FAIR HOUSING PROJECT - PHILIPPINES

By

Brigido R. Simon, Jr.

(Former Mayor of Quezon City, Philippines)

Suite 205 Borres Building, No. 4 Ilang-ilang Street, New Manila, Quezon City Telephone Nos. (02) 632-724-5493/ 666-0819/ 666-4552

President and Chairman of the Board BUMBARAN DEVELOPMENT CORPORATION Email Address: bumbaran062002@yahoo.com

Background BUMBARAN is a magical place in the Muslim world. A wise and good king once asked Allah for magical power to build a palace with one post in the middle. It would be a place where people could live peacefully. The wish was granted and the place was called BUMBARAN. Vision A city where everybody has a home to call his own. A city where there are no more squatters and there are no more slums. Mission To develop housing initiatives that will act as models for both government and private developers to replicate. Our developments shall provide low-income families affordable dwelling units within the urban center. a. List of SWOT in our latest strategic planning session Strengths one of few developers selling affordable condominium units for low income families within the city center - very high demand for low income housing - low risk high yield investment package is very attractive for investors Weaknesses - finding it difficult to obtain permits and licenses due to government bureaucracy. Opportunities

BDC package offers a solution to the housing problem for low income families in the urban center Metro manila is a vast source of prime land, privately owned but squatted upon. The BDC package offers a viable solution to this private land owners headache

Threats - Spiralling prices of construction materials like steel - Continued delays in obtaining licenses and permits for the projects. (this is due to the refusal of BDC to go-along with corruption in the system) C. Product Services Socialized Housing in the form of 3-storey to 5-storey walk-up condominium units within the urban center D. Our Business a. Market position The BDC constructs condominium units for low income households within the inner city core with the price ranging from P 300,000 to P750,000 (US $ 6,500 to US $ 16,300 ). The monthly amortization ranging from P2,000 to P4,500 (US $ 43 to US $ 100). BDC were able to make a loanable profit and procure prime real estate at a very low price because the land that BDC is purchasing is squatted properties where the land owner is unable to remove this illegal structures and tenants. BDC is able to do this by entering into joint ventures with private land owners whose land is presently occupied by illegal occupants (squatters). E. Beneficiaries The squatters occupying the property subject of the joint venture. Our first beneficiaries are the squatters themselves. We have developed a subsidy scheme that allows the urban poor squatters presently occupying the land that we are to develop to buy into the project. BDC enrolls the squatter/beneficiary into the Home Development and Mutual Fund, the Philippine Government financing institution that takes out the housing loan mortgages. Low-income government and private employees who are members of the Home Development Mutual Fund.

A major beneficiary is the land owner. He is able to solve his life-long headache on how to encash his squatted property.

Philippine Government Approach in Solving the Squatting Problem is relocation Relocation, is unfair to the squatter because it further aggravates their already difficult financial situation. Metro Manila, the capital of the Republic of the Philippines, has a population of 12 million people. About half of them live in slums or squatter areas. Today, government demolishes these squatters and relocates them outside the metropolis. This strategy removes the urban blight and beautifies the metropolis but creates more poverty. The Livelihood of the majority of these urban poor families is in the sales and services sector. Their primary source of income is servicing the rich who live in the urban centers. Relocating the poor distances them from their work places and their sources of income. Relocation therefore, aggravates their already difficult financial situation. . Community Mortgage Program The Community Mortgage Program is a Philippines government program where the government buys the land and sells it to the squatter at affordable rates. Low interest and long term. This allows the squatter to have security of tenure and ultimately own the land that they are presently squatting on. However, Community Mortgage Program seems unfair to: 1. The landowner. The government buys the property at a maximum of P 2,500/ sq.m. way below its current market value. 2. To the other slum dwellers. Classified as sharers and renters who are evicted because they cannot be accommodated. i. e. a 1,000 sq.m. property can be subdivided into 25 lots only. This is not sufficient to accommodate all the squatters living in the area. So a system of priorities is made. First priority structure owner, second priority sharer and the third priority renter. Everybody in excess of what 25 lots can accommodate are disqualified.

Introducing the Bumbaran Development Corporations Fair Housing Program Metro Manila, the National Capital Region of the Republic of the Philippines, has a population of 14 million people. About half of the population live in slums or squatter areas. Today, government demolishes these squatters and relocates them outside the metropolis. This strategy removes the urban blight and beautifies the metropolis but creates more poverty. The livelihood of the majority of these urban poor families is in the sales and services sector. Their primary source of income is servicing the rich who live in the urban centers. Relocating the poor distances them from their workplace and their sources of income. Relocation therefore only makes the poor even poorer. Our business is to provide low income household with affordable dwelling unit with the city core. Many squatters are squatting in prime pieces of privately owned real estate. The owners of these properties have been trying to remove them from their land. The continued proliferation of squatters on privately owned properties show that the private landowners as a whole have not been successful in ejecting the squatters from their properties thus a Fair Housing Program. Why FAIR HOUSING? Fair to the Land Owner Fair to the Squatters Fair to the Financier/ Developer Fair to the Neighborhood Fair to Everybody

Fair to the Land Owner. We shall offer to buy these properties. Our price is prevailing market price less 50%. If the price of the property is P 20,000/ sq.m (US $ 435). We shall offer to buy it at P 10,000/ sq.m.( US $ 218). Most of the time, the owner will agree, because he knows that we are buying not a piece of real estate but a big headache. At the moment, the city and national government buys squatted properties under the community mortgage program for a maximum of P 2,500/ sq.m. (US $ 55).

Fair to the Squatters. Affordable houses within the urban center, is it possible? We will consider the 50% discount that we were able to get from the landowner as squatters equity. This is rightfully so. If the land was not squatted upon the price is P 20,000 since it was squatted the price became P 10,000. The reduction in price was given because of the presence of squatters in the property. The P 10,000 should therefore belong to the squatters. If the land in question is 1,000 sq.m. multiplied by P10,000/ sq.m. the squatters equity is P 10,000,000. If there are 50 squatters in the property, the individual squatters equity therefore is P 200,000 minus government taxes and brokers commission. From actual experience, since 50 % is net to the land owner we subtract the 10 % government taxes and the 5% brokers commission from the 50% squatters equity. Net to the Squatter is 35%. Fair to the Financier/ Developer. In the BDC model the private developers who will be willing to undertake this kind of human development effort will be able to make more than a nominal profit. Fair to the Neighborhood. BDC is able to remove the neighborhood slum and in its place construct an orderly row of condominium buildings. Fair to Everybody. Other low income earners who are not squatters can also avail of the condominium units at very affordable prices.

Sample Project Land Owner Ledesma Family Area 1,109 sq.m. Location Within the vicinity of the University of the Philippines, Quezon City Hall, Congress of the Philippines and various government agencies Status Presently, occupied by around 30 squatter-families

Pictures of the Sample Project

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