Before anything else, fix housing

Written by Marvin A. Tort / Sway

Friday, 02 July 2010 00:11

If Albay Gov. Joey Salceda is to be believed, former Naga City mayor and Ramon Magsaysay awardee Jesse Robredo may soon head the National Housing Authority. If this will be the case, then Robredo will be a good choice. Housing—and squatting—is a major problem not only in Metro Manila but in other urban areas as well, and getting someone like Robredo to help makes plenty of sense. Vice President Jejomar Binay may want a crack at the problem as well, in the same way that Vice President Noli de Castro was housing czar during the Arroyo administration. One major achievement to his credit is the way he helped in the relocation of squatters along the rail lines in Makati City several years back, while he was still city mayor. Obviously, there is more to public housing than squatting. Another area that desperately needs government attention is financing for more public- housing projects. Singapore, with its current housing-development model touted to be a great success, reportedly patterned its existing housing- development program after that of the Philippines. To date, however, while Singapore has managed to build modern residences for its people, the Philippines still has a long way to go in terms of providing decent housing, particularly for the middle-class and the urban poor. To a large extent, project financing has been an issue, considering the government’s fiscal situation. But to the government’s credit, there are attempts to creatively finance the construction of more dwellings, if only to provide for a credible shelter program. For instance, the National Home Mortgage Finance Corp. (NHMFC) is reportedly looking at issuing P2.2 billion in residential mortgage-backed bonds later this year to raise more money for public housing. NHMFC uses funds from the Social Security System (SSS) and Pag-IBIG, or the Home Development Mutual Fund, to buy quality residential mortgages from banks, developers and state housing institutions. It then uses these mortgages as a sort of “collateral” for bonds sold to the public. And from the sale of the bonds, funds from the SSS and Pag-IBIG are paid back. Meantime, bond buyers also make a small profit from the “investment.” Everybody wins. Something similar was actually conceptualized late in the Aquino administration, and implemented early in the Ramos administration, to help finance public-housing development at the infamous Smokey Mountain in Tondo, Manila. As a result, today, what used to be the dump for a mountain of garbage is a bustling harbor development hosting homes and businesses. However, even a successful urban- development financing program is not without controversy. On June 18 a complaint was filed at the Office of the Ombudsman against then-Vice President Castro and several other officials for trying to find ways to break the 18-year-old legal impasse involving the financing of Smokey Mountain project. The complaint accused de Castro and other officials of taking part in a “midnight deal” to settle government obligations of around P4.4 billion to the state-run Home Guaranty Corp. (HGC). This settlement or payment by the government, the complainant alleged, would lead to overpayments to the Smokey Mountain project developer, R-II Builders. But the fact is, as noted in a recent Court of Appeals decision in one of several cases involving the project, CA Associate Justices Noel G. Tijam, Ramon M. Bato Jr. and Antonio L. Villamor all affirmed that R-II Builders is hardly the beneficiary of the P4.4 billion. Most of the money will be used to pay investors or financiers, and only a small fraction will actually go to R-II. When the Smokey Mountain project was conceptualized in 1992, the government had no money for the project. Thus, the state approved the creation of an asset pool or a special fund—with money sourced from various government financial institutions such as the SSS and Pag-IBIG—to help pay for the project. Funders were issued certificates to indicate the amount of money they lent to the asset pool or asset fund. The asset pool, in turn, infused a total of P4.1 billion into the project. As a result, 33 temporary buildings were built, and 21 permanent buildings now occupied by over 2,500 families. Also, 79 hectares of land were reclaimed. Of the P4.4 billion now sought as payment, inclusive of interests, and which was validated by the government itself after three years of audit and verification, P1.2 billion will actually go to the SSS as holder of Smokey Mountain Development certificates, and P3 billion will go to state-run HGC. And with that, project financiers will be fully paid. R-II Builders, meanwhile, will get only the residual amount of the asset pool, if any is left, in line with development agreement it had signed with the government. And it will receive its share only after all project obligations and liabilities have been settled, and the asset pool finally dissolved. In his inaugural address on Wednesday, President Aquino asked the public to do its share in helping the government achieve national goals. But how can one expect private business, particularly, to do its part if it cannot be guaranteed fairness and due process in its dealings with the government, as in the case of the Smokey Mountain development project? The developer has been waiting over 18 years (and five presidents) to get paid for its work, for agreeing to the government challenge to transform a former dump, a national embarrassment, to productive property. But the seeming lack of clarity in the rules of engagement just resulted in a long-running legal dispute with the state, to its financial disadvantage. But even as the government acknowledges the obligation, and the amount due, and that its own agencies such as the SSS and HGC will benefit from the settlement of the obligation, the hapless developer still cannot collect his due after almost two decades. And attempts to amicably settle the matter has just been held hostage by a graft suit. With its current financial situation, and its promise of social alleviation, the new government is in dire need of extensive private support and investments, particularly in infrastructure, to help improve the lives of the poor. One can only hope the President can quickly fix the troubled housing sector, and boost investor confidence in new and better ways to finance public housing projects.