Groundbreaking for ADB Project to Develop Poor Urban Communities

ANGELES CITY, PHILIPPINES (20 October 2004) - Angeles City was today the groundbreaking site of an ADB project to bring affordable housing and serviced land to about 20,000 urban poor families outside Metro Manila.

Attending the ceremony were Vice President Noli de Castro, chairman of the Housing and Urban Development Coordinating Council (HUDCC), and Michael Lindfield, ADB Senior Housing and Urban Development Specialist.

The Development of Poor Urban Communities Sector Project is funded by an ADB loan of $30 million, approved in December 2003.

Six pilot communities from 4 participating local government units (LGUs) (i.e., Angeles City, Bacolod City, Talisay City, and Cagayan de Oro City) will constitute the pilot areas or first batch of subprojects. The second and third batches will be finalized from a list of eligible subprojects submitted by interested LGUs. About 20 cities are expected to benefit from this demand-driven sector project, which will be made available to all cities and first-class municipalities outside Metro Manila.

The project comprises three parts. In the first part, new and existing sites will be developed to provide affordable land tenure and basic infrastructure services in communities where the majority live below the poverty line. The Development Bank of the Philippines (DBP) will relend to qualified LGUs for site development and land title distribution.

In the second part, DBP will establish shelter financing and microcredit facilities for the potential beneficiaries to finance serviced plots and house improvements, new housing loans, and microenterprise credit facilities. About 10,000 loans will be provided for small enterprises, which could generate jobs for some 40,000 households and benefit as many as 100,000 poor urban residents.

In the third part, DBP and Housing and Urban Development Coordinating Council (HUDCC) will undertake capacity building and project implementation support programs for the communities and the LGUs to carry out community-driven planning and decentralize shelter delivery.

"The three components of the project work together to create sustainable systems such as security of tenure and livelihood opportunities where previous slum-upgrading initiatives have had limited success," says Mr. Lindfield.

To address repayment problems for past government housing schemes, the project uses targeted land cost subsidies to make it affordable, but retains an incentive for the poor to pay and for financial institutions to be proactive in ensuring repayment. It avoids the past practice of distorting interest rates, relying instead on targeted subsidies.

Specifically, in Angeles city, the proposed off-site development subproject is expected to benefit 67 urban poor households affiliated with the Tinig Ng Pagkakaisa Ng Pulungbulu (TNP). These households were displaced by the eruption of Mt. Pinatubo.

The site is about 1.2 km away from the MacArthur Highway and is accessible to the urban center of Angeles City. It is situated near a Furniture Manufacturing and Exporting Factory where many of the employed workers of TNP are working.

DBP is the executing agency for the Site Development and Shelter Finance components. HUDCC is the executing agency for the shelter sector strengthening activities while DBP handles the activities related to project implementation support.

Housing and land markets have not kept pace with rapid urban growth in the Philippines, where half the population lives in urban areas. This figure is expected to reach 60% by 2010. Shelter is not affordable for the poor and more than 40% of urban families live in makeshift dwellings in informal settlements.

The six-year project, due for completion at the end of 2009, is patterned after ADB's pilot projects for the urban poor in Payatas and Muntinlupa, Metro Manila, which have been successful in community mobilization, shelter and infrastructure provision and financing, and livelihood support.

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