Low-income Housing Finance CODI Experience

1. Low-income Housing FinanceCODI Experience

2. CODIin brief • Founded in 2000 • A public organization: having a government institution status with flexibility in organization management • Main objective:strengthening poor community organizations

3. Current Activities • Citywide slum upgrading ( “Baan Mankong”) • Poverty Alleviation (Supporting communities in savings, credits and loans and community development plan, etc.) • Community Welfare • Assisting in setting up of Community Organization Councils throughout the country • Promoting natural resource management and sustainable agriculture • Solving land and housing disputes in rural areas

4. CODI strategies • To play supporting role in community development process • People, not CODI, are the owners and key actorsof the process • To coordinate with govt. agencies, NGOs, other civic groups • To promote community-based savings • To use finance as a tool for development

5. Network Network SAVINGS - CREDIT LAND - HOUSING WELFARE CODI COMMUNITY ENTERPRISE ENVIRONMENT Network Academics OTHERS Community Development Committee Supported Agencies Others NGOs Local Authorities

6. CODI provides financial support by lending its capital funds to community organizations. • At present, CODI credit facilities comprise four types of loans as follows; - Loans for housing and development - Loans for community enterprises/income generation - Loans for holistic development - Short-term revolving funds

7. Income Generation Activities

8. Baan Mankong Housing ProgramCitywide slum upgrading • a breakthrough in solving slums on a citywide scale • Comprehensive approach in dealing with problems of land tenure, infrastructure, environment, construction and financing • Combination of self support, government subsidy and private cooperation • Lead to amendments in rules and laws which are obstacles to housing solutions for the poor

9. BMK demonstrates strong PPP partnership • P- Poor people/communities as key actors in identifying problems, developing plans to resolve problems and implementing those plans themselves • P- Public; government, CODI, local authorities, etc. Government as subsidy provider: CODI as facilitator, provider of long-term housing loan • P- Private sector; NGOs, professionals, educational organizations etc. provide technical support

10. City-wide upgrading involving many possible city development actors and find various secured housing solutions for all communities in the city On-site Upgrading Community Row-house Community Land-sharing& reconstruction Flat Find various solutions suitablefor all communities in city City-widesurvey / joint planning, search forsolutions together Detach house Reblocking & readjustment Municipality Flat Resettlements่ Other dev.agencies Row-housing Mixed approach

11. Baan Mankong Procrss • City-Wide Planning • Organize meetings of stakeholders • Establish joint committee to oversee implementation • Survey all communities to identify problems and create holistic plan • Develop housing, land tenure and policy plan for whole city

12. Form savings groups • Mobilize local resources, strengthen local groups, and build collective management skills • Set up community working team • Collect information about land, housing, physical infrastructure, income, employment, problems, and existing development initiatives

13. Conceptualize housing and development goals regarding land tenure, upgrading scheme, involvement of local authorities, NGOs, etc. • Formulate financing plan • Work with architecture and engineer on developing housing designs and infrastructure • Submit detailed plan to BMK committee

14. Community Survey all communities in districts and city Community survey of all households In the community and all communities in the city carried out by community people การ

15. Participatory planning process

16. Loan process • Loan approval • Screened by local and regional committees before being sent to CODI • Approved by BMK sub-committee comprising reps from communities, CODI, NHA,GSB, GHB • If loan amount exceeds THB50 mln.(~USD1.7), approved by CODI board of directors • Loan disbursement • Loans are disbursed in tranches based on progress of project

17. Progress of Baan Mankong(up to March 2011) • Number of project approval 882 • Number of cities 278 • Number of communities 1,552 • Number of families 91,822 • Govt. subsidy (THB mln. ) 4,706

18. Baan Mankong Chantaburi Before and after

19. Baan Mankong: Financial Aspect

20. Providing Flexible Financial Support for City-wide Upgrading by Communities • Upgrading of infrastructure and social • facilities Grant 2) Local management cost 3) Support for exchange visits, capacity building, seminars, coordinator Members FromCODI Revolving Fund Interest 4 % Communities Loans Members Members Government Subsidy Banks

21. Source of Financing Three components of BMK financing: • Local communities’ own savings (10% of project cost) • Government subsidy-THB80,000(~USD2,667) per family • Housing loan from CODI

22. Government subsidy • Subsidy is given to community not to individual family • Allocation of THB80,000 (~USD2,667) • Infrastructure development 55% • Financial support 30% • Project management (incl. 15% meetings, training, exchange visits, etc.)

23. CODI loan • A collective loan to community organization, not to individual household • Collective land tenure • Loan maturity is 15 years and is payable in 180 equal monthly installments • Interest rate is fixed at 4% p.a. • Maximum loan amount per household is THB 300,000 (~USD10,000) • CODI finances up to 90% of the project cost.

24. Loan Security: 1) Land and buildings are mortgaged with CODI 2) Guarantee agreement signed by chairman, committee and all members of the community organization.

25. Re-lending to members • A loan from CODI is on-lent to individual household with a margin of 2-3% added to e interest cost. • The margin is set aside for the purpose of loan administration, community welfare and serves as a cushion for loan repayment in case any member fails to meet his or her obligation in any particular month.

26. Loan management by community CODI Interest 4% Community organization • Subgroup management • Subgroup daily savings • Loan collection • Group guarantee • Help members who cannot pay subgroup subgroup subgroup subgroup Community Cooperatives on lends to members at 6-7 %. Margin for community development, management and welfare

27. BMK Loan Performance (as of Mar.2011) (Accumulated amt.) THB mn.(USDmn.) • Approval 4,464(149) • Disbursement 2,700 (90) • Repayment 519 (17) • Outstanding 2,181 (73) • NPLs 2.05% • Beneficiaries • No. communities 1,119 • No. households25,866

28. Funding sources • Current funding sources for long-term housing finance • CODI initial capital fund approx. THB 2,800 mln. • Government budget (2009) THB 3,000 mln. • CODI-GHB Refinancing scheme THB 500mln.

29. CODI-GHB Refinancing scheme • Total amount: THB 500 mln. • GHB agrees to refinance BMK loans from CODI at the same interest rate and same terms and conditions • CODI and GHB agrees on mechanism to compensate GHB for interest rate differentials

30. Project assessment • Key success factors • Strong community leadership • Flexible, affordable financing for the poor • People process which suits poor community livelihood • Barriers • Public land-use policies • Certain rules and regulations • Coordination among relevant agencies

31. Challenges • Future funding for the program • Scarcity of affordable land • Linkage between formal and informal financial markets

32. New look of a slum in Pitsanuloke province

33. Bangbua Community before upgrading

34. Bangbua community during completion

36. Thank You