ABSTRACT

Statement of the Problem This thesis seeks to determine the feasibility of developing and managing a mass housing project through a cooperative effort which in this instance refers to the proposed Phase II development plan of at least 90 modest housing units in Sitio Tomay, La Trinidad, Benguet, based on the NHA-Cooperative Socialized Housing Joint Venture Program. This study shall expound on market, technical, and financial aspects. On the market aspects in particular, the researcher seeks to establish an answer to the following question: 1. Who are the prospective end-users of the proposed Phase II development project, based on the following: a. Present demographic profile? b. Present housing situation? c. Housing desires and aspirations? d. Economic capabilities? On the technical aspect, the researcher sought to establish answers to the following questions: 1. What project management scheme is proposed for the project? 2. Does the proposed site possess the accessibility, weight bearing capacity and the topography suitable for the proposed mass housing project? 3. Will utilities such as electric power, water, sewage, and garbage disposal pose as a problem for the proposed site? 4. What are the general guidelines on subdivision development to be followed? 5. What design methods are proposed for the project in general? 6. What development plan is proposed for the project? 7. What is the projected completion time for project? On the financial aspect, the researcher sought to determine the following: 1. What is the expected total project cost, and its breakdown according to major components?

2. What are the proposed sources of financing and scheme of fund release and repayments? 3. What is the expected cost of the housing unit (House and lot), or costs of the housing units, if two or more types of houses are proposed, to be passed over to the prospective Phase II end-users? 4. Is the housing unit affordable to the prospective Phase II end-users? 5. What is the projected financial performance of the mass housing project based on the following: a. projected cash flow (construction period) b. projected cash flow (25 years of operation) c. debt service analysis Importance of the Study In line with government policies to help solve the national housing problem, Housing Cooperatives are given the much needed boost in the form of low interest financing to develop housing units at the lowest, reasonable cost to its members. The governments attitude towards the housing problem has made all this possible. The creation of the NHA has made credible the position of Housing Cooperatives, who are usually lacking in much needed finances. This study will show the relevance of housing cooperatives to the national housing problem, and thus, augment the efforts of the private and government sectors in a three-pronged approach. So far only 49 housing units have been constructed, falling short of the minimal 250 housing units requirement of the Bureau of Cooperatives Development (BCOD). It is through this basis of cooperative effort between the NHA and Housing Cooperatives as a whole, that their individual and common goals are achieved. Scope and Limitation of the Study The La Trinidad Housing Cooperative, Inc. is the only Housing Cooperative being discussed and referred to in this study. In particular, the Phase II development plan is the only development plan being discussed in this study. Mention of Phase I of said Cooperative are only made for inferential purposes.

On the marketing aspect, it refers to the broad or narrow scale, in the strictest sense of the word. The broad market refers to the qualified members of the La Trinidad populace. On the narrow sense, market refers to the houseless, qualified members of the La Trinidad Housing Cooperative, Inc. who are directly affected. The latter sense is Preferred in this study, since Phase II development is intended directly for them. Furthermore, the limited number of housing units to be constructed in Phase II makes the narrow sense of the market the only logical possibility. On technical matters, NHA guidelines shall be employed in determining the type of housing for Phase II. This ticklish matter must be resolved collectively by the affected members through a general consensus. Resource persons were tapped by the researcher to backup inadequacies on some technical aspects. However, general concepts in this study are part and parcel of researchers work. On financial aspects, the NHA-Cooperative Socialized Housing Joint Venture Program of the NHA achieves the main goals of the Housing Cooperative. In addition to this, the NHA makes available its financial resources to indigent organizations interested in housing development, like Housing Cooperatives as an example. Furthermore, it is financially solid and stable, hence, in this study, it was considered as the only source of financing primarily. The study does not consider the possibility of additional grants or loans of a similar nature from a foreign Foundation previously dealt with, as confirmed in a letter to the Cooperative, to that effect. Finally, new developments and changes after January, 1978, in general, are excluded from this study, hence, not included in its discussion. Methodology and Procedure of Research This study is primarily descriptive in nature, hence, it is data-intensive. Since the narrow sense of the market has been selected for study, primary data is essential for market identification, needs, and capabilities. This is achieved by aid of a questionnaire intended for the prospective and end-users of Phase II. However, for inferential purposes, data on the housing backlog for Benguet Province to the broad aspect of the market were gathered from previous studies on the matter, by various government agencies such as the National Housing Authority, and the

Office of Human Settlements. Present and projected housing backlogs were gathered in tabular and graphical form. With reference to this study, data on such housing backlog are classified as secondary in nature. Primary technical data were supplied b Technical resource persons which have proven to be a goldmine in complementing the researchers inadequacies on certain aspects. One such person is the Project Manager of the 130 Housing Unit-Philippine Shares Subdivision in Antipolo, Rizal. Housing schemes, know-how in subdivision, suggestions were considered. On financial aspects, researches on prevailing averages on costs of material and labor were updated by the researcher for the first quarter of January, 1978. Previous dealings by the project manager of the housing subdivision in Rizal with NHA plus direct contact with the Planning and Development Office (PDO), NHA proved helpful in making clear the general concepts as well as details of the NHA Cooperative Socialized Housing Joint Venture Program. Financial aspects for Phase I so that performance of Phase II could be aptly gauged. Summary of Findings Market feasibility. From the viewpoint of the NHA, the entire nation as a whole has housing backlog of 200,000 urban dwelling units for 1977 after considering the efforts of the private sector which are mainly profit-motivated. The target beneficiaries of the NHA are the low and middle income groups which comprise 44 and 18 percent, respectively of the countrys population. By annual income, the low and middle income groups are classified as those who earn Php3,000 to Php7,999 and Php8,000 to Php22,000, respectively. On the provincial scale of which La Trinidad is a part thereof, Benguet needs 9,682 dwelling units of which 3,166 dwelling units will go to urban areas like Baguio City and the balance of 6,516 dwelling units will go to the rural areas of which La Trinidad is categorized as part thereof. Regarding market projections, Benguet needs 13,753 dwelling units by 1982; 15,735 dwelling units by 1987; and 31,027 dwelling units by year 2000. Unless the baby

boom is curtailed, combined efforts by the government and private sectors to bridge the gap between the demand and supply will have minimal effect. From the aforementioned background, reflections of such occur in the housing cooperatives situations, 201 eager applicants, qualified, and willing at that to at least 92 future available units. A classic case of demand overwhelming supply. In this particular case, its importance cannot be overemphasized. Technical feasibility. Engineering and architectural evaluations made by resource technical persons have indicated that the development of the mass housing project is technically feasible. One such person is the Project Director of Magnaland Development Corporation (MDC), a private construction group engaged in high rise buildings and housing subdivision for low, middle, and high income groups. No obstructions exist in moving construction materials to and from the site. Earthmoving equipment if deemed necessary can be moved in or out of the site at will. The topography and physical features of the site allow the development of the mass housing project and its auxiliary facilities. A four-inch well similar to that of Phase I can be drilled for water, since the Tacdian loam is predominant in that area. Furthermore, the weight bearing capacity of the soil does not pose as a problem. Electric power can be tapped from existing distribution lines in the vicinity to an independent voltage transformer of the Cooperative for excellent voltage regulation. Accessibility is no problem, since lot is adjacent to the main highway. Within a three-kilometer radius, one finds the communitys requirements such as the Provincial Capitol, Mountain State Agricultural College (MSAC) of which majority of the applicants work, the Municipal Hall, hospital and market, so with Camp Dangwa, so peace and order in vicinity is practically no problem. Financial feasibility. The total project cost is estimated at Php3.27 million, where raw land cost is estimated at Php148,960 land development at Php387,161 and construction cost of Php2.55 million, for the 92-houisng units.

The NHA will primarily finance the project, with a financial support of Php3 million and the remainder of Php276,000 from equity. The expected cost of one Duplex housing unit that is house and lot, is estimated at Php36,007.89, with a low monthly amortization of Php212.65 for 25 years at six percent, after downpayment of Php3,000. Similarly for the Apartment housing unit, it is estimated at Php32,660.89 with a low monthly amortization of Php190.90, under similar conditions. To prevent upsets in cost estimates, ten percent contingency allowance is built into the project cost estimate. In the event that this safety measure is not utilized due to stability of commodity prices and labor cost, such allowances automatically revert to savings and will be used in the continuous development of community facilities. Repayment of the Php3 million loan from NHA, shall be done for 300 monthly payments of Php18,041.30 each which is subjected to an interest of six per cent. At the end of the construction period, it is expected that 92 housing units and corresponding land development shall have been completed with excess funds of Php189,115, more or less, considering actualities, which could serve as a ready fund for development of second priority items. For the duration of the 25-year amortization period, the Cooperative can ably meet cash expenses and loan amortizations or Php216,495.60 yearly and still come out with excess funds at the end of the amortization period, which will serve as ready fund for further development or patronage refund or for the purchase of the future Phase III site. Conclusions Demographic profile. Mean age of the household head is 34.02 years old,

though this could range from 32.36 years to 35.67 years, considering the confidence level of our sample. Whereas, for the spouses, mean age gathered was 36.27 years. Considering the Cooperative as a whole, all the households shall have completed the 25year amortization period before reaching the retirement age of 65 years. All the household heads and spouses have undergone formal education in one way or another, where 79.56 percent of the heads are college graduates, and 65.51 percent

similarly for the spouses. Such formal education received, would definitely be a positive factor in the social development of the cooperative as a whole. Considering the sample taken, a total population of 317 persons was accounted for, including 156 children and 68 other dependents, where the mean age of the children and other dependents were gathered at 7.99 years and 26.32 years respectively. Other dependents referred to here are the old parents of either the head or spouse, and relatives. Close-knit family ties, a Filipino trait are considered a factor here, though it is understood, that such other dependents, have no credible source of livelihood. Present housing situation. Majority of the 93 respondents (families) are

presently renting their place of abode, with 63.44 percent comprising a majority. Occupants of government cottages are next with 21.50 percent, and residual percentage of 15.05 percent living with either their parents or relatives. As expected, nobody owns a house, furthermore, not one of the 93 responding heads are happy with their present housing situation. Various reasons were given with non-ownership of present abode (59.13%) as the foremost reason. Other major reasons such as inadequate facilities (58.06%) and lack of privacy (43.38%) were also accounted for. Whereas, minor reasons such as high rent, inaccessibility, no place for visitors, congestion, and others were also mentioned. Housing desires and aspirations. Primary type of house desired was the

apartment (53.76%); Duplex (30.10%); and Single detached (16.14%), in that order. For this particular study, the Apartment and Duplex type of housing are the only types considered, since it is feasible on the market, technical and financial aspects. The single detached type had to be eliminated due to its high cost and the very limited number that could possibly be constructed, considering the Tomay site of 1.48 hectares only. With two rooms (35.48%) as the immediate need, majority opted for three rooms (54.83%), while still a liberal choice of four rooms was noted. Since functional requirements are expected to grow with the passing of time, expandability of the housing unit is a necessary feature, hence, its incorporation in the design.

Four possible directions of expansion is an open choice for the future end-users of the Duplex units. When polled on this matter, 37.63 percent of the total respondents opted for the backwards direction, whereas, 32.25 percent opted for the sidewards direction. This is so, because some of the respondents who chose previously the Duplex and single detached types, opted for the backwards and sidewards direction for obvious reasons, none wanted the bottom or frontwards direction. Additional areas desired. Additional areas entail additional cost, hence,

granting of such areas is conditional in the financial sense. However, if possibility exists, prospective Phase II end-users opted for the following in their order of priority. Built-in lockers (72.04%) Washroom (36.55%); Store room (38.70%); Study room (27.95%); and Guest room (25.80%). Community facilities. Such facilities will be located at the communal-

commercial area, except for the park and playground which is a separate area itself. Community facilities opted for were the following: Playground and Park (60.21%); Cooperative Store (59.13%); Dispensary (31.18%); and others such as the Social Hall, and Cooperative Office were made mention. Economic capabilities. Mean monthly family income is Php976, which is comparatively higher to Phase Is Php651.12, a good indicator on the affordability level, which is quite acceptable to the NHA since it is primary to them that their housing investments are also recoverable. Considering the NHA guideline of 20 percent allocation for housing purposes, the total family income is only 69 percent of the 201 qualified members can financially afford housing, through a much lesser percentage can be satisfied only, considering the 92 housing units to be constructed. Technical aspects 1. Project management scheme for the project is divided mainly into two main periods, namely: the Pre-operating period.

During the Pre-operating period, developer or developers are granted autonomous control to do all agreed development work, and ends upon its completion. The Memo-Agreement to be signed by the NHA, Cooperative and other government agencies shall play a vital role in guiding the actuations of such parties during this period. Whereas, during the Operating period, operating guidelines based on PD 175 and PD 501 and other regulations of the Bureau of Cooperatives Development (BCOD) through the Department of Local Government and Community Development (DLGCD) shall guide the Cooperative till its dissolution. 2. The general guidelines in selecting the future Phase II site are as follows: a. Lot must be adjacent or easily accessible to and from the main road. b. Lot must be strategically located with respect to the major land marks of La Trinidad such as the Provincial Capitol, Municipal Hall, Hospital, Municipal Market, etc. c. Abundance of public utility vehicles plying the adjacent or nearby road. d. Size and shape of the lot must permit ease and flexibility in planning. e. Price of lot must be within the economic reach of the cooperative. f. The title of the lot must be free from legal encumbrances. g. The lots must be within the established land boundaries of La Trinidad. The 14,896 square meters lot of Tomay, La Trinidad satisfies all the criteria mentioned above. 3. The future site possesses the accessibility, weight-bearing capacity and the topography suitable for the proposed mass housing project. 4. The presence of electric power lines, water-bearing soil strata, terrain suitable for sewage disposal and simple garbage systems tried and tested in Phase I, gives assurances to the Prospective Phase II end-users on the availability of this basic utilities. 5. As per PD 957, excerpts on Design Standards shall be guidelines on subdivision development. 6. Design methods as can be seen in Figure 4, collaborated by Figures 2 and 3, shall be adopted for the project in general. 7. Pursuant to PD 957, development plan for the project is based thereto. Where 92 housing units consisting of 70 Apartment units, and 22 Duplex units, including its

supporting roadways and utility systems shall be given first priority in project development. Furthermore, the Apartment and Duplex types of housing are the only types considered here due to financial, land restrictions, hence, the single-detached type of housing was therefore excluded. Depending on funds availability, second priority items such as those located in commercial and communal areas, shall follow there. 8. Project completion time for the project is estimated at 48 weeks under normal conditions. Financial aspects 1. The total project cost is safely estimated at Php3.27 million. Raw land cost is estimated at Php148,960, Land development cost estimated at Php387,161 and the Construction Cost estimated at Php2.55 million. 2. The national Housing Authority will primarily finance the mass housing project. However, a comparatively small amount of Php276,000 will come from equity through downpayments of the prospective 92 Phase II end-users. 3. The expected cost of one house and lot as passed to the prospective end-user, considering the Apartment and Duplex unit are Php32,629.89 and Php36,007.89, respectively. 4. Concerning the affordability of the housing units in general, 69 percent of the qualified market can afford such housing units premised on the fact that 20 percent of the total family income should be allocated for housing purposes. Survey shows that percentage affordable for housing will range from 17.24 percent to 19.40m percent considering the confidence level of our sample. Whereas, only 92 units will be constructed as planned, thereby satisfy only 46 percent of the qualified market, suggests that 54 percent of the qualified market or 109 qualified markets have to wait again for Phase III. 5. The projected financial performance of the Cooperative (Phase II), considering its nonprofit stance, is considered financially sound and viable. This could be shown directly by the following: a. Projected cash flow (Construction Period). The Cooperative has the capability to purchase proposed Phase II site, and with the reliable support of the NHA

can undertake the construction of the 92 housing units and other aspects pertaining to Land Development with possible surplus funds of Php197,565. However, in actuality, whatever surplus funds that could be realized, more or less to that mentioned, would serve as a ready fund for the funding of second priority items. b. projected cash flow (25 years of operation). The projected cash floes reflect the projects strength at internal cash generation. All cash requirements are ably met including loan amortizations with excess liquidity at the end of the 25-year amortization period as ready fund for further development or patronage refund or fund for purchasing the future Phase III site. c. Debt service analysis. The project will be able to meet all cash expenses

and loan amortizations of Pho216,495.60 yearly and still come out with excess funds. As a whole, this study is feasible as based on its market, technical, and financial aspects, hence. Its validity as based on the NHA-Cooperative Socialized Housing Joint Venture Program. The researcher strongly recommends to the Board of Directors of the La Trinidad Housing Cooperative, Inc., that the Phase II housing project at Tomay, La Trinidad be implemented immediately with its full support and cooperation to ensure its successful completion at the earliest possible time. Barring major changes in the said joint venture program, this study shall serve as a model for succeeding feasibility studies for the other phases of development should they avail of such NHA financial assistance. Recommendations 1. It is strongly recommended that this study be implemented soonest since the situation is volatile and to minimize delays during the construction phase in order to finish the entire project at the earliest possible time. 2. Contact other viable sources of financing, such as foreign foundations sympathetic to this endeavor for financial assistance through soft loans (3 percent) for the succeeding phases of development as a sound alternative to NHA financial assistance.

3. Extensive use of the Bayanihan concept to reduce labor cost where time and skills of the prospective Phase II end-users would apply. This is based on the premise that this concept is not being utilized by the cooperative. 4. That the following criteria for awarding housing units be implemented for Phase II. No definite criteria has been utilized in awarding Phase I units. Perfect score for these criteria is 100 per cent, whose breakdown is as follows: a. Bayanihan . 30% b. Downpayment .... 10% c. Seminar attended 10% d. Papers submitted 10% e. Number of dependents ... 10% f. Per capita income ... 10% g. Length of membership ... 10% h. Assembly meetings attended .. 10% The Bayanihan concept is strongly recommended here for screening purposes and for effectively building up the cooperative spirit among its members. 5. Propose amendments to the constitution and by-laws of the cooperative, so as to permit the purchasing of cheap, idle lands, ideal for subdivision development, which are located outside the La Trinidad area. Furthermore, to petition the NHA, which shall invoke their expropriatory powers, granted by virtue of PD 957, and further collaborated and substantiated by PD 175, on such idle or marginal lands for housing purposes, shall benefit the cooperative in general in the form of lands at an affordable and reasonable cost.

Title: A PROJECT FEASIBILITY STUDY BASED ON THE NHA- COOPERATIVE SOCIALIZED JOINT VENTURE PROGRAM FOR PHASE II, LA TRINIDAD HOUSING COOPERATIVE, INC. Author: CALUZA, Ruben R.