4.8 SHELTER PROGRAMME

4.8.1 FACILITATING ACCESS TO SHELTER

Until recently, the “housing problem” in Thimphu has been conceptualized as a number game. The available dwelling units have been compared with the number of households and a deficit has been calculated to determine a “housing shortage.” It has been the government’s responsibility to fill this gap, which always seems to be widening.

Two strategies seem to be required.

First, the problem needs to be re - conceptualized from that of a “housing shortage” to one of facilitating a shelter process. Next, the problem has to be seen as promoting private sector initiatives. Thus, we are moving from the government producing amounts of minimum standard housing units, to facilitating and promoting an array of private actors to get on with the process of creating shelter in various manifestations.

These strategies see the housing processes from different perspectives. These could be stated as, (a) access to land; (b) access to housing finance; (c) access to materials and technology; and (d) access to construction; (e) access to design, planning and management. The main actors in such a scenario are the landowners, the contractors, the potential buyers, the materials suppliers, the labour, the promoters, the designers and the financial institutions. If housing strategy is to facilitate all of these actors, the various barriers each faces in meeting its peak performance need to be isolated and actions taken to break those barriers.

Landowners require a Local Area Plan under which to market their land. They need to know the layout and subdivision rules which will determine the density, land use and nearby amenities which will all together set a value and define potential buyers. Individual owners may not have the management skills to develop their land, so a strategy must facilitate “promoters!” Promoters can bring together all of the other actors and manage a physical product within the boundaries of an investment package. Promoters also need to know the prices, the rules and prospects governing each site. A good plan removes the element of the unknown, tying down all of the facts about each parcel of land. Finance is another facilitative and promotive element of the strategy. Until now, housing finance has been for the end users to buy their homes over some period of amortization and rate of interest. This concept of finance needs to be broadened.

Finance must be extended to promoters for medium periods at medium rates of interest to buy property and to construct houses. This will facilitate the gestation period of site development and construction. Finance needs to be extended to contractors for very short periods at high interest rates, to buy materials and to pay the laborers during the construction process, between running bills. They need medium - to long - term loans to buy heavy equipment. Long - term finance needs to be made available to homeowners at low interest rates, for rates as low as possible. The interest rates must be lower than those given for automobiles and television sets. Materials producers and suppliers require loans to buy new equipment and to procure raw materials.

The system needs to consider other channels also. A household may opt to build its house. In this case it needs long - term finance just to buy the land. Medium term loans will facilitate owners to buy materials and to pay skilled laborers where they themselves cannot carry out an operation of construction.

The national skilled labour force is totally inadequate. The development of such a force is suppressed by the existence of an underpaid supply of foreign laborers. This must stop! By exploiting Indian labour, which is cheap, the nation is destroying its own labour market. With a per capita income about three times India’s, in the immediate future, Bhutanese working conditions will have to be protected, if there is to be any kind of working force at all. Otherwise Bhutan will be closing the door to its own youth from the potential job market, while creating an underclass of migrant workers. A skill development and construction management - training programme is needed. There must be a guaranteed minimum wage to attract Bhutanese youth into the construction industry, and to build up the national capability. The construction industry has the potential to be the country’s largest employer!

The government may promote such an effort by providing land owners with layouts for small plots and giving them support in planning site and services schemes on their land. Potential house owners may then buy these and build their own houses. By adjusting the building controls such that small houses do not need any permission, access to shelter becomes that much simpler.

This strategy proposes that the government get out of the housing design, construction, sales and management of estates and help facilitate and promote other actors to do these things. This would allow the government to “go to scale,” through a facilitative and promotive strategy.

The most facilitative process the government could initiate would be “packaging projects” such that teams could “bid” a turnkey price to construct and sell entire neighborhoods. For example, the government may provide the bidders with a site plan, a detailed building programme, the public facilities required, including housing units, site development, access roads, walkways and landscaping.

Teams including an Architect, Landscape Designer, Contractor and a Promoter, would submit a comprehensive proposal to build, say two hundred houses, and all of the infrastructure and amenities. These bids would be proposals for everything from the design, layout and selling prices of the houses shops and offices within the project. Out of seven or eight preliminary proposals, three would be selected based on their Technical Proposals for a design and layout and special conditions, which place all of the bidders on an equal bidding plain. After recommending the changes in the Technical Proposals the government may then take on the financial proposals, the time liability and the contractual conditions to be fulfilled. One of these finalists would be engaged on a turnkey basis.

For such a scheme to work the government needs rolling capital for land purchase and its overheads. It would recuperate these from the promoter whose responsibility would be to pay all of the actors concerned, maintain a schedule and to sell the units in the open market. For this the promoter would need short - term capital investment of a substantial level.

Financial institutions like the Royal Insurance Corporation of Bhutan, the Bank of Bhutan, and the Royal Pension Fund would play essential roles.

The advantage of this approach is that it off - loads the actual management of house building to the private sector; it facilitates the realization of the Structure Plan in terms of creating high density, compact, mixed - use communities near Neighborhood Nodes. Social facilities and amenities can be built in to these packages, by the government including their budget allocations for amenities in the budget for the package. With such limited responsibilities the government could then hone in its capabilities on “project packaging,” coordination and facilitation. Concentrating on the Neighborhood Nodes and high density precincts proposed in the Structure Plan, the government could initiate at least one such project the first year, and two every subsequent year. As the concerned department would be recuperating its overheads from the bidders, this activity would be self - financing. This also becomes a kind of land pooling scheme, as the government readjusts the land and hands it over to the promoters to develop and market it.

The landowners are compensated at market rates, but only as the project are sold to consumers.

The same scheme could be used for urban infill projects and Urban Core development projects, where saleable space makes up a sizable component of the works.

It is important that the strategy also include a Bago Improvement scheme to provide basic amenities to squatter settlements, such as path paving, street lighting, and potable water through common taps, common sanitary and bathing places, and washing areas. To cover these costs the local authority would place user charges on the inhabitants. Here again a fund would be needed to start the process. The user charges would have maintenance and capital formation components.

This strategy proposes that the government become a facilitator and promoter of shelter development rather than a provider of housing units.

MAP NO. 4.10 PROPOSED SHELTER DENSITIES (Click to view the map)