The Need to Redefine Socialized Housing Under RA 7279 (Part II)

 

In relation to yesterdays’ article, I read a news article by The Manila Times , that the House of Representatives has approved on second reading a measure amending Presidential Decree 957 or the Subdivision and Condominium Buyers’ Protective Decree of 1976.

Rep. Susan Yap of Tarlac, principal author of House Bill 395 said, “House Bill 395 should increase the penalties provided under PD957 to serve as a deterrent to the habitual and deliberate violation of unscrupulous developers. Due to obsolete penalties for violations of PD957 or the Subdivision and Condominium Buyer’s Protective Degree of 1976, many land and condominium developers contravene the decree knowing fully well that payment for the defiance of the law is so small”.

House Committee on Housing and Urban Development Chairman Rep. Alfredo Benitez of Negros Occidental province and co-author of the bill said “The enactment into law of the measure would ensure further protection to the buyers of subdivision lots and condominium units. A certificate of registration does not vest the owner or dealer of a project the authority to sell without the necessary license to sell”.

These are the violations to be penalized:

Failure to complete the development of the project, failure to deliver the title, failure to refund the purchase price, and failure to follow construction specifications or poor workmanship resulting to sub-standard units or to construction defects.

Violators face a fine of P500, 000 and jail-term of four years for the first offense, P750, 000 and 7 years imprisonment for the second offense and P1milliion and 10 year imprisonment and revocation of business permit and licenses for the third offense.

An additional fine of P500, 000 shall be imposed for every real estate or condominium unit sold by reason of advertisement in violation of the decree.

My opinion, on this issue is that our honorable congress is using a negative approach to the housing shortage. Putting more obstacles, difficulties, and road blocks to private sector initiatives, which are the prime movers in developing socialize housing. 

Looking at the past, just like the Rent Control Law, proved counterproductive. Our Apparent owners were compromised, and rents were frozen to below real estate taxes! While tenants enjoyed all the benefits of “possession”, they abused the owners’ rights. Several Apartments that were tenanted became business ventures and these apartments were converted into commercial use. Those in ” possession” by right and protected by the Law, profited from frozen rent, using these apartments for sari-sari stores , shops , dormitories and bed-spaces, to name a few. They ventured into very lucrative and profitable ” underground business”, which, does not pay taxes, nor did they improve the Apartment building .  Who benefited from the rent control law? The few tenants at the expense of owners. The result is what we see, a blighted city, dilapidated apartments, and no housing supply for the rental market.  

If congress keeps on making laws that would dampen the private sectors role, then, once again we shall experience extreme shortage of homes that the government has failed to address properly. 

 

In this second part, from Atty. Ryan Tan, President of OSHPAP, we will tackle the issues of the housing sector.  

 II. Statement of the Issues

House Bill Nos. 89, 1484 and 2576 therefore, bring us to question: are we really addressing the problems squarely by the introduction of these amendments? What are the urgency, beneficiality, necessity and practicability of these proposals?

 Whether we answer these questions affirmatively, negatively or even alternatively, it is imperative that we are backed up with very reliable data and spot-on analysis of the real problems on the ground.

For OSHDP, these are the problems:

1.      Production of socialized housing stock is low because there is no real incentive for the private sector to participate.

1.      Profit margin is low,

2.      Administrative and operational costs are higher (than low-cost or even middle cost housing development), and

3.      Incidences of turn-over and back-outs are very likely, among others;

4.      Sec. 20, RA 7279 incentives are difficult because of the restrictions in their granting and availment.

5.      There is a widening gap between the cost of a minimum-standard housing unit and the affordability of a household. Government needs to help the intended beneficiaries pay (or buy down) their housing loans.

6.      Colliding policies and regulations of various government instrumentalities most evident of them are our experiences with the local government units.

We do not see how the proposed amendments to Sec. 18, RA 7279 in their present form can solve these problems.

Nonetheless, allow us to submit our comments and recommendations.

III. Recommendations

Consistent with the foregoing premises, OSHDP proposes that the definition of socialized housing be amended as follows:

A. Definition of Socialized Housing

Republic Act No. 7279

OSHDP Proposal

Section 3 – Definition of Terms

(r)        “Socialized housing” refers to housing programs and projects covering houses and lots or homelots 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 this Act;

Section 3 – Definition of Terms

(r)“Socialized Housing” refers to housing programs and projects covering HOMELOTS, houses and lots, or low-rise to medium-rise buildings, or high density housing projects undertaken by the Government or private sector for the poor which shall include sites and services development, long-term financing, direct subsidy programs, liberalized terms on interest payments, and such other benefits.

   

B. Joint Venture between Private Developers as an Alternative Compliance 

We endorse joint ventures between two private developers to produce socialized housing projects.

HB 1484 and 2576

OSHDP Comment

 Sec. 18. Balanced Housing Development

XXX

(c) Joint-venture projects FOR SOCIALIZED HOUSING with either the local government units or any of the housing agencies[;] OR WITH ANOTHER PRIVATE DEVELOPER:PROVIDED, THAT, THE OWNER AND/OR DEVELOPER OF THE MAIN SUBDIVISION OR CONDOMINIUM PROJECT SHALL BE SOLIDARILY LIABLE WITH THE OWNER AND/OR DEVELOPER OF THE SOCIALIZED HOUSING PROJECT FOR THE DEVELOPMENT OF THE LATTER, IRRESPECTIVE OF THE PROVISIONS OF THEIR JOINT VENTURE AGREEMENT; or

 

OSHDP strongly supports this alternative compliance. As a matter of fact, “joint ventures between two private developers” to produce socialized housing projects was a major position taken by the organization in 2011, which was adopted by the HLURB in its Resolution No. 890, Series of 2012.

(For the reference of the TWG, we are attaching a copy herewith to form part of our position paper).

C. “Land Development Cost” be made basis of computation of 20% of compliance based on project cost

Consistent with the comments of Hon. Amado Bagatsing, during the December 11, 2013 housing and urban development committee hearing, about the legislative intent of the 20% computation, we adopt his view, and so posit, that the computation of 20% should be based on land development cost, excluding land acquisition cost and building or structure construction cost.

The reason for this is to ensure practicability of the law without overburdening the private sector and the market in general. We hasten to respectfully remind the committee that this provision was never intended to be confiscatory or an undue taxation. The same should be implementable in order to achieve its intended purpose.

Rep. Bagatsing’s clarification was a welcome and enlightening remark. As such, we propose,

HB 00089

OSHDP Proposal

Sec. 18. Balanced Housing Development. — The Program shall include a system to be specified in the Framework plan whereby developers of proposed subdivision projects shall be required to develop an area for socialized housing equivalent to at least twenty percent (20%) of the total subdivision area or total subdivision project cost, at the option of the developer, within the same city or municipality, whenever feasible, and in accordance with the standards set by the Housing and Land Use Regulatory Board and other existing laws. The balanced housing development as herein required may also be complied with by the developers concerned in any of the following manner: 

XXX

Sec. 18. Balanced Housing Development. — The Program shall include a system to be specified in the Framework plan whereby developers of proposed subdivision projects shall be required to develop an area for socialized housing equivalent to at least twenty percent (20%) of the total subdivision area or total subdivision project LAND DEVELOPMENT cost, at the option of the developer, within the same city or municipality, whenever feasible, and in accordance with the standards set by the Housing and Land Use Regulatory Board and other existing laws. The balanced housing development as herein required may also be complied with by the developers concerned in any of the following manner: 

XXX

D. Flexibility of Administrative Agencies to Prescribe Other Forms of Compliance consistent with the Spirit of the Law

We ask the authors to take a second look at the formulation, “NO OTHER FORM OF COMPLIANCE TO THIS SECTION MAY BE PRESCRIBED EXCEPT THROUGH THE ENACTMENT OF A SUBSEQUENT LAW.”

With all due respect, we believe that this clause should be deleted in HB 01484 and 02576 because our administrative agencies must be allowed some room to adapt to the changing times given the advancement in technology, the varying conditions in terms of time, space and people.

To our mind, the question of whether the administrative agency goes beyond the spirit of the law, or commits grave abuse of discretion amounting to lack or in excess of jurisdiction, or passes an unconstitutional rule, must be brought to the appropriate court in exercise of its judicial review at the proper time.

HB 01484 and 02576

OSHDP Proposal

“NO OTHER FORM OF COMPLIANCE TO THIS SECTION MAY BE PRESCRIBED EXCEPT THROUGH THE ENACTMENT OF A SUBSEQUENT LAW.

 Delete proposed formulation.

E. Remove Imprisonment in the Penalty

 For OSHDP, there should be no imprisonment in the penalty as this is clearly excessive, which may not really be germane to the purpose of RA 7279 in general. The role of the private sector to pursue the social justice objectives of the constitution is by way of cooperation.

 Imprisonment may be too harsh, excessive and may not be commensurate to the spirit of the constitution.

IV. Conclusion

The Philippines’ housing program is unique and internationally, our counterparts are observing and assessing its success or failure.

We need to do this right.

Twenty-one (21) years after the enactment of RA 7279, the problems of homelessness still persist. Most urgent of them are those countrymen of ours living in danger zones; and our government, both national and local, is clearly overwhelmed in addressing them.

The role of the private sector is pivotal

However, in crafting legislation and designing (or redesigning) a program, the same must avoid bordering on undue taxation of the private sector by way of over-burdening them with responsibilities that are primarily governmental, if not excessively entangling them just to go about their business.

Considering that we are the most affected sector given that the proposals are seeking to amend compliance with the balanced housing development program, we respectfully urge our lawmakers to seriously consider our position.

Thank you. 

Source: The Manila Times

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