When the UCDO was set up in 1992, one its top priorities was housing development, and one of the new UCDO fund’s main functions was to channel accessible housing loans to poor communities. By 2000, when UCDO’s work was integrated into CODI, housing loans had been provided to 47 housing projects, in a variety of situations, involving 6,400 households. Most of those projects were planned and implemented as stand-alone projects, focusing mostly on the physical elements of housing, and many of them faced a lot of problems.
Those early housing projects taught the UCDO staff and the community networks many lessons, and one of the most important was that housing cannot be developed in isolation, but must be part of a much larger and more holistic community development process which addresses the structural issues of poverty in a city like land, infrastructure, governance and political participation. As more projects were done and everyone kept learning, it became clearer that when the production of housing does address these larger socio economic and political issues, it builds stronger communities, better livelihoods and new relationships of trust and respect between poor communities and their cities.
So when the political stage opened up new space in 2003, CODI saw an opportunity and was ready to propose building a larger-scale, more comprehensive and more integrated community housing process. That was the beginning of the Baan Mankong (which means “Secure house” in Thai) program. In January of that year, the Thai government announced an important policy to address the housing problems of the country’s urban poor citizens, at scale, with two distinct programs. In one program, the Baan Ua Arthorn (“We care”) program, the National Housing Authority (NHA) designs, constructs and sells ready-to-occupy flats and small houses at subsidized rates to individual lower income households who can afford the monthly “rent-to-own” payments of 1,000 to 1,500 baht (US$ 25-37).
The second program was CODI’s Baan Mankong program, which channels government funds, in the form of infrastructure and housing subsidies, soft housing and land loans and technical support, directly to poor communities, which plan and carry out improvements to their housing, environment, basic services and tenure security and manage the budgets themselves. Instead of delivering housing units to individual poor families or individual communities, the Baan Mankong program puts Thailand’s poor and informal communities (and their community networks) at the center of a collective process of developing long-term, comprehensive, citywide and richly varied solutions to problems of land and housing in Thai cities.
Key Elements in Baan Monkong
Citywide housing rather than individual projects:
Instead of scattered projects here and there, the Baan Mankong program aims to solve all the housing problems in a city. Doing so requires close collaboration between poor communities, local governments, professionals, universities and NGOs from the very beginning. So, the first step is to set up a joint city committee to provide a platform for all these groups to understand the problems together and work together to oversee a process in which all the poor communities in the city are surveyed, possible land for housing is identified (both in-situ and relocation) and the land negotiations and project planning to improve all the communities in that city starts.
In any city, land is always one of the most difficult elements, and transforming informal settlements into fully legal, formal communities is one of the most crucial parts of the housing process. The citywide strategy allows communities and their supporters in a city to explore a number of land options. For example, squatters are on privately-owned land might negotiate a land-sharing agreement where part of the land is returned to the owner and part is sold to the people at an affordable price. This kind of win-win solution allows the owner to get part of the land back without having to resort to eviction, and allows the people to get legal ownership of at least part of the land to redevelop their housing. For squatters on public land, one solution is to negotiate with the land-owning authority for a long-term lease. Or if that’s not possible, then the local government might help the community to find a new plot for relocation. Once a community has secure land, then they are ready to start planning and carrying out their housing project, with financing support from the Baan Mankong program.
A demand-driven approach to housing:
The Baan Mankong Program represents a dramatic change in the government’s role, from being a supply-driven provider of housing to being a facilitator of a demand-driven local housing co-production mechanism, in which communities, their local governments and other local stakeholders are the essential partners in that solution-making mechanism. In all these ways, the Baan Mankong Program represents an important commitment by the Thai government to allow people to be the core actors and to decentralize the solution-finding process to cities and communities.
The Baan Mankong’s strategy of using communities – and city-based partnerships in which communities take the lead – is also a concrete way of developing local capacities and local partnerships to resolve local housing problems. Because the Baan Mankong program allows communities to plan and implement the housing projects themselves, according to needs and priorities they identify themselves, through an extensive process of surveying, discussion and horizontal-sharing, the program creates a “demand driven” approach to providing housing. And because the program gives communities control over the finances and control over the form the housing takes (which could be on-site upgrading or reblocking or reconstruction, or a new community built on land they find elsewhere to buy or rent), the Baan Mankong program makes more efficient use of state resources for the poor and promotes variation rather than standard solutions.
Types of Upgrading
What kind of housing upgrading is possible?
Instead of promoting a single model for obtaining secure land tenure and improving housing and living conditions, a range of options are being tried and tested by communities. As the work spreads out and scales up, these strategies are being expanded, refined and adapted to suit the particular needs, aspirations and conditions in each city and each community. The five broad strategies listed below are by no means the final word on what’s possible, but they make a good starting list of options for communities upgrading under the Baan Mankong program
1. On-site upgrading: Slum upgrading is a way of improving the housing, physical environment and basic services in an existing community, while preserving its basic layout of plots, lanes and open spaces and its character and social structures. Besides improving the physical conditions and quality of life in these poor communities, the physical improvements made under an upgrading process can act as a springboard for other kinds of development among their members, like income generation, welfare, etc.
2. On-site reblocking : Reblocking is a more systematic way of improving the infrastructure and physical conditions in existing communities by making adjustments to the layout of houses to install sewers, drains, walkways and roads, but doing so in ways which ensure the continuity of the community. Communities can then develop their housing gradually, at their own pace. When communities opt for reblocking, some houses may have to be moved and partially or entirely reconstructed to improve access, or some lanes may have to be re-aligned to enable drainage lines, water supply systems or sewers to be constructed. Reblocking is often undertaken in cases where communities have negotiated to buy or obtain long-term leases for the land they already occupy. In both cases, the process of reblocking is an important step in the progress towards land tenure security and improved housing.
3. On-site reconstruction: In this strategy, existing communities are totally rebuilt on the same land, either under a long-term lease or after the people have negotiated to purchase the land. The new security of land tenure on the already-occupied land often provides community people with a strong incentive to invest in their housing, through rebuilding or new construction. Reconstruction also allows communities on low-lying land to first raise the level of the land above flood lines before investing in proper housing. Although the reconstruction option involves making considerable physical changes within the community and requires some adaptations to a new environment, the strategy allows people to stay in the same place and to remain close to their places of work and vital support systems. This continuity is a crucial compensation for the expense and difficulty reconstruction involves.
4. Land sharing: Land-sharing is a housing and settlement improvement strategy which allows both the land-owner and the community people living on that land to benefit. After a period of negotiation and planning, an agreement is reached to “share” the land, where the settlement is divided into two portions. The community is given, sold or leased one portion (usually the less commercially attractive part of the site) for reconstructing their housing, and the rest of the land is returned to the land-owner to develop. There’s no rule about how the land is divided: the amount of land the people get and how much goes back to the owner is settled during the negotiations. At the core of a land sharing process is the ability to translate conflicting needs and conflicting demands into a compromise which takes a concrete “win-win” form, and which is acceptable to all parties involved. The people may end up with less area than they had before, and the land-owner may get back less-than-all of his land, but the trade-off is that the poor will no longer be squatters but the legal owners or tenants of their land. And the landlord finally gets to develop the land.
5. Relocation: The greatest advantage of the relocation strategy is that it usually comes with housing security, through land use rights, outright ownership or long-term land lease. Relocation sites can sometimes be far from existing communities, job opportunities, support structures and schools. In these cases, community members who want to keep their old jobs or attend the same schools must bear the burden of additional traveling time and expense and must adapt themselves to a new environment. But in many towns and cities around the country, resourceful communities are finding bits of land to buy or rent cheaply for their housing that are not far away at all. In Baan Mankong, a distinction is made between nearby relocation (within 5 kilometers of the original settlement) and relocation projects (more than 5 kms away). In all cases – whether it is nearby or not-so-nearby relocation – communities face the cost of reconstructing their houses at the new site, and in some cases the additional burden of land purchase payments. But tenure security tends to be a big incentive to invest in housing and environmental development at the new community.
Flexible Housing Finance
Explanation of Diagram (above): This diagram shows how finance for housing development can be flexible, so that it suits a variety of realities and a variety of housing solutions. CODI provides two kinds of finance in Baan Mankong housing projects:
SUBSIDY: In most public housing programs around the world, governments use subsidies as a tool to make the housing more affordable to the low-income target group. Those subsidies normally come in the form of block grants to lower the cost of construction, or subsidies to the implementing agency or the contractor, to lower their overheads and lower unit costs. But in the Baan Mankong Program, the subsidy strategy has been redesigned, in order to activate the community process, rather than just help out each family individually, and to give communities a lot of freedom to be creative in how they use the subsidy to plan and carry out their housing projects. The Baan Mankong program comes with a total subsidy from the government that works out to about 80,000 baht (US$ 2,500) per unit. But this modest subsidy has been divided up, to address different needs within the housing process. Instead of being given to families individually, though, the subsidy amount is calculated according to the total number of families in a given project and managed as a group by the community cooperative. That way, everyone knows exactly how much subsidy the community has, and the power is given to the community to use their creativity and their togetherness to plan and design how they will use the subsidy. The diagram above shows how this 80,000 baht per-unit subsidy is broken down:
1.Infrastructure subsidy: 25,000 – 45,000 baht ($780 – $1,405) per unit. Part of the Baan Mankong subsidy package allows communities to upgrade their infrastructure (such as land-filling, drains, utility connections), living environment and social facilities (playgrounds, community centers), according to priorities they set, using a budget they manage collectively and technical assistance they select themselves. The size of each community’s subsidy is calculated by multiplying the number of households by the per-family infrastructure subsidy (which is a less for on-site upgrading or reblocking, and more for reconstruction or relocation). A community of 200 houses, for example, which is upgrading their housing on the same site, will get a total upgrading budget of 5 million Baht (US$ 156,250) to work with.
2.Community management subsidy: 5% of the infrastructure subsidy (#1). A grant equal to 5% of the total project cost (up to maximum 500,000 baht per project) is made available to the community to cover their internal project management expenses, meetings and community process.
3.House construction subsidy: 25,000 baht ($780) per unit. This part of the Baan Mankong subsidy package comes in the form of a grant to each family, at the start of the project, to subsidize the cost of building their new house or upgrading their existing house. In cases where community members don’t wish to take CODI housing loans, they can use this subsidy to improve their existing houses or build a very simple new house.
4.Process support subsidy: 9,600 baht ($300) per unit, or 12% of the 80,000 baht total subsidy package. Part of this subsidy stays with CODI, to cover its institutional support work, meetings, exchanges, workshops and capacity building and part goes into a special central fund to support NGOs, community architects and other actors who support the community housing development process.
LOANS: Project costs and financing are key issues communities have to deal with when they plan their Baan Mankong housing projects. Usually, the project budgets come from three sources: a community’s own savings, government subsidies (as described above), and loans from CODI. Soft loans are made from the CODI Fund to registered community cooperatives to purchase new land (in the case of relocation) and/or to improve their houses or build new ones after in-situ upgrading or relocating. CODI housing and land loans are given to cooperatives at 4% annual interest, and CODI requires that the community has to save at least 10% of the amount they borrow. Most cooperatives then add a 1 – 2% margin on top of the 4% interest from CODI (to support their activities and create a fund for late repayments) when they on-lend to members, so individual cooperative members pay 5 – 6% interest on their loans. The ceiling for land and housing loans put together is 360,000 Baht (US$ 11,250) per family. All loans are made collectively to the community cooperative, not to individual families. With both housing and land loans, the community cooperatives must have saved 10% of the amount they borrow from CODI and must keep that 10% in their community savings account during the repayment period.