LOCATION SUBSIDY FOR CONSTRUCTION PROJECTS
OF THE HOUSING SOLIDARITY FUND PROGRAM (SFP)
OF THE MINISTRY OF HOUSING AND URBAN DEVELOPMENT –
CHILE
Ana Beckmann Silva1
abeckmann@minvu.cl
Nicolás Romero Alvarez2
e-mail: nromero@minvu.cl
Housing and Urban Studies Commission of the Ministry of Housing and Urban Development
ABSTRACT
In Real Estate, location is a factor that guarantees the success of a project. For families that belong to
the most vulnerable segments of the population, in the context of a free urban land market, it is not easy
to find a house with a good location because this condition is usually linked to a high price.
In this sense, beginning in the year 2007 the Ministry of Housing and Urban Development (MINVU)
granted an additional housing subsidy that seeks to improve the location of social housing through the
Housing Solidarity Fund Program (FSV).
This paper reviews the impact of the location subsidy for social housing developments funded by the
State, in the mode called “Construction on New Sites” (CNT) in the Metropolitan Region of Santiago.
As we shall see, the importance of this type of project lies in the allocation of public funds, the number
of beneficiaries, and the impact that the location of these housing developments may have on people.
Keywords: Real estate, housing policy, location subsidies, urban development
Since the implementation of Location Subsidies (SDL)
in the year 2007 and until December 2009, the Chilean
State has provided funds to acquire sites or existing
houses for more than 77,000 families — more than
28,000 of them in the Metropolitan Region of Santiago
alone. In the latter, the allocation of housing subsidies
has been increasing. Most types of housing projects of
the housing Solidarity Fund Program are destined for
Construction on New Sites (CNT).
1
2
SFP: N°of beneficiary families in Santiago Metropolitan Region
2007-2009
LOCATION SUBSIDY
14.000
12.000
With Location Subsidy
Without Location Subsidy
10.000
N° of Families
1.
8.000
6.000
4.000
2.000
0
2007
2008
Source: Housing Observatory MINVU
Engineer – analyst of the Housing Observatory. Housing and Urban Studies Commission of the Ministry of Housing and Urban Development.
Geographer of the Urban Observatory. Housing and Urban Studies Commission of the Ministry of Housing and Urban Development.
2009
The evaluation factors are established in the regulations of the Fondo Solidario de Vivienda D.S.-174
MINVU (SFP), which are summarized in the following table:
Table 1: Housing Solidarity Fund Evaluation Factors
LOCATION
LOCATION BY TERRITORIAL PLANNING INSTRUMENT
G = Projects located within city limits.
P = Projects located outside city limits.
SANITARY FEASIBILITY
G = Located within the operating range of a sanitary services company.
P = Located outside the operating range of a sanitary services company.
TYPE OF CONNECTIVITY TO RURAL OR URBAN ROAD NETWORK
G = Has direct access to a local or main road.
P = Only Has direct access to roads less important than a local road.
ACCESS TO SERVICES AND PUBLIC TRANSPORTATION
G = Public transportation within a walking distance of no more than 500 meters,
certified by the Municipal Transportation Department.
SCORE
GOOD
POOR
5 points
0 points
GOOD
POOR
5 points
0 points
GOOD
POOR
10 points
0 points
GOOD REGULAR POOR
Preschool and Primary education facilities with certified enrollment vacancy
located at a walking distance of no more than 1,000 meters.
Primary health centers located at a walking distance of no more than 2,500 meters.
15
points
10 points
0 points
R = Fulfills at least two of the previous three conditions (access to public transportation
and access to preschool and primary educational facilities).
P = Does not fulfill any of the previous conditions.
This subsidy may be applied in any city with a population of at least 5,000 inhabitants. In order for
CNT projects to apply for the location subsidy, they must not include more than 150 families, and the
maximum amount available for each subsidy is 200 UF3.
The subsidy granted to housing location projects that receive good scores is determined using a formula
in which the most significant factors include the number of houses in the housing project, the surface
area allotted to the project, and the fiscal appraisal of the site according to the Internal Revenue
Service.
2.
LOCATION SUBSIDY FOR CONSTRUCTION PROJECTS IN THE METROPOLITAN
REGION OF SANTIAGO (RM).
In the Metropolitan Region of Santiago, and during the 2007-2009
period, more than 35%of the SFP’s total social housing subsidies
were destined to housing developments in the CNT project mode.
During the same period, the number of families that benefitted
from housing subsidies through CNT projects represented 43% of
all families in the region (around 18,000).
SFP: RM Distribution of subsidies by type
2007 - 2009
SFP AVC
10%
SFP1 AVC
46%
Source: Housing Observatory. MINVU
3 An UF is an indexed monetary unit used for Real Estate transactions.
CNT
35%
other type
9%
Also, in terms of the distribution of location subsidies in
the region, the relative importance of CNT projects is
greater than other type of SFP construction project. In
this period, CNT projects represented 80% of location
subsidies.
SFP I Construction: RM SDL by type
2007-2009
CSP
3%
CSR
14%
DP PIS
0,2% 2%
On the other hand, it is important to point out that in the
country, of all construction projects selected for the 20072009 period, the families from CNT projects represent
66%, around 52,000 families.
CNT
80%
Source: Housing Observatory. MINVU
3.
IMPACT OF APPLYING LOCATION SUBSIDIES TO CNT CONSTRUCTION
PROJECTS IN THE METROPOLITAN REGION OF SANTIAGO
The following table (Table No. 2) displays the results obtained during the first year of the location
subsidy program; in terms of percentages, 70% of the beneficiary families were located outside the
Metropolitan Area of Greater Santiago4 (AMGS).
Table 2: Beneficiary families with location subsidies for Construction on New Sites (CNT), by zone within the
Metropolitan Region of Santiago.
ZONE
AMGS
Américo Vespucio Ave.
Outside AMGS
Total
No. of Families
2,343
879
7,544
10,766
%
21.76
8.16
70.07
100%
Source: Housing and Urban Studies Commission, with information from the Housing Solidarity Fund, 2007.
21.7% of beneficiary families from this region were located within the AMGS, whereas only 8% of all
beneficiaries (879 families) were located inside the Américo Vespucio Ave. circumference.
Map 1: Location of CNT projects inside and outside the Metropolitan Area of Greater Santiago.
Source: Housing Observatory. Housing
and Urban Studies Commission. MINVU,
with information from geo-referenced
projects, 2007-2008, SFP.
4
The Metropolitan Region of Santiago has 52 municipalities. The metropolitan area consists of 34 inter-connected urban municipalities, which correspond to all the
municipalities in the Province of Santiago, plus the municipalities of San Bernardo and Puente Alto.
Map 1 illustrates this situation: most CNT projects are located outside Américo Vespucio Circular
Avenue, which defines. Meanwhile, the projects located outside AMGS are built mainly on the edges
of the closest city, as in the cases of Talagante, Peñaflor and El Monte.
Map 2: Location of families by municipality in the Metropolitan Region.
Source: Housing Observatory. Housing and Urban Studies Commission, with information from FSV (MINVU).
Map 2 shows the number of families in each municipality, which varies according to the intensity of
the colors. The darkest colors correspond to the municipalities to the South and South-West of the
region, in municipalities such as Melipilla, El Monte and Isla de Maipo. Even though the municipalities
of Renca, Peñalolén and Puente Alto –all within the AMGS– also have an important number of
beneficiaries, these darker areas have even more (Table 3).
Map 3: Location subsidies by municipality in the Metropolitan Area of Greater Santiago.
Source: Housing and Urban Studies Commission, with information from FSV (MINVU).
The amounts granted for location subsidies in each municipality (see Map 3) reveal the importance of
subsidies in municipalities outside the Metropolitan Area of Greater Santiago (AMGS). However,
inside this area, once again, we may observe that most subsidies are granted in the municipalities of
Renca and Peñalolén.
Table 3 lists the number of beneficiary families and the total amount of subsidies allocated in each
municipality in the Metropolitan Region of Santiago during 2007-2009. As expressed above, there are a
significant number of beneficiaries from municipalities outside the AMGS, especially when
considering that these municipalities have a comparatively smaller urban population than the
municipalities within the AMGS.
Table 3: Total amount of location subsidies and beneficiary families by zone.
Inside AMGS
Outside AMGS
Area
Total
Housing
Municipality
Subsidy (UF)
Melipilla
776.150
El Monte
448.890
Isla de Maipo
454.078
Paine
301.229
Colina
219.314
Peñaflor
192.528
Buin
179.540
Talagante
127.608
Lampa
109.451
Curacaví
98.958
María Pinto
43.166
Renca
445.530
Peñalolén
390.740
Puente Alto
357.134
Pedro Aguirre Cerda
227.672
La Florida
177.145
Lo Espejo
161.204
Huechuraba
158.530
Pudahuel
119.944
La Pintana
115.400
San Joaquín
84.960
San Bernardo
60.630
Cerrillos
57.300
Lo Barnechea
57.300
La Granja
52.218
El Bosque
43.930
Quinta Normal
39.214
Conchalí
38.200
Independencia
35.992
Maipú
30.560
San Ramón
30.208
Quilicura
17.954
Cerro Navia
3.820
Families
2.027
1.175
1.142
772
569
504
470
334
281
259
113
1.151
929
940
596
435
422
415
282
270
180
150
150
150
124
115
97
100
72
80
64
47
10
Housing
Subsidy
per family
(UF)
383
382
398
390
385
382
382
382
390
382
382
387
421
380
382
407
382
382
425
427
472
404
382
382
421
382
404
382
500
382
472
382
382
Number of Families per
projects
project
15
9
9
6
4
4
4
3
3
3
2
12
9
6
6
5
3
4
3
3
2
1
1
1
3
2
2
1
1
1
1
1
1
135
131
127
129
142
126
118
111
94
86
57
96
103
157
99
87
141
104
94
90
90
150
150
150
41
58
49
100
72
80
64
47
10
Total
location
subsidy
(UF)
217.642
138.757
179.997
124.223
36.313
100.800
39.057
24.906
42.505
6.425
4.360
182.635
185.800
70.383
115.177
55.380
19.096
30.283
45.335
42.761
26.522
30.000
30.000
18.906
23.722
23.000
15.553
20.000
14.400
15.998
4.508
1.242
1.855
Location
subsidy per
family (UF)
107
118
158
161
64
200
83
75
151
25
39
159
200
75
193
127
45
73
161
158
147
200
200
126
191
200
160
200
200
200
70
26
186
Population
94.540
26.459
25.798
50.028
77.815
66.619
63.419
59.805
40.228
24.298
10.343
133.518
216.060
492.915
114.560
365.674
112.800
74.070
195.653
190.085
97.625
246.762
71.906
74.749
132.520
175.594
104.012
133.256
65.479
468.390
94.906
126.518
148.312
% Urban
population
64
84
73
63
81
95
84
84
70
64
16
100
100
100
100
100
100
100
98
100
100
98
100
97
100
100
100
100
100
99
100
100
100
In general, the municipalities that are not part of the AMGS, and present CNT projects during this
period, are concentrated in 11 municipalities (7,647 families); on the other hand, municipalities that are
part of the AMGS (which has 34 municipalities in total), and that present CNT projects during this
period, account for only 6,779 families in 22 municipalities.
Considering the number of municipalities and CNT beneficiary families, outside the AMGS there are
an average of 695 families per municipality, while inside the AMGS this figure accounts for 308
families per municipality. In short, there are more beneficiary families outside the AMGS (+125.5%).
Meanwhile, as far as the amount assigned, the municipalities outside the AMGS have been granted a
total of 914,985 UF, while those inside the AMGS have been granted 972,557. If this value is
contrasted with the number of municipalities with CNT projects during the period, inside the AMGS a
total of 44,207 UF was assigned per municipality, while outside this area a total of 83,180 UF was
assigned per municipality (88.1% more).
4.
ANALYSIS OF RESULTS
The scaled location subsidy is a good attempt for improving the location of housing projects within the
city, however, as we observed, geo-referenced CNT projects (corresponding to the 2007-2008 period)
were located mainly in the peripheral municipalities of the AMGS, or outside this area. The high land
prices that lead to a good location may have interfered with allowing more successfully located social
housing projects, from the perspective of the economic investment.
In calculating location subsidies, the value of the fiscal appraisal of sites is highly weighted before
assigning the total amount, and so a high fiscal appraisal would imply proportionally increasing the
subsidy. Meanwhile, the maximum subsidy limit for each family is 200 UF. In this sense, there is no
simple solution. Raising the maximum value of the family subsidy would intensify speculation and
generate market distortions. However, a redistribution of subsidies may at least promote the execution
of more projects in metropolitan areas.
Under current conditions, the application of a location subsidy is not proportional to city size, and
therefore, both metropolitan areas and small cities must follow the same rules and have the same
requirements. Consideration must be given to the fact that land markets perform differently in each
city, where the supply and price structure are directly related to the size of the population, economic
growth and economic activity of each city.
Assigning a location subsidy according to city size would be justified according to the argument
presented above. In urban areas, the different levels of services and public infrastructure, among other
factors, determine land prices. In metropolitan areas, access to a house with these “location benefits” is
more difficult, and in this sense, 200 UF of urban land in small cities is not comparable to the
application of the same amount in a metropolitan area. In the period of time analyzed, 88% more
resources were assigned to municipalities that do not belong to the AMGS, and there were 126% more
beneficiary families outside this same area; these aspects are relevant and deserve more attention.
On the other hand, the analysis of subsidy allocation among different city types shows that minor cities
represent a similar percentage of total allocation to the case of intermediate size cities. It represents a
higher proportion than the case for Metropolitan Cities even though the latter gather over 60% of the
population of the country.
Table: SFP allocation y city type
City type
Metropolitan
Major Intermediate
Minor cities
Country totals
2007
2008
584.496
1.162.803
1.394.812
3.142.111
666.072
1.026.706
934.785
2.627.562
2009
Total UF
691.079
1.941.64
1.272.263 3.461.771
967.584 3.297.181
2.930.926 5.563.004
%
22
40
38
100
In conclusion, the distribution of resources among municipalities that do not belong to the AMGS as
well as the number of beneficiary families outside this area suggest the necessity for deepening the
analysis mainly considering the following:
i)
ii)
The spatial focalization of the supply according to potential demands such as the number of
non-proprietor households (see table Nº 5), and
The study of the supply of social housing within the region, particularly reviewing the
characteristics of this fraction of the real estate market as well as the economic considerations at
the moment of initiating a social housing project.
Table 5: Non proprietor households by RM zone, 2008
Metropolitan Region of Santiago
Non proprietor households
according to SFP data base
Municipalities outside the AMGS
31.220
Municipalities belonging to the AMGS
210.700
Source: Social Protection Form Database
5.
ENVIRONMENTAL AND STATISTICAL CONSIDERATIONS
The special subsidy analyses in this paper is without doubt a State recognition of the costs of sprawl be
them increased transportation costs, pollution amongst other. But there is also no doubt that in spite of
the materialization of new housing for the most vulnerable citizens and households there remain
important endeavors to be tackled in order to effectively improve their localization. Further analysis of
the processes of urban land occupation would help to shed some light on the intricacies of actually
measuring these costs.
From another perspective, these analyses may also help to identity whether household location choice
is exclusively economic. It might also be possible to gather further information on the functional
household dependence on urban centralities through the inclusion of specific questions on the
application forms.
From a more statistical perspective it is important to mention that the location subsidy data base is
updated monthly and validated by the ministry’s offices in all regions of the country. This permits to
make analyses on particular registers not considering those projects that for several reasons may be
paralyzed or not initiated. In spite of the latter there is much work to be done to improve the data base
informatics systems which are nowadays oriented to monitor administrative processes and require
manual and off system validation and processes in order to ensue to statistical analysis.
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