On the proposed ‘Bikini Bottom’ down South

With the approval of the 2017 national budget of PHP3.35T of which PHP2.5B is allotted for tourism, the country’s thirteen regions can now start implementing their tourism plans. But especially this year having declared 2017 as the Year of Sustainable Tourism for Development the UN reminds nations that it’s not just tourism. This test for sustainability came early to our shores, in Coron Palawan last year’s ‘Best Island in the World’ according to Travel+Leisure where a Nickeldeon theme park has been proposed. An environmentalist group claiming the proposed park will involve underwater development mounted a social media campaign against it.

Without additional information than what’s reported online, I cannot say whether or not the group has it right. However, their campaign against the development highlights two things that are also faced by the rest of the country which compel vigilant groups to react thus.

First: the more legitimate group of people to voice what, why, where, and how development should happen be it in their barangay, municipality, city, province, or region are the insiders or residents (voters and taxpayers in the area, technically). That’s not happening though. Yes, locals talk among themselves when development activities negatively affect them but such do not reach the camps of decisionmakers. Are they scared? Maybe. Cynical? Perhaps. Regardless of reason, local people have effectively surrendered their collective right to development, viz.

Recognizing that development is a comprehensive economic, social, cultural and political process, which aims at the constant improvement of the well-being of the entire population and of all individuals on the basis of their active, free and meaningful participation in development and in the fair distribution of benefits resulting therefrom,

Recalling also the right of peoples to exercise, subject to the relevant provisions of both International Covenants on Human Rights, full and complete sovereignty over all their natural wealth and resources,

Recognizing that the human person is the central subject of the development process and that development policy should therefore make the human being the main participant and beneficiary of development,

Proclaims the following Declaration on the Right to Development:

1.   The human person is the central subject of development and should be the active participant and beneficiary of the right to development.   

2.   All human beings have a responsibility for development, individually and collectively, taking into account the need for full respect for their human rights and fundamental freedoms as well as their duties to the community, which alone can ensure the free and complete fulfilment of the human being, and they should therefore promote and protect an appropriate political, social and economic order for development.

Abdication from the inside has given rise for outsiders, be it civil society groups and organizations, media, academia, and such like, to step in and determine “in behalf” of locals what is best for them. This is not to say that outsiders have no business doing so, but rather if and when outsiders must go in they are duty-bound to ensure informed and meaningful participation of local people. At the end of the day, the decision of local people should be respected. In committing to this process, not only are outsiders protecting local people’s right to development but also set the stage for greater awareness, knowledge, and capacity for self determination.

In the cited Palawan development case, the voice of locals are absent in the campaign and media reports. What do they know? What do they say? Theirs is the most important.

Second: We can get too focused on the immediate negative costs of the project that we forget we’re living in an age of technological advancement in architectural and engineering design, methods, materials, and tools hence lose what could otherwise be greater benefits of the project. Don’t Filipinos make regular pilgrimages to Disneyland in HongKong, Gardens by the Bay in Singapore, or Palm Island in Dubai? Weren’t these places developed at the scale that it’s disapproved here? The latter two are on reclaimed land.

Development is the future. We cannot live in huts forever. Sooner or later, a tide of such great height will come and wash it away. Nor live off bananas and coconuts straight from the trees everyday. The more intelligent way forward therefore is to pay more attention to developers’ plans to mitigate unsustainable effects and impacts of their projects, and if such are absent or mitigation measures inadequate it is the place of local people to say so.

This is done through the standard development process known as Environment Impact Assessment (EIA) System, or what’s referred to in the Philippines as the Philippine EIS System (PEISS). This is not only just an SOP in development planning, but in this country a legal requirement under Presidential Decree 1586 passed in 1978 subsequently enhanced in 1981 through Proclamation 2146.

Coron is an Environmentally Critical Area (ECA) hence under PD 2146 development projects sited there shall comply with the PEISS. The figure below illustrates the EIA processes corresponding with the phases in the project development cycle:

Here in more detail are the different stages in EIA. Public input are required during (1) EIA study scoping, (2) EIA study/report, (3) review and evaluation of EIA, and (4) environmental monitoring and evaluation or audit.

At the time former President Marcos signed off on PDs 1586 and 2146 the country was under a centralized government system which explains identification of the Ministry of Human Settlements as lead agency of the PEISS. The National Environmental Protection Council (DENR now) served as Secretariat. In 1991 during Corazon Aquino’s administration LGUs were given authority over devolved activities of national government. DENR took over the PEISS mandate and in more recent years specifically through DENR MC 2007-08 clarified the LGUs’ involvement in the Process .

In reality, however, the PEISS has been largely flouted. The concrete result of this we see on the landscape. Therefore I do understand the immediate negative reactions to the Coron development. To be blunt, nothing brings out the “dirt” in development than this side of the planning process ie. permits and approvals from planning boards, zoning authorities, conservation and/or historical commissions, and environmental authorities. It’s good training ground for fresh out of university urban planners though.

How do you face an angry mob of locals? You don’t. There’s a roundabout way to deal with that. It’s called the impact fee and it’s legal. Here and abroad. The LGU planning officer (or other assigned personnel) negotiates with the developer for the best monetary deal in the name of mitigation measures. The fee could amount to anything as name your price. What these impact fees are actually spent on- locals don’t usually hear about it either. It could be a handful of trees for all the community know. Regardless, and from all angles, the developer walks away the winner in these deals. They could pass on the impact fee amount to buyers.

When an LGU has been paid the impact fee and there’s no improvement seen or felt in the locality… this is when the importance of organization hits community residents. They need to have legal entity with legal rights to acquire funding and therefore employ professional expertise, lobbying power. I have yet to see in the country a community-based group organized around property or development rights and sustainable development.

How do I conclude? Real estate development can be quite a jungle but it’s not to say development projects per se are bad. This country is being groomed and marketed as a “more fun” tourist destination and to deliver on that promise we need to upgrade services and infrastructures in order to compete with other destinations worldwide. What makes development bad is when locals are deliberately left out of the process and gain nothing or little from development projects.

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Rizal and Equitable Development Part II

The furor over Torre de Manila getting in the view of a national and cultural interest also highlights the issue of growth control, or in local governance parlance , land use planning, and the actual implementation of land use plans. Relative to devolved DENR processes, environmental impact assessments of development projects as well and utilization of development fees in the mitigation of project impacts.  With the ongoing Senate investigation on Vice President Jejomar Binay and his project the Makati City Hall 2, the issue of where money from real estate developers went as alleged by former Vice Mayor Mercado is now widely known.

Local Government Units (LGUs) are mandated via Executive Order 72 series 1993 to prepare 10-year Comprehensive Land Use Plans (CLUPs) and the accompanying Zoning Ordinances which are ultimately approved by the Housing and Land Use Regulatory Board (HLURB).

CLUP preparation process, via HLURB Guidebook

But, years after 1993, 87% of LGUs are operating with approved CLUPs. Of the total 1,610 LGUs, close to half are still preparing or updating their plans. One wonders: what do these LGUs base their decisions on as to land use and development?  What do local Zoning Boards base their decisions on as for instance whether or not to upzone or restrict zoning?  What does the national government base it’s decision on as to the release of IRAs and how are rate performances including LGU competitiveness rating measured when these crucial and basic local plans are lacking?

Rizal and equitable development

Another building that continues to draw flak is Torre de Manila, a residential condominium project of DMCI Homes. As of August 20, construction is 22.83% underway. When it’s done, the high rise, per artist rendition, will appear as that in the image below, seen from Rizal Park.

via manilacitynews

That’s how the petition on change.org to stop construction started. Accordingly, the building “ruins the sanctity of the Rizal sightline” and “jeopardises the surrounding community with (it’s) zoning violations”. Torre de Manila and Makati City Hall 2 are both being questioned on grounds of quality. The latter, in terms of quality of the building itself (whether or not it’s world class (presented within allegation of plunder)). As for the first, quality in relation to the surrounding community. According to DMCI Homes, Torre de Manila

is an exclusive residential community right in the heart of the city (where) work and worship, wisdom and health – life’s essentials within minutes of your home.

Petitioners are contesting this community’s exclusivity which they perceive as alienating others i.e. communities outside of Torre de Manila’s gates. From this emerges issues on gentrification, and most especially the extent to which national goal of equitable development, in rural or urban, continues to be attained. There’s the 2009-2016 National Urban Development and Housing Framework (NUDHF) and related policies at the national, but it is Local Government Units who play a key and lead role (via e.g. urban planning and management) in operationalizing equitable development on the ground, considering such issues as who do we plan, design, and build for? who decides? who’s left out? what can we do to mitigate negative effects of development?

These for me hold greater weight than the first justification which is, the ruination of Rizal’s sightline. Rizal, I imagine, would instead be more concerned about the state of the Filipino Nation now. Has the Nation changed for the better, by leaps and bounds, since after he died for it? And yes, he’d be concerned about the building behind him and not because it’s blocking people’s view of his rear.

What to do now with Torre de Manila? For a start, resolution of the issue is not the primary responsibility of the Senate. It’s the Local Government Unit’s. The fact that the petition came only after the permits were issued to the developer and when construction is already nderway indicates that the planning process did not include members or residents of the community. Urban planners in local governments would counter that community participation prolong the planning process as they have to contend with several and differing interests. But that’s precisely their job and why they studied urban planning. It’s their job to study how to streamline the process without sacrificing quality, to keep themselves up to date with best practices and new knowledge and approaches, to experiment and make refinements, to strive to stay true to their profession.

I once overheard a graduate student saying that she took up environmental planning because there was money in signing on subdivision plans! A rational decision, economists say, but for the sake of the country and it’s future, I hope this is not all that drives Filipino urban planners in government.

But, back to the issue, Manila City Hall is obligated to respond to the petition and lead in it’s resolution. To the petitioners, their petition may have legal implications – which is often the case involving huge development projects that didn’t go through the process – which they haven’t explored yet. This means in order to seek a satisfactory resolution their petition may have to go beyond change.org into the real world boardroom or courtroom.

The transactional business model and corruption

This article on The Urbanophile reminds me of the question nature or nurture? asked of a child who “suddenly” commits a violent act. Thoughts on corruption follows a similar line of thought. One explanation centers on local economics as the author makes a case for how globalization changes the composition of business firms the effect being a reorientation of doing business which in turn opens the system to corrupt practices.

With banking and utility deregulation, we saw large numbers of hometown banks merged out of existence. Industry after industry has been subjected to national or international level roll-ups as changes in the economy and regulatory environment gave increasing returns to scale.

Why is it that “real estate interests” dominate in a local economy like Cleveland? Because, to a great extent, they are among the only ones left. Consider the local industries that have not been as subject to roll-ups. Principal among these are real estate development, construction, and law (though we are starting to see rollups in these industries too).

Where then is the source of transactions these firms can turn to in order to sustain their business? The public sector, of course.

I would hypothesize that many local transactionally oriented services companies have seen the public sector take on a greater share of billings than in the past. With the old school bankers and industrialists mostly out of the picture, the leadership in our communities consists increasingly of the political class and a business community dominated by transactional interests.

When you look at the composition of this group, it should come as no surprise that the publicly subsidized real estate development is the preferred civic strategy. Politicians get to cut ribbons. Cranes always look good on the skyline. Local architects, engineers, developers, and construction companies love it. And there is plenty of legal work to go around.

This is not to say these people are necessarily acting nefariously. And nor were old school bankers and industrialists always acting purely altruistically. But there’s a very different world view between people steeped in operational businesses and those in transactionally oriented one.

– Aaron M. Renn, The City As a Decline Machine, or How the Loss of Hometown Banks Paved the Way For Corruption

What’s happening in Cleveland is happening in Philippine cities here, the difference being that the impacts and effects of transactional interests cut deeper here given that the physical and socio-political environment in which these occur is third world-ish.  Disregard of people and their say in what affects them is observable from all fronts, even in business.

On the highest and best use of land

The Food and Agriculture Organization (FAO) says land is used in the best way when it fulfils three goals:
1. Efficiency, or use of land in such a way that it yields the greatest benefit at the least cost of inputs or improvements.
2. Equity and Acceptability, or that the land use is socially acceptable and does not create or widen disparities.
3. Sustainability, or use of land that meets present needs at the same time conserving resources for the future.

In reality however the goals conflict with one another hence the trade-offs as when equity is sacrificed in the pursuit of efficiency.

The highest use of land, according to the real estate development sector which leads in land valuation, implicates ‘value’ therefore ‘highest use’ is the greatest value that can be derived from a land use. ‘Value’ involves the dynamics of cost, price, and utility but, in the final analysis, the value of land is its economic or ground, rent capitalized. (Ground rent is computed as the total amount of the gross rent derived from the land and any building upon it less actual expenses, charges and taxes, less interest on the cost of any improvement, and less a sufficient amount for depreciation.)

The highest ground rents and consequently the greatest land values are where the most lucrative businesses are located:
1. Land in financial centers (usually in the CBDs).
2. Land in high class retail sections (e.g. 6740 in Makati City).
3. Land in high class residential sections (e.g. South Drive in Baguio City).
4. Land used for hotels, better residential apartments and office buildings outside the financial district.
5. Land in wholesale business districts, next to the retail district.
6. Land useful for ordinary tenement purposes.
7. Land for suburban or detached residences.
8. Land for factory purposes.
9. Farm lands.
10.Timber lands.
11.Grazing land.
12.Waste land.

Factors that have bearing on land values are:
1. Easements.
2. Restrictions (e.g. deeds).
3. Zoning regulations. Under-zoning with a high or increasing level of demand will result in semi-monopolistic conditions of supply. Over-zoning in a district is likely to result in a lowering of the unit or parcel price of land in that district.
4. Transit (availability of transportation, time it takes to reach a desired location, convenience, and cost of transportation).
5. Trend of population and business toward a locality.
6. Pedestrian count (i.e. probability of passers-by in a given location to make purchases in shops there, using the Law of Probabilities or Law of Averages which contends that a fairly constant percentage of the people passing a given store will enter and make purchases) has bearing on rent charged on property.
7. Community growth (trend of a city’s development leads to anticipation of lands for future use hence speculation over the resource and to its sale at a price in excess of actual value).
8. Neighbourhood influences (crime and nuisances detract from values).
9. Block and street plan (provision for private areas, proper direction for flow of traffic, front footage, accessibility of loading and unloading, and parking hike up land value).
10. Depth of lot (real estate theory supposes that the portion of a lot nearest the street is the most valuable and so when the lot is shortened value is taken away from it. E.g. a lot 20 by 80 ft. containing 1600 sq. ft. is said to be usually worth more than 80% of value of a lot 20 by 100 ft. containing 2,000 sq. ft. But, if proper improvement for the shortened lot would be shops or stores it might be almost as valuable as a full depth residential lot).
11. Width and shape of lot (valuation of different widths and shapes of lots typically follow either the Hoffman-Neils rule: the typical lot is divided into strips of 5 ft. wide across the lot and values arbitrarily assigned to each, taken for granted that all parts of those strips are of equal value throughout; Or, the Davies rule: value is ascribed to each foot in the lot, makes allowance for added worth of land behind a line 100 ft. from street).
12. Condition of lot (standard lot values usually mean values of the lots of standard size at grade i.e. on a level with the grade of the street. Land above grade detracts value as there will be some expense in removing surplus soil. Same applies to land much below grade or having a muddy bottom as it requires filling).
13. Corners and corner influence (corner lots usually are 50% of inside lot value; corner influences, or proximity to the corner lot usually are 10% of inside lot value).
14. Key lots (or, lot that is desirable or necessary for proper utilization of adjoining land such as development of a block of business property. Total value of key lots is computed as the normal value or stand-alone value plus the additional value added due to its key position).
15. Plottage and assemblage (assemblage refers to the gathering together of two or more adjoining lots to which added value may be ascribed because a building of greater size capable of producing a larger net rental may be erected on the larger plot. The added value resulting from assemblage is usually considered to be 10% of the total value of the separate lots.).
16. Management (when two pieces of property are almost identical but show substantially different earnings the difference is in management. Good management will increase the net income of a piece of property, poor management will lower it.).

Similar to the dichotomy in the ‘best use’ of land, a given piece of property at a given time will have different values to persons with different interests. For instance, a property owner has a different value set from the mortgagee and tenants and vice-versa.

In the Philippines, I take it that the goal in the current Philippine Development Plan which is ‘inclusive growth’ is also the goal which land use planning (in terms of highest and best use) in the localities aims for. Other important and complementary national goals such as urban competitiveness and smart growth (as contained in the NUDHF) are I surmise also used as land use planning frameworks. In reality though there can’t be a perfect match among these development goals and objectives. This drives home the concern raised in the argument for highest and best use – whose valuation of the land has the upper hand? Supposedly, the conflict should be resolved when there is inclusive participation or a good representation of the affected community taking part in the planning and valuation process. Otherwise, contestation from those marginalized in the process should be expected, which I believe is often the case in the country.

An example of the conflict in terms of the highest use but not necessarily best use of land is real estate development in Bonifacio Global City.

1. The strip of land to be developed, One Bonifacio High Street, is prime land (since it’s in a growing financial center, in a high class retail center, in a high class residential area, and where the starred hotels, better residential apartments, and office buildings outside of the Makati financial district are located).
2. Land value in the area ranges from PhP154,500 to PhP225,145 per square meter in the first quarter of this year and speculated to rise by 17% within the year.
3. The land will be developed into a mixed-use block of office, commercial and residential use which will cost the developers PhP30 billion spread over four years.

From a business or market economics perspective, the land use is the highest use since it will realize the highest investment returns in terms of ground rent.

But in the face of the problem of access to land and quality housing by the urban poor population the decision and investment on that land raises questions concerning equity and acceptability and sustainability: How does one make justifications for the PhP30 billion investment which will benefit already wealthy corporations and families in contrast to measly investment for urban poor communities who are in real need of such investment? How come we nurture the attitude that socialized housing should not be on prime land but instead on former garbage dumpsites and waste lands? Will ownership of prime land and good housing environment which the wealthy take for granted remain removed and an impossible dream for the (urban) poor? Whose future are being secured with that investment?.

In the Philippines, when we say socialized housing it is usually about rows and rows of box-type houses rr, floors of narrow spaces without maintenance (if it’s a flat-type)in a physically-suffocating space on reclaimed (either garbage dumpsites or waste lands) or unproductive lands (which have been degraded in other ways) in the outskirts (where access to transportation, work sites, etc. is expensive to maintain on a daily basis (which is also why the poor end up selling the house) or deteriorating inner sites. Put a wealthy family in one of this and I’m sure they won’t last the morning – what more if it’s a lifetime, day after day for 50 years or so in that environment? Yet, both the wealthy and the poor families are comprised of human beings. Human beings. Why can’t everyone (whether poor or not) be integrated into prime areas as a community? The answer calls for an honest soul searching – why this discriminatory attitude – and until then this country can’t hope to close the gap of inequality. To institute or carry on rules which favor certain human beings (the wealthy) the best of the country’s spaces and others (the poor) the dank places one witnesses the imposition of (feelings and belief of) superiority of one human being against the other.

Further, in the context of the community, how does the investment and particular use of that land contribute to urban competitiveness – by consistently concentrating large investments in prime areas doesn’t it actually contribute to widen inequality within that space and relative to undeveloped spaces outside of it? Doesn’t it contribute to maintain social distance i.e. the invisible demarcation lines and boundaries which segregate spaces for the wealthy and spaces for the poor? What is keeping us from mainstreaming the poor (socialized housing) into non-poor areas?; to smart growth – by concentrating smart growth in affluent areas doesn’t it actually allow for chaotic growth to happen in neighboring areas?; to inclusive growth – how are the gains from that land use trickle down to benefit Philippine society?

I think that when liabilities impacting on society (e.g. in this case widening inequality by leaps and bounds) far outweigh productivity gains for a few, that is the signal that land is not being used in the best and highest way; at the same time that it is the signal for the State to step in with its facilitative and regulatory function.