San José, Costa Rica, since 1956

Gov’t Reveals Plan to Reduce Shantytowns

Throughout Costa Rica, an estimated 40,000 families live in more than 400 shantytowns, or tugurios, defined as groupings of approximately five families or more where housing conditions do not meet basic health requirements.

If President Oscar Arias has his way, his administration will halve that number by the time he leaves office in 2010, or perhaps make an even bigger dent if the Legislative Assembly approves his proposed tax on luxury homes. Last week, Fernando Zumbado, Minister of Housing and the Fight against Poverty, presented the administration’s plan for building new housing for shantytown residents and moving families into their own, well-built homes with a minimum of upheaval.

Thanks to a change to the way the country finances housing, approved recently by the Legislative Assembly, the Housing Mortgage Bank (BAHNVI) can now devote 40% of its Housing Subsidies Fund (FOSUVI) to eliminating shantytowns, an increase from 20% before the change. This means at least ¢10-11 billion per year (approximately $20-$22 million) will now be spent on everything necessary to get poor families out of shantytowns – from buying and distributing plots of land, to building homes, to repairs and improvements.

“Socially, we have a time bomb (on our hands) if we don’t act,” Zumbado said during a press conference June 27 at BAHNVI in eastern San José. Since half of people below the poverty line in greater San José live in shantytowns, improving living conditions for shantytown residents is a crucial step toward “breaking the vicious cycle of poverty,” according to the minister.

The ministry has already selected 2,655 families at shantytowns throughout the country, from Alajuelita in southern San José to Heredia, north of the capital, to the Caribbean-slope town of Sarapiquí, to include in a pilot program to test the new approach. During the next month, the nonprofit Costa Rica-Canada Foundation, charged with choosing the private developers to take on the housing projects, will open a public bidding process, Zumbado said. According to vice-minister Jorge Sánchez, this approach is “innovative.”

Zumbado said the foundation’s technical experience in social projects, particularly in shantytowns, will help ensure the pilot program is successful, and that placing the contract process in the hands of the private sector helps avoid some of the bureaucracy involved in public-sector contract processes.

BAHNVI Director Ennio Rodríguez said that unlike some previous efforts to build housing for low-income families, when developers chose when and where to build, the Costa Rica-Canada Foundation will be under the supervision of the state bank and governed by regulations now being finalized by the Housing Ministry. Sánchez explained the regulations include how the ministry will identify eligible families; the “rules of the game” for the bank, the foundation and private developers; how construction quality will be evaluated during and after building; and long-term instruments to measure the social impact of the plan.

When the increase in funds to eliminate shantytowns was under debate in the Legislative Assembly, some legislators said additional controls were needed to ensure the quality of construction or selection of beneficiaries.

At the time, Zumbado promised the Housing Ministry regulations to accompany the law would fill the gap (TT, June 9).

He acknowledged last week that the ministry’s effort to give families ownership of their homes may involve some legal wrangles, since many tugurios are also precarios, formed when people settle on land that does not belong to them. For that reason, the families in the pilot program live on land belonging to the government’s National Institute for Housing and Urban Development (INVU).

Arias, who made the fight against poverty a major element of his recent campaign, also focused on housing during his first term (1986-1990). He created the Housing Mortgage Bank and built approximately 80,000 homes for the poor.

Last month, he proposed increasing funds for eliminating shantytowns still further through a tax on luxury homes (TT, June 9). However, Zumbado clarified last week that the tax is still under consideration within the Finance Ministry, which is preparing to submit its tax reform bills to the Legislative Assembly.


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