Housing policies and the roles of local governments in Latin America: recent experiences

I. Introduction

The right to adequate housing is fundamental to guaranteeing a dignified life to all. In an increasingly urbanized world, the right to housing means more than just a right to private property or “owning a home”. It also means the right to the city’s opportunities, as recommended by the New Urban Agenda, which placed housing at the centre of the agenda for fairer and more inclusive cities.

In Latin America and the Caribbean (LAC), the most urbanized region of the global South, the level of urbanization went from 41 per cent in 1950 to 75 per cent in 2000 – highly accelerated compared to Europe, which took 150 years to reach that level. With about 502 million inhabitants in urban centres, by 2015 LAC urbanization reached 79.9 per cent and is projected to increase to 82.4 per cent by 2025.⁽¹⁾ LAC’s urbanization boomed after the Second World War because of the region’s late industrialization, a process marked by social segregation and precarity. Without adequate policies to deliver on the housing and urban land needs of the poorest,⁽²⁾ workers’ families had to build their own houses on the outskirts of cities –”urbanization at low wages”.⁽³⁾

In Latin America (LA), formal housing production historically does not offer affordable housing for all and public housing production is still insufficient to reach the demand. Therefore informal production and the so-called self-construction sector remains predominant, representing between 30 and 60 per cent of housing stock in the region’s countries.⁽⁴⁾

Whether housing production is formal or informal, Latin America is essentially a region of homeowners. Rental housing is less prevalent than elsewhere. In the first decade of this century, approximately 20 per cent of housing stock was rented, less than in the United States (33 per cent) or Western Europe (30 per cent).⁽⁵⁾ Despite social rental housing programmes of some local governments in the region, housing policies in LA are mostly based on promoting homeownership, with few cases of social renting solutions or rental market regulation.

Over the years, LA housing policies have focused on new construction, housing improvement and upgrading of informal neighbourhoods and slums.⁽⁶⁾ Implementation of these policies, with some poverty reduction between 1995 and 2009 (the latest available data), resulted in improved housing conditions in many Latin American countries. A study of quantitative housing shortages in the region found a decrease from 8 to 6 per cent. Poor-quality housing decreased from 12 to 7 per cent, and a lack of infrastructure from 24 to 16 per cent.⁽⁷⁾ However, households facing insecure tenure grew from 10 to 11 per cent. The lack of housing units reached 7.3 million in 2009, while 8.6 million households lived in precarious conditions.⁽⁸⁾

In most LA countries, housing is one of the least decentralized government responsibilities. However, housing policies developed by local governments, or in partnership with them, present the most interesting results. Knowing local territories and their social, cultural, political, economic and governance dynamics is central to good development, and local governments are well placed to promote socially just and environmentally balanced responses to the housing problem. Latin American local governments offer a broad range of good experiences, supporting the centrality of housing in the urban development agenda.

This paper describes governance, planning and finance actions and strategies implemented by the region’s subnational governments, highlighting experiences implemented in the last 20 years. Rather than providing a case-by-case analysis, this attempts to cover the recent panorama of regional housing policies. Most of the experiences presented come from middle-sized and big cities because documentation for small municipalities is scarce and because they depend more on direct support from national and regional governments. The paper’s aim is to clarify the primary role of local governments in designing and implementing housing policies, and the need for these governments to be empowered to improve governance, promote better planning practices and increase funding for these efforts.

II. Local Governments’ Governance Experiences with Housing Policies

Local governance requires decentralization of political power and resources. The region’s political decentralization has been implemented mainly since the re-democratization of the 1980s and 1990s. Before that, many LA national governments were characterized by decades of centralized authoritarian power, top-down public policies and administration, little or no interaction with local governments and even less with civil society. Despite the huge challenge, local governments in the last two decades have developed innovative governance, planning and funding policies for housing.

In the 1980s and 1990s, decentralization occurred in a neoliberal context. After 2000, more democratic and social approaches attempted to correct the harmful effects of the neoliberal agenda.⁽⁹⁾ In the first 15 years of this century, LA local governments, once strengthened, began adopting new paradigms of decentralized governance, with more efficient models of governance and urban planning, especially around urbanization, land regularization, urban infrastructure and, in the biggest cities,⁽¹⁰⁾ construction of new housing.⁽¹¹⁾

Despite this advance, in several LA countries decentralization resulted in an increase in local governments’ responsibilities without accompanying financial or technical resources. Even where local governments’ role in housing and urban issues has been strengthened, housing policies are still dominated by national government agendas, as in countries supporting massive housing production programmes with public funding for social housing constructed by private contractors and direct public subsidies for purchasing this housing.⁽¹²⁾ This was first tried in Chile in the late 1980s.While such programmes can benefit households in need, there are also harmful urban consequences because of a splintered planning process and a mismatch of housing production schemes with land and urban policies. The weak involvement of local government in the process and the lack of well-located land reserves and land-use planning have contributed to this scenario.

In LA, greater investment in governance structures is necessary to improve local governance, even in countries that have achieved some degree of urban and housing policy decentralization. There is no single solution on this front, given the heterogeneity of municipalities in terms of economic capacities and size, and the varied level of informality and housing needs, but the region offers some good examples of national and subnational government support.

In Colombia, national law 388/1997 delegated the responsibility for implementing urban development plans to municipalities with more than 30,000 inhabitants, and placed at the disposal of municipalities the support of various national government planning bodies for elaborating their plans (Planos de Ordenamiento Territorial – POT).⁽¹³⁾ Brazilian municipalities, especially small ones, find it difficult to carry out their plans, mainly due to the lack of funding and technical expertise. In 2005, the federal government created the Sistema Nacional de Habitação de Interesse Social (National Social Interest Housing System – SNHIS), consisting of national and local government institutions. The aim was to decentralize financial resources and promote social control of federal transfers for housing programmes. To benefit from the associated resources (National Social Interest Housing Fund – FNHIS), local governments must prepare and approve a Local Social Housing Plan, and create a Municipal Housing Fund and Council for social control. However, among 5,570 Brazilian municipalities, only 2,212 had a housing plan by 2017,⁽¹⁴⁾ indicating that this is not an easy task for local governments.

In Argentina, partnerships between national and subnational governments to strengthen housing and urban governance were also identified. The federal programme Fortalecimiento de las Áreas de Desarrollo Urbano de los Institutos Provinciales de Vivienda (Strengthening the Urban Development Areas of the Institutes of Housing) aims to support more autonomous local housing agencies and to strengthen technical capacity to formulate local housing policy.⁽¹⁵⁾ It also establishes partnerships between the central government’s Undersecretariat of Urban Development and Housing and provincial bodies, with each entity providing half the investments needed locally. This aims at improving capacity of provincial agencies’ urban development departments and housing agencies, which assume responsibility for, among other things, identifying vacant land in municipalities under their jurisdiction for future social housing construction.

Another interesting experience can be observed in Mexico City, where the local government set up the Instituto de Vivienda (Institute of Housing – INVI). This is a decentralized, autonomous public agency for handling housing policies for the low-income population and residents of at-risk areas, aiming for higher-quality new housing units in areas supplied with good infrastructure, services and jobs.⁽¹⁶⁾ With decentralized governance and financial resources, INVI was not only able to plan Mexico City’s housing policy, but also to carry out such significant actions as the granting of hundreds of thousands of loans to low-income families, for either new housing or housing improvements, or for taking over mortgage portfolios for households that could no longer pay their private bank mortgages.⁽¹⁷⁾

Since urban expansion may occur beyond municipal limits, another approach has been creating consortia of several municipalities to develop joint knowledge, policies and actions, and effective mechanisms and tools for metropolitan planning and governance.⁽¹⁸⁾ An example is the Consejo de Alcaldes del Área Metropolitana de San Salvador (Council of Mayors of the Metropolitan Area of   San Salvador), in conjunction with the Oficina de Planificación del Área Metropolitana de San Salvador (Planning Office of the Metropolitan Area of   San Salvador – COAMSS/OPAMSS), a decision-making body that coordinates policies and programmes for a metropolis of 14 municipalities. This institutional arrangement was set up after the 1986 earthquake, recognizing that the metropolis had problems that could not be addressed independently by each local administration.⁽¹⁹⁾

Housing policy decentralization should also create spaces for democratic, participatory and inclusive governance with deliberative power for citizens. Some local governments have followed this path. Queretaro in Mexico, Pichincha in Ecuador, and several municipalities in the Dominican Republic, Chile and Brazil are examples. In Argentina, the national government created La Mesa de Diálogo (The Dialogue Panel, 2016-present). This is a space for regular meetings of civil society organizations, local and provincial governments, and national government areas to strengthen their interaction on local housing problems.⁽²⁰⁾ In June 2018, this tool was used by the Instituto de Vivienda de Buenos Aires (Buenos Aires Housing Institute) to coordinate discussions among local government, the city’s tenants’ association, Public Ministry of Defence, Cámara de Propietarios Argentina (Argentina Owners Chamber), Cámara Inmobiliária Argentina (Argentine Real Estate Chamber), and such organizations as Habitat for Humanity. They discussed how to make rental housing in Buenos Aires more affordable, encourage landlords to rent to residents, combat vacant properties, and create incentives for administrative procedures that provide formal guarantees to tenant families.⁽²¹⁾

In Venezuela, a successful example of a democratic, participatory, inclusive governance space is the Comités de Tierras Urbanas (Urban Land Committees – CTUs), a civil society initiative recognized by the national government and institutionalized through a decree in 2002. The committees arise from neighbourhood associations, with the community defining its territory, electing representatives and constituting autonomous units, independent of government institutions or non-governmental organizations.⁽²²⁾ In partnership with the Instituto Nacional de Tierras Urbanas (National Institute of Urban Lands), the CTUs contribute to the full regularization of land tenure in consolidated urban or peri-urban settlements. By 2016, more than 650,000 titles to urban land had been granted through the CTUs, benefitting more than one million families.⁽²³⁾

Another approach is participatory budgeting (PB), through which residents vote directly on municipal budget priorities, resource allocations, and the works and services executed by the municipal administration. PB has been identified in more than 40 countries globally, but has been particularly prevalent in LA, where the first experience was implemented in 1989 in Porto Alegre, Brazil. After that, PB spread across the region: Belo Horizonte, Brazil (1993); Guarulhos, Brazil (1999); Ilo, Peru (1999); Rosario, Argentina (2002); Várzea Paulista, Brazil (2005); and Canoas, Brazil (2009) are examples.⁽²⁴⁾ PB has also been identified in several local governments in Brazil, Mexico, Argentina, Uruguay, Colombia, Ecuador, Guatemala, El Salvador, Peru and Chile, and at the central level through national laws in Guatemala, Nicaragua and Peru.⁽²⁵⁾

PB experiences tend to promote new forms of social control of public budgets, and hence of governance. In Porto Alegre, virtually all households have been provided with electricity and sanitation, after several decades of PB following collectively instituted guidelines. In Ilo, community members were elected to new bodies for control of PB, the Panel for the Management of PB and the PB Oversight Committee. In these two cases, delegates are selected from these bodies to the Provincial Coordination Council and the Permanent Committee for PB, where rules and final decisions are made, in a mixed governance model. This shows how governance can be improved through integration between governance and citizens⁽²⁶⁾ in the discussion of housing and urban issues.

In cities of over a million people, participatory processes can be a challenge. Advances in   information technology and communication networks have allowed for a new field of action through the use of interactive electronic instruments to improve social control over public housing policies, while bringing civil society closer to government planning. São Paulo, Brazil’s biggest municipality, has set up interesting online platforms to promote citizen input into draft versions of bills and plans, including its new master plan (2014), before sending them to the city council to be voted on.⁽²⁷⁾ In El Salvador, the web platform Observatorio Territorial (Territorial Observatory, 2014-present) is a tool to disseminate geo-referenced information to civil organizations, the public and private sectors, and the general population to contribute to improvements in decision-making on spatial transformations.⁽²⁸⁾

The different strategies conceived by some LA local governments to improve local and regional governance attest to great creativity, and indicate the more general potential in Latin American cities and provinces if properly supported.

III. Urban and Metropolitan Planning for Social and Spatial Inclusion

Planning skills are crucial to the formulation of accurate local development plans, with proper planning tools and strategies for solving local housing needs, accessing well-located land for social housing provision, protecting those in subpar settlements, and setting up local housing plans to address both insufficient supply and inadequate quality of housing. LA local governments supported in these skills offer a good range of interesting planning experiences, despite the difficulties many of them have putting planning into practice.

IV. Financing Housing Policies of Latin American Local Governments

For the success of social housing policies promoted by local governments, the capacity for financing is crucial. However, generally speaking, Latin American countries tend to concentrate expenditures at the national level. Few municipalities in the region have a strong enough economic dynamic to fund their own housing actions (Buenos Aires, Mexico City, São Paulo and Medellín are some examples). Finding ways to overcome these challenges is key to the effectiveness of local government planning and governance on housing, which involves expensive and long-term policies. Obtaining land, building houses, producing and managing urban infrastructure and public parks, rehabilitating existing properties for social housing, urbanizing precarious settlements – all with the purpose of addressing hundreds of thousands of housing unit deficits – requires massive public resources for direct or indirect interventions. This set of strategies addressing various dimensions makes housing policy one of the most complex tasks that governments face.

Most LA municipalities depend on external resources (state, provincial, national or international). There are also significant differences between countries’ decentralization of expenditure.⁽⁵⁸⁾ By 2013, five countries – Argentina, Brazil, Colombia, Mexico and Peru – had high levels of spending decentralization. Argentina, Brazil and Mexico have federal government structures based on strong regionalist traditions, while Peru and Colombia have unitary country systems. A second group of countries – including Chile, Ecuador, El Salvador, Honduras and Paraguay (all unitary countries) – show in-between levels of decentralization, with subnational government expenditure varying from 9 per cent to 13 per cent. A third group of countries has low levels of decentralization, from 2 to 4 percent in Costa Rica, Guatemala, the Dominican Republic and Jamaica.⁽⁵⁹⁾

Housing policies in most Latin American countries are thus to a large extent designed, financed and implemented by central governments.⁽⁶⁰⁾ The challenge is greatest for small and medium-sized municipalities, which have low revenues, little potential for attracting foreign investments, and little attention from the formal producers of urban space. In Central America, for example, an increase in the responsibilities of municipalities in recent years, unaccompanied by an increase in their capacity to fund this, compromises their capacity to implement several policies.⁽⁶¹⁾ The following subsections present some strategies LA local governments have implemented to finance and implement housing policies.

V. Conclusions

LA countries have come a long way in improving the living conditions of urban populations, but still face enormous challenges. Progressive governments in several countries in the first decade of this century saw housing and related urban issues as key to national and subnational development, and housing policies improved in terms of governance, planning and finance. Then the 2008 economic crisis started shifting this promising scenario. The current economic slump in the region, associated with the new wave of conservative regimes, requires our attention to how housing and urban policies will be implemented from now on.

The New Urban Agenda, signed in 2016, points to local governments as important agents in this regard, and they must be empowered. Housing policy must respond to extremely diverse situations (precarious housing in risky situations, consolidated neighbourhoods in need of urban and housing improvements, insufficient supply of housing units and demand for affordable rental housing). Local governments are privileged actors, able to formulate policies adapted to local housing needs, but they need autonomy to determine the best actions in each case and develop integrated and complex solutions. However, housing policy in LA remains very centralized at the national level – few countries have delegated this to subnational governments, and even those cities with this responsibility remain essentially dependent on financial transfers from national governments.

To take best advantage of local government knowledge, it is crucial to have political, financial and administrative decentralization. This also tends to foster more participatory societies, since local governments have greater capacity to consult with the population, promoting greater transparency and involvement.

Another important factor is the integration of housing and urban policies. Despite some successful cases, LA local governments have generally failed to promote this integration – they remain focused on reducing quantitative housing shortages and diminishing their impact, for instance in reducing social and economic inequalities and environmental impacts. This oversight costs citizens a great deal. Housing policies conceived at the national level and implemented as social programmes benefitting individual households cannot ensure that these households have access to the services they need in their new homes. Fortunately, where decentralization occurs, positive housing policy experiences encompass, with support from higher levels, the institutional development of local governments; the creation of spaces for the exchange of experiences among local governments; and civil society participation in policy and programme design and implementation. In countries where informal settlements are widespread, positive experiences include greater investment in improving local capacity, strengthening of technical teams, boosting of the available work infrastructure, and promotion of more complex programmes.

There is a diversity of urban, metropolitan and regional development plans in LA, as well as some local housing plans. Some of these plans expand public policies and urban planning tools, and promote integrated solutions for housing needs, especially in larger cities, given their greater capacities. The integration between urban and housing planning systems is also happening mainly in the largest local administrations, including strategies for funding and for reserving land for social housing development. However, these systems generally are not integrated, and where they are, this does not always promote spatial justice. Nor does the existence of plans guarantee their implementation, so social control through permanent participation of the population is crucial.

Funding remains a major obstacle to local success. These policies are expensive and most LA subnational governments depend on national government transfers. Despite these limitations, local governments have been creative in promoting housing policies and programmes, especially those in economically dynamic regions. Some have developed both financial strategies to guarantee income to finance their housing programmes and financial instruments (credit and subsidy) to ensure that low-income families can have their right to housing guaranteed. There is good potential, already applied in some larger cities especially, for using urban planning tools to finance housing policies with non-tax resources, expanding the range of financial alternatives available to local governments, and guaranteeing credit and subsidies to low-income families, all of which can serve as a reference for smaller cities. LA local governments, in general, could go further, introducing progressive taxation policies, as well as capturing land values.

Considering the variety of housing needs, the more diverse policies are, the more efficiently they work. The experiences assembled here demonstrate that, while the region offers multiple housing policies, most solutions are in fact not that diverse, focusing mainly on land availability, production of housing units, and encouragement of lending for homeownership. Generally, units are produced by private companies with federal support, but private-sector solutions do not work for everybody. The region has a wide range of strategies and planning tools and policies and very creative local administrators. These experiences could be better fostered with effective decentralization of power, governance, planning and financing, so LA local governments could progress even further in guaranteeing their citizens access to adequate housing and the right to the city.