MEETING OF THE UCLG COMMITTEE ON LOCAL FINANCE AND DEVELOPMENT (CLFD) June 11 -12, 2007, Barcelona, Spain "Challenges in Financing Local Infrastructure in Makati City, Philippines" Violeta Somera Seva Senior Advisor, Office of the Mayor Makati City, Philippines
MAKATI CITY PROFILE • 2000 Census:471,379 • Growth Rate: 0.4% • 2007 projected population: 533,715 • Daytime Population:3.7 Million
LAND AREA : 27.36 sq km (2,736 has) (4.3% of Metro Manila’s land area) Metro Manila MAKATI AIRPORT • Metropolitan Manila: 17 cities and municipalities • Makati is one of the component cities
Metro Manila • Governed by a policy making body called the • Metro Manila Council: • 17 Metro Manila Mayors, • President of the Vice Mayors League , • President of the Metro Manila Councilors League • Secretaries of the national line departments with non voting powers
Services requiring local infrastructure and financing • LOCAL GOVERNMENT CODE OF THE PHILIPPINES: Devolved certain functions and responsibilities of the national government to LGUs • Solid waste management • Health services • Social services • Transportation and traffic management • Water and waste water management
But in Metro Manila… • DPWH (Dept. of Public Works and Highways) • roads and bridges • Major flood control projects • DOTC (Dept. of Transportation and Communication) • rail based transport facilities • MMDA (Metro Manila Development Authority) • solid waste disposal facilities • DepEd (Department of Education) • School buildings • (LGUs) Makati City build schools to augment the lack of educational facilities • Metro Manila Water and Sewerage Administration • Water and Wastewater • privatized in favor of two concessionaires Manila Water and Maynilad.
Makati’s Infrastructure Requirements • Local road construction and maintenance • Drainage • Street lighting • School buildings • Health centers • Hospitals • Barangay halls/ community centers • Public housing
Makati 21- City Development Agenda • Identified public infrastructure requirements of the City for the next 5 years • A set of strategic directions were formulated through a series of consultation meetings with key stakeholders: • Business retention, promotion expansion, privatization and redevelopment of potential satellite business districts/ communities • Human Resource Development and Enhancement • Expansion of Financial resources and its Revenue Base
Priority programs and projects requiring financing beyond the internal capacity of the city: • Makati Urban Transportation Integration Program • Housing Development Program • Development of Satellite Business Districts • Development of Community Commercial Zones in the barangays • Urban Strip Development • Makati Heritage Zone Project $ 240 M = (P 11.3 Billion ) short and medium term
Project Feasibility Studies • These projects would initially require studies: • market, technical, physical, environmental, organizational, economic, and financial feasibility. • Counterpart funding from donor agencies to secure foreign and local experts to compose the study team. • The best alternative financing schemes shall be explored: • direct financing from the city budget, • joint financing with national government agencies and government owned or controlled corporations, • BOT, • joint ventures with local and foreign partners, • bond offerings, • long term loans from local and foreign sources and • community corporate ownerships. • The studies shall also explore cost recovery and income generating possibilities .
Bankability : Makati City • a first class, highly urbanized city • City assets: US$ 420 M (P20 Billion) • Ranked third in terms of income amongst Philippines Cities • compared to other cities, Makati is not heavily dependent on national subsidies.
Challenges Faced in pursuit of Makati’s Livability • inadequacy of open spaces • supply of housing facilities • improve air quality • discharge of waste water • garbage in waterways • severe traffic congestion • existence of informal settlers
Issues and Challenges Faced in Financing Urban Infrastructure • Inadequate local government capacity. • lack of sufficient number of technically able staff • Heavy reliance on consultants • Credit environment is not LGU friendly. • pass on rate to LGs is high and expensive. • Direct lending to LGs from international funding institutions is not allowed or is constrained by national laws and regulations. • Home grown hedging by LGs not allowed • stifling the potential of entrepreneurial LGs to exercise proprietary functions. • Bureaucratic red tape in availing foreign loans by multifarious national agency and bank requirements • causing delay in project approval and implementation • Coordination issues on projects pursued by national agencies, private sector and the LGs itself. • Plans and projects have to be synchronized to avoid overlaps and duplication to save on valuable resources .
Recommendations and Conclusion • Adopt innovative revenue generation and resource mobilization schemes • improve revenue collection, • maximize utilization of the city’s financial resources • tap other potential sources of funds. • Institutional, legal and administrative issues have to be addressed • LGU friendly financial regime or environment
Recommendations and Conclusion • Enhance capability of staff through capacity programs • seminars, workshops, trainings, technical staff exchanges, city to city cooperation, exchange of information and knowledge • Lobby for review and repeal or amendment of laws or regulations that inhibit the local governments from engaging in entrepreneurial projects. • Lobby for direct access of local authorities to facilities of international funding institutions • Establish clear agreements to cut on bureaucratic red tape • not only in the country but with International banking institutions and other organizations dealing with local finance. • Strengthen coordination mechanisms to improve the planning and implementation of infrastructure projects to avoid wastage of valuable resources. UCLG Local Finance and Development efforts: a Welcome Development
Thank you and Mabuhay!!!