NISUS Final Report - July2014 PDF

Developing a National Informal Settlements
Upgrading Strategy for the Philippines
FINAL REPORT
July 2014
Developing a National Informal Settlements Upgrading Strategy of the Philippines FINAL REPORT
TABLE OF CONTENTS
Page
EXECUTIVE SUMMARY vi
1 INTRODUCTION 1
1.1 A Rapidly Urbanizing Philippines 1
1.2 Urbanization and the Pervasiveness of Informal Settlements in the Philippines 1
1.3 Addressing Climate Change and Disaster Risks 1
1.4 Purpose and Structure of the Report 2
2 COMPREHENSIVE SECTOR ASSESSMENT: KEY FINDINGS AND RECOMMENDATIONS 3
2.1 Informal Settlements in the Philippines: Trends and Patterns 3
2.2 Sector Assessment 6
2.3 The Beginnings of a Reform Strategy 9
3 THE NATIONAL INFORMAL SETTLEMENTS UPGRADING STRATEGY OF THE PHILIPPINES: 11
ROADMAP TO TRANSFORMATION
3.1 The Vision: The Informal Settler Families of Tomorrow 12
3.2 The Mission Statement: Enabling the ISF’s Envisioned Transformation 12
3.3 Guiding Principles: Shepherding Actions Toward the Vision 12
3.4 The Strategic Objectives: What Will be Achieved for the ISFs by When? 13
3.5 The Strategies: Pathways to ISF Transformation 14
3.6 The Strategic Action Plan: Blueprint for Operationalizing NISUS 17
4 THE NISUS INVESTMENT REQUIREMENTS, 2014-2025 21
4.1 Production Programs 21
4.2 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
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LIST OF TABLES
1 The NISUS Strategic Objectives 14
2 The NISUS Strategic Action Plan, 2015-2025 17
3 Summary of Indicative Investment Program, 2014-2025 21
4 Indicative Investment Program—Low Estimate (Current Prices) 22
5 Indicative Investment Program, 2014-2025—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, 2014-2025—High and Low Options (Current Price) 29
9 The NISUS Strategic Action Plan: Short-, Medium-, and Long-Term Actions 32
10 The NISUS Policy and Institutional Reform Matrix 36
11 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
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ACRONYMS
ADB Asian Development Bank
APDs Areas for Priority Development
BIR Bureau of Internal Revenue
BSP Bangko Sentral ng Pilipinas
CA Cities Alliance
CALABARZON Cavite, Laguna, Batangas, Rizal and Quezon
CAS Country Assistance Strategy
CBDRRM Community-Based Disaster Risk Reduction Management
CBHM Capacity Building for Housing Microfinance
CCA Climate Change Adaptation
CCC Climate Change Commission
CDP Comprehensive Development Plans
CDS City Development Strategies
CLUP Comprehensive Land Use Plans
CMP Community Mortgage Program
CMS Content Management System
CODI Community Organizations Development Institute
CoP Community of Practice
CPH Census of Population and Housing
CSOs Civil Society Organizations
CWS Cities Without Slums
DBM Department of Budget and Management
DePED Department of Education
DENR Department of Environment and Natural Resources
DILG Department of Interior and Local Government
DIP Detailed Implementation Plan
DOH Department of Health
DOJ Department of Justice
DOLE Department of Labor and Employment
DPUCSP Development of Poor Urban Communities Sector Project
DPWH Department of Public Works and Highways
DSWD Department of Social Welfare and Development
ELA Executive Legislative Agenda
FAIR Fair, affordable, innovative and responsive
FTR File Transfer Protocol
GDP Gross Domestic Product
GIS Geographical Information System
GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit
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GoP The Government of the Philippines

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

PCUP Philippine Commission for the Urban Poor
PDP Philippines Development Plan
PMES Project Monitoring and Evaluation System
Pos Private Organizations
PPP Center Public-Private Partnership Center
SCC Special Conditions of Contract
SEHAB São Paulo Municipal Housing Secretariat
SHFC Social Housing Finance Corporation
SWS Social Weather Station
TA Technical Assistance
TCR Task Completion Report
ToR Terms of Reference
TTP Technology Transfer Plan
UPSURGE Urban Partnerships for Sustainable Upliftment, Renewal, Governance and
Empowerment
UN-Habitat United Nation Human Settlements Programme
UUPCRS Upscaling Urban Poor Community Renewal Scheme
WB World Bank
WFP Work and Financial Plan
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Developing a National Informal Settlements Upgrading Strategy for the Philippines FINAL REPORT
EXECUTIVE SUMMARY
In accordance with the contract between GHK Consulting Ltd, United The National Informal
Kingdom (the Consultants) and the Housing and Urban Development Settlements Upgrading
Coordinating Council (HUDCC) covering the provision of consulting Strategy, or NISUS for
services on the “Developing a National Informal Settlements Upgrading short. is the Philippine
Strategy (NISUS) for the Philippines Project” (or the Project), this Government’s response to
strategic plan, also known as the NISUS, was prepared with the funding the challenges posed by
and technical support of the Cities Alliance and the World Bank. The rapid urbanization and
proliferation of informal settlements in the Philippines has become a climate change. NISUS
phenomenon associated with rapid urbanization. With rapid was formulated using a
urbanization came unprecedented surges in the demand for housing and highly participatory
approach designed to
basic services in many cities, particularly the key drivers of the economy.
facilitate the achievement
Many local governments, while trying, have been unable to meet the
of a multisectoral and
increased demand given the accelerated pace warranted. The majority
multistakeholders
of informal settler families (ISFs) live in chronic urban poverty,
consensus on how NISUS
confronted by physical, economic, social, legal and environmental risks can effectively and
on a day-to-day basis. They have limited or no access to security of efficiently address the
tenure, capital, social networks, environmental safety and legal security. challenges posed by ISFs.
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 2014.
The NISUS takes off from the major finding of a comprehensive The key rationale for
assessment report (CAR) earlier undertaken as part of the Project. The NISUS is that it will be
key rationale for NISUS is that it will be instrumental in instituting the instrumental to instituting
major corrections urgently needed to the government’s housing major corrections to the
program for informal settler families (ISFs). The current programs for government’s housing
informal settlers, whether undertaken by the government, civil society, program for ISFs to
people’s organizations or the private sector, are all too small in relation achieve the scale
to the need. Most of the interventions, especially those of government, warranted by the
need to be scaled up to tackle the problems of ISFs. The future program magnitude of the
must be built on lessons learned from past interventions, and focus problem. In the next 10
years, it will serve as the
accordingly on communities. People must be put the driving seat—to
overarching strategy of
allow them to decide their own futures. This means supporting those
the Philippine Government
who in reality are the risk takers, potential entrepreneurs, and
for upgrading informal
tomorrow’s middle class—those willing to uproot themselves from settlements particularly
rural complacency and poverty in search of better opportunities and those in the danger areas.
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.
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The NISUS 2025 vision statement is—ISFs transformed into formal The agreed Vision 2025 is
urban residents in resilient, vibrant, and connected communities. This ISFs transformed into
vision statement was discussed and agreed with the stakeholders during formal urban residents in
the meetings and regional consultations. Informal settlements are resilient, vibrant, and
essentially a staging ground for people moving to the city or for people connected communities.
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 The agreed Mission is a
for at least one million ISFs by 2025—through secure and better quality profound commitment to
housing, improved physical infrastructure and social services, and a more dignified life for at
greater access to jobs, transport, capital, and livelihood. A life of dignity least one million ISFs by
is a life of pride and self-respect. NISUS will work towards providing at 2025—through secure and
least one million ISFs with a life of more dignity by 2025. The target of better quality housing,
one million ISF entails the delivery of quality housing, improved improved physical
infrastructure and social services, and greater access to jobs, transport, infrastructure and social
capital and livelihood to an average of 100,000 ISFs annually for 10 years. services, and greater
This represents a big leap from the current 30,000 delivered by the access to jobs, transport,
capital, and livelihood.
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 The objectives of NISUS
analysis of the informal settlements in the Philippines was conducted to are as follows: (1)
define the core problem, its effects, and its causes. The objectives of upgrading, relocation and
NISUS address the three main causes of the huge demand-supply gap incremental, affordable
that exists in affordable ISF housing. The first objective which relates to new homes for sale and
inadequate planning and production is: upgrading, relocation and rent, (2) market-based
incremental, affordable new homes for sale and rent. The targets for housing and microfinance
this objective are: and targeted subsidies for
ISFs, and (3) strengthened
 ISFs living in danger areas rehoused in vibrant, resilient and sector governance,
connected communities; organizational, staff and
 ISFs on public and private land live in fully upgraded communities resource capacity at the
local and national levels.
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;
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 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 2025.
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 2025.
Strategies have been prepared, discussed and agreed with the Five strategies will support
stakeholders to support each of the three NISUS objectives. Five the NISUS objective of
strategies will help achieve the first objective of upgrading, upgrading, relocation and
relocation and incremental affordable new homes for sale and incremental affordable
rent. They include: new homes for sale and
rent. They are predicated
 guiding future land development within the context of strategic on the LGUs taking the
city-wide planning and climate change adaptation and disaster lead in strategic city-wide
risk reduction and management (CCA/DRRM); urban planning, urban
renewal, and ISF housing
 adopting informal settlements upgrading with alternativesecure
through viable partnerhips
tenure mechanisms within an urban renewal, CCA/DRRM, and
with the private sector,
income generating framework; civil society and people’s
 resettling people more selectively with appropriate organizations. The key
compensation and choice in sustainable new towns; approach to ISF housing
will be on-site upgrading
 engagaging the private sector and civil society to produce and and when necessary,
manage affordable new homes to ISFs, and resettling people
selectively to viable new
 encouraging a fully functioning private rental market.
towns connected to jobs,
A strategic city-wide planning provides more scope for ISF communities employment, transport
to be recognized for their contributions to the city and the local and livelihood.
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
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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 Four strategies aimed at
market-based housing finance and microfinance and targeted achieving market-based
subsidies for ISFs. They include: housing finance and
microfinance and targeted
 shifting more to the market for ISF housing finance to facilitate subsidies for ISFs will be
guarantees, securitization, private sector participation in implemented. A national
financing and cost recovery; facility for urban renewal
and ISF will be launched
 expanding the role of microfinance and community finance in and operationalized.
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.
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 Five strategies will help
strengthened sector governance, organizational staff, and achieve the fifth objective
resource capacity at the local and national levels. They include: of strengthened sector
governance,
 improving the capacity of LGUs as the lead agencies for urban organizational staff, and
renewal and ISF housing; resource capacity at the
 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 A strategic action plan has
strategy, the agencies and organizations involved, as well as the time been agreed and prepared
frame for implementation. The Consultants have proposed that NISUS to speed up the NISUS
be implemented through a 10-year program, consisting of 3 projects. implementation. The
Each project will be implemented in 3-4 years, may overlap, and will have Consultants have
the following components: (i) an investment component to prepare and recommended that a 10-
implement IS upgrading and new towns through LGU stand alone or year implementation
PPPP projects; (ii) a housing finance and microfinance/community finance program be launched,
component; (iii) a policy and institutional reform component; and (iv) a consisting of 3 shorter-
capacity development component. The priority actions comprising the term projects. The priority
actions comprising the
critical path have been identified as follows:
critical path to
 Guide future land development within the context of strategic city- implementing NISUS have
wide development, climate change adaptation (CCA) and disaster been identified.
risk reduction management (DRRM)—where each city prepares a
July 2014 Page ix

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 Preparations for the NISUS
legislative and executive measures has been formulated to support the policy and institutional
implementation of NISUS. A preliminary results and monitoring reform matrix, results and
framework based on the proposed NISUS has been prepared for the monitoring framework,
overall program. This will be reviewed as the program design progresses and an effective
further and one for each project will also be produced to facilitate communication plan have
periodic performance monitoring and evaluation. A communication plan been initiated.
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).
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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. 2011. Regularization of Informal Settlements in Latin America. In
Policy Focus Report Series. Cambridge, USA: Lincoln Institute of Land Policy.
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July 2014
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. 2012. World
Urbanization Prospects–The 2011 Revision: Highlights. New York: United Nations.
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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 public-
private-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.
2. 1 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 United Nations Human Settlement Programme
the legal position of the settlements. For the (UN-Habitat) defines informal settlements as areas
purpose of NISUS, the UN-Habitat definition of where groups of housing units have been constructed
informal settlements has been applied. In essence, on land that the occupantshave no legal claim to, and
where housing is not in compliance with current
informal settlements have been defined as those that planning and building regulations.
cannot provide one of the following basic living
characteristics:
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.
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July 2014
 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 Box 1. A Rapidly Urbanizing Philippines
has accompanied this economic The Philippines had the highest level of urbanization among its
transformation of the Philippines—with neighboring Asian countries up until mid- to late 2000, with
millions of Filipinos migrating from farmlands 30.3% to 48% of its total population residing in urban areas. By
2015, nearly half of its entire population is projected to become
to cities each year, particularly to Metro urbanites. Its average annual rate of urbanization, which was
Manila, which with its estimated 11.5 million considered the fastest in the Asia region from 1960 up to the
urban residents, has become one of the mid-1990s, ranged from 3.79% to 5.04%.
world’s largest urban agglomerations (Box 1).
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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, In addition to income poverty, informal settlers
social services, and livelihood and employment. In confront on a daily basis social and economic
Metro Manila, Cebu, Davao and other emerging urban exclusion, as well as exposure to health risks and
centers, informal settlements stand in stark contrast to life threatening conditions.
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 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.
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July 2014
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.”
There are other relevant legislations. The

Comprehensive and Integrated Shelter Financing
Act of 1994 increased the paid up capital of the Box 2. Legal Framework for Informal Settlement
National Home Mortgage Finance Corporation Upgrading in the Philippines
(NHMFC) and the Home Guaranty Corporation The Local Government Code of 1991 and the Urban
(HGC) to ensure continuous funding support to Development Housing Act define the cornerstone for
vigorously implement the government's programs implementing socialized housing in the Philippines. Other
important, albeit a bit outdated, legislations support
for urban and rural housing, resettlement, the financing and planning.
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 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
July 2014
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 The massive relocation of informal settlers to distant
assisted more modestly under slum upgrading locations, destroying the existing housing stock and replacing
them with new units, has cost the Government a staggering
programs at a much less cost of nearly PhP8 Php42 billion in the last 12 years. In contrast, slum
billion—153,000 families under the Community upgrading programs have cost much less at just nearly Php 8
Mortgage Program (CMP) for an average cost of billion for almost the same number of beneficiaries.
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
beyond the affordable limits of many informal
Box 3. Inefficiencies of Housing Subsidies settlers. Furthermore, the collateral and other
The universal interest rate subsidies, guarantees and amortization documentary requirements of HDMF financing
support have seriously distorted the low-middle income housing were too difficult and costly for the informal
finance market and have meant that the private banking sector settler families to qualify.
could not be involved in such financing in a big way, if at all.
Private developers, too, have failed to reach the
Furthermore, the subsidies set a bad example, such that people
informal settlers since many consider housing for
become dependent upon them. To provide a subsidy for the entire
the poor to be a non-profitable segment of the
duration of 25-30 year mortgage loan is self defeating, and
unfortunately implies that the beneficiaries will remain poor over
market. Many of them perceive they will be
the duration of repayment period—the only justification for the
unable to build and sell house and lot packages
continuing subsidy. And repayment periods beyond 20 years
for at most PhP450,000—the socialized housing
make very little difference to loan affordability. Furthermore,
price ceiling. Nevertheless, this package appears
evidence shows that many of these subsidized loans went to the
to be affordable by many whose incomes are at
better off. 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.
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July 2014
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 Enforcement of the laws against squatting has also been weak.
often “boiler plate” plans are produced, Countless new structures are regularly built, many in danger areas and
while the horizon for the CDPs is too in some cases on land already cleared once before. Weak capacity
short, seldom incorporating strategic within the local governments, an unwillingness of officials to act, and a
thinking and often ending as a “wish list” tolerance, often for political reasons has made enforcement nearly
of unfunded investment projects. Even impossible. But there have been some good examples where
the considerable growth of Metro Manila communities have been called upon to monitor and report all new
construction activities to the city government who check that they have
and its extended urban area has taken the required permits.
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, 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. Public infrastructure
currently follows, rather than leads development.
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.
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July 2014
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 The reform strategy must be built on lessons learned from past
interventions, and focus accordingly on communities and put
allows people the opportunity to transform people and the local governments firmly in the driving seat. It
from informal settlers into active participants should also supportthose who in reality are the risk takers,
of the urban economy, and for the potential potential entrepreneurs, and tomorrow’s middle class—those
beneficiaries to fully accept and assume the willing to uproot themselves from rural complacency and poverty
responsibilities that go with this change. Given in search of better opportunities and wealth.
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:
 Accept that people matter—informal settlers must be the decision makers.
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July 2014
 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 25-50-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.
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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 July 2014, 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 July 2014. 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.
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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 The VISION 2025 is ISFs transformed into
where they can live cheaply in the interim, until formal urban residents in resilient, vibrant,
they establish themselves. In the long-term, most and connected communities.
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 self-

respect. NISUS will work towards
providing at least one million ISFs with a The MISSION is profound commitment to a more
more dignified life by 2025. The target dignified life for at least one million ISFs by 2025—
of one million ISF entails the delivery of through secure and better quality housing, improved
quality housing, improved infrastructure
physical infrastructure and social services, and greater
access to jobs, transport, capital, and livelihood.
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

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.
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July 2014
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
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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 2025
3.5 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
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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
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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
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
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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, 2015-2025

Agencies/Organizations
Objectives/Strategies/Actions Timeframe
Responsible
Strategic Objective No. 1: Upgrading, relocation, and incremental, affordable new homes for sale and rent
1.1. Prepare, approve, and mainstream guidelines for 2015
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, 2015-2017
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, 2015-2017
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 2015
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 2015-2016
bring idle lands into productive use including ISF
housing
1.6 Reassess and address constraints to land HUDCC, KSAs, HLURB,
administration and management with respect to DENR, DOJ, LRA, LMB 2015-2017
urban areas, including informal settlements
2.1 Prepare, mainstream, and approve urban HUDCC, MMDA, NHA, 2015
renewaland income generating concepts HLURB, DILG, DOLE,
Strategy 2. Adopt 2.2 Review and improve community action planning DSWD, DPWH, DOTC, 2015
including tools developed under previous projects
informal settlements 2.3 Develop and implement urban renewal concept for PCUP, NAPC
upgrading with secure 2015-2025
each city
tenure within an urban 2.4 Review and implement improvements to CMP LGUs, League of Cities,
2015-2025
renewal, CCA/DRRM, and program design and upgrade existing projects NHA, SHFC, HUDCC,
income generating 2.5 Use rights-based instruments as alternatives to DENR, DOJ LRA, LMB, 2015-2025
titles to accelerate secure tenure for ISFs
framework BSP, Concerned Private
2.6 Develop and implement upgrading plans for land 2015-2025
proclaimed for socialized housing Sector and Civil Society
2.7 Prepare and implement plans for comprehensive IS Groups, Regional and
upgrading in danger/high risk areas, privately Metropolitan 2015-2025
owned land, and government owned land, Coordinating Boards
incorporating community action plans
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Responsible
3.1 For ISFs in danger/high risk areas or on land
needed for government infrastructure projects, HUDCC, KSAs, MMDA, 2015-2016
identify ISFs for relocation DILG, DOF, NEDA,
Strategy 3. Resettle 3.2 Formulate policy framework for in-city and off-city DOTC, Dep Ed, DOH,
people selectively with relocation schemes including selection criteria, PCUP, NAPC, LGUs, 2015
appropriate compensation, and other incentive schemes for Leagues of Cities
receiving LGUs
compensation and LGUs, Leagues of Cities,
3.3 Review and revise compensation and subsidy 2015
choice within a policies for affected ISFs Concerned Private
sustainable new town 3.4 For each city, develop and implement plans for in- Sector and Civil Society
framework city relocation and sustainable new town Groups, Regional and 2015-2025
schemesfor off-city relocation Metropolitan
3.5 Ensure appropriate post-relocation support is Coordinating Boards 2015-2025
provided to affected ISFs
4.1 Reassess current model schemes for PPPs involving HUDCC, NHA, MMDA,
private sector, MFIs and NGOs—from management Other KSAs, PPP Center, 2015
contracts to joint ventures DTI-BOI, BIR, DOF,
Strategy 4. Engage the 4.2 Strengthen policy and regulatory framework, and 2015-2016
incentives for PPPs and PSPs PCUP, NAPC, LGUs,
private sector and civil
4.3 Develop and implement PPPs and PSPs League of Cities, 2015-2025
society to produce and
4.4 Involve the private sector and civil society, NGOs Concerned Private
manage affordable, new 2015-2025
and MFIs in estate management activities Sector and Civil Society
homes to ISFs 4.5 Encourage major industrial enterprises to provide Groups, Regional and
suitable employee housing or accommodations Metropolitan 2015-2025
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, 2015-2016
Strategy 5. Encourage a improve the private rental market for ISFs
5.3 Design and implement a rental housing support Concerned Private
fully functioning private
program for ISFs Sector and Civil Society
rental market
Groups, Regional and 2015-2025
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 HUDCC, KSAs, GSIS, SSS, 2015-2016
prospects of securitization DOF, NEDA, BSP,
Strategy 6. Shift more 6.2 Amend the HGC guaranty program for socialized Commercials Banks, 2015-2016
housing to partial coverage
to the market for ISF 6.3 Adopt market-driven, variable interest rates for MFIs, PCUP, NAPC,
housing finance Concerned Private 2015-2016
socialized housing
6.4 Seek commercial banking involvement Sector and Civil Society 2015-2016
6.5 Adopt more efficient and pro-poor collection Groups
2015-2025
systems
7.1 Strengthen SHFC as microfinance wholesaler and 2015-2016
development financier
Strategy 7. Expand the 7.2 Promote saving schemes within ISF communities HUDCC, SHFC, NHA, 2015-2025
role of microfinance 7.3 Promote and incentivize MFIs to provide HGC, BSP, PCUP,
and community finance appropriate housing finance products and services NAPC, Concerned Private 2015-2025
in urban renewal and for ISFs Sector and Civil Society
ISF housing 7.4 Establish and implement mechanisms for community Groups
finance to facilitate ISF housing and small-scale 2015-2025
infrastructure improvement
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Responsible
8.1 Design a targeted subsidy system for ISFs HUDCC, KSAs, MMDA, 2015
Strategy 8. Target 8.2 Identify funding sources for the targeted subsidy DOF, DBM, NEDA, DILG, 2015-2016
subsidies to those in program PCUP, NAPC, DSWD,
need based on 8.3 Devise mechanisms for implementing rules and Concerned Private 2015-2016
regulations
household incomes 8.4 Implement and monitor the program Sector and Civil Society
Groups 2016-2025
9.1 Design a competitive system based on performance
and develop funding mechanisms for local 2015-2016
governments’ access to finance for urban renewal HUDCC, KSAs, DOF,
and ISF housing DBM, NEDA, DILG,
Strategy 9. Provide
9.2 Prepare the implementing rules and regulations for Concerned Private
appropriate funding for the system including the institutional and financing 2016
Sector and Civil Society
urban renewal and ISF arrangements Groups, Regional and
housing 9.3 Prepare and package projects for financing 2015-2025
Metropolitan
9.4 Identify and mobilize other resources for LGUs to Coordinating Boards
finance and implement urban renewal and ISF 2015-2025
housing
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 HUDCC, MMDA, NEDA, 2015-2025
upgrading, estate management and PPPs DILG, NDRRMC, CCC.
10.3 Develop and create incentives for LGUS to adopt PCUP, NAPC, PPP
Strategy 10. Improve an institutionalized response to urban renewal and 2015-2017
ISF housing Center, LGUs, Regional
capacity of local
10.4 Encourage more partnerships between LGUs and or Metropolitan
governments as the
academic and professional organizations, private Coordinating Bodies, 2015-2025
lead agencies for sector and civil society Concerned Private
urban renewal and ISF 10.5 Strengthen practice of coordinated IS planning Sector, Civil Society
housing within a cluster city or metropolitan development 2015-2025
approach among LGUs Groups, Academe,
10.6 Improve capacity and system for enforcement of Professional
laws against illegal land occupation and Organizations 2015-2025
construction
10.7 Develop improved mechanisms for implementing the 2015-2016
20% balanced housing policy of the government
11.1 Clarify the role and responsibilities of HUDCC in 2015
urban development and ISF housing
11.2 Develop corporate business plan for SHFC and HUDCC, SHFC, NHA,
enact appropriate legislation for its role in ISF HGC, MMDA, PCUP, 2015-2016
Strategy 11. Improve
housing NAPC, Concerned Private
sector governance 11.3 Clarify the roles and involvement of NHA, HGC, and Sector and Civil Society 2015
MMDA in ISF housing Groups
11.4 Establish effective coordination and linkages with 2015
other government agencies involved in the sector
12.1 Strengthen HUDCC’s leadership and managerial
Strategy 12. Enhance capacity for urban development, ISF housing and 2015-2016
PPPs HUDCC, KSAs,
sector leadership, wider
12.2 Review and improve training modules of HUDCC for MMDA,PPP Center, DILG.
vision and improved 2015-2016
local governments and ISF communities PCUP, NAPC,
skills for urban
12.3 Strengthen the capacity of KSAs to engage in Concerned Private
development and ISF urban development, ISF housing, CCA in ISF 2015-2019
Sector and Civil Society
housing at the national housing, and PPPs Groups
level 12.4 Strengthen the capacity of NHA for estate 2015-2017
management
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Responsible
12.5 Strengthen the capacity of DILG and MMDA for
strategic urban planning, urban renewal, and ISF 2015-2016
housing
13.1 Develop and operationalize a comprehensive and HUDCC, NEDA, NSO,
integrated program performance monitoring system 2015
including transformative indices MMDA, DILG, PCUP,
Strategy13: Set up, 13.2 Develop, operationalize, and train HUDCC in NAPC, Academe,
operationalize and monitoring and evaluation and knowledge and Concerned Private 2015
build capacity for information management for the urban Sector, Civil Society
development and housing sector Groups, and People’s
appropriate data
13.3 Improve data collection, aggregation, and analysis 2015
collection, mapping, of urban and housing data Organizations
knowledge management, 13.4 Design/install or update GIS for city-wide mapping LGUs, League of Cities,
and monitoring systems of ISFs, hazards, and economic activities within Concerned Private 2015-2025
each city
13.5 Train city staff in maintaining and operating the Sector and Civil Society
Groups 2015-2025
local GIS
14.1 Provide training in strategic urban planning, urban
renewal, community action planning and safe 2015
housing, and community finance
14.2 Strengthen the capacity of POs, CBOs, HOAs and
cooperatives in estate/community management 2015
Strategy 14: Build including billing and collection , financial
capacity of people’s management and accountability
14.3 Enhance the capacity of POs, CBO, and HOAs in SHFC, PCFC,NHA,
organizations,
project monitoring , evaluation, and impact HLURB, PCUP, NAPC, 2015-2017
community-based assessment Concerned Private
organizations and 14.4 Design and implement training modules in the Sector, Civil Society
homeowners’ application of microfinance to ISF housing including
Groups, MFIs 2015-2025
associations to engage savings mobilization, credit enhancement, and
more in ISF housing conflict resolution
14.5 Strengthen capacity of communities in working with
LGUs to enforce laws against illegal land 2015-2017
occupation and construction
14.6 Develop partnerships between POs and academe in
building capacity for community-based planning 2015-2016
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
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4 THE NISUS INVESTMENT REQUIREMENTS, 2014–2025
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 506.7 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, 2014-2025

Low Estimate High Estimate
Investment Cost Php Billions US$ Billions Php Billions US$ Billions
Construction of new housing units 206.6 4.8 469.8 10.9
Relocation/upgrading of existing informal settlements 300.1 7.0 582.3 13.6
Total 506.7 11.8 1,052.1 24.5
Average annual investment requirements 42.2 1.0 87.7 2.0
Subsidy requirements
Amount (Billions) 79.6 268.8
Percentage of total investments 15.7% 25.5%
Number of Units Low Estimate (Millions) High Estimate (Millions)
Construction of new housing units 0.4 0.7
Relocation/upgrading of existing informal settlements 1.0 1.5
Total 1.4 2.2
Average annual number of units Low estimate High estimate
Construction of new housing units 35,600 59,200
Relocation/upgrading of existing informal settlements 83,300 125,200
Total 118,900 184,400
Source: Consultant’s estimates, July 2014
Note: Exchange rate US$1 = PhP43
4.1 Production Programs

4.1.1 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
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July 2014
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 decile6 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 Php2683.8 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, 2014-2025—Low Estimate (Current Prices)

Investment Cost - Pesos Billions 2014/2015 2016/2020 2021/2025 Total
Construction of new housing units:
National Capital Region For Poorest 30% 3.37 36.64 69.91 109.91
Urban Areas Outside National Capital Region For Poorest 30% 3.14 24.63 68.86 96.64
Sub-total 6.51 61.27 138.77 206.55
Average annual requirements 3.26 12.25 27.75 17.21
Relocation/upgrading of existing informal settlements
National Capital Region - 100% of ISFs 11.45 96.69 77.43 185.58
Outside National Capital Region - 45% of ISFs 2.31 50.07 62.15 114.53
Sub-total 13.76 146.76 139.58 300/10
Total
National Capital Region 14.82 122.33 147.34 295.49
Urban Areas Outside National Capital Region 5.45 74.71 131.01 211.17
Grand Total 20.27 208.04 278.35 506.66
Number of Units 2014/2015 2016/2020 2021/2025 Total
National Capital Region For Poorest 30% 8,064 76,854 120,540 205,458
Urban Areas Outside National Capital Region For Poorest 30% 9,361 64,207 147,520 221,088
Sub-total 17,425 141,061 268,060 426,546
Average new units per year 8,712 28,212 53,612 35,546
National Capital Region - 100% of ISFs 43,832 321,434 219,159 584,425
Outside National Capital Region - 45% of ISFs 10,389 197,398 207,788 415,575
Sub-total 54,221 518,832 426,947 1,000,000
Average number of ISF per year 27,111 103,766 85,389 83,333
6 Under current market lending terms of 6% annual interest with repayments over a maximum of 15 years.
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Total
National Capital Region 51,896 398,288 339,699 789,883
Urban Areas Outside National Capital Region 19,750 261,605 355,308 636,663
Grand Total 71,646 659,893 695,007 1,426,546
Average new units/ISFs per year 35,823 131,979 139,001 118,879
Subsidy requirements - Pesos Billions 2014/2015 2016/2020 2021/2025 Total
Sub-total 0.62 5.41 13.32 19.35
Sub-total 1.93 27.78 30.53 60.24
Total
Grand Total 2.55 33.20 43.85 79.59
Key Assumptions 2014/2015 2016/2020 2021/2025
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%
Table 5. Indicative Investment Program, 2014-2025—High Estimate (Current Prices)

Investment Cost - Pesos Billions 2014/2015 2016/2020 2021/2025 Total
Sub-total 14.81 139.39 315.65 469.85
Sub-total 21.92 275.10 285.23 582.25
Total
Grand Total 36.73 414.49 600.88 1,052.10
Number of Units 2014/2015 2016/2020 2021/2025 Total
National Capital Region For Poorest 50% 13,440 128,090 200,899 342,429
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July 2014
Urban Areas Outside National Capital Region For Poorest 50% 15,602 107,012 245,867 368,481
Sub-total 29,042 235,102 446,766 710,910
Average new units per year 14,521 47,020 89,353 59,242
National Capital Region - 100% of ISFs 43,832 321,434 219,159 584,425
Outside National Capital Region - 100% of ISFs 22,948 436,008 458,956 917,912
Sub-total 66,780 757,442 678,115 1,502,337
Average number of ISF per year 33,390 151,488 135,623 125,195
Total
National Capital Region 57,272 449,524 420,058 926,854
Urban Areas Outside National Capital Region 38,550 543,020 704,823 1,286,393
Grand Total 95,822 992,544 1,124,881 2,213,247
Average new units/ISFs per year 47,911 198,509 224,976 184,437
Subsidy requirements - Pesos Billions 2014/2015 2016/2020 2021/2025 Total
Sub-total 2.18 19.37 46.87 68.42
Sub-total 5.62 90.78 103.97 200.37
Total
Grand Total 7.80 110.16 150.84 268.79
Key Assumptions 2014/2015 2016/2020 2021/2025
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%
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.
4.1.2 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
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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, 2012. 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 2026. 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 2026.
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
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July 2014
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:
2014/15 25.0% 10.0%
Time period 2016/20 75.0% 25.0%
2021/25 100.0% 50.0%
Average cost of housing units (Pesos)
Multi-story apartments 580,000 820,000 440,000 760,000
Row houses 400,000 600,000 300,000 450,000
Sites and services 290,000 440,000 220,000 330,000
Percentage distribution Multi-story apartments 30% 30% 30% 30%
among housing units Row houses 30% 30% 30% 30%
Sites and services 40% 40% 40% 40%
Weighted average cost of housing unit/limit for
410,000 600,000 310,000 500,000
directed subsidy (Pesos)
Annual urban population 2010/15 1.98% 2.25%
growth rates 2016/20 2.33% 2.28%
2021/25 2.44% 2.34%
New house purchase Annual interest rate 6% 6%
housing loan terms Period (years) 15 15
Monthly household First 12,229 10% 7,345 10%

income and % for Second 15,005 12% 9,526 12%
loan repayments by Third 18,005 15% 11,243 12%
decile: Fourth 21,309 15% 13,425 12%
Fifth 23,844 15% 15,544 12%
General assumptions:
2014/15 3.6% 3.6%
Annual inflation rate for
2016/20 4.0% 4.0%
period
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, 2013. 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%.
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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 in-
city 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 NCR8. 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
Capital Region
Informal settlements—relocation and upgrading
Number and % of Low estimate (Peso) 584,425 100.0% 415,575 45.3%
families under
High estimate (Peso) 584,425 100.0% 917,911 100.0%
program, 2014/25:
Weighted average cost of upgrading/relocation in 2013 Low estimate High estimate Low estimate High estimate
prices/limit for directed subsidy (Pesos) 250,000 330,000 210,000 280,000
In-city relocation (ICR) 450,000 450,000 330,000 330,000
Unit cost per program
Off-city relocation (OCR) 290,000 290,000 210,000 210,000
(Pesos)
On-site upgrading (OSU) 165,000 165,000 120,000 120,000
Percentage of ISFs Low estimate High estimate Low estimate High estimate
assumed to select Location ICR OCR OSU ICR OCR OSU ICR OCR OSU ICR OCR OSU
each program Danger areas 50 30 20 75 25 0 30 50 20 75 25 0
Public infrastructure 60 40 0 70 30 0 60 40 0 70 30 0
Public land 0 0 100 20 20 60 0 0 100 20 20 60
Private land 20 20 60 50 25 25 20 20 60 50 25 25
Other 30 30 40 20 20 60 30 30 40 20 20 60
In-city relocation 21.7% 46.0% 26.5% 64.7%
Percentage of IFS Off-city relocation 17.4% 23.6% 40.2% 24.5%
under each program 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.
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Assumptions
Capital Region
ISF housing loan Interest rate (pa) 6% 6%
terms Period (years) 15 15
Monthly HH % of income for Monthly HH % of income for
income (Php) loan repayments income (Php) loan repayments
Monthly household First 4,433 10% 1,773 10%
income and % for Second 6,448 10% 2,579 10%
loan repayments by Third 7,657 10% 3,063 10%
decile: 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
Percentage of total 2014 2.5% 0.0%
program implemented 2015 5.0% 2.5%
in each year 2016 7.5% 5.0%
2017 10.0% 7.5%
2018 12.5% 10.0%
2019 12.5% 12.5%
2020 12.5% 12.5%
2021 12.5% 12.5%
2022 10.0% 12.5%
2023 7.5% 10.0%
2024 5.0% 10.0%
2025 2.5% 5.0%
Total 100.0% 100.0%
General assumptions:
2014/15 3.6% 3.6%
Annual inflation rate
2016/20 4.0% 4.0%
for period
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
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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, 2014-2025—High and Low Options (Current Prices)
Mortgage Finance Requirements - Pesos Billions
Low Estimate 2014/2015 2016/2020 2021/2025 Total
Sub-total 5.70 53.92 121.39 181.02
Sub-total 11.83 118.98 109.05 239.86
Total
Grand Total 17.53 172.90 230.44 420.88
High estimate 2014/2015 2016/2020 2021/2025 Total
Sub-total 12.07 114.58 256.92 383.58
Sub-total 16.30 184.32 181.26 381.88
Total
Grand Total 28.37 298.90 438.18 765.45
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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.
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Table 9. The NISUS Strategic Action Plan: Short-, Medium-, and Long-Term Actions
Year
Strategy/Action
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
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 city-
wide 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 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
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Year
Strategy/Action
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
3.4 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
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Year
Strategy/Action
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
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 city-
wide 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
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July 2014
Year
Strategy/Action
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
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
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 community-
based 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
Legend:
Actions required in the short-term
Actions required over the medium-term
Actions required over the long-term
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July 2014
Table 10. The NISUS Policy and Institutional Reform Matrix

Actions
Policy Objective Issues Agency Timeframe Status/Remarks
To be Taken
1. Implement Upgrading, Relocation, and Incremental, Affordable New Homes for Sale and Rent
 Guide future land  Inadequate guidelines for  Amend the implementing rules HUDCC, MMDA, HLURB, NEDA, DILG, 2015
development within strategic urban assessments and regulations of the National DPWH, DOTC, DENR, NDRRMC, CCC,
The context of and plans including ISF Building Code to include PCUP, NAPC, LGUs, LGU Leagues,
Strategic city-wide housing which incorporate CCA/DRRM to ensure disaster Concerned Private Sector, Civil Society
Groups, People’s Organizations, Regional
Development and CCA/DRRM principles resilient construction.
and Metropolitan Coordinating Boards
CCA/DRRM  Prepare implementing rules and
regulations for strategic city-wide
planning.
 Adopt informal  Government housing  A HUDCC-led inter-agency HUDCC, MMDA, NHA, HLURB, DILG, 2015-2016 The BSP had previously passed a
settlements with programs for ISFs are slowed technical working group to DOLE, DSWD, DPWH, DOTC, PCUP, circular covering provisions of housing
secure tenure within down by difficult access to update usufructs and other lease NAPC, LGUs, League of Cities, NHA, Microfinance lending facility of
an urban renewal, financing due to collateral variants as negotiable and SHFC, HUDCC, DENR, DOJ LRA, LMB, microfinance institutions and rural bank.
BSP, Concerned Private Sector and Civil The guidelines allowed non-freehold
CCA/DRRM, and requirements and the need transferrable rights-based
Society Groups, Regional and titles or rights-based instruments as
income generating for secure tenure instruments as collateral Metropolitan Coordinating Boards collateral and even provided the
framework substitutes. A joint memorandum guidelines for appraisal for various
circular to encourage their use instruments.
to be issued.
 Resettle people  Absence of strong ISF  Executive issuance on ISF housing HUDCC, KSAs, MMDA, DILG, DOF, NEDA, 2015 SHFC Board has likewise passed a
selectively with housing policy framework policy framework for in-city and DOTC, Dep Ed, DOH, PCUP, NAPC, resolution allowing rights-based
appropriate that covers in-city and off off-city relocation schemes LGUs, Leagues of Cities, Concerned instruments as collaterals to housing
compensation and city relocation, and onsite including selection criteria, Private Sector and Civil Society Groups, loans based on a legal opinion obtained
Regional and Metropolitan Coordinating by SHFC
choice within a upgrading compensation, and other
Boards Preference for selective resettlement has
sustainable new town  Weak policy on subsidies incentive schemes for receiving
been indicated as a preferred option for
framework LGUs.
ongoing projects for ISFs along
 Formulate and issue guidelines waterways and also for those on land
for targeted capital subsidies for needed for government infrastructure
the ISFs projects
July 2014 Page 36

Actions
To be Taken
World Bank provided technical
assistance to establish subsidy
Mechanism for ISFs covered by the
government project for ISFs along
waterways.
 Engage the private  Private sector, communities,  Review and revise current laws HUDCC, NHA, MMDA, Other KSAs, PPP 2015-2025 Participation of private sector developers
sector and civil and other stakeholders need on PPs and PSP to strengthen Center, DTI-BOI, BIR, DOF, PCUP, NAPC, through OSHDP and others have
society to produce to be included in ISF incentive mechanism LGUs, League of Cities, Concerned presented opportunities for partnerships
and manage Housing. Private Sector and Civil Society Groups, in ISF housing projects. NGOs have also
Regional and Metropolitan Coordinating worked alongside communities to build
affordable, new homes
Boards affordable homes for ISFs
to ISFs
The current project for ISFs along the
waterways will include rental housing as
an alternative to temporary housing.
 Encourage a fully  Private rental market  Strengthen policy and regulatory HUDCC, NHA, MMDA, Other KSAs, PPP
functioning private requires recognition and measures to improve the private Center, DTI-BOI, BIR, DOF, PCUP, NAPC,
rental market strengthening. rental housing for ISFs LGUs, League of Cities, Concerned
Private Sector and Civil Society Groups,
Regional and Metropolitan Coordinating
Boards Coordinating Boards
2. Promote Market-Based Housing Finance and Microfinance and Targeted Subsidies for Socialized Housing
 Shift more to the  Ongoing use of interest rate  Issue revised implementing rules HUDCC, KSAs, GSIS, SSS, DOF, NEDA, 2015-2016 BSP approved a housing microfinance
market for ISF housing subsidy by shelter finance and regulations amending the BSP, Commercials Banks, MFIs, PCUP, product manual to instruct banking MFIs
finance institutions causes market HGC Guaranty program for NAPC, Concerned Private Sector and on how to engage in pro-poor, market-
distortions socialized housing to partial Civil Society Groups based shelter finance programs using
microfinance polices and practices.
coverage.
 Secure enactment of the law
creating SHFC.
 Executive issuances adopting
market-driven, variable interest
rates for socialized housing
July 2014 Page 37

Actions
To be Taken
 Target subsidies to  Loose targeting and  Prepare targeted subsidy HUDCC, KSAs, MMDA, DOF, DBM, NEDA, 2015-2016 World Bank has aided the establishment
those in need based allocation of subsidies often mechanisms and clear DILG, PCUP, NAPC, DSWD, Concerned of a subsidy structure for the
on household incomes. crowd out private sector implementing rules and Private Sector and Civil Society Groups government project on prioritized danger
financing. regulations including an efficient areas. This may be adopted for policy
framework.
monitoring system.
 Provide appropriate  Lack of funding mechanism  Prepare the implementing rules HUDCC, KSAs, DOF, DBM, NEDA, DILG, 2016
funding for urban for LGUs to finance urban and regulations for a Concerned Private Sector and Civil
renewal and ISF renewal and ISF Housing performance-based competitive Society Groups, Regional and
housing transfer system for LGUs Metropolitan Coordinating Boards
including the institutional and
financing arrangements
3. Strengthened Sector Governance, Organizational Staff, and Resource Capacity at the Local and International Levels
 Improve capacity of  Government housing finance  Review and revise laws against HUDCC, MMDA, NEDA, DILG, NDRRMC, 2015-2017 Study to determine appropriate linkages
local governments as institutions with socialized illegal land occupation and CCC. PCUP, NAPC, PPP Center, LGUs, amongst KSAs to support scaling-up of
the lead agencies for housing mandate require construction Regional or Metropolitan Coordinating their respective pro-poor housing
urban renewal and capacity building to provide Bodies, Concerned Private Sector, Civil programs is necessary.
efficient services which will
 Develop improved mechanisms Society Groups, Academe, Professional
ISF housing 20% balanced housing is viewed by
increase the urban poor’s and prepare guidelines for Organizations various stakeholders as a tool to raise
access to shelter finance and implementing the 20% balanced funds for the LGU urban renewal and
livelihood opportunities housing policy of the government ISF housing program.
July 2014 Page 38

Table 11. Preliminary Results and Monitoring Framework for NISUS
Results Summary Performance Targets/Indicators Data Source/Reporting Assumptions and Risks

Mechanisms
Impact: By 2030: Assumption
 ISFs transformed into formal  Government and the political
urban residents in resilient,  Urban poverty incidence  HUDCC Annual Reports climate continue to be
vibrant, and connected reduced by 40% supportive of NISUS
 Philippine Statistical Reports
communities.  Community transformability Risk
indeces improved by 50% 9  NSO Quarterly and Annual
Reports  Adverse economic
 NAPC, PCUP Reports developments, locally or
internationally, slow down or
 Community Transformability stop program implementation
Indeces, Ateneo de Manila
University Reports
Outcome: By 2025: Assumption
 A more dignified life for  Number of ISFs particularly  HUDCC Annual Reports  ISFs, people’s organizations
ISFs through secure and in highly urbanized cities and local governments are
 Philippine Statistical Reports able to collaborate closely
better quality housing, reduced by at least 60%
improved physical  NSO Quarterly and Annual with the private sector and
infrastructure and social  Incomes of ISFs improved Reports civil society on urban renewal
services, and greater access by at least 50% and ISF housing
 NAPC, PCUP Reports
to jobs, transport, capital,  Improved social networks Risk
and livelihood. and governance in ISF
communities  ISF housing and infrastructure
built under NISUS damaged by
disasters, typhoons and floods
Output 1: By 2025: Assumptions

 Upgrading, relocation and  ISFs living in danger areas  Local governments are willing
incremental, affordable new rehoused in vibrant,  HUDCC Annual Reports to take the lead in urban
homes for sale and rent resilient and connected  NHA, SHFC Annual Reports renewal and ISF housing with
communities proper training and incentives
 LGU Status Reports
 ISFs on public and private  HUDCC and its KSAs as well
land live in fully upgraded  Project Progress and as other government agencies,
communities and inclusive Completions Reports private sector groups and
cities  Construction Records people’s organizations will
form the necessary
 Annual demand for  Project Feasibility and partnerships to implement
affordable socialized housing Appraisal Reports NISUS
met through viable public-
private-people partnerships Risk
 Climate change destroys more
infrastructure and ISF houses
Output 2: Assumptions
 Market-based housing and  A national financing facility  HUDCC Annual Reports  HUDCC and its KSAs allocate
microfinance and targeted for urban renewal and ISF resources and staff to NISUS
subsidies for ISFs housing capitalized and fully  SHFC, HGC, Pag-Ibig Annual implementation
functional by 2016 Reports
 NH Reports
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
July 2014
Data Source/Reporting
Results Summary Performance Targets/Indicators Assumptions and Risks
Mechanisms
 Targeted housing subsidy  MFI Status Reports  Commercial banks, thrift
program for ISFs designed, banks and MFIs are properly
funded and operationalized  Urban Renewal and ISF incentived to participate in
by 2025 Housing Financing Facility the program
Reports
 At least 20% of MFIs Risk
engaged in housing  Bangko Sentral ng Pilipinas
microfinance for ISFs by Reports  Policy and institutional
2025 reforms required are delayed
or not adopted
 At least 20% of ISF
housing finance comes from
commercial and thrift banks
by 2025
Output 3: Assumptions
 Strengthened sector  At least 40% of cities are  LGU Status Reports  National and local
governance, organizational, implementing city-wide governments remain fully
staff and resource capacity urban renewal, upgrading,  HUDCC Periodic Reports committed to NISUS
at the local and national housing programs and have  NHA Periodic Reports
approved strategic urban  Adequate financing is made
levels. available and easy to access
development plans by 2025  SHFC Periodic Reports
by the local governments
 Strengthened and fully  DILG Periodic Reports
equipped HUDCC providing Risk
sector leadership,  Reports from People’s  National and local elections
monitoring and training in Organizations, NGOs and change national and local
strategic urban planning other Civil Societry Groups personnel involved in NISUS
and development, urban
renewal, and ISF socialized  Project Progress and
housing by 2017 Completions Reports
 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
programs by 2020
 Capacity of people’s
organizations, community-
based organizations and
homeowners’ associations to
engage in urban renewal
and ISF housing developed
by 2025
Page 40
July 2014
Appendix 1
Comprehensive Assessment Report
Appendix 1: Comprehensive Assessment Report
COMPREHENSIVE ASSESSMENT REPORT
July 2014 1
TABLE OF CONTENTS
Page
EXECUTIVE SUMMARY vi
1 INTRODUCTION 1
1.1 A Rapidly Urbanizing Philippines 1
1.2 Urbanization and the Pervasiveness of Informal Settlements in the Philippines 1
1.3 Addressing Climate Change and Disaster Risks 2
1.4 Purpose and Structure of the Report 2
2 APPROACH AND METHODOLOGY 5
2.1 A Participatory and Consultative Approach to Formulating NISUS 5
3 INFORMAL SETTLEMENTS IN THE PHILIPPINES: PATTERNS AND TRENDS 7
3.1 The Evolution of Informal Settlements in the Philippines 7
3.2 Characterizing the Informal Settlements 12
4 ASSESSMENT OF POLICIES, PROGRAMS, PROCESSES AND INSTITUTIONS 17
4.1 Purpose ad Scope of the Chapter 17
4.2 National and Local Government Policies on Informal Settlements Upgrading 17
4.3 Informal Settlements Upgrading Related Projects, Programs and Processes 21
4.4 Other Current and Related Government Programs 28
4.5 Who are involved? 29
4.6 Accomplishments of Key Shelter Agencies 35
4.7 Current Subsidy Structure 35
4.8 Affordability 38
5 ISSUES CENTRAL TO INFORMAL SETTLEMENTS 41
5.1 Weak Enforcement and Monitoring of Local Land Use Planning & Standards for 41
Informal Settlements
5.2 Inadequate, Unharmonized, and Unfocused Socioeconomic Development Policies 44
and Programs
5.3 Limited Access of Informal Settlers to and Availability of Affordable Housing 46
Finance
5.4 Insufficient Supply of Affordable and Adequate Housing for Informal Settlers 50
5.5 Unclear Delineation of Accountabilities of Institutions 54
6 BEST PRACTICES ON INFORMAL SETTLEMENTS UPGRADING 57
6.1 Approaches to Identifying Lessons for Upgrading 57
6.2 Evolution of Policy Responses and Approaches to Informal Settlements 58
Upgrading—Lessons Along the Way
6.3 Looking at the Philippine Housing and Finance Markets 60
July 2014 2
6.4 Distilling Critical Success Factors – What Worked? 67

6.5 Lessons for Policy Consideration 69
7 FROM INFORMAL SETTLERS TO FORMAL RESIDENTS – PATHWAYS TO REFORM 71
7.1 The Problem 71
7.2 Beginnings of a Reform Strategy 76
7.3 Defining the Pathways to Reform 82
APPENDICES
First semester 2012 per capita poverty threshold and poverty incidence among families,
1
by region and province
Accomplishment of the national government: housing and secure tenure provision from
2
July 2010 to December 2011
Latest guidelines for the SHFC developmental financing component (Corporate Circular
3
AKPF #13)
4 LGU Compliance with MC 2011-17
5 Write-up of lessons learned
6 Results & Documentation of Workshops Conducted
6- Consultations and Workshops Attendance List
A
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, 2011 13
4 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, 2012 12
4 Informal Settler Families in the Philippines, 2011 13
5 ISFs in Metro Manila: By Type 15
6 ISFs in Metro Manila: By City 15
July 2014 3
7 Policies and Analysis 17

8 Projects, Programs and Processes 21
Highlights of Socialized Housing Production and Finance Programs of Key Shelter
9 30
Agencies
10 Agencies Involved in ISFs 34
11 Subsidy Structure in Socialized Housing Delivery and Finance 35
12 Annual Family Income and % Distribution by Income Decile, 2012 (Philippines) 38
Annual Family Income and % Distribution by Income Decile, 2012 (National Capital
13 38
Region)
14 Scenario 1 – Affordability Profile 39
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
July 2014 4
ACRONYMS
ADB Asian Development Bank
APDs Areas for Priority Development
CA Cities Alliance
CALABARZON Cavite, Laguna, Batangas, Rizal and Quezon
CAS Country Assistance Strategy
CBDRRM Community-Based Disaster Risk Reduction Management
CBHM Capacity Building for Housing Microfinance
CCA Climate Change Adaptation
CDP Comprehensive Development Plans
CDS City Development Strategies
CLUP Comprehensive Land Use Plans
CMP Community Mortgage Program
CMS Content Management System
CODI Community Organizations Development Institute
CoP Community of Practice
CPH Census of Population and Housing
CSOs Civil Society Organizations
CWS Cities Without Slums
DILG Department of Interior and Local Government
DIP Detailed Implementation Plan
DPUCSP Development of Poor Urban Communities Sector Project
DSWD Department of Social Welfare and Development
ELA Executive Legislative Agenda
FAIR Fair, affordable, innovative and responsive
FTR File Transfer Protocol
GDP Gross Domestic Product
GIS Geographical Information System
GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit
GoP The Government of the Philippines
GSS Global Strategy for Shelter
HDMF Home Development Mutual Fund
HPFP Homeless People’s Federation of the Philippines
HUDCC Housing and Urban Development Coordinating Council
HUDCC-PMT HUDCC Project Management Team
JSDF Japan Social Development Fund
IADB Inter-American Development Bank
ICT Information Communication Technology
IS Informal Settlements
ISFs Informal Settler Families
KIP Kampung Improvement Program
KSP Knowledge Sharing Plan
July 2014 5
LCP League of Cities in the Philippines

LGC Local Government Code
LGU Local Government Unit
LSP Local Shelter Plan
M&E Monitoring & Evaluation
MMDA Metro Manila Development Authority
MOU Memorandum of Understanding
MTPDP Medium Term Philippine Development Plan
NCR National Capital Region
NEDA National Economic Development Authority
NGAs National Government Agencies
NGC National Government Corporation
NGOs Non-Government Organizations
NHA National Housing Authority
NMES NISUS Monitoring and Evaluation System
NPLs Non-Performing Loans
NSCB National Statistical Coordination Board
NSDF National Slum Dwellers Federation
NSO National Statistics Office
NSUS National Informal Settlements Upgrading Strategy
NUDHF National Urban Development Housing Framework
OSHDP Organization of Socialized Housing Developments of the Philippines
PAC Project Advisory Committee
PDP Philippines Development Plan
PMES Project Monitoring and Evaluation System
Pos Private Organizations
SCC Special Conditions of Contract
SEHAB São Paulo Municipal Housing Secretariat
SHFC Social Housing Finance Corporation
SWS Social Weather Station
TA Technical Assistance
TCR Task Completion Report
ToR Terms of Reference
TTP Technology Transfer Plan
UPSURGE Urban Partnerships for Sustainable Upliftment, Renewal, Governance and Empowerment
UN-Habitat United Nation Human Settlements Programme
UUPCRS Upscaling Urban Poor Community Renewal Scheme
WB World Bank
WFP Work and Financial Plan
July 2014 6
EXECUTIVE SUMMARY
In accordance with the contract between GHK Consulting The CAR— culminating output of
Ltd, United Kingdom (the Consultants) and the Housing NISUS Phase 2
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 Structure of the CAR
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 Informal settlements in the
developing world for areas where groups of housing units Philippines have become pervasive
have been illegally constructed and where housing does not but estimates do not reflect this
comply with planning and building regulations to enable a reality
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 Part of the challenge of informal
and strictly define informal settlements as households settlements in the Philippines lies in
occupying rent-free lots without the consent of the owners. the more accurate determination of
The National Housing Authority works with local the magnitude of the problem
government units (LGUs) to support a broader definition
that includes (i) lots without the consent of the owners, (ii)
July 2014 7
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 The Metro Manila extended urban
urbanization have been interlinked. The economy, over the region and 7 cities in the Visayas and
last decades, has continued to expand by transitioning from Mindanao are the key drivers of the
being predominantly rural to becoming more industrially Philippine urban economy,
diverse and service-oriented. This structural accounting for 80% of total GDP
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 Informal settlements have become
demand for housing and basic services in many cities, vivid manifestations of deepening
specially the key drivers of the economy. Many local and widening urban poverty,
governments, while trying, have been unable to meet the particularly in the highly urbanized
increased demand given the accelerated pace warranted. cities of the Philippines
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.
July 2014 8
Beyond income poverty, informal settlers in the Philippines In addition to income poverty,
live in poor quality housing, lack of public and private informal settlers confront on a daily
services, and integrate poorly into the broader basis social and economic exclusion,
communities and their opportunities. Informal settlers as well as exposure to health risks
score far lower on human development indicators than and life threatening conditions
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 Government Code of 1991
the local governments the efficient and effective delivery of and the Urban Development Housing
basic services, including socialized housing, to its Act define the cornerstone for
constituents. The Urban Development and Housing Act implementing socialized housing in
(UDHA), also enacted in 1991, tasked the local government the Philippines
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 Other important, albeit a bit
and Integrated Shelter Financing Act of 1994 increased the outdated, legislations support
paid up capital of the National Home Mortgage Finance financing and planning
Corporation (NHMFC) and the Home Guaranty
July 2014 9
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 Yet, past government housing
focused on the relocation of informal settlers, construction programs have concentrated on the
of new houses for the fortunate few, and subsidized lending relocation of informal settlers,
which often benefited the more affluent rather than the construction of new houses, and
urban poor. But, over the past few years there has been a subsidized lending… benefiting the
sign of change and substantial resources have been made more affluent rather than the
available to the sector. However, government is struggling informal settlers
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 Many socialized housing programs
failed to respond to the challenges of the informal settlers involving local governments have so
and instead have looked to the central government to lead far not prospered
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
July 2014 10
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 The massive relocation of informal
relocation of entire communities to distant locations, often settlers to distant locations,
against the wishes of the inhabitants and their inevitable loss destroying the existing housing stock
of income as a consequence. Furthermore, about PhP42 and replacing them with new units,
billion has been spent by the national government on has cost the Government a
relocating 227,000 families from 2001 to 2013—with an staggering Php42 billion in the last
average cost of about PhP185,000 per unit. But this has 12 years
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 The housing finance system has
failed to cater to the informal settlers. The now defunct encouraged some private developers
Unified Home Lending Program (UHLP) of the NHMFC, to build more affordable housing—
despite the earlier rhetoric, never really benefited informal unfortunately not for the informal
settlers, although it encouraged some private developers to settlers
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 2013. 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 Innovative programs involving
through the Gawad Kalinga program adopting partnerships NGOs, local governments and the
and using grant funds from private companies under their private sector are ongoing—but
corporate social responsibility programs. Often this they are not of the scale required to
housing is built on land donated by local government. In a make a significant difference
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
July 2014 11
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 scaled-
up. However, the approach needs to be more tailored to
the Philippines and its local governance system.
The current programs for informal settlers, whether A major correction to the
undertaken by the government, civil society, communities government’s housing program is
or the private sector, are small in relation to the need. All needed
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 The beginnings of the reform
by government include (i) a return to informal settlements strategy
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
July 2014 12
performance fund and local, area-specific urban renewal or

regeneration partnerships.
July 2014 13
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. 2006. 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 4–8.
July 2014 14
planning, lack of serviced land, a dearth in affordable socialized housing, and a dysfunctional legal
system.2
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 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. 2011. 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. 2012. World
Urbanization Prospects–The 2011 Revision: Highlights. New York: United Nations.
July 2014 15
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
Figure 1: Overview of the NISUS Project

PHASE 1: Preparatory Activities PHASE 2: Comprehensive Assessment PHASE 3: Strategy Formulation
Establishing the institutional Obtain in-depth understanding of the Based on the findings of Phase
arrangements diverse conditions, complex issues, 2, formulate the national
Preparatory workshops to launch opportunities, risks, and formal as informal settlements upgrading
project well informal structures governing strategy
Local and global insights to inform informal settlements. This will serve
as anchor for the formulation of a
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 2013.
5 The Consultants’ terms of reference was revised by HUDCC and agreed with ICF GHK following a World Bank’s
implementation review mission in July 2013. 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.
July 2014 16
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
July 2014 17
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: Relevant ISF IS issues and Policies, Best practices & Stakeholders
typologies programs, lessons learned and Institutions
Data data and
processes
gathering and statistics
collation
Activity 2a: In- Preliminary Analysis Leading to Five

depth Analysis (5) Thematic Areas
Activity 2b: Thematic, sectoral and

regional consultations
Activity 4: Final
Comprehensive Activity 5: National Informal
Activity 3: Preliminary Multisectoral
Comprehensive Assessment Assessment Report Settlements
and Vision, Mission, Consultation
Report Strategy and
Objectives for IS Action Plan
Upgrading
HUDCC/WB/PAC/KSA
Technical Inputs and
Comments
July 2014 18
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
The United Nations
as a result of industrialization and rapid urbanization. The
Human Settlement
name implies that these settlements subsist outside the
Programme (UN-Habitat)
existing and legal regulatory framework. Due to their
defines informal
inherent "non-legal" status, informal settlements lack settlements as areas
adequate services and infrastructure. An often used name for where groups of housing
informal settlements is slum settlements. Slums are units have been
residential areas that are physically and socially deteriorated, constructed on land that
making a decent quality of life impossible. Hence, many the occupants have no
distinguish a slum settlement as referring to the condition of legal claim to, and
a settlement, while an informal settlement refers to the legal where housing is not in
position of the settlement. For the purpose of this study, the compliance with current
UN-Habitat definition of informal settlements as areas where planning and building
groups of housing units have been constructed on land that regulations.
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 Informal settlements
UN-Habitat defines informal settlements as households that have different names in
cannot provide one of the following basic living different countries. From
the rancherios puebros
characteristics: 6
in Paraguay, the tugurios
in El Salvador, and the
 Durable housing of a permanent nature that protects
favelas of Brazil in Latin
against extreme climate conditions.
America, to the bastees
 Sufficient living space, which means not more than of India, the bidonvilles
three people sharing the same room. of Bangladesh, the
 Easy access to safe water in sufficient amounts at an kampungs of Indonesia
affordable price. and the barong-barongs
 Access to adequate sanitation in the form of a private of the Philippines in
or public toilet shared by a reasonable number of Asia, each informal
people. settlement has come to
 Security of tenure that prevents forced evictions. represent the worsening
urban poverty in the
Informal settlements in the Philippines have become cities of the developing
pervasive… world.
6 UN-Habitat. What are slums and why do they exist? http://www.unhabitat.org/downloads/docs/4625_51419.
July 2014 19
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 Informal settlements in
study funded by the Asian Development Bank (ADB) the developing world are
reported that there were significantly more informal the result of unplanned
settlers—estimated at 2.5 million households and comprising and rapid urban growth.
nearly 35% of the country’s total urban population. 9 Available data barely
accounts for the reality,
In 2007, a study commissioned by HUDCC concluded that as in most cases, they
are based on figures
there were 550,770 informal settler families, accounting for
extrapolated from
just over 5% of the total urban population during the same
year. This suggested a drastic reduction in the magnitude of old census, carried out
the problem but further analysis showed that the estimate in the 1970s or, if more
was based on an extrapolation of the 2000 Census of recent, obtained with
Population and Housing (CPH) which strictly defined poor accuracy,
informal settlements as households occupying rent-free lots
without the consent of the owners. A comparison of these In the Philippines, slums
results with a 2007 survey of informal settlers conducted by or informal settlements
the National Housing Authority (NHA) in Metro Manila have long been
showed that the CPH-based estimate was considerably recognized as a
lower. Adjusting for the underestimation in the CPH-based challenge that must be
study using the NHA survey results indicated that the faced. But part of the
number of informal settler families could be as high as 1.5 challenge lies in a more
million, accounting for nearly 15% of the total urban accurate determination
population. 10 of the extent of the
problem. The key
A more recent study conducted by the Statistical Research questions are: where are
and Training Center in collaboration with HUDCC these settlements and
estimated that informal settler households nationwide had how many really exist; at
gone down to 471,481.11 This constituted about 4.6 % of the what pace have they
grown; and, finally, how
total urban population in 2010. However, this number was
many people will need
also based on the 2010 CPH which measured informal
affordable housing and
settlers as households occupying rent-free lots without the
basic services.
consent of the owners. No census or survey was found to
7 World Bank. Philippines: Metro Manila Urban Development Project. Report on the Status of the Tondo Foreshore
Development Project. Unpublished.
8 Sandra O. Yu. 2002. 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. 2001. Development of Poor Urban Communities Project. Consultant’s report. Manila. (TA 3291-PHI).
10 Cruz, Jeanette. 2010. 11th National Convention on Statistics. Estimating Informal Settlers in the Philippines. Manila, 4-5
October.
11 Magtulis, Mary Ann and Eleanore Ramos. 2013. 12th National Convention on Statistics. Estimating Housing Needs Based on
2010 Census of Population and Housing. Manila, 1-2 October.
July 2014 20
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 Structural change models
increasing levels of urbanization—the process by which focus on the
large numbers of people become spatially concentrated in mechanisms by which
cities where they focus on non-agricultural activities. Cities underdeveloped
are often described as “the engines of national prosperity or economies transform
economic growth.” They serve as the locations where new their domestic economic
forms of economic activity and economic organization structures—from a heavy
evolve and gain higher value. emphasis on traditional
subsistence agriculture to
Economic development in the Philippines and urbanization a more modern, more
has been just as intertwined. The economy, over the last urbanized and more
decades, has managed to continue expanding by industrially diverse
transitioning from being predominantly rural to being more manufacturing and
industrially diverse and service-oriented. From the 1950 to service economy.
the 1970s, the agriculture sector was a major contributor
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 139–191, May 1954.
14 Cham, Rowena and Dante Canlas. Notes on Philippine Economic Growth and Its Sources. The Philippine Review of
Economics. Vol. XLV, pages 1-14, June 2008.
July 2014 21
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 1960 1970 1980 1990 2000 2010 2015*
Philippines
Urban Population (thousand) 7,880 11,691 17,640 29,945 37,101 45,370 50,544
Percent of Population in Urban Areas 30.3 33.0 37.5 48.6 48.0 48.0 49.8
Average Annual Rate of Growth 4.47 3.79 3.86 5.05 2.08 1.98 2.16
Indonesia
Viet Nam
Thailand
India
Pakistan
Average Annual Rate of Growth 3.17 4.29 1.03 0.45 -0.35 0.89 1.36
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…
July 2014 22
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)
2010 2011 2012
Region/Year
Amount % Share Amount % Share Amount % Share
Philippines 5,701.54 100.0 5,909.01 100.0 6,311.67 100.0
NCR Metro Manila 2,038.18 35.7 2,101.69 35.6 2,255.12 35.7
CAR Cordillera 120.14 2.1 121.73 2.1 122.97 1.9
I Ilocos 179.93 3.2 184.25 3.1 193.74 3.1
II Cagayan Valley 99.84 1.8 105.43 1.8 114.06 1.8
III Central Luzon 510.62 9.0 546.83 9.3 581.38 9.2
IVA CALABARZON 1,009.39 17.7 1026.05 17.4 1,097.72 17.4
IVB MIMAROPA 101.84 1.8 104.99 1.8 109.43 1.7
V Bicol 114.11 2.0 116.24 2.0 124.49 2.0
VI Western Visayas 227.24 4.0 241.41 4.1 259.43 4.1
VII Central Visayas 340.70 6.0 363.91 6.2 397.65 6.3
VIII Eastern Visayas 150.80 2.6 153.89 2.6 144.35 2.3
IX Zamboanga Peninsula 117.02 2.1 117.18 2.0 131.69 2.1
X Northern Mindanao 210.96 3.7 223.16 3.8 239.68 3.8
XI Davao Region 217.31 3.8 225.46 3.8 242.23 3.8
XII SOCCSKSARGEN 151.32 2.7 159.31 2.7 172.26 2.7
XIII CARAGA 64.53 1.1 70.00 1.2 77.43 1.2
ARMM Muslim Mindanao 47.61 100.0 5,909.01 100.0 48.04 0.8
Note: In constant 2000 prices.
Source: National Statistical Coordination Board, July 2013.
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 The Urban Development
number of informal settlers who will not be able to find Housing Act of 1992
stable employment, they will live a hand-to-mouth existence point to the informal
in the informal sector and life will be hard and uncertain. settlers or slum dwellers
Social exclusion, lack of empowerment, illness or living in a as those whose income
precarious and illegal situation will make it difficult for them or combined household
to do more than survive, sometimes in reasonable, if income falls within the
insecure, conditions.15 poverty threshold
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. 2003. The Challenge of Slums: Global Report on Human Settlements 2003. London.
July 2014 23
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 5,717Below the 2012
Second Decile 197,980 92,402 7.700poverty threshold
Third Decile 231,134 107,875 8,990
Fourth Decile 277,621 129,572 10,788
Fifth Decile 328,517 153,326 12,777
Sixth Decile 390,886 182,435 15,203
Seventh Decile 490,002 228,695 19,058
Eight Decile 613,665 286,411 23,868
Ninth Decile 817,204 381,408 31,784
Tenth Decile 1,532,805 715,395 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
July 2014 24
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 2011. 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
Table 4. Informal Settler Families in the Philippines, 2011

Areas
Total
Earmarked Government Privately
Informal
Danger
Region for Owned Owned Others
SettlerAreas
Government Lands Lands
Families
Infra
Philippines 1,502,336 767,502 52,797 265,361 378,517 38,159
NCR Metro Manila 584,425 104,219 21,132 158,647 279,966 20,461
CAR Cordillera 23,547 9,912 600 6,035 7,000 0
I Ilocos 44,364 30,492 0 0 13,872 0
II Cagayan Valley 13,292 9,516 0 316 3,460 0
III Central Luzon 117,670 117,170 0 500 0 0
IVA CALABARZON 221,284 189,407 2,870 16,616 7,833 4,558
IVB MIMAROPA 29,949 21,396 0 7,179 1,297 77
V Bicol 142,028 91,354 12,077 23,962 8,888 5,747
VI Western Visayas 31,129 17,440 897 2,837 9,836 119
VII Central Visayas 63,681 37,183 2,693 1,122 19,238 3,445
VIII Eastern Visayas 9,212 686 0 7,216 1,310 0
IX Zamboanga Peninsula 55,393 44,123 0 6,808 4,462 0
X Northern Mindanao 82,272 69,781 9,023 496 187 2,785
XI Davao Region 8,255 2,268 0 433 5,554 0
XII SOCCSKSARGEN 14,725 5,255 947 199 8,249 75
XIII CARAGA 44,339 15,380 958 20,422 6,687 892
ARMM Muslim Mindanao 16,771 1,920 1,600 12,573 678 0
Sources: National Housing Authority; Local Government Units; Department of Public Works and Highways
Figure 3. Magnitude of Informal Settlers by Region, 2011
Metro Manila
Cordillera
Ilocos
Cagayan Valley
Central Luzon
CALABARZON
39% MIMAROPA
Bicol
Western Visayas
9%
Central Visayas
Eastern Visayas
Zamboanga Peninsula
Northern Mindanao
15% Davao Region
8% 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.
July 2014 25
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
Settle easement issue; new housing development—

Danger/high risk areas On site vertical solutions (medium rise complexes);
resettlement within neighborhood that is not part
 esteros, waterways, shoreline of danger areas through re-blocking or rental
 roads, garbage dumps housing; provision of vouchers for construction
materials; riverfront redevelopment through pro-
Government Infrastructure Projects
In city Explore the possibility of realignment resulting to
 road right of way (RROW) least dislocation; land consolidation and
 port areas, terminals, airports densification.
Convince owner to dispose to settlers through CMP

Privately Owned Lands or direct sales; land swapping arrangements; rental
Near city housing arrangement with government providing
 with court case
resettlement loans for construction of rental housing (pure rent,
 negotiable and abandoned rent-to-own, long term lease, etc); incentivize LGUs
and owners enrolling lands for upgrading
Government Owned Lands

Off site Usufructury arrangements for future redevelopment;
resettlement protect open space for environmental and
 proclaimed institutional purposes; mixed development; PPP for
 allotted for institutional use redevelopment with employment priority given to
Source: Department of the Interior and Local Government
July 2014 26
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); government-
owned 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%
Areas Earmarked
For Govt Infra
51% Government Owned
Lands
Privately Owned
18% 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 6. ISFs in Metro Manila: By City

Table 5. ISFs in Metro Manila: By Type City No. of ISFs %
Type of Area No. of ISFs % Quezon City 232,181 40%
Private lands / properties 279,966 48% Caloocan City 79,280 14%
Government owned lands 158,647 27% Pasay City 34,450 6%
Manila City 30,913 5%
Danger areas 104,219 18%
Paranaque City 28,539 5%
Government infrastructure project Malabon City 27,203 5%
21,132
areas 4% Mandaluyong City 23,847 4%
Other areas 20,461 4% Valenzuela City 21,404 4%
TOTAL 584,425 100% Muntinlupa City 20,712 4%
Source: National Housing Authority 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%
July 2014 27
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

Around 55% of the total
 Pasig River – 1,434 ISFs identified by NHA as
 Tullahan River – 3,683 living in danger zones
 Maricaban Creek – 1, 637 are located in Quezon
 Manggahan Floodway – 2,997 City and Manila There
 Estero Tripa de Gallina – 3,887 are 31,275 ISFs in
 Estero de Maypajo – 1, 415 and Quezon City, (30 per
 Estero de Sunog Apog – 170 cent); while 26,029
families or 25% is in
In August 2011, President Benigno Aquino III issued a Manila.
directive to prepare a 5-year plan for housing about 100,000
priority informal settler families living in danger areas in The NHA MRB Projects:
Metro Manila, with consideration of in-city resettlement, and
 Smokey Mountain
approximately PhP10 billion budget allocation for the first
(Paradise Heights) in
year. The President has recently allowed the release of
Tondo, Manila;
PhP374.4 million for the resettlement program for ISFs living
 Tala 2 and Camarin,
in these priority waterways in Metro Manila as part of the
both in Caloocan
government's broader flood control and management plan. City;
 Pleasant Hills in San
The NHA has 10 multi-level low-rise house projects in Jose del Monte,
various stages of development for informal settler families Bulacan;
(ISF) living in danger areas in Metro Manila. As of June 2013,  Tanza, Gulayan and
construction of 6,404 housing units worth P3.4 billion from Tanglaw, all in
the 10 housing projects is underway. The housing sites will Navotas;
receive ISFs currently being relocated from danger zones.  MMDA Depot in
Manggahan, Pasig
City;
 National Government
Center Housing
Project in Quezon
City; and
 Disiplina Village 2 in
Valenzuela City
July 2014 28
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 Box 1: Local Government Planning Processes and
these can be mainstreamed into the development process and Instruments
integrated with national and local government planning processes
and instruments (Box 1). Past and current programs are reviewed  Comprehensive Land Use Plan (CLUP),
to determine the factors that have contributed to success/failure.  Comprehensive Development Plan (CDP),
 Executive Legislative Agenda (ELA), and
 Local Shelter Plan (LSP)
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

The following laws, memorandum circulars, and other issuances which serve as informal settlements
upgrading related policies.
Table 7. Policies and Analysis

Policy / Description & Effectivity / Implementation Enhancing Effectiveness
Definition
RA 7279 or the Urban The provisions of the law set the Revisit the UDHA and propose
Development and Housing Act authority for HUDCC and NEDA to amendments such as:
defines Socialized Housing as prescribe the price ceilings for  crediting socialized housing for
“Housing programs and projects socialized, low cost, economic ISFs as compliance, provided the
covering houses and lots or home housing packages. These ceilings are development is within the city or
lots only, undertaken by the observed by the lending facilities of within the same project;
Government or the private sector such as the HDMF, HLURB, as well as  requiring the condominium,
for the underprivileged and the private developers in production townhouses, and high-rise
July 2014 29

Definition
homeless citizens which shall of housing. developers to comply with the
include sites and services balanced housing requirement
development, long-term financing, LGUs are ordered to prepare their  providing a mechanism to ensure
liberalized terms on interest Comprehensive Land Use Plans that the housing programs will
payments, and such other benefits (CLUPs) for their respective localities continue beyond the term of the
in accordance with the provisions in accordance with the provisions of local executives.
of this Act.” the Act which include an inventory
and identify of all lands for socialized  Based on the review of costs for
housing and resettlement areas and land, site development, and house
the provision of socialized housing or construction of socialized housing
resettlement areas. 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.
RA 7835 or the The law provided financing for 3 SHFC is poised to reactivate the
Comprehensive and major components of housing developmental financing component
Integrated Shelter Financing provision: of the AKPF in response to the
Act of 1994, expanded the scope clamor for developmental lending
and usage of the Abot-Kaya 1. Amortization Subsidy – (i) facilities. Latest guidelines for this
Pabahay Fund. direct amortization subsidy for facility is found in Annex 3 -
initial 5 years of the maximum Corporate Circular AKPF #13.
HUDCC from time to time individual housing loan amount of
determines the income ceilings and P80,000 at a graduated rate of
loanable amounts for both levels 35% to 14% for Income level 1 HGC operates the Abot Kaya
(a) and (b) borrowers and the (then at maximum of P4,000 Cashflow Guaranty Program.
socialized/ low-cost housing limit monthly gross family income), and
eligible for development financing. (ii) for initial 4 years of the
individual housing loan (above
P80,000 to maximum P100,000) Annual releases to the fund from
at a graduated rate of 25% to 7% government was also programmed
for income level 2 (above income under the law. This may be reviewed
level 1 to maximum of to determine fund requirements for
P5,000.monthly gross family the 3 components to support
income); structured incentives and subsidies.as
well as credit guaranty for other
2. Development financing – for financing institutions such as NGOs
private developers and NGOs and MFIs.
engaged in socialized housing
production;
July 2014 30

Definition
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 The ceilings for socialized and low- Guaranty premium and extent of
Home Guaranty Corporation cost housing loan packages are jointly guaranty coverage favor the socialized
Act of 2000 initially sets the determined by HUDCC and NEDA. housing in terms of guaranty benefits.
percentage of guaranty accounts per Such ceilings may be reviewed,
housing package. revised and adjusted to conform to HGC is committed to cover Small
prevailing economic conditions at any Loans for Home Improvement
time, but not more than once in extended by MFIs, MFI banks,
every two (2) years. cooperatives and other financial
institutions.
Batas Pambansa 220 established The law provides for minimum  Review current trends in the
different levels of standards and standards and technical requirements structure of a typical
technical requirements for the for housing units, lot and block sizes, neighborhood unit including
development of economic and road widths, community facilities walkability, open space, civic
socialized housing projects and depending on the density and space, work areas and public
housing units in urban and rural construction specifications. transport.
areas. Economic and socialized
housing refers to housing units  Improve the Implementing Rules
which are within the affordability and Regulations on standards for
level of the average and low-income As of this report submission, BP 220 multi-storey housing projects.
earners which is thirty percent is currently being updated to
(30%) of the gross family income as incorporate minimum standards on  Reinforce BP 220 to incorporate
determined by the National Climate Change Adaptation and minimum standards in various
Economic and Development Disaster Risk Reduction. geographical contexts such as
Authority from time to time. It shall coastal/riverine areas, sloping
also refer to the government- areas, etc.
initiated sites and services
development and construction of  Expand housing typologies to
economic and socialized housing include mixed uses including but
projects in depressed areas. not limited to shop houses, civic
uses, etc.
 Update standards for utilities to

include sustainable alternative
technologies.
MC No. 2011-17 dated January 31, In compliance with the said
2011 “Prevention of Memorandum Circular, LGUs from
Proliferation of Informal Regions IV-A, VII, IX, X, XII, CAR and
Settlers.” NCR instituted specific actions (see
Annex 4)
National government allocation for Limited program reach; annual

housing only accounts for less than provision of affordable housing (2001-
1% of total annual budget 2010) averaged only 104,000,
equivalent to 3% of estimated gap
PD 933, EO 648, amended by EO 90 Comprehensive Land Use Plans Integrate housing needs by population
of 1986 empower the Housing Land (CLUPs) of Local Government Units growth and housing needs due to
Use Regulatory Board to review, are based on the HLURB Guidelines backlog (doubled-up households,
evaluate, and approve or disapprove Guide to Sectoral Studies in CLUP displaced units and homeless
land use plans of cities and Preparation which includes a Sub- households) through more innovative
municipalities, based on EO 72 Sector on Housing. and inclusive solutions such as cross
which calls for the preparation of subsidies, rental housing, etc. In land
July 2014 31

Definition
Comprehensive Land Use Plans use planning this will result in
(CLUPs) of Local Government Units “Socialized Housing” not being a
pursuant to the Local Government separate land use in most cases.
Code of 1991.
Republic Act 6975 otherwise The DILG developed the Rationalized  Resolve confusion between CDPs
known as the Department of Planning Systems (RPS) as the and CLUPs by synchronizing the
Interior and Local Government framework for local planning and time frames with terms of local
Act of 1990, with the mandate of formulated the Guide to officials.
strengthening local government Comprehensive Development
capability, the DILG is tasked to Planning (CDP) for LGUs that offers  Create a single government agency
establish plans, policies and procedures, tools and techniques that to oversee, coordinate, monitor
programs that will strengthen the are designed to respond to varying and evaluate CDPs and CLUPs.
technical, fiscal and administrative capabilities of local government in
capabilities of local governments, as local comprehensive planning.
well as formulate the operational
guidelines of the local development
process.
BSP-Monetary Board Circular This was a formal recognition by the The provisions of the circular will be
M-2008-015 Philippine banking system of housing considered to initiate:
microfinance as a pro-poor product
which is similar but different from 1. Adoption of incremental
microenterprise finance. It liberalized borrowing mechanism for home
collateral instruments, allowing banks improvements attuned to the
to lend to the eligible poor for affordable limits of ISFs;
housing microfinance not just against 2. Use of rights-based secure tenure
freehold titles which tended to be instruments as alternative to titling
costly but also against usufruct, long- as a least cost approach
term leases and other rights-based 3. Classification of rights-based
variants. The appraisal methodology instruments as negotiable
was provided for the specific type of instruments to allow its use as
instrument. collaterals under the various
programs such as the CMP,
resettlement and other housing
projects of NHA utilizing
government properties under
usufructory use agreement.
RA 9676 or the Real Estate The law prohibits real estate
Service Act 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.
Local Government Code of The LGC provided the major  In majority of municipalities in the
1991 functions of local government units country, the shelter plan is simply
down to the barangay level. It a template and not implemented
defined the required adoption of either in the local budgetary
CLUP for each municipality and city provision nor in line-up of
to guide development requirements proposed projects. Shelter
of the locality. The local shelter plan planning exercises is currently
is one of the required subcomponents undertaken by HUDCC through
of the CLUP and the creation of a its national and regional office.
local housing board (LHB) with its Compliance with zoning areas for
own fund was likewise covered. socialized housing purpose are
reviewed to determine lands
 In general, devolution of functions to classified for this purpose are
the LGUs, specifically zoning and land accessible to public transport and
July 2014 32

Definition
use classification, approval of suitable for development.
development and building permits for
subdivisions and other housing  Compliance to 20% balanced
developments are all being handled by housing has been utilized by a few
the engineering/planning offices with LGUs such as Quezon City,
no participation from a duly created Taguig, and Muntinlupa as a tool to
housing board. raise much needed funds for
socialized housing development
within and near city areas.
 Devolution of development permits
to LGUs have increased costs and  Participation of the community-
delayed developments. based 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. 3533 “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.
July 2014 33
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)
Table 8. Projects, Programs, and Processes

Projects, Programs and Description / Status Issues (if any)
Processes
National Government Initiated
1. HUDCC
 TA on Local Shelter Plan  Providing assistance to LGUs that request

preparation 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 The legal process behind proclaimed
proclamations/Presidential issuances for sites has to be facilitated. Titling is
socialized housing. This comprised 27,286 tedious, costly, and so time
hectares of land estimated to benefit 270,000 consuming.
beneficiaries.
 Asset Reform Program ARP aims to provide tenure security to poor
(ARP) HUDCC 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.
 Housing Caravan The Caravan was undertaken to bring closer
to the LGUs the government’s housing
programs/projects and create awareness on
The Caravan included the the TAs available from KSAs to help more
housing programs: of key effectively fulfill their mandate in the delivery
shelter agencies. of basic services including housing for their
constituents.
2. Social Housing Finance Corporation
July 2014 34

Processes
SHFC has been tasked with the development and administration of the Abot- Only community-based
Kaya Pabahay Fund and the Community Mortgage Program, taking over these organizations are qualified under the
functions from NHMFC. SHFC’s mandates include: (i) encouraging maximum CMP. Currently, the prospective
participation by stakeholders such as LGUs, NGOs, and POs in socialized informal sector individual
housing; (ii) institutionalizing and promoting self-help housing methods; and (iii) borrowers remain unserved.
providing a strong and sustainable socialized housing finance system.
 Localized CMP The primary objective of the program is to Limited absorptive capacity of the
assist residents of blighted or depressed LGUs in borrowing and
areas to own the lots they occupy, or where implementation of CMP projects
they choose to relocate to, and eventually affect prospects of upscaling the use
improve their neighborhood and homes to of this product.
the extent of their affordable limits.
 Abot Kaya Pabahay Fund- Please see Annex 3 for guidelines of the CMP and LCMP needs to be
Developmental Financing facility. augmented with developmental
window financing product line and thus the
reactivation of the AKPF
developmental financing window.
 High Density Program for The window was opened to serve the needs Structure of incentives/subsidies
ISFs of resettling the ISFs along the waterways of have been drafted and are under
MM. SHFC may purchase the land and allow consideration with the help of WB
use via usufruct. The package price is at a consultants for subsidy structure.
ceiling of PhP450,000 at a rate of 4.5% per
annum for a 30 year period. Graduated The indirect interest rate subsidy is
amortization for first 10 years, increasing by in place.
10% to reach the fixed amortization starting
on the 11th year. A one month grace period Usufructory use of the land may be
from date of occupancy is observed. 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.
3. National Housing Authority
NHA’s is focused on socialized housing through development and For 2012-2013, the PhP20.0B fund
implementation of comprehensive and integrated housing development and was allocated to NHA for the
resettlement; determination and development of government lands suitable for resettlement of ISFs along
housing; and the sustainability of socialized housing funds by improving its waterways in Metro Manila.
collection efficiency, among others. 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
July 2014 35

Processes
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 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.
 Resettlement Assistance The Program aims to assist LGUs in Despite the availability of RAP, this
Program (RAP) for LGUs addressing the resettlement requirements of strategy is not widely practiced in
informal settler families in their localities. the Greater Manila Area. This is
Resettlement projects shall be implemented possibly tied to constraints in land
as a joint undertaking of NHA and LGU. The values and other best use of the
LGU shall provide the land and the NHA to land and would need the national
cover the cost of land development. government’s actions to look into
incentives as well as regulations on
affordable housing development in
cities.
 Resettlement Program for The NHA has implemented resettlement According to Ballesteros, M. &
government projects projects since the 1970s as a major housing Egana, J. (December 2012), NHA’s
program for the low-income sector. resettlement program has been
implemented with doubtful
In the last decade, NHA focused on the performance. There have been
resettlement program in line with the complaints on the lack of livelihood
relocation need of the North and South Rail opportunities and deficient basic
Infrastructure Project, which required the services (power, water) in
relocation of close to 100,000 families. resettlement sites. Some families
abandoned or sell their rights and
Between 2001 and 2011, the resettlement return back to the city to squat.
program received the largest budget and The COA Annual Audit Report
accounted for about 75% of NHA production (2010) noted the poor collection
outputs for the period. 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.
 Slum upgrading An on-site housing development program The program is well-accepted by
where NHA acquires occupied lands and beneficiaries. Reblocking may
provides on-site improvement through become a cause of week
introduction of roads or alleys and basic cooperation of some community
July 2014 36

Processes
services such as water and power. Land members. ISFs would always prefer
tenure issue is resolved through sale of this program as this would ensure
homelots to bonafide occupants. their nearness to their place of
work and least additional
transportation cost.
 Sites and Services Involves the development of raw land into The living condition of beneficiaries
Development service homelots to serve as catchment area are not totally improved as housing
for informal settlements. The intent is to help materials will be the old materials of
families acquire housing on an incremental shanties where they came from.
basis. This program can be tied up with
resettlement program
 Core Housing 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.
 Medium Rise Housing An in-city housing program that entails the The program is currently being
construction of two- to five-storey buildings utilized to develop the housing needs
utilizing funds allocated under Republic Act of the ISFs in danger areas and
No. 7835 or the Comprehensive and waterways.
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
 Disposition Program The NHMFC will partner with LGUs in The entity has already disposed of
addressing their housing needs by offering to retail assets through its partnership
LGUs the sale of its acquired assets. with Deutsche Bank’s arm which
was established for this purpose.
 Housing Loan Receibables NHMFC has opened a window catering to The agency is actively strategizing its
Purchasing Program financiers of housing loans which may be planned purchase of other
liquefied through sale of receivables to receivables in the sector.
NHMFC. These will be used in the flotation
of asset/mortgage backed securities in the
secondary mortgage market which it
operates.
 Flotation PhP1.085 bonds issuance in the securities

market and has retained AA rating.
5. Home Development Mutual Fund (HDMF/Pag-Ibig Fund)

 Affordable Housing Loan  The Pag-IBIG Housing Loan Program for HDMF caters to its members only.
Program (HDMF/Pag-IBIG) LGUs is geared towards sustaining the The target borrowers belong to the
capabilities of LGUs to fast-track the formal sector. Although at the
development and implementation of initial stage a number of
housing projects in their respective beneficiaries are non-members, part
localities, and to make housing accessible of the program is to streamline
and affordable for its employees and their membership under the Fund.
constituents.
July 2014 37

Processes
 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.
 Kasambahay Housing  The program serves as a savings Marketing of services under this
Program mechanism and housing finance window window will better inform target
for household help and other employees beneficiaries/members defined by
qualified under the Kasambahay Law – SSS the law.
membership, Philhealth, and HDMF
membersip
6. Housing and Land Use Regulatory Board (HLURB)
The Housing and Land Use Regulatory Board  Inadequate data base on inventory
(HLURB) is the national government agency of available lands;
tasked with the planning, regulatory and
quasi-judicial responsibilities relating to land  Provide periodic updates on
use development and real estate and housing outcome and impact of
regulation in the Philippines. Formerly known compliance to 20% balanced
as the Human Settlements Regulatory housing.
Commission (HSRC), HLURB which was
established in 1981 through Executive Order  Encourage participation of civil
No. 648 (EO 648), ensures rational land use organizations, NGOs, private
for the equitable distribution and enjoyment sector stakeholders in review and
of development benefits. It is charged with update of CLUPs.
encouraging greater private sector
participation in low-cost housing through  Possible monitoring of compliance
liberalization of development standards, to creation of Local Housing
simplification of regulations, and Board and Fund.
decentralization of approvals for permits and
licenses. It extends comprehensive and  The CLUP should include local
productive planning assistance to provinces, planning under a zero backlog in
cities and municipalities in the formulation of housing provision program.
their Comprehensive Land Use Plans
(CLUPs).
 TA to LGUs on It consists of a map showing how the use of
preparation/ updating of land in a specific area will be regulated, as
CLUP well as a written
document containing a profile of the

community, its vision and the strategies on
how it will achieve its vision.
 Registration and Regulation HLURB handles registration of homeowners

of Homeowners organizations and also performs regulatory
Associations (HOAs) 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 How much of HGC guaranty
effective delivery of housing and other related services, primarily for the low- portfolio is catering to socialized
income earners through a viable system of credit insurance, mortgage guarantee housing?
and securitization.
 Retail Guaranty HGC is also mandated to administer the
 Developmental Guaranty 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
July 2014 38

Processes
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 “fund-
mobilizer 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.
 Forms of Guaranty Payment Mode

Coverage
 cash Cash payment on 100% of outstanding
principal balance
 standard 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;
 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 Crucial for MMDA operations is the
program has also caused delay in achievement fast tracking of addressing how ISF
of targets. First line of victims to flooding are concerns be addressed so that flood
the highly vulnerable areas along the control program can be pushed
waterways in NCR. through
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.
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
July 2014 39

Processes
 Pasig Housing Finance High density (5-storey) buildings; Recovery prospects – LGU uses its
Program – 5 Eusebio Villes 2 buildings (2-storey) constructed using own funds for development of the
Habitat for Humanity technology; project then does in-house financing
of ISFs qualified for the project.
Thus the rules on defaulting
LGU-owned properties on which the accounts are strictly enforced.
buildings are erected are covered under Those who forfeit their occupancy
usufruct agreement. rights due to default are turned
over to NHA for resettlement.
Collection efficiency is at 83%.
 Makati Resettlement  Bulacan: Dream land village: sweat equity- Problems include:
Program values formation via Gawad Kalinga  high cost of land for in-city
resettlement of ISFs;
Another resettlement area was purchased in  weak link between public and
Laguna. private sectors requires package
of incentives to entice private
Agreement of support to the receiving LGUs sector participation;
were drafted to facilitate acceptance of the  community organization and
resettlement program. values formation is a must to
 Question from Director Cruz: Arrangement form sustainable communities
with GK: find sponsors – CSRs – livelihood: and cut dependency on
agriculture and production 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 settlers-
the 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
July 2014 40

Processes
is given for those in the danger
areas (as with National
Government) (3 meter and 10
meter easement).
CSOs / POs / NGOs
 Microfinance Institutions  MFIs -- housing microfinance is a resource- Availment of housing microfinance
 Alalay sa Kaunlaran Inc. based lending facility. Train on financial serves as an incentive to members
(ASKI) based in education, especially on the rural areas. with good payment history on their
Cabanatuan City, Nueva  micro businesses. MFIs focus on
Ecija  Housing Microfinance is generally based on extension of microenterprise loans.
 ASHI incremental lending and short term loans.
 TSPI MFI loans are extended to members
 CARD 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.
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.
Homeless People’s Federation Inc.
 Savings mobilization, Sources of funds - Low collection rate due to
land acquisition, - Community-Led Infrastructure Finance disasters
network formation Facility (CLIFF) - Unclear penalties and sanctions
 Community upgrading, - Asian Coalition for Community Action - ISFs accustomed to dole outs
housing construction, (ACCA) - Insufficient monitoring and
site development, and - Asian Coalition for Housing Rights (ACHR) evaluation capacity
disaster interventions - Slum Dwellers International (SDI)
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 lands17 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.
July 2014 41
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.
July 2014 42
Table 9. Highlights of Socialized Housing Production and Finance Programs of Key Shelter Agencies
NATIONAL HOUSING AUTHORITY SOCIAL HOUSING FINANCE PAG-IBIG HOME GUARANTY

(NHA) CORPORATION (SHFC) FUND/HDMF CORPORATION (HGC
Community High Density Socialized

Resettlement Settlement AFP/PNP Retail Developmental
Information Other Programs Mortgage Housing Housing
Program Upgrading Housing Guaranty Guaranty
Program Program Program
1. OBJECTIVE/S (production and social services)
-serve needs of -provide regular - assist in -assist in sites and -finance land - finance land -finance members’ -provide -provide guaranty
infrastructure slum upgrading AFP/PNP Housing services and/or core acquisition, acquisition, loans to purchase guaranty over
projects assistance I and II housing housing construction of lot, house and lot, coverage to developmental
construction, low rise or residential unit qualified loans extended by
site medium rise (LRBs and MRBs) financing financing loans for
development buildings, site within socialized institutions development of
(on site and off- development housing price extending socialized housing
site) for (on site/near/ ceiling socialized project/s
organized off-site) for housing loans
communities organized to individual
communities borrowers.
residing along
waterways and
other danger
areas
-assist LGUs in -provide slum -assist in -provide medium -assist LGUs in -provide -refinance -provide -guarantee
their needs, upgrading BJMP/BPF rise/ temporary accessing CMP technical qualified cashflow receivables
including services as pre- Housing housing/emergency financing for assistance to members’ loans guaranty financing either
indigenous people proclamation housing assistance their prioritized LGUs, NGOs with other coverage to through
activities communities and financing socialized discounting or
communities, institutions housing loans securitization of
map Informal extended by asset-backed
settlements, SSS/GSIS/ securities –
land inventory, HDMF and proceeds of which
community other qualified will be used for
planning financing further
through institutions development of
citywide under the housing projects
approach to Abot-Kaya
slum upgrading Pabahay Fund
- provide housing -provide housing -provide -provide -guaranty
under off-city and financial assistance developmental developmental coverage on
in city financing to financing to securitization of
relocation– for qualified qualified organized
July 2014 43


NCR ISFs in LCMP/CMP and community or socialized
danger areas HDH developer under housing loans
borrowers any of HDMF’s
Under the programs
Abot-Kaya
Pabahay Fund
-provide -assist in home -provide MFIs
temporary improvements with guaranty
housing and/or provision of coverage for
reconstruction of utilities; housing loans
NHA condemned -assist in matching extended to
buildings skills with members and
livelihood/employ- non-members
ment
-provide -assist in survey and
construction and titling
housing materials
in reconstruction
for post- calamity
assistance
2. FEATURES
-target market ISFs belonging to ISFs belonging ISFs belonging to ISFs belonging to LGUs, ISFs ISFs in Qualified HDMF housing retail Qualified
lowest 3 income to lowest 3 lowest 3 income lowest 3 income belonging to waterways and members with loans government and
deciles income deciles deciles deciles lowest 3 income danger areas in loan value within private financial
deciles NCR belonging socialized housing institutions
to lowest 3 ceiling extending
income deciles developmental
loans
-lending 6% per annum 6% per annum 6% per annum 6% per annum 6% per annum 4.5% per annum Abot Kaya Developmental
rate/guaranty fee for the first 10 Guaranty cover loans with bond
years, then to is not subject of coverage- lowest
be reprised at guaranty fees. guaranty fee of
the end of the 1.25% plus audit
10th year and Standard risk fee of o.25% per
every 3,5,10, or cover for retail annum for
15 years loans – 1.4% socialized housing
thereafter based per annum for packages;
on the option
July 2014 44


selected by socialized
borrower; housing loans
Bond coverage
for retail loans
– 1.2% per
annum for
socialized
housing loans
-maximum loan P205,000.00 (net P 450,000/ Socialized Php75.0 million for
amount of P85,000 household housing ceiling construction and
subsidy) Php20.0 million for
working capital
HUCs P165,000/hh
Other areas P120,000/hh
Cities and 6% Omnibus
Municipalities Commitment
line of P50.0
million
Barangays 6% P20.0 million
line
Abot Kaya Lending policies P15.0 million P75.0 Socialized
Developmental and guidelines are loan/HOA million/HOA Housing ceiling
Loan presented in
Annex 3.
-maximum term 25 years 25 years 30 years for 30 years Based on
individual projected
borrowers’ cashflows of
loans and 3 project
years from loan
drawdown for
developmental
loans
-repayment P200 for the first Fixed monthly Fixed
scheme 5 years and then amortization amortization
average starts on 11th
amortization of month,
graduated
July 2014 45


P965.00 per amortization at
month 10% annual
increase
-equity If HH income is
requirement within NEDA-
based poverty
threshold –no
equity
1st to 4th class
municipalities –
20%
5th to 6th class-
10%
July 2014 46
 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:
Table 10. Agencies Involved in ISFs

AGENCY GAPS & Weaknesses
National Housing Authority 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
Local Government Units 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 Coordination with DILG regarding CLUPs and CDPs.
Board 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.
National Home Mortgage Finance The NHMFC remains the chartered agency which owns the SHFC as a subsidiary
Corporation as the charter of the SHFC has not been passed by Congress.
July 2014 47
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 2013. 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 PhP982.08 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 2013. 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 2013.
A detailed presentation of annual accomplishments of KSAs for direct and indirect assistance during
the period 2001 to 2013 is presented in Annex 2.
4.7 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:
Table 11. Subsidy Structure in Socialized Housing Delivery and Finance

Pag-IBIG Fund
NHA Resettlement SHFC Community Affordable
Program Mortgage Program Housing NOTES
Program
1. Direct Subsidies:
1.1 Capital Subsidy Php 35,000.00 cash subsidy
July 2014 48
Pag-IBIG Fund
Program
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 Exemption from Exempted from
tax, real property tax, income payment of capital payment of capital
tax for NHA. These costs are gains tax equivalent gains tax, legal
therefore savings which reduce to 6% whichever is process and lien
cost of housing unit. lower among per Revenue
appraised value, Memo Circular
market value & selling No. 43-2011
price pursuant to Sec.
19 of RA 9679.
2. Indirect Subsidies
2.1 Interest Rate 6% 6% 4.5% for first 10 HDMF lending rate is
years, repricing lower than market
after 10th year, rate or lending rate of
every 3,5,10,15 banks for housing
years (options) loans
2.2 HGC Guaranty
2.2.1 Guaranty fee 1.4% for standard coverage 1.4% for standard No guaranty fee Lower than guaranty
coverage for Abot-Kaya fees for higher loan
1.2% for bond coverage Cashflow values than socialized
1.2% for bond Guaranty housing loans- 1.7%
coverage enrollment and 1.5%
May enroll under
regular retail
guaranty.
2.2.2 Guaranty 100% 100% 100%

coverage on Principal
loan value
2.2.3 Guaranteed 11% 11% 11%
interest rate
2.2.4 Tax Exemption Up to 11% Up to 11% Up to 11%
on interest rate
Uncollected amortizations on Uncollected
housing loans (Collection amortizations on
Informal Subsidies Efficiency Ratio ranges from 30- housing loans
35%) (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
July 2014 49
Pag-IBIG Fund
Program
Less: 85,000 Less taxes: 12,000 1.5% interest rate
subsidy compared
205,000 to NHA and
153,000 SHFC lending
Less taxes 12,300
Less Uncollected rates.
192,700 amount of 25% :
Less Uncollected amount of Php114,750 or
70% : Php134,870 30.5% subsidy on
or 53.5% subsidy on loan loan value
value
Source: Findings on Review of Socialized Housing Program, HUDCC, October 2013.
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
Interest Rates
Socialized Housing
Lending Rates
Average Banks'
Lending Rates
Source: Report on Domestic Lending Rates of Banks, Bangko Sentral ng Pilipinas, December 2013.
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
July 2014 50
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 30th 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.
Table 12. Annual Family Income and % Distribution

By Income Decile, 2012 (Philippines)
Income Average monthly
Income Class Total Average per family income/family Percentile
(million pesos) (pesos) (pesos)
0 0.0
First Decile 146,984 68,601 5,717 7.5
Second Decile 197,980 92,402 7,700 17.5
Third Decile 231,134 107,875 8,990 27.5
Fourth Decile 277,621 129,572 10,798 37.5
Fifth Decile 328,517 153,326 12,777 47.5
Sixth Decile 390,886 182,435 15,203 57.5
Seventh Decile 490,002 228,695 19,058 67.5
Eight Decile 613,665 286,411 23,868 77.5
Ninth Decile 817,204 381,408 31,784 87.5
Tenth Decile 1,532,805 715,395 59,616 97.5
Total 5,026,798 234,612 19,551
Note: Details may not add due to rounding
Source: 2012 Family Income and Expenditure Survey, National Statistics Office. Consultant’s estimates.
July 2014 51
Table 13. Annual Family Income and % Distribution

By Income Decile, 2012 (National Capital Region)
Income Average Monthly
Income Class Total (million Average Per income/family Percentile
Pesos) Family (Pesos) (pesos)
0 0.0
First Decile 42,808 146,754 12,229 8.0
Second Decile 52,522 180,055 15,005 17.0
Third Decile 63,025 216,061 18,005 27.0
Fourth Decile 74,590 255,708 21,309 37.0
Fifth Decile 83,462 286,123 23,844 47.0
Sixth Decile 96,966 332,417 27,701 57.5
Seventh Decile 106,466 364,985 30,415 66.0
Eight Decile 136,189 466,880 38,907 77.5
Ninth Decile 160,777 551,172 45,931 86.0
Tenth Decile 289,365 991,995 82,666 96.0
Total 1,106,169 379,215 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

Loan Monthly Income to
Percentile Amount Amortization 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
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.

Amount Amortization Afford Percentile
20% NCR Outside
1,350,000 11,453 57,266 90th-95th 95th-100th
1,080,000 9,163 45,813 85th-90th 90th-95th
900,000 7,635 38,177 75th-80th 90th-95th
720,000 6,108 30,542 65th-70th 85th-90th
585,000 4,963 24,815 45th-50th 75th-80th
495,000 4,200 20,998 35th-40th 70th-75th
405,000 3,436 17,180 20th-25th 60th-65th
360,000 3,054 15,271 15th-20th 55th-60th
270,000 2,291 11,453 5th-10th 35th-40th
225,000 1,909 9,544 5th-10th 30th-35th
Source: Consultant’s estimates.
July 2014 52
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.

Amount Amortization Afford Percentile
20% NCR Outside
1,200,000 10,955 54,773 85th-90th 95th-100th
960,000 8,764 43,819 80th-85th 90th-95th
800,000 7,303 36,515 70th-75th 85th-90th
640,000 5,842 29,212 60th-65th 85th-90th
520,000 4,747 23,735 45th-50th 75th-80th
440,000 4,017 20,084 30th-35th 70th-75th
360,000 3,286 16,432 20th-25th 60th-65th
320,000 2,921 14,606 15th-20th 55th-60th
240,000 2,191 10,955 5th-10th 35th-40th
200,000 1,826 9,129 5th-10th 25th-35th
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 23rd percentile—within the 30th percentile government target. A
household at the 10th 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 49th percentile under the concessionary terms of fixed 6% interest
rate for 25 years repayment scheme, and the 62nd percentile prevailing market terms. These are all
well outside the UDHA-mandated and government target of the poorest 30% for socialized housing.
July 2014 53
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.
5.1.1 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 1991. 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 2002.
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.
July 2014 54
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.
5.1.2 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.
 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.
July 2014 55
 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.
5.1.3 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.
5.1.4 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.
 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
July 2014 56
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.
5.2.1 Unsustained efforts on local economic growth and job creation
NEDA midterm review of the Philippine Development Plan 2010-2016 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 1st semester of 2012 and this figure shows that there is no statistical significance
when compared to the 28.6% level for the period 2006-2009. Unemployment rate reached 7.0%
while underemployment rate was registered at 20% for the first semester of 2012. 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.
 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
July 2014 57
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.
5.2.2 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.
 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.
July 2014 58
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.
 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.
5.2.4 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.
 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 783518 (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 1994. Manila
July 2014 59
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.
5.3.1 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 non-
affiliation to a livelihood cooperative or microfinance institution, fund sources for livelihood micro-
and 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.
 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.
5.3.2 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
July 2014 60
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) community-
led 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.
 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 2013.
Makati City.
July 2014 61
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 15th and 30th 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.
5.3.3 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 2016.
 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.
5.3.4 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.
 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.
5.3.5 Housing microfinance has not achieved scale.
July 2014 62
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.
 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 settlers20 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.
5.4.1 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.
July 2014 63
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
 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 m2 row house on a 28
m2 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 4th 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 1st, 2nd and 3rd 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.
5.4.2 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 2013.
22 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.
July 2014 64
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.
 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.
 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.
July 2014 65
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.
 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.
5.4.4 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.
July 2014 66
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.
 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.
5.4.5 Lack of information/Database23
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 well-
targeted. It has also been difficult to track down the awardees of housing units due to the lack of a
monitoring system.
 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
July 2014 67
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 2012-2016.
NHA utilized the PhP20.0 billion for 2012 and 2013 for the construction of homes under the
prioritized relocation of ISFs from danger areas.
5.5.1 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.
 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.
5.5.2 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.
 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.
July 2014 68
Compliance of local planning offices countrywide should be monitored and evaluated as to

sufficiency.
5.5.3 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.
 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.
5.5.4 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.
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.
July 2014 69
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
24World Bank, Indonesia Impact Evaluation Report: Enhancing the Quality of Life in Urban Indonesia—The Legacy of the
Kampung Improvement Program, Report No. 1747-IND, 1995
July 2014 70
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 low-
income 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.26
6.2 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:27
25 World Bank, Upgrading Urban Communities—A Resource Framework: Case Examples, 2001. See
http://web.mit.edu/urbanupgrading/upgrading/case 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 1997

27 Cities Alliance, Cities Without Slums, 2003 Annual Report, page 20
July 2014 71
Figure 7. Policy Responses Over the Years

The 1950’s & 1960s: Planned cities The 1980s: First pilots yield
collide with unplanned growth; the success; integrated projects
poor see cities as opportunities, but develop; first large-scale upgrading
find slums and official indifference. begins. Land tenure revealed as a
Two parallel worlds emerged–formal major issue. Local NGOs take on
and informal –and clashed around the task of upgrading.
the dilemma of housing. Decentralisation takes hold.
The 1970s: Slums reach the political The 1990s: Civil society and NGOs
agenda; alternatives to public housing are stronger; community
are tested. Some international involvement increases; and secure
development agencies merge official tenure is more widely recognised as
policy and informal practice. Learning key. Necessity of upgrading is
by doing characterises agency and widely accepted, and slum
NGO efforts. 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,
July 2014 72
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 decision-
making 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 markets28

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, 2001. 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.
July 2014 73
loan portfolio for socialized housing for the period 2004 to 200731. 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 market-
based 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, community-
based housing programs such as Community Mortgage Program32 (CMP) have benefited low-
income 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 2000. 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.
July 2014 74
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 one-
time 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.
July 2014 75
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 2000.35 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, 2003. 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.
July 2014 76
was based on the lessons documented by ADB’s 2001 study and MTPDP 1999-2003, 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 freehold38. 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, 1999. 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.
July 2014 77
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 1999-2003 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, market-
based 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 pro-
poor 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.
July 2014 78
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 far-
reaching 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 public-
private 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 pro-
poor, market-based shelter finance programs using microfinance policies and practices.
July 2014 79
 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 Box 2: The Challenge of Scale – Nationwide
Upgrading
programmatic approaches. This will call for an urgent scale
up of financial resources and long-term political  What support do national governments provide to
commitments, with a robust understanding of the their cities undertaking citywide slum upgrading?
successful experiences of national governments in  What powers and functions should be
establishing policies and programs for upgrading and decentralized, and what role should national
control of informal settlements. governments take?
 How can the resources of slum dwellers, and the
risk capital of the private sector, be mobilized?
Learning from the experience of countries that have  How can land markets be opened?
demonstrated leadership in addressing essential questions  What lessons can we learn from countries that
(Box 2) that lie at the very center of the challenge of have already undertaken nationwide slum
nationwide informal settlement upgrading. 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 inter-
agency 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.
July 2014 80
(a) Brazil: progressively designed and implemented

instruments to facilitate informal settlement Box 3: The Case of Brazil
upgrading, with many innovations emerging at the
local level before becoming more widely accepted. Brazil’s larger cities have traditionally taken the lead
 The Zones of Special Urbanisation (ZEIS) in slum upgrading, most notably through the
pioneering Favela Bairro program in Rio de Janiero
concept was first introduced in Recife in the and the Guarapiranga project in São Paulo.
1980s and subsequently adopted by several Throughout Brazil, municipalities have been moving
municipalities. These are local authority- from sectoral projects towards comprehensive
demarcated areas allowing for the application upgrading frameworks designed to integrate slums
of more flexible standards to promote into the city fabric. This is done by land tenure
regularization, social development initiatives, and
upgrading and protect the right to housing
community participation schemes. Through the
 Usucapião Especial Urbano, which allows adoption of the City Statute, an innovative and far-
for families (including low-income families on a reaching legal framework for urban policy has been
collective basis) that have been occupying created and incorporates a number of instruments
residential land for five uninterrupted years and that facilitate both informal settlement regularization
without legal action by the land owner to be and upgrading. Resulting from an intense negotiation
process that lasted more than ten years, the City
granted land ownership. In this way, an Statute confirmed and widened the legal and political
irregular settlement with 5,000 households can role of municipalities in urban policy, while also
be regularized through the granting of a single fundamentally asserting a social approach to urban
Usucapião; property rights, which will have a profound long-term
 Direito de Superficie, which allows housing impact on urban upgrading and social inclusion.
regularization through transfer of the surface right
from the land owner to the occupier for a number of years; and
 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,
http://www.iadb.org/en/news/news-releases/2012-09-05/slum-upgrading-lessons-learned-in-brazil,10096.html
July 2014 81
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)
July 2014 82
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.
July 2014 83
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 families41. 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.
July 2014 84
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 terms42 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%.
July 2014 85
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 families43 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
30th to 60th 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 25-30 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.
July 2014 86
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 30th 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 market-
oriented 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 23rd percentile, still within the government target. A
household at the 10th 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 49th percentile
under the concessionary terms, and the 62nd 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.
July 2014 87
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 long-
term 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
July 2014 88
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.
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 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
July 2014 90
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
July 2014 91
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 down-
payments 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.
July 2014 92
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.
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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 25-50-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.
July 2014 94
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.
July 2014 95
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 funds47
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.
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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 Incidence
Poverty Threshold (PhP) among Families (%)
2006 2009 2012 2006 2009 2012
PHILIPPINES 6,703 8,448 9,385 23.4 22.9 22.3
NCR 7,718 9,456 10,084 2.8 3.7 3.8

1st District b/ 7,718 9,456 10,084 2.7 4.4 3.8
2nd District b/ 7,718 9,456 10,084 2.8 3.2 3.1
3rd District 7,718 9,456 10,084 3.2 6.5 4.9
4th District b/ 7,718 9,456 10,084 2.4 2.1 3.8
CAR 7,031 8,492 9,734 25.6 22.7 22.6

Abra 7,273 8,753 9,908 41.6 41.8 34.4
Apayao b/ 6,835 8,210 9,336 51.3 43.9 59.8
Benguet b/ 6,744 8,096 9,407 6.1 7.0 4.3
Ifugao 7,183 8,647 9,999 32.8 28.4 47.5
Kalinga b/ 6,518 7,843 8,712 43.6 25.8 29.4
Mt. Province b/ 7,598 9,129 10,573 40.2 42.6 34.8
Region I 7,086 8,729 9,224 23.3 18.5 16.7

Ilocos Norte b/ 7,345 8,979 9,313 16.3 14.6 11.0
Ilocos Sur b/ 7,290 9,135 10,406 17.9 14.9 17.1
La Union 7,017 8,607 9,148 21.9 21.4 19.8
Pangasinan 7,031 8,660 8,972 26.5 19.5 17.0
Region II 6,984 8,566 9,503 22.0 22.3 19.8

Batanes a/ 9,022 11,084 13,190 0.0 14.3 21.4
Cagayan 7,222 8,875 9,341 25.8 21.3 17.7
Isabela 6,849 8,421 9,564 23.5 26.7 21.7
Nueva Vizcaya b/ 6,802 8,365 9,283 12.4 11.6 17.0
Quirino 6,640 8,141 9,709 12.1 14.5 21.7
Region III 7,344 9,251 10,121 13.0 12.5 12.2

Aurora a/ 6,798 8,481 9,429 22.4 20.4 30.7
Bataan 6,874 8,707 9,374 9.4 5.5 7.3
Bulacan 7,204 9,012 9,878 6.8 7.5 6.7
Nueva Ecija 7,908 9,925 10,662 26.3 27.0 23.0
Pampanga 6,850 8,420 9,620 3.3 5.9 6.4
Tarlac 6,910 8,622 9,557 20.7 15.5 14.0
Zambales b/ 7,229 9,086 10,701 17.3 9.4 18.0
Region IV-A 6,611 8,481 9,601 10.1 10.8 11.2

Batangas 6,823 8,604 9,895 13.3 14.1 19.4
Cavite b/ 6,576 8,200 9,808 2.9 3.8 4.1
Laguna 6,758 8,631 9,863 5.8 7.4 6.3
Quezon 6,293 7,945 8,949 27.4 22.8 22.6
Rizal 7,356 9,300 10,225 5.5 9.5 7.6
July 2014 97

2006 2009 2012 2006 2009 2012
Region IV-B 6,238 7,751 8,527 34.1 30.6 28.4

Marinduque 6,296 7,812 8,509 33.0 25.0 29.4
Occidental Mindoro b/ 6,414 7,966 8,484 39.5 28.4 38.0
Oriental Mindoro b/ 6,604 8,207 8,599 33.8 33.0 26.2
Palawan b/ 5,741 7,149 8,168 30.5 29.3 25.2
Romblon 6,298 7,737 9,247 38.4 35.8 29.8
Region V 6,618 8,420 9,022 36.2 36.5 34.1

Albay 6,855 8,732 9,363 32.3 33.9 36.1
Camarines Norte b/ 6,439 8,221 9,166 29.5 32.4 24.7
Camarines Sur 6,726 8,578 9,097 38.7 37.2 33.5
Catanduanes a/ 6,469 8,210 9,154 31.2 20.3 27.1
Masbate 6,443 8,194 8,660 47.8 49.8 44.2
Sorsogon 6,389 8,172 8,715 30.6 34.3 32.1
Region VI 6,421 8,153 8,957 27.5 26.7 24.7

Aklan 6,680 8,440 8,785 32.3 38.4 21.0
Antique 6,474 8,215 8,308 44.6 34.0 32.1
Capiz b/ 6,794 8,663 9,973 25.6 22.9 25.4
Guimaras a/ 6,429 8,133 9,374 25.4 18.6 26.2
Iloilo 6,367 8,112 9,343 20.8 22.4 21.9
Negros Occidental 6,296 8,002 8,538 28.9 28.3 26.2
Region VII 7,269 8,648 9,296 35.0 31.6 28.8

Bohol 7,100 8,399 9,354 41.0 38.6 32.5
Cebu 7,657 9,052 9,436 28.3 26.7 22.4
Negros Oriental 6,668 7,912 9,046 50.3 41.9 45.3
Siquijor a/ 7,068 8,357 8,928 33.3 26.1 24.6
Region VIII 6,266 8,107 8,989 33.3 36.2 37.2

Biliran 5,851 7,600 8,553 24.2 34.6 20.7
Eastern Samar 6,566 8,539 10,054 39.4 46.7 59.4
Leyte 6,350 8,276 8,593 33.2 33.1 31.9
Northern Samar 6,601 8,607 9,511 45.1 43.6 43.7
Southern Leyte b/ 6,196 8,078 9,805 21.9 28.2 36.4
Western Samar 5,486 7,155 7,881 29.6 37.4 36.0
Region IX 6,159 8,053 8,881 41.0 41.5 36.9

Zamboanga del Norte 6,723 8,717 9,114 61.5 63.6 50.3
Zamboanga del Sur 5,764 7,479 8,883 30.6 29.1 30.1
Zamboanga Sibugay 5,600 7,183 8,160 37.2 40.8 36.8
Isabela City a/ 6,331 8,229 9,674 38.1 23.6 19.4
Region X 6,450 8,456 9,604 35.1 35.4 35.6

Bukidnon 6,515 8,588 10,048 40.4 38.8 43.3
Camiguin a/ 5,878 7,834 9,290 27.4 17.2 34.9
Lanao del Norte 6,285 8,302 9,467 36.4 40.4 42.5
Misamis Occidental b/ 6,030 7,941 8,985 37.2 40.1 36.6
Misamis Oriental 6,737 8,861 9,566 29.3 29.0 25.0
Region XI 6,721 8,547 9,927 26.9 27.3 28.6

Davao del Norte 6,746 8,580 10,302 32.2 29.2 30.9
Davao del Sur b/ 6,712 8,550 9,639 20.9 20.8 22.3
July 2014 98

2006 2009 2012 2006 2009 2012
Davao Oriental 6,565 8,348 9,659 41.8 47.6 48.0

Compostela Valley 6,869 8,752 10,477 29.5 32.7 36.3
Region XII 6,619 8,126 9,243 34.7 31.1 37.5

North Cotabato 5,963 7,321 8,969 29.3 24.4 43.9
Saranggani 6,422 7,890 9,303 40.8 45.4 46.5
South Cotabato b/ 6,858 8,439 9,797 28.5 26.8 28.0
Sultan Kudarat 6,925 8,508 8,642 51.9 44.2 41.6
Cotabato City a/, b/ 7,459 9,172 10,168 33.6 24.5 41.5
Caraga 6,996 8,905 9,779 43.3 43.3 34.1

Agusan del Norte 6,943 8,860 9,528 37.3 33.5 32.0
Agusan del Sur b/ 7,292 9,251 9,847 45.7 51.3 38.6
Surigao Del Norte 6,980 8,881 10,122 45.3 47.7 34.6
Surigao Del Sur 6,734 8,571 9,636 45.1 43.2 31.8
ARMM 6,319 8,257 10,027 43.0 42.0 46.9

Basilan 6,347 8,191 9,541 31.2 37.4 32.5
Lanao del Sur 6,443 8,309 10,970 38.1 51.4 68.9
Maguindanao 6,241 8,048 9,530 47.7 37.6 57.8
Sulu 6,860 8,837 9,996 42.9 37.9 30.3
Tawi-tawi b/ 5,691 7,289 8,244 50.6 48.3 20.8
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
July 2014 99
ANNEX 2: ACCOMPLISHMENT OF THE NATIONAL GOVERNMENT: HOUSING AND SECURE TENURE PROVISION FROM 2001 TO 2013
HOUSING AND SECURE TENURE ACTUAL ACCOMPLISMENT REPORT
2001 –2013
2001 2002 2003 2004 2005 2006 2007
SUMMARY
(In Households Assisted) Units Values Units Values Units Values Units Values Units Values Units Values Units Values
1. NHA HOUSING PRODUCTION1 19,278 1,112.67 19,281 198.60 8,613 1,486.51 18,479 1,244.17 35,653 1,805.35 29,708 2,999.84 28,578 2,792.19
RESETTLEMENT 6,840 553.426 4,381 107.849 4,131 1,041.733 11,760 846.382 16,960 1718.699 15,390 2,658.97 16,568 2743.848
SETTLEMENT UPGRADING 5,961 0.157 5,019 2.340 1,505 0 1,812 1.561 5,132 8.799 1,338 17.593 3,889 0.883
AFP/PNP HOUSING 0 0 0 - 0 0 0 0 0 0 0 0 0
OTHER PROGRAMS 6,477 559.084 9,881 88.407 2,977 444.772 4,907 396.224 13,561 77.855 12,980 323.278 8,121 47.463
2. COMMUNITY MORTGAGE PROGRAM2 9,457 347.533897 12,331 485.472 14,026 616.5747742 14,129 695.5235989 14,199 722.1562199 13,783 740.4283134 11,819 625.8828425
3. RETAIL & DEVELOPMENTAL FINANCING (TOTAL) 17,993 4,579.31 24,738 7,643.056 37,627 13,462.44 44,614 17,752.44 39,138 16,631.41 33,427 16,559.88 48,020 24,076.08
End-User Financing (HDMF)3 16,194 3,820.35 19,125 5,402.033 29,035 9,324.269 39,562 14,786.787 37,175 15,291.246 33,066 16,194.8 47,367 23,665.156
GFIs End-User Financing 1,799 758.96 5,613 2,241.023 8,592 4,138.17 5,052 2,965.65 1,963 1,340.17 361 365.08 653 410.92
4
LBP 89 99.06 141 107.985 116 136.29 78 82.262 37 53.534 65 117.093 103 180.796
SSS5 734 321.04 746 325.470 349 164.76 187 90.66 91 43.51 47 25.3 37 22.59
DBP 0 - 0 - 0 0 66 5 220 15
GSIS 976 338.86 4,726 1,807.568 8,127 3,837.119 4,721 2,787.726 1,835 1,243.122 249 222.683 293 192.536
TOTAL DIRECT HOUSING PROVISION 46,728 6,039.51 56,350 8,327.12 60,266 15,565.52 77,222 19,692.13 88,990 19,158.92 76,918 20,300.15 88,417 27,494.15
2008 2009 2010 2011 2012 2013 TOTAL

SUMMARY
(In Households Assisted) Units Values Units Values Units Values Units Values Units Values Units Values Units Values
1. NHA HOUSING PRODUCTION1 28,778 4,976.32 26,997 5,082.24 32,034 3,588.57 31,321 7,479.53 56,221 18,397.79 80,908 4,591.58 415,849 55,755.35
RESETTLEMENT 18,674 4,945.197 19,840 5013.593 14,600 3,572.067 5,814 2,845.75 37,417 12,822.00 54,954 3,139.027 227,329 42,008.55
SETTLEMENT UPGRADING 6,606 4.562 3,076 22.338 15,720 0 7,197 6.399 1,443 15.52 647 - 59,345 80.15
AFP/PNP HOUSING 0 0 0 0 15,150 4,591.08 16,680 5,547.98 22,278 1,360.000 54,108 11,499.06
OTHER PROGRAMS 3,498 26.562 4,081 46.307 1,714 16.505 3,160 36.299 681 12.28 3,029 92.551 75,067 2,167.59
2. COMMUNITY MORTGAGE PROGRAM2 9,169 513.0272486 10,022 561.1487795 7,109 396.9164696 15,875 982.084 9,287 548.78 11,779 713.832 152,985 7,949.36
3. RETAIL & DEVELOPMENTAL FINANCING (TOTAL) 62,846 34,569.53 75,328 46,383.85 63,813 41,521.20 46,642 32,221.27 47,270 32,477.84 41,730 29,935.06 583,186 317,813.35
End-User Financing (HDMF)3 62,507 34028.495 74,973 45701.976 62,041 40,803.928 46,296 31532.21 46,898 31,821.48 41,484 29,555.63 555,723 301,928.36
GFIs End-User Financing 339 541.04 355 681.87 1,772 717.28 346 689.06 372 656.36 246 379.43 27,463 15,884.99
4
LBP 186 402.223 281 593.409 285 598.436 281 611.38 325 596.12 213 340.39 2,200 3,918.97
SSS5 62 53.14 74 88.46 100 107.09 65 77.68 47 60.24 33 39.04 2,572 1,418.98
DBP 16 1.75 1,387 11.75 - - - - 1,689 33.50
GSIS 75 83.925 - - - - 21,002 10,513.54
TOTAL DIRECT HOUSING PROVISION 100,793 40,058.88 112,347 52,027.23 102,956 45,506.69 93,838 40,682.88 112,778 51,424.41 134,417 35,240.47 1,152,020 381,518.06
July 2014 100


SUMMARY
2001 2002 2003 2004 2005 2006 2007
(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 51,688
6
4.1 Proclamation 87,762 29,590 20,256 44,248 11,784 15,082 51,688
4.2 Mt. Pinatubo 28,500
7
5. HGC (Total) 18,761 11,699.40 15,034 6,372.72 129,369 27,069.32 19,019 2,459.81 68,276 21,959.72 59,994 24,802.73 62,957 35,097.32
Retail Guaranty 16,413 11,422.90 12,737 6,152.65 129,072 27,026.49 19014 2372.98 68,119 21,716.06 59,962 24,292.76 57,740 34,297.66
Developmental Guaranty 2,348 276.50 2,297 220.07 297 42.83 5 86.83 157 243.66 32 509.97 5,217 799.66
Public Corporate Borrowings
Securitization
Cashflow 7,187 1,190.66 3,552 525.17 7,859 1,375.17 11,909 2,351.09 12,986 2,525.00 6,414 1,317.00 7,187 1,190.66
6. NHMFC 8
Housing Loan Receivables Purchase Program (HLRPP)
7 HLURB9
License to Sell 97,437 113,452 131,130 172,883 167,229 187,001 172,967
No. of LGUs provided assistance in CLUP
SUMMARY
2008 2009 2010 2011 2012 2013 TOTAL
(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 6,504 5,286 100 300 301,100
6
4.1 Proclamation 6,504 5,286 100 300 272,600
4.2 Mt. Pinatubo 28,500
7
5. HGC (Total) 31,936 25,518.33 26,164 23,404.57 40,404 45,522.25 25,009 37,899.79 20,637 32,427.74 6,894 10,353.89 524,454 304,587.59
Retail Guaranty 30,767 24,097.22 12,181 16,556.23 15,709 28,607.32 20,246 33,666.13 14,698 27,877.890 5,511 8,005.770 462,169 266,092
Developmental Guaranty 925 622.21 311 415.51 17 117.63 541 68.50 12,147 3,403
Public Corporate Borrowings 175 708.03 1,206 4,571.87 24,594 16,625.99 4,191 4,091.56 2,560 4,096.420 1,379 2,335.86 34,105 32,430
Securitization 69 90.87 12,466 1,860.96 84 171.31 31 73.60 3,379 453.430 4 12.260 16,033 2,662
Cashflow 12,586 3,027.22 14,441 3,930.00 11,065 3,310.40 9,959 3,196.94 8,621 2,814.260 5,672 1,782.97 119,438 28,537
6. NHMFC 8
Housing Loan Receivables Purchase Program (HLRPP) 2 1.064 1,693 436.16 6,643 1,163.000 3,676 906.41 12,014 2,507
7 HLURB9
License to Sell 220,756 200,124 195,807 170,379 264,237 181,948 2,275,350 -
No. of LGUs provided assistance in CLUP 26 148 1,040 1,158 2,372 -
Note:
1
NHA's Accomplishment Report as of December 2013
2
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 2013
4
LBP's Accomplishment Report as of October 2013
5
SSS's Accomplishment Report as of December 2013
6
HUDCC Accomplishment as of September 2011
7
HGC's Accomplishment Report as of November 2013
8
NHMFC's Accomplishment Report as of November 2013
9
HLURB's Accomplishment Report as of December 2013
July 2014 101

ANNEX 3: LATEST GUIDELINES FOR THE SHFC DEVELOPMENTAL FINANCING COMPONENT (CORPORATE
CIRCULAR AKPF #13)
July 2014 102

July 2014 103

July 2014 104

July 2014 105

July 2014 106

ANNEX 4: LGU COMPLIANCE WITH MEMORANDUM CIRCULAR 2011-17
LGU ACTIONS ON PREVENTION OF PROLIFERATION OF IFS1
Pursuant to MC No. 2011-17 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 P4,000.00
 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 2011
July 2014 107

REGION XI
 LGU is planning to buy a resettlement area

 477 IFS in danger areas, road right-of-way
 Households were seen in the hospital sites
CAR
 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
July 2014 108

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 2014. 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$ 25–37 per month.
July 2014 109

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 2001. 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
July 2014 110

 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 low-
income 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
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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 sqm2 (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 BOX 1: The Case of Brazil
■ Institutional and Political Commitment. The Brazil’s larger cities have traditionally taken the lead in
slum upgrading, most notably through the pioneering Favela
Brazilian experience serves as a good model for inter- Bairro program in Rio de Janiero and the Guarapiranga
agency collaboration with very strong leadership as well project in São Paulo. Throughout Brazil, municipalities have
as housing provisions. In Brazil the issue of political will been moving from sectoral projects towards comprehensive
has assumed a centrality that is matched in few other upgrading frameworks designed to integrate slums into the
countries. Key factors include giving priority to a city fabric. This is done by land tenure regularization, social
development initiatives, and community participation
program by state or municipal authorities, as well as the
schemes. Through the adoption of the City Statute, an
commitment on the part of the different agencies innovative and far-reaching legal framework for urban policy
involved—and the ability to build bridges with other has been created and incorporates a number of instruments
government entities and navigate political-administrative that facilitate both informal settlement regularization and
differences. The national government has put poverty at upgrading. Resulting from an intense negotiation process
the top of its priorities and created a Ministry of Cities to that lasted more than ten years, the City Statute confirmed
and widened the legal and political role of municipalities in
spearhead and coordinate some of the new policy urban policy, while also fundamentally
approaches even in the face of severe budget constraints. asserting a social approach to urban property rights, which
(Box 1). will have a profound long-term impact on urban upgrading
and social inclusion.
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■ 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.
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 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
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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
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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.
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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 2.
2. 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
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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

No. of
Thematic Area Date & Time Venue
Participants
Citywide urban planning and low- 13 September 2013
43
income housing 8:30 a.m. – 11:30 a.m. TERRA FUNCTION
Socialized and Pro-poor Housing 27 September 2013 ROOM
5/F, Serenity Tower 32
Delivery Systems 8:30 a.m. – 11:30 a.m.
Sustainable Housing Finance 27 September 2013 BEST WESTERN
Antel Hotel 33
1:30 p.m. –4:30 p.m.
Social and Economic Development 30 September 2013 7829 Makati Avenue
Makati City 30
8:30 a.m. – 11:30 a.m
Institutional Strengthening and 30 September 2013
34
Capacity Development 1:30 p.m. – 4:30 p.m.
3.2 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
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 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

BOX 1: The following guide questions helped to
workshop groups that were tasked to discuss the preliminary keep the discussion focused:
problem tree, react to it, comment on it and revise it— if • Do you agree with the stated core problem?
deemed necessary. The group discussion focused on the If you don’t, how can it be restated?
particular theme of the consultation workshop. Members • Do you agree with the stated effects of the
were advised not to introduce other topics outside the core problem? If you don’t, what will you
change and how?
thematic area (Box 1).
• Do you agree with the underlying causes of
the core problem as presented? If you don’t,
suggest changes.
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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 CITYWIDE URBAN PLANNING AND LOW INCOME

HOUSING
CORE PROBLEM 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.
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Table 4: THEME SOCIALIZED AND PRO-POOR HOUSING DELIVERY

SYSTEMS
CORE PROBLEM Insufficient supply of affordable and adequate housing for informal
settlers
THE EFFECTS  Proliferation of informal settlements
 Overcrowding of existing low income housing
 Considerable stock of legal but poor quality housing
 Deteriorating environment of neighborhoods
THE CAUSES  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 Inadequate access by informal settlers to affordable housing
finance
THE EFFECTS  Proliferation of informal settlements
 Overcrowding of existing housing stock in urban centers
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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 SOCIAL AND ECONOMIC DEVELOPMENT

CORE PROBLEM Unfocused and inadequate socioeconomic policies and programs for the
informal settlers
THE EFFECTS  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
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Table 6: THEME SOCIAL AND ECONOMIC DEVELOPMENT

 Increased livelihood and income risks and vulnerabilities due to
extreme weather events or hazards
THE CAUSES  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  What change is needed?
are needed: (i) embrace change; (ii)  What will it look like?
improve governance; and (iii) accomplish  What business transformation is
needed?
both through business transformation.  How do we manage the transition?
Four elements are critical in the pathways  What will the institutional set-up
look like in five to ten years?
to transformation—people, structure, policy and finance.
Table 7: THEME Institutional strengthening and capacity development

CORE PROBLEM Inadequate institutions for informal settler housing
THE EFFECTS  Growth of informal settlements
 Poor urban fabric
 Congested and polluted cities
 Many live in danger areas
THE CAUSES  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
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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 REACTIONS / COMMENTS
Citywide Planning and Low-Income Housing
Nathaniel “Dinky” von  IS is a very visible manifestation of poverty. For as long as we have poverty there
Einseindel will be informal settlements
 There is a very strong mindset that IS are generally seen as blighted areas which
Director, CONCEP, Inc. do not maximize the economic productivity of the land. This is related to the
(Consultants for capitalistic economic mindset of people. IS need to be cleared and relocated
Environmental Planning) 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
July 2014 124


 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
Mr. Lito Adelfo  Charter RA 409 – land for the landless program; beneficiaries are the actual
City of Manila Representative 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; off-
city 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
Ms. Ofelia Bagotlo  Participation of urban poor should be recognized; not in all municipalities;
National President treated as “foes”; they need to know how this benefits them, and how they can
Homeless People’s participate; they are open to ideas but need help understand
Federation, Inc. (HPFI)  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
July 2014 125


 Recognize their initiatives
 Biggest contributor to the economic development
 Urban poor has been capacitized -- except for municipalities that don’t see
them positively
Socialized and Pro-poor Housing Delivery Systems
Juanito Tan &  High cost of land, especially in Makati- there is a national shelter program
Maribel Lumang where there are shortcomings in terms of affordable housing.
 Description on relocation sites in Bulacan and Laguna: Makati’s program in
Makati City LGU Bulacan and Laguna (Tanauan and San Jose, relocated from danger zones from
Representatives 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 important-
should 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 2008- the city procured 2 sites (Bulacan and Laguna).
 Roy: agree with the cause that there is a lack with regards to housing finance-
focus 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.
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 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)
Maricel Genzola  Agree with the statement re core problem
Foundation for the  Concerns raised by the urban poor alliance (situation): inadequate facilities in
Development of the Urban resettlement sites (ex. water), lack of continued power supply, etc.
Poor (FDUP)
 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
Ramon Falcon  Economic performance- we are on track, but we need to improve on our socio
NEDA 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
Institutional strengthening and capacity development
Atty. Paul Vega  Concern: fragmented institutional framework: holistic approach- interagency
Pasay City, UDHO 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
Rey Lunas  Still need to see the commitment re policy
MMDA  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
Felix Fuentebella  Updates on the pending bill for the creation of the Department of Housing and
Congressman, 4th District Urban Development (DHUD)
Camarines Sur  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.
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4. The Sectoral Consultations & Workshops

4.1 Schedules & Venue
Table 9: Summary of Sectoral Consultation Schedules

No. of
Sector Date & Time Venue
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 22
*including HUDCC and ICF GHK
The first sectoral group was the largest in terms of participants. Of the 46 who attended, almost one-
fourth (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.
Each of the sectoral consultations and workshops started in the morning and lasted into the mid-
afternoon, 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 Registration of Participants
AM Philippine National Anthem & Opening Prayer
AM Welcome/Opening Remarks by HUDCC
AM Introduction of Participants
AM Backgrounder on NISUS and the Consultation Series: Project Milestones and Workshop
Objective [NISUS Team]
July 2014 128

AM Presentation of Results of Thematic Consultations: The Summary Problem Tree

[NISUS Team]
AM Break [Morning snacks to be served]
AM Presentation on Government Initiatives Related to the Core Problems [NISUS Team]
AM Introduction to the Workshop Proper/Brief Presentation of Results of the Previous
Sectoral Consultation [NISUS Team]
Lunch
PM Plenary: Workshop Group Presentations
PM Synthesis of Discussions
PM 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.
July 2014 129

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
No. of
Region Date Venue
Participants
Mindanao 23 October 2013 Blue Chateau Function Room
Grand Men Seng Hotel, Davao City
Visayas 7 November 2013 Tuscany A & B Function Room
The Hotel Elizabeth, Cebu City
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.
The program followed the same flow as the previous consultations as shown in Table 12 below:
Table 12 : Regional Consultations Program of Activities

AM Registration of Participants
AM Opening Remarks by HUDCC
Atty. Wendel Avisado, HUDCC Deputy Secretary General
AM Introduction of the Participants
AM Background of NISUS and Presentation of Workshop Objectives
Ms. Gloria Guevarra, ICF GHK NISUS Project Management and Microfinance Specialist
AM 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
AM Question & Answer
July 2014 130

AM Coffee Break
AM 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
AM Question & Answer

AM The Visioning Process for Sustainable Development of Informal Settlements
Dr. Joji I. Reyes, ICF GHK NISUS Team Leader
NN Lunch Break
PM Workshop Mechanics and Groupings
Dr. Joji I. Reyes, ICF GHK NISUS Team Leader
PM Workshop Group Discussions
PM Coffee Break and Snacks
PM Workshop Group Presentations
PM Synthesis and Agreements
PM 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.
July 2014 131

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)
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Appendix 2
The Regional Consultation Workshop
in the Visayas
Appendix 2: Results and Documentation of Workshops for the Visayas Regional Consultation

PHASE 3 Visayas Regional Consultation & Workshop

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 2014. 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  Department of Social Welfare and
Visayas Development (DSWD)
 Department of Public Works and 62
Highways (DPWH)
 Department of Environment and
Natural Resources (DENR)
 Department of Agrarian Reform (DAR)
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July 2014
 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
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
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July 2014
 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 BOX 1: Workshop Instructions
provided opportunity for the participants to clarify certain • Each workshop group will prepared their comments
points, or share what their agency, institution, or local and response to the Proposed Strategic Plan for
government is doing or has done related to the topic. Upgrading Informal Settlements in the Philippines.
Highlights of the issues raised during the open forum are • Each workshop group will be given 15-20 minutes
to present their respective Summary Comments and
shown separately in ANNEX C. Response to the participants in a plenary session
• The following instructions will help focus the group
 Workshop Mechanics. The participants were divided into three discussions:
(1) Agreement or suggested revision/s to the Vision
workshop groups that were tasked to discuss the proposed and Mission Statements;
strategic plan for upgrading IS in the Philippines, react to it, (2) Agreement or suggested revision/s to the
comment on it and revise it—if deemed necessary. The Guiding Principles and Objectives;
participants were pre-assigned to either housing (3) For the Strategies and Proposed Strategic
production, housing finance, or governance with a set of Action Plan: (a) Identify key lessons learned from
past experience/projects and comment/agree on
instructions (Box 1). which strategy and proposed action/s correspond
to such key lessons; (b) If any lesson identified
3. The Results from the Workshops 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;
In a plenary session following the workshops, each breakout (c) Agreement or suggested revision/s.
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.
Table 3: Summary of Comments to the Proposed Strategic Plan

Groupings COMMENTS
Housing Production  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
July 2014
Groupings COMMENTS
 ISFs are bankable/ they can pay, but this depends on who collects.
Housing Finance  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.
Governance  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.

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
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July 2014
Developing a Informal Settlements Upgrading Strategy of the Philippines FINAL REPORT
Annex A: Analytical Framework for NISUS Phase 3
THE ICF GHK ANALYTICAL FRAMEWORK FOR NISUS PHASE 3
1 Background
GHK Consulting Limited (ICF GHK1) 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 2012. 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
July 2014
Figure 1. An Inclusive, Participatory Strategic Planning Process for NISUS Phase 3
Activity 1: Activity 2: Activity 3: Activity 4:

Scanning and research Develop Draft Develop Draft Finalize the Draft
Document current Create the Develop and Incorporate

state of reality and framework for document comments
desired future for broad direction action plans to to finalize
informal and priorities achieve the the National
 Conduct SWOT Analysis  Develop the draft strategic  Develop the draft  Revise Draft Strategic
 Distill Comprehensive plan document to serve as implementation plan which will Plan and Implementation
Assessment Report from Phase a broad outline to guide contain: Plan based on comments
2 future direction. The draft o Strategies from regional
 Review thematic, sectoral and Strategic Plan will contain: o Action Plans consultations and
regional consultations for o Mission, Vision and o Performance Targets workshops and the PAC
problem tree analysis and Guiding Principles  Develop the draft NISUS project  Present the Revised Plans
preliminary vision, mission and o Strategic Goals monitoring and evaluation to stakeholders in a
objectives from Phase 2 o Objectives system national workshop
 Review other relevant plans, o Summary of  Finalize the website for  Finalize the Strategic Plan
documents and recent Comprehensive Assessment disseminating NISUS  Finalize the
developments affecting the Implementation Plan
Thematic, Sectoral, & Regional Consultations & Workshops National Workshop

Regional
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
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
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July 2014

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 July 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
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Annex B: List of Participants for the Regional Consultation Workshop for Visayas
Page 1
July 2014
Page 2
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Page 3
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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.
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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
Lessons Learned and

Proposed Vision & Mission Proposed Guiding Principles &
REGION & GROUP Corresponding/Proposed
Statements Objectives
Strategies and Action(s)
VISAYAS
In full agreement with the Objective 1 Lessons Learned:
PRODUCTION proposed Vision and Mission • Strategic city-wide assessments  Livelihood should be embedded
Statements and planning guidelines applied to in actual production
15 cities, 1 Province (Siquijor) by  Urban Renewal “New Township”
2025 possible for growing LGUs. Very
 Strategic infrastructure hard for urbanized LGUs since it
requirements and urban renewal is driven by cost of land. Thus,
area plans for 15 cities approved encourage land use planning for
and implemented by 2025 a comprehensive township
 Guidelines for safe, resilient housing.
housing incorporated into national  HLURB to monitor 20% balance
building code and applied to 15 housing compliance. This
cities within a risk sensitive land should be clearly defined. A
use planning framework mechanism for transparency
 XXX families in 15 cities directly should be in place
living in danger areas and on
land needed for public Proposed Strategies/Actions:
infrastructure relocated to
 Strict enforcement of building
sustainable new towns by 2025
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 1 1.1
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
1 2.1
 HUDCC, MMDA, NHA, HLURB,
DILG, DOLE, DSWD, DPWH,
DOTC, TESDA, DTI
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Lessons Learned and

 P – additional agency on
objective 15.1 DOTC and DPWH
In full agreement with the Objective 2 Strategy 6 Land ownership is an
HOUSING FINANCE proposed Vision and Mission  6. 3 Adopt market driven, important consideration to
Statements variable interest rates for enable an effective housing
socialized housing and cooperative financing program
housing
Objective 2 Strategy 7
 7.4 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.
•The group agrees with the Vision. Objective # 3
GOVERNANCE •For the Mission: Delete “resilient,  Delete NHA role (“clarified,
vibrant and connected approved, and operationalized”)
communities.”  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
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Lessons Learned and

agencies responsible, add HLURB &
PCUP.
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July 2014
Appendix 3
in Mindanao
Appendix 3: Results and Documentation of Workshops for the Mindanao Regional Consultation

PHASE 3 Mindanao Regional Consultation & Workshop

2. The Consultations & Workshops

The second of the series of regional consultation was held on 29 May 2014. 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

Government Agencies (13)
Davao City,  National Housing Authority (NHA)
Mindanao  Department of Labor and
Employment (DOLE)
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 Socialized Housing Finance
Corporation (SHFC) 47
 Housing Land and Urban Regulatory
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)
Authority (NEDA)
 Home Development Mutual Fund
(HDMF)
 Philippine National Police (PNP)
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
 UP Mindanao
 MINLAND/KAMI
 Tagbuan Inc.
 Homeless People’s Federation of the
Philippines, Inc.
 University of Mindanao
 Maginhawang Pabahay, Inc.
break-out groups.
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 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 BOX 1: Workshop Instructions
under Phase 2. Her 3-part presentation consisted of a • Each workshop group will prepared their comments
discussion on the trends and patterns of informal and response to the Proposed Strategic Plan for
settlements, followed by an executive summary Upgrading Informal Settlements in the Philippines.
• Each workshop group will be given 15-20 minutes
that distilled the experiences of past and ongoing to present their respective Summary Comments and
programs, and concluded by the beginnings of a Response to the participants in a plenary session
reform strategy. • The following instructions will help focus the group
discussions:
Following the CAR presentation, Dr. Reyes presented (1) Agreement or suggested revision/s to the Vision
the proposed strategic plan for upgrading informal and Mission Statements;
(2) Agreement or suggested revision/s to the
settlements that included a draft vision and mission, the Guiding Principles and Objectives;
guiding principles, and 3 overall objectives and (3) For the Strategies and Proposed Strategic
corresponding targets. Action Plan: (a) Identify key lessons learned from
past experience/projects and comment/agree on
Both the presentations of the CAR and proposed which strategy and proposed action/s correspond
strategic plan have been made an integral part of the
does not respond to a strategy and proposed
main section of this draft final report (DFR). action/s, propose such a strategy and/or action/s
to enrich the Strategies and Proposed Action Plan;
 Open Forum An open forum followed the presentation (c) Agreement or suggested revision/s.
which provided opportunity for the participants to
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July 2014
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

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.

Group COMMENTS
Housing Production  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
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July 2014
Group 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
Governance  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


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1 Background
summarized.

Page 1
July 2014



Regional
Page 2
July 2014



consultations
Deliverables
Draft PMES
Revised Draft NISUS
Revised Draft PMES
Final NISUS
Final PMES
Final NISUS Website
Page 3
July 2014
Annex B: List of Participants for the Regional Consultation Workshop for Mindanao
Page 1
July 2014
Page 2
July 2014
Page 3
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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
July 2014

Lessons Learned and

MINDANAO
Strategy 1
PRODUCTION  #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
 We agree with the proposed Strategy 6
HOUSING FINANCE Vision and Mission Statements  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
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Lessons Learned and

Vision: Guiding Principles:  Add: 12.3: Institute housing
GOVERNANCE  Agree, appropriately worded,  Nicely worded offices in all LGUs in Mindanao
attainable  Implementation and funding
 Add: 14.5 Involve ISF
 Comprehensive
representation in all structural
 Capturing all the things we
mechanisms
Mission: would like to attain
 Is 1M realistic? – Yes with
conditions; 100,000 ISFs per Objective #3:
year nationwide  Revised HUDCC mandate approved
 Why 2025? 10 years from 2015; and operationalized by (2015)
timeframe of the program is 10  NHA role clarified (strengthened)
years ...
 Coordinated efforts  Capacity of NHA and (Mindanao-
 Integrated approach on agencies based) LGUs in estate
(holistic) management strengthened by
 Informal settlers: generic term (2015)
 Capacity of DILG and MMDA for
strategic urban planning, urban
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)
Strategy 10
 10.1 Clarify (Strengthen) role and
responsibilities of HUDCC . . .
 10.3 Clarify (Define and
strengthen) roles and involvement
. . . in ISF housing
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Lessons Learned and

Strategy 11
 11.5 Strengthen the capacity of
DILG and MMDA (LGUs) for
strategic urban planning, urban
renewal, and ISF housing.
Strategy 12
 12.2 Develop capacity of LGUs to
undertake city-wide (municipal)
strategic planning, urban renewal
...
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July 2014
Appendix 4
in Luzon
Appendix 4: Results and Documentation of Workshops for the Luzon Regional Consultation

PHASE 3 Luzon Regional Consultation & Workshop

2. The Luzon Consultation & Workshop

The last of the series of regional consultation was held on 3 June 2014. 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

Government Agencies (19) 44
 Department of Health (DOH)
Luzon  Socialized Housing Finance
Corporation (SHFC)
 Department of Social Welfare and
Development (DSWD)
Page 1
July 2014
 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)
 National Housing Authority (NHA)
Authority (NEDA)
Poor (PCUP)
Local Government Units (3)
 Valenzuela City
 Mandaluyong City
 Manila City
 HPFPI
 DLSU Manila
 Tulay sa Pagunlad, Inc.
 Ateneo School of Governance
 HCDRD
 PBSP
 Alter Plan
 OSHDP
 PIDS
break-out groups.
Page 2
July 2014

 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 BOX 1: Workshop Instructions
Team Leader, Dr. Joji Reyes did the presentation on the • Each workshop group will prepared their comments
results of the comprehensive assessment done by the and response to the Proposed Strategic Plan for
consultants under Phase 2. Her 3-part presentation Upgrading Informal Settlements in the Philippines.
consisted of a discussion on the trends and patterns of • Each workshop group will be given 15-20 minutes
to present their respective Summary Comments and
informal settlements, followed by an executive Response to the participants in a plenary session
summary that distilled the experiences of past and • The following instructions will help focus the group
ongoing programs, and concluded by the beginnings of a discussions:
reform strategy. (1) Agreement or suggested revision/s to the Vision
and Mission Statements;
(2) Agreement or suggested revision/s to the
Following the CAR presentation, Dr. Reyes presented the
Guiding Principles and Objectives;
proposed strategic plan for upgrading informal settlements (3) For the Strategies and Proposed Strategic
that included a draft vision and mission, the guiding Action Plan: (a) Identify key lessons learned from
principles, and 3 overall objectives and corresponding past experience/projects and comment/agree on
targets. which strategy and proposed action/s correspond
does not respond to a strategy and proposed
Both the presentations of the CAR and proposed strategic action/s, propose such a strategy and/or action/s
plan have been made an integral part of the main section of to enrich the Strategies and Proposed Action Plan;
this draft final report (DFR). (c) Agreement or suggested revision/s.
Page 3
July 2014
 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

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.

Group COMMENTS
LUZON
Housing Production  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”)
Housing Finance  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
Governance  Vision statement – add “empowered”
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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


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July 2014
1 Background
summarized.

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Regional
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consultations
Deliverables
Draft PMES
Revised Draft NISUS
Revised Draft PMES
Final NISUS
Final PMES
Final NISUS Website
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Annex B: List of Participants for the Regional Consultation Workshop for Luzon
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LUZON REGIONAL CONSULTATION-WORKSHOP
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
o Key Lessons: agree with the sentiment- providing security of tenure (incremental process- UDHA-
and 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 microfinance-
agree 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 strategy-
there 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)
o 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
o 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)
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o Analysis done on programs and roles- looking at national policy- in the process of your analysis-
was 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
o 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
o 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?
o 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
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Lessons Learned and

LUZON
Vision  Guiding principles – OK  For Strategy 4: Add 4.5
PRODUCTION  Define what is meant by Stringent criteria (policy for
“formal” –define as  Comments on incremental screening) for accreditation of POs
empowerment, security of tenure, approach: and NGOs.
formalizing their livelihood – can we refrain from using
programs “incremental” when referring
to the land tenure? SHFC:
Mission Maybe we can use the term
 Agreed with the mission, but “multi-option” approach
look the trend if doable. – when you do incremental for
housing, there should be a
Following are some assumptions: standard , based on
affordability
 There is effective coordination
– Freehold vs incremental
among stakeholders
– Incremental only on housing
 New policy pronouncements
but not on land tenurial.
 New legislations or amendments
to old legislations
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)
Strategy 2
 Comments/suggestion: remove the
“return to” and just plain IS
upgrading with secure tenure…
Strategy 3
 3.1 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
Vision and Mission: Guiding Principles and Objectives  Refer to 9.1: How do we
HOUSING FINANCE  PDP: 2016- how to align the strengthen the local government?
 Generally agree with the principles
NISUS with the next –through assets (ex. Angono LGU-
administration replicate this kind of model –
Target 1: policy issue in shifting
 Definition of formal (or use of purchasing loans from Pag-IBIG
current rates to market rates (6%)
the word “formal”) – ISF and NHMFC? How to replicate to
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Lessons Learned and

transformed into a “secured” (developmental and retail); Pag-IBIG the LGUs since the ISFs are more
community (mandated to cater lower than the of a local issue than national-
 Make sure of the distinction of market rates: 15K for NCR, 12K for make the LGU more committed
formal employment and informal non-NCR, strictly for Pag-IBIG than the banks.)
employment and tenurial security members/access to membership)
(establish income) *established that the ISF has income  Refer to 9.4: we should put up
an effective collection management
 market based interest rate:
system (ex.
political will to shift
NHMFC- securitization, DOF-
 SHFC: having targeted those who
quality of assets should be
cannot pay- fixed rate but on a
assured, which is what NHMFC
subsidized rate (depends on the
should be doing)
client/affordability); depends on
 Funding source: can this be
certain income deciles
allocated among the agencies
 uniform criteria: not per agency
 Community development plan of
basis but uniformed (for funding
the LGU varies/differs
source)
 Targeting should be clear
 in principle- agree to shift to the
 We should look at it long term
market base (interest rate) with
(through collateral)
uniform criteria among the
agencies serving the ISF (some
can do it but not all)
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 Fund-
help for the interest rate (get the
difference from this Fund) – are
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Lessons Learned and

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
 7.2 – 7.3: agree
 7.4: agree (policies to support
the scale up the projects ex.
Habitat- from the national
budget, allocated to help support
these)
 8.1 – 8.4: agree
GOVERNANCE Vision: Adopt Strategic City-wide Planning:  Incorporate intercity connectivity

“ISFs transformed into formal Planning must be undertaken with a or also known as “Metropolitan
residents in resilient, vibrant long-term strategic perspective that Approach”; coordination or
empowered, and connected sets the spatial pattern for future protocols between sending and
communities” growth and enables cities to plan receiving LGUs;
primary infrastructure in advance of
Mission: land development. For Objective 3:
“We are committed to provide, at 1. Adoption of community
least one million ISFs with have Strategy 10 and 11 agencies: HUDCC, transformational index
tenurial security and better quality SHFC, NHA, HGC, MMDA, concerned • Physical and Environmental
housing, improved physical and private sector and civil society Livability
social infrastructure, and access to groups, PCUP • Mobility and access
jobs, capital and livelihood—in • Economic/Livelihood
resilient, vibrant, and connected Strategy 11.5: add Local • Community governance
communities, by 2025” Government Academy • 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
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Lessons Learned and

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.
10.2 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

1.4.4 Add: conflict resolution and
handling grievances
Across the board: add governance

policies in mobilizing funds
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Appendix 5
NISUS National Forum
Appendix 5: Results and Documentation of National Forum

PHASE 3: National Forum
July 2, 2014
Sofitel Philippine Plaza, Pasay City

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, 2014.
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
The Honorable Jejomar Binay
Vice-President of the Republic of the Philippines and HUDCC Chairman
10:35 AM Coffee Break
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
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2.1 Preliminaries
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
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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 REACTIONS / COMMENTS

Bimbo Fernandez  Role clearly stated in Local Government Code and UDHA
Assistant Secretary  Housing is not just roof; it should include basic services
Department of Interior and Local  Responsibility of LGU to exercise its power
Government  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 Yolanda-
affected areas.
Mr. Eduardo T. Manisio Socialized  The NISUS promotes community-driven approach (people’s rights to cities)
Housing Finance Corporation  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
Ms. Ofelia Bagotlo  Paano maisasakatuparan? Marami ng nakasulat na nasa papel lang, natutupad ba?
National President  The local housing board should allow participation of ISFs; they can contribute ideas and
Homeless People’s Federation, schemes because they are the ones who know their needs and have actual experience.
Inc. (HPFI)  Concern for the next generation - will this continue beyond the 2025 target?
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 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
Atty. Christopher Ryan Tan  There are members of the private sector who are willing to focus on people not just on
President, housing and financing
Organization of Socialized  Trying to bridge this gap for low-cost housing: HOW? Developers still can’t find balance
Housing Developers of the between cost of production and compliance to building code with safety nets and
Philippines 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
Dr. Segundo Romero  Come up with innovations to get out of poverty
Ateneo School of Governance  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
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 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
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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.
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Annex A: List of Participants
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Appendix 6
NISUS Website Development
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 stand-
alone? 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
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July 2014

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 BOX 1: Cloud Hosting
to build it are already available. To also eliminate
subscription cost, the website was developed in Cloud hosting services provide hosting for websites on
virtual servers, which pull their computing resource from
www.wix.com, an SaaS webhosting provider. This is fully extensive underlying networks of physical web servers.
described in later sections. It follows the utility model of computing in that it is
available as a service rather than a product and is
4. Designing the website framework 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 Consultants worked with HUDCC as to the general
the demands of their website, and they will only pay
look and feel of the site such as color schemes, fonts, lay for what they use. It exists as an alternative to hosting
out, menu style, etc. It was deemed best to keep complex websites on single servers (either dedicated or shared
and resource hungry elements off, like flash and animations, servers) and can be considered as an extension of the
to enable the website to load and respond faster and to concept of clustered hosting where websites are hosted
make the site easier to update. Rather than build the on multiple servers. With cloud hosting, however, the
network of servers that are used is vast and often
website from the ground up, The Consultants also pulled from different data centers in different locations.
recommended the use of the pre-defined templates
offered by free online sites (Box 2). The ready templates http://www.interoute.com/what-cloud-hosting
can provide the structure and reduce the time needed to
build the framework. All that was needed was to fill in the
contents.
5. Build website for approval of HUDCC

BOX 2: Hosting the NISUS Website on Wix
This involved constructing the framework and putting in the
Wix provides free web-designing tools and templates. It
runs millions of websites in its datacenters and has content and functionality. After reviewing the content
datacenters in 2 different continents, allowing for higher design, and checking for proper placement, relevance, and
fault tolerance and availability. accuracy, the Consultants submitted the website for initial
approval of HUDCC.
The decision to host the NISUS website on Wix was based
largely on cost, speed of development and ease of
maintenance.
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 top-
right 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 http://nisusproj.wix.com/nisus-3. Because the hosting plan for the
website is free, there are Wix banners lining the top and bottom of every page.
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July 2014
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 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
About Us Describes the objectives of NISUS and the organizations involved in the
project, namely, ICF Consulting Ltd., HUDCC, and the Cities Alliance /
World Bank
Executive Summary 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.
Library 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
Contact Provides the email and phone numbers of HUDCC
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July 2014
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 https://www.facebook.com/nisus.phils. 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 follow @NISUS_Phils. They will be able to receive tweets on Android and iOS.
Page 4
July 2014

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Developing a National Informal Settlements

Upgrading Strategy for the Philippines

GoP The Government of the Philippines

PCFC People’s Credit and Finance Organization

July 2014 Page vi

July 2014 Page vii

 targeted housing subsidy program for ISFs designed, funded and

 at least 40% of cities are implementing city-wide urban renewal,

July 2014 Page viii

July 2014 Page ix

strategic plan that identifies strategic infrastructure requirements

July 2014 Page x

1.1 A Rapidly Urbanizing Philippines

1.2 Urbanization and the Pervasiveness of Informal Settlements in the Philippines

1.3 Addressing Climate Change and Disaster Risks

1.4 Purpose and Structure of the Report

2 COMPREHENSIVE SECTOR ASSESSMENT: KEY FINDINGS AND RECOMMENDATIONS

2. 1 Informal Settlements in the Philippines: Trends and Patterns

 lots without the consent of the owners,

2.2 Sector Assessment

There are other relevant legislations. The

additional unit has been added to the housing

2.3 The Beginnings of a Reform Strategy

The above implies adopting the following principles:

 Accept that people matter—informal settlers must be the decision makers.

 a return to informal settlements upgrading within an urban renewal/regeneration framework,

3 THE NATIONAL INFORMAL SETTLEMENTS UPGRADING STRATEGY OF THE PHILIPINES:

3.1 The Vision: The Informal Settler Families of Tomorrow

Informal settlements are essentially a staging

3.2 The Mission Statement: Enabling the ISF’s Envisioned Transformation

A life of dignity is a life of pride and self-

3.3 Guiding Principles: Shepherding Actions Toward the Vision

Guiding Principle No. 5: Adopt Strategic City-wide Planning.

Guiding Principle No. 7: Shift More toward the Market.

Guiding Principle No. 11: Integrate Upgrading with Urban Renewal.

Guiding Principle No. 14: Implement and Act through Partnerships.

Table 1. The NISUS Strategic Objectives

3.5 The Strategies: Pathways to ISF Transformation

Specific strategies to support Objetive 1 of NISUS are as follows:

Strategy 5: Encourage a fully functioning private rental market

Specific strategies to support Objetive 3 of NISUS are as follows:

Strategy 11: Improve sector governance

3.6 The Strategic Action Plan: Blueprint for Operationalizing NISUS

Table 2. The NISUS Strategic Action Plan, 2015-2025

4 THE NISUS INVESTMENT REQUIREMENTS, 2014–2025

Table 3. Summary of Indicative Investment Program, 2014-2025

4.1 Production Programs

Table 4. Indicative Investment Program, 2014-2025—Low Estimate (Current Prices)

Table 5. Indicative Investment Program, 2014-2025—High Estimate (Current Prices)

Construction of New Housing Units

Table 6. Assumptions Used to Estimate Investment Requirements—New Housing Units

Monthly household First 12,229 10% 7,345 10%

Informal Settler Families (ISFs)—Relocation and Upgrading

Table 7. Assumptions Used to Estimate Investment Requirements—Relocation and Upgrading

4.2 Mortgage Finance Requirements

 an urban renewal and housing finance and microfinance/community finance component;

 a policy and institutional reform component; and

 a capacity development component.

Table 10. The NISUS Policy and Institutional Reform Matrix

July 2014 Page 36

July 2014 Page 37

July 2014 Page 38

Table 11. Preliminary Results and Monitoring Framework for NISUS