognize the limited affordable limits of informal settler families. Partnerships between and among the local governments, national government, private sector groups and civil society organizations including community organizations are essential to sustainable informal settlements upgrading and urban renewal because each has a comparative advantage to offer. Bundling rights through alternative rights-based instruments, rather than freehold, may offer more financially viable means to secure tenure. A financial institution that caters to the development and end-user financing of ISFs through a variety of appropriate and innovative lending instruments is vital to scaling up the interventions. Adopting self-targeting mechanisms, combined with upfront capital grants, can enhance the efficiency of the subsidy system and reduce fiscal burden. Housing microfinance, combined with microenterprise finance, is promising in terms of sustainable, unleveraged finance for ISFs but a lot more tailoring needs to be done in these area. Localizing informal settlements upgrading is dependent not only on the capacity and willingness of the LGUs but also on the ability of the national governments and their regional agencies, civil society and the public sector to support the localized programs. Subsequently, the draft NISUS was discussed with the stakeholders at the regional consultations held in Cebu, Davao and Manila to conform with the inclusive, participatory approach of the Project. 4 Throughout the process, the draft NISUS was revised iteratively to incorporate the comments of participants from the local governments, regional government offices, people s organizations, NGOs, academic groups professional organizations, and the public sector in the Luzon, Visayas and Mindanao regions. On 3, a national forum to present the proposed NISUS was convened by HUDCC. 5 The worskhop proceedings for the regional consultation in the Visayas is in Appendix 2; for Mindanao in Appendix 3, and for Luzon in Appendix 4. The NISUS which incorporates revisions to address the comments during the regional consultations and the national forum is presented and discussed in detail in the following pages. 4 The regional consultations to discuss the preliminary draft of NISUS in Cebu, Davao and Luzon were held on 27 May 2014, 29 May 2014, and 3 June 2014, respectively. 5 The national forum was held at the Sofitel Philippine Plaza Manila on 3. Mr. Motoo Konishi, World Bank Country Director for the Philippines delivered the welcome remarks while the the Honorable Jejomar Binay, Vice-President of the Philippines and HUDCC Chairman, delivered the key note address. Page 11

23 Developing a National Informal Settlements Upgrading Strategy of the Philippines 3.1 The Vision: The Informal Settler Families of Tomorrow The NISUS 2025 vision statement is ISFs transformed into formal urban residents in resilient, vibrant, and connected communities. This vision statement was discussed and agreed with the stakeholders during the meetings and regional consultations held. Informal settlements are essentially a staging ground for people moving to the city or for people who are temporarily in trouble, a place where they can live cheaply in the interim, until they establish themselves. In the long-term, most informal settlers aim to find a better place to live. NISUS envisions most, if not all, ISFs finding such a secure and better place of residence in the cities by 2025 in resilient communities that are able to withstand climate change and natural disasters, vibrant communities animated with socio-economic dynamism and quality urban infrastructure and services, and connected communities that are linked by transport and telecommunication to employment, sources of livelihood, the urban economy, the rest of the city and beyond. 3.2 The Mission Statement: Enabling the ISF s Envisioned Transformation The mission is a profound commitment to a more dignified life for at least one million ISFs by 2025 through secure and better quality housing, improved physical infrastructure and social services, and greater access to jobs, transport, capital, and livelihood. A life of dignity is a life of pride and selfrespect. NISUS will work towards providing at least one million ISFs with a more dignified life by The target of one million ISF entails the delivery of quality housing, improved infrastructure and social services, and greater access to jobs, transport, capital and livelihood to an average of 100,000 ISFs annually for 10 years. This represents a big leap from the current 30,000 delivered by the various government housing programs every year but the stakeholders agreed that significantly more ISFs must be targeted in order to achieve the scale that will make a difference. 3.3 Guiding Principles: Shepherding Actions Toward the Vision The VISION 2025 is ISFs transformed into formal urban residents in resilient, vibrant, and connected communities. The MISSION is profound commitment to a more dignified life for at least one million ISFs by 2025 through secure and better quality housing, improved physical infrastructure and social services, and greater access to jobs, transport, capital, and livelihood. Accompanying the mission are guiding principles for how the objectives, strategies and actions will be formulated and implemented. Consensus among the stakeholders was achieved on a set of guiding principles based on the CAR and review of lessons learned and best practices from past and ongoing informal settlements or slum upgrading, both locally and internationally. The guiding principles are as follows: Guiding Principle No. 1: Scale-Up the Current Interventions. Current programs for informal settlers must benefit more. Guiding Principle No. 2: Maximize Retention and Minimize Relocation of ISFs. Relocate only those in danger areas and on land needed for public infrastructure. Page 12

24 Developing a National Informal Settlements Upgrading Strategy of the Philippines Guiding Principle No. 3: Build on Lessons Learned. Successful interventions must be institutionalized and replicated; learn from past mistakes. Guiding Principle No. 4: Focus on People. The informal settlers must drive the process and decision making demand-driven approach. Guiding Principle No. 5: Adopt Strategic City-wide Planning. Planning must be undertaken with a long-term strategic perspective that sets the spatial pattern for future growth and enables cities to plan primary infrastructure in advance of land development. Guiding Principle No. 6: Plan for Climate Change. Incorporate climate change adaptation in urban renewal and ISF housing programs. Guiding Principle No. 7: Shift More toward the Market. House construction and rental housing must be provided predominantly through the private sector and civil society; and housing finance must be market-related. Guiding Principle No. 8: Target Subsidies Toward the Needy. Provide capital subsidies instead of interest rate subsidies, and target them towards the needy. Guiding Principle No. 9: Adopt an incremental approach to providing housing. Recognize that ISFs have low incomes and most of them can only build houses incrementally. Guiding Principle No. 10: Use alternative rights-based instrument. Lease variants and other rights based instruments to secure tenure must be applied. Guiding Principle No. 11: Integrate Upgrading with Urban Renewal. Policies for ISFs must be seen as part of a more embracive city-wide urban renewal and inter-city connectivity. Guiding Principle No. 12: Implement ISF Programs at the Local Level under a Participatory, Decentralized Framework. LGUs must lead programs with support from people s organizations, NGOs, civil society and the private sector using participatory approaches. Guiding Principle No. 13: Tailor Housing Finance to the ISF s Income and Expenditure Patterns. Adopt principles of microfinance and community finance which are proving to be more appropriate for ISFs. Guiding Principle No. 14: Implement and Act through Partnerships. Urban renewal and ISF housing must be implemented through partnerships of the local governments with the people s organizations, civil society, private sector and the national government. 3.4 The Strategic Objectives: What Will be Achieved for the ISFs by When? During the thematic, sectoral and consulations in Phase 2, problem tree analyses of the informal settlements in the Philippines were conducted to define the core problem, its effects, and its causes. The strategic objectives of NISUS address the three main causes of the huge demand-supply gap in affordable and viable ISF housing. The first objective which relates to inadequate planning and production is: upgrading, relocation and incremental, affordable new homes for sale and rent.the second objective which addresses the inadequacy of financing for affordable ISF housing is: market-based housing and microfinance and targeted subsidies for ISFs. The third objective which deals with the weak sector Page 13

25 Developing a National Informal Settlements Upgrading Strategy of the Philippines capacity overall is: strengthened sector governance, organizational, staff and resource capacity at the local and national levels. The strategic objectives and the NISUS targets for each are summarized below (Table 1). Table 1. The NISUS Strategic Objectives Objective 1: Upgrading, relocation, and incremental, affordable new homes for sale and rent Targets: By 2025, ISFs living in danger areas rehoused in vibrant, resilient and connected communities ISFs on public and private land live in fully upgraded communities and inclusive cities Annual demand for affordable socialized housing met through viable public-private-people partnerships Objective 2: Market-based housing and microfinance and targeted subsidies for ISFs Targets: National financing facility for urban renewal and ISF housing capitalized and fully functional by 2016 Targeted housing subsidy program for ISFs designed, funded and operationalized by 2025 At least 20% of microfinance institutions (MFIs) engaged in housing microfinance for ISFs by 2025 At least 20% of urban renewal and ISF housing finance comes from commercial and thrift banks by 2025 Objective 3: Strengthened sector governance, organizational staff, and resource capacity at the local and national levels Targets: At least 40% of cities are implementing city-wide urban renewal and ISF housing with approved strategic urban development plans by 2025 Strengthened and fully equipped HUDCC providing sector leadership, monitoring and training in strategic urban planning and development, urban renewal, and ISF socialized housing by 2017 Strengthened NHA as government s housing production, IS upgrading and related training arm; SHFC as an autonomous corporation financing urban renewal and ISF housing; and DILG capacitated to support cities urban renewal and ISF housing programs by 2020 Capacity of people s organizations, community-based organizations and homeowners associations to engage in urban renewal and ISF housing fully developed by The Strategies: Pathways to ISF Transformation Strategies have been prepared, discussed and agreed with the stakeholders to support each of the three NISUS objectives. Five strategies will help achieve the first NISUS objective of upgrading, relocation and incremental affordable new homes for sale and rent. At the heart of these strategies is the adoption of informal settlements upgrading within an urban renewal/regeneration, climate change adaptation (CCA)/disaster risk reduction and management (DRRM), and income generating framework. Urban regeneration or renewal is at the core of city planning. It can be defined as the integrated local redevelopment of deprived areas at the neighborhood, city, or metropolitan area. It covers many aspects of city life, including physical, social, economic and environmental characteristics. The approaches depend on a city s history, and policies must be integrated, area-based and focused on communities and people. It often involves the redevelopment, refurbishment, renovation, reconstruction and reuse of old sites or buildings. Urban regeneration is about improving social Page 14

26 Developing a National Informal Settlements Upgrading Strategy of the Philippines conditions, stimulating the local economy to increase jobs and business opportunities, infrastructure and housing improvements, and development financing. It is a collaborative process. In the Philippines, informal settlement upgrading should be a major component, linked with measures to increase jobs and improve social services, including education and health. Accepting that people matter and adopting the principle of subsidiarity, suggests adoption of the informal settlement upgrading approach. Programs and projects must put people and communities first, and help them plan and upgrade their settlements according to their needs and priorities but within the constraints of their affordable limits through a community action planning process. Resettlement must be done selectively and must be implemented within a viable new town scheme. Partnerships of local governments with the communities, the private sector and civil societry must be encouraged. Long-term, strategic spatial planning must enable cities to guide development rather than having to provide connecting infrastructure and public transport retroactively. Under this more rational approach, affordable land would then be acquired and developed together with future public transport networks, employment areas, under compact settlement designs. Specific strategies to support Objetive 1 of NISUS are as follows: Objective 1: Upgrading, relocation, and incremental, affordable new homes for sale and rent Strategy 1: Guide future land development within the context of strategic city-wide planning and CCA/DRRM Strategy 2: Adopt informal settlements upgrading with secure tenure within an urban renewal, CCA/DRRM, and income generating framework Strategy 3: Resettle people selectively with appropriate compensation and choice within a sustainable new town framework Strategy 4: Engage the private sector and civil society to produce and manage affordable, new homes to ISFs Strategy 5: Encourage a fully functioning private rental market Objective 2: Market-based housing finance and microfinance and targeted subsidies for ISFs Four strategies have been identified and agreed to achieve the second NISUS objective of market-based housing finance and microfinance and targeted subsidies for ISFs. The need for sustained financing to scale-up urban renewal and ISF housing underpin these strategies. Shifting more to the market reduces the distortions caused by the poorly targeted public subsidies of past and ongoing socialized housing programs. A better designed, and upfront, capital rather than interest-based, subsidy system targeted to the poor eliminates the crowding out of the private sector by the Government and creates incentives for their increased participation in urban renewal and ISF housing finance. Encouraging MFIs and community finance promotes savings, introduces credit discipline and more pro-poor housing finance and cost recovery among ISFs and people s organizations. Scaling-up urban renewal and ISF housing will require adequate development and end-user finance. Bringing in the private sector, particularly the commercial and thrift banks, will significantly augment the limited resources available to the Government. Adequate funding for the urban renewal/regeneration and ISF housing programs of local governments must be provided. A local government urban renewal/regeneration fund could be provided as matching Page 15

27 Developing a National Informal Settlements Upgrading Strategy of the Philippines funds to those LGUs with an approved long-term integrated shelter and urban renewal/regeneration plan, which includes a major informal settlements upgrading component; to those who pursue effective enforcement against squatting; and to those with an appropriate institutional arrangement to implement the program. The money would be in addition to and independent of the internal revenue allotment (IRA). The strategies discussed and agreed among the stakeholders to help achieve Objective 2 of NISUS are as follows: Strategy 6: Shift more to the market for ISF housing finance Strategy 7: Expand the role of microfinance and community finance in urban renewal and ISF housing Strategy 8: Target subsidies to those in need based on household incomes Strategy 9: Provide appropriate funding for urban renewal and ISF housing Objective 3: Strengthened sector governance, organizational staff, and resource capacity at the local and national levels The last five strategies support the achievement of the third objective of NISUS which focuses on developing improved capacity for sector governance at the local and national levels. Capacity within HUDCC is still weak, and is compounded by the limited skills within the KSAs, and the local governments. Much of the problem lies at the local level where city planning lacks a strategic dimension, there are no clear visions regarding urban renewal and informal settlement upgrading, and when undertaken, it is neither integrated with shelter nor city planning. Spatial and investment planning are seldom linked effectively; project identification, feasibility and packaging is poor; and the ability to mainstream urban renewal/regeneration and CCA/DRRM into city planning and onto the project development cycle is lacking. Neither HUDCC nor the KSAs have the resources required to vigorously lead the way in improving capacities at the local level. Instead, this is spearheaded by the DILG, who has too little training or updated knowledge of urban development and shelter, and related policies. Capacity development for HUDCC and the KSAs needs to focus on strategic city planning and urban policy formulation, innovations and good practice in urban renewal and informal settlements upgrading, and on program formulation and project identification, feasibility and structuring. For informal settler housing upgrading, the skill sets to be developed can cover community involvement, innovative architecture and engineering, low income housing finance including microfinance and community finance land management land pooling and readjustment and estate management. These skills need to be passed on to the local governments and whenever possible, to the people s organizations that work in partnership with the cities, civil society and private sector groups. Capacity for appropriate data collection, mapping, knowledge management and monitoring systems must be developed both at the local and national levels. Specific strategies to support Objetive 3 of NISUS are as follows: Strategy 10: Improve capacity of local governments as the lead agencies for urban renewal and ISF housing Strategy 11: Improve sector governance Strategy 12: Enhance sector leadership, wider vision and improved skills for urban development and ISF housing at the national level Page 16

28 Developing a National Informal Settlements Upgrading Strategy of the Philippines Strategy 13: Set up, operationalize and build capacity for appropriate data collection, mapping, knowledge management, and monitoring systems Strategy 14: Build capacity of people s organizations, community-based organizations and homeowners associations to engage more in ISF housing 3.6 The Strategic Action Plan: Blueprint for Operationalizing NISUS A strategic action plan detailing the tasks entailed to achieve the NISUS objective and strategies, the agencies and organizations involved, as well as the time frame for implementation have likewise been agreed as part of the regional consultations. The strategic action plan presented below includes the revisions and additions proposed by the stakeholders during the regional consultation and national forum on NISUS (Table 2). Table 2. The NISUS Strategic Action Plan, Objectives/Strategies/Actions Agencies/Organizations Responsible Strategic Objective No. 1: Upgrading, relocation, and incremental, affordable new homes for sale and rent 1.1. Prepare, approve, and mainstream guidelines for strategic urban assessments and plans HUDCC, MMDA, HLURB, Strategy 1: Guide future 1.2 For each city, apply approved strategic city-wide NEDA, DILG, DPWH, assessments and planning guidelines to the CDPs, land development CLUPs, and shelter plans DOTC, DENR, NDRRMC, within the context of 1.3 For each city, identify strategic infrastructure CCC, PCUP, NAPC, strategic city-wide requirements and urban renewal areas, including LGUs, LGU Leagues, development and ISF communities Concerned Private CCA/DRRM 1.4 Review and improve guidelines for safe, resilient Sector, Civil Society housing to incorporate into national building code and application at the local level within a risk Groups, People s sensitive land use planning framework Organizations, Regional 1.5 Review and operationalize concepts for land and Metropolitan readjustment and pooling, and measures needed to Coordinating Boards bring idle lands into productive use including ISF Strategy 2. Adopt informal settlements upgrading with secure tenure within an urban renewal, CCA/DRRM, and income generating framework housing 1.6 Reassess and address constraints to land administration and management with respect to urban areas, including informal settlements 2.1 Prepare, mainstream, and approve urban renewaland income generating concepts 2.2 Review and improve community action planning including tools developed under previous projects 2.3 Develop and implement urban renewal concept for each city 2.4 Review and implement improvements to CMP program design and upgrade existing projects 2.5 Use rights-based instruments as alternatives to titles to accelerate secure tenure for ISFs 2.6 Develop and implement upgrading plans for land proclaimed for socialized housing 2.7 Prepare and implement plans for comprehensive IS upgrading in danger/high risk areas, privately owned land, and government owned land, incorporating community action plans Timeframe HUDCC, KSAs, HLURB, DENR, DOJ, LRA, LMB HUDCC, MMDA, NHA, HLURB, DILG, DOLE, DSWD, DPWH, DOTC, PCUP, NAPC LGUs, League of Cities, NHA, SHFC, HUDCC, DENR, DOJ LRA, LMB, BSP, Concerned Private Sector and Civil Society Groups, Regional and Metropolitan Coordinating Boards Page 17

29 Developing a National Informal Settlements Upgrading Strategy of the Philippines Strategy 3. Resettle people selectively with appropriate compensation and choice within a sustainable new town framework Strategy 4. Engage the private sector and civil society to produce and manage affordable, new homes to ISFs Strategy 5. Encourage a fully functioning private rental market Strategy 6. Shift more to the market for ISF housing finance Objectives/Strategies/Actions 3.1 For ISFs in danger/high risk areas or on land needed for government infrastructure projects, identify ISFs for relocation 3.2 Formulate policy framework for in-city and off-city relocation schemes including selection criteria, compensation, and other incentive schemes for receiving LGUs 3.3 Review and revise compensation and subsidy policies for affected ISFs 3.4 For each city, develop and implement plans for incity relocation and sustainable new town schemesfor off-city relocation 3.5 Ensure appropriate post-relocation support is provided to affected ISFs 4.1 Reassess current model schemes for PPPs involving private sector, MFIs and NGOs from management contracts to joint ventures 4.2 Strengthen policy and regulatory framework, and incentives for PPPs and PSPs Agencies/Organizations Responsible HUDCC, KSAs, MMDA, DILG, DOF, NEDA, DOTC, Dep Ed, DOH, PCUP, NAPC, LGUs, Leagues of Cities LGUs, Leagues of Cities, Concerned Private Sector and Civil Society Groups, Regional and Metropolitan Coordinating Boards HUDCC, NHA, MMDA, Other KSAs, PPP Center, DTI-BOI, BIR, DOF, PCUP, NAPC, LGUs, Timeframe Develop and implement PPPs and PSPs League of Cities, Involve the private sector and civil society, NGOs Concerned Private Sector and Civil Society and MFIs in estate management activities 4.5 Encourage major industrial enterprises to provide Groups, Regional and suitable employee housing or accommodations Metropolitan Coordinating Boards 5.1 Identify constraints to the provision of formal and HUDCC, KSAs, MMDA, 2015 informal private rental accommodation for ISFs DILG, DOF, DBM, 5.2 Strengthen policy and regulatory measures to NEDA, PCUP, NAPC, BIR, improve the private rental market for ISFs 5.3 Design and implement a rental housing support Concerned Private program for ISFs Sector and Civil Society Groups, Regional and Metropolitan Coordinating Boards Strategic Objective No. 2: Market-based housing and microfinance and targeted subsidies for ISFs 6.1 Develop appropriate underwriting criteria and collateral for ISF housing finance to improve prospects of securitization Strategy 7. Expand the role of microfinance and community finance in urban renewal and ISF housing HUDCC, KSAs, GSIS, SSS, DOF, NEDA, BSP, Commercials Banks, MFIs, PCUP, NAPC, Concerned Private Amend the HGC guaranty program for socialized housing to partial coverage 6.3 Adopt market-driven, variable interest rates for socialized housing 6.4 Seek commercial banking involvement Sector and Civil Society Adopt more efficient and pro-poor collection Groups systems 7.1 Strengthen SHFC as microfinance wholesaler and development financier 7.2 Promote saving schemes within ISF communities HUDCC, SHFC, NHA, Promote and incentivize MFIs to provide HGC, BSP, PCUP, appropriate housing finance products and services NAPC, Concerned Private for ISFs Sector and Civil Society Groups 7.4 Establish and implement mechanisms for community finance to facilitate ISF housing and small-scale infrastructure improvement Page 18

30 Developing a National Informal Settlements Upgrading Strategy of the Philippines Strategy 8. Target subsidies to those in need based on household incomes Strategy 9. Provide appropriate funding for urban renewal and ISF housing Strategy 10. Improve capacity of local governments as the lead agencies for urban renewal and ISF housing Objectives/Strategies/Actions Agencies/Organizations Responsible 8.1 Design a targeted subsidy system for ISFs HUDCC, KSAs, MMDA, 8.2 Identify funding sources for the targeted subsidy DOF, DBM, NEDA, DILG, program PCUP, NAPC, DSWD, 8.3 Devise mechanisms for implementing rules and Concerned Private regulations 8.4 Implement and monitor the program Sector and Civil Society Groups 9.1 Design a competitive system based on performance and develop funding mechanisms for local governments access to finance for urban renewal and ISF housing 9.2 Prepare the implementing rules and regulations for the system including the institutional and financing arrangements HUDCC, KSAs, DOF, DBM, NEDA, DILG, Concerned Private Sector and Civil Society Groups, Regional and Timeframe Prepare and package projects for financing Metropolitan Coordinating Boards 9.4 Identify and mobilize other resources for LGUs to finance and implement urban renewal and ISF housing HUDCC, MMDA, NEDA, DILG, NDRRMC, CCC. PCUP, NAPC, PPP Center, LGUs, Regional or Metropolitan Coordinating Bodies, Concerned Private Sector, Civil Society Groups, Academe, Professional Organizations Strategic Objective No. 3 Strengthened sector governance, organizational staff, and resource capacity at the local and national levels 10.1 Reinforce LGUs as lead agencies for urban renewal, 2015 ISF housing and PPPs 10.2 Develop capacity of LGUs to undertake city-wide strategic planning, urban renewal, CCA/DRRM, IS upgrading, estate management and PPPs Strategy 11. Improve sector governance Strategy 12. Enhance sector leadership, wider vision and improved skills for urban development and ISF housing at the national level 10.3 Develop and create incentives for LGUS to adopt an institutionalized response to urban renewal and ISF housing 10.4 Encourage more partnerships between LGUs and academic and professional organizations, private sector and civil society 10.5 Strengthen practice of coordinated IS planning within a cluster city or metropolitan development approach among LGUs 10.6 Improve capacity and system for enforcement of laws against illegal land occupation and construction 10.7 Develop improved mechanisms for implementing the 20% balanced housing policy of the government 11.1 Clarify the role and responsibilities of HUDCC in urban development and ISF housing 11.2 Develop corporate business plan for SHFC and enact appropriate legislation for its role in ISF housing 11.3 Clarify the roles and involvement of NHA, HGC, and MMDA in ISF housing 11.4 Establish effective coordination and linkages with other government agencies involved in the sector 12.1 Strengthen HUDCC s leadership and managerial capacity for urban development, ISF housing and PPPs 12.2 Review and improve training modules of HUDCC for local governments and ISF communities 12.3 Strengthen the capacity of KSAs to engage in urban development, ISF housing, CCA in ISF housing, and PPPs 12.4 Strengthen the capacity of NHA for estate management HUDCC, SHFC, NHA, HGC, MMDA, PCUP, NAPC, Concerned Private Sector and Civil Society Groups HUDCC, KSAs, MMDA,PPP Center, DILG. PCUP, NAPC, Concerned Private Sector and Civil Society Groups Page 19

31 Developing a National Informal Settlements Upgrading Strategy of the Philippines Strategy13: Set up, operationalize and build capacity for appropriate data collection, mapping, knowledge management, and monitoring systems Strategy 14: Build capacity of people s organizations, community-based organizations and homeowners associations to engage more in ISF housing Objectives/Strategies/Actions 12.5 Strengthen the capacity of DILG and MMDA for strategic urban planning, urban renewal, and ISF housing 13.1 Develop and operationalize a comprehensive and integrated program performance monitoring system including transformative indices 13.2 Develop, operationalize, and train HUDCC in monitoring and evaluation and knowledge and information management for the urban development and housing sector 13.3 Improve data collection, aggregation, and analysis of urban and housing data 13.4 Design/install or update GIS for city-wide mapping of ISFs, hazards, and economic activities within each city 13.5 Train city staff in maintaining and operating the local GIS 14.1 Provide training in strategic urban planning, urban renewal, community action planning and safe housing, and community finance 14.2 Strengthen the capacity of POs, CBOs, HOAs and cooperatives in estate/community management including billing and collection, financial management and accountability 14.3 Enhance the capacity of POs, CBO, and HOAs in project monitoring, evaluation, and impact assessment 14.4 Design and implement training modules in the application of microfinance to ISF housing including savings mobilization, credit enhancement, and conflict resolution 14.5 Strengthen capacity of communities in working with LGUs to enforce laws against illegal land occupation and construction Agencies/Organizations Responsible HUDCC, NEDA, NSO, MMDA, DILG, PCUP, NAPC, Academe, Concerned Private Sector, Civil Society Groups, and People s Organizations LGUs, League of Cities, Concerned Private Sector and Civil Society Groups SHFC, PCFC,NHA, HLURB, PCUP, NAPC, Concerned Private Sector, Civil Society Groups, MFIs Timeframe Develop partnerships between POs and academe in building capacity for community-based planning BIR = Bureau of Internal Revenue; BSP = Bangko Sentral ng Pilipinas; CCC = Climate Change Commission; DBM = Department of Budget and Management; DENR = Department of Environment and Natural Resources; DePED = Department of Education; DILG = Department of Interior and Local Government; DOH = Department of Health; DOJ = Department of Justice; DOLE = Department of Labor and Employment; DOTC = Department of Transportation and Communication; DPWH = Department of Public Works and Highways; DSWD = Department of Social Welfare and Development; DTI-BOI = Department of Trade and Investment Board of Investment; GSIS = Government Service Insurance System; HGC = Home Guaranty Corporation; HLURB = Housing and Land Use Regulatory Board; HUDCC = Housing and Urban Development Coordinating Council; KSAs = Key Shelter Agencies; LGUs = Local Government Units; LMB = Land Management Bureau; LRA = Land Registration Authority; MFIs = Microfinance Institutions; MMDA = Metro Manila Development Authority; NAPC = National Anti-Poverty Commission; NDRRMC = National Disaster Risk Reduction Management Commission; NEDA = National Economic Development Authority; NHA = National Housing Authority; NSO = National Statistics Office; PCFC = People s Credit and Finance Corporation; PCUP = Philippine Commission for the Urban Poor; PPP Center = Public-Private Partnership Center; SHFC = Socialized Housing Finance Corporation; SSS = Social Security System Page 20

32 Developing a National Informal Settlements Upgrading Strategy of the Philippines 4 THE NISUS INVESTMENT REQUIREMENTS, This chapter outlines the indicative investment requirements for the implementation of the strategy from 2014/25. It is in two parts: (i) the capital investment requirements for the production program construction of new affordable units for informal settler families (ISFs), and those for relocation and the upgrading of existing informal settlements; and (ii) mortgage finance requirements for the two production programs. Two estimates were prepared high and low. Table 3 shows that the total investment requirements range from Php billion (US$ 4.8 billion) to Php 1,052.1billion (US$24.5 billion), financing some 0.4 million to 0.7 million new units and transforming 1.0 to 1.5 million informal settler families (ISF) over the 2014/25 period. Table 3. Summary of Indicative Investment Program, Low Estimate High Estimate Investment Cost Php Billions US$ Billions Php Billions US$ Billions Construction of new housing units Relocation/upgrading of existing informal settlements Total , Average annual investment requirements Subsidy requirements Amount (Billions) Percentage of total investments 15.7% 25.5% Number of Units Low Estimate (Millions) High Estimate (Millions) Construction of new housing units Relocation/upgrading of existing informal settlements Total Average annual number of units Low estimate High estimate Construction of new housing units 35,600 59,200 Relocation/upgrading of existing informal settlements 83, ,200 Total 118, ,400 Source: Consultant s estimates, Note: Exchange rate US$1 = PhP Production Programs Investment Requirements Total investment requirements in current prices for the implementation of the production program of the strategy, over the 2014/25 period, range from Php506.7 billion (Table 4) to Php1,052.1 billion (Table 5), according to low and high estimates of program coverage. This amounts to about Php206.6 billion for the construction of new units, and Php300.1 billion for upgrading/relocation of ISFs under the low estimate. The high estimate comprises Php469.8 billion for new units construction and Php582.3 billion for ISF housing. Average annual requirements under the high option would be Php87.7 billion in total Php39.2 billion for new units and Php48.5 billion for ISFs. For the low estimates, the average annual requirements would be Php42.2 billion Php17.2 billion for new units and Php25.0 billion for ISF housing. Under the low estimate, some 0.4 million new units would be financed, and 1.0 million ISFs would be relocated or their plots upgraded. Of the total 1.4 million units, 0.8 million would be in the National Page 21

33 Developing a National Informal Settlements Upgrading Strategy of the Philippines Capital Region (NCR) and 0.6 million in urban areas outside. The high estimate relates to financing an estimated 0.7 million new units and 1.5 million ISF all of those total identified in the 2011 count. Of the total 2.2 million units, 0.9 million would be in the NCR while 1.3 million would be in urban areas outside. The annual average number of units financed under the low option would be some 102,000, while under the high estimate; the average would be about 157,000. Indicative estimate of subsidy requirements have been prepared for both estimates. The strategy assumes the adoption of a direct subsidy scheme towards those who cannot afford to make adequate downpayments or to repay housing loans without assistance. Subsidies were assumed to be the difference between the affordable limits of households within each decile 6 and the weighted average prices of typical low-cost housing units. These were estimated separately for new units and relocation/upgrading within the NCR and in urban areas outside. Under the low estimates, some Php79.6 billion would be required to fund the subsidies, amounting to 16% of the total investment requirements. The amount more than triples to Php billion under the high estimate, and accounts for 26% of the total investment requirements. These estimates are also shown in Tables 4 and 5. All estimates were made in current prices, applying annual inflation rates of 3.6% for years 2014 to 2015, and 4.0% thereafter to base cost estimates prepared in 2013 prices. Table 4. Indicative Investment Program, Low Estimate (Current Prices) Investment Cost - Pesos Billions 2014/ / /2025 Total Construction of new housing units: National Capital Region For Poorest 30% Urban Areas Outside National Capital Region For Poorest 30% Sub-total Average annual requirements Relocation/upgrading of existing informal settlements National Capital Region - 100% of ISFs Outside National Capital Region - 45% of ISFs Sub-total /10 Average annual requirements Total National Capital Region Urban Areas Outside National Capital Region Grand Total Average annual requirements Number of Units 2014/ / /2025 Total Construction of new housing units: National Capital Region For Poorest 30% 8,064 76, , ,458 Urban Areas Outside National Capital Region For Poorest 30% 9,361 64, , ,088 Sub-total 17, , , ,546 Average new units per year 8,712 28,212 53,612 35,546 Relocation/upgrading of existing informal settlements National Capital Region - 100% of ISFs 43, , , ,425 Outside National Capital Region - 45% of ISFs 10, , , ,575 Sub-total 54, , ,947 1,000,000 Average number of ISF per year 27, ,766 85,389 83,333 6 Under current market lending terms of 6% annual interest with repayments over a maximum of 15 years. Page 22

34 Developing a National Informal Settlements Upgrading Strategy of the Philippines Total National Capital Region 51, , , ,883 Urban Areas Outside National Capital Region 19, , , ,663 Grand Total 71, , ,007 1,426,546 Average new units/isfs per year 35, , , ,879 Subsidy requirements - Pesos Billions 2014/ / /2025 Total Construction of new housing units: National Capital Region For Poorest 30% Urban Areas Outside National Capital Region For Poorest 30% Sub-total Average annual requirements Relocation/upgrading of existing informal settlements National Capital Region - 100% of ISFs Outside National Capital Region - 45% of ISFs Sub-total Average annual requirements Total National Capital Region Urban Areas Outside National Capital Region Grand Total Average annual requirements Key Assumptions 2014/ / /2025 Percentage of program coverage for construction of new units: National Capital Region 25.0% 75.0% 100.0% Urban Areas Outside National Capital Region 10.0% 25.0% 50.0% Annual inflation rate 3.6% 4.0% 4.0% Source: Consultant s estimates, Table 5. Indicative Investment Program, High Estimate (Current Prices) Investment Cost - Pesos Billions 2014/ / /2025 Total Construction of new housing units: National Capital Region For Poorest 50% Urban Areas Outside National Capital Region For Poorest 50% Sub-total Average annual requirements Relocation/upgrading of existing informal settlements National Capital Region - 100% of ISFs Outside National Capital Region - 100% of ISFs Sub-total Average annual requirements Total National Capital Region Urban Areas Outside National Capital Region Grand Total , Average annual requirements Number of Units 2014/ / /2025 Total Construction of new housing units: National Capital Region For Poorest 50% 13, , , ,429 Page 23

35 Developing a National Informal Settlements Upgrading Strategy of the Philippines Urban Areas Outside National Capital Region For Poorest 50% 15, , , ,481 Sub-total 29, , , ,910 Average new units per year 14,521 47,020 89,353 59,242 Relocation/upgrading of existing informal settlements National Capital Region - 100% of ISFs 43, , , ,425 Outside National Capital Region - 100% of ISFs 22, , , ,912 Sub-total 66, , ,115 1,502,337 Average number of ISF per year 33, , , ,195 Total National Capital Region 57, , , ,854 Urban Areas Outside National Capital Region 38, , ,823 1,286,393 Grand Total 95, ,544 1,124,881 2,213,247 Average new units/isfs per year 47, , , ,437 Subsidy requirements - Pesos Billions 2014/ / /2025 Total Construction of new housing units: National Capital Region For Poorest 50% Urban Areas Outside National Capital Region For Poorest 50% Sub-total Average annual requirements Relocation/upgrading of existing informal settlements National Capital Region - 100% of ISFs Outside National Capital Region - 100% of ISFs Sub-total Average annual requirements Total National Capital Region Urban Areas Outside National Capital Region Grand Total Average annual requirements Key Assumptions 2014/ / /2025 Percentage of program coverage for construction of new units: National Capital Region 25.0% 75.0% 100.0% Urban Areas Outside National Capital Region 10.0% 25.0% 50.0% Annual inflation rate 3.6% 4.0% 4.0% Source: Consultant s estimates, The estimates show the indicative scale of resources required under different assumptions and targets, and relate to those of government, the private sector, individuals and communities. A breakdown between the various sources cannot be made at this time without further research and analysis. The low estimate reflects the conservative targets proposed under the NISUS, while the high one assumes a more ambitious program that could be adopted if capacity is improved and there is greater private sector involvement than at present Assumptions Key assumptions used are shown as Table 6 for the construction of new units, and Table 7 for the relocation and upgrading programs. Both tables show the differences between those for the low and high estimates. In summary, the major differences are: The weighted average unit cost for ISFs relocation and upgrading Php330,000 for new units in the NCR, and Php280,000 elsewhere under the high estimate; and Php250,000 and Page 24

36 Developing a National Informal Settlements Upgrading Strategy of the Philippines Php210,000 respectively for the low option. These were based on unit costs of NHA and SHFC for alternative programs in-city relocation, off-city relocation and on-site upgrading weighted according to assumptions on program composition see section on methodology below. The weighted average cost of new units Php600,000 for new units in the NCR, and Php500,000 elsewhere under the high estimate; and Php410,000 and Php310,000 respectively for the low option. These were based on unit costs from NHA and the private sector SHFC for alternative programs multi-story apartments, row houses and sites and services developments weighted according to assumptions on program composition see section on methodology below. Upgrading/relocation of all 1.5 million ISFs identified in 2013 under the high estimate, but only 1.0 million under the low option the target for the strategy. The target group for new units under the high estimate relates to the poorest 50% for both NCR and urban areas outside, while under the low option the target group is the poorest 30% for both. Construction of New Housing Units The basis of the estimates for the new house construction program was the projected increase in the number of households from 2010 to 2025 undertaken at five year intervals for the NCR and all urban areas outside. Urban population figures for 2010 were those reported in the national census of the same year, while the projections used the rates of increase recorded in the United Nations, Department of Economic and Social Affairs, World Urbanisation Prospects: The 2011 Revision, Average household sizes and households per dwelling unit were also taken from the 2010 census results, and no changes were assumed over the forecast period (Table 6). It is unrealistic to assume that all of the annual demand for new units will be accommodated at once neither the government, nor the private sector have the capacity or willingness to produce affordable units on the scale demanded. For the NCR it has been assumed that 25% of the demand would be met in the 2014/15 period, 75% from 2016 to 2020, and 100% from 2021 to For the urban areas outside the NCR, the assumptions were for 10% of the demand to be met in the 2014/15 period, 25% from 2016 to 2020, and 50% from 2021 to Unit costs for the construction of new dwellings were based on figures provided by NHA and the private sector for three types of accommodation medium-rise, walk up apartments; row housing; and sites and services development separately for the NCR and urban areas outside Metro Manila. Unit costs for each type of accommodation differed between the high and low estimates. Assumed distributions of take-up of the options were made as shown in Table 6 where 30% were assumed to opt for both medium rise, multi-story apartments and row-housing, while 40% of families wer4e assumed to select the sites and services option within the NCR and in urban areas outside. Combining the assumed distributions amongst programs with the unit cost estimates enabled the weighted average units costs to be computed. This resulted in a figure of Php600,000 in NCR and Php520,000 in urban areas outside for the high estimate; and Php410,000 in NCR and Php310,000 outside for the low estimate. Subsidies for new dwellings were based on a simple affordability analysis that related household income at each decile to the loan amounts afforded. Data from the 2012 Family Income and Expenditure Survey (FIES), National Statistics Office was used to establish household income distributions for the NCR and urban areas outside. For the NCR, the distribution reported in the FIES was used. For the urban areas outside the NCR, data was not available, and the basis was that for the Philippines overall relative to the figures for the NCR. The assumption was that household incomes within each decile for urban areas outside NCR were 25% of the difference between those for the NCR and the Philippines overall, added to the latter. Affordability was based on typical percentages of income available for loan repayments at Page 25

37 Developing a National Informal Settlements Upgrading Strategy of the Philippines each decile capitalized on the basis of current market rates and lending terms. 7 The direct subsidy was the difference between the weighted average house price and the affordable limits of families whose incomes were the average within each decile. Table 6. Assumptions Used to Estimate Investment Requirements New Housing Units Assumptions Indicator Urban Areas Outside National National Capital Region Capital Region Construction of new housing units Low estimate High estimate Low estimate High estimate Government program to serve Poorest 30% Poorest 50% Poorest 30% Poorest 50% Percentage of housing need provided under program: 2014/ % 10.0% Time period 2016/ % 25.0% 2021/ % 50.0% Average cost of housing units (Pesos) Multi-story apartments 580, , , ,000 Row houses 400, , , ,000 Percentage distribution among housing units Weighted average cost of housing unit/limit for directed subsidy (Pesos) Annual urban population growth rates New house purchase housing loan terms Monthly household income and % for loan repayments by decile: General assumptions: Annual inflation rate for period Source: Consultant s estimates, Sites and services 290, , , ,000 Multi-story apartments 30% 30% 30% 30% Row houses 30% 30% 30% 30% Sites and services 40% 40% 40% 40% 410, , , , / % 2.25% 2016/ % 2.28% 2021/ % 2.34% Annual interest rate 6% 6% Period (years) First 12,229 10% 7,345 10% Second 15,005 12% 9,526 12% Third 18,005 15% 11,243 12% Fourth 21,309 15% 13,425 12% Fifth 23,844 15% 15,544 12% 2014/15 3.6% 3.6% 2016/20 4.0% 4.0% 2021/25 4.0% 4.0% Informal Settler Families (ISFs) Relocation and Upgrading The base numbers of ISFs used to prepare the estimated need were those compiled by NHA in July 2011 Magnitude of Informal Settler Families. Those used were the figures reported for the NCR, and those aggregated for urban areas outside from the provincial data available. The household income distribution adopted for the affordability and subsidy exercises was that reported in the UP Planades study, Socio Economic Profile of Informal Settler Families in Eight Waterways in Metro Manila, For ISFs 7 Housing loans of commercial banks are currently at 6% annual interest rate, with repayments over 15 years. Different proportions of income available for loan repayment were taken according to decile and based on the results of the UP Planades Survey, 2013 which ranged from 10% to 20%. Page 26

38 Developing a National Informal Settlements Upgrading Strategy of the Philippines outside the NCR, it was assumed that the average household incomes for each decile was 40% of those of the NCR. The unit costs for relocation and upgrading were the weighted averages of separate unit costs for incity relocation, off-city relocation, and on-site upgrading, differentiated by geographical location within or outside the NCR. The weights were determined according to assumed distributions of IFS programs following the 2011 classification of IFS within and outside NCR by category those living in danger areas; those occupying land needed for public infrastructure; those occupying government-owned lands; those located on privately-owned land; and others. (See Table 7 for the details). Average unit costs for relocation and upgrading within NCR reflected those currently incurred by NHA for its in-city relocation of Php450,000, and for its off-city program of P290,000. For the cost of on-site upgrading, the maximum loan amounts available under the Community Mortgage Program (CMP) of Php165,000 was used. For areas outside the NCR, the unit cost for on-site upgrading also was assumed to be the maximum loan amount under the CMP for other areas which is Php120,000. The average unit costs for in-city and off-city relocation outside Metro Manila were based on those for the NCR but reduced following the ratio of the CMP on-site upgrading unit costs outside to that of the NCR 8. This resulted in units costs of Php330,000 for in-city relocation, Php210,000 for off-city relocation and Php120,000 for on-site upgrading for areas outside NCR. Other differences between the high and low estimates reflected alternative assumptions on the percentages of IFS assumed to select the different options. The high estimate represents more people opting for relocation rather than on-site upgrading, while the reverse is true for the low estimate. Table 7. Assumptions Used to Estimate Investment Requirements Relocation and Upgrading Assumptions Indicator Urban Areas Outside National National Capital Region Capital Region Informal settlements relocation and upgrading Number and % of Low estimate (Peso) 584, % 415, % families under program, 2014/25: High estimate (Peso) 584, % 917, % Weighted average cost of upgrading/relocation in 2013 Low estimate High estimate Low estimate High estimate prices/limit for directed subsidy (Pesos) 250, , , ,000 In-city relocation (ICR) 450, , , ,000 Unit cost per program Off-city relocation (OCR) 290, , , ,000 (Pesos) On-site upgrading (OSU) 165, , , ,000 Percentage of ISFs assumed to select each program Percentage of IFS under each program Low estimate High estimate Low estimate High estimate Location ICR OCR OSU ICR OCR OSU ICR OCR OSU ICR OCR OSU Danger areas Public infrastructure Public land Private land Other In-city relocation 21.7% 46.0% 26.5% 64.7% Off-city relocation 17.4% 23.6% 40.2% 24.5% On-site upgrading 60.9% 30.4% 33.3% 10.8% Total 100.0% 100.0% 100.0% 100.0% 8 The Social Housing Finance Corporation s (SHFC) maximum loan packages under its CMP are Php165,000 for Metro Manila and Php120,000 for other areas. Packages for those outside Metro Manila are 72.7% of those within NCR (120,000/165,000) and this was used to reduce the average units costs within NCR as determined by NHA to those for in-city and off-city relocation options for those living outside Metro Manila. Page 27

39 Developing a National Informal Settlements Upgrading Strategy of the Philippines Indicator ISF housing loan terms Monthly household income and % for loan repayments by decile: Percentage of total program implemented in each year General assumptions: Annual inflation rate for period Source: Consultant s estimates, Assumptions National Capital Region Urban Areas Outside National Capital Region Interest rate (pa) 6% 6% Period (years) Monthly HH % of income for Monthly HH % of income for income (Php) loan repayments income (Php) loan repayments First 4,433 10% 1,773 10% Second 6,448 10% 2,579 10% Third 7,657 10% 3,063 10% Fourth 8,866 12% 3,546 10% Fifth 9,672 12% 3,869 10% Sixth 1,686 12% 4,675 10% Seventh 3,701 12% 5,481 10% Eighth 7,328 12% 6,931 10% Ninth 23,373 15% 9,349 12% Tenth 30,627 15% 12,251 12% Year Percentage Percentage % 0.0% % 2.5% % 5.0% % 7.5% % 10.0% % 12.5% % 12.5% % 12.5% % 12.5% % 10.0% % 10.0% % 5.0% Total 100.0% 100.0% 2014/15 3.6% 3.6% 2016/20 4.0% 4.0% 2021/25 4.0% 4.0% Subsidies were estimated as the difference between the house price afforded under current market rates for loans, and the weighted average unit price of Php330,000 in the NCR and Php280,000 in urban areas outside for the high estimate. Php250,000 and Php210,000, respectively, were adopted for the low option. 4.2 Mortgage Finance Requirements Total mortgage finance required to support the production program described above from 2014/15 amount to Php420.9 billion under the low estimate and Php765.5 billion for the high option (Table 8) 83.1% and 72.8% of the total investment requirements, respectively. The funding requirements were estimated as the difference between the program investment cost and the combined down-payments and subsidy estimates, assuming that all families would need to borrow the balance. Under the low option, some Php181.0 billion would be required for the purchase of new units, and some Php239.9 Page 28

40 Developing a National Informal Settlements Upgrading Strategy of the Philippines billion for the purchase of relocation/upgrading units. Under the high option, the figures are Php383.6 billion and Php381.9 billion, respectively. Table 8. Mortgage Finance Requirements, High and Low Options (Current Prices) Mortgage Finance Requirements - Pesos Billions Low Estimate 2014/ / /2025 Total Construction of new housing units: National Capital Region For Poorest 30% Urban Areas Outside National Capital Region For Poorest 30% Sub-total Average annual requirements Relocation/upgrading of existing informal settlements National Capital Region - 100% of ISFs Outside National Capital Region - 45% of ISFs Sub-total Average annual requirements Total National Capital Region Urban Areas Outside National Capital Region Grand Total Average annual requirements High estimate 2014/ / /2025 Total Construction of new housing units: National Capital Region For Poorest 50% Urban Areas Outside National Capital Region For Poorest 50% Sub-total Average annual requirements Relocation/upgrading of existing informal settlements National Capital Region - 100% of ISFs Outside National Capital Region - 100% of ISFs Sub-total Average annual requirements Total National Capital Region Urban Areas Outside National Capital Region Grand Total Average annual requirements Source: Consultant s estimates, Page 29

41 Developing a National Informal Settlements Upgrading Strategy of the Philippines 5 IMPLEMENTATION MODALITIES The proposed NISUS will be implemented through a 10-year program, consisting of 3 projects. Each project will be implemented in 3-4 years, may overlap, and will have the following components: an investment component to prepare and implement IS upgrading and new towns through LGU stand alone or PPPP projects; an urban renewal and housing finance and microfinance/community finance component; a policy and institutional reform component; and a capacity development component. To facilitate the NISUS implementation and program design, a NISUS work plan indicating the short-, medium- and long-term actions required has been prepared by the Consultants (Table 9). The priority actions comprising the critical path are summarized below: Guide future land development within the context of strategic city-wide development, climate change adaptation (CCA) and disaster risk reduction management (DRRM) where each city prepares a strategic plan that identifies strategic infrastructure requirements and urban renewal areas. Adopt informal settlements upgrading with secure tenure within an urban renewal framework as a national program where each city develops and implements an urban renewal approach incorporating informal settlements upgrading and income and employment generation programs Design and direct subsidies to those in need according to household incomes adopt capital subsides for both IFS upgrading and new affordable housing programs to lower loan to value ratios, and eliminate interest rate subsides as government IFS housing finance moves towards the market. Adopt negotiable rights-based instruments as alternatives to titles to accelerate secure tenure and facilitate access to housing finance for ISFs. Reinforce the role of local governments as the lead and agencies for urban renewal and IFS housing through building capacity to undertake city-wide strategic planning, urban renewal, CCA/DRRM, informal settlements upgrading, estate management and PPPs; and the design and implementation of a competitive system of funding for local government s access to finance for urban renewal and ISF housing based on performance. Build capacity of civil society NGOs, CBOs, Homeowners Associations, Cooperatives, MFIs, etc to engage in ISF housing, including microfinance and estate management, and to work with local governments to enforce laws and against illegal land occupation and construction. Enhance sector leadership by strengthening capacity of HUDCC, DILG and KSAs to plan, design and implement strategic urban development and ISF housing. A policy and institutional reform matrix which indicates actions requiring legislative and executive issuances has been prepared (Table 10). A results and monitoring framework will be prepared for the program and each project to facilitate periodic performance monitoring and evaluation. A preminary result and monitoring framework has been prepared by the Consultants for the overall program (Table 11). A communication plan will also be prepared and implemented. Toward this, a NISUS website has been developed and will be launched. The website will also feed into other popular social networks (Facebook, Tweeter, LinkedIn etc). The proposed NISUS website is described fully in Appendix 6. Page 31

42 Developing a National Informal Settlements Upgrading Strategy of the Philippines Table 9. The NISUS Strategic Action Plan: Short-, Medium-, and Long-Term Actions Year Strategy/Action Strategic Objective No. 1: Upgrading, relocation and incremental, affordable new homes for sale and rent Strategy 1. Guide future land development within the context of strategic city-wide development and CCA/DRRM 1.1. Prepare, approve, and mainstream guidelines for strategic urban assessments and plans 1.2 For each city, apply approved strategic citywide assessments and planning guidelines to the CDPs, CLUPs, and shelter plans 1.3 For each city, identify strategic infrastructure requirements and urban renewal areas, including ISF communities 1.4 Review and improve guidelines for safe, resilient housing to incorporate into national building code and application at the local level within a risk sensitive land use planning framework 1.5 Review and operationalize concepts for land readjustment and pooling, and measures needed to bring idle lands into productive use including ISF housing 1.6 Reassess and address constraints to land administration and management with respect to urban areas, including informal settlements Strategy 2. Adopt informal settlements upgrading with secure tenure within an urban renewal, CCA/DRRM, and income generating framework 2.1 Prepare, mainstream, and approve urban renewaland income generating concepts 2.2 Review and improve community action planning including tools developed under previous projects 2.3 Develop and implement urban renewal concept for each city 2.4 Review and implement improvements to CMP program design and upgrade existing projects 2.5 Use rights-based instruments as alternatives to titles to accelerate secure tenure for ISFs 2.6 Develop and implement upgrading plans for land proclaimed for socialized housing 2.7 Prepare and implement plans for comprehensive IS upgrading in danger/high risk areas, privately owned land, and government owned land, incorporating community action plans Strategy 3. Resettle people selectively with appropriate compensation and choice within a sustainable new town framework 3.1 For ISFs in danger/high risk areas or on land needed for government infrastructure projects, identify ISFs for relocation 3.2 Formulate policy framework for in-city and offcity relocation schemes including selection criteria, compensation, and other incentive schemes for receiving LGUs 3.3 Review and revise compensation and subsidy policies for affected ISFs Page 32

43 Developing a National Informal Settlements Upgrading Strategy of the Philippines Strategy/Action Year For each city, develop and implement plans for in-city relocation and sustainable new town schemes for off-city relocation 3.5 Ensure appropriate post-relocation support is provided to affected ISFs Strategy 4. Engage the private sector and civil society to produce and manage affordable, new homes to ISFs 4.1 Reassess current model schemes for PPPs involving private sector, MFIs and NGOs from management contracts to joint ventures 4.2 Strengthen policy and regulatory framework, and incentives for PPPs and PSPs 4.3 Develop and implement PPPs and PSPs 4.4 Involve the private sector and civil society, NGOs and MFIs in estate management activities 4.5 Encourage major industrial enterprises to provide suitable employee housing or accommodations Strategy 5. Encourage a fully functioning private rental market 5.1 Identify constraints to the provision of formal and informal private rental accommodation for ISFs 5.2 Strengthen policy and regulatory measures to improve the private rental market for ISFs 5.3 Design and implement a rental housing support program for ISFs Strategic Objective No. 2: Market-based housing and microfinance and targeted subsidies for ISFs Strategy 6. Shift more to the market for ISF housing finance 6.1 Develop appropriate underwriting criteria and collateral for ISF housing finance to improve prospects of securitization 6.2 Amend the HGC guaranty program for socialized housing to partial coverage 6.3 Adopt market-driven, variable interest rates for socialized housing 6.4 Seek commercial banking involvement 6.5 Adopt more efficient and pro-poor collection systems Strategy 7. Expand the role of microfinance and community finance in urban renewal and ISF housing 7.1 Strengthen SHFC as microfinance wholesaler and development financier 7.2 Promote saving schemes within ISF communities 7.3 Promote and incentivize MFIs to provide appropriate housing finance products and services for ISFs 7.4 Establish and implement mechanisms for community finance to facilitate ISF housing and small-scale infrastructure improvement Strategy 8. Target subsidies to those in need based on household incomes 8.1 Design a targeted subsidy system for ISFs 8.2 Identify funding sources for the targeted subsidy program 8.3 Devise mechanisms for implementing rules and regulations 8.4 Implement and monitor the program Page 33

44 Developing a National Informal Settlements Upgrading Strategy of the Philippines Year Strategy/Action Strategy 9. Provide appropriate funding for urban renewal and ISF housing 9.1 Design a competitive system based on performance and develop funding mechanisms for local governments access to finance for urban renewal and ISF housing 9.2 Prepare the implementing rules and regulations for the system including the institutional and financing arrangements 9.3 Prepare and package projects for financing 9.4 Identify and mobilize other resources for LGUs to finance and implement urban renewal and ISF housing Strategic Objective No. 3 Strengthened sector governance, organizational staff, and resource capacity at the local and national levels Strategy 10. Improve capacity of local governments as the lead agencies for urban renewal and ISF housing 10.1 Reinforce LGUs as lead agencies for urban renewal, ISF housing and PPPs 10.2 Develop capacity of LGUs to undertake citywide strategic planning, urban renewal, CCA/DRRM, IS upgrading, estate management and PPPs 10.3 Develop and create incentives for LGUS to adopt an institutionalized response to urban renewal and ISF housing 10.4 Encourage more partnerships between LGUs and academic and professional organizations, private sector and civil society 10.5 Strengthen practice of coordinated IS planning within a cluster city or metropolitan development approach among LGUs 10.6 Improve capacity and system for enforcement of laws against illegal land occupation and construction 10.7 Develop improved mechanisms for implementing the 20% balanced housing policy of the government Strategy 11. Improve sector governance 11.1 Clarify the role and responsibilities of HUDCC in urban development and ISF housing 11.2 Develop corporate business plan for SHFC and enact appropriate legislation for its role in ISF housing 11.3 Clarify the roles and involvement of NHA, HGC, and MMDA in ISF housing 11.4 Establish effective coordination and linkages with other government agencies involved in the sector Strategy 12. Enhance sector leadership, wider vision and improved skills for urban development and ISF housing at the national level 12.1 Strengthen HUDCC s leadership and managerial capacity for urban development, ISF housing and PPPs 12.2 Review and improve training modules of HUDCC for local governments and ISF communities Page 34

45 Developing a National Informal Settlements Upgrading Strategy of the Philippines Strategy/Action Strengthen the capacity of KSAs to engage in urban development, ISF housing, CCA in ISF housing, and PPPs 12.4 Strengthen the capacity of NHA for estate management 12.5 Strengthen the capacity of DILG and MMDA for strategic urban planning, urban renewal, and ISF housing Strategy 13: Set up, operationalize and build capacity for appropriate data collection, mapping, knowledge management, and monitoring systems 13.1 Develop and operationalize a comprehensive and integrated program performance monitoring system including transformative indices 13.2 Develop, operationalize, and train HUDCC in monitoring and evaluation and knowledge and information management for the urban development and housing sector 13.3 Improve data collection, aggregation, and analysis of urban and housing data 13.4 Design/install or update GIS for city-wide mapping of ISFs, hazards, and economic activities within each city 13.5 Train city staff in maintaining and operating the local GIS Strategy 14: Build capacity of people s organizations, community-based organizations and homeowners associations to engage more in ISF housing 14.1 Provide training in strategic urban planning, urban renewal, community action planning and safe housing, and community finance 14.2 Strengthen the capacity of POs, CBOs, HOAs and cooperatives in estate/community management including billing and collection, financial management and accountability 14.3 Enhance the capacity of POs, CBO, and HOAs in project monitoring, evaluation, and impact assessment 14.4 Design and implement training modules in the application of microfinance to ISF housing including savings mobilization, credit enhancement, and conflict resolution 14.5 Strengthen capacity of communities in working with LGUs to enforce laws against illegal land occupation and construction 14.6 Develop partnerships between POs and academe in building capacity for communitybased planning CBOs = community based organizations; CCA = climate change adaptation; CDPs = comprehensive development plans; CLUPs = comprehensive land use plans; ISF = informal settler families; CMP = community mortgage program; DILG = Department of the Interior and Local Government; DRRM = disaster risk reduction and management; GIS= geographic information system; HGC = Home Guaranty Corporation; HOAs = home owners associ ations; HUDCC = Housing and Urban Development Coordinating Council; IS = informal settlements; KSAs = key shelter agencies; LGUs = local government units; MFIs = mirofinance institutions; MMDA = Metro Manila Development Authority; NGOs = nongovernmental organizations; NHA = National Housing Authority; POs = people s organizations; PPPs = public-private partnerships; PSP = private sector participation; SHFC = Socialized Housing Finance Corporation Year Legend: Actions required in the short-term Actions required over the medium-term Actions required over the long-term Page 35

46 Developing a National Informal Settlements Upgrading Strategy of the Philippines Actions Policy Objective Issues To be Taken 1. Implement Upgrading, Relocation, and Incremental, Affordable New Homes for Sale and Rent Guide future land development within The context of Strategic city-wide Development and CCA/DRRM Adopt informal settlements with secure tenure within an urban renewal, CCA/DRRM, and income generating framework Resettle people selectively with appropriate compensation and choice within a sustainable new town framework Inadequate guidelines for strategic urban assessments and plans including ISF housing which incorporate CCA/DRRM principles Government housing programs for ISFs are slowed down by difficult access to financing due to collateral requirements and the need for secure tenure Absence of strong ISF housing policy framework that covers in-city and off city relocation, and onsite upgrading Weak policy on subsidies Table 10. The NISUS Policy and Institutional Reform Matrix Amend the implementing rules and regulations of the National Building Code to include CCA/DRRM to ensure disaster resilient construction. Prepare implementing rules and regulations for strategic city-wide planning. A HUDCC-led inter-agency technical working group to update usufructs and other lease variants as negotiable and transferrable rights-based instruments as collateral substitutes. A joint memorandum circular to encourage their use to be issued. Executive issuance on ISF housing policy framework for in-city and off-city relocation schemes including selection criteria, compensation, and other incentive schemes for receiving LGUs. Formulate and issue guidelines for targeted capital subsidies for the ISFs Agency Timeframe Status/Remarks HUDCC, MMDA, HLURB, NEDA, DILG, DPWH, DOTC, DENR, NDRRMC, CCC, PCUP, NAPC, LGUs, LGU Leagues, Concerned Private Sector, Civil Society Groups, People s Organizations, Regional and Metropolitan Coordinating Boards HUDCC, MMDA, NHA, HLURB, DILG, DOLE, DSWD, DPWH, DOTC, PCUP, NAPC, LGUs, League of Cities, NHA, SHFC, HUDCC, DENR, DOJ LRA, LMB, BSP, Concerned Private Sector and Civil Society Groups, Regional and Metropolitan Coordinating Boards HUDCC, KSAs, MMDA, DILG, DOF, NEDA, DOTC, Dep Ed, DOH, PCUP, NAPC, LGUs, Leagues of Cities, Concerned Private Sector and Civil Society Groups, Regional and Metropolitan Coordinating Boards The BSP had previously passed a circular covering provisions of housing Microfinance lending facility of microfinance institutions and rural bank. The guidelines allowed non-freehold titles or rights-based instruments as collateral and even provided the guidelines for appraisal for various instruments SHFC Board has likewise passed a resolution allowing rights-based instruments as collaterals to housing loans based on a legal opinion obtained by SHFC Preference for selective resettlement has been indicated as a preferred option for ongoing projects for ISFs along waterways and also for those on land needed for government infrastructure projects Page 36

47 Developing a National Informal Settlements Upgrading Strategy of the Philippines Policy Objective Engage the private sector and civil society to produce and manage affordable, new homes to ISFs Encourage a fully functioning private rental market Issues Private sector, communities, and other stakeholders need to be included in ISF Housing. Private rental market requires recognition and strengthening. Actions To be Taken Review and revise current laws on PPs and PSP to strengthen incentive mechanism Strengthen policy and regulatory measures to improve the private rental housing for ISFs 2. Promote Market-Based Housing Finance and Microfinance and Targeted Subsidies for Socialized Housing Shift more to the market for ISF housing finance Ongoing use of interest rate subsidy by shelter finance institutions causes market distortions Issue revised implementing rules and regulations amending the HGC Guaranty program for socialized housing to partial coverage. Secure enactment of the law creating SHFC. Executive issuances adopting market-driven, variable interest rates for socialized housing Agency Timeframe Status/Remarks HUDCC, NHA, MMDA, Other KSAs, PPP Center, DTI-BOI, BIR, DOF, PCUP, NAPC, LGUs, League of Cities, Concerned Private Sector and Civil Society Groups, Regional and Metropolitan Coordinating Boards HUDCC, NHA, MMDA, Other KSAs, PPP Center, DTI-BOI, BIR, DOF, PCUP, NAPC, LGUs, League of Cities, Concerned Private Sector and Civil Society Groups, Regional and Metropolitan Coordinating Boards Coordinating Boards HUDCC, KSAs, GSIS, SSS, DOF, NEDA, BSP, Commercials Banks, MFIs, PCUP, NAPC, Concerned Private Sector and Civil Society Groups World Bank provided technical assistance to establish subsidy Mechanism for ISFs covered by the government project for ISFs along waterways Participation of private sector developers through OSHDP and others have presented opportunities for partnerships in ISF housing projects. NGOs have also worked alongside communities to build affordable homes for ISFs The current project for ISFs along the waterways will include rental housing as an alternative to temporary housing BSP approved a housing microfinance product manual to instruct banking MFIs on how to engage in pro-poor, marketbased shelter finance programs using microfinance polices and practices. Page 37

48 Developing a National Informal Settlements Upgrading Strategy of the Philippines Policy Objective Issues Actions To be Taken Agency Timeframe Status/Remarks Target subsidies to those in need based on household incomes. Loose targeting and allocation of subsidies often crowd out private sector financing. Prepare targeted subsidy mechanisms and clear implementing rules and regulations including an efficient monitoring system. HUDCC, KSAs, MMDA, DOF, DBM, NEDA, DILG, PCUP, NAPC, DSWD, Concerned Private Sector and Civil Society Groups World Bank has aided the establishment of a subsidy structure for the government project on prioritized danger areas. This may be adopted for policy framework. Provide appropriate funding for urban renewal and ISF housing Lack of funding mechanism for LGUs to finance urban renewal and ISF Housing Prepare the implementing rules and regulations for a performance-based competitive transfer system for LGUs including the institutional and financing arrangements HUDCC, KSAs, DOF, DBM, NEDA, DILG, Concerned Private Sector and Civil Society Groups, Regional and Metropolitan Coordinating Boards Strengthened Sector Governance, Organizational Staff, and Resource Capacity at the Local and International Levels Improve capacity of local governments as the lead agencies for urban renewal and ISF housing Government housing finance institutions with socialized housing mandate require capacity building to provide efficient services which will increase the urban poor s access to shelter finance and livelihood opportunities Review and revise laws against illegal land occupation and construction Develop improved mechanisms and prepare guidelines for implementing the 20% balanced housing policy of the government HUDCC, MMDA, NEDA, DILG, NDRRMC, CCC. PCUP, NAPC, PPP Center, LGUs, Regional or Metropolitan Coordinating Bodies, Concerned Private Sector, Civil Society Groups, Academe, Professional Organizations Study to determine appropriate linkages amongst KSAs to support scaling-up of their respective pro-poor housing programs is necessary. 20% balanced housing is viewed by various stakeholders as a tool to raise funds for the LGU urban renewal and ISF housing program. Page 38

49 Developing a National Informal Settlements Upgrading Strategy of the Philippines Table 11. Preliminary Results and Monitoring Framework for NISUS Impact: Results Summary ISFs transformed into formal urban residents in resilient, vibrant, and connected communities. Performance Targets/Indicators By 2030: Urban poverty incidence reduced by 40% Community transformability indeces improved by 50% 9 Data Source/Reporting Mechanisms HUDCC Annual Reports Philippine Statistical Reports NSO Quarterly and Annual Reports NAPC, PCUP Reports Community Transformability Indeces, Ateneo de Manila University Reports Assumption Assumptions and Risks Government and the political climate continue to be supportive of NISUS Risk Adverse economic developments, locally or internationally, slow down or stop program implementation Outcome: A more dignified life for ISFs through secure and better quality housing, improved physical infrastructure and social services, and greater access to jobs, transport, capital, and livelihood. By 2025: Number of ISFs particularly in highly urbanized cities reduced by at least 60% Incomes of ISFs improved by at least 50% Improved social networks and governance in ISF communities HUDCC Annual Reports Philippine Statistical Reports NSO Quarterly and Annual Reports NAPC, PCUP Reports Assumption ISFs, people s organizations and local governments are able to collaborate closely with the private sector and civil society on urban renewal and ISF housing Risk ISF housing and infrastructure built under NISUS damaged by disasters, typhoons and floods Output 1: Upgrading, relocation and incremental, affordable new homes for sale and rent By 2025: ISFs living in danger areas rehoused in vibrant, resilient and connected communities ISFs on public and private land live in fully upgraded communities and inclusive cities Annual demand for affordable socialized housing met through viable publicprivate-people partnerships HUDCC Annual Reports NHA, SHFC Annual Reports LGU Status Reports Project Progress and Completions Reports Construction Records Project Feasibility and Appraisal Reports Assumptions Local governments are willing to take the lead in urban renewal and ISF housing with proper training and incentives HUDCC and its KSAs as well as other government agencies, private sector groups and people s organizations will form the necessary partnerships to implement NISUS Risk Climate change destroys more infrastructure and ISF houses Output 2: Market-based housing and microfinance and targeted subsidies for ISFs A national financing facility for urban renewal and ISF housing capitalized and fully functional by 2016 HUDCC Annual Reports SHFC, HGC, Pag-Ibig Annual Reports NH Reports Assumptions HUDCC and its KSAs allocate resources and staff to NISUS implementation 9 The Ateneo School of Government through a grant from the Rockefeller Foundation under the Informal City Dialogue has developed indices for assessing an informal community s transformation in the six areas encompassing a sustainable urban system: (1) physical and environmental livability; (2) mobility and access; (3) livelihood opportunities; (4) socio-cultural dimensions; (5) community governance; and (6) local systems integration. Page 39

50 Developing a National Informal Settlements Upgrading Strategy of the Philippines Results Summary Performance Targets/Indicators Targeted housing subsidy program for ISFs designed, funded and operationalized by 2025 At least 20% of MFIs engaged in housing microfinance for ISFs by 2025 At least 20% of ISF housing finance comes from commercial and thrift banks by 2025 Data Source/Reporting Mechanisms MFI Status Reports Urban Renewal and ISF Housing Financing Facility Reports Bangko Sentral ng Pilipinas Reports Assumptions and Risks Commercial banks, thrift banks and MFIs are properly incentived to participate in the program Risk Policy and institutional reforms required are delayed or not adopted Output 3: Strengthened sector governance, organizational, staff and resource capacity at the local and national levels. At least 40% of cities are implementing city-wide urban renewal, upgrading, housing programs and have approved strategic urban development plans by 2025 Strengthened and fully equipped HUDCC providing sector leadership, monitoring and training in strategic urban planning and development, urban renewal, and ISF socialized housing by 2017 Strengthened NHA as government s housing production, IS upgrading and related training arm; SHFC as an autonomous corporation financing urban renewal and ISF housing; and DILG capacitated to support cities urban renewal and ISF housing programs by 2020 Capacity of people s organizations, communitybased organizations and homeowners associations to engage in urban renewal and ISF housing developed by 2025 LGU Status Reports HUDCC Periodic Reports NHA Periodic Reports SHFC Periodic Reports DILG Periodic Reports Reports from People s Organizations, NGOs and other Civil Societry Groups Project Progress and Completions Reports Assumptions National and local governments remain fully committed to NISUS Adequate financing is made available and easy to access by the local governments Risk National and local elections change national and local personnel involved in NISUS Page 40

51 Appendix 1 Comprehensive Assessment Report

52 COMPREHENSIVE ASSESSMENT REPORT 1

53 EXECUTIVE SUMMARY TABLE OF CONTENTS 1 INTRODUCTION A Rapidly Urbanizing Philippines Urbanization and the Pervasiveness of Informal Settlements in the Philippines Addressing Climate Change and Disaster Risks Purpose and Structure of the Report 2 2 APPROACH AND METHODOLOGY A Participatory and Consultative Approach to Formulating NISUS 5 3 INFORMAL SETTLEMENTS IN THE PHILIPPINES: PATTERNS AND TRENDS The Evolution of Informal Settlements in the Philippines Characterizing the Informal Settlements 12 4 ASSESSMENT OF POLICIES, PROGRAMS, PROCESSES AND INSTITUTIONS Purpose ad Scope of the Chapter National and Local Government Policies on Informal Settlements Upgrading Informal Settlements Upgrading Related Projects, Programs and Processes Other Current and Related Government Programs Who are involved? Accomplishments of Key Shelter Agencies Current Subsidy Structure Affordability 38 5 ISSUES CENTRAL TO INFORMAL SETTLEMENTS Weak Enforcement and Monitoring of Local Land Use Planning & Standards for Informal Settlements 5.2 Inadequate, Unharmonized, and Unfocused Socioeconomic Development Policies and Programs 5.3 Limited Access of Informal Settlers to and Availability of Affordable Housing Finance 5.4 Insufficient Supply of Affordable and Adequate Housing for Informal Settlers Unclear Delineation of Accountabilities of Institutions 54 6 BEST PRACTICES ON INFORMAL SETTLEMENTS UPGRADING Approaches to Identifying Lessons for Upgrading Evolution of Policy Responses and Approaches to Informal Settlements Upgrading Lessons Along the Way 6.3 Looking at the Philippine Housing and Finance Markets 60 Page vi

54 6.4 Distilling Critical Success Factors What Worked? Lessons for Policy Consideration 69 7 FROM INFORMAL SETTLERS TO FORMAL RESIDENTS PATHWAYS TO REFORM The Problem Beginnings of a Reform Strategy Defining the Pathways to Reform 82 APPENDICES First semester 2012 per capita poverty threshold and poverty incidence among families, by region and province Accomplishment of the national government: housing and secure tenure provision from July 2010 to December 2011 Latest guidelines for the SHFC developmental financing component (Corporate Circular AKPF #13) 4 LGU Compliance with MC Write-up of lessons learned 6 Results & Documentation of Workshops Conducted 6- A Consultations and Workshops Attendance List 6-B Consultations and Workshops Outputs LIST OF FIGURES 1 Overview of the NISUS Project 3 2 Schematic Overview of Analytical and Consultative Approach to NISUS 6 3 Magnitude of Informal Settlers by Region, Typology of Informal Settlers and Prioritization of Schemes 14 5 Informal Settler Families in the Philippines, by Type 15 6 Domestic Lending Rates and Socialized Housing Lending Rate of 6% Per Annum 37 7 Policy Responses Over the Years 59 LIST OF TABLES 1 Worldwide Urbanization Trends: Indicators for Selected Asian Countries 10 2 Gross Regional Domestic Products of the Philippines (in PhP million) 11 3 Philippines Annual Family Income and Distribution, Informal Settler Families in the Philippines, ISFs in Metro Manila: By Type 15 6 ISFs in Metro Manila: By City 15 3

55 7 Policies and Analysis 17 8 Projects, Programs and Processes 21 9 Highlights of Socialized Housing Production and Finance Programs of Key Shelter Agencies 10 Agencies Involved in ISFs Subsidy Structure in Socialized Housing Delivery and Finance Annual Family Income and % Distribution by Income Decile, 2012 (Philippines) Annual Family Income and % Distribution by Income Decile, 2012 (National Capital Region) 14 Scenario 1 Affordability Profile Scenario 2 Affordability Profile Scenario 3 Affordability Profile LIST OF BOXES 1 Local Government Planning Processes and Instruments 17 2 The Challenge of Scale Nationwide Upgrading 67 3 The Case of Brazil 67 4 Housing Subsidies in Chile 69 5 A Policy Framework for a Slum Upgrading program 70 4

56 ACRONYMS ADB APDs CA CALABARZON CAS CBDRRM CBHM CCA CDP CDS CLUP CMP CMS CODI CoP CPH CSOs CWS DILG DIP DPUCSP DSWD ELA FAIR FTR GDP GIS GIZ GoP GSS HDMF HPFP HUDCC HUDCC-PMT JSDF IADB ICT IS ISFs KIP KSP Asian Development Bank Areas for Priority Development Cities Alliance Cavite, Laguna, Batangas, Rizal and Quezon Country Assistance Strategy Community-Based Disaster Risk Reduction Management Capacity Building for Housing Microfinance Climate Change Adaptation Comprehensive Development Plans City Development Strategies Comprehensive Land Use Plans Community Mortgage Program Content Management System Community Organizations Development Institute Community of Practice Census of Population and Housing Civil Society Organizations Cities Without Slums Department of Interior and Local Government Detailed Implementation Plan Development of Poor Urban Communities Sector Project Department of Social Welfare and Development Executive Legislative Agenda Fair, affordable, innovative and responsive File Transfer Protocol Gross Domestic Product Geographical Information System Deutsche Gesellschaft für Internationale Zusammenarbeit The Government of the Philippines Global Strategy for Shelter Home Development Mutual Fund Homeless People s Federation of the Philippines Housing and Urban Development Coordinating Council HUDCC Project Management Team Japan Social Development Fund Inter-American Development Bank Information Communication Technology Informal Settlements Informal Settler Families Kampung Improvement Program Knowledge Sharing Plan 5

57 LCP LGC LGU LSP M&E MMDA MOU MTPDP NCR NEDA NGAs NGC NGOs NHA NMES NPLs NSCB NSDF NSO NSUS NUDHF OSHDP PAC PDP PMES Pos SCC SEHAB SHFC SWS TA TCR ToR TTP UPSURGE UN-Habitat UUPCRS WB WFP League of Cities in the Philippines Local Government Code Local Government Unit Local Shelter Plan Monitoring & Evaluation Metro Manila Development Authority Memorandum of Understanding Medium Term Philippine Development Plan National Capital Region National Economic Development Authority National Government Agencies National Government Corporation Non-Government Organizations National Housing Authority NISUS Monitoring and Evaluation System Non-Performing Loans National Statistical Coordination Board National Slum Dwellers Federation National Statistics Office National Informal Settlements Upgrading Strategy National Urban Development Housing Framework Organization of Socialized Housing Developments of the Philippines Project Advisory Committee Philippines Development Plan Project Monitoring and Evaluation System Private Organizations Special Conditions of Contract São Paulo Municipal Housing Secretariat Social Housing Finance Corporation Social Weather Station Technical Assistance Task Completion Report Terms of Reference Technology Transfer Plan Urban Partnerships for Sustainable Upliftment, Renewal, Governance and Empowerment United Nation Human Settlements Programme Upscaling Urban Poor Community Renewal Scheme World Bank Work and Financial Plan 6

58 EXECUTIVE SUMMARY In accordance with the contract between GHK Consulting Ltd, United Kingdom (the Consultants) and the Housing and Urban Development Coordinating Council (HUDCC) covering the provision of consulting services on the Developing a National Informal Settlements Upgrading Strategy for the Philippines Project (NISUS or the Project), this comprehensive assessment report (CAR) was prepared with funding support from the World Bank. The CAR is the culminating output for Phase 2 of the Project. Phase 1 focused on the project preparatory activities, while Phase 3 using the findings of the CAR will focus on formulating the strategy and action plans for upgrading informal settlements in the Philippines. The report comprises seven parts. Section 1 provides a backgrounder on the Project and introduces the CAR. Section 2 presents the approach and methodology used by the Consultants to undertake the assignment. Section 3 provides an in-depth analysis of informal settlements in the Philippines their nature, causes and consequences as well as how they shape the demand for pro-poor housing in the country. Section 4 presents the existing laws on planning, regulatory, and financing aspects of the housing sector. It also provides an assessment of the housing programs of government and the private sector. Section 5 discusses the results of the thematic, sectoral and regional consultations conducted under Phase 2 to assess the demand and supply gap factors influencing NISUS. Section 6 highlights the selected best practices for informal settlements upgrading and lessons for the Philippines to consider. Section 7 builds on the comprehensive analysis undertaken and presents possible ways forward. Informal settlement is the generic term used in the developing world for areas where groups of housing units have been illegally constructed and where housing does not comply with planning and building regulations to enable a decent quality of life. In the Philippines, the proliferation of informal settlements has become a phenomenon associated with big cities and expanding urban centers. From the early 1970s to more recent years, estimates of the number of informal settlers in the country have varied, ranging from as low as 470,000 families to as high as 2.5 million families. The estimates depend on who is conducting the study. Statistical bodies use the census of population and housing and strictly define informal settlements as households occupying rent-free lots without the consent of the owners. The National Housing Authority works with local government units (LGUs) to support a broader definition that includes (i) lots without the consent of the owners, (ii) The CAR culminating output of NISUS Phase 2 Structure of the CAR Informal settlements in the Philippines have become pervasive but estimates do not reflect this reality Part of the challenge of informal settlements in the Philippines lies in the more accurate determination of the magnitude of the problem 7

59 danger areas along river banks, railways, under the bridge and others, (iii) areas designated for government infrastructure projects, (iv) protected/forest areas, except for indigenous peoples, (v) areas for priority development, if applicable, and (vi) other government/public lands or facilities not intended for human habitation. Current estimates using the broader definition place the number of informal settler families at about 1.5 million, representing 15% of the country s total urban population. Yet, this still seems to be significantly lower than those suggested by global studies which indicate that about 30% to 60% of the population in many cities in the developing world lives in informal settlements. In the Philippines. Economic development and rapid urbanization have been interlinked. The economy, over the last decades, has continued to expand by transitioning from being predominantly rural to becoming more industrially diverse and service-oriented. This structural transformation of the economy has been accompanied by a rapid pace of urbanization with millions of Filipinos migrating away from farm lands into the cities, particularly into Metro Manila, or the National Capital Region, which has become one of the world s largest megacities. The adjacent cities of Antipolo and Lucena in the CALABARZON region, and Angeles and Olongapo cities in the Central Luzon region extend the urban reach of Metro Manila. These three regions, usually referred to as the Metro Manila extended urban region (EUR), account for 62% of the Philippines gross domestic product (GDP). The Metro Manila EUR with Cebu, Lapu-Lapu and Mandaue cities in the Central Visayas region; Bacolod and Iloilo cities in Western Visayas; and Davao and Cagayan de Oro cities in the southern and northern Mindanao regions produce 80% of the economy s total output. With rapid urbanization came unprecedented surges in the demand for housing and basic services in many cities, specially the key drivers of the economy. Many local governments, while trying, have been unable to meet the increased demand given the accelerated pace warranted. The result has been a sustained, enormous demand-supply gap, manifested by the proliferation of informal or slum settlements which have become intertwined with a deepening urban poverty. This is because for the most part, the majority of informal settlers are among the poorest in the cities, typically comprising the three bottom deciles of the Philippine income distribution. Paradoxically, while the more urbanized regions and provinces have lower recorded poverty incidences, the multiplicity of vulnerabilities and deprivation affecting millions of informal settler families in these cities cannot be ignored. The Metro Manila extended urban region and 7 cities in the Visayas and Mindanao are the key drivers of the Philippine urban economy, accounting for 80% of total GDP Informal settlements have become vivid manifestations of deepening and widening urban poverty, particularly in the highly urbanized cities of the Philippines 8

60 Beyond income poverty, informal settlers in the Philippines live in poor quality housing, lack of public and private services, and integrate poorly into the broader communities and their opportunities. Informal settlers score far lower on human development indicators than other urban residents. They have more health problems, and have limited access to capital, education, social services, and livelihood and employment. In Metro Manila, Cebu, Davao and other emerging urban centers, informal settlements stand in stark contrast to the gated and exclusive communities inhabited by the rich with access to all the amenities and conveniences of a comfortable life. Informal settlers live in sprawling slums that do not meet the most basic needs or worse, are used as dumping grounds for hazardous wastes, and where they are continually exposed to serious health risks. The Local Government Code of 1991 (LGC) devolved to the local governments the efficient and effective delivery of basic services, including socialized housing, to its constituents. The Urban Development and Housing Act (UDHA), also enacted in 1991, tasked the local government units or the National Housing Authority, as the primary government agency responsible for providing housing to the underprivileged and homeless, to cooperate with private developers and other concerned agencies in socialized housing. Socialized housing as defined by UDHA refers to housing programs and projects covering houses and lots, or lots only, undertaken by the Government or the private sector for the underprivileged and homeless citizens. It encompasses sites and services development, long-term financing, liberalized terms on interest payments, and other benefits. In addition, UDHA stipulates that socialized housing shall be provided with (i) potable water, (ii) power and electricity and an adequate power distribution system, (iii) sewerage facilities and an efficient and adequate solid waste disposal system; and (iv) access to primary roads and transportation facilities. The provision of other basic services and facilities such as health, education, communication, security, recreation, relief and welfare shall be planned and shall be given priority by the local government units and concerned agencies. To the extent feasible, socialized housing and resettlement projects shall be located near areas where employment opportunities are accessible. On-site development is to be implemented whenever possible in order to ensure the minimum movement of occupants in blighted lands and slum areas. There are other relevant legislations. The Comprehensive and Integrated Shelter Financing Act of 1994 increased the paid up capital of the National Home Mortgage Finance Corporation (NHMFC) and the Home Guaranty In addition to income poverty, informal settlers confront on a daily basis social and economic exclusion, as well as exposure to health risks and life threatening conditions The Local Government Code of 1991 and the Urban Development Housing Act define the cornerstone for implementing socialized housing in the Philippines Other important, albeit a bit outdated, legislations support financing and planning 9

61 Corporation (HGC) to ensure continuous funding support to vigorously implement the government's programs for urban and rural housing, resettlement, the development of sites and services, and the renewal of blighted areas. It increased the capability of low-income groups to acquire decent and low-cost housing units through the introduction of amortization subsidies, development financing and cash flow guaranty. There is also, among others, Batas Pambansa 220 (BP 220) which, in part, prescribes the minimum allowable standards and technical requirements for socialized housing. Past government housing programs, however, have largely focused on the relocation of informal settlers, construction of new houses for the fortunate few, and subsidized lending which often benefited the more affluent rather than the urban poor. But, over the past few years there has been a sign of change and substantial resources have been made available to the sector. However, government is struggling to effectively disburse this money to improve the plight of the informal settlers. For instance, although there have been changes to the Community Mortgage Program (CMP) incorporating basic infrastructure improvements with tenure regularization under Phase 1, and there is a local government supported CMP, the program has so far originated, approved, and implemented relatively few projects. Furthermore, the Social Housing Finance Corporation (SHFC) has recently introduced its high density housing multi-storey buildings loans program to provide in-city, near city or near site housing for relocated informal settlers in the NCR. But the resulting high cost of each unit has prompted the adoption of highly concessional terms to make the loan entitlements affordable for a package of up to PhP450,000 per family. The Asian Development Bank (ADB) funded Development of the Urban Poor Communities Project demonstrated that public private partnerships for new informal settler housing and housing microfinance offer solutions, but a component involving local government borrowing failed. The assessment shows that many local governments have failed to respond to the challenges of the informal settlers and instead have looked to the central government to lead and sometimes, even to relinquish their socialized housing responsibilities. Many of them are reluctant to properly allocate adequate resources to the housing sector, except perhaps for their own employee housing. City planning and housing policy remain uncoordinated, both at the national and local levels. Despite the requirement for the preparation of a City Land Use Plan (CLUP) and a City Development Plan (CDP) by each local government, most planning in the Philippines lacks a strategic direction and a long-term vision. Too often boiler plate plans are Yet, past government housing programs have concentrated on the relocation of informal settlers, construction of new houses, and subsidized lending benefiting the more affluent rather than the informal settlers Many socialized housing programs involving local governments have so far not prospered 10

62 produced, while the horizon for the CDPs is too short, seldom incorporating strategic thinking and often ending as a wish list of unfunded investment projects. The government s approach has led to a policy of massive relocation of entire communities to distant locations, often against the wishes of the inhabitants and their inevitable loss of income as a consequence. Furthermore, about PhP42 billion has been spent by the national government on relocating 227,000 families from 2001 to 2013 with an average cost of about PhP185,000 per unit. But this has meant the demolition of existing houses and their replacement by new units, one for one, hence, not a single additional unit has been added to the housing stock to arrest the backlog or meet new demand. In contrast some 212,000 families have been assisted more modestly under slum upgrading programs at a much less cost of nearly PhP8 billion 153,000 families under the Community Mortgage Program (CMP) for an average cost of PhP52,000 per family, and 59,000 families under the program of the National Housing Authority (NHA) for an average cost of PhP1,300 per family. Both these NHA and CMP programs mainly addressed tenure regularization and the provision of basic services of informal settlers. Interventions through the housing finance system has also failed to cater to the informal settlers. The now defunct Unified Home Lending Program (UHLP) of the NHMFC, despite the earlier rhetoric, never really benefited informal settlers, although it encouraged some private developers to move down market and build houses more affordable to the lower-middle income group largely for those in the 30th to 60th percentiles of the household income distribution for the NCR. Lending under the end-user program of the Home Mutual Development Fund (HDMF) has cost the fund almost PhP318 billion to finance 556,000 housing units from 2001 to This reflects an average of PhP545,000 per unit which is clearly beyond the affordable limits of many informal settlers. Furthermore, the collateral and other documentary requirements of HDMF financing were too difficult and costly for the informal settler families to qualify. There have been a number of housing projects developed through the Gawad Kalinga program adopting partnerships and using grant funds from private companies under their corporate social responsibility programs. Often this housing is built on land donated by local government. In a number of cases, the program has benefitted families relocated from danger areas, although in others some new housing has been built for the poor from informal settlements. Other programs such as STEP-UP of the Philippine Business for Social Progress (PBSP), and Habitat for Humanity schemes have been undertaken, often as The massive relocation of informal settlers to distant locations, destroying the existing housing stock and replacing them with new units, has cost the Government a staggering Php42 billion in the last 12 years The housing finance system has encouraged some private developers to build more affordable housing unfortunately not for the informal settlers Innovative programs involving NGOs, local governments and the private sector are ongoing but they are not of the scale required to make a significant difference 11

63 modest projects in partnerships with the local governments and communities. Cost recovery under these programs, however, has been minimal, mostly rely on donations to continue. And because they are not mainstreamed, they only have benefited a lucky few. The Asian Coalition for Community Action (ACCA) approach to slum upgrading is promising because it has demonstrated that it can be scaledup. However, the approach needs to be more tailored to the Philippines and its local governance system. The current programs for informal settlers, whether undertaken by the government, civil society, communities or the private sector, are small in relation to the need. All interventions, especially those of government need to be scaled up, once and for all, to tackle the problems of informal settlements. Government must encourage the creation of an enabling policy environment that allows people the opportunity to transform from informal settlers into active participants of the urban economy, and for the potential beneficiaries to fully accept and assume the responsibilities that go with this change. Given the resources available, and with the right direction and prioritization, it will be possible to make a difference. The future program must be built on lessons learned from past interventions, and focus accordingly on communities and put people in the driving seat to allow them decide their own futures. This means supporting those who in reality are the risk takers, potential entrepreneurs, and tomorrow s middle class those willing to uproot themselves from rural complacency and poverty in search of better opportunities and wealth. The directions of change and reform that could be pursued by government include (i) a return to informal settlements upgrading within an urban renewal/regeneration framework, (ii) urban development and housing to occur guided by long term spatial planning and guidelines by the national or local governments, (iii) Government not to build houses but only demonstrate model schemes; (iv) only those actually living in the danger zone to be relocated, not the whole informal settlement; (v) rationalized and effectively targeted subsidies; (vi) adoption of market-based approaches to housing finance and production, (vii) microfinance and community finance as reliable alternatives in the provision of housing and infrastructure for informal settlements, (viii) bringing in the private sector to social housing finance by attracting investments into SHFC or exploring the possibility of private banks providing such finance by opening up special windows for socialized housing; (ix) strengthening the capacity of HUDCC to lead and provide a wider vision for urban development and housing in the Philippines, and (x) enabling local governments to lead through a sustainable urban renewal A major correction to the government s housing program is needed The beginnings of the reform strategy 12

64 performance fund and local, area-specific urban renewal or regeneration partnerships. 13

65 1 BACKGROUND AND INTRODUCTION 1.1 A Rapidly Urbanizing Philippines The Philippines is one of the most rapidly urbanizing countries in Asia. This trend reflects the cumulative aftermath of years of sustained high rates of natural population growth and considerable rural-to-urban migration. Urbanization in the Philippines has since the 1950s been driven by its capital city, Metro Manila, which is also known as the National Capital Region (NCR). In addition to Metro Manila, there are 5 metropolitan areas in the Philippines with a population of at least 750,000. They are Metro Cebu in the Central Visayas region with a population of 2.3 million; Metro Davao in southern Mindanao, with 2 million; Metro Cagayan de Oro, with 1.1 million; Metro Angeles in central Luzon with.97 million; and Metro Iloilo-Guimaras, with.79 million. 1.2 Urbanization and the Pervasiveness of Informal Settlements in the Philippines Fast-paced urbanization appears to have a direct positive causal relationship with the proliferation of slums or informal settlements in metropolitan areas or growing urban centers. Two main types of informal settlements were increasingly found in the highly dense, congested cities of the developing world. A squatter settlement was characterized as an unplanned, chaotic and spontaneous occupation of land with the residents having no secure tenure and access to basic infrastructure services such as roads, footpaths, drainage, water supply, electricity and sanitation facilities. Informal subdivisions, on the other hand, were described as those settlements with a surveyed plot and proof of ownership or land-lease rights but do not have infrastructure and common facilities for public use. As early as the 1970s with its Tondo Foreshore Urban Development Project, a slum upgrading approach was adopted by the Philippine Government to provide the residents with basic infrastructure services using the process of reblocking. The reblocking process used called for the realignment of existing structures in the slum area to provide alleys and pathways that connected to the major road network. Communities were consulted and asked to approve the reblocking plan affecting their structures. Land property rights were further legalized by the National Housing Authority (NHA) to grant security of tenure to the residents and to motivate them to further invest in decent, affordable housing. Enthusiasm for the community-focused slum upgrading approach used in the Tondo Foreshore Development Project, financed by the World Bank paved the way for more devolved implementation in the Philippines to the local governments and the passage of laws promoting informal settlements upgrading in the country, not just by the public sector but by the private sector and civil society groups including NGOs as well. 1 Yet more than 30 years later, there are about 1.5 million informal settler families (ISFs) or almost 7 million people residing in informal settlements as reported by the NHA. These are considerably more than the numbers estimated in the 1970s. These ISFs live in chronic urban poverty, confronted by physical, economic, social, legal and environmental risks on a day-to-day basis. They have limited or no access to security of tenure, capital, social networks, environmental safety and legal security. The private sector, on the other hand, has estimated that a housing backlog of 1.3 million exists and 12.4 million housing units will be needed by 2030, given the pace of urbanization in the country and current demand-supply trends and analyses. Clearly, as in other developing countries, the pervasiveness of informal settlements in the Philippines can be traced to low income, unrealistic and inadequate urban 1 Joji I. Reyes Community Focused Urban Poverty Reduction: Institutional Perspectives for Sustainable Urban Upgrading. Final Report submitted to the Asian Development Bank under RSC No. C31595 ADM/03-484, INO: Community-Focused Poverty Reduction, pp

66 planning, lack of serviced land, a dearth in affordable socialized housing, and a dysfunctional legal system Addressing Climate Change and Disaster Risks The Philippine archipelago has been singled out as one of the most disaster prone in the world, ranking among the top 10 countries most likely to be affected by climate change due to its geographic location. Its metropolitan centers particularly Metro Manila with its dense and rapidly growing population are increasingly vulnerable to the threats of natural disasters. The Philippines is ranked third in the world in terms of vulnerability to tropical cyclone occurrence. An average of 20 typhoons traverses the country yearly, causing physical and economic devastation. Climate change has induced more severe droughts during El Niño episodes while triggering massive flooding during La Niña. Many cities are exposed to more than one natural hazard but Metro Manila is the largest urban agglomeration in the world at high risk of cyclones, floods and earthquakes. Metro Davao, a coastal city, is also potentially exposed to same risks. 3 In September 2009, tropical storm Ondoy hit the Philippines, proving the country s vulnerability to disasters. The intense volume and prolonged rainfall caused by Ondoy exceeded the carrying capacity of Marikina River and Laguna Lake, generating unprecedented and widespread flooding in the cities comprising Metro Manila and the neighboring Rizal and Laguna provinces. Typhoon Pepeng followed and after a highly irregular path, poured heavy rains almost unceasingly for a week over the Central and Northern Luzon regions. A Post Disaster Needs Assessment (PDNA) conducted confirmed the staggering damage and losses of these typhoons reaching nearly 2.7% of GDP. The typhoons left about 220,000 homes completely destroyed or partially damaged by the floodwaters in Metro Manila and across Luzon. Hundreds of thousands of people lost their homes and their sources of livelihood. The informal sector, with their makeshift dwellings in flood-prone and unsafe areas, sustained the worst damage. In November 2013, the exceptionally powerful tropical cyclone Haiyan made landfall in the Visayas regions, bringing strong winds and heavy rains that caused massive flooding, landslides, and widespread damage. Known as Yolanda in the Philippines, it has become the deadliest typhoon on record to hit the country, affecting 10 million people and killing at least 5,632 while damaging 1.1 million houses. Yolanda affected 4 provinces and 10,436 barangays in 575 municipalities when it hit land with sustained winds of 196mph and even stronger gusts which ripped off roofs, collapsed buildings, shattered windows and inundated coastal regions with an incredible storm surge. The storm surge swallowed houses and people, destroyed boats and fishing inputs, and left the majority of homes in the affected areas either completely destroyed or uninhabitable. Given the expected frequency of natural disasters in the Philippines and their consequent tremendous negative impacts on, and damages to, the housing sector, climate change adaptation (CCA) and disaster risk mitigation and management (DRRM) will have to play a pivotal role in addressing the plight of the country s millions of informal settlers. 1.4 Purpose and Structure of the Report In accordance with the contract between GHK Consulting Ltd, United Kingdom (the Consultants) and the Housing and Urban Development Coordinating Council (HUDCC) covering the provision of consulting services on the Developing a National Informal Settlements Upgrading Strategy for the 2 For further reading on this topic, see Edésio Fernandes Regularization of Informal Settlements in Latin America. In Policy Focus Report Series. Cambridge, USA: Lincoln Institute of Land Policy. 3 Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat World Urbanization Prospects The 2011 Revision: Highlights. New York: United Nations. 15

67 Philippines Project (NISUS or the Project), this deliverable was prepared to constitute the draft comprehensive assessment report (CAR). 4 The CAR is the culminating output for Phase 2 of the Project (Figure 1). 5 PHASE 1: Preparatory Activities Figure 1: Overview of the NISUS Project PHASE 2: Comprehensive Assessment PHASE 3: Strategy Formulation Establishing the institutional arrangements Preparatory workshops to launch project Local and global insights to inform Obtain in-depth understanding of the diverse conditions, complex issues, opportunities, risks, and formal as well informal structures governing informal settlements. This will serve as anchor for the formulation of a Based on the findings of Phase 2, formulate the national informal settlements upgrading strategy Under Phase 2 Comprehensive Assessment of NISUS, the Consultants were tasked to focus on evaluating the conditions, issues, opportunities and risks confronting informal settlements communities in the Philippines to provide the necessary information and serve as anchor for the formulation of a national informal settlements upgrading strategy. The Consultants were also required to conduct an inventory and assessment of policies, programs, processes undertaken by the government, NGOs and the private sector on informal settlements upgrading in the Philippines. In preparing this report, the Consultants took into consideration the expectations, inputs, clarifications, and recommendations obtained during and after the inception phase of the consulting services. Much of these were gathered during several meetings held with HUDCC, World Bank, the Project Advisory Committee, and other groups and individuals relevant to the project. Section 1 of the report provides a backgrounder on the Project and introduces the draft CAR. Section 2 presents the approach and methodology used by the Consultants to undertake the consulting services. Section 3 provides an in-depth analysis of informal settlements in the Philippines their nature, causes and consequences as well as how they shape the demand for pro-poor housing in the country. Section 4 presents the existing laws on planning, regulatory, and financing aspects of the housing sector. It also provides an assessment of the various housing programs of government and the private sectors. Section 5 discusses the results of the thematic, sectoral and regional consultations conducted by the Consultants to assess the demand and supply gap factors influencing the upgrading of informal settlements in the Philippines. Section 6 highlights the selected best practices on informal settlements upgrading and lessons for the Philippines to consider. Section 7 builds on the comprehensive analysis undertaken and presents possible ways forward. It concludes that the government s housing program is not working for the poor, and that despite the considerable resources put into it, the program has accomplished too little for informal settlers. The focus on relocation and resettlement has often proved difficult for communities and people, and housing subsidies have been expensive. A redirection of policy is recommended. 4 GHK Consulting Ltd of the United Kingdom (also known as ICF GHK) was engaged by HUDCC on February 2013 to undertake the comprehensive assessment and strategy formulation phases of the Project with funding support from the Cities Alliance and the World Bank. The ICF GHK team mobilized on 20 March The Consultants terms of reference was revised by HUDCC and agreed with ICF GHK following a World Bank s implementation review mission in July The revisions focused on using a more strategic and consultative approach and eliminating tasks requiring the Consultants to pilot or implement analytical tools and survey activities which were broadly termed soft implementation given the limited resourced and time available for the Project. 16

68 2 APPROACH AND METHODOLOGY There has been a long standing debate in the Philippines about how to deal with the urban challenge of increasing and growing informal settlements. As earlier discussed, the Philippine Government with World Bank support pioneered the urban upgrading of Tondo Foreshore, the largest squatter colony in Asia at that time, in the 1970s. The basic principles used in Tondo by the NHA of minimum dislocation and maximum retention of structures remain valid for many of the informal settlements in the Philippines today. However, there are segments of society who believe that informal settlers must be resettled preferably outside the cities to give way to the needs of urban development and expansion, and in many cases, urban redevelopment, and regeneration. The debates extend to what type of interventions should be used to upgrade or develop informal settlements, how they should be financed, and who should finance them. Discussions also focus on how institutions must be organized to address the needs of the informal settlements, the roles of the government at the national and local levels and private sector groups, civil society organizations and community-based organizations as well as people s organizations. As the Philippines continue to rapidly urbanize, more informal settlements will be created, and those already existing will become worse, if no effective strategy for upgrading them is agreed and effectively implemented. Compounding the problem are the environmental risks posed by climate change and natural disaster to these informal settlers given the massive damages caused by Ondoy and more recently Yolanda. Together, these developments point to the need to achieve consensus on a strategy for informal settlements upgrading that leads to safe, inclusive and economically resilient communities. 2.1 A Participatory and Consultative Approach to Formulating NISUS A key objective of the Consultants approach to NISUS is to facilitate the achievement of a multisectoral and multistakeholders consensus on a strategy for sustainable informal settlements upgrading. Under the comprehensive assessment phase, the Consultants and HUDCC designed and conducted a series of consultations to help deepen the technical analysis and understanding as well as facilitate informed discussions on the nature, causes and consequences of informal settlements in the Philippines. These discussions aimed to support a more in-depth appreciation for what constitutes the demand of informal settlers and how factors such as income, taste, preferences, and prices affect their demand. The consultations also provided a venue for learning exchanges on the supply side enabling the various stakeholder groups to access the latest information and knowledge about housing and basic urban services delivery systems working for informal settlements, not only in the Philippines and its neighboring Asian countries but from the rest of the world as well. Four types of consultations were conducted on five thematic areas: Citywide urban planning and low income housing; Sustainable housing finance; Socialized and pro-poor housing delivery systems; Institutional strengthening and capacity development; and Social and economic development. The first thematic area citywide urban planning and low income housing built on the lesson learned from Brazil where the first step taken by the country s successful and UN-Habitat awarded housing program was to effectively integrate city urban planning with slum upgrading. This thematic area also covered design standards for informal settlements upgrading since this was deemed critical to the delivery of affordable housing and basic urban services and infrastructure to the informal settlements. In sustainable housing finance, innovative products and programs were reviewed including those 17

69 involving microfinance. Under the thematic area of socialized and pro-poor housing delivery systems, best practices in urban upgrading including those that promote innovative production technologies were discussed. The institutional strengthening and capacity development thematic consultations analyzed, among others, effective institutions such as public-private-people partnerships the emerging 4Ps in urban upgrading and community-driven approaches to scaling up slum upgrading such as the Community Organization Development Institutions (CODI) program in Thailand. Effective knowledge management programs were also reviewed. The final thematic area, social and economic development, emphasized the comprehensive and integrated approach required for sustainable informal settlements upgrading. These consultations considered effective pro-poor interventions such as skills development, micro-, small, and medium enterprises (MSMEs) development, job placements and matching programs with the private sector, and other strategies to help transform the mindsets of many that informal settlements upgrading was a social obligation rather than an investment for the city s future. The thematic consultations adopted a problem tree analytical approach to dissect the nature, causes and consequences of the informal settlements challenges in the Philippines as they related to each specific theme of the workshops. The thematic consultations were supplemented by sectoral and regional consultations. Under the sectoral consultations, the following groups were targeted: public sector, private sector, civil society and community as well as people s organizations. The regional consultations were held in Luzon, Visayas, and Mindanao. Figure 2 provides a schematic diagram for the analytical framework used and how the consultative approach adopted supported the comprehensive assessment in Phase 2 and paved the way for a consensus building approach to formulating the NISUS. Figure 2: Schematic Overview of Analytical and Consultative Approach to NISUS Activity 1: Data gathering and collation Relevant ISF data and statistics IS issues and typologies Policies, programs, processes Best practices & lessons learned Stakeholders and Institutions Activity 2a: Indepth Analysis Preliminary Analysis Leading to Five (5) Thematic Areas Activity 2b: Thematic, sectoral and regional consultations Activity 3: Preliminary Comprehensive Assessment Report Activity 4: Final Comprehensive Assessment Report and Vision, Mission, Objectives for IS Upgrading Activity 5: Multisectoral Consultation National Informal Settlements Strategy and Action Plan HUDCC/WB/PAC/KSA Technical Inputs and Comments 18

70 3 INFORMAL SETTLEMENTS IN THE PHILIPPINES: PATTERNS AND TRENDS Formulating a national informal settlements upgrading strategy requires, first and foremost, a thorough understanding of the current conditions, issues, opportunities, and risks affecting informal settlements and settlers in the Philippines. This section provides an assessment of informal settlements in the Philippines describing their evolution over the years, the scale and magnitude of the problem, and how they came about as a result of accelerated economic development and rapid urbanization. This section also provides a characterization of informal settlements in the Philippines, how they relate to urban poverty, where they are located, and how classifying them facilitates planning for appropriate interventions. 3.1 The Evolution of Informal Settlements in the Philippines Informal settlement is the generic term used for areas inhabited by millions of urban poor in the developing world as a result of industrialization and rapid urbanization. The name implies that these settlements subsist outside the existing and legal regulatory framework. Due to their inherent "non-legal" status, informal settlements lack adequate services and infrastructure. An often used name for informal settlements is slum settlements. Slums are residential areas that are physically and socially deteriorated, making a decent quality of life impossible. Hence, many distinguish a slum settlement as referring to the condition of a settlement, while an informal settlement refers to the legal position of the settlement. For the purpose of this study, the UN-Habitat definition of informal settlements as areas where groups of housing units have been constructed on land that the occupants have no legal claim to and where housing is not in compliance with current planning and building regulations to enable a decently quality of life will be used. In essence, the UN-Habitat defines informal settlements as households that cannot provide one of the following basic living characteristics: 6 Durable housing of a permanent nature that protects against extreme climate conditions. Sufficient living space, which means not more than three people sharing the same room. Easy access to safe water in sufficient amounts at an affordable price. Access to adequate sanitation in the form of a private or public toilet shared by a reasonable number of people. Security of tenure that prevents forced evictions. Informal settlements in the Philippines have become pervasive The United Nations Human Settlement Programme (UN-Habitat) defines informal settlements as areas where groups of housing units have been constructed on land that the occupants have no legal claim to, and where housing is not in compliance with current planning and building regulations. Informal settlements have different names in different countries. From the rancherios puebros in Paraguay, the tugurios in El Salvador, and the favelas of Brazil in Latin America, to the bastees of India, the bidonvilles of Bangladesh, the kampungs of Indonesia and the barong-barongs of the Philippines in Asia, each informal settlement has come to represent the worsening urban poverty in the cities of the developing world. 6 UN-Habitat. What are slums and why do they exist? 19

71 In the Philippines, the proliferation of informal settlements has become a phenomenon associated with big cities and growing urban centers. In the early 1970s, Tondo earned the distinction of being the largest slum in Southeast Asia, with over 180,000 urban poor informal settlers. It was also the most politically volatile slum community in Metro Manila, the largest urban agglomeration in the Philippines. In addition, by the 1980s, pockets of slums around Metro Manila involving at least one million people had emerged while at about the same time, notable slums had surfaced in the secondary or regional cities of Cebu, Cagayan De Oro, Davao, and Baguio. 7 During the 1990s, it was reported that the growth of informal settlements in the country was averaging roughly 3.6% annually. By 2000, there were over 1.2 million families living in informal settlements amid the major urban centers of the Philippines. Together, they represented close to 30% of the urban population with more than 50% coming from Metro Manila. 8 In 2001, however, a study funded by the Asian Development Bank (ADB) reported that there were significantly more informal settlers estimated at 2.5 million households and comprising nearly 35% of the country s total urban population. 9 In 2007, a study commissioned by HUDCC concluded that there were 550,770 informal settler families, accounting for just over 5% of the total urban population during the same year. This suggested a drastic reduction in the magnitude of the problem but further analysis showed that the estimate was based on an extrapolation of the 2000 Census of Population and Housing (CPH) which strictly defined informal settlements as households occupying rent-free lots without the consent of the owners. A comparison of these results with a 2007 survey of informal settlers conducted by the National Housing Authority (NHA) in Metro Manila showed that the CPH-based estimate was considerably lower. Adjusting for the underestimation in the CPH-based study using the NHA survey results indicated that the number of informal settler families could be as high as 1.5 million, accounting for nearly 15% of the total urban population. 10 A more recent study conducted by the Statistical Research and Training Center in collaboration with HUDCC estimated that informal settler households nationwide had gone down to 471, This constituted about 4.6 % of the total urban population in However, this number was also based on the 2010 CPH which measured informal settlers as households occupying rent-free lots without the consent of the owners. No census or survey was found to Informal settlements in the developing world are the result of unplanned and rapid urban growth. Available data barely accounts for the reality, as in most cases, they are based on figures extrapolated from old census, carried out in the 1970s or, if more recent, obtained with poor accuracy, In the Philippines, slums or informal settlements have long been recognized as a challenge that must be faced. But part of the challenge lies in a more accurate determination of the extent of the problem. The key questions are: where are these settlements and how many really exist; at what pace have they grown; and, finally, how many people will need affordable housing and basic services. 7 World Bank. Philippines: Metro Manila Urban Development Project. Report on the Status of the Tondo Foreshore Development Project. Unpublished. 8 Sandra O. Yu Infrastructure Development and the Informal Sector in the Philippines. ILO Employment Intensive Infrastructure Programmes: Socio-Economic Technical Paper (SETP no 12). Geneva: International Labour Office. 9 ADB Development of Poor Urban Communities Project. Consultant s report. Manila. (TA 3291-PHI). 10 Cruz, Jeanette th National Convention on Statistics. Estimating Informal Settlers in the Philippines. Manila, 4-5 October. 11 Magtulis, Mary Ann and Eleanore Ramos th National Convention on Statistics. Estimating Housing Needs Based on 2010 Census of Population and Housing. Manila, 1-2 October. 20

72 support attempts to broaden the operational definition of informal settlers to include individuals or households living under any of the following conditions: 12 Lot without consent of the property owner; Danger areas along riverbanks, railways, under the bridge and others; Areas designated for government infrastructure projects; Protected/forest areas, except for indigenous peoples; Areas for Priority Development (APDs), if applicable; and Other government/public lands or facilities not intended for human habitation. Data from surveys conducted by NHA with support from some local governments as of July 2011 placed the number of informal settlers much higher, at about 1.5 million, representing approximately 15% of the total urban population. Yet, this still seems to be significantly lower than global studies which indicate that about 30% to 60% of the population in many cities in the developing world lives in informal settlements. Mainly fuelled by the Philippines economic growth and rapid urbanization of the last decades Economic theories link economic growth with urbanization. Classical economic development models have emphasized the need for predominantly rural economies to structurally transform to industrial economies in order to achieve steady and sustained growth. 13 The offshoot for the developing world has been increasing levels of urbanization the process by which large numbers of people become spatially concentrated in cities where they focus on non-agricultural activities. Cities are often described as the engines of national prosperity or economic growth. They serve as the locations where new forms of economic activity and economic organization evolve and gain higher value. Economic development in the Philippines and urbanization has been just as intertwined. The economy, over the last decades, has managed to continue expanding by transitioning from being predominantly rural to being more industrially diverse and service-oriented. From the 1950 to the 1970s, the agriculture sector was a major contributor Structural change models focus on the mechanisms by which underdeveloped economies transform their domestic economic structures from a heavy emphasis on traditional subsistence agriculture to a more modern, more urbanized and more industrially diverse manufacturing and service economy. to economic output and employment with a share to GDP that ranged from 24% to 30%. However, its contribution has started to decline toward the end of the 1980s. 14 By the end of 2012, agriculture s share had shrunk to 11%, with the industry and services sectors accounting for 89% of the country s total economic output. This structural transformation of the Philippine economy has been accompanied by a rapid pace of urbanization with millions of Filipinos migrating from farm lands to cities, particularly to Metro Manila which has become one of the world s largest urban agglomerations. Table 1 shows that the Philippines had the highest level of urbanization among its neighboring Asian countries up until mid- to late 2000, with 30.3% to 48% of its total population residing in urban areas. By 2015, nearly half of its entire population is projected to become urbanites. Its average annual rate 12 Definition proposed by the Statistical Research and Training Center and the Technical Working Group on Housing Statistics coordinated by the National Statistical Coordination Board. 13 See for example Lewis, W. Arthur. Economic Development of Unlimited Supplies of Labor. The Manchester School. Volume 22, Issue 2, pages , May Cham, Rowena and Dante Canlas. Notes on Philippine Economic Growth and Its Sources. The Philippine Review of Economics. Vol. XLV, pages 1-14, June

73 of urbanization, which was considered the fastest in the Asia region from 1960 up to the mid-1990s, ranged from 3.79% to 5.04%. Table 1. Worldwide Urbanization Trends: Indicators for Selected Asian Countries Urbanization Indicator * Philippines Urban Population (thousand) 7,880 11,691 17,640 29,945 37,101 45,370 50,544 Percent of Population in Urban Areas Average Annual Rate of Growth Indonesia Urban Population (thousand) 13,411 20,206 33,338 56,381 89, , ,343 Percent of Population in Urban Areas Average Annual Rate of Growth Viet Nam Urban Population (thousand) 5,170 8,222 10,398 13,591 19,196 26,700 31,066 Percent of Population in Urban Areas Average Annual Rate of Growth Thailand Urban Population (thousand) 5,373 7,711 12,721 16,793 19,669 23,315 25,255 Percent of Population in Urban Areas Average Annual Rate of Growth India Urban Population (thousand) 80, , , , , , ,509 Percent of Population in Urban Areas Average Annual Rate of Growth Pakistan Urban Population (thousand) 10,150 14,737 22,591 34,198 47,892 62,290 71,213 Percent of Population in Urban Areas Average Annual Rate of Growth Source: Source: United Nations, Department of Economic and Social Affairs, Population Division (2012). World Urbanization Prospects: The 2011 Revision, CD-ROM Edition. Cities are considered essential to economic growth and development because they provide economies of scale and agglomeration, as well as the economic and social infrastructure within which many businesses and entrepreneurships are incubated and nurtured. Large cities typically contribute the biggest share to the GDP of their countries. Metro Manila, also known as the National Capital Region (NCR) of the Philippines and home to 25% of its total urban population, is the country s most populous city. It is the premier financial, commercial, social, cultural, and educational center of the Philippines and the seat of the National Government. It is also the national gateway for most trade and commerce in the Philippines, contributing about 36% to the country s GDP, ensuring its continued urban primacy in the country and its status as the preferred destination of the majority of migrants from rural areas nationwide. The adjacent cities of Antipolo and Lucena in CALABARZON and Angeles and Olongapo cities of the Central Luzon regions extend the urban reach of Metro Manila and together, they account for 62% of the Philippine s total GDP (Table 2). Typically referred to as the Metro Manila extended urban region (EUR), these three regions represent the key drivers of the Philippines urban economy. Cebu, Lapu- Lapu and Mandaue cities in the Central Visayas region contribute 6% while Bacolod and Iloilo cities in Western Visayas produce an additional 4%. Davao and Cagayan de Oro cities in southern and northern Mindanao contribute 7.6% of GDP. The Metro Manila EUR with these 7 cities in the Visayas and Mindanao regions produce 80% of the economy s total output proving that in the Philippines, at least, economic development and urbanization are still positively interlinked. Becoming vivid manifestations of the deepening and widening urban poverty in the country 22

74 As lack of employment opportunities, overpopulation, and poor crop yields push people to leave the countryside while the prospects of better paying jobs, higher standards of living, and more advanced health and educational facilities pull people into the cities. These push and pull factors work simultaneously as economic development accelerates creating increased demand for housing and basic services which many local governments are unable to meet at the pace warranted. The result is an enormous demand-supply gap, manifested in the developing world by the preponderance of informal or slum settlements. Table 2. Gross Regional Domestic Product of the Philippines (in PhP million) Region/Year Amount % Share Amount % Share Amount % Share Philippines 5, , , NCR Metro Manila 2, , , CAR Cordillera I Ilocos II Cagayan Valley III Central Luzon IVA CALABARZON 1, , IVB MIMAROPA V Bicol VI Western Visayas VII Central Visayas VIII Eastern Visayas IX Zamboanga Peninsula X Northern Mindanao XI Davao Region XII SOCCSKSARGEN XIII CARAGA ARMM Muslim Mindanao , Note: In constant 2000 prices. Source: National Statistical Coordination Board, July Informal settlements or slums are essentially a staging ground for people moving to the city or for people who are temporarily in trouble, a place where they can live cheaply in the interim, until they establish themselves. In the long-term, most informal settlers aim to make some money and find a better place to live. Some succeed but others do not. For an increasing number of informal settlers who will not be able to find stable employment, they will live a hand-to-mouth existence in the informal sector and life will be hard and uncertain. Social exclusion, lack of empowerment, illness or living in a precarious and illegal situation will make it difficult for them to do more than survive, sometimes in reasonable, if insecure, conditions. 15 In the Philippines, informal settlements and urban poverty and those who do not are almost always entwined. This is because for the most own housing facilities. part, people who live in informal settlements are among the They include those who poorest of the cities. The majority of informal settlers fall live in makeshift dwelling within the income poverty thresholds, typically comprising units and do not enjoy the three bottom deciles of the Philippine income security of tenure. distribution (Table 3). The 2012 poverty threshold calculated on an annual basis for an average-sized Filipino family is PhP93,850 or US$2,085. Annex 1 provides the first semester 2012 per capita poverty 15 UN-Habitat The Challenge of Slums: Global Report on Human Settlements London. The Urban Development Housing Act of 1992 point to the informal settlers or slum dwellers as those whose income or combined household income falls within the poverty threshold 23

75 thresholds and poverty incidence among families, by region and province. While the data show that the more urbanized regions and provinces such as NCR or Metro Manila, Bulacan, Pampanga, Cavite, Laguna, and Rizal have lower poverty incidence among families ranging from 3.1% to 7.6% compared to the 34.1% to 46.9% in the predominantly rural regions the magnitude and depth of the urban poverty affecting millions of Filipinos living in the cities cannot be ignored. Beyond the income poverty, informal settlements in the Philippines can be distinguished by their poor quality of housing, the lack of public and private services, and the poor integration of their inhabitants into the broader communities and their opportunities. Informal settlers score far lower on human development indicators than other urban residents; they have more health problems, and have limited access to capital, education, social services, and livelihood and employment. In Metro Manila, Cebu, Davao and other emerging urban centers, informal settlements stand in stark contrast to the gated and exclusive communities inhabited by the rich where they have access to all the amenities and conveniences that make life exceedingly comfortable and pleasant. Informal settlements are in sprawling slums that fail to meet even the most basic needs or worse, used as dumping grounds for hazardous wastes and other socially undesirable externalities, and where lack of access to safe water and adequate sanitation pose serious health risks and create life-threatening conditions. Table 3. Philippines Annual Family Income and Distribution, 2012 Income Average Average Total Income Class annual monthly Remarks (Peso income/family income/family Million) (in Pesos) (in Pesos) First Decile 146,984 68,601 5,717 Below the 2012 Second Decile 197,980 92, poverty threshold Third Decile 231, ,875 8,990 Fourth Decile 277, ,572 10,788 Fifth Decile 328, ,326 12,777 Sixth Decile 390, ,435 15,203 Seventh Decile 490, ,695 19,058 Eight Decile 613, ,411 23,868 Ninth Decile 817, ,408 31,784 Tenth Decile 1,532, ,395 59,616 Note: Details may not add due to rounding. Sources: 2009 Family Income and Expenditure Survey, National Statistics Office. Consultants estimates. 3.2 Characterizing the Informal Settlements Informal settlements in the Philippines are located in the urban areas, mostly in the highly urbanized cities Informal settlements or slums are the unintended consequence of achieving a more accelerated growth yet steady growth path for the Philippines. As the urban sector fuels and steers the economy, the limited capacity of many local governments to respond to the influx of migrants into the cities has led to overcrowded, unplanned, and unregulated informal settlements. As of end-2013, there were 144 cities comprising the Philippines. Thirty-five of them were classified as highly urbanized; five, as independent component, and the rest considered component cities of their respective provinces. The National Statistical and Coordination Board (NCSB) defines Highly Urbanized Cities (HUCs) as cities with a minimum population of two hundred thousand inhabitants as certified by the National Statistics Office and with the latest annual income of at least Fifty Million Pesos (P50, 000,000.00) based on 1991 constant prices. Independent Component Cities (ICCs) are 24

76 cities outside the provincial jurisdiction which have not yet attained the 'highly urbanized' status, while Component Cities (CCs) are those under a province's jurisdiction. Table 4 provides a breakdown by region and by type from NHA of informal settler families (ISFs) as of July Figure 3 shows that of the 1.5 million total estimated ISFs, almost 40% are in the NCR while another 24% live in the Southern Luzon and Bicol regions. 16 Region Table 4. Informal Settler Families in the Philippines, 2011 Total Informal Settler Families Danger Areas Areas Earmarked for Government Infra Government Owned Lands Privately Owned Lands Others Philippines 1,502, ,502 52, , ,517 38,159 NCR Metro Manila 584, ,219 21, , ,966 20,461 CAR Cordillera 23,547 9, ,035 7,000 0 I Ilocos 44,364 30, ,872 0 II Cagayan Valley 13,292 9, ,460 0 III Central Luzon 117, , IVA CALABARZON 221, ,407 2,870 16,616 7,833 4,558 IVB MIMAROPA 29,949 21, ,179 1, V Bicol 142,028 91,354 12,077 23,962 8,888 5,747 VI Western Visayas 31,129 17, ,837 9, VII Central Visayas 63,681 37,183 2,693 1,122 19,238 3,445 VIII Eastern Visayas 9, ,216 1,310 0 IX Zamboanga Peninsula 55,393 44, ,808 4,462 0 X Northern Mindanao 82,272 69,781 9, ,785 XI Davao Region 8,255 2, ,554 0 XII SOCCSKSARGEN 14,725 5, , XIII CARAGA 44,339 15, ,422 6, ARMM Muslim Mindanao 16,771 1,920 1,600 12, Sources: National Housing Authority; Local Government Units; Department of Public Works and Highways Figure 3. Magnitude of Informal Settlers by Region, % 15% 8% 39% Metro Manila Cordillera Ilocos Cagayan Valley Central Luzon CALABARZON MIMAROPA Bicol Western Visayas Central Visayas Eastern Visayas Zamboanga Peninsula Northern Mindanao Davao Region SOCCSKSARGEN CARAGA Muslim Mindanao Source: National Housing Authority 16 These figures need to be validated with other census or ongoing registration activities using the biometrics system for more accuracy. 25

77 Most informal settlements can be found in danger areas, public lands, and privately owned lands. From a planning standpoint, the location of informal settlers or ISFs presents a viable typology from which priority areas for intervention may be drawn. At the same time, using this typology allows the Government to immediately identify the types of intervention required, as well as the agencies and institutions to be involved and resources needed as depicted in Figure 4. The four major types of informal settlers, namely: (a) areas at risk; (b) for road right of way public infrastructure projects; (c) government land; and (d) private land, can be further subdivided. Those in danger or physically at risk areas are mostly found along waterways and bodies of water. The prescribed three meter easement in urban areas is a non-negotiable policy while housing beyond this area may be allowed depending on the results of technical studies as well as land acquisition possibilities. Similarly, areas where the risks have not been clearly established and/or under contention will require more careful study before any decision to do either on-site upgrading or resettlement is made. Some areas within public infrastructure project sites may additionally be examined as to the possibility of redesigning the project so that decreasing the number of affected informal settlers can be considered. In addition to ISFs in the four major areas, there are those residing in areas for priority development (APDs) although this is already being addressed and in other government/public lands or facilities not intended for habitation. Still, another category could be the families in resettlement areas requiring upgrading. While this may rightly no longer be categorized as informal settlers, their relocation sites may be considered ill prepared. Their resettlement areas remain in need of improvement, including meeting demands for housing and providing basic services and facilities. It will also be useful to understand the conditions and ongoing needs of those in off city resettlement areas so that more responsive and appropriate interventions can be developed for the other four groups. Figure 4. Typology of Informal Settlers and Prioritization of Schemes GOVERNMENT PRIORITIES Examples of Interventions Danger/high risk areas esteros, waterways, shoreline roads, garbage dumps Government Infrastructure Projects road right of way (RROW) port areas, terminals, airports Privately Owned Lands with court case negotiable and abandoned Government Owned Lands proclaimed allotted for institutional use On site In city Near city resettlement Off site resettlement Settle easement issue; new housing development vertical solutions (medium rise complexes); resettlement within neighborhood that is not part of danger areas through re-blocking or rental housing; provision of vouchers for construction materials; riverfront redevelopment through pro- Explore the possibility of realignment resulting to least dislocation; land consolidation and densification. Convince owner to dispose to settlers through CMP or direct sales; land swapping arrangements; rental housing arrangement with government providing loans for construction of rental housing (pure rent, rent-to-own, long term lease, etc); incentivize LGUs and owners enrolling lands for upgrading Usufructury arrangements for future redevelopment; protect open space for environmental and institutional purposes; mixed development; PPP for redevelopment with employment priority given to Source: Department of the Interior and Local Government 26

78 Looking at the scenario nationwide, 767,502 families or 51% of the total estimated ISFs are in danger areas. The remaining ISFs are distributed among: privately owned lands (25 per cent); governmentowned lands (18%); areas earmarked for government infrastructure projects (3.5 per cent); and others (2.5 per cent). Figure 5 provides a graphical distribution of the location of ISFs nationwide. Figure 5. Informal Settler Families in the Philippines, by Type Danger Areas 25% 18% 51% Areas Earmarked For Govt Infra Government Owned Lands Privately Owned Lands Others Of the more than 700,000 families in the danger areas nationwide, the Southern Luzon and Bicol areas (Regions IV-A, IV-B and V combined) have the highest number with more than 300,000 families or 39.4% living in areas at risk. This is followed by Northern and Central Luzon regions, at 21.8% outnumbering those in the NCR at 13.6%. In all, nearly 75% of families in danger zones can be found in Luzon, the largest of the three islands. The Mindanao region is home to 138,727 families or 18% of ISFs in danger areas. The Visayas regions have 55,309 families representing 7.2% of the total ISFs in danger areas nationwide. Table 5 and Table 6 summarize the number of informal settler families in accordance with the four types discussed above and by city, respectively. Table 5. ISFs in Metro Manila: By Type Type of Area No. of ISFs % Private lands / properties 279,966 48% Government owned lands 158,647 27% Danger areas 104,219 18% Government infrastructure project 21,132 areas 4% Other areas 20,461 4% TOTAL 584, % Source: National Housing Authority Table 6. ISFs in Metro Manila: By City City No. of ISFs % Quezon City 232,181 40% Caloocan City 79,280 14% Pasay City 34,450 6% Manila City 30,913 5% Paranaque City 28,539 5% Malabon City 27,203 5% Mandaluyong City 23,847 4% Valenzuela City 21,404 4% Muntinlupa City 20,712 4% Taguig City 19,458 3% San Juan City 14,857 3% Las Pinas City 14,107 2% Navotas City 11,052 2% Marikina City 10,114 2% Makati City 10,106 2% Pasig City 4,173 1% Municipality of Pateros 2,029 0% 27

79 The need for climate change resilience prompts priority action for informal settlements in the danger zones. Of the estimated 104,219 informal settler families living in danger areas, around 60,130 of them occupy major waterways. The DILG has identified about 19,440 families residing along eight waterways that are deemed very hazardous: San Juan River 4,217 Pasig River 1,434 Tullahan River 3,683 Maricaban Creek 1, 637 Manggahan Floodway 2,997 Estero Tripa de Gallina 3,887 Estero de Maypajo 1, 415 and Estero de Sunog Apog 170 In August 2011, President Benigno Aquino III issued a directive to prepare a 5-year plan for housing about 100,000 priority informal settler families living in danger areas in Metro Manila, with consideration of in-city resettlement, and approximately PhP10 billion budget allocation for the first year. The President has recently allowed the release of PhP374.4 million for the resettlement program for ISFs living in these priority waterways in Metro Manila as part of the government's broader flood control and management plan. The NHA has 10 multi-level low-rise house projects in various stages of development for informal settler families (ISF) living in danger areas in Metro Manila. As of June 2013, construction of 6,404 housing units worth P3.4 billion from the 10 housing projects is underway. The housing sites will receive ISFs currently being relocated from danger zones. Around 55% of the total ISFs identified by NHA as living in danger zones are located in Quezon City and Manila There are 31,275 ISFs in Quezon City, (30 per cent); while 26,029 families or 25% is in Manila. The NHA MRB Projects: Smokey Mountain (Paradise Heights) in Tondo, Manila; Tala 2 and Camarin, both in Caloocan City; Pleasant Hills in San Jose del Monte, Bulacan; Tanza, Gulayan and Tanglaw, all in Navotas; MMDA Depot in Manggahan, Pasig City; National Government Center Housing Project in Quezon City; and Disiplina Village 2 in Valenzuela City 28

80 4 ASSESSMENT OF POLICIES, PROGRAMS, PROCESSES AND INSTITUTIONS 4.1 Purpose and Scope of the Chapter This section presents our findings on the following: (i) informal settlements upgrading related national and local government policies; (ii) informal settlements upgrading related projects, programs and processes of national government agencies, NGOs, private sector, civil society organizations, and LGUs; and (iii) other current and related government programs. The national and local government policies include, but are not limited to laws, department orders, ordinances and resolutions, Presidential Proclamations. The upgrading related projects, programs and processes will also cover arrangements, incentives, and issues on LGU to LGU relocation and resettlement documenting and evaluating the Philippine relocation and resettlement experience. Finally, the third item will take into account the National Government Resettlement Policy and Sustainable Communities Program spearheaded by HUDCC, and the informal settlements work led by the Department of the Interior and Local Government (DILG). The objective is to provide an analysis of the mandates, quality of implementation, and degree of effectiveness of these policies, processes, programs, and institutions which cut across the five thematic areas and how these can be mainstreamed into the development process and integrated with national and local government planning processes and instruments (Box 1). Past and current programs are reviewed to determine the factors that have contributed to success/failure. In addition, this section analyzes government and NGOs with mandates/functions related to informal settlements upgrading to determine their performance and the options for enhancing their effectiveness. These analyses stem from the results of the thematic and sectoral consultations conducted as part of Phase 2 of the assignment to identify the gaps and weaknesses in the policies, processes, programs, and institutions. Where feasible, we identify and examine options for integrating informal settlements upgrading approaches of government and NGOs and developing partnerships among the different institutions in the implementation of joint informal settlements-upgrading programs. Findings are summarized in the different matrices/tables below. 4.2 National and Local Government Policies on Informal Settlements Upgrading Box 1: Local Government Planning Processes and Instruments Comprehensive Land Use Plan (CLUP), Comprehensive Development Plan (CDP), Executive Legislative Agenda (ELA), and Local Shelter Plan (LSP) The following laws, memorandum circulars, and other issuances which serve as informal settlements upgrading related policies. Policy / Description & Definition RA 7279 or the Urban Development and Housing Act defines Socialized Housing as Housing programs and projects covering houses and lots or home lots only, undertaken by the Government or the private sector for the underprivileged and Table 7. Policies and Analysis Effectivity / Implementation The provisions of the law set the authority for HUDCC and NEDA to prescribe the price ceilings for socialized, low cost, economic housing packages. These ceilings are observed by the lending facilities of such as the HDMF, HLURB, as well as the private developers in production Enhancing Effectiveness Revisit the UDHA and propose amendments such as: crediting socialized housing for ISFs as compliance, provided the development is within the city or within the same project; requiring the condominium, townhouses, and high-rise 29

81 Policy / Description & Definition homeless citizens which shall include sites and services development, long-term financing, liberalized terms on interest payments, and such other benefits in accordance with the provisions of this Act. RA 7835 or the Comprehensive and Integrated Shelter Financing Act of 1994, expanded the scope and usage of the Abot-Kaya Pabahay Fund. HUDCC from time to time determines the income ceilings and loanable amounts for both levels (a) and (b) borrowers and the socialized/ low-cost housing limit eligible for development financing. Effectivity / Implementation of housing. LGUs are ordered to prepare their Comprehensive Land Use Plans (CLUPs) for their respective localities in accordance with the provisions of the Act which include an inventory and identify of all lands for socialized housing and resettlement areas and the provision of socialized housing or resettlement areas. The law provided financing for 3 major components of housing provision: 1. Amortization Subsidy (i) direct amortization subsidy for initial 5 years of the maximum individual housing loan amount of P80,000 at a graduated rate of 35% to 14% for Income level 1 (then at maximum of P4,000 monthly gross family income), and (ii) for initial 4 years of the individual housing loan (above P80,000 to maximum P100,000) at a graduated rate of 25% to 7% for income level 2 (above income level 1 to maximum of P5,000.monthly gross family income); 2. Development financing for private developers and NGOs engaged in socialized housing production; Enhancing Effectiveness developers to comply with the balanced housing requirement providing a mechanism to ensure that the housing programs will continue beyond the term of the local executives. Based on the review of costs for land, site development, and house construction of socialized housing units for the informal sector, the latest ceiling for socialized housing loans has been set at P450,000, at 6% per annum For CMP which is handled by the SHFC, term is a maximum of 25 years. NHA finances housing provision at a graduated amortization payment scheme for a maximum 30 years. In lieu of interest subsidies, capital subsidies may be considered, specifically on land, site development, and housing construction to bring down recoverable costs and close the gap between package price and affordable limits of ISFs. The inventory of sites for socialized housing should be undertaken and planned for on a city-wide scale rather than piecemeal and should result in a list of sites and projects for developers to consider. SHFC is poised to reactivate the developmental financing component of the AKPF in response to the clamor for developmental lending facilities. Latest guidelines for this facility is found in Annex 3 - Corporate Circular AKPF #13. HGC operates the Abot Kaya Cashflow Guaranty Program. Annual releases to the fund from government was also programmed under the law. This may be reviewed to determine fund requirements for the 3 components to support structured incentives and subsidies.as well as credit guaranty for other financing institutions such as NGOs and MFIs. 30

82 Policy / Description & Definition Effectivity / Implementation Enhancing Effectiveness 3. Cashflow guaranty to cover retail loans enrolled under the fund by SSS, GSIS, and HDMF within the loan packages stated by the law. RA 8763, Section 15 of the Home Guaranty Corporation Act of 2000 initially sets the percentage of guaranty accounts per housing package. The ceilings for socialized and lowcost housing loan packages are jointly determined by HUDCC and NEDA. Such ceilings may be reviewed, revised and adjusted to conform to prevailing economic conditions at any time, but not more than once in every two (2) years. Guaranty premium and extent of guaranty coverage favor the socialized housing in terms of guaranty benefits. HGC is committed to cover Small Loans for Home Improvement extended by MFIs, MFI banks, cooperatives and other financial institutions. Batas Pambansa 220 established different levels of standards and technical requirements for the development of economic and socialized housing projects and housing units in urban and rural areas. Economic and socialized housing refers to housing units which are within the affordability level of the average and low-income earners which is thirty percent (30%) of the gross family income as determined by the National Economic and Development Authority from time to time. It shall also refer to the governmentinitiated sites and services development and construction of economic and socialized housing projects in depressed areas. MC No dated January 31, 2011 Prevention of Proliferation of Informal Settlers. National government allocation for housing only accounts for less than 1% of total annual budget The law provides for minimum standards and technical requirements for housing units, lot and block sizes, road widths, community facilities depending on the density and construction specifications. As of this report submission, BP 220 is currently being updated to incorporate minimum standards on Climate Change Adaptation and Disaster Risk Reduction. In compliance with the said Memorandum Circular, LGUs from Regions IV-A, VII, IX, X, XII, CAR and NCR instituted specific actions (see Annex 4) Limited program reach; annual provision of affordable housing ( ) averaged only 104,000, equivalent to 3% of estimated gap Review current trends in the structure of a typical neighborhood unit including walkability, open space, civic space, work areas and public transport. Improve the Implementing Rules and Regulations on standards for multi-storey housing projects. Reinforce BP 220 to incorporate minimum standards in various geographical contexts such as coastal/riverine areas, sloping areas, etc. Expand housing typologies to include mixed uses including but not limited to shop houses, civic uses, etc. Update standards for utilities to include sustainable alternative technologies. PD 933, EO 648, amended by EO 90 of 1986 empower the Housing Land Use Regulatory Board to review, evaluate, and approve or disapprove land use plans of cities and municipalities, based on EO 72 which calls for the preparation of Comprehensive Land Use Plans (CLUPs) of Local Government Units are based on the HLURB Guidelines Guide to Sectoral Studies in CLUP Preparation which includes a Sub- Sector on Housing. Integrate housing needs by population growth and housing needs due to backlog (doubled-up households, displaced units and homeless households) through more innovative and inclusive solutions such as cross subsidies, rental housing, etc. In land 31

83 Policy / Description & Definition Comprehensive Land Use Plans (CLUPs) of Local Government Units pursuant to the Local Government Code of Republic Act 6975 otherwise known as the Department of Interior and Local Government Act of 1990, with the mandate of strengthening local government capability, the DILG is tasked to establish plans, policies and programs that will strengthen the technical, fiscal and administrative capabilities of local governments, as well as formulate the operational guidelines of the local development process. BSP-Monetary Board Circular M RA 9676 or the Real Estate Service Act Local Government Code of 1991 Effectivity / Implementation The DILG developed the Rationalized Planning Systems (RPS) as the framework for local planning and formulated the Guide to Comprehensive Development Planning (CDP) for LGUs that offers procedures, tools and techniques that are designed to respond to varying capabilities of local government in local comprehensive planning. This was a formal recognition by the Philippine banking system of housing microfinance as a pro-poor product which is similar but different from microenterprise finance. It liberalized collateral instruments, allowing banks to lend to the eligible poor for housing microfinance not just against freehold titles which tended to be costly but also against usufruct, longterm leases and other rights-based variants. The appraisal methodology was provided for the specific type of instrument. The law prohibits real estate developers from providing real estate services to the buying public. This has been deemed as disadvantageous to small developers who may bring down marketing cost with an internal sales unit for their projects, especially since they possess the experience in processing loans for clients. The LGC provided the major functions of local government units down to the barangay level. It defined the required adoption of CLUP for each municipality and city to guide development requirements of the locality. The local shelter plan is one of the required subcomponents of the CLUP and the creation of a local housing board (LHB) with its own fund was likewise covered. In general, devolution of functions to the LGUs, specifically zoning and land Enhancing Effectiveness use planning this will result in Socialized Housing not being a separate land use in most cases. Resolve confusion between CDPs and CLUPs by synchronizing the time frames with terms of local officials. Create a single government agency to oversee, coordinate, monitor and evaluate CDPs and CLUPs. The provisions of the circular will be considered to initiate: 1. Adoption of incremental borrowing mechanism for home improvements attuned to the affordable limits of ISFs; 2. Use of rights-based secure tenure instruments as alternative to titling as a least cost approach 3. Classification of rights-based instruments as negotiable instruments to allow its use as collaterals under the various programs such as the CMP, resettlement and other housing projects of NHA utilizing government properties under usufructory use agreement. In majority of municipalities in the country, the shelter plan is simply a template and not implemented either in the local budgetary provision nor in line-up of proposed projects. Shelter planning exercises is currently undertaken by HUDCC through its national and regional office. Compliance with zoning areas for socialized housing purpose are reviewed to determine lands classified for this purpose are accessible to public transport and 32

84 Policy / Description & Definition Effectivity / Implementation use classification, approval of development and building permits for subdivisions and other housing developments are all being handled by the engineering/planning offices with no participation from a duly created housing board. Devolution of development permits to LGUs have increased costs and delayed developments. Enhancing Effectiveness suitable for development. Compliance to 20% balanced housing has been utilized by a few LGUs such as Quezon City, Taguig, and Muntinlupa as a tool to raise much needed funds for socialized housing development within and near city areas. Participation of the communitybased organizations (CBOs), people s organizations (POs), NGOs at the review and update of land use planning be ensured to achieve an inclusive CLUP. Proposed bills in support of socialized housing development currently under congressional review are enumerated below: Pending House Bill obliging condo developers to comply with the 20% socialized housing requirement of UDHA. This proposed law will increase construction cost and detract developers from their core competencies. Pending House Bill rationalizing fiscal incentives abolishing the income tax holiday (ITH) extended to mass housing. Bill creating the Department of Housing, Planning and Urban Development has gone through revisions after years of review without final approval. House Bill No An Act Instituting the National Land Use Policy of the Republic of the Philippines, Providing the Implementing Mechanisms Therefore, and for Other Purposes is cued for congressional approval. SECTION 45 of the bill specifies the required Designation and Zoning of Socialized Housing Zones. Each LGU unit is to designate lands for socialized housing and resettlement areas for the immediate and future needs of the underprivileged and homeless in their territory, pursuant to existing laws and regulations. The designated sites for socialized housing shall be located in residential zones, and shall be zoned as socialized housing zones that are integrated in the city or municipality's zoning ordinance duly approved by the HLURB, pursuant to existing laws and regulations. The proposed law is laudable because it attempts to integrate all the national policies on various aspects related to land use. However, it failed to advocate a national urban development policy that is based on CURRENT trends and needs. 4.3 Informal Settlements Upgrading Related Projects, Programs and Processes Table 8 below lists projects, programs, and processes in three categories: National Government initiated: this refers to interventions (programs and projects) initiated by national government agencies because of scope, resource requirements, or strategic impact. 33

85 LGU initiated: This pertains to interventions initiated by LGUs, the scope of which is limited to the boundaries of their localities. Resource requirements may totally be shouldered or mobilized by the LGU concerned. Community and/or non-government initiated: This includes projects initiated by ISF groups making use of existing government programs and projects (e.g., CMP) or their own resources as well as contributions from partner NGOs (self-help schemes, grant funds, land and labor contributions/ sweat equity; e.g., Habitat, Gawad Kalinga) Projects, Programs and Processes National Government Initiated 1. HUDCC Table 8. Projects, Programs, and Processes Description / Status Issues (if any) TA on Local Shelter Plan preparation Providing assistance to LGUs that request for TA in the formulation of LSP. This is done through a 3-day workshop. The LSP serves as a roadmap for the local chief executives to effectively address the housing need for both the informal and formal sector in their constituencies. The LSP focuses on the assessment of resources and current capacity of the LGU relative to the delivery of housing and urban services vis-à-vis their actual and projected housing need. One feature of the LSP is the inventory of ISFs by an LGU, which serves as the baseline data for an LGU in the preparation of a realistic plan and addresses the housing need of both the formal and informal sector. Integration of climate change resiliency and disaster risk reduction and management features into the local shelter plan. Lessons learned from the UN Habitat experience maybe considered in the drafting of this section of the LSP. Proclamation Program Since 2001, there are 115 proclamations/presidential issuances for socialized housing. This comprised 27,286 hectares of land estimated to benefit 270,000 beneficiaries. Asset Reform Program (ARP) HUDCC Housing Caravan The Caravan included the housing programs: of key shelter agencies. 2. Social Housing Finance Corporation ARP aims to provide tenure security to poor and informal settler families, through the issuance of Presidential Proclamations that declare parcels of government land as socialized housing sites, open for disposition to qualified beneficiaries. The Caravan was undertaken to bring closer to the LGUs the government s housing programs/projects and create awareness on the TAs available from KSAs to help more effectively fulfill their mandate in the delivery of basic services including housing for their constituents. The legal process behind proclaimed sites has to be facilitated. Titling is tedious, costly, and so time consuming. 34

86 Projects, Programs and Processes Description / Status SHFC has been tasked with the development and administration of the Abot- Kaya Pabahay Fund and the Community Mortgage Program, taking over these functions from NHMFC. SHFC s mandates include: (i) encouraging maximum participation by stakeholders such as LGUs, NGOs, and POs in socialized housing; (ii) institutionalizing and promoting self-help housing methods; and (iii) providing a strong and sustainable socialized housing finance system. Localized CMP Abot Kaya Pabahay Fund- Developmental Financing window High Density Program for ISFs The primary objective of the program is to assist residents of blighted or depressed areas to own the lots they occupy, or where they choose to relocate to, and eventually improve their neighborhood and homes to the extent of their affordable limits. Please see Annex 3 for guidelines of the facility. The window was opened to serve the needs of resettling the ISFs along the waterways of MM. SHFC may purchase the land and allow use via usufruct. The package price is at a ceiling of PhP450,000 at a rate of 4.5% per annum for a 30 year period. Graduated amortization for first 10 years, increasing by 10% to reach the fixed amortization starting on the 11 th year. A one month grace period from date of occupancy is observed. 3. National Housing Authority NHA s is focused on socialized housing through development and implementation of comprehensive and integrated housing development and resettlement; determination and development of government lands suitable for housing; and the sustainability of socialized housing funds by improving its collection efficiency, among others. Issues (if any) Only community-based organizations are qualified under the CMP. Currently, the prospective informal sector individual borrowers remain unserved. Limited absorptive capacity of the LGUs in borrowing and implementation of CMP projects affect prospects of upscaling the use of this product. CMP and LCMP needs to be augmented with developmental financing product line and thus the reactivation of the AKPF developmental financing window. Structure of incentives/subsidies have been drafted and are under consideration with the help of WB consultants for subsidy structure. The indirect interest rate subsidy is in place. Usufructory use of the land may be priced at low or zero level for high density housing to augment interest rate subsidy with capital subsidies as in the lease rate on the land, site development an building construction costs. For , the PhP20.0B fund was allocated to NHA for the resettlement of ISFs along waterways in Metro Manila. Production targets may not be achieved with the limited capacity of NHA. Private sector participation (developers and NGOs) should be considered to hasten availability of supply. The general situation with NHA programs is the inefficient recovery of investments in the production of socialized housing provision. Findings of a council-wide study showed that NHA suffers from a low 20-30% collection efficiency. Even with subsidies on materials, interest rate, land, a gap exists between the willingness and affordable limits of the beneficiaries against the pricing of units and the terms of payment offered to the communities. An income decile approach to 35

87 Projects, Programs and Processes Description / Status Issues (if any) establishing entitlement to subsidies may result to zero recovery from those belonging to the lowest income decile. There is an ongoing study of subsidy structure for the programs of NHA which is sponsored by the WB. Affordability must be established and applied accordingly to recovery. The 30 year period of repayment may be used to better inform the communities on the cost of their housing units. Local Housing Program Resettlement Assistance Program (RAP) for LGUs Resettlement Program for government projects Slum upgrading The Program involves the implementation of cost-recoverable socialized housing projects in urban and urbanizable areas in all congressional districts. The beneficiaries of the Program are the homeless and underprivileged families/low-income families who need housing assistance. The Program aims to assist LGUs in addressing the resettlement requirements of informal settler families in their localities. Resettlement projects shall be implemented as a joint undertaking of NHA and LGU. The LGU shall provide the land and the NHA to cover the cost of land development. The NHA has implemented resettlement projects since the 1970s as a major housing program for the low-income sector. In the last decade, NHA focused on the resettlement program in line with the relocation need of the North and South Rail Infrastructure Project, which required the relocation of close to 100,000 families. Between 2001 and 2011, the resettlement program received the largest budget and accounted for about 75% of NHA production outputs for the period. An on-site housing development program where NHA acquires occupied lands and provides on-site improvement through introduction of roads or alleys and basic Despite the availability of RAP, this strategy is not widely practiced in the Greater Manila Area. This is possibly tied to constraints in land values and other best use of the land and would need the national government s actions to look into incentives as well as regulations on affordable housing development in cities. According to Ballesteros, M. & Egana, J. (December 2012), NHA s resettlement program has been implemented with doubtful performance. There have been complaints on the lack of livelihood opportunities and deficient basic services (power, water) in resettlement sites. Some families abandoned or sell their rights and return back to the city to squat. The COA Annual Audit Report (2010) noted the poor collection efficiency for most resettlement sites. In the North and South Rail resettlement sites, collection performance is less than 50% of targets. This performance deprives the agency of much needed funds for other development programs. The program is well-accepted by beneficiaries. Reblocking may become a cause of week cooperation of some community 36

88 Projects, Programs and Processes Sites and Services Development Core Housing Medium Rise Housing Description / Status services such as water and power. Land tenure issue is resolved through sale of homelots to bonafide occupants. Involves the development of raw land into service homelots to serve as catchment area for informal settlements. The intent is to help families acquire housing on an incremental basis. This program can be tied up with resettlement program This program provides service lots with core housing specifically targeted to low-salaried government and private sector employees. The projects are implemented under joint venture arrangement with private sector or LGUs. An in-city housing program that entails the construction of two- to five-storey buildings utilizing funds allocated under Republic Act No or the Comprehensive and Integrated Shelter Financing Act of 1994 (CISFA). The units are made available under lease or lease to own arrangements. Standard unit cost is about PhP485,000 to PhP580,000 for a 4-storey and 5-storey building, respectively. This amount excludes the cost of land. Lease rates per month range from PhP750 to PhP4,000 more or less. 4. National Home Mortgage Finance Corporation (NHMFC) The National Home Mortgage Finance Corporation (NHMFC) was created in 1977 primarily to develop and operate a secondary market for home mortgages Issues (if any) members. ISFs would always prefer this program as this would ensure their nearness to their place of work and least additional transportation cost. The living condition of beneficiaries are not totally improved as housing materials will be the old materials of shanties where they came from. The program is currently being utilized to develop the housing needs of the ISFs in danger areas and waterways. Disposition Program Housing Loan Receibables Purchasing Program Flotation The NHMFC will partner with LGUs in addressing their housing needs by offering to LGUs the sale of its acquired assets. NHMFC has opened a window catering to financiers of housing loans which may be liquefied through sale of receivables to NHMFC. These will be used in the flotation of asset/mortgage backed securities in the secondary mortgage market which it operates. PhP1.085 bonds issuance in the securities market and has retained AA rating. The entity has already disposed of retail assets through its partnership with Deutsche Bank s arm which was established for this purpose. The agency is actively strategizing its planned purchase of other receivables in the sector. 5. Home Development Mutual Fund (HDMF/Pag-Ibig Fund) Affordable Housing Loan Program (HDMF/Pag-IBIG) The Pag-IBIG Housing Loan Program for LGUs is geared towards sustaining the capabilities of LGUs to fast-track the development and implementation of housing projects in their respective localities, and to make housing accessible and affordable for its employees and constituents. HDMF caters to its members only. The target borrowers belong to the formal sector. Although at the initial stage a number of beneficiaries are non-members, part of the program is to streamline their membership under the Fund. 37

89 Projects, Programs and Processes Kasambahay Housing Program Description / Status Individual members loans for socialized housing package price of PhP450,000 and below are extended at 4.5% per annum for maximum of 30 years. Interest repricing every 3, 5, 10, or 15 years thereafter based on the option selected by the borrowers. The program serves as a savings mechanism and housing finance window for household help and other employees qualified under the Kasambahay Law SSS membership, Philhealth, and HDMF membersip 6. Housing and Land Use Regulatory Board (HLURB) The Housing and Land Use Regulatory Board (HLURB) is the national government agency tasked with the planning, regulatory and quasi-judicial responsibilities relating to land use development and real estate and housing regulation in the Philippines. Formerly known as the Human Settlements Regulatory Commission (HSRC), HLURB which was established in 1981 through Executive Order No. 648 (EO 648), ensures rational land use for the equitable distribution and enjoyment of development benefits. It is charged with encouraging greater private sector participation in low-cost housing through liberalization of development standards, simplification of regulations, and decentralization of approvals for permits and licenses. It extends comprehensive and productive planning assistance to provinces, cities and municipalities in the formulation of their Comprehensive Land Use Plans (CLUPs). TA to LGUs on preparation/ updating of CLUP It consists of a map showing how the use of land in a specific area will be regulated, as well as a written Issues (if any) Marketing of services under this window will better inform target beneficiaries/members defined by the law. Inadequate data base on inventory of available lands; Provide periodic updates on outcome and impact of compliance to 20% balanced housing. Encourage participation of civil organizations, NGOs, private sector stakeholders in review and update of CLUPs. Possible monitoring of compliance to creation of Local Housing Board and Fund. The CLUP should include local planning under a zero backlog in housing provision program. document containing a profile of the community, its vision and the strategies on how it will achieve its vision. Registration and Regulation of Homeowners Associations (HOAs) HLURB handles registration of homeowners organizations and also performs regulatory functions, hears pertinent cases, and bases decisions according to existing laws and other issuances related to housing concerns.. 7. Home Guaranty Corporation (HGC) HGC is mandated to mobilize resources to broaden the capital base for the effective delivery of housing and other related services, primarily for the lowincome earners through a viable system of credit insurance, mortgage guarantee and securitization. Retail Guaranty Developmental Guaranty HGC is also mandated to administer the Cash Flow Guaranty Component of the Abot Kaya Pabahay Fund (AKPF) to provide credit insurance on the socialized housing loans extended by the Government Financial How much of HGC guaranty portfolio is catering to socialized housing? 38

90 Projects, Programs and Processes Forms of Guaranty Coverage cash standard Description / Status Institutions (GFIs) such as the SSS, GSIS and HDMF. The AKPF is a subsidy fund. As such, the guaranty is premium-free. The AKPF CCredit guaranty will cover risk faced by lending institutions. HGC is currently initiating agreements with MFIs housing cooperatives and other institutions to provide credit risk cover on Small loans for home improvement; and rural banks to boost home financing in the countryside. Bankers-Builders-Buyers Program is an enhancement of HGC s mandate as fundmobilizer for housing. The BBB Program encourages greater private sector participation in housing concerns by bringing together the stakeholders of the housing sector in a circle complementing each other s needs and functions. Payment Mode Cash payment on 100% of outstanding principal balance HGC debenture bond payment on100% of outstanding principal balance if call is made during first 5 years of loan term; cash payment if call occurs after 5th year of loan term; Issues (if any) bond Payment of guaranty claim shall be made in the form of an HGC debenture bond. modified cashflow Payment of guaranty claim shall follow the guaranty amortization schedule of the defaulted borrower but the interest component shall be limited to the guaranteed rate. 8. Metro Manila Development Authority (MMDA) MMDA Flood Control Program Linkages of the multi-agencies involved in the program has also caused delay in achievement of targets. First line of victims to flooding are the highly vulnerable areas along the waterways in NCR. Resettlement of 62,590 ISFs OPLAN LIKAS concern was raised on which along 659,076 linear meters of agency is spearheading the project waterways in Metro Manila implementation DILG, MMDA, or HUDCC. Crucial for MMDA operations is the fast tracking of addressing how ISF concerns be addressed so that flood control program can be pushed through Private sector developers are willing to participate, specifically development and construction of resettlement projects on government-owned properties on a win-win situation. This means facilitated permits and licenses for the project to avoid unnecessary additional processing costs and delays. Local Government Initiated 39

91 Projects, Programs and Processes Pasig Housing Finance Program 5 Eusebio Villes Makati Resettlement Program Description / Status High density (5-storey) buildings; 2 buildings (2-storey) constructed using Habitat for Humanity technology; LGU-owned properties on which the buildings are erected are covered under usufruct agreement. Bulacan: Dream land village: sweat equityvalues formation via Gawad Kalinga Another resettlement area was purchased in Laguna. Agreement of support to the receiving LGUs were drafted to facilitate acceptance of the resettlement program. Question from Director Cruz: Arrangement with GK: find sponsors CSRs livelihood: agriculture and production Issues (if any) Recovery prospects LGU uses its own funds for development of the project then does in-house financing of ISFs qualified for the project. Thus the rules on defaulting accounts are strictly enforced. Those who forfeit their occupancy rights due to default are turned over to NHA for resettlement. Collection efficiency is at 83%. Problems include: high cost of land for in-city resettlement of ISFs; weak link between public and private sectors requires package of incentives to entice private sector participation; community organization and values formation is a must to form sustainable communities and cut dependency on government; social preparation before, during and after resettlement should include full discussion of policies on entitlement to affordable homes. Estate management is also another responsibility to be turned over to the community. How did you deal with the IS who went back?- Makati: through the peace and order council- get attention of the barangay captains on those who go back to their areas. They are then returned to their respective areas- most of the ISFs rent rooms or bed spaces nearer to their place of work and they rent out or let relatives live in their respective units. How do you ensure that these families have not been awarded? we give the list to NHA, and we also have our own data. Before giving the final list of beneficiaries- we do matching first to discover if there are families who were already awarded before either by the NHA or the city government. Rental housing? Makati s rental housing is for formal settlersthe rental is for employees and formal settlers. Who spent for the reliable list of ISFs including tagging, validation and mapping of ISFs? Makati City Hall Welfare has an annual budget for this purpose. How do you prioritize? Priority 40

92 Projects, Programs and Processes Description / Status Issues (if any) CSOs / POs / NGOs Microfinance Institutions Alalay sa Kaunlaran Inc. (ASKI) based in Cabanatuan City, Nueva Ecija ASHI TSPI CARD MFIs -- housing microfinance is a resourcebased lending facility. Train on financial education, especially on the rural areas. Housing Microfinance is generally based on incremental lending and short term loans. is given for those in the danger areas (as with National Government) (3 meter and 10 meter easement). Availment of housing microfinance serves as an incentive to members with good payment history on their micro businesses. MFIs focus on extension of microenterprise loans. MFI loans are extended to members only to ensure that they have gone through required financial education and they have the matching capital build-up in place. Rural banks have started to extend incremental housing loans as many MFIs and MFI banks are doing. Homeless People s Federation Inc. Savings mobilization, Sources of funds land acquisition, - Community-Led Infrastructure Finance network formation Facility (CLIFF) Community upgrading, - Asian Coalition for Community Action housing construction, (ACCA) site development, and - Asian Coalition for Housing Rights (ACHR) disaster interventions - Slum Dwellers International (SDI) Linkages with HDMF and HGC are being formalized to avail of credit risk cover and partnership with HDMF members as a start up of going for larger loan amounts and longer term loans. - Low collection rate due to disasters - Unclear penalties and sanctions - ISFs accustomed to dole outs - Insufficient monitoring and evaluation capacity 4.4 Other Current and Related Government Programs Department of Agriculture (DA) Convergence Program: The DA is implementing a convergence program, which aims to provide and utilize unproductive lands 17 in the provinces by giving two-hectare parcels of land to families willing to go back to the provinces. Through the program, water and road systems are put in place to induce development in these areas. While similar to a Balik Probinsiya Program, the package offers a more holistic approach, as it provides families with means of livelihood. DTI, DOLE, and TESDA. These agencies help ensure that families will have the opportunity to find gainful employment wherever they may be relocated. Department of Trade and Industry (DTI). The DTI is tasked to identify areas outside NCR with growing industries and employment opportunities that may benefit from the presence of relocates. The location of industries that could serve as possible places of employment for informal settler families 17 Unproductive areas pertain to unoccupied parcels of land in the provinces with limited or no access and few people occupying them. 41

93 that may be relocated and uprooted from their sources of livelihood is likewise one of its responsibilities. Department of Labor and Employment (DOLE). The DOLE is tasked to identify growth areas with employment opportunities and match these with the skills of possible breadwinners from informal settler families. DOLE has committed to conduct its Skills Registration System, in partnership with the Public Employment Service Offices (PESOs) of concerned local government units (LGUs), in informal settler communities in NCR. The intention is to match the skills of potential breadwinners from informal settler families with relevant employment opportunities. This way, the relocation of informal families will be targeted based on the ideal alignment of skills and opportunities. The DENR Community Based Forestry Management (CBFM). DENR is currently conducting a land audit on possible areas in public lands that can accommodate informal settlers from the urban areas. The audit, however, does not include areas occupied by Indigenous Peoples (RA 8371) and those under the National Integrated Protected Area System (RA 7586). The upland population is currently estimated around 25 million (Rebugio, UPLB 2005), which is also considered as belonging to the poorest sector of society. DENR is looking into the possibility of titling all government lands in the name of the Republic of the Philippines as a strategy to prevent informal settlers from occupying them. In Davao, the DENR office shared their program of awarding available land for socialized housing of illegal settlements and supporting the ISFs in the agriculturally-based income generating activities in coordination with the DAR. The DSWD Core Poverty Reduction Program Convergence Framework. This includes the Pantawid Pamilyang Pilipino Program (4Ps); The KALAHI-CIDSS (KC) Project; Self-Employment Assistance Kaunlaran (SEA-K) Integrated Program. The objective is to harmonize these three core social protection projects at both the program and operational level to generate greater impact on poverty reduction beyond what each project can accomplish on its own. National Household Targeting System for Poverty Reduction (NHTS-PR) Project. The project commenced in January 2009, this aims to come up with a unified, functional, objective and transparent targeting system that would identify the poorest, who and where they are, as basis for identifying beneficiaries of social protection programs. 4.5 Who are involved? Critical roles of HUDCC and DILG. The collaboration between DILG and HUDCC is critical to providing shelter and related services to ISF communities as well as to overall shelter planning and development. HUDCC: Its role as main body presiding over policy making and coordination on housing and urban development will facilitate the convergence of key shelter and financing institutions as well as its ongoing review and updating of the National Urban Development and Housing Framework, particularly with regard to the inclusion of an increased focus on ISF housing. HUDCC is also moving firmly toward putting in place a National Resettlement Policy Framework as well as a National Informal Settlements Upgrading Strategy, for which lessons learned from the initial experiences of the ISF shelter development initiative can provided significant inputs. Table 9 presents the specific objectives and features of services offered by the NHA, SHFC, Pag-IBIG Fund, and the HGC. 42

94 Table 9. Highlights of Socialized Housing Production and Finance Programs of Key Shelter Agencies NATIONAL HOUSING AUTHORITY (NHA) SOCIAL HOUSING FINANCE CORPORATION (SHFC) PAG-IBIG FUND/HDMF HOME GUARANTY CORPORATION (HGC Information Resettlement Program Settlement Upgrading 1. OBJECTIVE/S (production and social services) -serve needs of infrastructure projects -assist LGUs in their needs, including indigenous people - provide housing under off-city and in city relocation for -provide regular slum upgrading assistance -provide slum upgrading services as preproclamation activities AFP/PNP Housing - assist in AFP/PNP Housing I and II -assist in BJMP/BPF Housing Other Programs -assist in sites and services and/or core housing -provide medium rise/ temporary housing/emergency housing assistance -provide housing financial assistance Community Mortgage Program -finance land acquisition, housing construction, site development (on site and offsite) for organized communities -assist LGUs in accessing CMP financing for their prioritized communities High Density Housing Program - finance land acquisition, construction of low rise or medium rise buildings, site development (on site/near/ off-site) for organized communities residing along waterways and other danger areas -provide technical assistance to LGUs, NGOs and communities, map Informal settlements, land inventory, community planning through citywide approach to slum upgrading -provide developmental financing to qualified Socialized Housing Program -finance members loans to purchase lot, house and lot, residential unit (LRBs and MRBs) within socialized housing price ceiling -refinance qualified members loans with other financing institutions -provide developmental financing to qualified organized Retail Guaranty -provide guaranty coverage to qualified financing institutions extending socialized housing loans to individual borrowers. -provide cashflow guaranty coverage to socialized housing loans extended by SSS/GSIS/ HDMF and other qualified financing institutions under the Abot-Kaya Pabahay Fund -guaranty coverage on securitization of Developmental Guaranty -provide guaranty over developmental loans extended by financing loans for development of socialized housing project/s -guarantee receivables financing either through discounting or securitization of asset-backed securities proceeds of which will be used for further development of housing projects 43

95 NATIONAL HOUSING AUTHORITY (NHA) SOCIAL HOUSING FINANCE CORPORATION (SHFC) PAG-IBIG FUND/HDMF HOME GUARANTY CORPORATION (HGC Information 2. FEATURES -target market -lending rate/guaranty fee Resettlement Program NCR ISFs in danger areas -provide temporary housing reconstruction of NHA condemned buildings -provide construction and housing materials in reconstruction for post- calamity assistance ISFs belonging to lowest 3 income deciles Settlement Upgrading ISFs belonging to lowest 3 income deciles AFP/PNP Housing ISFs belonging to lowest 3 income deciles Other Programs -assist in home improvements and/or provision of utilities; -assist in matching skills with livelihood/employment -assist in survey and titling ISFs belonging to lowest 3 income deciles Community Mortgage Program LGUs, ISFs belonging to lowest 3 income deciles High Density Housing Program LCMP/CMP and HDH borrowers Under the Abot-Kaya Pabahay Fund ISFs in waterways and danger areas in NCR belonging to lowest 3 income deciles 6% per annum 6% per annum 6% per annum 6% per annum 6% per annum 4.5% per annum for the first 10 years, then to be reprised at the end of the 10 th year and every 3,5,10, or 15 years thereafter based on the option Socialized Housing Program community or developer under any of HDMF s programs Qualified HDMF members with loan value within socialized housing ceiling Retail Guaranty socialized housing loans -provide MFIs with guaranty coverage for housing loans extended to members and non-members housing retail loans Abot Kaya Guaranty cover is not subject of guaranty fees. Standard risk cover for retail loans 1.4% per annum for Developmental Guaranty Qualified government and private financial institutions extending developmental loans Developmental loans with bond coverage- lowest guaranty fee of 1.25% plus audit fee of o.25% per annum for socialized housing packages; 44

96 NATIONAL HOUSING AUTHORITY (NHA) SOCIAL HOUSING FINANCE CORPORATION (SHFC) PAG-IBIG FUND/HDMF HOME GUARANTY CORPORATION (HGC Information Resettlement Program Settlement Upgrading AFP/PNP Housing Other Programs Community Mortgage Program High Density Housing Program selected by borrower; Socialized Housing Program Retail Guaranty socialized housing loans Developmental Guaranty -maximum loan amount P205, (net of P85,000 subsidy) HUCs P165,000/hh Other areas P120,000/hh Cities and Municipalities 6% Omnibus Commitment line of P50.0 million Barangays 6% P20.0 million line Abot Kaya Developmental Loan Lending policies and guidelines are presented in Annex 3. P15.0 million loan/hoa P 450,000/ household P75.0 million/hoa -maximum term 25 years 25 years 30 years for individual borrowers loans and 3 years from loan drawdown for developmental loans -repayment scheme P200 for the first 5 years and then average amortization of Fixed monthly amortization Fixed amortization starts on 11 th month, graduated Bond coverage for retail loans 1.2% per annum for socialized housing loans Socialized housing ceiling Socialized Housing ceiling Php75.0 million for construction and Php20.0 million for working capital 30 years Based on projected cashflows of project 45

97 NATIONAL HOUSING AUTHORITY (NHA) SOCIAL HOUSING FINANCE CORPORATION (SHFC) PAG-IBIG FUND/HDMF HOME GUARANTY CORPORATION (HGC Information -equity requirement Resettlement Program P per month Settlement Upgrading AFP/PNP Housing Other Programs Community Mortgage Program If HH income is within NEDAbased poverty threshold no equity 1 st to 4 th class municipalities 20% 5 th to 6 th class- 10% High Density Housing Program amortization at 10% annual increase Socialized Housing Program Retail Guaranty Developmental Guaranty 46

98 DILG: Mainly serves as the bridge between NGAs and LGUs for a broader or across agency handling of urban poor shelter and other concerns. Its direct links with LGUs also provide a distinct advantage in pushing for strict UDHA compliance along with more urgent ISF shelter provision at the local levels. Offering packages of incentives and penalties, or programs for incentivizing LGUs in addressing ISF concerns is strongly recommended. There is also an opportunity to highlight housing for ISFs in the Local Governance Performance Management System (LGPMS) output outcome indicators as well as in awarding the Seal of Good Housekeeping for Local Governments (SGHK). LGUs: Community-based Monitoring System undertaken by LGUs with the strong participation of barangays should be maintained and updated periodically. Data accuracy will be maximized as the lowest level of government are the ones working with the communities to gather, verify and maintain the data repository. In the course of consultations, several gaps or weaknesses in the programs and/or policies of some of the key shelter agencies and these are summarized in Table 10 below: AGENCY National Housing Authority Local Government Units Table 10. Agencies Involved in ISFs GAPS & Weaknesses POs appreciate the social preparation extended to them prior, during, and post resettlement. However, post resettlement is shortlived and most often than not, the ISFs are left without the much needed livelihood opportunities. Estate management is also deemed as a major task to be turned over to the communities. However, a longer period of time is needed for their guidance after resettlement has been completed. The host LGU involvement is seen as a must. Problem is availability of funds to sustain the support to the communities Creation of the Local Housing Board and Office of the Municipal/City Architect is optional not required. Capacity of LGU to formulate CLUPs, CDPs and Shelter Plans. Local Development Council/Housing Board should be inclusive & truly representative of the stakeholders Coordination with HLURB regarding CLUPs and CDPs. Capacity to secure and renew danger areas vacated by communities resettled to safer settlements as taken up under AusAid s preparatory studies on safer settlements. With Taguig as pilot project. Housing Land Use Regulatory Board National Home Mortgage Finance Corporation Coordination with DILG regarding CLUPs and CDPs. Capacity to review, evaluate, approve or disapprove land use plans of cities and municipalities, specifically on provision of socialized housing. This would entail recognition of land allocation in city as it has access to the LGUs inventory of available land and the matching land values which would necessitate provision of subsidies. Capacity to monitor compliance with the implementation of the shelter plan presented in the CLUPs. Compliance to 20% Balanced Housing requirement is under the mandate of HLURB and the agency could utilize its authority to ensure the delivery of socialized housing component for all types of housing projects except for condominium development. The NHMFC remains the chartered agency which owns the SHFC as a subsidiary as the charter of the SHFC has not been passed by Congress. 47

99 4.6 Accomplishments of Key Shelter Agencies The National Housing Authority (NHA) and Social Housing Finance Corporation (SHFC) are the lead agencies for socialized housing program. The housing sector s production arm, NHA, has delivered a total of 415,849 units valued at PhP55.76 billion for the period 2001 to December Of these, 75% of production cost or PhP42.0 billion was devoted to complete some 227,329 units (55% of total) for resettlement purposes. For site upgrading projects, approximately 59,345 units (14% of total assistance) valued at minimal cost of PhP80.15 million were benefitted. The agency has supported the AFP/PNP/BFP with an estimated PhP11.5 billion (21% of total cost) to provide 54,108 units or 13% of total accomplishment. For other programs such as assistance to calamity areas, some PhP2.17 billion covered production of 75,067 units or 18% of total accomplishments. During the same period of 2001 to 2013, SHFC under its community mortgage program, assisted 152,985 households with a total of PhP7.95 billion loan value. Approximately 10.4% or 15,875 families were provided housing finance of PhP million or 12.4% of total loan value was the highest level of support granted for the period. The Pag-IBIG Fund provides end-users financing under (i) affordable housing loan program, (ii) Kasambahay Loan program, (iii) developmental financing. However, a review conducted by the HUDCC of the socialized housing delivery relative to the increased ceiling of PhP450,000 for socialized housing packages, revealed that of the 346 accounts financed by HDMF during the first quarter of 2013, only 13 borrowers loans fell under the lowest 30% income deciles. It is evident that the Fund barely caters to the socialized housing beneficiaries needs for housing finance. Other accomplishments of the sector may be traced to HUDCC which spearheads the proclamation of lands for housing purposes. An estimated 90.5% or 272,580 ISFs were granted secure tenure upon completion of proclamation process. HGC s Abot Kaya Cashflow Guaranty program provided credit risk cover to 24,252 loans extended by NHMFC, Pag-IBIG Fund, GSIS, and SSS amounting to PhP7.79 billion as of December The NHMFC in its secondary market operations has securitized 12,014 mortgage/sales receivables to raise some PhP2.51 billion funds under its Housing Loans Receivables. Purchase Program. The HLURB has issued licenses to sell covering the production of approximately 2.28 million housing units of various classifications. The agency has likewise assisted 1,158 local government units in drafting their respective Comprehensive Land Use Plans (CLUPs) for the period 2001 to A detailed presentation of annual accomplishments of KSAs for direct and indirect assistance during the period 2001 to 2013 is presented in Annex Current Subsidy Structure The socialized housing program carry subsidies, both direct and indirect, and in the form of interest, capital, and tax subsidies. These are summarized below: 1. Direct Subsidies: Table 11. Subsidy Structure in Socialized Housing Delivery and Finance NHA Resettlement Program 1.1 Capital Subsidy Php 35, cash subsidy SHFC Community Mortgage Program Pag-IBIG Fund Affordable Housing Program NOTES 48

100 NHA Resettlement Program SHFC Community Mortgage Program Pag-IBIG Fund Affordable Housing Program NOTES Php40,000-50,000 for connection to utilities and survey Land value average of Php700.00/sqm which is always below prevailing market price 1.2 Tax Subsidy Exemption includes capital gains tax, real property tax, income tax for NHA. These costs are therefore savings which reduce cost of housing unit. Exemption from payment of capital gains tax equivalent to 6% whichever is lower among appraised value, market value & selling price Exempted from payment of capital gains tax, legal process and lien per Revenue Memo Circular No pursuant to Sec. 19 of RA Indirect Subsidies 2.1 Interest Rate 6% 6% 4.5% for first 10 years, repricing after 10 th year, every 3,5,10,15 years (options) 2.2 HGC Guaranty Guaranty fee 1.4% for standard coverage 1.2% for bond coverage 1.4% for standard coverage 1.2% for bond coverage No guaranty fee for Abot-Kaya Cashflow Guaranty enrollment May enroll under regular retail guaranty. HDMF lending rate is lower than market rate or lending rate of banks for housing loans Lower than guaranty fees for higher loan values than socialized housing loans- 1.7% and 1.5% Guaranty coverage on Principal loan value Guaranteed interest rate Tax Exemption on interest rate 100% 100% 100% 11% 11% 11% Up to 11% Up to 11% Up to 11% Informal Subsidies Uncollected amortizations on housing loans (Collection Efficiency Ratio ranges from 30-35%) Uncollected amortizations on housing loans (Collection Efficiency Ratio ranges from 75-80%) Sample Computation Resettlement Package: CMP loan in HUCs: Php 450,000 Loan = Php 290,000 Loan = Php 165,000 49

101 Interest Rates Developing a National Informal Settlements Upgrading Strategy for the Philippines NHA Resettlement Program Less: 85, ,000 Less taxes 12, ,700 Less Uncollected amount of 70% : Php134,870 or 53.5% subsidy on loan value SHFC Community Mortgage Program Less taxes: 12, ,000 Less Uncollected amount of 25% : Php114,750 or 30.5% subsidy on loan value Source: Findings on Review of Socialized Housing Program, HUDCC, October Pag-IBIG Fund Affordable Housing Program 1.5% interest rate subsidy compared to NHA and SHFC lending rates. NOTES It can be gleaned from the foregoing table that subsidies abound in the socialized housing program of government. However, the low collection efficiency rate of NHA (range of 30-35%) and SHFC CER of 75-80% are evident that even with the existence of subsidies from 31-54% of principal value, the recovery of investments has not been realized due to low repayment rates. Subsidies have not reached the targeted beneficiary households. The lowest 30% of income deciles are being served but provision of subsidies has not resulted to the efficient recovery of investments. Thus, the socialized housing program continues to be dependent on national government subsidy to meet production and financing targets. The lending terms have also constrained private and government financial institutions from participating in the program. Commercial, rural, thrift banks cannot compete with fixed lending rate of 6% for a maximum term of 25 to 30 years. Figure 6 depicts the interest subsidy for socialized housing loans against prevailing bank rates. Figure 6. Domestic Lending Rates and Socialized Housing Lending Rate of 6% Per Annum Socialized Housing Lending Rates Average Banks' Lending Rates Source: Report on Domestic Lending Rates of Banks, Bangko Sentral ng Pilipinas, December In comparison, the CER of SHFC s CMP stands at a relatively higher level of 75-80%. This may be traced to the borrowers belonging to an organized community of households who have lived in a 50

102 common area for years, strengthened by social ties and intermediation received from the LGU, possibly partner NGO, and SHFC. CMP accounts are generally for the purpose of land acquisition and secure tenure over a property the households have occupied for years. The community loan is an onsite type of land purchase. Aside from collection efforts exerted by SHFC staff and accredited private collection agencies. Peer pressure among community members also exist. Households do not undergo offsite relocation but possibly reblocking which the community determines during the planning stage. For resettlement projects, recovery is deemed low at 30-35%. Resettlement sites are chosen primarily based on land value to meet pricing policy and affordable limits of target households. However, additional costs of transportation to and from work, and alternative livelihood opportunities appear as secondary factors for consideration. Working members of households experience longer travel period and higher transportation costs which will affect the expenditure level of the households. This situation may lead to non-payment of monthly amortizations and possibly a return to the city center and expanded incidence of informal settlements. The subsidy structure should consider the affordable limits of target households, possibly providing as high as 100% to those in lowest income decile. 4.8 Affordability The magnitude of informal settlers in the NCR and other highly urbanized centers raises concern that the housing units produced are unaffordable to the urban poor belonging to the 30 th percentile. Periodic adjustment to the ceiling of socialized housing package price have been adopted in relation to construction materials price index, consumer price index and prevailing market price of rawland. The ceiling has been adjusted to PhP450,000 for socialized housing. The issues which have been raised in the HUDCC-led review include: (i) ceiling of PhP450,000 mismatched with affordable limits of market, and (ii) leakage of subsidies in the system due to inefficient targeting of beneficiaries. The continuing growth in numbers of informal settler families are deemed as rooted to the inefficient and ineffective program policies prevailing in the sector. The annual family income and distribution for the Philippines and the NCR are summarized below. Income Class Table 12. Annual Family Income and % Distribution By Income Decile, 2012 (Philippines) Total (million pesos) Income Average per family (pesos) Average monthly income/family (pesos) Percentile First Decile 146,984 68,601 5, Second Decile 197,980 92,402 7, Third Decile 231, ,875 8, Fourth Decile 277, ,572 10, Fifth Decile 328, ,326 12, Sixth Decile 390, ,435 15, Seventh Decile 490, ,695 19, Eight Decile 613, ,411 23, Ninth Decile 817, ,408 31, Tenth Decile 1,532, ,395 59, Total 5,026, ,612 19,551 Note: Details may not add due to rounding Source: 2012 Family Income and Expenditure Survey, National Statistics Office. Consultant s estimates. 51

103 Income Class Table 13. Annual Family Income and % Distribution By Income Decile, 2012 (National Capital Region) Total (million Pesos) Income Average Per Family (Pesos) Average Monthly income/family (pesos) Loan Monthly Income to Amount Amortization Afford Percentile 20% NCR Outside 1,350,000 11,453 57, th -95 th 95 th -100 th 1,080,000 9,163 45, th -90 th 90 th -95 th 900,000 7,635 38, th -80 th 90 th -95 th 720,000 6,108 30, th -70 th 85 th -90 th 585,000 4,963 24, th -50 th 75 th -80 th 495,000 4,200 20, th -40 th 70 th -75 th 405,000 3,436 17, th -25 th 60 th -65 th 360,000 3,054 15, th -20 th 55 th -60 th 270,000 2,291 11,453 5 th -10 th 35 th -40 th 225,000 1,909 9,544 5 th -10 th 30 th -35 th Source: Consultant s estimates. Percentile First Decile 42, ,754 12, Second Decile 52, ,055 15, Third Decile 63, ,061 18, Fourth Decile 74, ,708 21, Fifth Decile 83, ,123 23, Sixth Decile 96, ,417 27, Seventh Decile 106, ,985 30, Eight Decile 136, ,880 38, Ninth Decile 160, ,172 45, Tenth Decile 289, ,995 82, Total 1,106, ,215 31,601 Note: Details may not add due to rounding. Source: 2012 Family Income and Expenditure Survey, National Statistics Office. Consultants estimates. The income profile of the NCR population shows higher level of average income per family. To establish the affordable limits of the ISFs, various scenarios were undertaken. Scenario 1 assumes: (i) 10% down payment, (ii) 25-year term, (iii) 6% per annum interest rate, and (iv) 20% affordable limit for housing. Results of Scenario 1 are shown below: Table 14. Scenario 1 Affordability Profile Percentile Loan Amount Monthly Amortization Income to Afford Percentile NCR Outside 20% NCR Outside 80th-85th 90th-95th 1,350,000 8,801 44,003 85th-90th 90th-95th 65th-70th 85th-90th 1,080,000 7,040 35,202 70th-75th 85th-90th 55th-60th 80th-85th 900,000 5,867 29,335 60th-65th 85th-90th 35th-40th 70th-75th 720,000 4,694 23,468 40th-45th 75th-80th 25th-30th 60th-65th 585,000 3,814 19,068 30th-35th 65th-70th 15th-20th 55th-60th 495,000 3,227 16,134 20th-25th 60th-65th 5th-10th 40th-45th 405,000 2,640 13,201 5th-10th 45th-50th 5th-10th 35th-40th 360,000 2,347 11,734 5th-10th 40th-45th 5th-10th 20th-25th 270,000 1,760 8,801 5th-10th 25th-30th 0th-5th 10th-15th 225,000 1,467 7,334 0th-5th 10th-15th Source: Consultant s Estimates Scenario 2 assumes: (i) 10% equity, (ii) maximum term of 25 years, (iii) 9% per annum interest rate, (iv) 20% affordable limit for housing. Table 15. Scenario 2 Affordability Profile 52

104 Scenario 3 reflects affordability limits where (i) 10% equity, (ii) maximum term of 20 years, (iii) 9% per annum lending rate, (iii) 20% affordable limit for housing. Table 16. Scenario 3 Affordability Profile Loan Amount Monthly Amortization Income to Afford Percentile 20% NCR Outside 1,200,000 10,955 54, th -90 th 95 th -100 th 960,000 8,764 43, th -85 th 90 th -95 th 800,000 7,303 36, th -75 th 85 th -90 th 640,000 5,842 29, th -65 th 85 th -90 th 520,000 4,747 23, th -50 th 75 th -80 th 440,000 4,017 20, th -35 th 70 th -75 th 360,000 3,286 16, th -25 th 60 th -65 th 320,000 2,921 14, th -20 th 55 th -60 th 240,000 2,191 10,955 5 th -10 th 35 th -40 th 200,000 1,826 9,129 5 th -10 th 25 th -35 th Source: Consultant s estimates. It can be gleaned from the foregoing tables that considering the market-oriented term rates of 9% interest per annum, maximum repayment period of 20 years and a 20% down-payment, the house and lot package will be affordable at the 23 rd percentile within the 30th percentile government target. A household at the 10 th percentile would be able to afford a house and lot package of about P370,000 in the NCR under the same terms. Assessing affordability based on the 2012 household income distribution for the Philippines overall, the current socialized housing ceiling of P450,000 house and lot package is only affordable at the 49 th percentile under the concessionary terms of fixed 6% interest rate for 25 years repayment scheme, and the 62 nd percentile prevailing market terms. These are all well outside the UDHA-mandated and government target of the poorest 30% for socialized housing. 53

105 5 ISSUES CENTRAL TO INFORMAL SETTLEMENTS This section aims to provide a sound understanding of the complex issues, diverse conditions, and risks confronting informal settlements communities, among others. This will help establish a comprehensive and reliable baseline information to inform the NISUS formulation process. To achieve this. The issues core problem, causes, and effects drawn up from proceedings of the thematic consultations and workshops, will serve as drivers to policy and institutional reforms to improve efficiency, effectivity, and impact of upgrading informal settlements. 5.1 Weak Enforcement and Monitoring of Local Land Use Planning & Standards for Informal Settlements A review of planning standards and regulations for informal settlements reveal that there are sound and solid policies, regulatory and even institutional framework as mandated by various Republic Acts, laws, and issuances. HLURB has assisted 2,372 local government units in the preparation of their CLUPs which contain a section on housing provision. However, despite the foregoing, key problems are highly visible and these include: (1) weak technical capability at the local level; (2) ineffective planning standards; (3) weak planning for informal settlements and, (4) a weak review of CLUPs/CDPs by the national planning agencies Weak Technical Capability at the Local Level: Most Local Planning and Development Offices (PDOs) are composed of the Local Planning and Development Officer and their staff who assist them in the day-to-day activities of the PDO. Many of these PDOs were an offshoot of the City Engineer s Office, until the establishment of a PDO in each LGU was required by the Local Government Code of Thus, the unit may be manned by engineers with no training in Urban Planning or Housing. Only a few PDOs have created a housing unit and possess adequate manpower with graduates of degrees in Urban and Regional Planning and licensed Environmental Planners. Furthermore, they have limited access to training and capacity development. Although the DILG and HLURB are continually offering training programs/courses on crafting CDPs and CLUPZOs, not all local governments avail due to budget constraints and heavy work schedule. Most LGUs convene the various special boards as required by the local government: (i) the Local Development Council, (ii) the Local Health Board, (iii) the Local School board, among others. But most LGUs do not convene the Local Housing Board as required by Memorandum Order 74 series of Another optional position in the LGU is the local architect. Not many LGUs appoint an architect, who would greatly strengthen the housing team in providing alternative concepts and designs for socialized housing. Thus, because the leadership and staff are basically not qualified planners and/or architects, there is lack of knowledge on the provision of innovative housing strategies and designs. 54

106 POLICY IMPLICATION/S: The Local Government Code of 1991 mandated the responsibilities of all local government inclusive of shelter provision. Under the Code, each LGU at the provincial and municipal/city level is required to adopt a Comprehensive Land Use Plan, encompassing all aspects of urban development and services. HLURB is the key shelter agency which supports the LGUs in this exercise while HUDCC assists in the preparation of shelter plans. Strengthening of institutional linkage and possibly HLURB authority to ensure acceptability of identified sites for formal and informal settlers is deemed necessary. Further, the compliance to establishment of a distinct and well-manned unit for housing in the LGU may also be supported by both HLURB and the HUDCC to facilitate efficient data gathering and planning Ineffective Planning Standards Despite the integration of housing guidelines from HUDCC and the HLURB standards into the local comprehensive development and land use plans the standards for the housing subsector are rendered ineffective. There seems to be a conflict between the DILG and the HLURB in the provision of CDPs. The DILG requires CDPs from their LGUs whereas the HLURB reviews the CLUPs. The CDP is actually part of the CLUP and the difference lies in the timeframe and agency responsible for control and monitoring of compliance. Despite the clarifications issued by the DILG that they are complementary, there is duplicity in the process and The LGUs have difficulty complying with this requirement. Due to the lengthy process of updating standards, these do not reflect current planning norms and practices. For instance, the palette of housing approaches in the 2007 HLURB features mostly off-site relocation based approaches in contrast to city-wide approaches. POLICY IMPLICATION/S: BP 220 is the law encompassing the minimum standards for socialized housing. It contains an outline for minimum standards in site selection, permitting, site development planning, housing and condominium development. Although, in 2013, the HLURB began consultations for integration of provisions on Climate Change Adaptation and Disaster Risk Reduction, it is strongly recommended that the minimum standards should require planning to reach the level of neighborhoods and town centers. BP 220 merely regulates minimum lot sizes and maximum block length and community facilities vis-a-vis density or maximum population. To enhance planning parameters, it is viewed that BP 220 should likewise regulate the maximum size of a neighborhood, minimum provision of neighborhood facilities such as civic center, recreational space, work areas, market, school, and transit terminal within the maximum walkable distance of the community members. The present standards encourage sprawl and the placement of community facilities based on economies of scale. This sprawling type of development encourages dependence on the car rather than walkable type of neighborhoods. The law should also include recommendations that would allow retrofit works for existing neighborhoods to enjoy a healthier environment with walkable areas. Relocation strategies should benefit from citywide planning framework, be inclusive of socialized housing development and of required provisions on transport, infrastructure and urban services, and livelihood opportunities. 55

107 The challenge is to tailor-fit each housing development plan to the dynamics of the communities who will reside there. Community involvement and participation must truly be part of participative planning exercises for a socialized housing development to be successful. In most cases, communities are not recognized as the planning unit in the CLUP process. Although the process is deemed consultative, the informal settlers have either minimal or no participation at all in consultations. Results reflect the top-bottom approach as the informal settlers are treated as a project rather than a stakeholder in the project. The HLURB has a Zero Backlog Project wherein LGUs are encouraged to complete their CLUPs training or technical assistance. However, there is no monitoring system to check LGUs compliance to create and maintain database to support implementation of socialized housing program Mindset Planning for informal settlements is weak because of the existing mindset that socialized housing is a social service, not an investment in the city s future. Thus, weak planning for informal settlements prevail as informal settlers rights & privileges arise, and recognition of the informal sector contribution to the local economy remain at nil or minimal level. ISFs are presumed to be non-taxpayers by the general public and the LGUs as majority of households belong to the informal economy and this view has caused LGUs to give less priority to their needs. However, they also pay taxes directly when employed in formal jobs and with their purchases which are priced inclusive of VAT. Many of them are part of the service economy (household help, family drivers, gardeners, etc) that support mainstream jobs. Another mindset that needs to be refocused, according to Architect ENP Yuri Espina is to study the process of absorption and integration of the informal settlers into the urban city Weak Monitoring and Linkages Weak monitoring and review of CLUPs/CDPs by national planning agencies, fragmented housing delivery systems, limited options, limited access to land for socialized housing and the lack of coordination among agencies in implementing programs/projects of ISFs are other causes of the core issue. At the province level, municipal/city CLUPs are reviewed by the Provincial Land Use Committee of the Provincial Government whereas the provincial physical development plans are reviewed by the Regional Development Committee (RDC). HUDDC is not represented in both bodies therefore housing is not given the prominence it deserves. POLICY IMPLICATION/S: For the highly urbanized towns and cities, there needs to be a regional level governing body similar to the Metro Manila Development Authority. Metro Davao, Metro Cebu and Metro Iloilo still do not have the formal legal mandate of a metropolitan government. MMDA s role needs to be expanded from traffic and solid waste management, flood control, to include planning for safer settlements and retrofitting of vacated areas as a post resettlement phase of its projects. The LGC and UDHA are specific on inter-agency and intra-agency coordination/linkages with regard to socialized housing. National agencies are tasked to monitor the LGUs and review the 56

108 CLUPs/CDPS. However, in practice, the numerous functions, duties and tasks of various agencies prevent them from focusing on socialized housing. National government agencies and the LGUs have been mandated to undertake an inventory of land for socialized housing. However, not all local governments have been able to identify lands for socialized housing. This is where stronger linkages between local and national agencies would greatly help local governments. Where local land for socialized housing is unavailable perhaps the national government may have available land within the geographic limits governed by the LGU. It could also be an opportunity to strengthen partnerships with the private sector in augmenting the inventory particularly in providing developers with options in complying with the twenty percent (20%) balanced housing requirement. 5.2 Inadequate, Unharmonized, and Unfocused Socioeconomic Development Policies and Programs Due to the sheer size of the informal settlement communities, social and economic challenges are equally huge in scope. Unfortunately, the deteriorating urban environment has been viewed as the emerging state of affairs which impact on the bid for competitiveness, social and economic growth of urban areas. Sadly, those that are affected most by these challenges are very poor households and women. Whatever the causes of urban crumble, the economic, social, and environmental costs of informal settlements have reached a critical point. A major challenge is how to accommodate rapidly increasing informal settler population and the swift program to facilitate improvements of their communities risks and vulnerabilities. Furthermore, there is strong need for an effective response to the weak and/or lack of resources for social services, employment and other income generating activities. Relentless extreme climate changes have definitely added pressure to the ISFs demand for essential urban basic services. The key shelter agencies and other national agencies including the LGUs did implement programs and services in order to uplift the current conditions of informal settlements in the entire country. However, despite these provisions, the task of bridging the gap between the current situation and the desired end of having sustainable communities is still present. Some probable causes of these are perhaps due the enormity and extent of the problem, lack of funds, weak governance structure that provides a venue for a better policy dialogue, program implementation, coordination and convergence of actions among government agencies, the private sector, with a meaningful participation of the ISFs Unsustained efforts on local economic growth and job creation NEDA midterm review of the Philippine Development Plan indicated that we are on track with respect to our economic targets which indicated an increase in Gross Domestic Product (GDP) by 7-8% as well as an increase to 22% in investment ratio. Economic growth has reached an acceptable level though this has not favourably trickled down to poverty reduction. Achievement of MDG goals in the social services targets has remained a considerable challenge. NSCB quoted poverty incidence at 27.9% as of the 1 st semester of 2012 and this figure shows that there is no statistical significance when compared to the 28.6% level for the period Unemployment rate reached 7.0% while underemployment rate was registered at 20% for the first semester of Various studies and review on poverty situation in the country suggest that poverty in the Philippines is associated with the problem of unemployment and underemployment due to low economic growth. POLICY IMPLICATION/S: Low economic growth is ascribed to low investments and slow technology development, lack of access to production growth, and the country s capacity to mitigate ill impacts of natural disasters 57

109 and extreme weather disturbances that affect labor intensive sector particularly the informal settlements. Regularity of disasters can negate the gains or even push back development. The limited incentives for local economic development activities that are primarily intended for the ISFs need improvement. Priority attention must be geared to policy enhancement on the incentives offered to investors which are expected to open more job opportunities, as well as mobilize entrepreneurial and livelihood investments in the ISF communities Weak coordination among government agencies and private sector The magnitude of informal settlers in the entire country had increased tremendously over the last decades after a presidential proclamation for Areas for Priority Development (APDs) were established way back in the 80 s. Few of these informal settlement sites have been upgraded under the NHA s Zonal Improvement Program (ZIP) and the Slum Improvement and Resettlement (SIR) program that were both implemented in major urban centers in Metro Manila and in the key urban cities in the regions of Visayas and Mindanao. NHA s approach then to housing development was complemented with the provisions of cross subsidy scheme with commercial lots, infusion of direct funds for social services, basic utilities and services, livelihood and school facilities for the relocatees. While the mandate for the soft programs is the responsibility of other government agencies, the NHA was authorized to advance the investment in behalf of these agencies providing the soft inputs with the arrangement that they shall be reimbursed of their funds by the other government agencies including the power and water utility companies. Investments in the provision of basic social services were also implemented and funds for education and health facilities were provided for by NHA through this scheme. However, through the years, the NHA had a downgrade on its mandate which required NHA to focus its investment in the production of low cost housing primarily for the informal settlers that shall be relocated off city and or near city. Inputs for the other components were lodged with the regular agencies of government, utility companies and the host LGUs. Funds for these components were measly provided as the timing for the budget cycle has never been effectively coordinated to ensure timeliness and lead time to complete the facilities prior to the transfer of informal settlers. POLICY IMPLICATION/S: While efforts of NHA to undertake preparatory work with the informal settlements were effective, many challenges were identified as in the following areas: (i) uncoordinated budget preparation and implementation schedule among key agencies mandated to provide housing and other services; (ii) unclear delineation of roles and responsibilities in terms project identification, development and construction, beneficiary selection and monitoring and sustenance of project inputs in the ISF communities; (iii) lack of intensive social dialogue among various stakeholders including the main players in the relocation/upgrading process, including that of community participation; (iv) lack of available land in the city and near city for the relocation of the informal settlers. Many more challenges were faced by the NHA with regard to the formulation of a national program to abate the constant increase of informal settlements in Metro Manila and in the urban centers in Visayas and Mindanao. This is worsened by the weak compliance of the local government to embark on the prevention mechanism to bar the continuous increase of informal settlements within their jurisdiction. The proliferation of informal settlements in the Metropolis is attributed to the weak compliance of the LGUs in the preparation, update, and the weak enforcement of CLUP and the CDPs. These mandatory documents are the basic guideposts of the LGUs in their bid to be the forefront of development efforts for their constituency. 58

110 5.2.3 Lack of targeted programs and social protection measures for ISFs To ascertain the number of ISFs remains difficult due to the fact that there is no reliable and standard data base for the informal settlements except for the estimates submitted by the LGUs to the national agencies. It is likely difficult to allocate resources toward targeted programs for social services and social protection measures. Access to social protection in the country has limited coverage as it is implemented on a voluntary basis. Thus, the larger part of the vulnerable work force with seasonal employment belong to the ISFs. POLICY IMPLICATION/S: Social protection programs for the ISFs include among others the provision of social security, health insurance and housing. Data from the Bureau of Labor and Employment Services (BLES 2009) shows that almost half of the country s workforce belonged to the informal economy. They include, among others, micro-entrepreneurs, unpaid family workers, vendors, and domestic workers, a large majority of which are living in identified informal settlement communities. Unfortunately, they are beyond the coverage of the Labor Code and other legislations that make the ISFs subject of abusive and exploitative work arrangements. The absence of consistent policies to address their concerns will prevent their access to productive resources, just and humane conditions of work Limited investments in education, health and human capital To finance higher spending on infrastructure, education, and health, complementary reforms are needed in public financial management (PFM), taxation, and statistics. Enhancing official statistics is needed to improve evidence-based policymaking. Successful reforms in public finance management requires strengthening the demand side to cause financial reforms. Accelerated participatory budgeting such as bottom-up budgeting process, (BUB) and community-driven development have been defined as the major reforms required. Successful implementation of public sector reforms would allow the country to increase public investment and pro-poor spending to create an environment that is conducive to attracting more investments and creating better jobs. This scheme will allow the public to see and evaluate them and its development impact. They shall have the opportunity to examine tangible improvements in governance. Eventually, the taxpayers will be made aware that their taxes are being spent wisely in education, health and human capital build-up for maximum benefits to redound the entire population. POLICY IMPLICATION/S: Participation of private sector stakeholders such as NGOs and communities may be encouraged in the planning process. The barangays could spearhead the drafting of people s plans and serve as a voice at the municipal council level. Utilization of resources must be well programmed and based on prioritized needs which the communities themselves have identified. Improvements in the provision of basic services will be anchored on citywide methodology to ensure that the outcome and impact will benefit not only the formal taxpayers but the ISFs in the communities, too. 5.3 Limited Access of Informal Settlers to and Availability of Affordable Housing Finance Republic Act (Comprehensive and Integrated Shelter Financing Act or CISFA) provided the housing finance program, Abot Kaya Pabahay Program which covered amortization subsidy, 18 Republic Act 7835, Comprehensive and Integrated Shelter Financing Act, December Manila 59

111 development financing, and cashflow guaranty for individual borrowers loans. HUDCC was empowered to periodically determine the income ceilings and loanable amounts for both levels (a) and (b) borrowers and the socialized and low cost housing limits eligible for development financing. The financial sustainability was strengthened further by the R.A. 8763, otherwise known as the Home Guaranty Corporation Act of 2000 states a prime function of HGC as to ensure continuous funding support to vigorously implement the government s programs for rural and urban housing, resettlement, the development of site and services, and the renewal of blighted areas. Premium fees, fiscal incentives, allocation of networth are all structured to provide the highest preference to socialized or low income housing. Clearly, prevailing socialized housing financing facilities of government include fiscal subsidies for stakeholders, interest subsidies for individual and community loans, long term lending facilities to a maximum of 30 years, newly set ceiling of P450,000 for socialized housing loan as determined by HUDCC and NEDA, and the available credit guaranty. However, these have not ensured the much needed access to and availability of affordable housing finance Low affordable limits of ISFs Lack of employment opportunities at least transportation costs prevail. In all consultative workshops, this weakness has been identified as a major factor contributing to the affordability limits of ISFs. Specifically, for the cases of rural to urban migrants as well as resettled families, the skills of the household members mismatch the qualifying skills required for job openings. Limited access to capital holds ISFs from additional income generation activities. With nonaffiliation to a livelihood cooperative or microfinance institution, fund sources for livelihood microand small enterprises for the ISFs to start-up a small scale business enterprise is not within the reach of ISFs. These alternative sources of income could augment much needed resources for family expenses on food, shelter, education, health and other needs. POLICY IMPLICATION/S: Matching skills with employment opportunities, ensuring availability of transport linkage from resettlement sites to places of work, existence of health and education services at no additional costs to the households are some conditions to an efficient, effective and replicable resettlement. The concern has always been what will keep the families in their resettlement site? In general, resettlement sites are distant from the: (i) original place of work of employed household members, (ii) central city or tow market, transport terminal. These translate to additional costs which will affect available resources of the ISF and result to the need for additional income generating activities or these families will return to a location which brings them back to their spending power prior to resettlement. The affordable limits as shown in the previous chapter show the income profile of families in the lowest 30% income decile and affordable limits were established. However, reliable data on income profile of ISFs must be established to ensure that their projected monthly amortization and other costs of living will be sustained by their prevailing income Low income primary housing mortgages are not investable commodities Poor collections due to weak enforcement of policies bar entry of primary mortgages into the secondary mortgage market for additional liquidity in housing finance. Low recovery 60

112 of capital expenditures as indicated by collection efficiency rate (CER) established under the lending windows of the NHA and SHFC estimated at 30-35% and 75-80% levels respectively, reflect the need to improve collection efforts through alternative pricing package and/or collection mechanisms. The CMP facility has shown improvement at reaching an average rate of 75-80% 19 through the adoption of various remedial measures on lack of awareness which include: (i) issuance of individual statement of account to members of the communities which facilitated awareness amongst the borrowers repayment status; (ii) house to house collection system; (iii) communityled collection efforts where applicable; On the other hand, NHA s CER has been estimated at 30-35% for its resettlement program has been a foremost concern. Seemingly, the capital and interest subsidies in the housing program has not ensured a higher collection efficiency. NHA has started to explore community-led and outsourced collection services to remedy its weak recovery. The government resettlement projects are prone to the dole-out mentality and weak enforcement of policies and rules for such programs. It is also evident that the interplay of other factors such as unemployment, lack of access to capital for small scale enterprises, increased cost of transport to location of employment has a strong impact on the affordable limits of the ISFs. The utility providers present another burden to the ISFs as their requirements for transaction and processes to access services are also costly. Difficult and costly transaction costs prevail for titling, mortgage, and foreclosure on the mortgages. Eviction of existing occupant household is deemed difficult and foreclosure proceedings on mortgages as costly, resulting to even higher costs subject of recovery. The mismatch in design and pricing of the house and lot or lots only packages and affordable limits of target beneficiaries lead to imminent foreclosure on the mortgaged housing units. Returns have been classified as low or even negative. Overall position has been set at non-viability of primary mortgages for participation in the secondary market. This is a barrier to the generation of additional funds for upgrading ISFs. Stringent underwriting requirements and incomplete process for conversion of rights-based instruments into negotiable instruments was also highlighted in the workshops. Lack of information and education/awareness campaign is a reality. Recognition was given to the orientation program provided by SHFC for CMP borrower communities and LGUs participating in the LCMP as well as to the social preparation efforts of NHA pre, during, and post relocation or resettlement projects. However, there was agreement during consultations that lack of information and inadequate education/awareness campaign amongst ISFs still has to be strengthened. Estate management is of utmost concern as the ISFs need to realize that housing is an asset and not simply a loan to repay. Thus, continuous proper care of one s investment is long term and needs to be maintained to improve its value in the long run. Mismatch between repayment terms and the regularity of ISFs income exists. Looking deeper into the deterrents to timely amortization payments aside from the level of income and expenditures, it was realized that this is a possible cause of low collection efficiency which could have been handled under flexible terms of loan availment and repayment of the financing institutions. POLICY IMPLICATION/S: The microfinance sector has shown that the poor can pay. However, repayment scheme will closely take on the pattern of income generation activities which their member-borrowers have. 19 HUDCC. Findings on Socialized Housing Program in Support of the Proposed Socialized Housing Ceiling Adjustment. July Makati City. 61

113 Market vendors may opt for a daily to weekly repayment, those whose salaries are received every Saturday (construction and family workers) may pay on weekly basis, and there are others who receive salaries every 15 th and 30 th day of the month. Collection mechanism could be designed in various ways that would not require borrowers to absent themselves from work, ensure resources to pay monthly amortization are already available Limited lending facilities and financing programs for ISFs Housing finance is low priority of government as budgetary allocation for the housing sector remains at approximately 1% of the national budget. The PhP50.0 billion allocation for ISFs in Metro Manila is targeted on relocation (possibly on site or off site whichever is applicable) of households residing in danger areas, specifically along waterways (esteros, creeks, rivers) who are most vulnerable to flooding. The annual allocation of PhP10.0 billion for 2012 and 2013 have all been disbursed to the NHA for this purpose. However, the NGOs and private sector developers have strongly indicated their willingness and ability through proposals to the DILG to participate in the government s program for ISFs. As of consultation period of October 2013, no final implementing guidelines have been released for their participation which the stakeholders deem as cause of delay in production to meet targets for the period ending POLICY IMPLICATION/S: The revival of the Abot-Kaya Pabahay Fund developmental window under the SHFC umbrella would be beneficial to the system. NGOs and other private sector developers demand access to funds already available for socialized housing development. However, guidelines were not available for this purpose Policies and structure of incentives and subsidies discourage private sector participation in the production of housing units for ISFs. Government s Interest rate subsidy, fixed for a maximum term of 25 and/or 30 years has been a key factor to the insubstantial participation of private sector financial institutions in provision of financing needs of the socialized housing market. Majority of the private developers signified their interest to produce affordable homes for the ISFs in partnership with the public sector and the communities. However, an insight into the DTI-BOI incentive mechanism Socialized housing package is not covered by the Income Tax Holiday (ITH) under the IPP. The 2012 Investment Priority Plan (IPP) only covers those projects worth above PhP400,000 to P3.0 million. However, the majority of the SHFC and NHA package prices/ loans for ISFs considering their affordable limits fall below PhP300,000. This non-entitlement to the ITH translates to an estimated 4.9% additional cost to the ISF beneficiary. HDMF s lending rate of 4.5% per annum, prevailing fixed interest rate of 6% per annum for SHFC CMP and NHA resettlement lending windows, and the graduated amortization plan (GAP) of NHA provide very stiff competition for banking institutions which adopt market-based lending rates. POLICY IMPLICATION/S: Socialized housing package is not covered by the Income Tax Holiday under the Investment Priorities Plan Income Tax Holiday implemented by the DTI-BOI. The 2012 IPP only covers those projects worth above PhP400,000 (cap to socialized housing package) to PhP3.0 million. A revisit and realignment of this incentive would entice more private sector developers to actively participate in the government s program Housing microfinance has not achieved scale. 62

114 Most microfinance institutions (MFIs) operate locally and have limited resource base. Membership is a requirement to borrowing to ensure that the community members undergo in depth orientation on microfinance policies and guidelines, member s responsibilities, and financial literacy. Thus, lending has been limited to members. Loan amounts for both microenterprise and housing purposes are on incremental methodology. Increases in loan amount and term are determined by credit experience or historical credit performance of member-borrowers. NGO MFIs, MFI banks, and rural banks operate lending facilities on the basis of recovery of expenditures, at much higher rates than commercial banks and the key shelter agencies. However, it was highlighted during the consultative workshops that their collection efficiency rates range from 98-99%. Many MFIs have not participated in housing microfinance as this is not their core business. Since the MFIs (NGOs and banks) use an IT system based on short term incremental loans, many have limited capacity to participate in longer amount and term of housing microfinance. POLICY IMPLICATION/S: To expand qualified borrowers to non-members, the MFIs have started to partner with the HGC for credit risk cover. Preserving their policies on capital build-up and/or savings, incremental loans for home improvement, financial discipline, and microenterprise management would ensure maintenance of collection efficiency ranging from 98-99% The sector is looking at the possibility of SHFC to adopt some best practices of the microfinance sector in designing its lending facilities. SHFC caters to community loans and a window for individual ISFs is still to be established in the sector. 5.4 Insufficient Supply of Affordable and Adequate Housing for Informal Settlers Insufficient supply of affordable housing for informal settlers 20 may be traced to the mismatch in rapid increase in urban population resulting to an enormous demand for shelter and tenure security. With prohibitively expensive lands and high rental rates in the urban areas amidst declining real incomes, it is not surprising that cities host informal settler families in various types of unauthorized housing units with insecure tenure. Market values of residential lands in Metro Manila, for example, range from PhP3,000 to as high as PhP42,000 per square meter, far beyond the incomes earned by the majority of the urban poor. However, people need to live in areas where economic opportunities are available, and thus it becomes advantageous for most of them to occupy idle lands owned by government or the private sector. In a way, the proliferation of slums in Philippine cities is a coping mechanism for urban dwellers with affordable limits far below the cost of available supply. The components of delivering homes and establishing sustainable neighbourhoods requires a step change in the provision of affordable housing and informal settlements upgrading to ensure more effective delivery in ways that provide informal settlers with choice and options tailored to their needs. The approach should lead to better life opportunities and break the cycles of disadvantage and dependency Unsuitable land use, building regulations, and the mismatch of high demand, low purchasing power. 20 State of Philippine Cities, Dr Anna Marie Karaos of PHILSSA and Gerald Nicolas of John Carrol, Institute of Church and Social Issues. 63

115 The informal settlers will always prefer an in city site to avoid displacement from where they are now, and most importantly, stay close to their source of income, whether formal or informal. Further, being near the place where they used to dwell, they will continue to enjoy and preserve familiar and easy access to schools, hospitals, malls and other amenities/facilities. They will be provided with all the same basic utilities: water and power supply, although not necessarily inclusive of the sanitation aspect. However, such services may require an unaffordable, normally exorbitant, land acquisition cost, if privately owned. On the other hand, the ISFs would generally experience the costly and slow titling process, should the land be covered by a presidential proclamation or owned by an LGU willing to allocate it for resettlement purposes. Due to the constraint in the size of available land against the large number of target beneficiaries, the more expensive low rise building (LRB) is usually considered as the remedy. NHA estimates that even with the land shouldered by an LGU or national government, an 18 sqm unit of LRB would cost nearly PhP590,000, or twice the all in cost for a same area row house. 21 POLICY IMPLICATION/S: For most informal settlement upgrading, the usual choice is an off city resettlement. This is based on the premise that an urban land space will always have more commercial value other than being used as in-city land for residence of informal settlers. While the all in land acquisition plus the cost of site development and shelter is far cheaper at PhP290k for an 18 m 2 row house on a 28 m 2 lot, it also has its disadvantages. These includes, among others, the difficulty in access, significantly added travel time and transportation costs to and from the city where they work, considerable cost for ROW acquisition and construction of access roads, provision of community facilities, absence or late provision of basic utilities like water and electricity and non-proximity to schools, hospitals, malls and other basic amenities. 22 As experienced in the past resettlement projects, the absence of viable livelihood opportunities in the new sites has not been solved to date. After relocation, families are left to fend for themselves, and more often than not, sell rights to other non-qualified settlers and transfer back to other slum areas to be reintegrated as part of the ever increasing slum population. Most of the informal settlers belong to the lowest 3 income deciles and thus barely have the capacity to amortize the cost of shelter even for the cheaper off-site scheme, considering the additional costs on transport to and from work, school, market, and other facilities. Even the poor sector belonging to the 4 th decile can only afford PhP1333/mo for its socialized housing requirement. This amount is barely enough to amortize P200k loan at a low 4.5% interest for 30 years. The poor sector in the 1 st, 2 nd and 3 rd deciles can only afford monthly housing expenditures of P480, PhP737 and PhP903, respectively. Hence, it is not surprising that for most resettlement areas, collection of monthly housing payments is a perennial problem Inadequate supply of new housing units. Two types of sectors are involved in the production of new resettlements and shelters for ISF, the private sector and the government sector. Due to a number of constraints, the combined productions of these two sectors are not enough to fully address the required housing demand for the poor. Private Sector 21 NHA data for off-city and in-city cost/unit with 150 units/ha for one-storey units and 400 units/ha for four-storey buildings, HUDCC Presentation of Findings on Socialized Housing, July HUDCC, the agency overseeing these resettlement programs, explains these inadequacies as part of incremental approach where basic services are gradually provided as funds allow, even as families have already moved in. 64

116 While the private sector has its line of housing projects, most of these developers cater to the middle or high income groups developing midrise/high rise condominiums, subdivisions and townhouses. In general, the private sector has indicated their reluctance in pursuing socialized housing projects, citing a combination of deterrents like difficulties in government approval of subdivision/housing plans, very low profit for these type of projects, use of subsidized base costs and interest rates for government projects, difficulty in financing approvals and affordable limits of the informal sector. These developers will mostly cater to salaried employees, those with access to bank financing or those who are members and can avail the housing packages of Pag-IBIG Fund, SSS and GSIS. A very small percentage of the poor informal sector will ever will be able to meet financing requirements under these lending facilities. One of the strategies to house the poor is to entice the private sector to invest in socialized housing. The UDHA intends to bring this provision to fruition through a combination of incentives and regulations. The incentives are in the form of tax exemptions and financing window under the HDMF for socialized housing acquisition. But HUDCC findings indicate that the Pag-IBIG window has hardly been accessed by the ISFs who belong to the lowest 3 income deciles. POLICY IMPLICATION/S: To maximize private sector participation, access to resources for production of units and incentives must be ensured. These have been presented in previous sections of this chapter and include developmental financing window, take out mechanism for individual ISF, expansion of qualified packages under the BOI-DTI ITH incentive structure. Government Sector For the government sector, different agencies are actively involved from planning, financing, and implementation of resettlement to new sites, onsite upgrading for the poorest of the poor. HUDCC is the umbrella organization that oversees and regulates the complementary efforts of other key shelter agencies (KSAs) which include HLURB, NHMFC, SHFC, HDMF/Pag-Ibig Fund, NHA, and the HGC. The SHFC and NHA undertake socialized housing projects for the informal sector. The major implementing arm of government for the resettlement projects is the NHA. It has good track record of meeting its target but due to its budget limitation, the agency s production capacity barely makes a dent on the housing requirement for this sector. Cost recovery thru collections of monthly amortizations of beneficiaries is weak and hampered by collection problem. The UDHA states that LGUs should spearhead resettlement projects being the end receiver of these informal settlers. However, there are misinterpretations and/or mis-implementations by LGUs of said provisions. It has also been observed that majority of LGUs are opposed to the use of land in their locality as relocation sites. The identification of relocation site is a key consideration for the success of resettlement projects and the receiving LGU identified should have the willingness to take in the migrants. The receiving LGUs are often reluctant to accept incoming ISFs due to the limited social services and economic opportunities in the locality. The cost implications of maintenance of the relocation sites upon turnover to the communities is another issue. It is also noted that the LGU shelter program if ever included in the CLUP, is generally for paper compliance to the prescribed contents of the CLUP only. POLICY IMPLICATION/S: Capacity building at the level of the LGUs must be designed and implemented. HUDCC could help source funds from donors to ensure that the assigned staff at the LGUs received the necessary training on estate management and social intermediation at pre and post project phases. 65

117 5.4.3 Reduction in Housing Stock. Mostly built of light materials and generally along danger areas, the existing housing stock of ISFs tend to dwindle in times of natural calamities. As if this is not enough, man-made interference, like accidental fires and forced evictions on private lands and even displacements due to armed conflicts in Mindanao also contributes to the dwindling ISF housing stock. The recent 7.3 magnitude earthquake in Bohol, the latest super typhoon Yolanda and other previous typhoons have caused considerable reductions in the housing stock. Reports from Bohol earthquake indicated hundreds of thousands homes destroyed. In the recent super typhoon Yolanda, initial reports reveal reductions in housing stock of even greater magnitude. Nestling along danger areas like river banks, steep mountain slopes, along coastal areas, these homes are always prone and susceptible to either flooding, landslides, or even storm surge during typhoons. These reductions will again be added to the ever climbing backlog/demand for new shelter units for the poor. With the onset of climate change, typhoons of higher return periods are expected to be more frequent compared to their occurrence in the past. Such will aggravate reductions in housing stock. POLICY IMPLICATION/S: Adoption of onsite upgrading where possible should always be an initial consideration in lieu of resettlement or relocation. Then the existing structures maybe improved instead of demolition which actually decreases available housing stock Legal /Regulatory and other Weaknesses Weak Enforcement of Anti-Squatting Law. There are no policies and effective preventive strategies to control increase of informal settlers in Metro Manila except for the City of Marikina which has taken steps toward cities without slums strategy. Generally, LGUs do not possess the institutional capacity for curbing the growth of informal settlements nor invested resources required to control the development of urban poor settlements even in such high risk areas as esteros, sidewalks, railways, and garbage dump sites. The anti-squatting law which requires resettlement for the informal settlers if they are occupying government lands and issuance of court order to vacate private land needs to be revised. At the national level, there are no policies that guide the local governments on preventive actions against proliferation of informal settlements. National planning and budgetary allocation have, over the past decades, adopted a sectoral approach which did not fully consider the spatial implications of public investments, policies and programs. Regional development planning and physical planning frameworks have been introduced in the medium term development plan (MTDP) but these seem not to be harmonious to the sectoral plan. Compliance to the 20% Balanced Housing Provision of UDHA and Incentive Structure of Government. Originally, the government requires developers of non-socialized housing projects (except for condominium projects) to set aside 20% of non-socialized subdivision project area or total costs for socialized housing provision. The implementing rules of UDHA has been amended several times to include other means of compliance to this provision including investment in housing bonds, onsite upgrading of CMP, LCMP, NHA resettlement projects. However, compliance has not been adequately monitored. 66

118 The benefits from tax exemptions for socialized housing developers has not been included in the income tax holiday (ITH) under the DTI-BOI Investment Priorities Plan (IPP). Bureaucratic Process. The titling process of lands proclaimed for socialized housing remains cumbersome. For some proclaimed lands, valuation issues also arise and transfer of tenurial rights to beneficiaries or availability of title as collateral requirement for loan can be difficult thereby causing delay to project implementation. POLICY IMPLICATION/S: Adoption of rights-based secure tenure instruments as negotiable instruments to lessen titling expenses and hasten process of securing tenure for ISFs may be enforced. Take-off from the BSP circular for housing microfinance would facilitate the planned course of actions to achieve the objective of accepting tenurial documents used by various agencies in the sector. Linkage with the land registration, titling, and management agencies should be revived to iron out documentation process amongst agencies concerned Lack of information/database 23 There is difficulty in identifying target beneficiaries of government housing programs. Census tagging of beneficiaries for resettlement projects is a tedious process due to the unabated increase of potential beneficiaries magnified by the presence of professional squatters and syndicates. Income segregation among the affected households is also difficult to implement and thus, subsidies may not have be welltargeted. It has also been difficult to track down the awardees of housing units due to the lack of a monitoring system. POLICY IMPLICATION/S: Under UDHA the LGUs were required to identify and register all beneficiaries for socialized housing in their respective locality. The HUDCC, on the other hand, was to design a system for beneficiary registration to assist the LGUs. A list of 464 LGUs was selected to test the system and 320 of them submitted inventories in 1994 consisting of 842,642 beneficiaries. After this initial effort, however, the LGUs no longer conducted periodic updates there are no incentives given to sustain such database except for those needed for electoral and tax purposes. Thus, the list or identification of program beneficiaries is often ad hoc and politically dependent. The law also disqualified professional squatters or squatting syndicates to any housing program of government and provided the definitions for said groups. Unfortunately, these definitions are difficult to apply in the field since existing parameters are inadequate to assess sufficiency of income specifically in the informal sector. Another problem is the abandonment or transfer of awarded homelots by the beneficiaries, the reasons for which could be due to legitimate reasons such as the lack of economic opportunities and basic services in the distant resettlement sites. 5.5 Unclear Delineation of Accountabilities of Institutions. Governance is the center of institutional strength, competence, and linkages. The major pillars of which include structure, policy, finance, and the people. There are numerous long established and experienced institutions involved in the provision of housing and urban development in Philippines, 23 Housing Policy for the Poor : Revising UDHA and CISFA, Marife M. Ballesteros, PIDS Policy Notes 67

119 particularly those engaged in addressing the basic services and housing needs of households living in informal settlements. These comprise: (i) HUDCC and its key shelter agencies (HLURB, HGC, HDMF/Pag-IBIG, NHMFC, NHA, and SHFC); (ii) DILG, DPWH, DSWD, NAPC, UPAO, and other government agencies; (iii) LGUs, (iv) private developers; (v) banking and nonbanking financial institutions; (vi) NGOs; and (vii) community-based organizations (CBOs) and homeowners associations (HOAs). The respective institutional mandate of the government agencies enumerate functions and responsibilities which may be grouped under finance, housing and urban development, governance, and social services. Overlapping functions and/or programs have resulted to various weaknesses and confusion amongst stakeholders and the entities themselves. Such unclear delineation of institutional accountability has resulted to an immense impact on the timeliness of implementation, participation of the private sector, inclusion of the communities, NGOs, and ultimately on the viability and sustainability of projects. Current administration has indicated strong commitment to provision of housing for ISFs with the annual budgetary allocation of PhP10.0 billion for the period NHA utilized the PhP20.0 billion for 2012 and 2013 for the construction of homes under the prioritized relocation of ISFs from danger areas Structure Inefficient and fragmented institutional framework for informal settler housing. HUDCC and the KSAs have a coordinated mechanism in place for the sector, with clear mandates. Other national agencies and LGUs do not possess the core competencies to manage, implement, and provide urban services. They are also characterized by weak capacity to undertake urban development projects. There is insubstantial government inter-linkages with the provincial government having ineffective leadership at the provincial level. Although there is participation of private sector and the civil society organizations (POs and NGOs) in the sector development program, it is not up to the necessary level of participation. Many LGUs are reluctant participants in housing. There is lack of readiness of receiving LGUs to provide basic services for resettlement sites. POLICY IMPLICATION/S: The objectives of both the public and private sector are common and geared toward the upliftment of housing condition for ISFs. Constraints on the part of government must be ironed out for the private sector to gain wider access to the socialized housing development resources Policy Unintegrated and ineffective policies for tackling informal settlements. CLUPS are evident of non-integration of socialized shelter provision, socioeconomic, urban development policies, DRRM and CCA. There is lack of political support for in-situ community development and upgrading and this is accompanied by weak enforcement of regulatory policies to contain growth of informal settlements. Housing subsidy policy remains insufficient at the national and local levels of government. The strict policies and procedures of utility agencies require intervention by the LGUs to enable development with presence of utilities which is a factor necessary to encourage resettled ISFs to stay. POLICY IMPLICATION/S: The NEDA and NDRMMC spearhead training for DRRM at the barangay level to ensure that communities participate and have awareness. The LGUs through their planning unit are required to update their CDP and CLUP with the integration of DRRM and climate change resiliency. 68

120 Compliance of local planning offices countrywide should be monitored and evaluated as to sufficiency Finance Inadequate financial model. A financial model with the appropriate subsidy structure and subsidy eligibility criteria for improving informal settlements has not been established. The participation of the NGOs and private developer groups who have submitted proposals to the Project Advisory Committee created to oversee the utilization of the P50.0 billion fund for NCR still has to be defined through implementing rules and regulations for the Fund disbursement. Development finance under the Abot-Kaya Pabahay Fund will be reactivated, too, in response for the need to augment funds available in the sector. The existing system relies on expensive interest rate subsidies. There is insufficient access to private and community finance as lending models are based on land titles as collaterals for loans. Financing models do not match informal settler income patterns and this causes low collection rate. LGUs must be better informed of how compliance to the 20% balanced housing requirement may be used as a tool to increase supply of socialized housing and/or start their housing fund. Best practices of other LGUs may be shared with other LGUs. LGU borrowing capacity is limited by government s policy and LGUs lean heavier on loans for school buildings, hospitals, markets, and other infrastructure development which can be completed within the administration s term. Housing is a long process due to all the necessary consultations needed to be successful and therefore is given lower priority. POLICY IMPLICATION/S: Although the law provided for 20% balanced housing requirement, the implementing guidelines exempted the condominium developers from compliance. In the NCR and other HUCs, medium and high-rise development prevail as land values have risen to high levels. It is also in these same geographic areas that ISFs abound and resources are needed to service their needs. However, no funds from balanced housing are available. Very few LGUs have an urban renewal or housing development unit as a separate unit from the planning office. A champion unit that will work for gaining or access to municipal funds is much needed People Limited staff weaknesses. Leadership changes accompany political change which lead to different directions and priorities of the administration. In general, there is staff resistance to change in how the governance in the LGU core is set up. Change in administration may also result to change in staff who will have limited ability to embrace new skills, knowledge and approaches to program implementation. POLICY IMPLICATION/S: Permanent positions must be secured for the housing and urban renewal unit. As the common practice is to hire unqualified staff members at contractual basis and therefore lead to weak capability to undertake projects. Further, training of non-permanent staff will not benefit the target ISFs as project delays and turnover will usually occur. 69

121 6 BEST PRACTICES ON INFORMAL SETTLEMENTS UPGRADING The section presents a discussion of local and global insights culled out of experiences and lessons from both international and local programs that have implemented successful shelter programs and which can feed into the formulation of the strategy. A large number of international programs have successfully demonstrated that informal settlements and the lives of their residents can be improved. Considerable knowledge has also been gained locally as to what works best and what approaches and/or methodologies are ineffective and costly from experiences of KSAs. NGAs, LGUs, NGOs, and community associations or POs in the Philippines have, on their own or in partnership arrangements, engaged in various models of housing and informal settlements improvement. Many of these have been considered as best or good practices from which lessons for programming and expanded actions could be gleaned. During the preparatory workshops held on NISUS, housing and upgrading projects of selected countries Brazil, Viet Nam, Thailand, and Indonesia were highlighted to serve as examples of strategies that can be translated into the local context. Local housing programs of Valenzuela City, Taguig City and Naga City were likewise cited as good practices. Annex 5 complements this section with additional discussion on the various programs and the lessons that they provide. 6.1 Approaches to identifying lessons for upgrading Over the years, a number of studies have attempted to identify the lessons learned from the design and implementation of urban upgrading programs and projects in the developing world. While donor agencies have spearheaded much of these efforts, academic institutions, government agencies, and NGOs alike have been active at documenting and analyzing their experience particularly from designing and implementing informal settlements upgrading and sites and services development programs and projects, in order to better understand how urban poverty can be alleviated, if not totally eradicated. These studies have so far used a variety of approaches to identify such lessons. Some evaluation studies on urban upgrading have focused on a particular program or project, usually assessing whether its objectives were met or not and analyzing its impacts, if any, on the target beneficiaries. An evaluation study of the first generation of KIP projects in Indonesia mainly through minimum investments in improved footpaths and lighting, wider access to clean and safe water, and construction of drainage facilities that reduced the frequency of flooding in the affected neighbourhoods. But attempting to replicate KIP in cities beyond the metropolis of Jakarta and Surabaya highlighted the limitations of a highly centralized approach and emphasized the need to devolve the program to the local governments. 24 A case study on the Philippines Tondo Foreshore Development Project, on the other hand, showed that delays associated with project start-up, higher than expected land acquisition and reclamation costs, petroleum price increases, and a lack of detailed design and engineering during appraisal caused a large increase in the actual project cost. And yet, cost recovery was the weakest element of the project, with the land and lot prices set too prematurely, years before the project was completed and way below the project s actual cost. In the meantime, the incomes of the Tondo residents had risen threefold by project completion, dramatically increasing their capacity to pay for 24 World Bank, Indonesia Impact Evaluation Report: Enhancing the Quality of Life in Urban Indonesia The Legacy of the Kampung Improvement Program, Report No IND,

122 the secure tenure and access to improved basic infrastructure and services that they received under the project. Ironically, while extensive community participation which motivated Tondo residents to have an ownership stake and delays primarily due to the massive size of the project which comprised over 30,000 households. 25 Other evaluation studies have taken a number of programs and projects and applied carefully predetermined criteria for successes to distill lessons learned and best practices for future programs and projects. A review of some 70 World Bank-supported urban projects and at least a dozen water and sanitation projects with components aimed at providing basic infrastructure services to lowincome urban communities used the following criteria for successful projects or components: (i) they are able to reach the poor, even if not exclusively; (ii) they meet the effective demand of the target beneficiaries that is, they are able to provide the services for which users are willing to pay; (iii) the services they offer they can be sustained that is, there is an agreed institutional arrangement to cover recurrent costs and to carry out the required operation and maintenance during the life of the investments; and (iv) their approaches are capable of replication to serve a larger numbers of the target population than covered by the original projects. The study essentially concluded that slum upgrading brought about real improvements in the immediate environment of residents and stimulated considerable private investments in housing improvements and new housing, thereby raising the quality of life and local economic activities. The review also revealed that the obstacles to wider national replication of programs and projects are not just financial in nature, relating to issues such as the affordability of basic services and housing provision to either the households or to the public budget, but political and institutional as well. Scaling-up requires policies and institutions that promote innovation and mobilize the initiatives and resources required to meet the expanding and changing needs. This entails the empowerment and increased participation of the local populations in their own governance, the strengthening of intermediaries such as NGOs and private developers, and the assignment of new powers and responsibilities to local governments Evolution of policy responses and approaches to informal settlements upgrading lessons along the way The thinking on informal settlements upgrading have evolved over the years as depicted by Figure 7 below. A half century of experience has demonstrated many ways to successfully upgrade informal settlement communities. With the unique conditions, needs, priorities, and potential in each community, no single model for upgrading fits all. Rather, each offers new lessons, and the thousands of upgraded communities serve as the foundation for understanding how to scale up. The key players in strategic upgrading the communities, their NGO intermediaries, governments, and international development agencies have influenced practice, just as each decade s circumstances shaped outcomes. The last 50 years have generated valuable lessons on informal settlements upgrading and brought about significant evolution in policy responses to the challenge related to informal settlements. What worked and did not work in each decade has been summarized below: World Bank, Upgrading Urban Communities A Resource Framework: Case Examples, See examples/ce-ph-ton.html 26 Christine Kessides, World Bank Experience with the Provision of Infrastructure Services for the Urban Poor: Preliminary Identification and Review of Best Practices, January Cities Alliance, Cities Without Slums, 2003 Annual Report, page 20 71

123 Figure 7. Policy Responses Over the Years The 1950 s & 1960s: Planned cities collide with unplanned growth; the poor see cities as opportunities, but find slums and official indifference. Two parallel worlds emerged formal and informal and clashed around the dilemma of housing. The 1980s: First pilots yield success; integrated projects develop; first large-scale upgrading begins. Land tenure revealed as a major issue. Local NGOs take on the task of upgrading. Decentralisation takes hold. The 1970s: Slums reach the political agenda; alternatives to public housing are tested. Some international development agencies merge official policy and informal practice. Learning by doing characterises agency and NGO efforts. The 1990s: Civil society and NGOs are stronger; community involvement increases; and secure tenure is more widely recognised as key. Necessity of upgrading is widely accepted, and slum prevention is on the agenda. The 1950s and 1960s: Two parallel worlds emerged formal and informal and clashed around the dilemma of housing. Governments bulldozed informal settlements and built expensive housing projects. The poor built for themselves and began to organize for change. In a few places like Peru, Indonesia, and Brazil, informal settlement dwellers mobilized political power to seek improvements to their communities, creating the first examples of informal settlement upgrading. Lessons: What did not work and should be avoided: Informal settlement demolition, forced evictions, mass relocations; High-rise public housing blocks, public rental housing; Government-provided housing. What did work: Indonesia s home-grown upgrading took root; Peru s organized squatter invasions and Brazil s favela movement gained political recognition; Housing theories emerged. The 1970s: Informal settlement communities, with the support of NGOs, developed better ways of building for themselves. Some international agencies applied pressure to alter policies. The Tondo Foreshore project was financed conditioned on the government s agreement to stop informal settlement eradication and forced resettlement. Lessons: Upgrading informal settlements is a viable, low-cost, and effective way to help the urban poor solve their shelter needs; Land and services provision are also viable and necessary to meet demand; Centralized implementation is imperfect, and local agencies are weak; Land regularization issues are a stumbling block. The 1980s: Indonesia s Kampung Improvement Programme demonstrated a citywide approach, while El Salvador and Madras (Chennai, India) Sites and Services focused on informal settlement mitigation by supplying land and services. Sri Lanka launched its Million Houses Programme, 72

124 with the government providing support to people building and improving their own houses. Early theories (e.g., titled land for mortgages) frequently proved too cumbersome, costly, and unnecessary, and were dropped. Informal settlement dwellers and NGOs pointed to the need to include communities in project decisions and add broader development objectives. International agencies increased but then decreased support for upgrading. A few countries, such as Ghana, Tunisia, Senegal, and Morocco, asked aid agencies to continue their support for informal settlement upgrading. Lessons: Upgrading is a process. Everything need not be done at once: start with the basic infrastructure and services little will happen as long as water is unsafe, open sewers threaten public health, or children have no safe places to play; Informal settlement communities have more at stake and should have decisionmaking roles because they: Know their community and issues; Have to live with the results; Can, want, and have a right to participate; and Can and will pay for affordable improvements of their choosing. Upgrading is worthwhile, producing: Equity, which benefits both poor and other citizens alike by improving health, security, productivity, and so forth; Legal rights: right of the poor to basic services and citizenship; and Political gains: social stability and responsiveness from politicians. The 1990s: International agencies and governments moved to large-scale upgrading. Programs in Jordan, Morocco, and Tunisia began to assume a national scope, but land and local government issues persisted in slowing progress. The City Summit in Istanbul produced the Habitat Agenda, but failed to establish a global target. But in September 2000, the Cities Without Slums action plan was incorporated into the Millennium Declaration, establishing both a global target and the framework for a global slum upgrading agenda. 6.3 Looking at the Philippine housing and finance markets 28 An ADB study in 2001 determined that the Philippine housing and finance markets generally worked for the upper- and middle-income groups, emphasizing the challenge of using public policies and resources more efficiently and effectively to provide housing and basic services for the low-income groups. 29 The study which aimed to assess ongoing programs in housing and housing finance in the Philippines to understand the potential for ADB support to the sector underscored some key lessons learned which included the following: 30 Addressing the lack of affordable financing. Many of the informal settlers and the bottom 30 percent of the Philippine income distribution have been unable to access the highly subsidized loans provided through government s pension funds i.e., SSS, GSIS, and Pag-IBIG. Among the said pension funds, Pag-IBIG Fund provides the bulk of housing finance. However, the share of socialized housing in the total portfolio of Pag-IBIG averaged only 15 per cent of its 28 Taken from the Metro Manila Urban Services Project (MMUSP) Road Map 29 Asian Development Bank, Housing Sector Profile: Philippines. 30 The study reviewed the various housing programs in the Philippines, past and present, including the World Bank-funded Tondo Foreshore Development Project, Dadat-Dagatan Development Project, Slum Improvement Program, and Zonal Improvement Program and Public Sites and Services. 73

125 loan portfolio for socialized housing for the period 2004 to The rising cost of urban land and housing prices amidst income poverty has made shelter simply not affordable for the poor. In late 2006, the Fund s Housing Loan Program was modified to offer greater benefits to their members especially in the low-income category. The modifications include longer loan payment period, higher loan-to-collateral ratio, and lower interest rates. This is in line with its institutional strategy to focus more on the lower segment of the market and position itself more in socialized and low-cost housing, giving access to affordable housing to people who otherwise might never consider themselves capable of buying a house. Still, there is a need to adopt alternative market-based mechanisms that would enable poor and low-income households to access affordable and sustainable housing finance. In 2004, the Development Bank of the Philippines (DBP) has become a pivotal player in what is hoped to be a more viable socialized housing finance through the banking sector. In ADB s Loan PHI: Development of Poor Urban Communities Sector Project (DPUCSP), DBP primarily serves as a wholesale financial institution for socialized housing channeling funds for urban upgrading and new site development in areas outside Metro Manila through LGUs or private sector proponents working in association with LGUs. Funds for shelter finance to the end buyers of affordable house and lot packages were channeled through eligible thrift and rural banks and microfinance NGOs. Attractive pass-on rates under the DPUCSP substantially increased participation of private sector developers. However, implementation of the principle of marketbased interest rates was deferred due to the policy of subsidies and low interest rates at 6% per annum for socialized housing. A major feature of the DPUCSP is the provision of shelter financing and microcredit facilities at market-based rates to beneficiaries, and the collaboration with HOAs and large private sector developers. Strengthening community-based housing programs. Unlike past government housing programs such as the Unified Home Lending Program (UHLP) which could only be availed through memberships in the national pension funds and access to the formal banking system, communitybased housing programs such as Community Mortgage Program 32 (CMP) have benefited lowincome groups and allowed housing subsidies to directly accrue to the poor. This pioneering and innovative program was the government s banner program for the enabling approach espoused by the UN s Global Shelter Strategy to the Year CMP involved community organizing, community savings mobilization, and people empowerment processes. However, while the CMP has enabled numerous urban poor communities in Metro Manila to obtain secure tenure, many remain impoverished unable to access or afford Phase 2 (site development) of the program, thus, enduring a degraded quality of life caused by continued lack of access to basic services, livelihood opportunities, and overall community development. CMP has been experiencing financial and administrative problems and requires careful restructuring while other community-driven programs have yet to be encouraged through appropriate incentives. 31 Lucille P. Ortile, Recent Developments in Market-Based Housing Finance for the Poor; Policy And Implementation Lessons From DPUCSP/IMPACT 32 The inspiration for the Community Mortgage Program was the pilot project of an NGO named Pagtambayayong in Cebu (Rebullida, et.al., 1999). A few NGOs such as Freedom to Build had been participating in the UHLP with relatively good urban poverty reduction impact at the community level. However, they were more the exception rather than the rule and it was not until the CMP came that NGOs felt there was a program that can truly respond to the needs of urban poor communities. 74

126 The Strategic Private Sector Partnerships for Urban Poverty Reduction in Metro Manila Project (STEP- UP) 33, a three-year project, was designed and implemented to reduce urban poverty in 23 post- CMP areas using an integrated development approach that is driven by strategic public-private sector partnerships. The STEP-UP experience showed that participation entails time, resources and risks especially if the aim is to have the project community-led. The communities need to be empowered to take on a bigger role in determining the nature and design of the projects and correspondingly take the major responsibility for project implementation and maintenance of the community infrastructure. Community participation contributes to the overarching goals of poverty reduction and good governance, facilitates and enhances program or project design and effectiveness, and improves the impact and sustainability of programs or projects. Experience demonstrates that participation can be structured differently depending initially on the targeted communities degree of organization and capacity to participate. Reforming the housing subsidy system. The relatively large amount of subsidies provided to the housing sector under the UHLP have mainly benefited the non-poor groups. This prompts a redesign of the housing subsidy system which should be transparent and well-targeted to pave the way for the elimination of interest rate subsidies which have been shown to distort incentives and cause unintended consequences, particularly the channeling of subsidies away from those who cannot afford to pay to those who can afford the housing amortization payments. One approach that is becoming increasingly popular among countries intent on maximizing the net welfare benefits of their housing subsidy systems is to have targeted subsidies through onetime capital grants to the deserving poor households or housing allowances with finite duration and a built-in review procedure. Adopting self-targeting mechanisms, combined with upfront capital grants, can enhance the efficiency of the subsidy system while exerting a much lower fiscal burden to the government. Examples of these self-targeting mechanisms are: (a) adoption of rights-based secure land tenure arrangements; (b) application of differential pricing and cross-subsidy mechanisms between commercial and residential lots; (c) the use of sweat equity contributions to reduce cost of labor cost and the serviced plots; and (d) encouraging the use of non-traditional low-cost housing production technologies and minimum physical and environmental standards; Improving the regulatory and institutional framework. In keeping with international best practices, the Philippine Government has adopted an enabling approach in lieu of direct interventions in the housing and urban development markets. 34 While necessitating less resources, this approach if it is to succeed at all requires a transformation of the current regulatory and institutional framework into one that works more efficiently and harmoniously to 33 The STEP-UP was financed by the ADB-Japan Fund for Poverty Reduction and administered by the Philippine Business for Social Progress (PBSP) a corporate-led nongovernment organization (NGO) established in 1970 promoting social development. STEP-UP has three components: (i) strategic partnership building to promote corporate involvement and public-private sector partnerships for site-specific urban poverty reduction initiatives; (ii) funds for housing improvement, livelihood, and community infrastructure; and (iii) risk reduction and management that include physical design of houses, small infrastructure projects to protect communities from floods and typhoons, and educational activities. 34 The Global Strategy for Shelter to the Year 2000, launched by the United Nations in 1988, recognizing the urgency of addressing governments inabilities to respond to the accelerated rate of urban poverty in the cities of the developing world and the clamor for increased participation from the nongovernment groups, espoused the enabling approach. The approach rather than emphasizing direct government interventions called on governments to enact policies and incentives aimed at encouraging more NGOs to participate actively in housing and urban development. 75

127 encourage and facilitate increased private sector participation. Overlapping and duplication of functions should be removed while HUDCC s role as a mere overall coordinating body needs to be reviewed in light of the urgent demand for a more effective sector governance. One area where an enabling policy environment is needed is for the creation or acquisition of basic assets by the poor in order for them to live a decent quality of life. Government laws, regulations, administrative practices, investments, taxes, subsidies and a variety of other policy instruments affect the ability of urban upgrading programs or projects to deliver such assets to the poor. Foremost among the basic assets aspired to by the urban poor is secure tenure which is commonly defined as freedom from the threat of demolition and forced eviction from residential locations that allow them to easily access employment, education, health services, and the goods and services markets Localizing socialized housing. The direct participation of local governments in the delivery of socialized housing is legally mandated by the LGC and CISFA. Delivery of housing through a decentralized delivery framework is the centerpiece of the Government s campaign to provide more decent and affordable housing on a larger scale. While technically sound, localizing socialized housing is critically dependent not only on the capacity and willingness of the LGUs but also on the clarity of the roles of HUDCC, its KSAs, and other national government agencies in supporting the local housing programs; and Fostering increased private sector role in the sector. The Government and its pension funds have a relatively limited capacity to provide subsidized loans to the targeted poor borrowers at the scale warranted by demand. Thus, the support and cooperation of the private sector will be vital to responding to the growing challenge of providing socialized housing in the Philippines. Policy reforms in land titling and registration system, processing of permits and licenses, in addition to the obvious need to reduce the cost of construction materials will be paramount to encouraging increased private sector participation in the Government s pro-poor housing programs. A reform in the housing subsidy system will likewise provide the appropriate signals and incentives for the private sector to participate. Based on the results of the above study which was conducted in 1999, DPUCSP was formulated in The first sector loan of the ADB to the Philippine Government on housing and urban development which was approved on December 2003, DPUCSP had three fundamental objectives: (i) improve the access of poor urban households to secure land tenure, affordable shelter, basic municipal infrastructure, services, and community facilities; (ii) improve access to financial services for housing improvement and livelihood; and (iii) help decentralize shelter activities and strengthen the capacity of LGUs to meet their sector mandates as set out in the LGC. With its objectives, DPUCSP, as envisioned, comprised three components. Under the first component or Part A, new and existing sites will be developed to provide affordable secure tenure and infrastructure services for urban families in the lowest five income deciles. The Project targets poor communities where the majority is below the poverty line. In the second component or Part B, shelter financing mechanisms will be established, using MFIs and other qualifying intermediaries to support (i) purchase of serviced plot and house improvements, and (ii) microenterprise credit facilities. In the third component or Part C, capacity building and project implementation support programs will be implemented to improve decentralized shelter delivery. 36 The design of DPUCSP 35 As earlier discussed in Part Two, DPUCSP stands for the Development of Poor Urban Communities Sector Project which is being co-executed by HUDCC and DBP with funding assistance from ADB. 36 For more on DPUCSP, see Asian Development Bank, Report and Recommendation of the President to the Board of Directors on a Proposed Loan and Technical Assistance Grant to the Development Bank of the Philippines in the Republic of the Philippines for the Development of Poor Urban Communities Sector Project, Manila. 76

128 was based on the lessons documented by ADB s 2001 study and MTPDP , among others. However, additional lessons learned were further incorporated into the design of DPUCSP in the course of the feasibility study and they focused on the following: 37 Achieving secure tenure through freehold imposes high transaction costs on the urban poor in many developing countries. Secure tenure has been traditionally associated in the Philippines with obtaining individual freehold titles or private ownership of land. However, achieving secure tenure through freehold imposes exorbitant transactions costs stemming from inefficiencies in the existing land management records management system, the limited and costly access to the register of land deeds, and the fragmented institutional responsibilities for land administration and management. Shifting to more innovative rights-based instruments that are linked to cost recovery and affordable limits of the target beneficiaries, and are recognized by the financial and legal systems as well, offer more sustainable mechanisms for housing the poor. DPUCSP uses an incremental approach to helping develop urban poor communities offers a menu of secure tenure options, including but not limited to freehold 38. An enabling policy environment must be structured to minimize the transaction costs of implementing the incremental approach while maintaining fairness, stability and consistency. Conflicts must be inexpensively and speedily resolved, processes must be transparent and outcomes predictable, land use regulations must encourage, not stifle nor unduly burden, private sector investment including those from the informal sector, building regulations should be affordable, and financial regulations must facilitate access to funds by those engaged in incremental housing while allocating and mitigating the risks to those involved more efficiently. Housing microfinance offers the possibility of sustainable, unleveraged finance for the poor. Housing microfinance, a financial innovation of recent years, consists mainly of loans to low-income and poor households for renovation or expansion of an existing home, construction of a new home, land acquisition, and basic infrastructure. Filling a large void created by the limitations of traditional mortgage finance and building on the lessons of the microfinance revolution, it has emerged as a discrete area of practice that intersects housing finance and microfinance. Housing microfinance, as it is evolving, holds great promise for the poor households who have been unable to access traditional mortgage finance. It signifies to MFIs, housing finance providers, and even commercial banks that the housing needs of the poor can be financed in a sustainable manner through affordable products and a delivery system consistent with the tried and tested methods of microfinance. Implementation of DPUCSP, however, which started in 2004 was fraught with challenges and delays. The Project, despite many encouraging projections of physical and financial accomplishment was not able to fully take-off, unable to approve and implement many subprojects in the pipeline. Preliminary analysis suggested the following emerging lessons: Sector policy reforms critical to project implementation must be undertaken upfront. DPUCSP was designed to be flexible and innovative, promoting the use of rights-based secure tenure instruments to address the delays and inefficiencies in land titling. But without clear policy guidelines from HUDCC and its KSAs and other concerned agencies such as the BSP on which instruments can be recognized, how they could become negotiable and transferable, 37 Asian Development Bank, Technical Assistance to the Republic of the Philippines for the Development of Poor Urban Communities Project. Manila. (TA 3291-PHI, for $850,000, approved on 10 November 1999, with supplementary TA, for $150,000 approved on 2 April 2002). 38 Other options, which are clearly linked to affordability and cost recovery, and available to the targeted urban poor households, include: Interim Title; Lease-to-Own; Lease-with-Option-to Buy; and Long-term Lease. 77

129 and how they could be valued for collateral purposes, the processing and approval of many subprojects have been deferred by DBP. While considerable work was done on this policy front under HUDCC s leadership, it was evident that DPUCSP implementation could have been facilitated if these reforms were introduced and implemented much earlier or even before project implementation. The Government s housing subsidy policies are inconsistent and remain biased toward providing housing assistance at subsidized interest rates. DPUCSP promoted the use of capital, upfront targeted subsidies in lieu of interest subsidies in accordance with the housing development strategies of MTPDP in order to encourage increased participation of the private sector in housing finance. The Government, however, continued the use of interest subsidies on many of its housing programs, including CMP, making it more difficult to market DPUCSP. Ironically, the Government s fixed guarantee fee and foreign exchange risk premium made the DPUCSP lending and onlending interest rates unnecessarily higher. Nonetheless, after DPUCSP briefings, some LGUs eventually decided to innovate and participate in the Project, accepting the principles of having to pay at competitive, marketbased interest rates while providing capital, upfront subsidies on a more targeted basis and working with MFIs to assure a more efficient and accelerated cost recovery and DPUCSP loan repayment. Despite the promise of land proclamations and the abundance of public land for socialized housing, DPUCSP s subproject proponents still encountered substantive delays and uncertainties in trying to comply with the requirements of banking institutions like DBP. There were numerous uncertainties in the banking system about the documentation required to be able to use public land to be proclaimed for socialized housing or national government-owned land to be conveyed to local governments. The mechanics for how appropriate milestones in the proclamation or conveyance process can be documented and used to facilitate DPUCSP s subproject approval were reviewed. HUDCC in collaboration with the relevant agencies including DBP should facilitate the issuance of appropriate guidelines to fast track the use of national government land to be proclaimed for socialized housing or to be conveyed to the local governments for pro-poor housing programs. Most local governments have limited financial, technical and managerial resources to develop and manage sustainable housing projects for the poor. Many local governments did not have a local housing board, a local housing office, and a shelter plan all prerequisites to developing and implementing DPUCSP subprojects more efficiently and effectively. HUDCC with assistance from the DPUCSP Consultants helped some LGUs enrolled under the Project to set up local housing boards and conduct shelter planning. 39 HUDCC s capacity to provide technical assistance to the local governments on establishing local housing boards and local housing offices, conducting shelter planning, and developing and implementing propoor housing projects urgently needs more strengthening. Most local governments are averse to borrowing for socialized housing and to using their internal revenue allotments (IRAs) as collaterals for development financing. Local governments prefer to use their IRAs, internally-generated revenues, and grants to finance their development programs. Many LGUs perceived borrowing as politically risky since the consequent long-term debt servicing is burdensome and constrains future government spending. Local governments which enrolled under DPUCSP appreciated that the Project s approach and design principles ensured that the people would support the subproject being 39 The ADB provided a $1.5 million grant, ADB TA 3293-PHI Capacity Building for Housing Microfinance, to help implement DPUCSP. 78

130 financed and that working with MFIs provided a more effective and faster takeout mechanism for their borrowings. However, the majority of LGUs clamored for DBP to accept collaterals other than their IRAs to secure their DPUCSP loans. This placed pressure on HUDCC and DBP to develop and issue clear operating guidelines on other forms of acceptable collateral from the local governments to secure the DPUCSP loans. Traditional lending methodologies and policies will have to give way to more innovative and flexible practices including those that enable use of rights-based instruments and application of suitable housing microfinance programs. Delays in DPUCSP subproject processing were experienced because while the Project encouraged flexibility and innovation at the subproject development stage (e.g., using rights-based instruments for security of tenure, encouraging LGUs to develop public land proclaimed or to be proclaimed for socialized housing, and promoting public-private sector partnerships with NGOs, CBOs and HOAs, and private developers), traditional lending methodologies and policies were still applied by DBP to appraise and approve the subprojects. This project disconnect needed to be recognized and addressed in order to accelerate DPUCSP implementation. The promotion of the use of rights-based instruments had led to policy dialogues among government agencies and financial institutions, including the Bangko Sentral ng Pilipinas, to agree on the policies, regulations, and risk-protection mechanisms that will facilitate the acceptance of transactions involving such instruments. These dialogues proved fruitful when the BSP approved the use of rights-based instruments as part of the implementation of the housing microfinance program under the DPUCSP framework. The acceptability of these rights-based instruments, however, to the government and financial institutions involved, particularly as collateral substitutes that enable access by the poor to formal credit remains to be seen. The wholesale financial institution implementing DPUCSP should have a strong commitment to the Project and to the sector. Housing projects are generally complex involving interventions in a wide range of subsectors and at various levels of government and civil society. Socialized housing projects are even more complicated considering the farreaching macroeconomic implications of responding to the need to improve the plight of millions of poor informal settlers on a sustainable basis. The wholesale financial institution implementing DPUCSP must be strongly committed to the Project and to the sector able and willing to devote the resources required to adapt to the structural, staffing, and management changes essential to accelerating the development and implementation of viable subprojects. It must, together with HUDCC, nurture the development of various publicprivate sector partnerships for socialized housing. Implementing DPUCSP as part of a bundle of products and programs comprising the development and commercial portfolio of a bank which is not considered a KSA and therefore has no explicitly stated socialized housing mandate and accountability as far as the sector is concerned may not be the best institutional arrangement for the Project. Few MFIs are formally engaged in housing microfinance and will not engage in onlending for home improvements and housing loans in a large scale unless they are given incentives to build their capacity to develop and manage these new financial products. Despite expressing initial interests, only a few MFIs have so far really developed and launched their housing microfinance products (e.g., Enterprise Bank, Inc., and ASKI, Inc.). HUDCC worked with BSP to formulate and approve a housing microfinance product manual that could instruct banking MFIs on how to develop products and systems for engaging in propoor, market-based shelter finance programs using microfinance policies and practices. 79

131 The national government and local governments alone will not be able to solve the socialized housing problem. Alternative modalities of subproject development through partnerships with NGOs, HOAs, and private developers, particularly those not fully reliant on local governments but cognizant of their vital role in localized housing, needed to be encouraged and developed. Sustainable schemes for strengthening the capacity of HUDCC, its KSAs, LGUs, MFIs, NGOs, and HOAs to develop, implement and manage pro-poor housing and urban development programs are missing. More sustainable capacity building schemes for the project stakeholders must be put in place to ensure the continuity and replication of viable subproject schemes when the Consultants exited from the Project. 6.4 Distilling Critical Success Factors What Worked? There is considerable need for the Philippines to move interventions from project-based to policy and programmatic approaches. This will call for an urgent scale up of financial resources and long-term political commitments, with a robust understanding of the successful experiences of national governments in establishing policies and programs for upgrading and control of informal settlements. Learning from the experience of countries that have demonstrated leadership in addressing essential questions (Box 2) that lie at the very center of the challenge of nationwide informal settlement upgrading. Box 2: The Challenge of Scale Nationwide Upgrading What support do national governments provide to their cities undertaking citywide slum upgrading? What powers and functions should be decentralized, and what role should national governments take? How can the resources of slum dwellers, and the risk capital of the private sector, be mobilized? How can land markets be opened? What lessons can we learn from countries that have already undertaken nationwide slum upgrading? How can the growth of new slums be prevented? -- Cities Alliance, CWS, 2003 Annual Report Institutional and Political Commitment. The Brazilian experience serves as a good model for interagency collaboration with very strong leadership as well as housing provisions. In Brazil the issue of political will has assumed a centrality that is matched in few other countries. Key factors include giving priority to a program by state or municipal authorities, as well as the commitment on the part of the different agencies involved and the ability to build bridges with other government entities and navigate political-administrative differences. The national government has put poverty at the top of its priorities and created a Ministry of Cities to spearhead and coordinate some of the new policy approaches even in the face of severe budget constraints. (Box 3). Regularization. Countries that have embraced nationwide upgrading approaches have moved away from a policy of forced evictions and become willing to consider a range of tenure options for the urban poor. Cities and towns in most developing countries offer a wide variety of land tenure and property rights systems. In addition to freehold, other rights-based options have emerged including leasehold, public and private rental, and various categories of informal arrangements. 80

132 (a) Brazil: progressively designed and implemented instruments to facilitate informal settlement upgrading, with many innovations emerging at the local level before becoming more widely accepted. The Zones of Special Urbanisation (ZEIS) concept was first introduced in Recife in the 1980s and subsequently adopted by several municipalities. These are local authoritydemarcated areas allowing for the application of more flexible standards to promote upgrading and protect the right to housing Usucapião Especial Urbano, which allows for families (including low-income families on a collective basis) that have been occupying residential land for five uninterrupted years and without legal action by the land owner to be granted land ownership. In this way, an irregular settlement with 5,000 households can be regularized through the granting of a single Usucapião; Direito de Superficie, which allows housing regularization through transfer of the surface right from the land owner to the occupier for a number of years; and Box 3: The Case of Brazil Brazil s larger cities have traditionally taken the lead in slum upgrading, most notably through the pioneering Favela Bairro program in Rio de Janiero and the Guarapiranga project in São Paulo. Throughout Brazil, municipalities have been moving from sectoral projects towards comprehensive upgrading frameworks designed to integrate slums into the city fabric. This is done by land tenure regularization, social development initiatives, and community participation schemes. Through the adoption of the City Statute, an innovative and farreaching legal framework for urban policy has been created and incorporates a number of instruments that facilitate both informal settlement regularization and upgrading. Resulting from an intense negotiation process that lasted more than ten years, the City Statute confirmed and widened the legal and political role of municipalities in urban policy, while also fundamentally asserting a social approach to urban property rights, which will have a profound long-term impact on urban upgrading and social inclusion. Dação em Pagamento, which enables an indebted landowner to donate the land to the municipality in exchange for the debt. Over the past decade, Brazil has made important progress in legitimizing illegal settlements in big cities. However, according to a 2012 study by the Inter-American Development Bank (IDB), Cities Alliance, the Ministry of Cities, and the Caixa Econômica Federal (CEF), the technical capabilities of Brazilian municipal governments need to be strengthened if improvements are to be integrated into housing and urban policies that can be implemented in the city as a whole. The study shows that unsuitable dwellings of uncertain legal status continue to dominate the landscape in Brazilian cities. The analysis shows that a favela urbanization policy, when integrated into a municipal urban design plan, ensures economies of scale and the continuity of the actions taken, enabling municipalities to obtain the maximum return in terms of development and wellbeing from investments. 40 (b) Thailand: One of the well-known innovations that has been developed and implemented is the land sharing scheme communities involved in land disputes are able to negotiate agreements with landowners in which some portion of the land is returned to the landowner, while the balance is sold, rented, or donated to the community to redevelop their housing. (c) Viet Nam: Provision of tenure security through the issuance of Building Ownership and Land Use Certificates on a large scale to streamline land development procedures and help speed up the process. The government is also revising construction standards with a view to simplify them. (d) Kaantabay sa Kauswagan (Naga City): Institutionalized a functional mechanism for permanently settling land tenurial problems between landowners and land occupants. These strategies include accessing various modes of land acquisition like direct purchase, land 40 IDB; Upgrading slums in Brazil - where more can be done more efficiently, September 2012, 81

133 swapping, land sharing, community mortgage, and resettlement; institutionalizing a separate window catering specifically to urban poor clients of the lending arm of the local government; and evolving a financing scheme anchored on internally-generated resources of the beneficiaries. Functional partnerships. The Kaantabay sa Kauswagan program shows how a tri-partite approach of pooling resources and capabilities of private landowners, city and central government and the poor can be used to improve urban living conditions. City wide planning - all stakeholders come together and decide on ways to improve the slums in the city It is demand-driven by communities rather than supply-driven, as it supports communities who are ready to implement improvement projects and allows a great variety of responses, tailored to each community s needs, priorities and possibilities (for instance, communities choose how to use the infrastructure subsidy, which land to choose, what type of housing they like, etc.). Targeting the subsidies. It is widely recognized by now that housing subsidies particularly those that promote directed credit characterized by interest rate subsidies, mandated loan allocations by financial institutions to socialized or pro-poor housing, high default rates, and excessive loan write-offs create a lot of distortions that threaten the efficiency and efficacy of urban programs or projects. Consequently, governments of developing countries have been grappling with ways to reform their housing subsidy systems such that they are: More consistent with the level of fiscal resources available; Better targeted to the deserving poor; Transparent and easier to measure; Able to provide the appropriate signals and incentives for the private sector to participate; Complementary to the overall efforts to ensure sustainable finance for urban upgrading; and Less likely to dampen supply response and unduly increase house prices. As a result, targeted subsidies through one-time capital grants to the deserving poor households or housing allowances with finite duration and a built-in review procedure are finding increased popularity among countries intent on maximizing the net welfare benefits of their housing subsidy system (Box 4). Box 4: Housing Subsidies in Chile Chile has been implementing a comprehensive national housing program since the late 1970s. Linking a capital subsidy to household savings and credit, this program constituted an explicit shift towards a more demand-side approach to housing. In the mid-1970s, the government decided to move away from large, implicit, unpredictable, and poorly targeted credit subsidies and direct production in the housing sector to direct, explicit, one-time demand subsidies which allowed households to purchase housing from the private market. Households deposited their savings in a housing account at a financial institution, received a certificate which can only be used to purchase housing and did not have to used to purchase housing and did not have to be repaid, and was able to access a mortgage loan for the balance of the price of the house at prevailing market rates. The system allowed households to build or purchase a new or existing unit. The system was widely perceived as fair by the households and contributed to the decline of public housing staff and budgets by as much as 90 percent. The government recently introduced a number of reforms to the housing program, which is widely credited with having made a significant contribution to poverty reduction. The subsidy has been increased to try to reach the poorest 20 percent and to meet the rising costs of social housing, which is now as high as US$7,000 per unit, and also to compensate for the anticipated lack of commercial credit attracted by the new Fondo Concursable program. Sources: Renaud (1988), Mayo and Angel (1993), Cities Alliance (2003) 82

134 6.5 Lessons for Policy Consideration A policy framework for a slum upgrading program. The Cities Alliance has been actively involved in various worldwide projects related to upgrading since its establishment in 1999, through its Cities Without Slums Action Plan. This proposed a target of improving the lives of 100 million informal settlements dwellers by the year 2020 the first time such a measurable target had been set in the international development arena. Cities Alliance has come up with ten principles that shape the policy framework for a successful slum upgrading program which are worth incorporating in this report (Box 5). Box 5: A Policy Framework for a Slum Upgrading Program 1. Accept and acknowledge slums and their importance. Achieving a city without slums begins with a shared understanding that slums and their residents are an integral part of the city, and that slum residents have a right to the city and to its services. 2. Political will and leadership makes slum upgrading possible. Both national and local governments must provide the vision, commitment, and leadership required to sustain nationwide upgrading. Government authorities at all levels and other stake-holders make and uphold the commitment to upgrade slums because is in the best interest of the city and nation. 3. Include the slums in the city s plans. Create a strategy and plan how to transform slums as part of the core business of managing and improving the city and its economy. An effective tool to define these plans is to carry out a City Development Strategy (CDS) to identify city priorities, lead to producing a workable plan for the upgrading programme. 4. Mobilize partners. Partnership is important to successful upgrading. Successful slum upgrading is a highly participatory endeavour. It is also very comprehensive and complex, needing coordinated inputs from many local government agencies as well as those from outside the public sector. 5. Provide security of tenure. Secure tenure is at the very centre of slum upgrading. Without some form of legal tenure security the situation of slum residents and their neighbourhoods is uncertain: they could be removed at any time. People who fear eviction will not invest in their houses. They will invest, however, once they have a sense of permanence and realise that they can sell their house and recoup their investment. Furthermore illegality and informality make them susceptible to exploitation, corruption and extortion. 6. Plan with, not for, the slum communities. Residents are the main partners of slum upgrading programmes. Because their futures are directly affected by the decisions, and because they can help in the upgrading process, it is necessary that they be fully informed and actively involved. 7. Ensure continuity of effort over time and institutionalise the program. Upgrading is an incremental, but sustained process. When slum upgrading is municipal a core operation, it produces cohesion, coordination, and increases efficiencies in service provision. 8. Allocate budget, design subsidies, mobilise public and non-public resources. Stable and consistent national and local budgetary allocations are needed for slum upgrading. Large-scale upgrading programmes need central government support backed by corresponding national budgetary allocations, subsidy policies and human resources. 9. Find alternatives to new slum formation. Upgrading existing slums and preventing new slums are twin objectives of Cities without Slums policy. Until land and housing policies are changed to eliminate barriers for the poor, new slums will continue to occur. Therefore, cities need to introduce proactive measures for producing viable alternatives to slums. 10. Invest in community infrastructure. It is important to invest in a community infrastructure that helps build community cohesion. Investing in infrastructure demonstrates a government s commitment to an area and brings dignity back to a neighbourhood. If a government invests poorly, people will not respect the infrastructure. 83

135 7 FROM INFORMAL SETTLERS TO FORMAL RESIDENTS PATHWAYS TO REFORM This section builds upon the analysis undertaken earlier and gives some pointers to possible ways forward. It has been prepared as a discussion document. The section shows that government s housing program is not working for the poor, and that despite the considerable resources put into it, the program has accomplished too little for informal settlers. The focus on relocation and resettlement has often proved disastrous for communities and people, and housing subsidies have been an expensive folly. A redirection of current policy is urgently required. 7.1 The Problem Urbanization in the Philippines has been associated with the influx of informal settlers an unwanted feature of a growing city in the developing world According to World Bank statistics, the urban population of the Philippines in 2012 was about 47.5 million or 49.1% of the total population of 96.7 million. Urban population has increased at an average annual rate of 2.0% per annum since 2000 total population has grown at 1.8% per annum over the same period but in 2011 and 2012 annual urban population growth has increased and averaged 2.2%. This relatively rapid but increasing urban growth in the Philippines has been characterized by an ever expanding number of informal settlements made up of migrants originally coming to cities in search of jobs and better lives. In most cases the migrants and their off spring are unable to find alternative accommodation and thus live in informal settlements. This unwanted consequence of urbanization has impacted all urban areas of the Philippines but is more pronounced in the mega cities, especially Metro Manila. Of the total 1.50 million informal settler families nationwide in 2011, some 584,000 were in Metro Manila the National Capital Region (NCR) representing 24% of the region s households or 39% of total informal settler families 41. The highest proportion of informal settler families by region after NCR is Region 5 the Bicol region with 2.6% of its total households. No other region has more than 2% of the total. Five regions NCR, and Regions 3, 4A, 5 and 10 account for 76% or just over three quarters of the total informal settler families, some 1.15 million. Clearly the problem is focused on the greater Metro Manila extended region, comprising the National Capital Region (NCR), Central Luzon and Calabarzon, and Northern Mindanao and Bicol regions outside the capital. This would suggest that the focus of a national informal settlers upgrading strategy would be to tackle the problems within these regions first, especially the NCR. Such a focus would not only prioritize the areas with the highest number of informal settlers, but also would have a considerable visible impact upon the capital city and its environs, and show that government is committed to improving living conditions for the poor. Informal settlements arise because of the lack of affordable accommodation whether rental or for purchase available on the formal market for the new arrivals and their dependents. Informal, or arrival settlements as they are sometimes known, are therefore a major feature of cities, not only in the Philippines but also throughout the developing world. They represent the people s response to better themselves by taking direct action in an inequitable society. The Philippine Government, like many others in the region, feel ashamed of such settlements and tend to hide them from the view of visitors or other more affluent members of society. Governments would rather they did not exist, and fail to recognize the contributions they do and can make. 41 Magnitude of Informal Settler Families (as of July 2011). National Housing Authority. Local Government Units, Department of Public Works and Highways. These are the latest available figures, but they require updating. 84

136 Poor migrants to the city or informal settlers will always remain a feature of our cities until governments acquire the political will and efficiency in governance to adopt policies that enable the urban poor to become full and responsible members of urban society. No one wants to live with high unemployment and in poorly serviced and overcrowded informal settlements, but most do not have any other option. Improving conditions means focusing on creating more productive and better paid jobs, better education and skills, and building more resilient and livable communities. All this would improve incomes and living conditions. Only then will there be a transition of informal settlers to formal residents, and informal settlements into sustainable communities. Houses and money, not people the failure of government s housing program for informal settlers Past government housing programs for the poor, as shown in the previous chapters, have largely focused on the relocation of informal settlers, construction of new houses for the fortunate few, and subsidized lending, which often benefited the more affluent rather than the urban poor. These programs have focused on houses and money, rather than on people and communities. But, over the past few years there has been a sign of change and substantial resources have been made available to the sector. However, government is struggling to effectively disburse this money. Although there have been changes to the Community Mortgage Program (CMP), which have incorporated basic infrastructure improvements along with tenure regularization under stage 1, and there is a local government supported CMP, to date both have only involved a few projects. Furthermore, the Social Housing Finance Corporation (SHFC) has recently introduced its high density housing multi-storey buildings loans program to provide in-city, near city or near site housing for relocated informal settlers in the NCR. Highly concessional terms 42 have been adopted to make loan entitlements affordable for a package of up to PhP450,000 per family. The Asian Development Bank (ADB) funded Development of the Urban Poor Communities Project demonstrated that public private partnerships for new informal settler housing and housing microfinance offer solutions, but a component involving local government borrowing failed. However, more than a third of the ADB loan was cancelled after the Development Bank of the Philippines the implementing agency failed to disburse all funds within the time span of the project. Given the resources available, and with the right direction and prioritization, it will be possible to make a difference. The future program must be built on lessons learned from past interventions, and focus accordingly on communities and put people in the driving seat let them decide their own futures. This means supporting those who in reality are the risk takers, potential entrepreneurs, and tomorrow s middle class those willing to uproot themselves from rural complacency and move with their families to the city in search of better opportunities, and wealth. But first, both national and local governments need to: Accept informal settlers as essential participants in the urban economy, and members of society undertaking jobs and providing services that many others are unwilling to do. Provide conditions that enable the private sector to create more productive jobs and better earning opportunities than currently exist for the under and unemployed. Move away from policies that encourage dependency. 42 Loans at 4.5% annual interest, repaid over 30 years, with graduated amortizations with a yearly increment of 10%. 85

137 Relocation and poor enforcement Previous chapters have shown, quite clearly, that government s approach to informal settlers has failed largely because it has focused on the settlements and not the settlers themselves. This has led to a policy of massive relocation of entire communities to distant locations, often against the wishes of the inhabitants and their inevitable loss of income as a consequence. Furthermore, about PhP42 billion has been spent by the national government on relocating 227,000 families 43 from 2001 to 2103 with an average cost of about PhP185,000 per unit. But this has meant the demolition of existing houses and their replacement by new units one for one hence not a single additional unit has been added to the housing stock. In contrast some 212,000 families have been assisted under the slum upgrading program at a cost of almost PhP8 billion 153,000 under the Community Mortgage Program (CMP) average cost of about PhP52,000 per family, and 59,000 under the programs of the National Housing Authority (NHA) largely relating to Presidential Proclamations average cost of PhP1,300 per family. Both NHA and CMP have implemented projects mainly related to tenure regularization. Enforcement of the laws against squatting, too, has been weak. Countless new structures are regularly built, many in danger areas and in some cases on land already cleared once before. Weak capacity within the local governments, an unwillingness of officials to act, and a tolerance, often for political reasons has made enforcement nearly impossible. But there have been some good examples where communities have been called upon to monitor and report all new construction activities to the city government who check that they have the required permits. Housing finance a failed experiment for informal settlers Intervention through the housing finance system, too, has been a failure in respect of informal settlers. The Unified Home Lending Program (UHLP) of the NHMFC, despite the rhetoric, never really benefited informal settlers, although it has encouraged some private developers to move down market and build houses that are more affordable to the lower-middle income group largely for those in the 30 th to 60 th percentiles of the household income distribution for the NCR. But it has come at a price, and the lending under the end-user program of HDMF has cost the fund almost PhP318 billion to finance 556,000 housing units from 2001 to 2013, an average of PhP545,000 per unit beyond the affordable limits of many informal settlers. The universal interest rate subsidies, guarantees and amortization support have seriously distorted the low-middle income housing finance market and have meant that the private banking sector could not be involved in such financing in a big way, if at all. Furthermore, the subsidies set a bad example, such that people become dependent upon them. To provide a subsidy for the entire duration of year mortgage loan is self defeating, and unfortunately implies that the beneficiaries will remain poor over the duration of repayment period the only justification for the continuing subsidy. And repayment periods beyond 20 years make very little difference to loan affordability. Furthermore, evidence shows that many of these subsidized loans went to the better off. Private rental market flourishes The private rental market has been active, and its provision of accommodation, especially rooms or beds, have taken up some of the slack, but its contribution has largely been undervalued by policy makers. The extent of rental tenancies within informal settlements has, for too long, been ignored, especially when relocation takes place. The view that government can contribute by embarking on a 43 Covering resettlement from land needed for infrastructure projects, and those living in danger areas in Metro Manila, regional resettlement assistance to local governments, NHA condemned buildings, and as a result of calamities including housing materials assistance. 86

138 massive nationwide public rental housing building program should be a non starter. Past efforts have meant poorly constructed units, which have never been maintained properly, and in some cases have degenerated into new slums. Rents have seldom been set at levels that even cover the cost of routine or periodic maintenance. Affordable housing but not for the informal settlers Private developers too have failed to reach the low-income group on the scale needed, since many consider housing for the poor to be a non-profitable segment of the market, and perceive they are unable to build and sell house and lot packages for PhP450,000 or less the maximum price limit for a house and lot to qualify for concessionary lending under the current government housing program. Nevertheless, this package appears to be affordable by many whose incomes are at or below those of the 30 th percentile of the household income distribution in 2012 in the NCR the poorest 30%, 44 but not by those living in the regions. In fact, the house and lot package is afforded at the 10 th percentile of the 2012 household income distribution of the NCR, under lending terms of 6% interest per annum, repayments over 25 years, and an assumed down-payment of 10% of the price but these have been in place for a number of years when market rates were frequently 9% or more. Under more marketoriented rates of 9% interest per annum, and terms of 20 years to repay and a 20% down-payment, the house and lot package is afforded at the 23 rd percentile, still within the government target. A household at the 10 th percentile would be able to afford a house and lot package of about P370,000 in the NCR under the same terms. Assessing affordability against the 2012 household income distribution for the Philippines overall, the P450,000 house and lot package is only afforded at the 49 th percentile under the concessionary terms, and the 62 nd percentile under the more market related terms well outside the government target of the poorest 30%. Clearly the limit is about right for the NCR, but too high for those living outside. This suggests that there is a need to retain the limit in the NCR, but reduce it in the regions so that subsidies will help those in need the informal settlers. Different limits should apply to Metro Manila, the regional cities and elsewhere. Although very little research has been undertaken, it is likely that very few of the housing units funded under the government s housing finance programs would have gone to informal settlers, since most would be unable to provide evidence of regular, stable and sufficient incomes. This is clearly an area for future research. Innovative programs but not to scale Interestingly, there have been a number of housing projects developed through the Gawad Kalinga program adopting partnerships and using grant funds from private companies under their corporate social responsibility programs. Often this housing is built on land donated by local government. In a number of cases the program has benefitted families relocated from danger areas, although in others some new housing has been built for the poor from informal settlements, albeit on a small scale. Other programs such as STEP-UP of the Philippine Business for Social Progress (PBSP), and Habitat for 44 The Urban Development and Housing Act of 1992 defines socialized housing as housing programs and projects covering houses and lots or home lots only undertaken by the Government or the private sector for the underprivileged and homeless citizens which shall include sites and services development, long-term financing, liberalized terms on interest payments, and such other benefits in accordance with the provisions of the Act. Furthermore, underprivileged and homeless citizens refer to the beneficiaries of the Act and to individuals or families residing in urban and urbanizable areas whose income or combined household income falls within the poverty threshold as defined by the National Economic and Development Authority and who do not own housing facilities. This shall include those who live in makeshift dwelling units and do not enjoy security of tenure. The latest poverty statistics (2009) issued by the National Statistics Office (NSO) confirm that those belonging to the bottom 3 deciles of the Philippine income distribution fall within the estimated official poverty threshold. NSO is under the administrative supervision of NEDA. 87

139 Humanity schemes have been undertaken, often as one-off projects in partnerships with local governments and communities. Cost recovery under these programs, however, is minimal, and most rely on donations to continue. And because they are not mainstreamed, they only have benefited a lucky few. The Asian Coalition for Community Action (ACCA) approach to slum upgrading is promising because it has shown that it can be scaled-up. However, the approach needs to be more tailored to the Philippines and its local governance system The housing programs of the pension funds SSS and GSIS, and of PagIBIG have suffered constant interference by government to the detriment of their members, who after all are the real owners. The constant tinkering with the membership requirements of PagIBIG has diluted the benefits available to fully contributing members and at little gain for the informal settlers. More independence and direct accountability of the managers of these funds to their membership is needed, rather than further government interference and forced investments. Participation of the local governments has been lacking City governments also have failed to respond to the challenges of informal settlers, and instead have looked to central government to lead. Some even have suggested that, despite the provisions of the local government code, housing is national government responsibility. Without the full commitment of city governments, action on informal settlements will continue to be a piecemeal venture, rather than an all embracing strategic program. Many local governments seem reluctant to allocate resources to the housing sector, except perhaps for their own employee housing a questionable use of local tax payers money. Others look to non-government organizations for help, largely for resettlement housing. But many local governments just do not have the resources for such a program or prefer to spend money on other programs, including those that generate income for the authority. Expenditure figures show that most cities only allocate the mandatory 15% of their internal revenue allotments for development projects, and most of these relate to drainage improvements, road rehabilitation and perhaps administrative buildings of the city. Major capital development expenditures in the cities are usually made by national government agencies or the private sector. City planning and housing policy remain uncoordinated, both at the national and local levels. Despite the requirement for the preparation of a City Land Use Plan (CLUP) and a City Development Plan (CDP) by each local government, most planning in the Philippines lacks a strategic direction and a longterm vision. Too often boiler plate plans are produced, while the horizon for the CDPs is too short and they seldom incorporate strategic thinking, often ending as a wish list of unfunded investment projects. Even the considerable growth of Metro Manila and its extended urban area has taken place without a guiding strategic or structure plan, and with little thought about future primary infrastructure, public transport or an appropriate city form. This makes it difficult to adequately plan the spatial growth of cities, making it hard to determine the location of future new residential areas. In reality, private developers drive the future spatial growth of cities by developing land which they own or buy. Often this is some distance from the city center, and has little regard for future strategic infrastructure or public transport requirements. Public infrastructure currently follows, rather than leads development. National government lacking in urban development sector leadership, coordination and focus HUDCC is responsible for the formulation of plans and policies on housing and urban development; development and supervision of innovative programs and projects for tenure security, urban renewal and other support services; provision of overall administration and supervision to Key Shelter Agencies (KSAs); and provision of technical assistance to the local governments on the delivery of 88

140 housing services and providing support to the general public on appropriate information on housing and related referrals. HUDCC, as the nation s highest policy making and coordinating body for the housing and urban development sectors, lacks effective leadership in the urban development sector. Its focus has always been on shelter, and this has been at the expense of its role in integrating urban development policies and plans with those for housing. It has never really taken the lead policy role in the urban development sector. HUDCC, too, has been involved in actual housing development project implementation not a role for a national policy and coordinating body. Furthermore the policies and programs of the KSAs often are not coordinated properly and many of their interventions are not tailored for informal settlers. Besides the KSAs, a number of other public agencies are involved in land development, urban renewal, and urban poor matters, including the Metro Manila Development Authority (MMDA), Philippine Reclamation Authority (PRA), the Bases Conversion Development Authority (BCDA) Group, and the Presidential Commission for the Urban Poor (PCUP). Each one has been or is involved in programs for informal settlers almost entirely for relocation and resettlement for projects within specific geographical areas. But their programs and projects often are not coordinated or monitored by HUDCC. HUDCC is by no means the all-embracing urban policy and coordinating unit. 7.2 Beginnings of a Reform Strategy So what is suggested by the above? A major correction to government s housing program is needed. Its current focus must change, and be replaced by a more people-centered and strategically targeted and integrated program with a clear vision of what is to be accomplished for informal settlers. Government must encourage the creation of an enabling environment that allows people the opportunity to transform from informal settlers into active participants of the urban economy, and for the potential beneficiaries to fully accept and assume the responsibilities that go with this change. The current programs for informal settlers, whether undertaken by the government, civil society, communities or the private sector, are small in relation to need. All interventions, especially those of government need to be scaled up, once and for all, to universally tackle the problems of informal settlements. This implies adopting the following principles: Accept that people matter informal settlers must be the decision makers. Adopt strategic city planning with a long-term vision that sets the spatial pattern for future growth and enables cities to plan primary infrastructure in advance of land development. Move to the market where new housing construction is the responsibility of private developers, and rental housing is provided by private individuals or civil society; and where housing finance, whether government or the private sector, is market related. Provide subsidies only for the needy subsidies are targeted only to those in need rather than applied universally. Leveraging resources using public funds to encourage further investment from the private sector, civil society and individuals in housing. Devolve decision making where decision making is devolved to the lowest level of governance as possible, following the principle of subsidiarity Integrate upgrading with urban renewal where policies for informal settlers are seen as part of a wider, city-wide urban renewal/regeneration program. 89

141 Implement through partnerships where urban renewal is implemented through partnerships of the private sector, communities, civil society, and national and local government. A return to informal settlements upgrading within an urban renewal/regeneration framework Urban regeneration or renewal is at the core of city planning. It can be defined as the integrated local redevelopment of deprived areas neighborhood, city, or metropolitan area. It covers many aspects of city life, including physical, social, economic and environmental characteristics. Approaches depend on a city s history, and policies must be integrated, area-based and focused on communities and people. It often involves the redevelopment, refurbishment, renovation, reconstruction and reuse of old sites or buildings. Urban regeneration is about improving social conditions, stimulating the local economy to increase jobs and business opportunities, infrastructure and housing improvements, and development financing. It is a collaborative process. In the Philippines, informal settlement upgrading should be a major component, linked with measures to increase jobs and improve social services, including education and health. Accepting that people matter and adopting the principle of subsidiarity, suggests a return to the slum upgrading approach so successfully adopted in the late 1970 s and early 1980 s. This covered the Tondo Foreshore Development Project and the Zonal Improvement Program (ZIP) in Metro Manila, and the Slum Upgrading and Resettlement Program (SIR) in the regional cities of Cebu, Davao, Cagayan de Oro, Iloilo and Bacolod all assisted with World Bank and government funding. Later, in the mid 1980 s, came the innovative and world-renown Community Mortgage Program (CMP) mainly focusing on land tenure regularization for squatter colonies, but also involving the development of new subdivisions under its off-site component. These programs put people and communities first, and helped them plan and upgrade their settlements according to their wishes but within the constraints of their affordable limits. Resettlement in these upgrading schemes was limited less than 5% and avoided if possible. Also resettlement was voluntary. Structures were retained and sites were allocated for community uses where possible. Furthermore the basic principle of full recovery of properly allocated costs was adopted, where plots were priced with minimal direct subsidy costs of the water supply system were transferred to then MWSS, and recovered through water tariffs, and those of social facilities and off-site infrastructure to the concerned agencies. And there was limited cross subsidy corner plots and commercial lots were priced at a small premium. Modifications could be made to the CMP to incorporate the above features, and encourage the provision of much more basic infrastructure, especially drainage, sanitation improvements, water supply, street lighting, roads and footpaths, together with land tenure regularization under stage 1 instead of simply focusing on the land issue. Linkages to micro finance schemes could be facilitated for house improvements and extensions, and small business activities. But both programs require significant scaling-up to make a difference. To support the major thrust, partnerships with such programs as Gawad Kalinga, PBSP s STEPUP, the ACCA approach, and Habitat for Humanity, for example, should be developed enabling access to funds provided under the corporate social responsibility programs of private companies and other voluntary and donated funds. These programs, although small in scale, when added together can make up a significant program. But they do demonstrate that working with communities is successful and subsidies whether on land or through the provision of basic infrastructure can make a real difference. Approaches to informal settlements upgrading could vary according to the preferences of the communities. Whether it is simply tenure regularization under the CMP, or tenure regularization plus infrastructure provision/and or improvement according to the ZIP principles, or land pooling and readjustment, the program should be flexible to accommodate alternative approaches. It might even be possible to get the land owners where the occupied land is privately owned to work in partnership with the communities through land pooling. This would involve the construction of new 90

142 housing units by the private sector, some of which would be provided to those families giving up the land they occupy with the rest for sale on the open market. The same principles of land pooling and readjustment could apply to those informal settlers who already have acquired or are in the process of securing tenure to their plots, and who wish to redevelop their neighborhoods more rapidly. Partnerships with private developers could be encouraged. Other variants are possible too. All the above must be part of a city wide urban renewal/regeneration program that besides the informal settlements upgrading component would involve social programs to improve education and health and skills upgrading, and economic incentives through better infrastructure and a more business friendly environment to create competitive cities and livable neighborhoods. Government to guide land development New informal settlements will continue to be developed as arrival areas for those migrating from the rural areas as long as there is no alternative affordable accommodation available, and so long as governments are unwilling to protect their own, and private property from encroachment. The mass movement of people from the rural areas will continue for many years until urbanization reaches about 70%-80% currently it stands at nearly 50%. Only then will migration slow, and the majority of the demand for new urban housing, especially that of the informal settlers, will be the result of natural increase from the families who are already residing in cities. Cities already have substantial numbers of poor families, even those not residing in informal settlements, and natural population growth is inevitable. Given the high natural birth rate Philippines population is growing at about 1.8% per annum the demand for affordable housing from natural increase is significant. And this is leading to another movement of people from overcrowded central and inner cities to newer housing areas beyond the suburbs. This is already a feature of many Philippine cities, and is leading to the rapid population growth of settlements on the periphery of the NCR and beyond. Here substantial new, but uncoordinated housing developments are taking place, largely upon the initiatives of private developers in the absence of long term spatial planning and guidelines by the national or local governments. In future long-term, strategic spatial planning is essential so that cities are able to guide development rather than having to provide connecting infrastructure and public transport retroactively. Under this more rational approach, affordable land would then be acquired and developed together with future public transport networks, employment areas, under compact settlement designs. Government should not build houses only demonstrate model schemes Government does not have a good track record of building new housing on a large scale, and this clearly supports the need to encourage the private sector to enter the low-income market on a much larger scale than at present. Sites and services schemes which are in fact low-income residential subdivisions with or without core or basic row housing can provide affordable accommodation that is able to be expanded over time as incomes increase and families grow. House improvements and extensions can be accomplished using self-help methods and funded through micro-finance. Such schemes must be affordable to the informal settlers, and would suggest basic house and lot packages of between PhP330,000 and PhP500,000, the price range afforded by those whose incomes are at the average within the first and third deciles of the household income distribution in the NCR, and from PhP150,000 to PhP250,000 outside using the more market related lending rates and underwriting criteria. Under the concessionary lending of the government, the affordable price ranges increase to PhP420,000 to PhP610,000 in the NCR, and PhP190,000 to PhP310,000 in the regions. Discussions with the private sector indicate that developers can acquire land and build low-income housing units well within the price ranges shown above. They could even go lower, through 91

143 partnerships with government, NGOs or not-for-profit companies provided they would the select beneficiaries, sell the houses and lots turned over to them by the developers, and arrange financing. This turn-key model has been used by the NHA for much of its resettlement housing and could be adopted for a future local government implemented sites and services/core housing program. Government, however, can make a major contribution through the provision of infrastructure, both off-site connecting informal settlements to key city communication, transport and utility networks, and on-site basic local infrastructure including roads and footpaths, street lighting, drainage, sanitation, social and community facilities and open space development. Such investments within informal settlements can make a real difference and stimulate economic growth and further development. These improvements must be made within an overall urban renewal program, focusing on the informal settlers and their neighborhoods. Resettlement a project cost Some resettlement, clearly, will have to continue because of the need to remove families from danger zones or hazardous areas, and on land needed for public infrastructure. In the former case, only those actually living in the danger zone should be relocated, not the whole informal settlement. There should be no need to destroy entire communities if not all of the families actually live in the danger zone. Those remaining can become part of the revived informal settlements upgrading program/cmp, and be included as a first priority. Informal settlers on land needed for public infrastructure usually are the beneficiaries of social and resettlement safeguards when the projects are financed by international development and bilateral aid agencies, and can be adequately compensated with funds provided as part of the overall investment cost. Often, this means building appropriate alternative accommodation acceptable to them at a cost to that project. Government funded projects should follow similar principles. A return to basics for the funds Pag-IBIG, GSIS and SSS must be freed from government pressures and directives and serve their membership under rules acceptable to them. Their prime purpose is to enable members to save for housing, pensions, and emergency assistance in the case of disasters or job losses, among others. The managers of these funds should be able to invest where they can secure the best returns for their members, and the money not used as a substitute for government housing funds allocated according to political whims. Some of the members accumulated funds could be withdrawn and used as downpayments for house and lot purchases, with housing finance provided by the private sector thus leveraging scarce resources Subsidies the case being made There is currently much talk and work going on about designing a subsidy system for the informal settlers housing program. Suggestions include capital subsidies as well as the continuation of those on interest rates. Subsidies, however, are being designed on the basis that they are required because of low incomes. This is largely for the ISF in danger areas currently being relocated through the NHA. 45 The current income profiles show that all but the poorest 5% -10% or so are able to afford a loan to purchase a basic low-income housing unit, especially in the NCR. Earlier chapters of this report show that interest rates subsidies are unnecessary and that private developers can build and sell units that are within the affordable limits of the second and third deciles of the household income distribution, 45 Capital subsidies for the poorest of the poor are being formulated as part of the Php 50 billion ISF Fund appropriated for the NHA-led five year housing program for families living along the danger areas in Metro Manila. 92

144 and could go even lower. Poor collection rates on existing government housing loans are the result of poor governance, in that appropriate mechanisms for collections are not in place, and payments are not enforced, as they should be. Common with all countries, there are very poor households with zero or very minimal income. Nevertheless, assistance can be targeted to them through social programs, rather than through schemes that encourage dependency and distort the housing production and finance systems. Capital subsidies work better than interest rate subsidies, if properly targeted. The provision of local infrastructure and improved access by national and local governments has already been mentioned, and this can be an effective way of reducing the cost to the informal settlers of neighborhood upgrading. But the case for further subsidies still has to be made, and on the basis of current income statistics and affordable private sector developments, the rationale for a large scale subsidy program needs to be carefully considered. Move to market housing finance and production In future, it is advisable that housing finance is provided at or near market rates, whether by the government or the private banking sector. This implies interest rates that match those of the market and the adoption of variable rate mortgages, all provided under consistent underwriting criteria. Current interest rates are around or slightly above the 6% government housing loan rate, and this provides the ideal time to abandon the artificial fixed rates and instigate a system where they are reviewed and revised every six months to one year, and are related to the actual cost of funds, including inflation. The interest rate subsidies would be eliminated, and government programs redirected towards say guaranteeing part of a loan provided by a private bank people put up a 5%- 10% down-payment and government guarantees say 20% of the loan amount if a bank is willing to accept the lower down-payment and provide 90%-95% financing. Similar schemes could be adopted for informal settlers to buy or lease the land they occupy under the informal settlements upgrading program this could be the major intervention of SHFC under a modified CMP. But this also implies that private developers build more units at affordable prices and qualify for the guarantee on financing provided. Other incentives could be given to private developers in the form of corporate tax relief. The current elimination of VAT on house purchases for packages that are afforded by the urban poor should continue, but the qualifying limits should be reviewed and revised regularly. Much has been written about the promise of microfinance in low-income housing. Its relevance is that it can provide small loans with repayments over short periods to informal settlers for home improvements or extensions undertaken as incomes improve. Recurring small loans once the loan is paid off, another is taken out matches the incremental process that informal settlers follow to build houses. And these extensions are often used for income earning opportunities by renting the rooms financed or through the conversion of part of the house for commercial and business activities. Other income generating activities too can be supported through micro finance for micro-enterprises and small businesses through working capital and investment loans, perhaps under a specific program for informal settlers. The employment generation impact of such a program would be significant. Community finance, a close cousin of microfinance, provided through community development funds offers a reliable alternative in the provision of housing and infrastructure in low-income communities. The approach can be used to subsidize small-scale infrastructure, provide finance, resolve land tenure issues by securing rights for informal settlers, and can support architectural, planning and construction assistance. Communities are at the center of the approach, which involves interaction and partnerships with local governments and other parties. 93

145 Social housing finance bring in the private sector Both the proposed sites and services and informal settlements upgrading programs would require adequate buyers finance to be made available. SHFC is the obvious agency for this, but it would be worth exploring the possibility of private banks providing such finance by opening up special windows for low-income housing. Mortgage terms, however, would be at or near market rates these windows would cover facilities for providing loans to purchase land occupied by informal settlers or for new sites and services development, for instance. Another alternative for informal settlers living on government property would be to lease land to them under renewable year leases with options to purchase at any time or adopt usufruct arrangements. Annual ground rents would be charged for the use of the land in both cases, but this would be less than paying the purchase price of land, even in installments. Purchase could take place once household incomes had increased sufficiently to make such a sale affordable. However, this requires that financing institutions accept such contracts as security for loans. Alternatively, it is worth exploring the possibility of privatizing SHFC by selling initially say 51%-60% of its shares to the private banking sector, perhaps encouraging a similar ownership structure to that of the Local Government Unit Guarantee Corporation (LGUGC) 46. In the interim, a prospectus of SHFC should be prepared after a thorough review of its financial condition, assets, liabilities and equity. This would need to identify the items to be cleaned up on its balance sheet, bad debts which should be written off, and the arrears on its mortgage loans which would need to be reduced through the imposition of sanctions on those who are behind in payments. Non-essential functions should be shed. Institutional reform more leadership, a wider vision and improved skills at national level At the national level, the institutional debate is concerned with strengthening HUDCC by perhaps reconstituting it as a National Housing Board, or creating a Department of Housing and Urban Development (DHUD). But this is not the real issue functions of such a national body need to be defined first, and then followed with the design of the institutional structure to make it happen. Functions must be centered on urban development and shelter policy, planning, monitoring and evaluation of government s interventions, and on the sector overall. Focus needs to be on developing the capacity for strategic urban development and urban renewal/regeneration. Today, HUDCC follows rather than leads in policy formulation, and has little influence over urban renewal or informal settlement upgrading programs at the local level or those of other public agencies. Urban development and shelter planning is disjointed, and HUDCC has failed to show any leadership or have much influence on urban policy. Dissemination of knowledge and good practice in the sector is limited. And since HUDCC neither guides policy nor leads the operations of key shelter agencies (KSAs), they lack a clear vision of what they should be doing for informal settlers, and how they will accomplish this. Even though the HUDCC Chairman is the head of the boards of KSAs, coordination between them is not all that it could be. And there needs to be much better liaison and joint working with the Department of Interior and Local Government (DILG), the local governments, MMDA, SBMA, BCDA and its subsidiaries, PRA, and PCUP, especially regarding urban development/renewal projects and strategic city planning. 46 LGUGC was incorporated on March 2, 1998 with the primary mandate of granting local governments access to private sources of capital by providing credit enhancement to their debt. Its credit enhancement facilitates the entry of local governments with development projects in the capital market. LGUGC is a private corporation, owned 38% by the Bankers Association of the Philippines (BAP), 37% by the Development Bank of the Philippines, and 25% by the Asian Development Bank. BAP is the umbrella association of chief executives of all commercial and universal banks in the country, both private and government. 94

146 Perhaps these problems persist because capacity within HUDCC is still weak, and is compounded by the limited skills within the KSAs, and the local governments. Much of the problem lies at the local level where city planning lacks a strategic dimension, there are no clear visions regarding urban renewal and informal settlement upgrading, and when undertaken, it is neither integrated with shelter nor city planning. Spatial and investment planning are seldom linked effectively; project identification, feasibility and packaging is poor; and the ability to mainstream disaster risk reduction management and climate change adaptation and mitigation into city planning and the project development cycle is lacking. Neither HUDCC nor the KSAs are leading the way in improving capacities at the local level. Instead this is spearheaded by the DILG, who have too little training or updated knowledge of urban development and shelter, and related policies. Capacity development for HUDCC and the KSAs needs to focus on strategic city planning and urban policy formulation, innovations and good practice in urban renewal and informal settlements upgrading, and on program formulation and project identification, feasibility and structuring. For informal settler housing upgrading, the skill sets to be developed can cover community involvement, innovative architecture and engineering, low income housing finance including micro finance and community finance and land management land polling and readjustment. These skills need to be passed onto the local governments. Local government to lead a sustainable urban renewal performance fund and partnerships The subsidiarity principle would be exemplified by putting local governments firmly in the driving seat. National government needs to make it clear that housing is a local government responsibility, and help to build up the necessary capacities and organizational arrangements locally. Both the DILG and the NHA should be tapped for this the latter for its almost now forgotten slum upgrading experience and knowledge which still exists in some departments. NHA could also implement demonstration informal settlements upgrading projects in partnership with selected cities as a form of on-the-job training. Implementation of the capacity development program could start with the independent cities, where needed, and later be extended to the provinces who, with the help of the cities, could train municipality staff over the mid-term. Local governments need an effective institutional arrangement for planning and delivering urban renewal and its integrated informal settlement upgrading component. At present, many departments are involved in related aspects local shelter offices, city planning departments, engineering departments, urban poor offices, disaster risk management offices, among others. Although many local governments have established local housing boards, an operational focal point is needed in most. Housing and informal settlements upgrading is best when seen by a local government as part of an overall urban renewal program. A clear vision towards sustainable and livable neighborhoods is a must, whether they are informal settlements or new areas planned and serviced by appropriate mass public transport. Worldwide experience shows that local partnerships with communities and the private sector work best for urban renewal. Any new institutional arrangement within local governments needs to ensure an appropriate vehicle through which to implement urban renewal. Often, local area specific companies or partnerships, which are wound up after their objectives are accomplished, are best. These partnerships would prepare, design and coordinate the implementation of urban renewal projects in partnership with communities, the private sector and other government agencies. Cities need an operational unit to implement such partnerships. Housing and urban renewal authorities are one way forward. They would encourage the establishment of, and provide the cities with a vehicle through which they could receive funds, whether through loans, donations or grants, and channel investments into local, area specific urban renewal or regeneration partnerships. 95

147 Funding for the urban renewal/regeneration programs of local governments could be provided under an arrangement that is similar to the Performance Fund for Local Government Units, which provides counterpart grant funding on the condition that a local government complies with certain eligibility criteria. The local government urban renewal/regeneration fund could be provided as matching funds 47 to those authorities that have an approved long-term integrated shelter and urban renewal/regeneration plan, which includes a major informal settlements upgrading component; to those who pursue effective enforcement against squatting; and to those that have an appropriate institutional arrangement to implement the program. The money would be in addition to and independent of the internal revenue allotment. 7.3 Defining the Pathways to Reform This section has summarized some of the key problems identified in the earlier sections, and has given an indication of the directions of change and reform that could be pursued by government. At this stage, these are pointers to the contents of an effective strategy for improving living conditions of informal settlers. But this is the first step, and other ideas may be tabled. This section has been drafted to stimulate discussion, and observations and suggestions will be substantiated and developed further during the next phase. More detailed recommendations and supporting actions will follow the discussion of the pathways as part of the NISUS strategy formulation. 47 This could be on a 50:50 sharing basis between national and local government, but a 75:25 split in favor of the national government is likely to be more attractive in the early stages of implementation because of the local government resource constraints. 96

148 ANNEX 1: FIRST SEMESTER 2012 PER CAPITA POVERTY THRESHOLDS AND POVERTY INCIDENCE AMONG FAMILIES, BY REGION AND PROVINCE FIRST SEMESTER PER CAPITA POVERTY THRESHOLD AND POVERTY INCIDENCE AMONG FAMILIES, BY REGION AND PROVINCE: 2006, 2009 AND 2012 Per Capita Poverty Threshold (PhP) Poverty Incidence among Families (%) PHILIPPINES 6,703 8,448 9, NCR 7,718 9,456 10, st District b/ 7,718 9,456 10, nd District b/ 7,718 9,456 10, rd District 7,718 9,456 10, th District b/ 7,718 9,456 10, CAR 7,031 8,492 9, Abra 7,273 8,753 9, Apayao b/ 6,835 8,210 9, Benguet b/ 6,744 8,096 9, Ifugao 7,183 8,647 9, Kalinga b/ 6,518 7,843 8, Mt. Province b/ 7,598 9,129 10, Region I 7,086 8,729 9, Ilocos Norte b/ 7,345 8,979 9, Ilocos Sur b/ 7,290 9,135 10, La Union 7,017 8,607 9, Pangasinan 7,031 8,660 8, Region II 6,984 8,566 9, Batanes a/ 9,022 11,084 13, Cagayan 7,222 8,875 9, Isabela 6,849 8,421 9, Nueva Vizcaya b/ 6,802 8,365 9, Quirino 6,640 8,141 9, Region III 7,344 9,251 10, Aurora a/ 6,798 8,481 9, Bataan 6,874 8,707 9, Bulacan 7,204 9,012 9, Nueva Ecija 7,908 9,925 10, Pampanga 6,850 8,420 9, Tarlac 6,910 8,622 9, Zambales b/ 7,229 9,086 10, Region IV-A 6,611 8,481 9, Batangas 6,823 8,604 9, Cavite b/ 6,576 8,200 9, Laguna 6,758 8,631 9, Quezon 6,293 7,945 8, Rizal 7,356 9,300 10,

149 Per Capita Poverty Threshold (PhP) Poverty Incidence among Families (%) Region IV-B 6,238 7,751 8, Marinduque 6,296 7,812 8, Occidental Mindoro b/ 6,414 7,966 8, Oriental Mindoro b/ 6,604 8,207 8, Palawan b/ 5,741 7,149 8, Romblon 6,298 7,737 9, Region V 6,618 8,420 9, Albay 6,855 8,732 9, Camarines Norte b/ 6,439 8,221 9, Camarines Sur 6,726 8,578 9, Catanduanes a/ 6,469 8,210 9, Masbate 6,443 8,194 8, Sorsogon 6,389 8,172 8, Region VI 6,421 8,153 8, Aklan 6,680 8,440 8, Antique 6,474 8,215 8, Capiz b/ 6,794 8,663 9, Guimaras a/ 6,429 8,133 9, Iloilo 6,367 8,112 9, Negros Occidental 6,296 8,002 8, Region VII 7,269 8,648 9, Bohol 7,100 8,399 9, Cebu 7,657 9,052 9, Negros Oriental 6,668 7,912 9, Siquijor a/ 7,068 8,357 8, Region VIII 6,266 8,107 8, Biliran 5,851 7,600 8, Eastern Samar 6,566 8,539 10, Leyte 6,350 8,276 8, Northern Samar 6,601 8,607 9, Southern Leyte b/ 6,196 8,078 9, Western Samar 5,486 7,155 7, Region IX 6,159 8,053 8, Zamboanga del Norte 6,723 8,717 9, Zamboanga del Sur 5,764 7,479 8, Zamboanga Sibugay 5,600 7,183 8, Isabela City a/ 6,331 8,229 9, Region X 6,450 8,456 9, Bukidnon 6,515 8,588 10, Camiguin a/ 5,878 7,834 9, Lanao del Norte 6,285 8,302 9, Misamis Occidental b/ 6,030 7,941 8, Misamis Oriental 6,737 8,861 9, Region XI 6,721 8,547 9, Davao del Norte 6,746 8,580 10, Davao del Sur b/ 6,712 8,550 9,

150 Per Capita Poverty Threshold (PhP) Poverty Incidence among Families (%) Davao Oriental 6,565 8,348 9, Compostela Valley 6,869 8,752 10, Region XII 6,619 8,126 9, North Cotabato 5,963 7,321 8, Saranggani 6,422 7,890 9, South Cotabato b/ 6,858 8,439 9, Sultan Kudarat 6,925 8,508 8, Cotabato City a/, b/ 7,459 9,172 10, Caraga 6,996 8,905 9, Agusan del Norte 6,943 8,860 9, Agusan del Sur b/ 7,292 9,251 9, Surigao Del Norte 6,980 8,881 10, Surigao Del Sur 6,734 8,571 9, ARMM 6,319 8,257 10, Basilan 6,347 8,191 9, Lanao del Sur 6,443 8,309 10, Maguindanao 6,241 8,048 9, Sulu 6,860 8,837 9, Tawi-tawi b/ 5,691 7,289 8, Notes: a/ Province with sample size less than 100. b/ Coefficient of variation of 2012 first semester provincial poverty incidence among families is greater than 20%. Source: National Statistical Coordination Board 99

151 ANNEX 2: ACCOMPLISHMENT OF THE NATIONAL GOVERNMENT: HOUSING AND SECURE TENURE PROVISION FROM 2001 TO 2013 HOUSING AND SECURE TENURE ACTUAL ACCOMPLISMENT REPORT SUMMARY (In Households Assisted) Units Values Units Values Units Values Units Values Units Values Units Values Units Values 1. NHA HOUSING PRODUCTION 1 19,278 1, , ,613 1, ,479 1, ,653 1, ,708 2, ,578 2, RESETTLEMENT 6, , ,131 1, , , ,390 2, , SETTLEMENT UPGRADING 5, , , , , , , AFP/PNP HOUSING OTHER PROGRAMS 6, , , , , , , COMMUNITY MORTGAGE PROGRAM 2 9, , , , , , , RETAIL & DEVELOPMENTAL FINANCING (TOTAL) 17,993 4, ,738 7, ,627 13, ,614 17, ,138 16, ,427 16, ,020 24, End-User Financing (HDMF) 3 16,194 3, ,125 5, ,035 9, ,562 14, ,175 15, ,066 16, ,367 23, GFIs End-User Financing 1, ,613 2, ,592 4, ,052 2, ,963 1, LBP SSS DBP GSIS ,726 1, ,127 3, ,721 2, ,835 1, TOTAL DIRECT HOUSING PROVISION 46,728 6, ,350 8, ,266 15, ,222 19, ,990 19, ,918 20, ,417 27, TOTAL SUMMARY (In Households Assisted) Units Values Units Values Units Values Units Values Units Values Units Values Units Values 1. NHA HOUSING PRODUCTION 1 28,778 4, ,997 5, ,034 3, ,321 7, ,221 18, ,908 4, ,849 55, RESETTLEMENT 18,674 4, , ,600 3, ,814 2, ,417 12, ,954 3, ,329 42, SETTLEMENT UPGRADING 6, , , , , , AFP/PNP HOUSING ,150 4, ,680 5, ,278 1, ,108 11, OTHER PROGRAMS 3, , , , , ,067 2, COMMUNITY MORTGAGE PROGRAM 2 9, , , , , , ,985 7, RETAIL & DEVELOPMENTAL FINANCING (TOTAL) 62,846 34, ,328 46, ,813 41, ,642 32, ,270 32, ,730 29, , , End-User Financing (HDMF) 3 62, , ,041 40, , ,898 31, ,484 29, , , GFIs End-User Financing , ,463 15, LBP ,200 3, SSS ,572 1, DBP , , GSIS ,002 10, TOTAL DIRECT HOUSING PROVISION 100,793 40, ,347 52, ,956 45, ,838 40, ,778 51, ,417 35, ,152, ,

152 SUMMARY (In Households Assisted) Units Values Units Values Units Values Units Values Units Values Units Values Units Values INDIRECT HOUSING PROVISION 4. PROVISION OF SECURE TENURE 116,262 29,590 20,256 44,248 11,784 15,082 51, Proclamation 6 87,762 29,590 20,256 44,248 11,784 15,082 51, Mt. Pinatubo 28, HGC (Total) 7 18,761 11, ,034 6, ,369 27, ,019 2, ,276 21, ,994 24, ,957 35, Retail Guaranty 16,413 11, ,737 6, ,072 27, ,119 21, ,962 24, ,740 34, Developmental Guaranty 2, , , Public Corporate Borrowings Securitization Cashflow 7,187 1, , ,859 1, ,909 2, ,986 2, ,414 1, ,187 1, NHMFC 8 Housing Loan Receivables Purchase Program (HLRPP) 7 HLURB License to Sell 97, , , , , , ,967 No. of LGUs provided assistance in CLUP SUMMARY (In Households Assisted) TOTAL Units Values Units Values Units Values Units Values Units Values Units Values Units Values INDIRECT HOUSING PROVISION 4. PROVISION OF SECURE TENURE 6,504 5, , Proclamation 6 6,504 5, , Mt. Pinatubo 28, HGC (Total) 7 31,936 25, ,164 23, ,404 45, ,009 37, ,637 32, ,894 10, , , Retail Guaranty 30,767 24, ,181 16, ,709 28, ,246 33, ,698 27, ,511 8, , ,092 Developmental Guaranty ,147 3,403 Public Corporate Borrowings ,206 4, ,594 16, ,191 4, ,560 4, ,379 2, ,105 32,430 Securitization ,466 1, , ,033 2,662 Cashflow 12,586 3, ,441 3, ,065 3, ,959 3, ,621 2, ,672 1, ,438 28, NHMFC 8 Housing Loan Receivables Purchase Program (HLRPP) , ,643 1, , ,014 2,507 7 HLURB 9 License to Sell 220, , , , , ,948 2,275,350 - No. of LGUs provided assistance in CLUP ,040 1,158 2,372 - Note: 1 NHA's Accomplishment Report as of December SHFC's Accomplishment Report as of November 2013; January to October 2011 report includes the take-outs from the Localized Community Mortgage Program (LCMP); 3 HDMF's Accomplishment Report as of November LBP's Accomplishment Report as of October SSS's Accomplishment Report as of December HUDCC Accomplishment as of September HGC's Accomplishment Report as of November NHMFC's Accomplishment Report as of November HLURB's Accomplishment Report as of December

153 ANNEX 3: LATEST GUIDELINES FOR THE SHFC DEVELOPMENTAL FINANCING COMPONENT (CORPORATE CIRCULAR AKPF #13) 102

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158 ANNEX 4: LGU COMPLIANCE WITH MEMORANDUM CIRCULAR LGU ACTIONS ON PREVENTION OF PROLIFERATION OF IFS 1 Pursuant to MC No dated January 31, 2011 Prevention of Proliferation of Informal Settlers. In compliance with the said Memorandum Circular, LGUs from Regions IV-A, VII, IX, X, XII, CAR and NCR instituted the following actions: REGION IV-A IEC were conducted to all barangay officials regarding their mandate under the code to adopt measures to prevent and control the proliferation of squatters Relocation of households totaling 410 households Regular conduct of inventory of IFS in different barangays No housing projects in Balete and Laurel Municipal coordination with different barangays to monitor IFS Ongoing identification of possible sites for relocation Existing GK and CSAP housing Project Dialogue/consultation to address to address the problem of IFS Assistance given to property owners in the settlements of disputes regarding squatting problems LGU remains vigilant in preventing new IFS from coming in all IFS along the lake, shorelines, and riverbanks LCE closely monitor the actions of all Punong Barangays to prevent and control of the proliferation of IFS Continuous relocation with the help of Gov. Ynares REGION VIII Has provided programs and projects to IFS with initial total of P4, Ongoing dialogue with families living along the riverbanks Extended shelter allowance to IFS and has identified lot for socialized housing site Punong Barangays were called for strict compliance of said MC REGION IX Adopted measures to effectively curtail and minimize the number of IFS Info dissemination conducted by the LGU through the Municipal Planning Office Discussed with all Punong Barangays re measures to be adopted in their respective area of responsibility. REGION X Data collection and relocation issue referred to the Liga ng mga Barangay LGU has already procured a piece of land each to relocate IFS Issued instruction to concerned offices to mitigate illegal construction, strict implementation of the National Building Code 1 Source: TWG on Informal Settlers, DILG Presentation, August

159 REGION XI CAR LGU is planning to buy a resettlement area 477 IFS in danger areas, road right-of-way Households were seen in the hospital sites Formal transfer of land ownership to the occupants of BLISS Housing Project Shelter assistance, livelihood assistance Formulation of IFS Data Bank, local shelter plan formulation 108

160 ANNEX 5: WRITE-UP OF LESSONS LEARNED EXPERIENCE IN INFORMAL SETTLEMENT UPGRADING AND LESSONS LEARNED 1. Lessons Learned from National Slum Upgrading/ Housing Policies 1.1 Viet Nam s National Upgrading Strategy. The Government has initiated the development of a national strategy to scale-up slum upgrading and provide better housing and services to the urban poor. This strategy targets the provision of basic infrastructure in low-income urban areas, improving security of tenure, extending access to affordable credit, and improving standards and norms to encourage innovation and progressive improvements. 1.2 Brazil s first National Housing Plan: The Cities Alliance supported the development of Brazil s first National Housing Plan, which provides goals and targets for meeting the housing needs of a select population in the lowest income brackets and the emerging middle class over a period of 16 years. The National Housing Plan was the first step towards a new subsidies model implemented through the My Home, My Life (Minha Casa, Minha Vida) program, which aims to build 3.4 million houses by A benchmark for Brazil s housing policy, the program significantly scales up the level of individual subsidies and availability of funding for subsidies and finance. My Home, My Life is part of Brazil s massive Growth Acceleration Program (PAC), which includes slum upgrading and housing as a national priority. 1.3 Indonesia s Slum Alleviation Policy and Action Plan: The government initiated the development of a national slum upgrading policy and action plan that addresses the needs of the poor living in urban slums in three main areas: (i) land tenure; (ii) access to housing finance; and (iii) housing stock. The primary objective is to develop a national slum upgrading and slum prevention policy and strategy that will define the role of the national government so that it can enable local governments to promote the upgrading of existing slum settlements and put in place policies and programs to adequately house growing urban populations. The initiative is expected to raise awareness about the scale of the slum problem in Indonesia and establish a clear national policy framework for coordinating slum upgrading efforts. 2. Lessons Learned from Specific Slum Upgrading and/or Housing Programs 2.1 The Baan Mankong/Secure Housing Program (Thailand) In January 2003, the Thai government announced two new programs for the urban poor that seek to reach 1 million low-income households. The first of these is the Baan Mankong ( secure housing ) program, 2 which is implemented by an independent government agency called the Community Organizations Development Institute (CODI). This community upgrading project, is a particularly successful example of housing improvement, land-tenure security, and infrastructure development that places slum communities at the center of the upgrading process. 2 The second is the Baan Ua Arthorn Program, through which the National Housing Authority designs, constructs and sells ready-to-occupy flats and houses at subsidized rates to lower-income households who can afford rent-to-own payments of US$ per month. 109

161 Lessons learned from Baan Mankong: 3 With proper support the community members themselves can design housing and environment. The program gave the poor communities and stakeholders in each area key participatory roles in developing and executing the overall community plan. All stakeholders must be identified so the proposed program can be fully explained and understood. Horizontal learning and sharing among communities and cities. Successful experiences of other communities can add great value to and boost confidence of communities that are just embarking on the redevelopment process. Community savings and credit is key to enabling the community to manage finances for their own upgrading. Organizing cooperative savings groups in every community is a key element that not only mobilizes and strengthens local resources and builds collective management skills. Developing and sharing survey information. The use of satellite-based GIS and other information technologies has allowed CODI and its Baan Mankong project to develop a massive database on poor housing communities nationwide. Enabling communities to go beyond physical upgrading initiatives. Use the upgrading process to restructure social organization, financial capacities, welfare and management capacities. Early engagement with municipal officials. To ensure that proposed plans of the communities will be successfully endorsed and supported by municipal officials, a key part of the whole process is engaging in early dialogues. During this initial period, community members learn that their joint efforts are powerful enough politically to achieve their quest for better environments. 2.2 Bairro Legal Program (Sao Paolo, Brazil): The Cities Alliance has collaborated with the São Paulo Municipal Housing Secretariat (SEHAB) on a citywide slum upgrading program since As a result of the partnership, the Municipality of São Paulo established the Bairro Legal (Nice/Legal Neighborhood) Program, an initiative providing security of tenure and improved living conditions for slum dwellers. The Municipality also created HABISP, a centralized database with information about the city s precarious settlements that has become a valuable tool for urban development. Plans are underway to introduce HABISP into metropolitan São Paulo, which has a population of nearly 20 million. Lessons Learned from Bairro Legal: One of the more central lessons is the importance of taking the long view. Doing so has ensured that this partnership could survive different city government administrations and leadership changes at the Cities Alliance. HABISP s use of scientific data for strategic urban planning is a ground-breaking model. In 2008, São Paulo, with the support of SEHAB and the Cities Alliance, organised a successful south-south knowledge exchange on slum upgrading for representatives of six large cities including Cairo, Manila, Lagos, Ekurhuleni and Mumbai. However, dissemination efforts need to be improved for HABISP to gain eminence in global urban planning discourse and practice. The progress made in the field of city law, represented by a set of land tenure regularization measures and rules on access to urban land that are found in the City Statute (Estatuto da Cidade) is one of the lessons worth sharing. 3 Tummanon, Anchalee; CODI s Forward-looking Strategic Initiatives; Asia Pacific Housing Journal 110

162 There are no secrets to the present progress in São Paulo. The lessons learned come mainly from good urban management, a stable and consistent political commitment, and active participation by the community, through involved citizens. Cities that plan to build their own information and management system for planning purposes must be prepared to make significant investment in human, technological and financial capacity building. As one of the wealthiest cities in the region, São Paulo is able to invest substantial resources in HABISP. Also, replicating HABISP in the exact form used by São Paulo is not recommended. It is essential that cities first assess their capacity and invest in building their own unique information system based on their specific needs and institutional knowledge. 2.3 Kampung Improvement Program (KIP) Surabaya, Indonesia Soon after the economic crisis that hit Indonesia in the late 1990s, architectural students from the Institute of Technology in Surabaya, the second largest city in the country, went to visit people in lowincome urban settlements (kampungs) to learn how they were coping with the crisis. Surprisingly, the economic crisis had little impact on the kampungs. Rather, the 1999 national economic and social survey showed that housing conditions in the kampungs even showed improvement. Results of the following year s population census supported this trend thus demonstrating the success of the Kampung Improvement Program (KIP). Surabaya and Semarang were the two cities that first implemented KIP in 1924, which focused mainly on sanitation. In late 1960s, Jakarta and Surabaya reintroduced and remodeled KIP. Surabaya managed to develop many models, including participatory approaches in the inner city and fringe areas. In late 1970s, KIP was implemented as a national program in all urban areas of the country. The Comprehensive KIP (C-KIP) was introduced in mid 1990s. The emphasis was on community development using institution building (to include revolving credit schemes) and infrastructure improvement as a means to strengthen community involvement in building kampungs. KIP has five important objectives: To strengthen and recognize the kampungs, which house 60 per cent of Indonesia's urban population; To integrate the kampungs with urban housing and services systems; To increase kampung community participation and empowerment; To stimulate the social and economic mobility of the inhabitants; and To ensure the sustained improvement of the quality of life in kampungs. Lessons Learned from KIP: Community based mobilization of resources and implementation activities are very effective while dealing with low-income group's problems. The sense of ownership is very important for its sustainability and better management, which comes through community empowerment. Setting up independent institutions in communities is one of the core important aspects of the program. KIP has helped to make city "inclusive", responsible and credible through community participation and activities that fostered a sense of belongingness. This experience has opened up new avenues for communities to realize their potential to do better things in future. 2.4 Viet Nam Project: The Viet Nam Urban Upgrading Experience As part of its efforts to scale up its upgrading programs, the Government of Viet Nam has formulated a National Urban Upgrading Program. Finalized in 2008, the program provides, for the first time, an 111

163 overall demand assessment and cost estimate for urban upgrading in low-income areas in more than 100 cities and towns throughout Viet Nam. Slums in Viet Nam - The magnitude and concentration of slums and squatter communities in Viet Nam is small relative to other countries. Minimizing slums through efficient use of land the major cost input to low-cost housing production. Minimum lot sizes. If land is 70 per cent of housing production cost, then reducing the minimum lot size allowance to 25 sqm 2 (66% reduction) brings down overall costs by 50 percent. This has enabled a market of low-cost housing to develop and low income groups to gain access to lower prices. Lessons Learned from Viet Nam: Project ownership by communities is key robust and meaningful consultations are critical to optimizing impacts and capture community preferences. Minimize resettlement impacts (expensive, transaction intensive, key source of implementation delays) Connectivity and integration of communities with the City Master/Development Plan. Don t create upgraded islands bring the communities into the city. Resettlement is unavoidable so high quality resettlement areas are critical for community support and to avoid delays. Focus on: o Resettlement sites must be close to original communities (1-5 km in Vietnam) o Amenities (schools, community centers, green space, markets) and good design are important Keep the project design simple and appropriate to existing capacity Urban upgrading can be complex and requires strong project management skills, and robust technical assistance and quality assurance arrangements. Flexible design standards that are site specific cookie cutters do not work for urban upgrading 3. Highlighting Critical Success Factors Institutional and Political Commitment. The Brazilian experience serves as a good model for interagency collaboration with very strong leadership as well as housing provisions. In Brazil the issue of political will has assumed a centrality that is matched in few other countries. Key factors include giving priority to a program by state or municipal authorities, as well as the commitment on the part of the different agencies involved and the ability to build bridges with other government entities and navigate political-administrative differences. The national government has put poverty at the top of its priorities and created a Ministry of Cities to spearhead and coordinate some of the new policy approaches even in the face of severe budget constraints. (Box 1). BOX 1: The Case of Brazil Brazil s larger cities have traditionally taken the lead in slum upgrading, most notably through the pioneering Favela Bairro program in Rio de Janiero and the Guarapiranga project in São Paulo. Throughout Brazil, municipalities have been moving from sectoral projects towards comprehensive upgrading frameworks designed to integrate slums into the city fabric. This is done by land tenure regularization, social development initiatives, and community participation schemes. Through the adoption of the City Statute, an innovative and far-reaching legal framework for urban policy has been created and incorporates a number of instruments that facilitate both informal settlement regularization and upgrading. Resulting from an intense negotiation process that lasted more than ten years, the City Statute confirmed and widened the legal and political role of municipalities in urban policy, while also fundamentally asserting a social approach to urban property rights, which will have a profound long-term impact on urban upgrading and social inclusion. 112

164 Regularization. Countries that have embraced nationwide upgrading approaches have moved away from a policy of forced evictions and become willing to consider a range of tenure options for the urban poor: Brazil: progressively designed and implemented instruments to facilitate informal settlement upgrading, with many innovations emerging at the local level before becoming more widely accepted. The Zones of Special Urbanisation (ZEIS) concept was first introduced in Recife in the 1980s and subsequently adopted by several municipalities. Thailand: One of the well-known innovations that has been developed and implemented is the land sharing scheme communities involved in land disputes are able to negotiate agreements with landowners in which some portion of the land is returned to the landowner, while the balance is sold, rented, or donated to the community to redevelop their housing. Viet Nam: Provision of tenure security through the issuance of Building Ownership and Land Use Certificates on a large scale to streamline land development procedures and help speed up the process. The government is also revising construction standards with a view to simplify them. Kaantabay sa Kauswagan: Iinstitutionalized a functional mechanism for permanently settling land tenurial problems between landowners and land occupants. These strategies include accessing various modes of land acquisition like direct purchase, land swapping, land sharing, community mortgage, and resettlement; institutionalizing a separate window catering specifically to urban poor clients of the lending arm of the local government; and evolving a financing scheme anchored on internally-generated resources of the beneficiaries. Functional partnerships. The Kaantabay sa Kauswagan program shows how a tri-partite approach of pooling resources and capabilities of private landowners, city and central government and the poor can be used to improve urban living conditions. City wide planning - all stakeholders come together and decide on ways to improve the slums in the city It is demand-driven by communities rather than supply-driven, as it supports communities who are ready to implement improvement projects and allows a great variety of responses, tailored to each community s needs, priorities and possibilities (for instance, communities choose how to use the infrastructure subsidy, which land to choose, what type of housing they like, etc.,.). 4. The Philippine Experience 4.1 Lessons Learned from Previous Slum Upgrading Policies Among the key lessons learned in the implementation of housing programs for the poor are the following: Achieving secure tenure through freehold imposes high transaction costs on the urban poor. Housing microfinance offers the possibility of sustainable, unleveraged finance for the poor. For resettlement programs to be effective, a multi-stakeholder approach is necessary and should not be supply driven. The national government alone will not be able to solve the socialized housing issue. Despite the promise of land proclamations and the abundance of public land for socialized housing, many have limited financial, technical, and managerial resources to develop and manage sustainable housing projects for the poor. Likewise, most local government units are averse to borrowing for socialized housing and to using their internal revenue allotment (IRA) as collateral for development. 113

165 Capacity building is generally needed for all stakeholders, including national government agencies, local governments, and community associations to ensure continuity and replication of viable housing projects. Traditional lending methodologies and policies will have to give way to more innovative and flexible practices, including those that use rights-based instruments and suitable microfinance programs. Few microfinance institutions are formally engaged in housing microfinance and will not engage in on-lending for home improvements and housing loans in large scale unless they are given incentives to build their capacity and develop and manage these financial products. 4.2 Innovations in the provision of housing The following are some significant innovations in dealing with housing issues in the Philippines: adoption of beneficiary-led resettlement programs; multi-sectoral partnership in the delivery of housing services; localization of the Community Mortgage Program; development of alternative modalities through partnerships with NGOs, homeowners associations, and private developers; encouraging the widespread application of tried and tested microfinance principles in housing the poor; enabling the use of rights-based instruments for distributing security of tenure and facilitating access to affordable and sustainable housing finance; strengthening the capacity of shelter agencies to support the scaling-up of sustainable pro-poor housing and urban redevelopment programs in Metro Manila; accelerating the proclamation of land for socialized housing and the conveyance of nationally owned public land to the LGUs committed to housing the poor and informal settlers; strengthening the LGUs capacity to develop and implement viable urban upgrading and renewal programs, providing access to affordable development funds, and encouraging private sector participation. 5. Others -- Specific Issues and Lessons Related to Infrastructure for Informal Settlements Upgrading Infrastructure is a major component of any slum upgrading project. Infrastructure, which includes the upgraded area or the resettlement with the basic services like road, drainage, water supply and sanitation facilities accounts for the bulk of the project cost. The approach to infrastructure has evolved over the years based on which practices are more sustainable and which are not. Present approaches combine site upgrading, resettlement and even direct compensation to affected families. Despite these interventions, slum population both here and worldwide still continues to rise to unprecedented proportions. Lessons from previous upgrading projects find that infrastructure without the other support components will not work. The following are the lessons learned from some of the major upgrading projects. 5.1 Tondo Foreshore Development Project The project was built within a reclaimed area adjacent to the affected families in Tondo, Manila. The security of tenure and the provision of basic services had encouraged the families to build their own quality housing which surpassed the most pre-project optimistic prediction. The extensive community 114

166 participation in upgrading and their becoming property owners with stake in the project contributed greatly to the project s success and stability. Financially, however, cost recovery was weak. Likewise, cross subsidies from commercial and industrial sales were disappointing. 5.2 Cities Alliance Projects Cities Alliance has been actively involved in various worldwide projects related to upgrading for the past 50 years. Their major lessons learned can be generally summarized in the following general observations: Upgrading is a viable, low cost and effective way to help urban poor solve their shelter problems Land and provision of services are necessary but so are viable interventions to meet this urban housing demand Land regularization may be an obstacle in future upgrading projects Lessons from the 80 s - The slum communities have more at stake and should be actively involved in decision-making. This is imperative since they know their community and their issues, will live with the results and will pay for the affordable improvement of their choosing. In the 90 s. There was a stronger participation of NGOs and the civil societies together with the increased involvement of the communities. The security of tenure is recognized as the key to a successful upgrading project. Among the important lessons learned during this decade are the following: LGU should make slum upgrading a core business through a budgetary commitment. Development should move away from a single non-replicable project to fundamental works implying a systemic reform at local/ national level. There is a need to involve the resources of slum dwellers and private sector. Cities Alliance s strategy at present. Presently, Cities Alliance adheres to the following strategies in slum upgrading: Improvement of political will Setting of national and LGU targets Inclusion of upgrading in the budget Implementation of policy reforms Ensuring open and transparent client market Mobilization of non-public sector resources Prevention of growth of new slums 5.3 World Bank s PHILSSA UPSURGE PHILSSA UPSURGE is a tripartite slum upgrading project between the LGU, NGO and the community which has a cost recovery component. The strategy for this project seems to have incorporated major lessons learned from previous upgrading projects. There is a very strong community involvement, from mobilization to capacity building to participation. It has a menu of services to be provided, categorized under physical/environmental and socioeconomic development subprojects which can be preselected with proper consultations with the community. It has six major components, ranging from 115

167 design/organization, community plan and mobilization, training and capacity building, institutionalization, learning and dissemination to PHILSSA support to the project implementation. 5.4 UN HABITAT SUF SUF supports the idea that site upgrading is a much better approach than slum redevelopment. Specifically, it adheres to the following principles: New initiatives should be preceded by institutional analysis to identify policies and procedures. These are experimental programmes and should have sufficient flexibility during implementation. Finance should have a supportive institutional environment. LGU powers and resources vary considerably and cookie cutter approach does not always work. Early engagement of local and national offices to include slum upgrading program into a comprehensive national housing policy is good. Sustainability guarantee requires proper sharing of risk to avoid moral hazard problem. Cross subsidies from sale/lease of high end apartment rarely produces enough revenues for affordability. 116

168 ANNEX 6: RESULTS AND DOCUMENTATION OF WORKSHOPS SUMMARY AND HIGHLIGHTS OF PROCEEDINGS Thematic, Sectoral and Regional Consultations for NISUS Project 1. Background & Introduction Under Phase 2, a series of thematic, sectoral, and regional consultations was held from mid- September to the first week of November 2013 as part of the inclusive and consultative approach of ICF GHK an essential prerequisite to the successful implementation of the NISUS project. HUDCC has learned through the years that continued efforts to facilitate informed dialogues and discussions on informal settlements upgrading is vital as the political, institutional, and economic landscapes of the country evolve. Furthermore, enabling the stakeholder groups to participate in the formulation of the strategy for informal settlements provides the ownership incentive that is necessary for sustainability. Towards this end, a series of consultations that will help to promote technical understanding and informed discussions on the nature, causes, and consequences of informal settlements in the Philippines was conducted. These discussions sought to facilitate a more in-depth appreciation for what constitutes the demand of informal settlers and how factors such as income, taste, preferences, and prices affect their demand. The consultations also provided a venue for learning exchanges on the supply side enabling the various stakeholder groups to access the latest information and knowledge about housing and basic urban services delivery systems working for informal settlements, not only in the Philippines and its neighboring Asian countries but from the rest of the world as well. The consultations gradually built consensus within each stakeholder group before convening all of them in a multi-sectoral setting to agree on the key approach and strategy. Once a consensus is achieved, the strategy will be owned not just by HUDCC and its consultants but by the various participants to the whole consultation process. The consultation series was key to drafting the Comprehensive Assessment Report which includes the final version of the problem tree on the sector and the preliminary Vision-Mission- Objectives (VMO) that will drive the proposed 20-year road map constituting the NISUS. For a successful transition to Phase 3, HUDCC believes based on lessons learned for this type of activity that the VMO should be defined and agreed by the end of Phase The Consultation Series Three types of consultations were conducted. At the start, thematic consultations on five areas were held to agree on the key technical issues core problems, causes and effects. The themes covered were: Citywide urban planning and low income housing; Socialized and pro-poor housing delivery systems Sustainable housing finance; Social and economic development; and Institutional strengthening and capacity development; The thematic consultations were followed by sectoral and regional consultations. Under the sectoral consultations, the following groups were targeted: public sector, private sector, civil society and community as well as people s organizations. Regional consultations recognize that the 117

169 Philippines is an archipelago comprising more than 7,000 islands grouped into three major islands. Hence, regional consultations were held in Luzon, Visayas, and Mindanao. 3. The Thematic Areas Consultations & Workshops 3.1 Schedules & Venue The 5 thematic consultations were all held during September. They were participated in by representatives of agencies directly or indirectly concerned with the particular thematic area. Table 1 summarizes the dates and venue of the activities. The number of participants per thematic area is also indicated. Table 1: Summary of Thematic Consultations Schedules Thematic Area Date & Time Venue Citywide urban planning and lowincome housing Socialized and Pro-poor Housing Delivery Systems 13 September :30 a.m. 11:30 a.m. 27 September :30 a.m. 11:30 a.m. TERRA FUNCTION ROOM 5/F, Serenity Tower Sustainable Housing Finance 27 September 2013 BEST WESTERN 1:30 p.m. 4:30 p.m. Antel Hotel Social and Economic Development 30 September Makati Avenue 8:30 a.m. 11:30 a.m Makati City Institutional Strengthening and 30 September 2013 Capacity Development 1:30 p.m. 4:30 p.m. No. of Participants List of Participants The list of participants in each of the thematic consultations are presented separately as an annex to this report. In sum, the average attendance per thematic consultation was 34 individuals some attended more than one thematic area. 3.3 Workshop Objectives and Process Each of the five thematic area consultation and workshop was half a day long and followed the same program of activities as described in Table 2 below. In each instance, a member of the ICF GHK Team directed the program flow by introducing each activity, the assigned presenter or resource person, and moderating the question and answer portion. Table 2: Program of Activities of the Thematic Consultations & Workshops Registration of Participants National Anthem and Opening Prayer Opening/Welcome Remarks from HUDCC Introduction of Participants Backgrounder on NISUS and the Consultation Workshop and Problem Tree Analysis: First Step to Program/Project Design (ICF GHK) Presentation of Thematic Area (ICF GHK) Reactions from Panel of Resource Persons Question and Answer 118

170 Workshop Groupings and Mechanics (ICF GHK) Workshop Proper /Small Group Discussions on the Proposed Problem Tree Workshop Group Presentations Synthesis (ICF GHK) Closing Remarks (HUDCC) Opening Remarks. Director Zacarias Abanes was mainly HUDCC s representative who opened the activity and officially welcomed the participants in the different thematic consultations. He stated that their presence in the meeting despite their busy schedules demonstrates the importance of the work that has to be done. He stressed the importance of enabling different stakeholders, and that the consultations are intended to provide technical understanding and inform the major causes and consequences of informal settlements. HUDCC is committed to improve the quality of life of informal settlers and help them fulfill their dreams of having access to adequate housing. He expressed gratitude to the World Bank for extending technical assistance to the project to help the national government and LGUs to formulate policies and programs for the informal settler families. Background of NISUS and Problem Tree Approach. In all of the sessions, a member of the ICF GHK NISUS team provided the overview of the project, the objectives of the technical assistance, and the inclusive and consultative approach to formulating the strategy. The ultimate objective of the TA is to formulate a strategy and achieve consensus among the different stakeholders on the strategy which will include a 20-year roadmap for the sector. Central to the discussion is the approach using the problem tree analysis as a diagnostic tool and first step to program or project design. It is important to identify the problem correctly as without this one can not proceed to formulate strategy and the foundations to solve the problem. The objective is to appreciate, and arrive at a consensus on what the core problem is of the IS with respect to the thematic area discussed. Presentation by NISUS Consultants. The ICF GHK Consultants prepared their presentations specific to the thematic areas. Each presentation consisted of a brief situational assessment related to the topic and followed by a preliminary problem tree highlighting the core problem, causes and effects. A summary of the presentations is provided in the ensuing section (3.4). Reactions from Resource Persons. Following each presentation, a panel of reactors provided their insights on the thematic area. This is meant to enhance, strengthen, and broaden the understanding of the key technical issues raised. Some took the opportunity to share what their agency, institution, or local government is doing or has done related to the thematic area. The reactors and their responses to the presentations are included in a separate section (3.5). Workshop Mechanics. The participants were divided into two workshop groups that were tasked to discuss the preliminary problem tree, react to it, comment on it and revise it if deemed necessary. The group discussion focused on the particular theme of the consultation workshop. Members were advised not to introduce other topics outside the thematic area (Box 1). BOX 1: The following guide questions helped to keep the discussion focused: Do you agree with the stated core problem? If you don t, how can it be restated? Do you agree with the stated effects of the core problem? If you don t, what will you change and how? Do you agree with the underlying causes of the core problem as presented? If you don t, suggest changes. 119

171 3.4 Summary of Presentations and Preliminary Problem Trees Citywide urban planning and low income housing Presenter: Mia L. Quimpo, Urban Planning Specialist In the presentation, it was raised that the urgent need for systematic citywide urban planning that incorporates socialized housing does not seem to be a priority of LGUs. Planning on the local level should take into account the nature, causes and consequences of the demand for socialized housing, particularly in the urban areas. Community-driven development planning must be a primary consideration in citywide urban planning. Table 3: THEME CORE PROBLEM CITYWIDE URBAN PLANNING AND LOW INCOME HOUSING Local land use planning & standards are not inclusive of socialized housing THE EFFECTS Proliferation of slums without access to basic services and employment Land is not unlocked for socialized housing Informal settlers are exposed to continuing health and environmental risks Constrained local economic development and growth THE CAUSES Weak technical capability at the local level Lack of qualified staff No dedicated staff to shelter planning Limited access to training and capacity development Ineffective planning standards Standards not reflective of current planning norms and practices Planning in isolation; cookie-cutter approach Hardly recognize communities as the planning unit Insufficient planning for informal settlements Confusion about informal settlers rights and entitlements Failure to recognize the informal sector s contribution to the local economy Inability to match housing products and services with effective market demand Mindset that socialized housing is a social service, not an investment in the city s future. Socialized and pro-poor housing delivery systems Presenter: Roy A. C. Brockman, Housing and Institutional Development Specialist The presentation entitled Delivering Homes and Sustainable Neighborhoods dwelt on developing a set of actions that are focused on: (i) turning informal settlements into sustainable neighborhoods; (ii) responding to housing need in a way that maximizes choice and responsibility; (iii) effectively delivering accommodation programs rental, purchase and improvement. It presented the components of delivery to affordable housing and sustainable neighborhoods which include land and infrastructure; land use and building regulations; new and improved housing; and enforcement. 120

172 Table 4: THEME CORE PROBLEM THE EFFECTS THE CAUSES SOCIALIZED AND PRO-POOR HOUSING DELIVERY SYSTEMS Insufficient supply of affordable and adequate housing for informal settlers Proliferation of informal settlements Overcrowding of existing low income housing Considerable stock of legal but poor quality housing Deteriorating environment of neighborhoods Inadequate supply of new housing units Low production of public sector Minimal involvement of LGUs Focus on resettlement, rather than upgrading Limited involvement of civil society programs not gone to scale Private developers unwilling to go downmarket Unavailability of affordable land Destruction of housing stock Inappropriate model for slum upgrading slum clearance is the preferred approach Land needed for new public infrastructure Relocation of settlers living in danger areas Damages to houses caused by natural disasters & climate change Weak enforcement Of land use planning regulations Of building codes Of anti-squatting measures Of the 20% balanced housing provision of UDHA High demand, low purchasing power In migration to cities that leads a rapid urbanization High birth rate that leads to significant new household formation Low-incomes limited affordability Unsuitable land use & building regulations Relatively high building standards increase housing costs/prices Inappropriate land use regulations for socialized housing High transactions costs Lack of regulations for building resilience against disasters & climate change Sustainable housing finance Presenter: Felicidad G. de Leon, Deputy Team Leader/Housing Finance Specialist The topic emphasized the importance of enabling access, cost recovery, and replicability. It examined whether the government s socialized housing financing programs meet the affordable limits of the target clients. It also looked at whether the subsidy structure is actually provisioned for socialized housing beneficiaries. Table 5: THEME SUSTAINABLE HOUSING FINANCE CORE PROBLEM THE EFFECTS Inadequate access by informal settlers to affordable housing finance Proliferation of informal settlements Overcrowding of existing housing stock in urban centers 121

173 Table 5: THEME SUSTAINABLE HOUSING FINANCE Environmental degradation leading to public health risks More ISFs live in areas prone to natural disasters and other safety risks THE CAUSES Low affordable limits of ISF Lack of employment opportunities Inadequate skills to match employment opportunities Limited access to capital for livelihood micro- and small enterprises Low income primary housing mortgages are not investable commodities Poor collections Difficult and costly to foreclose on the mortgages Returns are low or even negative Inappropriate lending instruments for the ISFs Inflexible and costly security requirements Mismatch between repayment terms and the regularity of ISFs income Lack of facilities for incremental lending to match incremental housing construction Policies discourage private financial sector participation Interest rate subsidies of the government Stringent underwriting requirements Incomplete process for conversion of RBIs into negotiable instruments Secondary mortgage market not appropriate yet for socialized housing Underdeveloped primary mortgage market Complex and variable underwriting requirements High transaction costs Housing microfinance has not achieved scale Most MFIs operate locally and have limited resource base Many MFIs do not see housing as their core business Limited capacity to participate Social and economic development Presenter: Dr. Juliet Villegas, Social Development Specialist This theme reviewed the state of poverty in the country and the urban socioeconomic situation. It emphasized the comprehensive and integrated approach required for sustainable informal settlements upgrading. Data on informal settlers per region; estimated number of ISFs in the NCR; and statistics on unemployment and underemployment were presented. Table 6: THEME CORE PROBLEM THE EFFECTS SOCIAL AND ECONOMIC DEVELOPMENT Unfocused and inadequate socioeconomic policies and programs for the informal settlers Slums proliferate in urban areas with inadequate basic physical infrastructure, housing & support services Millions of the urban population are unskilled and unhealthy Urban poverty incidence remains unchanged encouraging offshore migration 122

174 Table 6: THEME THE CAUSES SOCIAL AND ECONOMIC DEVELOPMENT Increased livelihood and income risks and vulnerabilities due to extreme weather events or hazards Unsustained efforts on local economic growth and job creation Insufficient investments in job creation and skills development for the urban poor Inadequate incentives for micro-, small, and medium enterprises Limited access to capital and land, including security of tenure, by ISFs Insufficient attention to local economic development planning for informal settlement Lack of evidence-based and systematic social protection mechanisms Many weak and unfocused social development programs Lack of coordination among the various government agencies and private sector Poor accounting and monitoring of performance targets Limited investments in education, health and human capital build-up Inadequate facilities for health and education Poorly conceived and implemented education and health programs Increasing environmental and climate change risks Rapid and uncontrolled population Unprepared and ill-equipped ISFs for climate change adaptation and disaster risk reduction and management Institutional strengthening and capacity development Presenter: Roy A. C. Brockman, Housing and Institutional Development Specialist The presentation centered governance and change and how transforming housing for informal settlers is a governance challenge. To confront the core problem the following are needed: (i) embrace change; (ii) improve governance; and (iii) accomplish both through business transformation. Four elements are critical in the pathways to transformation people, structure, policy and finance. Table 7: THEME Institutional strengthening and capacity development CORE PROBLEM THE EFFECTS THE CAUSES Inadequate institutions for informal settler housing Growth of informal settlements Poor urban fabric Congested and polluted cities Many live in danger areas Inadequate financial model Finance Low-income mortgages are unattractive investments System relies on expensive interest rate subsidies Pricing not linked to investment targets Insufficient access to private and community finance Too few tax incentives What change is needed? What will it look like? What business transformation is needed? How do we manage the transition? What will the institutional set-up look like in five to ten years? 123

175 Table 7: THEME Institutional strengthening and capacity development Unintegrated and ineffective Policies Inefficient housing subsidy policy Inappropriate model for slum upgrading Lack of political support for in-situ slum upgrading Policies on enabling resilient housing lacking Non integration of shelter, economic and urban development policies Inadequate regulatory policies Inefficient and fragmented institutional framework Structure Overlapping functions of NHA, SHFC and LGUs for informal settlements Lack of coordination between agencies (DILG, HUDCC) Housing finance agencies under HUDCC and not MOF Many LGUs reluctant participants in housing Overlapping mandates Too few partnership with private sector and civil society Staff weaknesses People Leadership changes accompany political change poor quality of leadership Weak knowledge, skills and capacities in public and private bodies and civil society Resistance to change Limited ability to embrace new skills and approaches Weak enforcement capacity 3.5 Reactions from the Panel Table 8 below summarizes the reactions and issues raised by the panel of resource speakers. Table 8: Summary of Reactions from the Panel RESOURCE PERSON Citywide Planning and Low-Income Housing Nathaniel Dinky von Einseindel Director, CONCEP, Inc. (Consultants for Environmental Planning) REACTIONS / COMMENTS IS is a very visible manifestation of poverty. For as long as we have poverty there will be informal settlements There is a very strong mindset that IS are generally seen as blighted areas which do not maximize the economic productivity of the land. This is related to the capitalistic economic mindset of people. IS need to be cleared and relocated somewhere else for the highest and best use of the land Long history in addressing the IS late 60 s up to now. We know what works and hasn t, why some succeeded and why it didn t but problem doesn t seem to go less because of rapid urban and population growth. Urban centers and poor migrants are coming from NUHDF LGUs are doing or not doing provincial land use committee; CLUPs for submission; committees exist only on paper; many are understaffed or not qualified; tendency is just to take the document and check the table of contents if the sections are there, then approve Made a list of causes LGUs do not have land; a lot of difficulty acquiring land for social housing; no financial resources to buy land bur advertise properties for auction that do not pay taxes; lack of technical capability of manpower in LGUs; head of city planning are not planners or housing experts; superficial appreciation of real needs No clear policy on how to address human settlements; only see them as blighted areas; purchase property and distribute as is where is without improvements; example of Makati cemented roads but 4m wide, not enough parking space 124

176 RESOURCE PERSON Mr. Lito Adelfo City of Manila Representative Ms. Ofelia Bagotlo National President Homeless People s Federation, Inc. (HPFI) REACTIONS / COMMENTS Staff have no clear understanding of how urban development per se, how it happens, what prompts land development; know how IS happens but not the solutions to address them (50 min) Concentration on CLUP incorporating socialized housing; many are increasingly preparing shelter plans but no implementation mechanism; identified sites and accommodate no. of houses with costs; but can not defend plan to secure budget to implement plan Community initiated upgrading is the very complicated land registration system; organized communities find it difficult to acquire secure tenure; proclaimed lands have not been titled; title needed when borrowing from financial institutions Lessons from Brazil they also learned from us through the Tondo Foreshore Not only is shelter to be integrated with urban planning but also with urban management not only build houses but collect amortization (anything government is free); social preparation is lacking in many of the approaches. MRBs have rules and regulations require lifestyle change; can learn from MFI system go through orientation and values training; while housing is claimed to be a right, it carries responsibilities. Socialized housing is a social service when we consider that the poorest of the poor can not afford housing without any subsidy, housing is a social service, how else can they afford it. They can not afford the real cost. BLISS program many years ago is usufruct long-term lease, does not include cost of the land; question on policy with regard to rental housing A very large number of IS are renters; but tend to give too much emphasis on home ownership; if we are to introduce rental housing should not be the same building for ownership; with social transformation, the rental period can test if they can qualify for ownership Previous approaches that have been implemented in the past e.g. ZIP program, onsite upgrading of NHA; identified areas in MM which are targeted for onsite upgrading; BLISS medium-rise housing; not designed for the poorest of the poor, forerunner of Pag-IBIG housing Metro Manila the problems can no longer be solved within the boundaries of MM 16 cities and 1 municipality (Pateros); the built up area of MM has gone into Bulacan, Laguna, Cavite, and Rizal; A macro example of urban planning and housing and all other considerations are integrated Core city with surrounding municipalities that are interdependent; not only planning for the LGU boundary but also considering the adjacent municipalities similar to what J. Robredo did for Naga Charter RA 409 land for the landless program; beneficiaries are the actual occupants of the area; through expropriation they acquired the land to be distributed to the occupants; the beneficiaries will not follow the reblocking so they continue to be IS They already have subdivision plans, but physical aspect, they are still IS Other IS, RA 7279 these people are consulted and favor onsite relocation; offcity is not amenable There are residents that have ownership of land do not pay real estate taxes; public auction; 1-year redemption period to recover; buyer of auction land is hesitant because of the option to redeem; still problem of availability Social preparation IS and LGU have agreed on on-city relocation Participation of urban poor should be recognized; not in all municipalities; treated as foes ; they need to know how this benefits them, and how they can participate; they are open to ideas but need help understand Rapid urban population growth; Balik-probinsya program monitoring should be done well; ensure that they have opportunities in the province Not believe that urban poor consider that everything is free. They are able to pay. They need to be taught the value of paying Information and teaching Planning of city be part of it from the start Socialized housing: land use information and explanation (in particular BP 220); HLURB explaining the requirements; the responsibilities 125

177 RESOURCE PERSON Socialized and Pro-poor Housing Delivery Systems Juanito Tan & Maribel Lumang Makati City LGU Representatives REACTIONS / COMMENTS Recognize their initiatives Biggest contributor to the economic development Urban poor has been capacitized -- except for municipalities that don t see them positively High cost of land, especially in Makati- there is a national shelter program where there are shortcomings in terms of affordable housing. Description on relocation sites in Bulacan and Laguna: Makati s program in Bulacan and Laguna (Tanauan and San Jose, relocated from danger zones from the city). Include delivery mechanisms: strategies for resource mobilization (problem they are facing- what can be done for more PPPs to come up with more housing for ISFs) Causes of the core problem: weak link between public and private- we need to come up with a strategy to strengthen the private and public partnership. Provide incentives, etc. Sustainable neighborhood: include policies on ownership on affordable housing Community organizing and values formation: this is crucial and importantshould be developed to teach them to be sustainable on their own and not be too dependent on the government. Bulacan: Dream land village: sweat equity- values formation via Gawad Kalinga, social services extended in the area (presentation about their sites, Maribel Lumang) Question from Ms. de Leon: how long did it take to actually start the program? Maribel: started in the city procured 2 sites (Bulacan and Laguna). Roy: agree with the cause that there is a lack with regards to housing financefocus on the delivery side. How did you deal with the IS who went back? - Makati: through the peace and order council- get attention of the barangay captains on those who go back to their areas. They are then returned to their respective areas- most of the ISFs rent rooms or bed spaces nearer to their place of work and they rent out or let relatives live in their respective units. How do you ensure that these families have not been awarded? we give the list to NHA, and we also have our own data. Before giving the final list of beneficiaries- we do matching first to discover if there are families who were already awarded before either by the NHA or the city government. Question from Director Cruz: Rental housing? Our rental housing in Makati is for formal settlers- the rental is for employees and formal settlers. Arrangement with GK: find sponsors CSRs livelihood: agriculture and production Who spent for the reliable list of ISFs? Tagging, validation and mapping of ISFs City Hall Welfare has an annual budget for this. How do you prioritize? priority are those in the danger areas (as with National Government) (3 meter and 10 meter easement) What is the role of the Barangay and the City? Work hand in hand to execute program for ISFs- barangay- grass root level, front liners. Why was rental housing not offered to ISFs? as long as there are guidelines allotted for them (income bracket specified for them) Sustainable Housing Finance Erwin Embuscado MFIs- agree with the presentation regarding resource based- housing ASKI Representative microfinance as an incentive as we focus on micro businesses. Train on financial education, especially on the rural areas. We also will try our best to partner with PAGIBIG. Having a property/title is considered important to Filipinos. Social and economic development Evangeline Equipaje We have to define who are the informal settlers- general profile and database NHA Representative of all the settlers. 126

178 RESOURCE PERSON Maricel Genzola Foundation for the Development of the Urban Poor (FDUP) Ramon Falcon NEDA Institutional strengthening and capacity development Atty. Paul Vega Pasay City, UDHO Rey Lunas MMDA Felix Fuentebella Congressman, 4 th District Camarines Sur REACTIONS / COMMENTS Various definitions of the poor- we need to have face and names for all the kinds NHA- segregated in accordance to income, etc. a database that should be used by the government Financial literacy education Planning aspect should be strengthened, especially urban development (where to locate- zoning) How do we address the timely intervention to the growing social and economic problems? PESO should see to this (matching of skills, livelihood, matching of appropriate intervention based on the database, per group) Agree with the statement re core problem Concerns raised by the urban poor alliance (situation): inadequate facilities in resettlement sites (ex. water), lack of continued power supply, etc. Attention to LGU s providing shelter programs/socialized housing: providing outside of their area coverage usually do not turn over the relocates to the receiving LGU High incidence of disease and TB in relocation sites Skills matching- the skills we provide are home based and not industry based Economic performance- we are on track, but we need to improve on our socio economic aspects Challenges: constraints in budget (housing: less than 1% of the national budget), amendments to the laws on housing Migration (rural to urban) and rapid population growth Concern: fragmented institutional framework: holistic approach- interagency committee with the help of agency partners the LGU cannot do it alone. It should be a multi-agency thing. Proper social prep with emphasis on dissemination of information is important For sustainability and effectiveness of the program- we increase the involvement of the community in the clearing and cleaning operation (technical assistance) Still fine tuning the provision of livelihood to the communities Still need to see the commitment re policy Private sector participation is weak- but have we digested why? Private sector is motivated by profit. The institutions should provide incentives before we have the PPP Problem is political short terms of leaders, no continuity, etc Policies: problem with enforcement and implementation Updates on the pending bill for the creation of the Department of Housing and Urban Development (DHUD) Non-alignment of plans from top to bottom Basic services matrix/ tool that is easy for leaders and the community to use 3.6 Workshop results In a plenary session following the workshops, each breakout group presented their outputs with regard to their discussion on the preliminary problem trees. Their recommendations were subsequently processed and integrated by the Consultants to come up with the final thematic problem trees and an overall problem tree for the informal settlements in the Philippines. These are presented as an annex to this report. 127

179 4. The Sectoral Consultations & Workshops 4.1 Schedules & Venue Table 9: Summary of Sectoral Consultation Schedules Sector Date & Time Venue No. of Participants* CSOs, NGO, POs 14 October 2013 Kudyapi Function Room 46 Public Sector 16 October 2013 The Legend Villas, 35 Private Sector 18 October 2013 Mandaluyong City List of Participants *including HUDCC and ICF GHK The first sectoral group was the largest in terms of participants. Of the 46 who attended, almost onefourth (24%) were from the Homeowners Federation of Northville and Southville, Inc. (HFNSI). The rest were from different known NGOs such as the Gawad Kalinga (GK), Asia Foundation, PBSP, UN- HABITAT, ALTERPLAN, ICSI, and HPFPI. Two microfinance institutions (MFIs) participated, the Alalay sa Kaunlaran, Inc. (ASKI) and the TSPI Development Corporation. For the public sector consultation, there were 6 LGUs from Metro Manila represented with the Malabon LGU having the largest contingent. Other LGUs were from the cities of Pasig, Valenzuela, Taguig, Makati, and Paranaque. Key shelter agencies were represented by the NHA, SHFC, NHMFC, HLURB, and HGC. The DENR, DSWD, DPWH, and MMDA were the participating national government agencies. The third and last grouping the private sector was participated in by private developers coming from the Organization of Socialized Housing Developers of the Philippines (OSHDP), Chamber of Real Estate Brokers Association (CREBA), and Socialized Housing Developers Association (SHDA). Members of the academe were also present such as the Development Academy of the Philippines (DAP), and the DLSU Robredo Institute of Governance. Financing institutions made up the last grouping the Development Academy of the Philippines (DBP), Card Bank, Inc., Rural Bankers Association of the Philippines (RBAP), and the People s Credit and Finance Corporation (PCFC). The names of the participants representing the institutions, agencies, associations, and LGUs mentioned above are provided in the attendance list which is annexed to this documentation. 4.3 Workshop Objectives and Process Each of the sectoral consultations and workshops started in the morning and lasted into the midafternoon, and followed the same program of activities as described in Table 10 below. The flow of the program was facilitated and directed by a member of the ICF GHK Team. Table 10: Program of Activities for Sectoral Consultations AM AM AM AM AM Registration of Participants Philippine National Anthem & Opening Prayer Welcome/Opening Remarks by HUDCC Introduction of Participants Backgrounder on NISUS and the Consultation Series: Project Milestones and Workshop Objective [NISUS Team] 128

180 AM AM AM AM PM PM PM Presentation of Results of Thematic Consultations: The Summary Problem Tree [NISUS Team] Break [Morning snacks to be served] Presentation on Government Initiatives Related to the Core Problems [NISUS Team] Introduction to the Workshop Proper/Brief Presentation of Results of the Previous Sectoral Consultation [NISUS Team] Lunch Plenary: Workshop Group Presentations Synthesis of Discussions Closing Activities / Closing Remarks by HUDCC Session 1: Background on NISUS and Project milestones. The Consultants presented a background and objectives of NISUS and an update of activities conducted, in particular the results of the thematic consultations. The discussion aimed to achieve a common understanding of the outcomes of the project and inform the participants on the series of events up to project completion. It also provided an understanding of the expected outputs of the sectoral consultation. Session 2: Presentation of the summary problem tree and the results of the thematic consultation workshop. The Consultants discussed briefly each of the thematic problem trees that have been enhanced and strengthened by the consultations and workshops. The discussion then led to the presentation of the overall problem tree for the informal settlements. Session 3: Presentation on Government initiatives in addressing informal settlements. In this session, the Consultants presented the progress and gains on existing government s policies and programs that offered effective solutions in addressing the provision of shelter, sanitation and other basic needs and productivity growth of the IS in Metro Manila and key cities and municipalities in the regions. Session 4: Workshop: Analysis of the gaps indentified from the current initiatives vis-a-vis the problems. Despite the initiatives of the government, the problems still persist. Through the workshop the participants were given the opportunity to identify where the gaps are in terms of policies and implementation. It also provided an opportunity to identify key elements of success in addressing informal settlements in the country and the reforms needed with regard to policy, structure, finance, people, planning and delivery. The participants presented the outputs in a plenary session. This is included as an annex to this report. 129

181 5. The Regional Consultations & Workshops 5.1 Schedules and Venue It was agreed by HUDCC and the ICF GHK Consultants to only hold the regional consultations in Mindanao and the Visayas since significant consultations have already been conducted for Luzon. The schedules and venues are provided in Table 11 below. Table 11: Summary of Regional Consultation Schedules & Venues Region Date Venue Mindanao 23 October 2013 Blue Chateau Function Room Grand Men Seng Hotel, Davao City No. of Participants Visayas 7 November 2013 Tuscany A & B Function Room The Hotel Elizabeth, Cebu City 5.2 List of Participants The first regional consultation held in Davao was well-attended with a total of 61 participants that included HUDCC representatives from the central and regional offices, and the ICF GHK contingent. Representatives from six (6) LGUs and four (4) provincial governments were among the participants. Government agencies, urban poor peoples association, private developers, NGOs, and the academe were well represented during the consultation. The Visayas regional consultation in Cebu was 25 less in attendance than the one in Davao. This was primarily due to the threat of super typhoon Yolanda to the region (including Cebu) that day. Offices have been suspended in anticipation of the typhoon and some of the participants have opted to prepare for it. Nevertheless, the consultation proceeded although started much later to wait for more participants to come. A complete attendance list is provided as an annex to this report. 5.3 Workshop Objectives and Process The program followed the same flow as the previous consultations as shown in Table 12 below: Table 12 : Regional Consultations Program of Activities AM AM AM AM AM AM Registration of Participants Opening Remarks by HUDCC Atty. Wendel Avisado, HUDCC Deputy Secretary General Introduction of the Participants Background of NISUS and Presentation of Workshop Objectives Ms. Gloria Guevarra, ICF GHK NISUS Project Management and Microfinance Specialist Presentation on the Results of the Thematic Consultation Workshops Ms. Joy de Leon, ICF GHK NISUS Deputy Team Leader Dr. Juliet Villegas, ICF GHK NISUS Social Development Specialist Arch. Mia Quimpo, ICF GHK NISUS Urban Planning Specialist Engr. Pete Templo, ICF GHK NISUS Infrastructure Specialist Question & Answer 130

182 AM AM AM AM NN PM PM PM PM PM PM Coffee Break Presentation on the Results of the Sectoral Consultation Workshops Ms. Joy de Leon, ICF GHK NISUS Deputy Team Leader Dr. Juliet Villegas, ICF GHK NISUS Social Development Specialist Question & Answer The Visioning Process for Sustainable Development of Informal Settlements Dr. Joji I. Reyes, ICF GHK NISUS Team Leader Lunch Break Workshop Mechanics and Groupings Dr. Joji I. Reyes, ICF GHK NISUS Team Leader Workshop Group Discussions Coffee Break and Snacks Workshop Group Presentations Synthesis and Agreements Closing Remarks by HUDCC Director Zaki Abañes Welcome Remarks: Atty. Wendel Avisado, the Deputy Secretary General of HUDCC gave the opening/welcome remarks in Davao and Cebu doing so in English, the local dialect, and in Tagalog. Presentations. The Consultants provided a brief background of NISUS, its objectives, and the consultation process that has been undertaken thematic and sectoral leading to the regional consultation. Thus the presentations dwelt on the overall results of the thematic consultations and the outputs of the sectoral consultations. The Visioning Process for Sustainable Development. Through this presentation, the team led by Dr. Joji Reyes prepared the participants for the visioning exercise which was the main objective of the workshop. The presentation defined what a vision is, why it is important to success, what some vision statements of known organizations are like, and how this is done. The presentation also covered mission statements and setting of S-M-A-R-T objectives. Workshop Proper and Outputs. The participants were divided into groups. There were 4 breakout groups in the Davao City workshop and 2 in Cebu City. Each workshop group was tasked to prepare a preliminary VMO for developing informal settlements in the Philippines. Each workshop group was assigned a VISION BOARD or WALL where their proposed VISION, MISSION, and OBJECTIVES were posted. The entire process was facilitated by HUDCC with support from the ICF GHK consultants. 131

183 The agreed vision and mission statements, and objectives of each group were presented to the entire group. Sample vision statements are as follows: A dynamic human settlement where everyone has access to adequate housing. A sound and safe shelter for every Filipino Family One Family one house A transformed society without informal settlers. Home for the homeless Building sustainable communities, improving quality of lives of the ISFs. Building livable, sustainable, and resilient settlements for Filipino informal settler families. 6. ANNEXES to this REPORT The following annexes are integral to this documentation: A. Attendance sheets A-1 Thematic Consultations (5) A-2 Sectoral Consultations (3) A-3 Regional Consultations (2) B. Workshop outputs B-1 Final thematic areas problem trees B-2 Final output of the sectoral consultation B-3 V-M-Os of regional participants (Davao and Cebu) 132

184 Appendix 2 The Regional Consultation Workshop in the Visayas

185 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 2: Results and Documentation of Workshops for the Visayas Regional Consultation SUMMARY AND HIGHLIGHTS OF PROCEEDINGS PHASE 3 Visayas Regional Consultation & Workshop 1. Background & Introduction Under Phase 3 of the project, a series of consultations was held starting on the last week of May and first week of June 2014 as part of the strategy formulation process. Prior to undertaking the consultation series ICF submitted to HUDCC an analytical framework for Phase 3 which detailed the approach and methodology for the events. The analytical framework is annexed to this documentation (ANNEX A). The strategy has been based primarily on the findings and recommendations of the Comprehensive Assessment Report (CAR) generated under Phase 2, and also took into consideration the current directions and priorities of the Government. ICF submitted an initial CAR to HUDCC in mid-april 2014 which consequently underwent revisions following the various comments of HUDCC, WB and the Project Advisory Committee (PAC). The consultation series that followed was key to drafting the strategy as it provided the opportunity to solicit inputs and validate the findings and recommendations under the finalized CAR. The consultations were held in the key cities of the main island groups and in this order Visayas, Mindanao, and Luzon. The participants came from different sectors and agencies who are directly or indirectly involved in upgrading the informal settlements and addressing the plight of the settlers. 2. The Visayas Regional Consultation & Workshop 2.1 Schedule, Venue & Participants The first of the series of regional consultation was held on 27 May The venue was the Santorini Ballroom of The Hotel Elizabeth along Arch. Reyes Avenue in Camputhaw, Cebu City. The consultation in the Visayas had the highest total participants predominantly from the government agencies and with only 2 LGUs represented. Table 1 provides a list of the agencies that participated in Cebu. A complete list of the participants by name and agency is presented separately as ANNEX B of this report. Table 1: Phase 3 Consultation Participants: Cebu City Region Participating Agencies Total No. of Participants Government Agencies (10) Cebu City Visayas Department of Social Welfare and Development (DSWD) Department of Public Works and Highways (DPWH) 62 Department of Environment and Natural Resources (DENR) Department of Agrarian Reform (DAR) Page 1

186 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 2: Results and Documentation of Workshops for the Visayas Regional Consultation Region Participating Agencies Total No. of Participants Housing, Land and Urban Regulatory Board (HLURB) National Housing Authority (NHA) Pag-IBIG Fund Socialized Housing Finance Corporation (SHFC) National Economic Development Authority (NEDA) Presidential Commission for the Urban Poor Local Government Units(2) Talisay City Mandaue City Private Sector/Academe/NGOs (5) Pagtambayayong Fund Inc. Philres-Cebu ABOITIZ Land CIT University University of Visayas 2.2 Workshop Objectives and Process The table below describes the program of activities prepared and conducted jointly with HUDCC. A member of the ICF Team directed the program flow by introducing each activity, the assigned presenter or resource person, and HUDCC acted as moderator during the discussions among the break-out groups. Table 2: Program of Activities 8:00 AM 9:00 AM Registration of Participants 9:00 AM 9:05 AM Opening Remarks by HUDCC 9:05 AM 9:15 AM Introduction of the Participants 9:15 AM 10:00 AM Presentation of the Highlights of the NISUS Comprehensive Assessment Report and Proposed Strategic Plan 10:00 AM 10:30 AM Coffee Break 10:30 AM 11:30 AM Open Forum 11:30 NN 1:00 PM Lunch Break 1:00 PM 1:15 PM Workshop Mechanics and Grouping to Discuss Comments on the Proposed Strategic Plan Group 1 Housing Production Group 2 Housing Finance Group 3 - Governance 1:15 PM 2:30 PM Workshop Group Discussions 2:30 PM 3:30 PM Workshop Group Presentations 3:30 PM 4:20 PM Synthesis and Agreements 4:20 PM 4:30 PM Closing Remarks by HUDCC Page 2

187 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 2: Results and Documentation of Workshops for the Visayas Regional Consultation Opening Remarks. Director Zacarias Abanes was HUDCC s representative who opened the activity and officially welcomed the participants in the Visayas. He talked briefly about the NISUS and what the third phase being undertaken is about. He acknowledged the importance of the participation of each group in the strategy formulation and wished for a fruitful workshop. Presentation of the CAR and Proposed Strategic Plan. NISUS Team Leader, Dr. Joji Reyes did the presentation on the results of the comprehensive assessment done by the consultants under Phase 2. Her 3-part presentation consisted of a discussion on the trends and patterns of informal settlements, followed by an executive summary that distilled the experiences of past and ongoing programs, and concluded by the beginnings of a reform strategy. Following the CAR presentation, Dr. Reyes presented the proposed strategic plan for upgrading informal settlements that included a draft vision and mission, the guiding principles, and 3 overall objectives and corresponding targets. Open Forum. An open forum followed the presentation which provided opportunity for the participants to clarify certain points, or share what their agency, institution, or local government is doing or has done related to the topic. Highlights of the issues raised during the open forum are shown separately in ANNEX C. Workshop Mechanics. The participants were divided into three workshop groups that were tasked to discuss the proposed strategic plan for upgrading IS in the Philippines, react to it, comment on it and revise it if deemed necessary. The participants were pre-assigned to either housing production, housing finance, or governance with a set of instructions (Box 1). 3. The Results from the Workshops In a plenary session following the workshops, each breakout group presented their outputs with regard to their discussion on the proposed strategic plan. Their recommendations were subsequently processed and integrated by the Consultants to come up with the strategy for the informal settlements in the Philippines that is to be presented in a national forum. Table 3 below summarizes the workshop outputs per group. A detailed presentation is included as ANNEX D of this report. Groupings Housing Production Table 3: Summary of Comments to the Proposed Strategic Plan BOX 1: Workshop Instructions Each workshop group will prepared their comments and response to the Proposed Strategic Plan for Upgrading Informal Settlements in the Philippines. Each workshop group will be given minutes to present their respective Summary Comments and Response to the participants in a plenary session The following instructions will help focus the group discussions: (1) Agreement or suggested revision/s to the Vision and Mission Statements; (2) Agreement or suggested revision/s to the Guiding Principles and Objectives; (3) For the Strategies and Proposed Strategic Action Plan: (a) Identify key lessons learned from past experience/projects and comment/agree on which strategy and proposed action/s correspond to such key lessons; (b) If any lesson identified does not respond to a strategy and proposed action/s, propose such a strategy and/or action/s to enrich the Strategies and Proposed Action Plan; (c) Agreement or suggested revision/s. COMMENTS Agreed with the Vision & Mission statements. The group believes that it is doable to create almost a 100K housing units each year if we invest in housing and put our money where it should belong, the issues would be resolved. One important component is the livelihood and this should be embedded (business model of PureGold and Puregold JR) in the Plan. Page 3

188 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 2: Results and Documentation of Workshops for the Visayas Regional Consultation Groupings Housing Finance Governance COMMENTS ISFs are bankable/ they can pay, but this depends on who collects. Clarification on the role of NHA and performance of NHA (production VS financing). Redundancy in the work/ mandates (EO 90- roles and responsibilities of the KSAs) - but there are crosscutting responsibilities. The role of PCUP was recognized in terms of inputs to local governance and community building. Full agreement in the entire V&M (except suggestion to remove the redundancy). The group also indicated the need to add housing cooperatives, financing/bridge financing as well as other modalities for land ownership. 4. ANNEXES to this REPORT The annexes to this documentation are listed below: A. Analytical Framework for Phase 3 B. List of Participants C. Open Forum Highlights D. Detailed Workshop outputs Page 4

189 Developing a Informal Settlements Upgrading Strategy of the Philippines Annex A: Analytical Framework for NISUS Phase 3 THE ICF GHK ANALYTICAL FRAMEWORK FOR NISUS PHASE 3 1 Background GHK Consulting Limited (ICF GHK 1 ) was selected by the Housing and Urban Development Coordinating Council (HUDCC) as the Consultant to provide consulting services on the Developing a National Informal Settlements Upgrading Strategy Project ( NISUS or the Project ). The Government of the Philippines (GPH) through HUDCC received a grant from the Cities Alliance to implement the Project with HUDCC as the Executing Agency while the World Bank (WB) provides supervision. The consulting assignment aims to provide HUDCC, its relevant agencies and the concerned project stakeholders, such as the members of the Project Advisory Committee (PAC) and the WB, the technical support and required level of expert services to successfully implement the Project. The Project aims to strengthen and help the National Government and the local governments formulate and implement effective policies and programs to address the plight of the informal settlers The Project comprised 3 consecutive phases. Phase 1 Preparatory Activities which started in December 2011 was undertaken and completed by HUDCC in The activities in Phase 1 included: (i) facilitating the readiness of institutions involved in project implementation; (ii) establishing the corresponding institutional arrangements; and (iii) obtaining local and global insights to inform the design and implementation of the different phases of the Project. ICF GHK was engaged to undertake the remaining two phases of the project. Phase 2 Comprehensive Assessment which was completed by ICF GHK in March 2014 entailed an inventory and assessment of policies, programs, processes undertaken by the government, NGOs and the private sector on informal settlements upgrading in the Philippines. It called for an evaluation of the conditions, issues, opportunities and risks confronting informal settlements communities. The Comprehensive Assessment Report (CAR), the culminating output of Phase 2, was envisioned to provide the necessary information and serve as anchor for the formulation of the NISUS. In Phase 3 Strategy Formulation, the findings and recommendations of the CAR, generated under Phase 2, as well as the current directions and priorities of the Government will be considered. The development of the strategy will be subjected to stakeholder consultations and complemented with a communications scheme and a project monitoring and evaluation system (PMES) to promote and support the adoption and implementation of the strategy. In the ensuing paragraphs, the approach including the work plan to be used by ICF GHK in implementing Phase 3 will be discussed and summarized. 2 Approach and Methodology for Implementing NISUS Phase 3 ICF GHK offers our combined knowledge of strategic urban development planning, urban development and housing, community-focused urban poverty reduction, and the Philippines to successfully undertake Phase 3 of NISUS. In formulating the national strategy for informal settlements in the Philippines, we will be using an approach that relies heavily on an inclusive, participatory strategic planning process which is summarized in Figure 1 below. 1 ICF GHK is the brand name of GHK Holdings Limited and its subsidiaries. In February 2012, GHK Holdings and its subsidiaries were acquired by ICF International (NASDAQ:ICFI), a leading provider of consulting services and technology solutions to government and commercial clients. ICF GHK is also now able to bring to its clients the expertise and services of ICF International. Page 1

190 Developing a Informal Settlements Upgrading Strategy of the Philippines Annex A: Analytical Framework for NISUS Phase 3 Figure 1. An Inclusive, Participatory Strategic Planning Process for NISUS Phase 3 Activity 1: Scanning and research Activity 2: Develop Draft Activity 3: Develop Draft Activity 4: Finalize the Draft Document current state of reality and desired future for informal Create the framework for broad direction and priorities Develop and document action plans to achieve the Incorporate comments to finalize the National Conduct SWOT Analysis Distill Comprehensive Assessment Report from Phase 2 Review thematic, sectoral and regional consultations for problem tree analysis and preliminary vision, mission and objectives from Phase 2 Review other relevant plans, documents and recent developments affecting the Develop the draft strategic plan document to serve as a broad outline to guide future direction. The draft Strategic Plan will contain: o Mission, Vision and Guiding Principles o Strategic Goals o Objectives o Summary of Comprehensive Assessment Develop the draft implementation plan which will contain: o Strategies o Action Plans o Performance Targets Develop the draft NISUS project monitoring and evaluation system Finalize the website for disseminating NISUS Revise Draft Strategic Plan and Implementation Plan based on comments from regional consultations and workshops and the PAC Present the Revised Plans to stakeholders in a national workshop Finalize the Strategic Plan Finalize the Implementation Plan Thematic, Sectoral, & Regional Regional Consultations & Workshops National Workshop In undertaking Phase 3, we will conduct essentially four activities comprising scanning and research, developing the draft strategic plan, developing the draft implementation plan, and finalizing the plans. For Activity 1, we will conduct a strengths-weaknesses-opportunities-threats (SWOT) analysis for both internal and external scanning of the environment affecting the informal settlers. We will also rely heavily on the results of the CAR to firmly establish the current state of reality of informal settlements in the Philippines, encompassing both the demand and supply side. We will distill the CAR, prioritizing and organizing the issues identified by assessing whether they are interrelated and how they can significantly contribute to the following: Efficiency: Will addressing the issue contribute to producing the desired housing and basic services for the informal settlers within the allotted budget and time? Efficacy: Will addressing the issue contribute to the desired improvement in the quality of life of the informal settlers? Sustainability: Will addressing the issue contribute to stronger institutions and improved urban governance for dealing with informal settlements? Safety: Will addressing the issue address the need to minimize negative environmental impacts and strengthen climate resilience in the communities affected? Replicability: Will addressing the issue contribute to scaling up initiatives to address the plight of the informal settlers? Under Activities 3 and 4, we will prepare the draft strategic plan and its accompanying implementation plan. We will also prepare the project monitoring and evaluation system to facilitate progress tracking Page 2

191 Developing a Informal Settlements Upgrading Strategy of the Philippines Annex A: Analytical Framework for NISUS Phase 3 and addressing issues as they arise. The draft website we have prepared will be finalized under Activity 4 to be used as the main tool for disseminating NISUS. We will present and discuss through regional consultations in Manila (for Luzon), Cebu (for the Visayas), and Davao (for Mindanao) the draft outputs from these activities. Under Activity 5, we will revise the drafts in response to the comments received from the regional consultations and present the revised version in a national workshop to be held in Manila. The revised drafts will subsequently be finalized based on the results of this workshop. 3 Work Plan and Deliverables Figure 2 below summarizes our work plan and deliverables for Phase 3 of the assignment based on the NISUS timeline discussed and agreed with HUDCC. Activity/Task April 2014 May 2014 June 2014 Activity 1: Scanning and Research 1.1 Conduct SWOT analysis 1.2 Distill CAR and prioritize/group issues 1.3 Review thematic, sectoral and regional consultations 1.4 Review other relevant plans, documents, and recent developments 1.5 Present CAR to the NISUS Project Advisory Committee Activity 2: Develop Draft NISUS Strategic Plan 2.1 Prepare the Draft Strategic Action Plan Activity 3: Develop Draft NISUS Implementation Plan 3.1 Prepare the Draft Implementation Plan 3.2 Prepare the draft project monitoring and evaluation system 3.3 Finalize NISUS website 3.4 Present the Draft NISUS to the Project Advisory Committee 3.5 Conduct regional consultations to present/discuss Draft NISUS Activity 4: Finalize the Draft NISUS Plans 4.1 Revise drafts based on comments from HUDCC, WB, and regional consultations 4.2 Conduct national workshop to present/discuss the revised Draft NISUS plans 4.3 Finalize the NISUS Plans 4.4 Finalize the PMES Deliverables Draft NISUS (Strategic and Implementation Plans) Draft PMES Revised Draft NISUS Revised Draft PMES Final NISUS Final PMES Final NISUS Website Page 3

192 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex B: List of Participants for the Regional Consultation Workshop for Visayas Page 1

193 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex B: List of Participants for the Regional Consultation Workshop for Visayas Page 2

194 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex B: List of Participants for the Regional Consultation Workshop for Visayas Page 3

195 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex B: List of Participants for the Regional Consultation Workshop for Visayas Page 4

196 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex C: Open Forum Highlights OPEN FORUM HIGHLIGTHS VISAYAS REGIONAL CONSULTATION-WORKSHOP Q: What are specific elements of rights-based instruments? Answer: Rights can be bundled and used to gain collateral (the lowest form being the CELA) Q: According to the estimated affordability profile, why does it seem to give priority to NCR compared to the regions? Answer: The primary focus is on ISFs that are in danger zones, especially the waterways. These are primarily seen in the NCR region. More than 60% of the ISFs are also located in Metro Manila. Also, the administration is more evidence-based: meaning the inputs/reports should first show the numbers of ISFs per locality before funding is given. Q: Land in the city is too expensive and relocation is not an option, but if the ISFs live in danger zones, there is a clash between wanting to resettle them and to upgrade their site. Answer: Relocating but not giving access to basic services does not work and the relocatees go back to being ISFs again. But we need to also address those who are affected by climate change. There is also evidence that there are some ISFs who can afford the price of land as evidenced by the CMP projects (SHFC) and the problem not only lies in the cost of the land but the cost of living and availability of jobs/livelihood. Page 1

197 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex D: Detailed Workshop Outputs PHASE 3 REGIONAL WORKSHOPS OUTPUTS Response and Comments on the Proposed Strategic Plan for Upgrading Informal Settlements in the Philippines: Roadmap to Transformation REGION & GROUP VISAYAS PRODUCTION Proposed Vision & Mission Statements In full agreement with the proposed Vision and Mission Statements Proposed Guiding Principles & Objectives Objective 1 Strategic city-wide assessments and planning guidelines applied to 15 cities, 1 Province (Siquijor) by 2025 Strategic infrastructure requirements and urban renewal area plans for 15 cities approved and implemented by 2025 Guidelines for safe, resilient housing incorporated into national building code and applied to 15 cities within a risk sensitive land use planning framework XXX families in 15 cities directly living in danger areas and on land needed for public infrastructure relocated to sustainable new towns by 2025 Lessons Learned and Corresponding/Proposed Strategies and Action(s) Lessons Learned: Livelihood should be embedded in actual production Urban Renewal New Township possible for growing LGUs. Very hard for urbanized LGUs since it is driven by cost of land. Thus, encourage land use planning for a comprehensive township housing. HLURB to monitor 20% balance housing compliance. This should be clearly defined. A mechanism for transparency should be in place Proposed Strategies/Actions: Strict enforcement of building codes and land use plans P- 1.5 Review and operationalize concepts for land readjustment and pooling, and measures needed to bring idle lands into productive use including ISF housing. Provide menus, training, and incentives to LGUs in the implementation of the above P Agency responsible objective HUDCC, MMDA, HLURB, NEDA, DILG, DPWH, DOTC, DENR, NDRRMC, CCC, LGUs, LGU Leagues, Concerned Private Sector and Civil Society Groups, Coordinating body of Metro Cebu P- Agency responsible objective HUDCC, MMDA, NHA, HLURB, DILG, DOLE, DSWD, DPWH, DOTC, TESDA, DTI Page 1

198 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex D: Detailed Workshop Outputs REGION & GROUP HOUSING FINANCE Proposed Vision & Mission Statements In full agreement with the proposed Vision and Mission Statements Proposed Guiding Principles & Objectives Objective 2 Strategy Adopt market driven, variable interest rates for socialized housing and cooperative housing Lessons Learned and Corresponding/Proposed Strategies and Action(s) P additional agency on objective 15.1 DOTC and DPWH Land ownership is an important consideration to enable an effective housing financing program GOVERNANCE The group agrees with the Vision. For the Mission: Delete resilient, vibrant and connected communities. Objective 2 Strategy Establish and implement mechanism for community finance and bridge finance to facilitate ISF housing and small scale infrastructure improvement, livelihood, perpetual estate management and land acquisition. Objective # 3 Delete NHA role ( clarified, approved, and operationalized ) Enactment of SHFC charter through Congress Change MMDA to LGU for strategic urban... (11.5) Add HLURB to NHA/HUDCC under strengthen the capacity of... (11.4) HUDCC to do data collection, aggregation... (13.1) HLURB/ HUDCC to capacitate people s organizations. Strategies #10: Improve housing and urban development sector governance #11 & 12: (merge them): Enhance sector leadership... Urban development, urban renewal, and ISF housing at the national and local level. #13: Set up data collection seminar for ISF monitoring. #14: Agree. #10.1: Involve PCUP, change MMDA to LGU. #13: Change MMDA to LGUs. #14.1: Add financing after action planning. #14.2 & 14.3: After management (in 14.2) add project monitoring, evaluation & impact assessment. For Page 2

199 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex D: Detailed Workshop Outputs REGION & GROUP Proposed Vision & Mission Statements Proposed Guiding Principles & Objectives agencies responsible, add HLURB & PCUP. Lessons Learned and Corresponding/Proposed Strategies and Action(s) Page 3

200 Appendix 3 The Regional Consultation Workshop in Mindanao

201 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 3: Results and Documentation of Workshops for the Mindanao Regional Consultation SUMMARY AND HIGHLIGHTS OF PROCEEDINGS PHASE 3 Mindanao Regional Consultation & Workshop 1. Background & Introduction Under Phase 3 of the project, a series of consultations was held starting on the last week of May and first week of June 2014 as part of the strategy formulation process. Prior to undertaking the consultation series ICF submitted to HUDCC an analytical framework for Phase 3 which detailed the approach and methodology for the events. The analytical framework is annexed to this documentation (ANNEX A). The strategy has been based primarily on the findings and recommendations of the Comprehensive Assessment Report (CAR) generated under Phase 2, and also took into consideration the current directions and priorities of the Government. ICF submitted an initial CAR to HUDCC in mid-april 2014 which consequently underwent revisions following the various comments of HUDCC, WB and the Project Advisory Committee (PAC). The consultation series that followed was key to drafting the strategy as it provided the opportunity to solicit inputs and validate the findings and recommendations under the finalized CAR. The consultations were held in the key cities of the main island groups and in this order Visayas, Mindanao, and Luzon. The participants came from different sectors and agencies who are directly or indirectly involved in upgrading the informal settlements and addressing the plight of the settlers. 2. The Consultations & Workshops 2.1 Schedule, Venue & Participants The second of the series of regional consultation was held on 29 May The venue was the Granada Ballroom of the Grand Men Seng Hotel along Magallanes Street in Davao City. The Mindanao group was the second largest among the three consultations and the best distribution among the national agencies, LGUs, and the private sector groups. It also outnumbered Visayas and Luzon with regard to the number of LGUs represented. Table 1 provides a list of the agencies that participated in Davao City. A complete list of the participants by name and agency is presented separately as ANNEX B of this report. Table 1: Phase 3 Consultation Participants Region Participating Agencies Total No. of Participants Davao City, Mindanao Government Agencies (13) National Housing Authority (NHA) Department of Labor and Employment (DOLE) Page 1

202 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 3: Results and Documentation of Workshops for the Mindanao Regional Consultation Region Participating Agencies Total No. of Participants Socialized Housing Finance Corporation (SHFC) Housing Land and Urban Regulatory 47 Board (HLURB) Department of Public Works and Highways (DPWH) Technical Education and Skills Development Authority (TESDA) National Housing Mortgage and Finance Corporation (NHMFC) Department of Interior and Local Government (DILG) National Economic Development Authority (NEDA) Department of Environment and Natural Resources (DENR) Home Development Mutual Fund (HDMF) Philippine National Police (PNP) Presidential Commission for the Urban Poor (PCUP) Local Government Units(7) Tagum City LGU Digos City LGU Mati City LGU Panabo City LGU Davao City LGU Compostela Valley Davao Del Norte Private Sector/Academe/NGOs (6) UP Mindanao MINLAND/KAMI Tagbuan Inc. Homeless People s Federation of the Philippines, Inc. University of Mindanao Maginhawang Pabahay, Inc. 2.2 Workshop Objectives and Process The table below describes the program of activities prepared and conducted jointly with HUDCC. A member of the ICF Team directed the program flow by introducing each activity, the assigned presenter or resource person, and HUDCC acted as moderator during the discussions among the break-out groups. Page 2

203 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 3: Results and Documentation of Workshops for the Mindanao Regional Consultation Table 2: Program of Activities 8:00 AM 9:00 AM Registration of Participants 9:00 AM 9:05 AM Opening Remarks by HUDCC 9:05 AM 9:15 AM Introduction of the Participants 9:15 AM 10:00 AM Presentation of the Highlights of the NISUS Comprehensive Assessment Report and Proposed Strategic Plan 10:00 AM 10:30 AM Coffee Break 10:30 AM 11:30 AM Open Forum 11:30 NN 1:00 PM Lunch Break 1:00 PM 1:15 PM Workshop Mechanics and Grouping to Discuss Comments on the Proposed Strategic Plan Group 1 Housing Production Group 2 Housing Finance Group 3 - Governance 1:15 PM 2:30 PM Workshop Group Discussions 2:30 PM 3:30 PM Workshop Group Presentations 3:30 PM 4:20 PM Synthesis and Agreements 4:20 PM 4:30 PM Closing Remarks by HUDCC Opening Remarks. Ms. Rowena Dineros of the Policy and Programs Development Group (PPDG) gave the welcome remarks to start off the program. She thanked the participants for coming and stressed the importance of the third phase being undertaken. She acknowledged the importance of the participation of each group in the strategy formulation and wished for a fruitful workshop. Presentation of the CAR and Proposed Strategic Plan. In all of the consultations, NISUS Team Leader, Dr. Joji Reyes did the presentation on the results of the comprehensive assessment done by the consultants under Phase 2. Her 3-part presentation consisted of a discussion on the trends and patterns of informal settlements, followed by an executive summary that distilled the experiences of past and ongoing programs, and concluded by the beginnings of a reform strategy. Following the CAR presentation, Dr. Reyes presented the proposed strategic plan for upgrading informal settlements that included a draft vision and mission, the guiding principles, and 3 overall objectives and corresponding targets. Both the presentations of the CAR and proposed strategic plan have been made an integral part of the main section of this draft final report (DFR). Open Forum An open forum followed the presentation which provided opportunity for the participants to BOX 1: Workshop Instructions Each workshop group will prepared their comments and response to the Proposed Strategic Plan for Upgrading Informal Settlements in the Philippines. Each workshop group will be given minutes to present their respective Summary Comments and Response to the participants in a plenary session The following instructions will help focus the group discussions: (1) Agreement or suggested revision/s to the Vision and Mission Statements; (2) Agreement or suggested revision/s to the Guiding Principles and Objectives; (3) For the Strategies and Proposed Strategic Action Plan: (a) Identify key lessons learned from past experience/projects and comment/agree on which strategy and proposed action/s correspond to such key lessons; (b) If any lesson identified does not respond to a strategy and proposed action/s, propose such a strategy and/or action/s to enrich the Strategies and Proposed Action Plan; (c) Agreement or suggested revision/s. Page 3

204 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 3: Results and Documentation of Workshops for the Mindanao Regional Consultation clarify certain points, or share what their agency, institution, or local government is doing or has done related to the topic. Highlights of the issues raised during the open forum are shown separately in ANNEX C. Workshop Mechanics. The participants were divided into three workshop groups that were tasked to discuss the proposed strategic plan for upgrading IS in the Philippines, react to it, comment on it and revise it if deemed necessary. The participants were pre-assigned to either housing production, housing finance, or governance with a set of instructions (Box 1). 3. The Results from the Workshops In a plenary session following the workshops, each breakout group presented their outputs with regard to their discussion on the proposed strategic plan. Their recommendations were subsequently processed and integrated by the Consultants to come up with the strategy for the informal settlements in the Philippines that is to be presented in a national forum. Table 3 below summarizes the workshop outputs per group. A detailed presentation is included as ANNEX D of this report. Group Housing Production Table 3: Summary of Comments to the Proposed Strategic Plan COMMENTS The CAR is very relevant and timely (what happened before during Sendong) and policies should address the needs. Some provisions in the balanced housing are not utilized and not all stakeholders are able to participate Support system for programs is low- should look at an integral and comprehensive approach *we affirm the assessment but the recommendations should be out of the box approaches. Emphasize on basic needs, especially livelihood and enterprise development- start where the people are. Also address the stringent requirements (make it pro-poor) Mission - sustainable before connected Strategy 2: creation Local Housing Board to be included in criteria of DILG on good housekeeping 20% balanced housing transparency in collection and disbursements - strong monitoring system ID of ISFs - MIS efficient listing Housing Finance Strategy 6: Include practices like in Panabo City (land banking) and on interim financing. Communities could help in collection efficiency drive Strategy 7: Establish community based cooperatives in the absence of MFIs Strategy 8: Add PCUP, DSWD, CSSDO Strategy 9: Strong implementation of 20% balanced housing Revive the Group Land Acquisition and Development Program (GLAD) of Pag-IBIG - will require membership Asian Coalition for Community Action (ACCA) may be tapped for citywide approach BIR: delay in release of resolutions on tax exempt features for CMP Projects Link with PICE, the professional association of engineers Page 4

205 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 3: Results and Documentation of Workshops for the Mindanao Regional Consultation Group Governance COMMENTS Lessons learned: slums are part of the city and ISFs should be transformed to become an active partner in the urban community (part of the economy too) Emphasize on basic services and uplifting the moral capacity of the ISFs ISFs cannot be immediately settled because of lack of funds from LGUs Capacitate the LGUs on how to assist the ISFs Strict monitoring on balanced housing implementation Majority of ISFs have no fixed income (flow of financing) Migration from cities to municipalities Relocation sites have no basic services Delay in processes (housing sector) should have a one stop shop Housing officer per province SHFC has funds but ISF cannot access because of requirements and availability of land Role and Responsibilities - who is authorized to revise? - define the role in ISF housing and urban development Role of NHA- strengthened by 2015 Mindanao- based LGU in estate management (2016) MFIs/ Cooperatives DILG and LGUs -urban planning capacity 4. ANNEXES to this REPORT The annexes to this documentation are listed below: A. Analytical Framework for Phase 3 B. List of Participants C. Open Forum Highlights D. Detailed Workshop outputs Page 5

206 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex A: Analytical Framework for NISUS Phase 3 THE ICF GHK ANALYTICAL FRAMEWORK FOR NISUS PHASE 3 1 Background GHK Consulting Limited (ICF GHK 1 ) was selected by the Housing and Urban Development Coordinating Council (HUDCC) as the Consultant to provide consulting services on the Developing a National Informal Settlements Upgrading Strategy Project ( NISUS or the Project ). The Government of the Philippines (GPH) through HUDCC received a grant from the Cities Alliance to implement the Project with HUDCC as the Executing Agency while the World Bank (WB) provides supervision. The consulting assignment aims to provide HUDCC, its relevant agencies and the concerned project stakeholders, such as the members of the Project Advisory Committee (PAC) and the WB, the technical support and required level of expert services to successfully implement the Project. The Project aims to strengthen and help the National Government and the local governments formulate and implement effective policies and programs to address the plight of the informal settlers The Project comprised 3 consecutive phases. Phase 1 Preparatory Activities which started in December 2011 was undertaken and completed by HUDCC in The activities in Phase 1 included: (i) facilitating the readiness of institutions involved in project implementation; (ii) establishing the corresponding institutional arrangements; and (iii) obtaining local and global insights to inform the design and implementation of the different phases of the Project. ICF GHK was engaged to undertake the remaining two phases of the project. Phase 2 Comprehensive Assessment which was completed by ICF GHK in March 2014 entailed an inventory and assessment of policies, programs, processes undertaken by the government, NGOs and the private sector on informal settlements upgrading in the Philippines. It called for an evaluation of the conditions, issues, opportunities and risks confronting informal settlements communities. The Comprehensive Assessment Report (CAR), the culminating output of Phase 2, was envisioned to provide the necessary information and serve as anchor for the formulation of the NISUS. In Phase 3 Strategy Formulation, the findings and recommendations of the CAR, generated under Phase 2, as well as the current directions and priorities of the Government will be considered. The development of the strategy will be subjected to stakeholder consultations and complemented with a communications scheme and a project monitoring and evaluation system (PMES) to promote and support the adoption and implementation of the strategy. In the ensuing paragraphs, the approach including the work plan to be used by ICF GHK in implementing Phase 3 will be discussed and summarized. 2 Approach and Methodology for Implementing NISUS Phase 3 ICF GHK offers our combined knowledge of strategic urban development planning, urban development and housing, community-focused urban poverty reduction, and the Philippines to successfully undertake Phase 3 of NISUS. In formulating the national strategy for informal settlements in the Philippines, we will be using an approach that relies heavily on an inclusive, participatory strategic planning process which is summarized in Figure 1 below. 1 ICF GHK is the brand name of GHK Holdings Limited and its subsidiaries. In February 2012, GHK Holdings and its subsidiaries were acquired by ICF International (NASDAQ:ICFI), a leading provider of consulting services and technology solutions to government and commercial clients. ICF GHK is also now able to bring to its clients the expertise and services of ICF International. Page 1

207 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex A: Analytical Framework for NISUS Phase 3 Figure 1. An Inclusive, Participatory Strategic Planning Process for NISUS Phase 3 Activity 1: Scanning and research Activity 2: Develop Draft Activity 3: Develop Draft Activity 4: Finalize the Draft Document current state of reality and desired future for informal Create the framework for broad direction and priorities Develop and document action plans to achieve the Incorporate comments to finalize the National Conduct SWOT Analysis Distill Comprehensive Assessment Report from Phase 2 Review thematic, sectoral and regional consultations for problem tree analysis and preliminary vision, mission and objectives from Phase 2 Review other relevant plans, documents and recent developments affecting the Develop the draft strategic plan document to serve as a broad outline to guide future direction. The draft Strategic Plan will contain: o Mission, Vision and Guiding Principles o Strategic Goals o Objectives o Summary of Comprehensive Assessment Develop the draft implementation plan which will contain: o Strategies o Action Plans o Performance Targets Develop the draft NISUS project monitoring and evaluation system Finalize the website for disseminating NISUS Revise Draft Strategic Plan and Implementation Plan based on comments from regional consultations and workshops and the PAC Present the Revised Plans to stakeholders in a national workshop Finalize the Strategic Plan Finalize the Implementation Plan Thematic, Sectoral, & Regional Regional Consultations & Workshops National Workshop In undertaking Phase 3, we will conduct essentially four activities comprising scanning and research, developing the draft strategic plan, developing the draft implementation plan, and finalizing the plans. For Activity 1, we will conduct a strengths-weaknesses-opportunities-threats (SWOT) analysis for both internal and external scanning of the environment affecting the informal settlers. We will also rely heavily on the results of the CAR to firmly establish the current state of reality of informal settlements in the Philippines, encompassing both the demand and supply side. We will distill the CAR, prioritizing and organizing the issues identified by assessing whether they are interrelated and how they can significantly contribute to the following: Efficiency: Will addressing the issue contribute to producing the desired housing and basic services for the informal settlers within the allotted budget and time? Efficacy: Will addressing the issue contribute to the desired improvement in the quality of life of the informal settlers? Sustainability: Will addressing the issue contribute to stronger institutions and improved urban governance for dealing with informal settlements? Safety: Will addressing the issue address the need to minimize negative environmental impacts and strengthen climate resilience in the communities affected? Replicability: Will addressing the issue contribute to scaling up initiatives to address the plight of the informal settlers? Under Activities 3 and 4, we will prepare the draft strategic plan and its accompanying implementation plan. We will also prepare the project monitoring and evaluation system to facilitate progress tracking Page 2

208 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex A: Analytical Framework for NISUS Phase 3 and addressing issues as they arise. The draft website we have prepared will be finalized under Activity 4 to be used as the main tool for disseminating NISUS. We will present and discuss through regional consultations in Manila (for Luzon), Cebu (for the Visayas), and Davao (for Mindanao) the draft outputs from these activities. Under Activity 5, we will revise the drafts in response to the comments received from the regional consultations and present the revised version in a national workshop to be held in Manila. The revised drafts will subsequently be finalized based on the results of this workshop. 3 Work Plan and Deliverables Figure 2 below summarizes our work plan and deliverables for Phase 3 of the assignment based on the NISUS timeline discussed and agreed with HUDCC. Activity/Task April 2014 May 2014 June 2014 Activity 1: Scanning and Research 1.1 Conduct SWOT analysis 1.2 Distill CAR and prioritize/group issues 1.3 Review thematic, sectoral and regional consultations 1.4 Review other relevant plans, documents, and recent developments 1.5 Present CAR to the NISUS Project Advisory Committee Activity 2: Develop Draft NISUS Strategic Plan 2.1 Prepare the Draft Strategic Action Plan Activity 3: Develop Draft NISUS Implementation Plan 3.1 Prepare the Draft Implementation Plan 3.2 Prepare the draft project monitoring and evaluation system 3.3 Finalize NISUS website 3.4 Present the Draft NISUS to the Project Advisory Committee 3.5 Conduct regional consultations to present/discuss Draft NISUS Activity 4: Finalize the Draft NISUS Plans 4.1 Revise drafts based on comments from HUDCC, WB, and regional consultations 4.2 Conduct national workshop to present/discuss the revised Draft NISUS plans 4.3 Finalize the NISUS Plans 4.4 Finalize the PMES Deliverables Draft NISUS (Strategic and Implementation Plans) Draft PMES Revised Draft NISUS Revised Draft PMES Final NISUS Final PMES Final NISUS Website Page 3

209 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex B: List of Participants for the Regional Consultation Workshop for Mindanao Page 1

210 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex B: List of Participants for the Regional Consultation Workshop for Mindanao Page 2

211 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex B: List of Participants for the Regional Consultation Workshop for Mindanao Page 3

212 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex C: Open Forum Highlights OPEN FORUM HIGHLIGTHS MINDANAO REGIONAL CONSULTATION-WORKSHOP Some of the items were also raised in Visayas such as the role of academe in capacity development (UP Visayas, etc) CSO and Academe can play a big role in capacity development Agree to carefully use words in drafting the NISUS Confusion in the agencies involved re their role- redirect focus on people and there is a need to clarify the role Lack of housing offices/ units at the LGU level- lack of capacity at the LGU level: there is a need to strengthen this Values: microfinance also includes value formation (crucial aspect of community development) Inclusion of local housing offices Role of MMDA: from our analysis MM has a lot of ISFs- MMDA is in charge of this Page 1

213 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex D: Detailed Workshop Outputs PHASE 3 REGIONAL WORKSHOPS OUTPUTS Response and Comments on the Proposed Strategic Plan for Upgrading Informal Settlements in the Philippines: Roadmap to Transformation REGION & GROUP MINDANAO PRODUCTION HOUSING FINANCE Proposed Vision & Mission Statements We agree with the proposed Vision and Mission Statements Proposed Guiding Principles & Objectives Strategy 1 #1: Add DAR, PDRRMC/ CDRRMC/MDRRMC to agencies Strategy 2 Enactment of housing ordinance mandating the creation/installation of local housing board and creating city/local housing office as compliance to good housekeeping Enforcement of the 20% balance housing for land banking purposes Periodic monitoring of the management of the 20% balance housing for land banking purposes Strategy 3 For each city to develop a comprehensive data banking on ISF in coordination w/ all agencies and peoples organizations Strategy 5 Rent to own scheme Strategy 6 There active government programs which will complement this strategy Strategy 7 Establish community-based cooperatives Strategy 8 Include the following under the agencies responsible: PCUP, DSWD/CSSDO Strategy 9 Capture the 20% balance housing. The following agencies may be included: Pag-IBIG, PICE, SHEDA, ACCA Lessons Learned and Corresponding/Proposed Strategies and Action(s) Page 1

214 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex D: Detailed Workshop Outputs REGION & GROUP Proposed Vision & Mission Statements Proposed Guiding Principles & Objectives Lessons Learned and Corresponding/Proposed Strategies and Action(s) GOVERNANCE Vision: Agree, appropriately worded, attainable Mission: Is 1M realistic? Yes with conditions; 100,000 ISFs per year nationwide Why 2025? 10 years from 2015; timeframe of the program is 10 years Coordinated efforts Integrated approach on agencies (holistic) Informal settlers: generic term Guiding Principles: Nicely worded Implementation and funding Comprehensive Capturing all the things we would like to attain Objective #3: Revised HUDCC mandate approved and operationalized by (2015) NHA role clarified (strengthened)... Capacity of NHA and (Mindanaobased) LGUs in estate management strengthened by (2015) Capacity of DILG and MMDA for strategic urban planning, urban renewal and ISF housing strengthened by (2017) NHA/HUDCC strengthens the capacity of (Mindanao-based) LGUs to undertake city-wide (municipality) strategic planning, urban renewal, CCA/DRRM, IS upgrading, and PPPs developed by 2025 Data collection, aggregation and analysis of urban and housing data improved by (2015) Capacity of XXX (Mindanao-based) LGUs for GIS-based city-wide mapping of ISFs, hazards and economic activities developed by (2016) Capacity of XXX people s organizations or CBOs and XXX (Mindanao-based) homeowners association to engage in estate/community management, microfinance and project monitoring and evaluation improved by XXXX (2016) Add: 12.3: Institute housing offices in all LGUs in Mindanao Add: 14.5 Involve ISF representation in all structural mechanisms Strategy Clarify (Strengthen) role and responsibilities of HUDCC Clarify (Define and strengthen) roles and involvement... in ISF housing Page 2

215 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex D: Detailed Workshop Outputs REGION & GROUP Proposed Vision & Mission Statements Proposed Guiding Principles & Objectives Strategy Strengthen the capacity of DILG and MMDA (LGUs) for strategic urban planning, urban renewal, and ISF housing. Lessons Learned and Corresponding/Proposed Strategies and Action(s) Strategy Develop capacity of LGUs to undertake city-wide (municipal) strategic planning, urban renewal... Page 3

216 Appendix 4 The Regional Consultation Workshop in Luzon

217 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 4: Results and Documentation of Workshops for the Luzon Regional Consultation SUMMARY AND HIGHLIGHTS OF PROCEEDINGS PHASE 3 Luzon Regional Consultation & Workshop 1. Background & Introduction Under Phase 3 of the project, a series of consultations was held starting on the last week of May and first week of June 2014 as part of the strategy formulation process. Prior to undertaking the consultation series ICF submitted to HUDCC an analytical framework for Phase 3 which detailed the approach and methodology for the events. The analytical framework is annexed to this documentation (ANNEX A). The strategy has been based primarily on the findings and recommendations of the Comprehensive Assessment Report (CAR) generated under Phase 2, and also took into consideration the current directions and priorities of the Government. ICF submitted an initial CAR to HUDCC in mid-april 2014 which consequently underwent revisions following the various comments of HUDCC, WB and the Project Advisory Committee (PAC). The consultation series that followed was key to drafting the strategy as it provided the opportunity to solicit inputs and validate the findings and recommendations under the finalized CAR. The consultations were held in the key cities of the main island groups and in this order Visayas, Mindanao, and Luzon. The participants came from different sectors and agencies who are directly or indirectly involved in upgrading the informal settlements and addressing the plight of the settlers. 2. The Luzon Consultation & Workshop 2.1 Schedule, Venue & Participants The last of the series of regional consultation was held on 3 June The venue was the Raja Function Room of The Legend Villas along Pioneer Avenue in Mandaluyong City. The Manila group almost equaled in number the participants in Davao City but had the most number of government agencies represented. Table 1 provides a list of the agencies that participated in Manila. A complete list of the participants by name and agency is presented separately as ANNEX B of this report. Table 1: Luzon Consultation Participants Region Participating Agencies Total No. of Participants Government Agencies (19) Department of Health (DOH) 44 Luzon Socialized Housing Finance Corporation (SHFC) Department of Social Welfare and Development (DSWD) Page 1

218 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 4: Results and Documentation of Workshops for the Luzon Regional Consultation Region Participating Agencies Total No. of Participants National Housing Mortgage and Finance Corporation (NHMFC) Technical Education and Skills Development Authority (TESDA) Department of Interior and Local Government (DILG) Home Development Mutual Fund (HDMF) Department of Public Works and Highways (DPWH) Metro Manila Development Authority (MMDA) Home Guarantee Corporation (HGC) Department of Education (DepEd) Housing Land and Urban Regulatory Board (HLURB) People s Credit and Finance Corporation (PCFC) Department of Finance (DOF) Development Bank of the Philippines (DBP) Department of Environment and Natural Resources (DENR) National Housing Authority (NHA) National Economic Development Authority (NEDA) Presidential Commission for the Urban Poor (PCUP) Local Government Units (3) Valenzuela City Mandaluyong City Manila City Private Sector/Academe/NGOs (9) HPFPI DLSU Manila Tulay sa Pagunlad, Inc. Ateneo School of Governance HCDRD PBSP Alter Plan OSHDP PIDS 2.2 Workshop Objectives and Process The table below describes the program of activities prepared and conducted jointly with HUDCC. A member of the ICF Team directed the program flow by introducing each activity, the assigned presenter or resource person, and HUDCC acted as moderator during the discussions among the break-out groups. Page 2

219 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 4: Results and Documentation of Workshops for the Luzon Regional Consultation Table 2: Program of Activities 8:00 AM 9:00 AM Registration of Participants 9:00 AM 9:05 AM Opening Remarks by HUDCC 9:05 AM 9:15 AM Introduction of the Participants 9:15 AM 10:00 AM Presentation of the Highlights of the NISUS Comprehensive Assessment Report and Proposed Strategic Plan 10:00 AM 10:30 AM Coffee Break 10:30 AM 11:30 AM Open Forum 11:30 NN 1:00 PM Lunch Break 1:00 PM 1:15 PM Workshop Mechanics and Grouping to Discuss Comments on the Proposed Strategic Plan Group 1 Housing Production Group 2 Housing Finance Group 3 - Governance 1:15 PM 2:30 PM Workshop Group Discussions 2:30 PM 3:30 PM Workshop Group Presentations 3:30 PM 4:20 PM Synthesis and Agreements 4:20 PM 4:30 PM Closing Remarks by HUDCC Opening Remarks. Director Zacarias Abanes was HUDCC s representative who opened the activity and officially welcomed the participants in Manila. He talked briefly about the NISUS and what the third phase being undertaken is about. He acknowledged the importance of the participation of each group in the strategy formulation and wished for a fruitful workshop. Presentation of the CAR and Proposed Strategic Plan. NISUS Team Leader, Dr. Joji Reyes did the presentation on the results of the comprehensive assessment done by the consultants under Phase 2. Her 3-part presentation consisted of a discussion on the trends and patterns of informal settlements, followed by an executive summary that distilled the experiences of past and ongoing programs, and concluded by the beginnings of a reform strategy. Following the CAR presentation, Dr. Reyes presented the proposed strategic plan for upgrading informal settlements that included a draft vision and mission, the guiding principles, and 3 overall objectives and corresponding targets. Both the presentations of the CAR and proposed strategic plan have been made an integral part of the main section of this draft final report (DFR). BOX 1: Workshop Instructions Each workshop group will prepared their comments and response to the Proposed Strategic Plan for Upgrading Informal Settlements in the Philippines. Each workshop group will be given minutes to present their respective Summary Comments and Response to the participants in a plenary session The following instructions will help focus the group discussions: (1) Agreement or suggested revision/s to the Vision and Mission Statements; (2) Agreement or suggested revision/s to the Guiding Principles and Objectives; (3) For the Strategies and Proposed Strategic Action Plan: (a) Identify key lessons learned from past experience/projects and comment/agree on which strategy and proposed action/s correspond to such key lessons; (b) If any lesson identified does not respond to a strategy and proposed action/s, propose such a strategy and/or action/s to enrich the Strategies and Proposed Action Plan; (c) Agreement or suggested revision/s. Page 3

220 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 4: Results and Documentation of Workshops for the Luzon Regional Consultation Open Forum An open forum followed the presentation which provided opportunity for the participants to clarify certain points, or share what their agency, institution, or local government is doing or has done related to the topic. Highlights of the issues raised during the open forum are shown separately in ANNEX C. Workshop Mechanics. The participants were divided into three workshop groups that were tasked to discuss the proposed strategic plan for upgrading IS in the Philippines, react to it, comment on it and revise it if deemed necessary. The participants were pre-assigned to either housing production, housing finance, or governance with a set of instructions (Box 1). 3. The Results from the Workshops In a plenary session following the workshops, each breakout group presented their outputs with regard to their discussion on the proposed strategic plan. Their recommendations were subsequently processed and integrated by the Consultants to come up with the strategy for the informal settlements in the Philippines that is to be presented in a national forum. Table 3 below summarizes the workshop outputs per group. A detailed presentation is included as ANNEX D of this report. Group LUZON Housing Production Housing Finance Governance Table 3: Summary of Comments to the Proposed Strategic Plan COMMENTS Effective coordination among stakeholders NGAs, KSAs, POs, NGOs, Private Sector stakeholders New policy issuances and reforms including Accreditation of POs and NGOs policy and process Politics continuity of programs/staff Incremental terminology tenure (rental to freehold)/ on housing must comply with building standards Definition of danger areas include easements along and under transmission lines Agreement to IS upgrading with secure tenure (remove return to ) In general, there is agreement to the objectives. Market-based approach may not work in short term but may be considered a future direction Ensure quality of accounts for recovery prospects (collection efficiency) to ensure participation in secondary mortgage market (promote sustainability) HGC Guaranty deeper understanding of guaranty benefits to socialized housing/ Abot Kaya Pabahay Cashflow Guaranty Fund sources entice participation of banking sector as the 15% IRA of LGUs for housing not enough Pag-IBIG expansion of membership to cover ISFs initially and then becoming regular members at a later stage Targeted subsidies based on income level with clear definition of formal and informal employment Vision statement add empowered Page 4

221 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 4: Results and Documentation of Workshops for the Luzon Regional Consultation Group COMMENTS Metropolitan Approach strengthen practice of coordinated plans between sending and receiving LGUs for basic urban and social services Decentralized functions match tasks with financing Adoption of Community Transformability Index physical and environmental livability, mobility and access, economic/livelihood, socio-cultural, community governance,, local systems integration HUDCC and LGUs working as a LEDAC and involvement of academe with multi-sectoral viewpoint Support HUDCC role, SHFC charter, Local Housing Boards in Strategy 13 Strategy 14 add HLURB for conflict resolution and inclusion of fund sourcing among governance policies Grading system for People s Plan 4. ANNEXES to this REPORT The annexes to this documentation are listed below: A. Analytical Framework for Phase 3 B. List of Participants C. Open Forum Highlights D. Detailed Workshop outputs Page 5

222 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex A: Analytical Framework for NISUS Phase 3 THE ICF GHK ANALYTICAL FRAMEWORK FOR NISUS PHASE 3 1 Background GHK Consulting Limited (ICF GHK 1 ) was selected by the Housing and Urban Development Coordinating Council (HUDCC) as the Consultant to provide consulting services on the Developing a National Informal Settlements Upgrading Strategy Project ( NISUS or the Project ). The Government of the Philippines (GPH) through HUDCC received a grant from the Cities Alliance to implement the Project with HUDCC as the Executing Agency while the World Bank (WB) provides supervision. The consulting assignment aims to provide HUDCC, its relevant agencies and the concerned project stakeholders, such as the members of the Project Advisory Committee (PAC) and the WB, the technical support and required level of expert services to successfully implement the Project. The Project aims to strengthen and help the National Government and the local governments formulate and implement effective policies and programs to address the plight of the informal settlers The Project comprised 3 consecutive phases. Phase 1 Preparatory Activities which started in December 2011 was undertaken and completed by HUDCC in The activities in Phase 1 included: (i) facilitating the readiness of institutions involved in project implementation; (ii) establishing the corresponding institutional arrangements; and (iii) obtaining local and global insights to inform the design and implementation of the different phases of the Project. ICF GHK was engaged to undertake the remaining two phases of the project. Phase 2 Comprehensive Assessment which was completed by ICF GHK in March 2014 entailed an inventory and assessment of policies, programs, processes undertaken by the government, NGOs and the private sector on informal settlements upgrading in the Philippines. It called for an evaluation of the conditions, issues, opportunities and risks confronting informal settlements communities. The Comprehensive Assessment Report (CAR), the culminating output of Phase 2, was envisioned to provide the necessary information and serve as anchor for the formulation of the NISUS. In Phase 3 Strategy Formulation, the findings and recommendations of the CAR, generated under Phase 2, as well as the current directions and priorities of the Government will be considered. The development of the strategy will be subjected to stakeholder consultations and complemented with a communications scheme and a project monitoring and evaluation system (PMES) to promote and support the adoption and implementation of the strategy. In the ensuing paragraphs, the approach including the work plan to be used by ICF GHK in implementing Phase 3 will be discussed and summarized. 2 Approach and Methodology for Implementing NISUS Phase 3 ICF GHK offers our combined knowledge of strategic urban development planning, urban development and housing, community-focused urban poverty reduction, and the Philippines to successfully undertake Phase 3 of NISUS. In formulating the national strategy for informal settlements in the Philippines, we will be using an approach that relies heavily on an inclusive, participatory strategic planning process which is summarized in Figure 1 below. 1 ICF GHK is the brand name of GHK Holdings Limited and its subsidiaries. In February 2012, GHK Holdings and its subsidiaries were acquired by ICF International (NASDAQ:ICFI), a leading provider of consulting services and technology solutions to government and commercial clients. ICF GHK is also now able to bring to its clients the expertise and services of ICF International. Page 1

223 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex A: Analytical Framework for NISUS Phase 3 Figure 1. An Inclusive, Participatory Strategic Planning Process for NISUS Phase 3 Activity 1: Scanning and research Activity 2: Develop Draft Activity 3: Develop Draft Activity 4: Finalize the Draft Document current state of reality and desired future for informal Create the framework for broad direction and priorities Develop and document action plans to achieve the Incorporate comments to finalize the National Conduct SWOT Analysis Distill Comprehensive Assessment Report from Phase 2 Review thematic, sectoral and regional consultations for problem tree analysis and preliminary vision, mission and objectives from Phase 2 Review other relevant plans, documents and recent developments affecting the Develop the draft strategic plan document to serve as a broad outline to guide future direction. The draft Strategic Plan will contain: o Mission, Vision and Guiding Principles o Strategic Goals o Objectives o Summary of Comprehensive Assessment Develop the draft implementation plan which will contain: o Strategies o Action Plans o Performance Targets Develop the draft NISUS project monitoring and evaluation system Finalize the website for disseminating NISUS Revise Draft Strategic Plan and Implementation Plan based on comments from regional consultations and workshops and the PAC Present the Revised Plans to stakeholders in a national workshop Finalize the Strategic Plan Finalize the Implementation Plan Thematic, Sectoral, & Regional Regional Consultations & Workshops National Workshop In undertaking Phase 3, we will conduct essentially four activities comprising scanning and research, developing the draft strategic plan, developing the draft implementation plan, and finalizing the plans. For Activity 1, we will conduct a strengths-weaknesses-opportunities-threats (SWOT) analysis for both internal and external scanning of the environment affecting the informal settlers. We will also rely heavily on the results of the CAR to firmly establish the current state of reality of informal settlements in the Philippines, encompassing both the demand and supply side. We will distill the CAR, prioritizing and organizing the issues identified by assessing whether they are interrelated and how they can significantly contribute to the following: Efficiency: Will addressing the issue contribute to producing the desired housing and basic services for the informal settlers within the allotted budget and time? Efficacy: Will addressing the issue contribute to the desired improvement in the quality of life of the informal settlers? Sustainability: Will addressing the issue contribute to stronger institutions and improved urban governance for dealing with informal settlements? Safety: Will addressing the issue address the need to minimize negative environmental impacts and strengthen climate resilience in the communities affected? Replicability: Will addressing the issue contribute to scaling up initiatives to address the plight of the informal settlers? Under Activities 3 and 4, we will prepare the draft strategic plan and its accompanying implementation plan. We will also prepare the project monitoring and evaluation system to facilitate progress tracking Page 2

224 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex A: Analytical Framework for NISUS Phase 3 and addressing issues as they arise. The draft website we have prepared will be finalized under Activity 4 to be used as the main tool for disseminating NISUS. We will present and discuss through regional consultations in Manila (for Luzon), Cebu (for the Visayas), and Davao (for Mindanao) the draft outputs from these activities. Under Activity 5, we will revise the drafts in response to the comments received from the regional consultations and present the revised version in a national workshop to be held in Manila. The revised drafts will subsequently be finalized based on the results of this workshop. 3 Work Plan and Deliverables Figure 2 below summarizes our work plan and deliverables for Phase 3 of the assignment based on the NISUS timeline discussed and agreed with HUDCC. Activity/Task April 2014 May 2014 June 2014 Activity 1: Scanning and Research 1.1 Conduct SWOT analysis 1.2 Distill CAR and prioritize/group issues 1.3 Review thematic, sectoral and regional consultations 1.4 Review other relevant plans, documents, and recent developments 1.5 Present CAR to the NISUS Project Advisory Committee Activity 2: Develop Draft NISUS Strategic Plan 2.1 Prepare the Draft Strategic Action Plan Activity 3: Develop Draft NISUS Implementation Plan 3.1 Prepare the Draft Implementation Plan 3.2 Prepare the draft project monitoring and evaluation system 3.3 Finalize NISUS website 3.4 Present the Draft NISUS to the Project Advisory Committee 3.5 Conduct regional consultations to present/discuss Draft NISUS Activity 4: Finalize the Draft NISUS Plans 4.1 Revise drafts based on comments from HUDCC, WB, and regional consultations 4.2 Conduct national workshop to present/discuss the revised Draft NISUS plans 4.3 Finalize the NISUS Plans 4.4 Finalize the PMES Deliverables Draft NISUS (Strategic and Implementation Plans) Draft PMES Revised Draft NISUS Revised Draft PMES Final NISUS Final PMES Final NISUS Website Page 3

225 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex B: List of Participants for the Regional Consultation Workshop for Luzon Page 1

226 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex B: List of Participants for the Regional Consultation Workshop for Luzon Page 2

227 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex B: List of Participants for the Regional Consultation Workshop for Luzon Page 3

228 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex C: Open Forum Highlights OPEN FORUM HIGHLIGTHS LUZON REGIONAL CONSULTATION-WORKSHOP o o o o Mention about ISFS who can afford the 400K- how did you assess that and what are the lessons from that area? Have you also considered lessons in terms of prevention and the role of LGUs as well? Dr. Reyes: affordability limits analysis- we used the 2012 data on income distribution and compared that to the socialized housing (simulation)- we were using relatively low interest rates, longer terms, etc. - the income levels in MM are higher than the regions Problem is more of access to housing AND basic services Prevention: an important part of the equation- a part of what we're saying is that there should be a masterplan, we should know the ISFs and enforcement of the law (so we can understand, maintain, then reduce the number) *one part is the enforcement Design mechanisms on how communities will become sustainable Key Lessons: agree with the sentiment- providing security of tenure (incremental process- UDHAand not freehold)- if we remain in that direction, the final stage/ideal stage is freehold- there are various ways that provide security of tenure but not say "incremental". Direction in microfinanceagree that microfinance plays a large role- characterization of ISFs- there is alsoaneed for relocation (danger zones)- microfinance is used for retrofitting where they are- maybe instead of community led maybe LGU driven is better (instead of making the households the direct borrowers, the LGUs becomes the borrowers- risk financing- a gap we should think about)-maybe the subsidies could be used for risk. Dr. Reyes: Incremental process of bundling rights: the process is described in global literature (can start with CELA- right to remain in the area- then going up to other lease variants, then usufruct, etc)- this is what we mean in incremental bundling of rights- there are many more lessons and we will look at the literature regarding this Housing microfinance: we are not advocating housing microfinance as the only/sole strategythere is a financing mechanisms for LGUs- distinguish the various financing schemes. Housing microfinance -tendency to use this for relocation etc- we need to reevaluate the danger areas and the definition (relocated selectively- only those who only need to be relocating) Comment by MMDA: Share on the issue on prevention- for us to be able to come up with effective interventions to prevent further proliferation: one of the provisions in UDHA was not implemented by the LGUs- UDHA calls for an inventory of the ISFs- most of the LGUs did not do this - so every intervention there is a new "census" -now a socio economic profile of the ISFs- ongoing biometrics registration for all ISFs being relocated (priority 8 waterways)- foolproof system - official database Trends and patterns of ISFs: laying the premise for an urban led growth (urban centers) that contribute more GDP wise- maybe we have to be careful on this re urban led growth- but is this balanced growth? Urban VS rural development- let's also keep the option that we have to keep our rural areas developed too (agriculture, rural area, food production pulled us down) Page 1

229 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex C: Open Forum Highlights o o o o Analysis done on programs and roles- looking at national policy- in the process of your analysiswas there a national policy for ISFs in the first place? Ex. PDPs etc.- maybe we don't have any that's why it's scattered- no one linking it together Role of infrastructure: as we do a strategy- look at the contribution of infrastructure (ex. Roads, bridges, etc.)- maybe it is not developed fully hence we have problems in the rural areas Dr. Reyes: the study is not advocating an urban led growth- just documenting the trends/patterns- usually the literature blame urban development for the ISFs, etc. - you have to go back to the fact that the services and the industry sectors lead growth (economy theory) - many of the countries that have gone through growth (rural to services or manufacturing led) - document the transformation of our economy that we have been transitioning from a rural led to urban led (also compatible to what is happening to other countries). - this forum is not the venue to discuss the policies of the administration UDHA: many of the points in UDHA are relevant today- we already stated that there is lack of coordination/leadership- we have most of the policies we need we just need to implement Infrastructure: we are not saying that the lack of infrastructure - we will need to integrate efforts within a broader framework of urban and economic development Unbundling of property rights: we should make it clear that there is a hierarchy depending on what is available to the person- how these arrangements give us security of tenure- it will depend on what will make a family feel secure. Also based on your study on global literature: what made the communities accept the non-freehold arrangements more? How was it done to make communities understand that the non-freehold arrangements are also viable? There should be more coordination with NEDA with regards to infrastructure -maybe also connect to other cities to address land problems/issues (through good linkages in transportation) Dr. Reyes: There might be people who are happy with the usufruct etc.- the titling process in the Philippines is anti-poor because the process is long and expensive - we were talking to make these rights based instruments (they want security) - add and design rights based instruments so that people and the banking system could use (ISFs to give them purchasing power) People want to access funds- if they don't have the title, then this is hard. This is how it evolved (rights based instruments) which will allow them access to banking and other purchasing power/ security - make it more accepting to communities Infrastructure: we totally agree regarding this Page 2

230 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex D: Detailed Workshop Outputs PHASE 3 REGIONAL WORKSHOPS OUTPUTS Response and Comments on the Proposed Strategic Plan for Upgrading Informal Settlements in the Philippines: Roadmap to Transformation REGION & GROUP LUZON PRODUCTION Proposed Vision & Mission Statements Vision Define what is meant by formal define as empowerment, security of tenure, formalizing their livelihood programs Mission Agreed with the mission, but look the trend if doable. Following are some assumptions: There is effective coordination among stakeholders New policy pronouncements New legislations or amendments to old legislations Proposed Guiding Principles & Objectives Guiding principles OK Comments on incremental approach: can we refrain from using incremental when referring to the land tenure? SHFC: Maybe we can use the term multi-option approach when you do incremental for housing, there should be a standard, based on affordability Freehold vs incremental Incremental only on housing but not on land tenurial. Objectives and Strategies Strategy 1 all LGU updating CLUPs, all of them are doing hazard mapping, and development of local shelter plan (Comment: add NGOs/CSOs, POs) Lessons Learned and Corresponding/Proposed Strategies and Action(s) For Strategy 4: Add 4.5 Stringent criteria (policy for screening) for accreditation of POs and NGOs. Strategy 2 Comments/suggestion: remove the return to and just plain IS upgrading with secure tenure Strategy definition of danger areas as defined in UDHA and to include under transmission lines 3.2 formulation of policy framework in-city/off-city selection criteria/relocation schemes HOUSING FINANCE Vision and Mission: PDP: how to align the NISUS with the next administration Definition of formal (or use of the word formal ) ISF Guiding Principles and Objectives Generally agree with the principles Target 1: policy issue in shifting current rates to market rates (6%) Refer to 9.1: How do we strengthen the local government? through assets (ex. Angono LGUreplicate this kind of model purchasing loans from Pag-IBIG and NHMFC? How to replicate to Page 1

231 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex D: Detailed Workshop Outputs REGION & GROUP Proposed Vision & Mission Statements Proposed Guiding Principles & Objectives Lessons Learned and Corresponding/Proposed Strategies and Action(s) transformed into a secured community Make sure of the distinction of formal employment and informal employment and tenurial security (establish income) (developmental and retail); Pag-IBIG (mandated to cater lower than the market rates: 15K for NCR, 12K for non-ncr, strictly for Pag-IBIG members/access to membership) *established that the ISF has income market based interest rate: political will to shift SHFC: having targeted those who cannot pay- fixed rate but on a subsidized rate (depends on the client/affordability); depends on certain income deciles uniform criteria: not per agency basis but uniformed (for funding source) in principle- agree to shift to the market base (interest rate) with uniform criteria among the agencies serving the ISF (some can do it but not all) the LGUs since the ISFs are more of a local issue than nationalmake the LGU more committed than the banks.) Refer to 9.4: we should put up an effective collection management system (ex. NHMFC- securitization, DOFquality of assets should be assured, which is what NHMFC should be doing) Funding source: can this be allocated among the agencies Community development plan of the LGU varies/differs Targeting should be clear We should look at it long term (through collateral) AGREEMENT: we agree to a targeted, subsidized and enhanced rate for ISFs but with uniform criteria among the agencies AGREEMENT: Level of interest rate: subsidized level of interest rate but targeted Strategy 6: 6.1: Collateral/ underwriting criteria: do we agree to rights based collateral? Yes. 6.2: Widen to include others so that not all would go through MFIs (wider coverage) *create a guarantee program for ISFs (can be lower than 450,000, partial coverage) and not only socialized housing provided by HGC Amend charter of HGC to accommodate the policy change for guarantees (change the timeframe also if this will be done) 6.3: Market-rate based variable rates: Abot Kaya Pabahay Fundhelp for the interest rate (get the difference from this Fund) are Page 2

232 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex D: Detailed Workshop Outputs REGION & GROUP Proposed Vision & Mission Statements Proposed Guiding Principles & Objectives we amendable to the variable rate? note on the existing work on subsidies 6.4: Commercial banking: if there is guarantee then banks will take up on it (HGC) If there is guarantee, then collateral with variable rates then the private banks can come in 7.1: SHFC: no problem (microfinance wholesaler) can be included in the proposed charter : agree 7.4: agree (policies to support the scale up the projects ex. Habitat- from the national budget, allocated to help support these) : agree Lessons Learned and Corresponding/Proposed Strategies and Action(s) GOVERNANCE Vision: ISFs transformed into formal residents in resilient, vibrant empowered, and connected communities Mission: We are committed to provide, at least one million ISFs with have tenurial security and better quality housing, improved physical and social infrastructure, and access to jobs, capital and livelihood in resilient, vibrant, and connected communities, by 2025 Adopt Strategic City-wide Planning: Planning must be undertaken with a long-term strategic perspective that sets the spatial pattern for future growth and enables cities to plan primary infrastructure in advance of land development. Strategy 10 and 11 agencies: HUDCC, SHFC, NHA, HGC, MMDA, concerned private sector and civil society groups, PCUP Strategy 11.5: add Local Government Academy Incorporate intercity connectivity or also known as Metropolitan Approach ; coordination or protocols between sending and receiving LGUs; For Objective 3: 1. Adoption of community transformational index Physical and Environmental Livability Mobility and access Economic/Livelihood Community governance Socio-cultural Local systems integration 2. Executive and legislative agenda setting between HUDCC and LGUs Suggestion: Come up with a single and comprehensive performance management system for housing and urban development Additional suggested strategy: Engage LGUs, colleges, and universities in addressing issues relative to housing and urban Page 3

233 Developing a National Informal Settlements Upgrading Strategy of the Philippines Annex D: Detailed Workshop Outputs REGION & GROUP Proposed Vision & Mission Statements Proposed Guiding Principles & Objectives Lessons Learned and Corresponding/Proposed Strategies and Action(s) development i.e. curriculum, courses, multisectoral approach 10.1 Clarify role and responsibilities of HUDCC in urban development and ISF housing support movement for creation of Department of Housing Develop corporate business plan for SHFC and enact appropriate legislation for its role in ISF housing support movement for the Social Housing Finance Act 12.2 Develop capacity of LGUs to undertake city-wide strategic planning, urban renewal, CCA/DRRM, IS upgrading, and PPPs Add: Revitalize local housing boards Capacitate LGUs to do local housing finance Strategy 14: add HLURB Add: conflict resolution and handling grievances Across the board: add governance policies in mobilizing funds Page 4

234 Appendix 5 NISUS National Forum

235 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 5: Results and Documentation of National Forum SUMMARY AND HIGHLIGHTS OF PROCEEDINGS PHASE 3: National Forum July 2, 2014 Sofitel Philippine Plaza, Pasay City 1. Background & Introduction Based on the key inputs gathered from the three regional consultations, the consultants revised the strategic plan for presentation during the culminating forum for Preparing the National Informal Settlements Upgrading Strategy (NISUS) on July 2, The forum which was sponsored by the Housing and Urban Development Coordinating Council (HUDCC) with support from the Cities Alliance and the World Bank aims to provide a venue for the concerned stakeholder groups to provide their final comments and reactions to the proposed NISUS. 2. Program of Activities & Highlights The Program of Activities is shown in Table 1 below: Table 1: Program of Activities of the National Forum 08:30 AM Registration of Participants 09:30 AM National Anthem and Invocation 09:40 AM Introduction of Participants 09:50 AM Opening Remarks by HUDCC Secretary General Cecilia S. Alba 10:00 AM Message from the World Bank Country Manager Motoo Konishi 10:15 AM Presentation of the Keynote Speaker 10:16 AM Keynote Speaker 10:35 AM Coffee Break The Honorable Jejomar Binay Vice-President of the Republic of the Philippines and HUDCC Chairman 10:45 AM Presentation on the National Informal Settlements Upgrading Strategy by Dr. Joji I. Reyes, ICF International, NISUS Team Leader 11:30 AM Reactions from Panel of Discussants 12:00 PM Lunch 1:00 PM Reactions from Panel of Discussants 1:20 PM Plenary Session 1:50 PM Synthesis and Closing Page 1

236 Developing a National Informal Settlements Upgrading Strategy of the Philippines 2.1 Preliminaries Appendix 5: Results and Documentation of National Forum The program hosts, Dr. Juliet Villegas and Engr. Pete Templo both members of the ICF NISUS Team called the start of the forum at 9:30 AM with an invocation and the national anthem. They then acknowledged the participants starting with the special guests - government, private sector stakeholders, NGOs, and the POs, including members of the panel of discussants, and the various key shelter agencies represented. HUDCC Secretary General Cecilia S. Alba officially welcomed the guests to the forum. 2.2 Message from Mr. Motoo Konishi, World Bank Country Manager Mr. Konishi described the NISUS as being consistent with President Aquino s Social Contract with the Filipinos. As a strategy, he believes it is focused on inclusive growth and incorporates lessons learned from Brazil, Viet Nam and Thailand. The implementation of the NISUS vision will lead to a noble life for the informal settlers. The cities will stand to gain in upgrading communities. He equated upgrading slums with smart politics, and expressed that investments toward this end will redound to economic growth. He stressed that the informal settlers are not the problem but rather part of the shelter solution. He explained that the P50 Billion shelter program is not a subsidy for the poor, but the down payment of the government for Metro Manila to be renewed, modernized and flood-free. Strategy formulation, he stated, should involve the ISFs, adopt a community-driven incremental housing approach, with traditional off-city resettlement being the last resort. Mr. Konishi acknowledged that there are reform programs already undertaken by agencies. However, the policies should be backed up by investments. He reiterated World Bank s continuing support to ensure that the NISUS will be implemented. 2.3 Presentation on the NISUS by Dr. Joji I. Reyes, ICF International, NISUS Team Leader Highlights of the presentation of the proposed strategic plan include: More accurate determination of the magnitude of the problem Redefinition of urbanization Relocated families have returned to reside in the cities CMP approved and implemented relatively few projects compared to the need Affordable housing but not for the ISFs Cost recovery under innovative programs have been minimal relying mostly on donations to continue, thus the benefits accrue only to few Local governments weak participation People participation in planning should be encouraged Many plans exist, there is strong need to implement Capacity building will include HUDCC, KSAs, LGUs, NGOs, communities and other stakeholders Linkages amongst government, private stakeholders, and communities need strengthening 2.4 Keynote Speaker: The Honorable Jejomar Binay, Vice-President of the Philippines and HUDCC Chairman VP Binay recalled how he also spoke during the launch of the NISUS in 2012 where he cited the importance of strategic planning as it relates to addressing the housing need in our country. This national forum is the culmination of assessments, discussions, and consultations to prepare the road map that will help us achieve our aspiration of improving the quality of life of millions of informal Page 2

237 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 5: Results and Documentation of National Forum settlers in our midst today. The proposed NISUS to be presented is a product of a series of thematic, sectoral and regional consultations. It has taken the challenge of replacing the focus of current housing programs by a more people-centered and strategically targeted and integrated program with a clear vision of what is to be accomplished for the informal settlers. The NISUS, he says, provides us with the pathway to reform and introduces the directions of reform starting with the local governments being put firmly on the driving seat, putting the focus on the people, and viewing informal settlements upgrading as part of an overall urban renewal program. 2.5 Reactions from Panel of Discussants DISCUSSANT Bimbo Fernandez Assistant Secretary Department of Interior and Local Government Mr. Eduardo T. Manisio Socialized Housing Finance Corporation Ms. Ofelia Bagotlo National President Homeless People s Federation, Inc. (HPFI) REACTIONS / COMMENTS Role clearly stated in Local Government Code and UDHA Housing is not just roof; it should include basic services Responsibility of LGU to exercise its power Housing should be accessible to employment To date, 4500 have been moved out from the danger area out of the 11,000 ISFs in the 8 priority water ways We will do this not just in metro manila but also in other regions Can we workout an equitable scale? Is 3,000/month affordable without NISUS? Safe, decent, affordable homes accessible to livelihood From PAG-IBIG, bring in the other private sector On other initiatives of WB: o Subsidy we can make housing affordable to people. Right now housing is heavily subsidized by the government in various ways such as interest rate subsidy, long term of 30 years, financial assistance, grace period on monthly amortization payments, but not in a clear and transparent manner. We shall make it equitable. Per UP PLANADES study, 20% of the total ISFs surveyed belong to the higher income decile and can afford housing. Private sector can also come in. o There are also discussions on community driven incremental housing in Yolandaaffected areas. The NISUS promotes community-driven approach (people s rights to cities) Cities take the lead model One option may be affordable but not for the others so there is need to provide other options Rights-based instruments in lieu of freehold title may be viable Usufruct arrangement for ISFs are now accepted ISFs no longer need to borrow for land acquisition as SHFC and/or NHA will now acquire the land for usufruct arrangements Climate change: PAG-ASA and PhilVocs (disaster affected families) Innovative modalities must be adopted for sustainability as availability of long-term fund sources are limited SHFC targets are compatible with NISUS targets SHFC will explore possible role of microfinance wholesaler SHFC charter needs to be passed by Congress to support its operations Paano maisasakatuparan? Marami ng nakasulat na nasa papel lang, natutupad ba? The local housing board should allow participation of ISFs; they can contribute ideas and schemes because they are the ones who know their needs and have actual experience. Concern for the next generation - will this continue beyond the 2025 target? Page 3

238 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 5: Results and Documentation of National Forum DISCUSSANT Atty. Christopher Ryan Tan President, Organization of Socialized Housing Developers of the Philippines Dr. Segundo Romero Ateneo School of Governance REACTIONS / COMMENTS Give incentives or awards to the LGUs, government employees or officials so they can feel appreciation of what they are doing Community-based database possible depending on availability of computers and wifi Provide sanctions for LGUs which do not accomplish their tasks as mandated by LG Code and UDHA Participation depends on the government; LGUs should allow POs/Leaders to participate; people are not problems but solution There are members of the private sector who are willing to focus on people not just on housing and financing Trying to bridge this gap for low-cost housing: HOW? Developers still can t find balance between cost of production and compliance to building code with safety nets and finishing Constraints: legal framework does not allow vertical socialized housing. This is due to the price ceiling of socialized housing package. There is need to amend section 3 of BP 220. We have requested redefinition of socialized housing to include MRBs, We are also looking into lowering the cost of production (ie. Exemption from EVAT) Revisit the minimum standards in the BP 220 We raised issues in the implementation of the Fire Code Initiatives include: redefinition of socialized housing, issues on rules of NLUA, and Balanced Housing Development OSHDP members also assess consumption patterns of socialized housing target families and not just income trends to determine the capacity to pay Livelihood program should also be highlighted To consider other forms of vouchers (ie. CSR from private sector) Proposed a bill that solely addresses redefinition of urbanization PAG-IBIG should not be limited to formal working sector. They should design a membership for ISFs (not poorest of the poor only, also include those people who cannot afford houses like jeep or tricycle drivers) Government agencies that are involved in provision of livelihood programs in resettlement/relocation areas are few Housing Finance: vertical socialized housing units are unaffordable to ISFs. There should be private subsidies like housing vouchers coming from other sectors, not only government funded vouchers Compliance to20% balanced housing must be adopted as a tool to service needs of ISFs Come up with innovations to get out of poverty Formal city vs informal city There is money in serving the informal sector Tool on Community Transformability Scorecard o Dimensions: Housing, accessibility and mobility, livelihood and income, social network/safety nets, community governance, local system integration o Based on assessment those resettled off-city are doing very poorly as compared to those under onsite upgrading and in situ relocation. Courageous in coming up with this laudable NISUS: Use the NISUS not as a thermometer to measure temperature but use the NISUS as a Thermostat as a control mechanism; NISUS- crucial is the local chief executive; mayors should know how to engage communities Page 4

239 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 5: Results and Documentation of National Forum DISCUSSANT REACTIONS / COMMENTS HUDCC must assert its role as the coordinating body in housing and urban development Challenge: How do we utilize NISUS as an operating system not a screensaver? 2.6 Open Forum There were some comments and questions by the participants as summarized below: 1. There are no strategies to control the growth of ISFs (squatting syndicates). The 1.0 million target to 2025 will not be enough as numbers continue to grow annually considering natural growth and migration rates. 2. NAPC: Asec.Lina dela Cruz agreed to importance of community-based and people-centered planning: She mentioned that NAPC s focus in its soon to be launched Social Preparation Framework also include: Access to urban services including housing That the 14 strategies should be related to human rights The NISUS must also apply to ISFs in disaster areas It is important for NISUS to be mainstreamed to LGUs Off-city Resettlement/relocation housing has to entail job availability/income generating opportunities to succeed Efficient transport system and road connectivity must be present for new towns to survive and be sustainable 3. Happy Thoughts: Comparative scenario With and Without NISUS is interesting to look forward to Pilot implementation of NISUS, should follow soonest to sustain momentum Refine the targets so that NISUS can respond to the existing needs but include the annually growing demand. ISFs are not equal to slums nor are slums equal to urban poor. Cost in city relocation might be more costly than off-site relocation. 4. Point of view to be taken: demand-driven not supply 5. Me Ann Ignacio People benefits will be appreciated by people who believe in need for services Coordination Magbabawas ba ng tao? Kailangan ba mag create ng department? Anong position ng government sa 2025? How about LGUs that have no urban development and housing plans? How do we isolate NISUS from politicking and political maneuvers? Production is not equal to provision. NHA is for provision of housing, not production. Microfinance and NGOs Napoles NGO scam affected operations of NGOs 6. Linkage with DSWD and DOLE must be strengthened 7. Congressman Wimpy Fuentebella Page 5

240 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 5: Results and Documentation of National Forum HUDCC may not be able to respond directly to the needs of communities. However, HUDCC can strengthen ties with other government and private agencies in the provision of urban services such as water, electricity and security. The agency should be excellent in diagnosis of what needs to be done. Resources may be available but targeting and communication may be weak What will encourage resettled families to stay? Concentrate on measurements of supply versus demand to avoid politicking. Proper communication, correct and clear measurements must be applied. Key to successful implementation is the identification of and solution to irritants which may not even be costly to resolve. 8. Community representatives Clarify who will do what KSAs involved, communities role, involvement of other parties The community should participate in planning for their options to be heard and to level off expectations from all sides Clarify who will formulate and implement policies There are capacity building activities for people s organizations but no financial support for bringing down to the members of the communities Incentives from city government to implement the framework/strategy still weak 9. Resettled families Claimed that they became survivors as they have settled in the sites. There is need for continuing post relocation support provision from NHA or other agencies 3. Closing Remarks HUDCC Secretary General Cecilia Alba closed the event with an acknowledgement of the participants from various sectors, an appreciation of World Bank for NISUS and a call for all to support HUDCC and the key shelter agencies in the pilot implementation of the NISUS before a nationwide rollout is undertaken. Page 6

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247 Appendix 6 NISUS Website Development

248 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 6: NISUS Website Development THE NISUS WEBSITE 1 Background The NISUS Project Website is one of the deliverables of the Consultants under the Project. This website is expected to contain among other things, the Detailed Implementation Plan, the Project Monitoring & Evaluation System, and other related information, such as the project findings and analyses for information of HUDCC Management Committee, HUDCC Council, the Project Advisory Committee, the World Bank and the Cities Alliance. The content and functionality of the website was designed and developed based on the specific needs of the Project and prospectively has the following key outcomes and uses: Allow online sharing of appropriate Project information, progress and milestones of the assignment, as well as feedback from stakeholders; Serve as a repository of learning resources; Access to electronic programs and forms relevant to the NISUS; and A database of informal settlement information. 2 Developing the NISUS Website The steps undertaken by the Consultants in developing the website are described below: 1. Meet with NISUS team to determine and collate information to be published The Consultants worked closely with HUDCC in sorting through all the available materials and determining which will be included the design was dependent on the volume of information and type of content to be published (e.g. text, photos, and videos). The contents were classified by subject or by relevance. A site menu to provide navigation for site visitors was designed based on the content to be published. 2. Evaluate potential knowledge sharing tools, web hosting, technologies The Consultants recommended a free online Wiki host to simplify things, and make the website easy to manage at least cost. This also allows HUDCC to sustain and maintain it without the need for a technical expert on staff. Some questions had to be answered including: Is the website going to be run on HUDCC s webhost/webserver or with a third-party webhosting? Will it be integrated with another website, such as HUDCC s own website, or run as a standalone? This essentially dictated the tone (look and feel) of the site. How often will the website be updated and by whom? 3. Provisioning This involves purchasing software, hardware and licenses; subscription to services; and provisioning for web hosting. After careful consideration on what and how much resources is involved in provisioning Page 1

249 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 6: NISUS Website Development for web hosting whether in-house using either a dedicated or shared server, or externally and upon the recommendation of the Consultants, it was jointly agreed to provision the website on the cloud (Box 1). This will be quicker as the infrastructure and tools required to build it are already available. To also eliminate subscription cost, the website was developed in an SaaS webhosting provider. This is fully described in later sections. 4. Designing the website framework The Consultants worked with HUDCC as to the general look and feel of the site such as color schemes, fonts, lay out, menu style, etc. It was deemed best to keep complex and resource hungry elements off, like flash and animations, to enable the website to load and respond faster and to make the site easier to update. Rather than build the website from the ground up, The Consultants also recommended the use of the pre-defined templates offered by free online sites (Box 2). The ready templates can provide the structure and reduce the time needed to build the framework. All that was needed was to fill in the contents. BOX 1: Cloud Hosting Cloud hosting services provide hosting for websites on virtual servers, which pull their computing resource from extensive underlying networks of physical web servers. It follows the utility model of computing in that it is available as a service rather than a product and is therefore comparable with traditional utilities such as electricity and gas. Broadly speaking the client can tap into their service as much as they need, depending on the demands of their website, and they will only pay for what they use. It exists as an alternative to hosting websites on single servers (either dedicated or shared servers) and can be considered as an extension of the concept of clustered hosting where websites are hosted on multiple servers. With cloud hosting, however, the network of servers that are used is vast and often pulled from different data centers in different locations. BOX 2: Hosting the NISUS Website on Wix Wix provides free web-designing tools and templates. It runs millions of websites in its datacenters and has datacenters in 2 different continents, allowing for higher fault tolerance and availability. The decision to host the NISUS website on Wix was based largely on cost, speed of development and ease of maintenance. 5. Build website for approval of HUDCC This involved constructing the framework and putting in the content and functionality. After reviewing the content design, and checking for proper placement, relevance, and accuracy, the Consultants submitted the website for initial approval of HUDCC. 6. Linking to social networking sites To ensure the website is socially relevant and stakeholders better informed through social media with a continuous flow of communication, information dissemination, and exchange of experience and lessons learned HUDCC requested that the website be linked to two social networking sites, Facebook and Twitter. Icons were to be added on the topright corner of each page. Clicking the icons lead to each social networking site. 7. Final review and publishing of website As part of the Draft Final Report, the Consultant submits this NISUS website for final review and eventual publishing. Upon approval of HUDCC, the Consultants will make the NISUS website "go live". 3 Navigating the NISUS Website The URL of the NISUS website is Because the hosting plan for the website is free, there are Wix banners lining the top and bottom of every page. Page 2

250 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 6: NISUS Website Development The NISUS website is a static site, that is, the information published on it is updated manually. Ease of maintenance and simplicity were the primary design considerations. Figure 1 shows the site map for the NISUS website. The sections are described below: Home About Us Executive Summary Library Contact This is the starting point or front page of the web site and provides brief descriptions of NISUS and of the other webpages. It has a collage of various informal settlements Describes the objectives of NISUS and the organizations involved in the project, namely, ICF Consulting Ltd., HUDCC, and the Cities Alliance / World Bank Uploaded to the website is the executive summary of the Comprehensive Assessment Report (CAR) submitted under Phase 2. The CAR is also the basis for the formulation of the strategy. The website contains a collection of materials, references, and literature relating to the NISUS. Clicking an item opens the document it is linked to. The page is divided into the following subsections: Press Releases on the different events that took place during the project Reports the Inception and Comprehensive Assessment Reference Materials provided by HUDCC and used during the analytical phase Conferences and workshops Provides the and phone numbers of HUDCC Page 3

251 Developing a National Informal Settlements Upgrading Strategy of the Philippines Appendix 6: NISUS Website Development 4 Links to the social networking sites The website has links to two social networking sites, Facebook and Twitter, with icons situated on the top-right corner of each page. Clicking the icons lead to the respective social networking site. The Facebook page URL is Its purpose is to allow people from various sectors to share photos, ideas, opinion, insights and expertise on NISUS. The Twitter account allows HUDCC to share breaking news and announcement to followers of NISUS. Interested parties can They will be able to receive tweets on Android and ios. Page 4