URBAN INFRASTRUCTURE: FULLING ECONOMIC DEVELOPMENT AND ADAPTING TO CLIMATE CHANGE

Gabriel Nagy International Consultant – Housing, Finance and DevelopmentArchitect Msc. Planning and Urban Economics

Quito, December 3, 2015

URBAN TRANSFORMATION PROYECT IN GAUYAQUIL, ECUADORMaking Housing Policy Work: New Partnership for Economic

Development

Introduction

Note: The opinion and recommendations in this document are exclusive responsibility of the author. This are the author’s notes on urban infrastructure and community development issues.

This document highlights the importance of economic development among poor urban communities. It suggests homeownership is the primary means by which communities achieve stability and their residents overcome poverty, achieve financial security end economic independence.

It seeks to examine the barriers that impede large affordable housing production in our communities and proposes strategic measures through which such production may be increased.

The Sustainability and Affordability Index (S&AI) is designed to incentivize developers to improve their projects and allows investors to assess their social impact

Photo: Architect Camilo Santamaria.Note: Do People Shape Cities, or do cities shape people? The co-evolution of physical, social, and economic change in five major U.S. cities. Naik, Kominers, Raskar, Glaeser, and Hidalgo. October 2015

Does a city’s physical appearance impactsits social and economic outcomes?*

Housing policy: strategy to improve the quality of life of the population Homeownership is the primary means by which members

of a community achieve stability and overcome poverty , achieve financial security and ensure financial independence.

“Decent, affordable housing is fundamental to the health and well-being of people and to the smoth functioning of Economies.” (McKinsey Global Institute, 2014)

Examining the barriers to mass production of affordable housing in our communities and proposes policy measures through which they can increase production and use resources and expertise of the private sector.

4

Innovation and partnerships for a new urban agenda Private sector has the crucial ability to help

reinvent the city of tomorrow Contribute to a new urban paradigm Participate in the definition of the new

development agenda Post- 2015 Being part of the process preview to Habitat III

Conference, in order to influence the new agenda to determine the policies and programs of the next 20 years.

Urban transformation projects (UTP) Unless cities structure successful transformation projects

delivering quality of life and opportunities for mobility, resilience, better services and security, they will fail to fulfill their economic potential.

If city leaders want to win the support and trust of private citizens and the business sector, they need to invest in UTPs and deliver goods and services these constituent groups value the most.

Urban transformation projects (UTP) The challenges for city leaders will not be lack

of capital or even worthy projects, but the lack of good and sound structuring.

UTPs and investment opportunities need to be appraised and structured properly.

UTPs will require more innovation, more effort, and more thoughtfulness on the part of governments, business leaders and citizens. All of this is vital to ensure sufficient investment to support growth and help cities to do more with less.

Objective Develop Master Development Plan and Financial Plan for

Urban Transformation Project in District 8, Guayaquil, Ecuador.

Assembling 1,200 hectares and delivering urban guidelines to manage urban sprawl, setting standards for immediate and surrounding areas, while expanding the supply of affordable housing for middle and low incomes families.

Statistics Total Area 1,200 hectares 100% Infrastructure and green area: 204 – 300 hectares 17% - 25% Development area: 900 hectares 75%

Estimated unoccupied area (50%) 450 hectares

Net Density 160-190 Houses/hectare Total number of housing units: 72,000-85,500 Average floor area: 42-62-76 square meters

Total built area: 4,464,000 square meters Construction: $1,974,000,000 Sales: $3,950,000,000

Land 7%: $138,000,000 government contribution Infrastructure 5%: $99,000,000 government contribution Construction: $1,737,000,000 Private Sector $7.3 private sector per $1 of government expenditure

Execution period: 15 years Direct employment: 17,143 per year Indirect employment: 16,261 per year

9

Strategic objectives Provide to the Ecuadorian State, a shared vision of what

should be sustainable and inclusive developments.

That will allow the government, to develop policy guidelines and present to the international community an 'urban utopian vision' at the debates of the “New Urban Agenda" during Habitat III in 2016 .

Strategic objectives The Integrated Transformation Project in the Northwest

Zone Expansion of the City of Guayaquil, aims to help improve the living conditions of the community currently inhabiting the area of intervention, as well as its future population.

It aims to generate patterns of territorial organization and urban transformation projects that allow better internal integration with the whole city and the implementation of comprehensive and multi-sector operations.

Strategic objectives Our cities are still 'young' and still evolving; there is still

time to propose and design a more compact city (high density and mixed uses ), transit-oriented (access to mass transportation systems), more sustainable, and less vulnerable to the effects of climate change.

Strategic objectives Ensure the convergence of sector projects such as

education, public transport, water and sanitation and ability to generate impacts in all urban and regional spatial structure, guiding the overall growth of cities.

Structuring comprehensive urban transformation projects involves the generation, assembling and land development, focused on unlocking-value by delivering environmental goods, access to transportation, quality of life, housing and urban services through increased private sector participation .

Sustainability and Affordability Index Air and noise pollution (reduce) 0.5 Congestion and traffic (reduce) 0.5 Designated environmentally protected area

0.5 Affordable housing 1 Neighborhood upgrading 1 Green Building practices 0.5 Business plazas and corridors 0.5 At least 10,000 jobs created 0.5 TOTAL INDEX 5.0

Note: The Sustainability and Affordability Index (S&AI) is designed to incentivize developers to improve their projects and allows investors to assess their social impact

Tackling the affordable housing challenge: Market oriented solutions* Unlocking land supply, many parcels of land remain

unoccupied or underused.

Note: Tackling the world’s affordable housing challenge. Woetzel, Ram, Mischke, Garemo, and Sankhe. October 2014

16

Incentivizing Density Bonuses

Photo: Architect Camilo Santamaria.Note: El Rincón de Santa Fe. Soacha, Cundinamarca, Colombia.

Tackling the affordable housing challenge: Market oriented solutions* Reducing construction costs, in many places residential

houses are still built in the same way it was 50 years ago.

Project cost could be reduced if developers raise productivity, apply economies of scale and scope.

Note: Tackling the world’s affordable housing challenge. Woetzel, Ram, Mischke, Garemo, and Sankhe. October 2014

Assembling large chunks of underdeveloped land

Note: Capitalism begins at home. Providing better and more affordable housing could be the next “capitalist achievement”. The Economist, 2015

Defining a minimum-standard housing unit

$

%

M2$ Económico -Espacial

25 %

%

Socio- EconómicoSocio- Demográfico

$ 7.599

$ 6.258

$ 9.238

Déficit Cuantitativo

Déficit Cualitativo

62 M2

42 M2

Drechos de propiedadServicios BasicosVulnerabilitdad

Reasentamientos

Lotes & Servicios

Servicios + Unidad Básica

Rehabilitación

Ampliación

Vivienda Nueva

V

%

Socio -Espacial

V Quintil

M2$

Vivienda Promedio 51 M2

Económico -Espacial

25 %

19Note: Escenario Déficit Habitacional Paises en Desarrollo. Macking Housing Policy Work: Gabriel Nagy, 1989

Area vs. Finishing

1 Room40M2

2 Rooms57 M2

3 Rooms70 M2

Low

Medium

High

20

Defining a minimum-standard housing unit – reflecting rising aspirations

Note: Escenario Déficit Habitacional Paises en Desarrollo. Macking Housing Policy Work: Gabriel Nagy, 1989

Standardizing designs

21Note: Escenario Déficit Habitacional Paises en Desarrollo. Macking Housing Policy Work: Gabriel Nagy, 1989

Tackling the affordable housing challenge: Market oriented solutions* Lowering financing cost for buyers and developers Contractual savings, like those in place in Colombia since

1968 (National Savings Fund) or 1999 (Cuentas de Ahorro Programado, Decreto 824 de 1999).

Cut financial cost of developers making affordable housing projects less risky by supplying: Land trusts and government obtaining urbanization permits Innovative financing for infrastructure including PPP Presales Savings accounts registry

Note: Tackling the world’s affordable housing challenge. Woetzel, Ram, Mischke, Garemo, and Sankhe. October 2014

$

t

Affordable Housing Project Cycle

Fase de Ahorro y Preventas

Fase Repago Hipotecario y Titulación Fase de Venta y Construcción

Ventas

Costos Deuda