Mexico - Low-income Housing Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 5473c-ME STAFF APPRAISAL REPORT MEXICO LOW-INCOME HOUSING PROJECT July 18, 1985 Urban Projects Division Latin America and the Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY UNIT: PESO (Mex$) D&ILY MINIMUM WAGE MONTHLY MW Exchange Rates for I US$ National Average US$ EQUIVALENT 1980, December = Mex$ 23 Mex$ 136.6 : US$ 181 1981, June = Mex$ 24 Mex$ 178.9 : US$ 227 1981, December = Mex$ 26 Mex$ 178.9 : US$ 209 1982, June = Mex$ 48 Mex$ 239.6 : US$ 152 1982, December = Mex$ 96 Mex$ 311.5 : US$ 99 1983, June = Hex$ 120 Mex$ 388.0 : US$ 98 1983, December = MexS 144 Mex$ 448.0 : US$ 95 1984, June = MexS 167 Mex$ 593.0 : USS 108 1984, December = Mex$ 192 Mex$ 712.0 : US$ 113 1985, January = Nex$ 198 Mex$ 927.0 : US$ 142 Fiscal Year: January 1 to December 31 ACRONYMS BANOBRAS : National Bank of Public Works and Services BANXICO : Bank of Mexico CFE : Federal Electricity Commission CIHAC : Center for Housing and Construction Promotion CNIC : National Chamber of the Construction Industry CNSM : National Commission for Minimum Wages CODEUR : Urban Development Commission of the Federal District COPLAMAR : Coordination of the Program for Depressed Zones and Marginal Groups (now PRAZOMAR) COVI : Interministerial Commission for Housing CPP : Average Cost of Funds (Costo Porcentual Promedio de Captacion) DGCPV/SEDUE : General Directorate for Housing Coordination and Programming FICCOIA : Trust Fund for the Workers of the Sugarcane Industry FIDELAC : Trust Fund for Development of Lazaro Cardenas State FONHAPO : Low Income Housing Fund (BANOBRAS) FOVI-FOGA : Fund for Housing Operations and Bank Discounting (BANXICO) FOVIMI/ISSFAK: Social Security Institute of the Mexican Armed Forces FOVISSSTE : Housing Fund for State Service Workers INCEVIS : National Index of Building Costs for Social Interest Housing INDECO : National Institute for Housing and Community Development INFONAVIT : Institute of the National Housing Fund for the Workers INPC (CPI) : National Consumer Price Index (BANXICO) MW : Minimum Wage, housing costs often expressed in Multiples of the Minimum Wage (VSM): PEMEX : Mexico Petroleum Agency PEZUC Employment Program in Critical Urban Zones PFV Housing Finance Program (Programa Financiero de Vivienda) PIDER Integrated Program for Rural Development PIRE : Immediate Program for Economic Reorganization PMP : Medium Term Program for Urban Development and Housing PNDV : 1983-1988 National Housing Development Program PNV : 1978-1982 National Housing Program (Programa Nacional de Vivienda) SAHOP : Secretariat of Human Settlements and Public Works (now SEDUE) SEDUE : Secretariat of Urban Development and Housing (for SAHOP) SHCP : Secretariat of Finance and Public Credit SPP : Secretariat of Programming and Budgeting VAIM : Minimum Cost Units in FOVI-FOGA program up to 1983 VIS A,B : Social Interest Housing (Vivienda de Interes Social) (FOVI) FOR OFFICIAL USE ONLY MEXICO LOW-INCOME HOUSING PROJECT Staff Appraisal Report Table of Contents Page No. LOAN AND PROJECT SUMMARY v I. THE SECTOR . . . . . . . . . * . . . . . . . . . . . . 1 A. Main Features of Demand and Supply: 1.01 Size and Characteristics; 1.02 Unregulated Housing Supply; 1.04 Regulated Housing Supply; 1.05 Dimensions of Supply; 1.06 Supply Distortions; 1.07 The 1982 Crisis and Beyond. B. The Medium-Term Housing Plan: 1.08 Main Features; 1.09 Proposed Role of Regulated Housing Agencies; 1.10 Quantitative Aspects. C. Main Issues of the Sector: 1.12 Public vs. Private Sector Role; 1.13 The Fragmentation of Government Initiatives; 1.14 Low Rates of Capital Recovery; 1.18 The Distribution of Housing Subsidies; D. Bank Strategy: 1.26 Rationale for Bank Involvement; E. Bank Experience with Past Lending in the Sector. F. Sector Work and EDI Seminar. II. BORROWER, TRUST FUND, SUB-BORROWERS AND FINAL BENEFICIARIES. . 10 2.01 The Borrower (BANOBRAS); 2.03 The Trust Fund (FONHAPO): Brief History; 2.05 Organization; 2.07 Performance to Date; 2.09 Growth Management; 2.10 Possible Improvements; 2.11 The Sub-Borrowers; 2.12 The Final Beneficiaries. III. THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . 15 3.01 Background; 3.05 Project Objectives; 3.06 Project Description; 3.07 Project Costs; 3.08 Bank Participation; 3.10 Criteria for Sub-project Selection; 3.11 Commitment of Bank Funds; 3.13 Procurement; 3.16 Loan Disbursement; 3.17 Supervision and Monitoring; 3.18 Accounting and Auditing. This report is based on the findings of an appraisal mission to Mexico in August, 1984. The mission was led by Gian Carlo Guarda and included Antonio Zuniga (Engineer) and Grace Yabrudy (Research Assistant) of LCPUR and two consultants, Peter Doty (Financial Analyst) and Paulo Vieira da Cunha (Economist). Bertrand Renaud (WUDOR) and Suzana Augusto (Loan Officer) also participated in the mission. Mr. Koichi Mera and Mr. David Jones (WUD Advisors) provided valuable assistance on the economic and financial aspects of the appraisal. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World ank authorization. IV. IMPLEMENTATION ASPECTS . . . . . . . . . . . . . . . . . . . . 21 4.01 General; 4.02 Planning and Budgeting; 4.03 Promotion; 4.04 Design Standards and Building Codes; 4.05 Progressive Construction and Self-Help Activities; 4.07 Works Supervision; 4.08 Implementation Periods; 4.09 Advance Disbursement and Guarantees; 4.11 Works Completion and Final Disbursement; 4.12 Allocation to Final Beneficiaries; 4.13 Collection of Payments; 4.14 Monitoring and Evaluation. V. FINANCIAL ASPECTS . . . . . . . . . . . . . . . . . . . . . . . 25 5.01 FONHAPO's Old Portfolio: Original Assets; 5.02 Land Properties; 5.03 The Original Mortgage Portfolio; 5.04 Relevance to Future Operations; 5.05 The New Lending Programs and Government Support; 5.08 FONHAPO's Capital Recovery: Main Features; 5.11 Expected Cost Recovery; 5.12 Future Inflation Assumptions; 5.13 Sensitivity to Inflation; 5.16 Other Sensitivity Tests; 5.19 Financial Prospects of FONHAPO; 5.22 FONHAPO's Total Program; 5.25 The Bank Financed Project; and 5.26 Financial Rates of Return. VI. ECONOMIC ASPECTS . . . . . . . . . . . . . . . . . . . . . . 33 6.01 General; 6.03 Costs and Benefits: Market Value after Access to in FONHAPO's Projects; 6.05 Alternative Measurement of Benefits: Rents Paid Before Access to the Project. VII. PROJECT RISKS . . . . . . . . . . . . . . . . . . . . . . . . . 37 7.01 General; 7.02 Growth Capacity of FONHAPO; 7.04 Land Sites Availability; 7.06 Possible Policy Changes; 7.10 Inflation and Minimum Wages; 7.11 Other Risks; VIII. ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . 40 TEXT TABLES Table 01: Estimated Costs . . . . . . . . . . . . . . . . . . . . . . vi Table 1: Past and future Role of Formal Housing Supply Agents . . . . 4 Table 2: Loan Disbursement Schedule . . . . . . . . . . . . . . . . . 20 Table 3: Average Sub-project Implementation Schedules . . . . . . . . 23 Table 4: Summary of FONHAPO's Credit Conditions . . . . . . . . . . . 28 Table 5: Nominal and Effective Interest Rates . . . . . . . . . . . . 29 Table 6: Capital Recovery Ratios on FONHAPO's Sub-loans . . . . . . . 30 Table 7: ERRs based on Investment Costs and Market Value . . . . . . 35 Table 8: ERRs based on Investment Costs and Imputed Rental Value. . . 36 -ii- SUPPORTING ANNEXES, CHARTS AND TABLES CHAPTER II ANNEX: FONHAPO's NEW OPERATIONAL STRUCTURE . . . . . . . . 43 1. Statutory Objectives; 2. Sources of Financing; 3. Rules of Operation; 4. Terms and Conditions for FONHAPO Credits. Chart II-1: Organigram of FONHAPO . . . . . e . . . * . . . . . . . 42 CHAPTER IV ANNEX: TECHNICAL NOTES . . . . . . . . . . . . . . . . . . 47 1. Preparatiou of Sub-projects; 2. Extension Services; 3. Technical Aspects: Land Availability; 4. Lot Sizes and Land Use; 5. Infrastructure Standards; 6. Shelter Standards. Chart IV-1: Planning - Promotion - Application - Agreement . . . . . . 51 Chart IV-2: Disbursement - Allocation...... . . . . . . . . . . 52 Chart IV-3: Repayment - Evaluation. .......... . . . . . . . 53 Chart IV-4: Planning and Budgeting - Promotion . . . . . . . . . . . . 54 Chart IV-5: Sub-loan Application: Preparation - Approval - Signature. 55 Chart IV-6: Disbursement - Supervision - Completion Certificate. . . . 56 Chart IV-7: Allocation Process . . . . . . . ..... . .. . .. 57 Chart IV-8: Sub-loan Repayment - Monitoring and Evaluation . . . . . . 58 Chart IV-9: Revision of Sub-loan Agreement . . . . . . . . . . . . . . 59 CHAPTER V ANNEX A: DESCRIPTION OF THE COMPUTER MODEL USED . . . . . . 61 General; I. Amortization Module; I-a. Economic Variant of the Amortization Module; II. Program and Investment Module; III. Financial Statement Module CHAPTER V ANNEX B: PRINCIPAL ASSUMPTIONS UNDERLYING THE FINANCIAL. . . 66 PROJECTIONS Income Projections: 1. Loans Under the New Housing Program; 2. Interest Income and Expenses; 3. Construction Income; 4. Sales of Property. Expense Projections: 1. Personnel; 2. Repair Grant Buildings; 3. Administrative Expenses; 4. BANOBRAS Commissions; 5. Depreciation and Amortization; 6. Old Portfolio Losses. Chart V-1: Loan Repayment Diagram for Sites and Services Projects 73 Chart V-2: Loan Repayment Diagram for Progressive Construction Projects 75 Chart V-3: Twelve Month Running Percentual Changes of Key Indicators 77 Chart V-4: Capital Recovery Ratios. . . . . . . . . . . . . . . . . 83 Chart V-5: Project Impact on Total FONHAPO Program . . . . . . . . . 85 Table 5.1: Condensed Balance Sheets 1980-1984 . . . . . . . . . . . . 69 Table 5.2: Items Charged to Government - Summary of Government Grants 70 Table 5.3: Condensed Income Statements 1980-1984 . . . . . . . : . . 71 Table 5.4: Typical Amortization Table: Sites and Services Sub-loans . 72 Table 5.5: Typical Amortization Table: Progressive Construc.Sub-loans 74 Table 5.6: Mexico: Historical Trends of Key Indicators . . . . . . . 76 Table 5.7: Project Returns Analysis at Varying Speed of Infl. Decline 78 Table 5.8: Project Returns Analysis: Varying Levels of Start-Year Infl. 79 Table 5.9: Project Returns Analysis: 1) Different Start-Year Inflation (Scenario A-1); 2) Constant Inflation During Sub-loan Life. 80 Table 5.10: Project Returns Analysis: Capital Recovery Ratio with Inflation Declining . . . . . .... 81 -iii- Table 5.11: Project Returns Analysis: Capital Recovery Ratios with Various Starting Interest . . . . . . . . . . . . . . . . . 82 Table 5.12: Scenario A.1: Program Levelling at 100,000 Starts, Inflation Declining at -30% per annum . . . . . . . . . . 84 Table 5.13: Scenario A.2 - Program Levelling at 100,000 Starts, Inflation Declining at -15% per annum . . . . . . . . . . 86 Table 5.14: Scenario B: Program with Transfers Levelling at US$100 million per annum . . . . . . . . . . . . . . . . . . . . 87 Table 5.15: Program: Balance Sheet: Assets and Liabilities 88 Table 5.16: Program: Income Statements: Revenues and Expenditures. . 89 Table 5.17: Program: Sources and Applications of Funds. . . . . . . . 90 Table 5.18: Program: Government Grants and Annual Mortgage Portfolio. 91 Table 5.19: Program: Income Statements: Interest, Rents, Other and Costs 92 Table 5.20: Project: Investments in Current Mexican Pesos . . . . . . 93 Table 5.21: Project: Cash Flow in current Mexican pesos . . . . . . . 94 Table 5.22: Project: Cash Flow in 1984 US Dollars . . . . . . . . . . 95 Table 5.23: Project: Yearly Production of Units . . . . . . . . . . . 96 Table 5.24: Key Monitoring Indicators . . . . . . . . . . . . . . . . 97 CHAPTER VI ANNEX A: FINDINGS OF THE 1984 FONHAPO EVALUATION SAMPLE (FES) 99 1. Distributional Impact of the FONHAPO program; 11. The Household Budget: is FONHAPO's Solution Affordable? 15. Housing Conditions after the Credit. Chart VI-1: 1977 Household Survey: Income Distribution . . . . . . . . 98 Table 6.1: Income Distribution of EAP and Credit Recipients in FONHAPO's Evaluation Sample . . . . . . . . . . . . . . . . . . . . 100 Table 6.2: Credit Recipients by Class of Head of households Income: INFONAVIT and FONHAPO Evaluation Sample, 1984. . . . . . . 101 Table 6.3: Distribution Credit Recipients by Total Family Income - FONHAPO Evaluation Sample, 1984. . . . . . . . . . . . . . 102 Table 6.4: Summary Measures of Project Characteristics - FONHAPO Evaluation Sample - 1984 . . . . . . . . . . . . . . . . . 103 Table 6.5: Housing Stock Characteristics in the FONHAPO Evaluation Sample - Before Access to the Project . . . . . . 104 Table 6.6: Shares of Expenditures in Food and Housing in Total Family Income - FONHAPO Evaluation Sample . . . . . . . . . . . . 105 CHAPTER V- kNNEX B: NOTES ON THE MEASUREMENT OF BENEFITS AND COSTS . . 107 Table 6.7: Cash Flow for Cost Benefit Analysis. . . . . . . . . . . . 108 Table 6.8: Rental Payments in the FES Sample before Access to the Sub-projects . . . . . . . . . . . . . . . . . . . . . . . 110 CHAPTER VIII ANNEX: TERMS OF REFERENCE: MEXICO HOUSING FINANCE SECTOR 111 STUDY 1. Issues in the Housing Finance Sector of Mexico; 3. Objectives of the Study; 4. An Illustrative Outline; 5. Part I: Context; 6. Part II: Evaluation; 10. Part III: Recommendations. REFERENCE BOOKS AND DOCUMENTS . . . . . . . . . . . . . . . . . . . . . 116 -iv- MEXICO LOW INCOME HOUSING PROJECT LOAN AND PROJECT SUMMARY Borrower: Banco Nacional de Obras y Servicios Publicos, S.A. (BANOBRAS) Guarantor: United Mexican States Executing Fideicomiso Fondo Nacional de Habitaciones Populares (FONHAPO) Agency: Amount: US$150.0 million equivalent. Terms: 15 years, including 3 years of grace, at the standard variable interest rate. Relending Loan proceeds would be provided to FONHAPO by the Government Terms: as equity contributions. The proceeds would be relent by FONHAPO to states, municipalities, social and cooperative organizations and authorized banking institutions on terms and conditions which vary with the type of sub-borrower and the unit cost of sub-project facilities. Project (i) to increase the supply of public housing investment Objectives: provided to the poorest and largest segment of the housing market; (ii) to strengthen FONHAPO during a critical expansionary phase; and (iii) to support the Government in addressing sector issues. Project The project would finance sub-projects for the construction of Description: serviced sites and progressive construction units in rapidly growing medium size cities. FONHAPO would onlend funds to sub-borrowers who would implement sub-projects, participate in their financing, provide collateral guarantees and allocate constructed facilities to eligible beneficiaries (non wage workers earning less than 2.5 minimum wages) under appropriate mortgage arrangements. In addition, the project would provide technical assistance to FONHAPO required to support an increased lending program and to FONHAPO's sub-borrowers. Finally, the project would support the carrying out of a Housing Finance Study. The project would permit the settlement of about 142,300 families in serviced lots of which about 15,200 would include starter dwelling units. Project Risks: The main project risks are: (1) the possible reduction in FONHAPO's operational efficiency through its rapid growth; (2) the possible shortage of land sites of adequate quality, quantity and price; (3) possible discontinuity in the Government's housing sector policy; (4) eventual shortfalls or delays in beneficiaries repayments to sub-borrowers which would raise the level of implicit subsidy in the project. -v- Estimated Cost: Local Foreign Total US$ million --- I. Land Purchases 23.3 - 23.3 II. Civil Works Infrastructure 78.2 38.4 116.6 Buildings 28.5 11.1 39.6 III. Other Costs Professional Services 13.5 0.7 14.2 Technical Assistance 0.5 - 0.5 Project Administration 6.0 0.3 6.3 PROJECT BASE COST 150.0 50.5 200.5 Physical Contingencies 15.0 5.0 20.0 Price Contingencies 60.0 19.5 79.5 TOTAL PROJECT COST 1/ 225.0 75.0 300.0 Financing Plan: Local Foreign Total US$ million Government 40.0 - 40.0 FONHAPO 75.0 - 75.0 Sub-borrowers 35.0 - 35.0 Bank 75.0 75.0 150.0 TOTAL 225.0 75.0 300.0 Estimated Disbursements: --- ---- US$ millions ---- Bank FY 86 87 88 89 90 91 92 Annual 31.1 17.2 19.4 21.7 23.8 22.0 14.8 Cumulative 31.1 48.3 67.7 89.4 113.2 135.2 150.0 Economic Rate of Return: The economic rates of return are estimated at 20% for the sites and services component and 16% for the Progressive Construction component. 1/ Net of taxes -vi- MEXICO LOW-INCOME HOUSING PROJECT Staff Appraisal Report I. THE SECTOR A. Main Features of Demand and Supply 1.01 Size and Characteristics of Housing Demand: However measured, and there are problems of measurement, Mexico's housing deficit is large. Official estimates, drawn in year 1980, put it at 4.5 million units. The national housing problem is compounded by: (a) a large demograghic base (76 million) with a sustained rate of growth (2.9% per annum); (b) a rapid pace of urbanization (centers with more than 2,500 inhabitants grew at over 5% per year during the last decade, passing from 59% to 68% of total population); (c) the spatial polarization of a large share of housing demand (26.5% of Mexicans live in three main metropolitan areas); (d) the extreme dispersion of the rest (the country has 146 cities of intermediate size and 95,000 settlements with less than 2,500 inhabitants); and (e) the uneven financial capacity of the consumers (72% of the economically active population earns incomes of less than 3 minimum wages, which in present terms is the equivalent of US$425 per month. (Chart VI-1, p. 101). 1.02 Unregulated (Informal) Housing Supply: Like other developing countries, Mexico has a segmented structure of housing supply. Most additions to the stock are not of up-to-code "standard" units. During the past decade, as much as 65% of new housing was supplied either by consumers themselves or by informal builders operating at the margin of the building codes, the established construction industry and the regulated financial markets. At present, this percentage could be as low as 45%, due mostly to the intensification of public housing programs and the impact of the recession on private initiatives. 1.93 In the three main metropolitan areas (Mexico City, Guadalajara, Monterrey) as in many of the fast growing medium size cities, most of the new housing units are built on subdivisions opened up by clandestine and often unscrupulous developers on illegally occupied sites (generally on public property) with inadequate public services and, almost always, with infringements to planning ordinances and building codes. The lack of legal titles and inspection clearances prevents the buyers from using land and improvements as acceptable collateral for new loans and forces them to continue to operate on the unregulated credit market. And because it is unregulated and operates with higher risk, loan conditions in this segment of the market are disadvantageous to the borrowers. - 2 - 1.04 Regulated Housing Supply: The Government intervenes in the housing market through a large number of institutions, each with its own norms of operation and financial arrangements. Schematically, they can be grouped in three main categories: (a) financial agents, mainly nationalized commercial banks, regulated by the Bank of Mexico, which in addition to making mortgages at commercial terms, apply a mandatory reserve on their total liabilities (currently 8.8%) in form of "social interest" housing loans; these constitute the so called Programs Financiero de Vivienda or PFV, supported by a second-tier public agency (FOVI-FOGA) which finances and insures such loans. Although somewhat different in statute and controlled by the Secretariat of Urban Development and Ecology (SEDUE), the Fondo de Habitaciones Populares (FONHAPO) can also be included in this category, since it operates as a wholesale lender and is empowered to borrow funds from FOVI-FOGA and from the market; (b) the three payroll funds, financed through a 5% compulsory contribution on all wages and salaries paid by the orivate sector (INFONAVIT), the public bureaucracy (FOVISSSTE) and the military (FOVIMI-ISSFAM); and (c) the non-financial public housing agencies, supported by Federal or State treasury transfers, part of which come under the supervision of SEDUE, such as the State Housing Institutes or the Regional Development Funds, while others are autonomously managed as part of larger sector programs, such as the housing schemes for rural workers (PIDER), the employees of the petroleum industry (PEMEX) and the electricity corporation (CFE). The Federal District (DF) also has a housing scheme for its own employees. 1.05 Dimensions of Supply: Government sources have estimated that 11 million units should be built by the year 2000, to add to and partly to replace the 1980 housing stock of 12.2 million units. Although staggering, these figures are not alarming wheTn seen in light of past achievements. During the 1970's, housing output averaged about 393,000 units per year, with additions to the stock exceeding the rate of population growth. In an economy that grew at an extraordinarily fast pace, the construction industry grew at an even faster pace, averaging 12% annually over the expansionary cycle from 1978 to 1982. During the past sexenio (1977-1982) the regulated housing sector, supported by concessionary credit, contributed about 135,000 units per year reaching a peak of 263,100 units in 1982. The corresponding investment, measured in 1980 prices, was of USS10.7 billion. The payroll funds accounted for 63% of this investment total, the public agencies for 9% and the banking system financed the remaining 28%. Only about one fourth of housing loans made by the banks was onlent at commercial terms, to support the highly cyclical activities of private contractors operating almost exclusively for the upper segment of the market. Over the same period, unregulated housing production may have been on the order of 250,000 units per year. Of interest is the substantial reduction in the real cost of the average unit produced by the public sector during this period (-17%), which was achieved through changes in the structure of supply and the general adoption of less expensive design standards. In current dollars equivalent, the cost of the average unit dropped from USS8,950 in 1977 to US$7,350 in 1982. - 3 - 1.06 Supply Distortions: The recent expansion and favourable past performance did not, in themselves, resolve Mexico's housing problem. They may in fact have aggravated some of its aspects, mainly those related to efficiency and equity in the allocation of resources. First, most of the credit programs remained beyond the reach of the poorest and needy population. Second, improper lending terms caused a very low average rate of capital recovery (about 40% of real value over the period) and the transfer of some 100 billion pesos (about US$4.0 billion) to the consumers of public housing: a sum that at average 1980 costs would have financed 35% more units than those actually built during the sexenio.l/ Thirdly, the massive structure of the payroll funds, financed througbJdistortionary earmarked taxes, was characterized by inefficient and inequitable allocation criteria. 1.07 The 1982 Crisis and Beyond: 1982 was a turning point in the evolution of the Mexican construction industry. There was a sudden, severe drop in output and over half of the 1.9 million workers employed by the industry in 1981 were reportedly laid off. Though necessary and unpostponable, the current stabilization plan has had an enormous social cost. The GOM is sensitive to the limits to which the social system may be strained without unrest and disruption. In fact, it has implemented several measures to attempt to ward-off critical ruptures. Moreover and more importantly, the Government is aware of the need for speedy recovery in employment levels, once the basic macroeconomic balance has been restored. The present recession and the slower growth expected through the rest of the decade, as compared to the 1970's, heightens the importance of employment generation as a policy concern in the coming years. Because of its characteristics, the construction industry, and housing programs in particular, will have a central role in policies aimed at economic recovery with rapid employment growth. B. The Medium Term Housing Plan 1983-1988 1.08 Main Features: President de la Madrid's Administration has introduced a Medium Term Housing Plan for the 1983-1988 period (the PNDV or Programa Nacional para el Desarrollo de Vivienda) which: (a) establishes a new institutional framework for programming and monitoring public housing investment with the new 1ey Federal de Vivienda (February 1984), which should make more effective theTink between public spending and housing policy; (b) allocates extraordinary resources to the sector with the 1984 Programa Estrategico de Vivienda (US$760 million in addition to the USS1,940 million of the authorized budget); (c) reduces the role of the payroll funds, (down from 63% to 49% of planned regulated investment); (d) expands the role of the financial agents (from 28% to 44%) and improves substantially the rate of capital recovery in "social interest- housing credits by introducing (in March 1984) new financial rules for both the banking system and the FONHAPO programs; (e) stimulates private savings and private construction of medium income finished housing through the modified terms of FOVI-FOGA; 1/ The issues reviewed in this Chapter have been discussed at some length in the report: Public Housing Policy in Mexico, Urban Sector Report No. 4993-ME (Green Cover) p. 92, IBRD, June 1984. (f) keeps to a minimum the contribution of the non-financial public agencies (down from 9% to 6% of expected regulated investment); (g) concentrates budgetary transfers on the cost-effective FONHAPO program (increasing from 3% to 14% of regulated investment), which is tailored for the poorer segments of the population and their capacity to pay; and (h) favors cooperative community efforts organized at local level with appropriate technologies and labor-intensive construction methods. 1.09 Proposed Role of Regulated Housing Agencies: The Government's strategy, as reflected in the Medium Term Housing Plan, aims to achieve the desired targets of housing production by simply assigning different rates of growth to different agents of supply. This course of action (probably dictated by the political rigidities of the existing system) does not address the need for structural change and still implies a questionable use of resources, as will be discussed below. The changing role of different housing agencies, with respect to their past and present activities, can be gleaned from the following table: Table 1: Past and Future Role of Regulated Housing Supply Agencies Financial Agencies Non-Financial FONHAPO BANKS BOTH FUNDS OTHER TOTAL (in 1980 US$ Investments (in percentages of total investment) billions) 1977-1982 av. 3.4 24.3 27.7 63.3 9.0 100.0 10.7 1984 Program 4.8 44.9 49.7 40.3 10.0 100.0 2.7 1983-88 Plan 14.2 30.2 44.4 49.2 6.4 100.0 11.8 Shelter Units (in percentages of total No. of units) Units 1977-82 av. 4.4 21.5 25.9 43.0 31.1 100.0 803,500 1984 Program 25.9 34.3 60.2 29.5 10.3 100.0 270,236 1983-88 Plan 42.4 22.7 65.1 30.7 4.2 100.0 1,624,800 1.10 Quantitative Aspects: The Medium Term Housing Plan, echoes the recommendations made by COVL at the end of 1982.2/ It represents a rational response to then prevailing Mexican conTitions, but its structure and quantitative targets would now require further elaboration. The revised 1984 volume of sector investment, complemented in March by a 40% "strategic" allocation, amounted to a substantial MexS357 billion (US$2.7 billion) which has probably exceeded the target of 1% of GDP set for previous annual programs and is expected to generate 270,000 units. By 1988, the original Plan expected the realization of 1.6 million units, doubling the supply of housing from regulated programs with respect to the previous sexenio. 21 COVI, the Interministerial Commission on Housing, formed at the end of the previous Administration, formulated the basic estimates of housing needs and traced possible scenarios for public intervention. - 5 - 1.11 The target of 1.6 million new units would be achieved through a mere 11% increase in real investments, which implies a reduction of the average unit cost of production of 45% in real terms. Considering the dramatic drop in unit prices already achieved during the last sexenio, this calls for a dramatic expansion in the proportional output of least cost housing solutions (sites and services and progressive construction units), which are mainly financed by FONBAPO. The annual production of this agency should therefore increase from 69,000 starts in 1984 to an improbable 200,000 starts in 1988, virtually triplicating its output over five years. And since FONHAPO's growth largely depends on Government transfers, the Plan is (at least implicitly) based on a substantial provision of budgetary resources to the housing sector. This is to be made without the sacrifice of the earmarked taxes contributed to the payroll funds or the compulsory reserve requirements applied by the banks in "social interest" mortgage loans. Whether or not the fiscal budget will afford these initiatives, in a new era of greater austerity in public spending is a matter that deserves closer scrutiny. C. Main Issues of the Sector 1.12 Public vs. Private Sector Role: One issue not addressed by the Plan is the extent to which public sector intervention is justified for the supply of a private good such as housing.3/ Increasing public sector expenditures for this purpose has been advocated ambivalently in terms of anticyclical objectives (to exploit the large output multipliers and low import coefficients of a construction industry with high rates of unutilized capacity) and also in terms of distributional equity, pointing to the free market's failure to provide affordable homes for the poor and to the fact that appropriate shelter is recognized by the Mexican Constitution as a basic right of all citizens. The 1984 Strategic Housing Program concentrates budgetary contributions on minimum cost schemes, particularly in the provision of land, infrastructure and progressive construction assistance, for which the public sector's comparative advantages over the private sector can be more readily justified. This approach may help rationalize the construction initiatives of the informal market and support local organizational efforts and employment generation, but will have a rather muffled effect on the main construction industry. It also clashes with the existing structure of supply which remains dominated by agencies specialized in finished, up-to-code, "standardized" housing, and still accounted for most of the sector's investment in 1984, even after the drastic corrections made with the "strategic" allocations. The Fragmentation of Government Initiatives 1.13 Mexican authorities define as the "public sector's" housing program the combination of investment activities by various types of regulated institutions. However, there is no central financial authority to oversee all these institutions. Neither are there consolidated accounts 3/ According to a favorite indicator of Mexican housing authorities, the public share of investment in housing increased from 0.9% of GDP in 1978 to 1.2% of GDP in 1982. This order of magnitude is not uncommon in Latin American countries. In Mexico puL ic sponsored housing programs have been responsible for about 5% of gross capital formation and up to 12.5% of public capital formation during the last sexenio. - 6 - for the system as a whole4/. Excluding the banks, the agencies involved operate outside the mainsTream of the financial system and therefore are not directly regulated by the monetary authorities. Their funds are alternatively provided (in the case of the public housing agencies) or collected (in the case of the payroll funds) by the Secretariat of Finance (SHCP), but their rules of operation and procedures for onlending are determined by internal, agency specific arrangements. The resulting proliferation of activities and the variety of credit terms and conditions make it virtually impossible for the Government to carry out effective accounting and budgeting of the aggregate sector investment and of the implicit subsidy. 1.14 Low Rates of Capital Recovery: With an average cost of funds for the banking system on the order of 50% per annum and about the same level of inflation in housing production prices, the generally low interest rates on current mortgages involve considerable decapitalization, in spite of the recently introduced instruments of progressive adjustment which are described below. 1.15 In the FOVI-FOGA scheme (that of the banking system), the starting interest rates are quite negative, varying between 15% and 30% and are implicitly adjusted through the annual increment of loan repayments (set at 70% of the minimum wage increases) until they level off with the average cost of funds (CPP),5/ when amortization of principal would actually begin. In substance, mortgage payments in the initial years are wholly used to offset the accumulation of negative interest, until a second-tier mortgage is made. Strictly speaking the subsidy applies only for re-financing interest accrued on the loan, but it should be noted that the banks are obliged to refinance all loans up to 70% of their original value and that the resources used in these operations are charged against the compulsory reserve requirements In the rubric of social interest housing. In fact, this has led to a change in the volume and structure of the bank's mandatory reserves. The whole procedure is complex and obfuscates the true measure of the subsidy in the effective rate of interest, while trying to achieve two contradictory objectives: the reduction of the overall subsidy and, at the same time, the containment of debt service charges. Inevitably, the re-financing formula produces an average rate of interest well below the average cost of funds (CPP) even in the event that the starting rate would equal the CPP. Moreover, the subsidized average rate is not known a priori. In fact, the rate of interest is a dependent variable and not a parameter of the system. 4/ Some basic data for the system as a whole have been compiled by CODVI up to 1980 (published in 1982) and since then in special tabulations prepared by 0VI or by the DGCPV-SEDUE. These agencies, though not empowered to control housing credit institutions act as coordinators of the public sector's effort. 5/ The average cost of funds (Costo Porcentual Promedio de Captacion) or CPP is an index published each month by the Bank of Mexico, reflecting the weighted average interest rate paid by the financial institutions on time deposits in local currency. - 7 - 1.16 In the FONHAPO scheme, which must be affordable to a much poorer target group, the payments are fully kept in line with the annual minimum wage adjustments, but the starting interest rates are set as low as 9% up to a maximum 15% p.a., and are upgraded each year during the life of a loan according to a factor of 1.1. Effective rates are somewhat higher than nominal rates because they are charged monthly, while amortization of principal is applied annually (para. 5.10). 1.17 The payroll funds instead continue to offer mortgages at a flat rate of 4% per annum! Should inflation persist at the present high annual rates the level of capital recovery might range between 25% and 50% for the payroll funds, would hover about 60% for FONHAPO and possibly reach 70% for the PFV. In Mexico, as in the Bank, it is generally assumed that inflation will follow a descending path over the years to come. Since all Mexican schemes of housing credit are linked to the minimum wage and the real value of the latter is likely to be gradually readjusted, the relative rates of capital recovery will probably improve from the present low ebb. Nevertheless, all current credit schemes involve a sizeable amount of implicit subsidy and some of them are barely replicable.6/ What is more disturbing is that the financial rules now in place make7it difficult to monitor, lest to predict, the actual amount of public subsidy involved as well as the long-term sustainability of housing programs. 1.18 The Distribution of Housing Subsidies: The question is not whether "social interest" housing should or should not bear subsidies but rather to determine a level for such subsidies which may be tolerable for the Mexican economy and to ensure their appropriate distribution to "deserving" social groups. Under the present system, the bulk of housing subsidies goes to the beneficiaries of the payroll funds and to those of the regulated banking system, many of which could afford higher interest mortgages. A rough estimate of the total public subsidy involved in the 1984 investment program is on the order of US$1.4 billion, of which nearly half (47%) attributable to the payroll funds, over one third (35%) to the FOVI-FOGA system and some 14% to the public agencies. FONHAPO accounted for only 4% of the total housing subsidy while contributing 26% of the new housing units. 1.19 Although the payroll funds are limited to workers earning less than five minimum wages and should favor the lower wage workers, their impact is probably regressive. These programs are incapable of attending but a small portion of their captive demand. Yet, aside from making it difficult for account holders to withdraw deposits made in their behalf, the funds fail to pay either interest or monetary correction on the individual accounts. IMoreover, the payroll tax is probably shifted on to prices and may have a regressive incidence on the distribution of family budgets. And, because it leads to an increase in unit labor costs, the tax may also have an indirect unemployment effect. 6/ WUD advisory staff considers a housing project replicable when the investor (in this case the Government) recovers sufficient cash flow to finance a repeater project of the same size. To the extent that such decision implies a stable comnitment of public resources, social replicability could be achieved with a cost recovery (in real terms) as low as 50%. However, any increase in the volume of the repeater investment entails incremental public transfers unless returns on the prior investment are greater than 50%. - 8 - 1.20 The 1984 structure of bank mortgages under the PFV will concentrate credits on families with incomes in excess of four minimum wages (i.e. belonging to the top two deciles of the income distribution: see Chart VI-1). Given the fact that the PFV is implemented through the initiatives of private developers (who subsequently transfer bank loans to the final buyers) it is likely that, as in the past, the actual pattern of investment be heavily tilted to the upper limit of the PFV allowable income brackets, presently set at 7.5 minimum wages. 1.21 This leaves to the informal housing market the immense task of attending to the shelter needs of some 70% of the Mexican population. Only a minor portion of the total fiscal resources allocated in various forms of concessionary housing credit is assigned to FONHAPO to assist this market. In this respect, should the FONHAPO program be successful in rapidly expanding the supply of appropriate shelter solutions with a much lower fiscal subsidy per household than the conventional public housing programs, a consensus may gradually develop in the direction of supporting its further growth by diverting to it funds from other sources. D. Bank Strategy 1.22 The Government has officially stated its objective of improving the public management of subsidies. Specifically, this involves controlling and budgeting the subsidy element of preferential credit and making it explicit and transparent. For credit components under Bank-financed projects in sectors other than housing, the Government's commitment to the control and gradual reduction of subsidies was formalized in the General Agreement on Interest Rates (GIRA). Signed in August 1984, and effective since November 1984, the GIRA framework focusses on the progressive adjustment of preferential interest rates in accordance with variations to a central reference rate, the CPP (see footnote 5 on page 6). 1.23 Housing credit was not included in the GIRA because of the conceptual difference in the adjustment mechanism applied to such credits. The Government felt that adjustment through linkages with the minimum wage was socially and politically more acceptable in the case of housing credit, since this formula offers a more direct expression of affordability and can be easily explained to and understood by the target population. However, the current onlending terms for housing credit present obvious difficulties in respect to the Government's objective of improving the public management of subsidies. Because of their sensitivity to inflation trends and minimum wage policies, these credit terms result in subsidy transfers which remain unpredictable, uncontrollable and not transparent. 1.24 The proposed project would be the first in a series of lending operations in the housing sector and would support the establishment of a sector policy dialogue. The project would address the issue of capital recovery and measurement of subsidies for the FONHAPO program. While FONHAPO is presently responsible for only 5% of the regulated housing investment, the Government has targetted a rapid increase in the relative share of funds devoted to this program by 1988. The proposed loan would therefore assist the Government in pursuing a stated objective of fiscal policy during the critical expansionary phase of FONHAPO, while achieving greater distributional equity in the sectoral allocation of resources. -9- 1.25 At the same time, the project would support the carrying out of a housing finance study which would address system-wide issues such as replicability, cost recovery, measurement of subsidies, the adequacy of the payroll retention system, and the impact of general housing policy on financial savings, employment and the budget. The Government would forward terms of reference to the Bank, for comment, by December 31, 1985 (a first draft is proposed in Annex VIII), and exchange views with the Bank on the progress of the study by March 31, 1986. The Study would be finalized by December 31, 1986, at which time the Government would discuss results and conclusions with the Bank. Future housing loans of the Bank would support gradual reform of sector wide issues as addressed and discussed in connection with the study. Rationale for Bank Involvement. 1.26 By supporting the FONHAPO program, the Bank would be endorsing the Government's objectives of re-directing an increasing percentage of total public housing investment to the poorest and largest segment of the housing market. The rationale for the proposed loan would be to strengthen capital recovery and to develop better criteria for future replicability of the program after the critical initial phase of FONHAPO's expansion. Bank participation would complement necessary initial budgetary allocations, ensure maintenance of GOM commitment to this window of housing credit and require FONHAPO to meet specific standards of financial performance, thereby gradually increasing the agency's own contribution towards new investment financing, and reducing the need for incremental fiscal transfers. The proposed project would provide technical assistance required by the projected growth of FONHAPO's investment program. Finally, the project would be beneficial towards the establishment and maintenance of a comprehensive housing policy dialogue with the Government. E. Bank Experience with Past Lending in the Sector 1.27 Past Loans: Bank involvement in Mexican housing and urban development activities began seven years ago, with Loan 1554-ME signed in April 1978 (US$16.5 million) which has been fully disbursed. This project, located in the Lazaro Cardenas Conurbation, constituted a satisfactory experiment with the provision of serviced lots and progressive construction units to about 1000 low income families. A second project was signed in December 1981 (Loan 1990-ME of US$164 million) comprising a sites and services component for 1,900 units, distributed in 10 cities of the Gulf Region. The new Government has confirmed interest in the original objectives of this loan, but has requested some of its administrative arrangements to be revised in light of the new institutional organization for regional development. A third project is currently in course of implementation (Loan 2194-ME of US$9.2 million signed in August 1982), supporting the preparation of the pre-investment stage of a development program for the Mexico City-Region, which will also involve land and housing development schemes. - 10 - 1.28 The Bank has been assisting Mexico also in the implementation of a number of urban infrastructure projects. In June 1973, a US$90 million loan was signed to support bulk water supply for the Mexico City metropolitan area (Loan 909-ME now closed). Three other loans for water supply and sewerage projects were channeled to local companies through FIFAPA, a specialized Government Trust Fund (Loan 1186-ME of US$40 million, signed in January 1976, Loan 1913-ME of US$125 million, signed in November 1980, and Loan 2281-ME of US$100.3 million, signed in September 1983). Mexican performance under these loans is satisfactory in terms of sub-loan commitment and execution. Compliance with tariff increases required by loan covenants can be considered adequate in the majority of cities, given the critical economic situation of the country. Urban infrastructure components have been satisfactorily implemented with Bank participation also for projects in the tourism sector (Loans 793-ME of US$22 million, December 1971; 1420-ME of US$42 million, May 1977; and 1524-ME of US$50 million, March 1978). F. Sector Work and EDI Seminar 1.29 Two sector reports in the Housing and Urban Development sector (IBRD No. 4939-ME and IBRD No. 4993a-ME) have been produced in Green Cover in March and June, 1984 respectively, and informally discussed with Government officials. Two other urban sector reports concerning Territorial Development and Fiscal Devolution are presently in Yellow Cover stage (IBRD-5188a-ME of June 1984). A Sector Report on Water and Sewerage Policy has been completed in April 1984 (IBRD MD. 4840a-ME). 1.30 At the invitation of the GOM, EDI has helped organize a Seminar on Urban Management which took place in Mexico City during October 1980, following the publication of the first Mexican Housing Plan. Bank experiences with low-income housing projects in several Latin American countries were reviewed by operational staff with the authors of the Housing Plan and with senior officials from several States of Mexico. II. THE BORROWER, THE TRUST FUND, THE SUB-BORROWERS AND THE FINAL BENEFICIARIES The Borrower (BANOBRAS) 2.01 The loan would be made to the National Bank for Public Works and Services (BANOBRAS), which is a financial agent of the Government, legally empowered to act as a World Bank Borrower. BANOBRAS is a public development bank, which obtains its funds from the Mexican Government and the international market. According to BANOBRAS Organization Law, the Federal Government controls its policies and supervises its lending and borrowing activities. The Secretariat of Finance and Public Credit (SHCP) has veto power over the resolutions of BANOBRAS' Board of Directors and approves BANOBRAS yearly budgets. BANOBRAf is authorized to carry out such other functions related to its credit activities as may be approved by SHCP. - 11 - 2.02 BANOBRAS operates several trust funds, each corresponding to a specific Investment program, such as FIFAPA (the water and sewerage fund partially supported by three Bank loans); the FM or Municipal Development Fund (supported by an IDB loan) which finances a variety of urban facilities; FONHAPO (the low-income housing fund), and others. In addition, BANOBRAS makes direct loans to States, Municipalities and other public sector enterprises and is functioning as the financial intermediary for a number of World Bank loans in urban development, highways and railways. The Trust Fund (FONHAPO) 2.03 Brief History: From 1949 to December 1980, the Fideicomiso Fondo Nacional de Habitaciones Pokulares (National Trust Fund for Low-Income Housing, known by the acronym of FONHAPO) existed merely as a division of BANOBRAS, which had the mandate to construct low-cost housing. Two changes in the legislation under which BANOBRAS operates (December 31, 1980 and 1981), granted FONHAPO its own administration as a trust fund of the Government ("fideicomiso") and a new mandate to finance the construction of non-conventional housing types for low-income households as envisaged in the National Housing Program. The programs in which the World Bank would participate began in 1982. 2.04 The formal establishment of FONHAPO as a public credit agency took place through a Decree published in the Diario Oficital de la Republica on April 2, 1981 and the Agreement of May 13, 1981, stipulated between the Government through the Secretariat of Finance and Public Credit (SHCP) as the sole Trustor (the fideicomnitente or the entity who owns the fund) and BANOBRAS, as the Trustee (the fiduciaria or the entity which administers the fund). This Agreement indicated that the then Secretariat of Humuan Settlements and Public Works (SAHOP, which is now SEDIJE or the Secretariat of Urban Development and Ecology) would acquire tutorial and normative responsibility for the Trust Fund, and that funds would be allocated for FONHAPO's operations as part of the yearly budget of this Secretariat.7/ 2.15 Organization of FON4HAPO: the Fund has a Board of Directors (Comite Tecnico y de Distribuclon de Fondos) which is chaired by the Secretary of SEDUE and includes representatives of other concerned Secretariats (SHCP and SPP), of the banking sector (BANOBRAS and FOVI - Banco de Mexico) as well ai the Federal Controller, a Secretary and FONRAPO's General Director. Internally, seven Departments (Gerencias) report to the General Director. These include Administration, Finance, Real Estate, Legal, Technical, Planning, and Social Promotion.* In addition, there are the Operational Coordination office, and that of the Internal Controller (Chart II-1 in Annex). FONHAPO 's headquarters employ a qualified and motivated staff of about 300, more than half of which at 7/ The idea of establishing FONHAPO dates back to 1979, when an intersecretarial committee (COVI) was formed under the coordination of SAHOP, to carry out the technical, financial, administrative and economic studies necessary to frame the objectives of the new Fund in a general context of public housing policy. This preparatory work was concluded in December 1980, when the Secretariat of Planning and Budgeting (SPP) recommended to the Presidency to alter the structure and activities of a fund operated by BANOBRAS. - 12 - professional level. In addition, nine regional offices have been recently created to assist locally sub-borrowers in the preparation and implementation of projects and to supervise their execution. FONHAPO also keeps a roster of pre-qualified consultants to provide professional assistance to sub-borrowers under contract. 2.06 A detailed description of the Statutory Objectives, Sources of Financing, Rules of Operation, and of the current Terms and Conditions for onlending of FONHAPO is presented in Annex II. The main features of the typical sub-loans are summarized in Table 4 (para. 5.08). Typical amortization tables are supplied in Tables 5.4 and 5.5 and in Charts V-1 and V-2. 2.07 Performance to Date: Since the inception of the new Government in January 1982, FONHAPO has rapidly expanded its operations to the 31 States of Mexico with a total of over 250 sub-loans to date. During 1984, it has invested the equivalent of US$107 million (June 30, exchange rate) of which 25% in Sites and Services, 59% in Progressive Construction Dwellings, 16% in Home Upgrading. In terms of units financed, 36,000 were completed at the end of 1984, and about 69,300 have been started, to be completed in 1985. Sub-loan preparations for 1985, include 98,000 new units. 2.08 FONHAPO's records have been accurately kept, separating the new from the old portfolio, and an examination of its accounting and auditing procedures has proven satisfactory. The Fund maintains its own monitoring and evaluation program and bases its internal planning and financial projections on the marketing and implementation results achieved in the prior years. The disbursement period on a sample of 105 implemented sub-projects examined by the mission averaged less than one year. Under the new terms of onlending, sub-loans reach maturity in four to seven years, which woul-* allow FONHAPO to reinvest two to three times the funds received during the period of Bank loan repayment. 2.09 Growth Management: FONHAPO is already, and will be be more so in the future, a prime lender for housing projects meeting its requirements. During the three years it has been operating under the new statute the agency has competently managed its own growth. The present management's awareness of the problems of rapid expansion is revealed by the attention paid to development of a new organizational structure, with appropriate internal controls and a suitable information system. The Comite Tecnico (Loan Committee) which is responsible for the evaluation of all loans, receives a complete information package, much of it computerized, for its monthly meetings. In addition to the timely prepared monthly financial statements, the report contains recent information of all loans granted and in process under the new programs. To control loan processing and operations, operation manuals have been recently revised. A good example of these is the new procedural guide for the regional offices (Instrumentacion de las Delegaciones Regionales). Another example is the borrower's guide on loan processing (Instructivo pra la Elaboracion de los Formatos para la Contratacion del Credito). Finally, the whole structure of FONHAPO is being reorganized on the basis of an Organization Manual (Manual de Organizacion) prepared during 1984 by a team of management consultants, which details the new structure of the Fund and specifies the functions and responsibilities of its various branches (Charts IV-1 to IV-9 in Annex IV). - 13 - 2.10 Possible Improvements: further progress can be achieved in three main directions: (i) advances in computerization: FONHAPO has undertaken a modest program of mechanization, which has been slowed down by budget constraints imposed by the Mexican Government: completion of this computerization program would be supported by the Bank under the Technical Assistance Component; (ii) better financial information: the Finance Department should be encouraged to produce more details in its monthly financial statements on interest income by program, interest charged on overdue accounts and a more complete analysis of the new portfolio by dividing it into interest and non-interest bearing portions; (iii) borrower's guidance on collection: FONHAPO should consider designing a standard collection system for its borrowers, with manuals for organizing field collection offices, mechanization of collection records, and enforce its use by FONHAPO's borrowers (para. 4.13). The Sub-borrowers 2.11 FONHAPO channels its credits to sub-borrowers, which are responsible for the implementation of the sub-projects and the allocation of the facilities built to a pre-identified group of beneficiaries. sub-borrowers are authorized to apply a one point spread above the applicable FONHAPO interest rate an the mortgage contracts they stipulate with final beneficiaries, which is considered adequate to cover the sub-borrowers' administrative costs in view of the supplemental assistance furnished by FONHAPO. FONHAPO controls the process of allocation (para. 4.12), but has no direct contractual relationship with the ultimate beneficiaries of its lines of credit. The intermediary agents of FONHAPO can be: i) Federal public sector institutions, when their schemes and budgets for low-income housing developments have been approved by the Federal Government; ii) State and Municipal governments, decentralized institutions and parastatal or paramunicipal enterprises (most frequently State Housing Institutes), when developing low-income housing schemes consistent with the objectives of FONHAPO; iii) authorized banking institutions operating in accordance with the General Law of Credit Institutions and Auxiliary Organizations; iv) cooperative housing associations; and v) legally constituted groups, which are implementing programs consistent with the norms of FONHAPO. The Final Beneficiaries 2.12 FONHAPO's loans are destined to benefit a segment of Mexican population which must be: (a) preferably choosen among non-wage workers; (b) with heads of household receiving incomes no larger than 2.5 times the minimum wage (about US$355 per month in January 1985);8/ (c) intending to 8/ Reference to the level of income of the head of household which is more easily quantifiable than that of the household is generally adopted for normative purposes in Mexico. As discussed in Annex VI (para. 5) total family income per capita would represent a better measurement of the affordability of debt service. However FONHAPO does collect data of household income and household composition in its monitoring surveys of the target group. - 14 - purchase a home in order to live in it; and (d) not owners of other real estate property. In order to qualify for a credit from FONHAPO, sub-borrowers are required to submit an analysis of potential beneficiaries and FONHAPO's Loan Committee may reject selectively or totally the corresponding documentation if insufficient evidence is submitted of: i) the authenticity of the stated income of beneficiaries; ii) the absence of other real estate property; or iii) the composition of the households (para. 4.12). 2.13 From the 1984 Monitoring and Evaluation Survey of FONHAPO, one learns that less than half (48.5%) of the beneficiaries of completed projects, held a permanent job and the remainder were supporting themselves with informal sector activities. Prior to access to the sub-projects, some 58% of the surveyed population used to spend 21% of their income to pay rent, while the monthly payments on their FONHAPO-financed premises averaged only 17% of their current income. The remaining 42% of residents faced no special hardship in meeting the required monthly payments. The average household size was of 5.1 people. In general, the survey population had been previously residing in an urban area for approximately 10 years. 2.14 The analysis of a smaller, but carefully planned and executed sample of families in sites and services projects, conducted by FONHAPO's Monitoring and Evaluation Unit between May and July 1984 (details in Annex VI), affords the following conclusions: a) FONHAPO's Sites and Services projects do reach their intended target population, which constitutes a low, but not the lowest segment of the income distribution (the mean income of the household head is 1.33 MW (about US$189 per month) well below the established level for FONHAPO (2.5 MW); the average family income is expectedly higher, but still below 2.0 MW); b) this population is not reached, but exceptionally, by the other existing Government housing programs; c) FONHAPO's product and the associated financial schemes are affordable by the average family in the target population, even when due allowance is granted for supplementary expenditures in house-building. 2.15 These data confirm the effectiveness of the FONHAPO program. An explanation of its marketing success, particularly in medium size cities, can be gleaned from Chart VI-1 in Annex, which illustrates the income distribution of Mexican households. While the graphic represents the findings of a national survey conducted in 1977, it must be noted that income distribution in Mexico has shown a remarkably constant structure over time and has probably not improved significantly since then, in light of the recent recession of the economy. The 1980 Census analysis confirms that the bulk of housing demand comes from households below the seventh decile of income distribution (2.5 minimum wages). - 15 - III. THE PROJECT Background 3.01 During the Annual Meetings of September 1983, the Mexican Government expressed interest in a significant amount of World Bank support to the housing sector. This first loan through FONHAPO has been prepared for Bank approval in response to that request. Project preparation has been based on the findings of a study on Public Housing Policy in Mexico (IBRD-4993a-M) which has been produced by Bank staff in June 1984. 3.02 The report on public housing policy in Mexico explains the present structure of housing institutions and their very recent operational reorganization, following the new federal housing law (Ley Federal de Vivienda of December 29, 1983). Staff reviews of the report concluded that early but limited circulation of its findings to Mexican authorities would already serve as the foundation for a more intensive review, centered on the financial issues encountered in the housing sector. 3.03 During discussions of the housing policy report and the preparation of the proposed project, preliminary agreement was reached with the Government to undertake a more analytical study on housing finance through the joint efforts of the Bank and the four key Mexican agencies: SHCP (finance), SPP (budget), SEDUE (housing policy), and Banco de Mexico. The Government gave assurances during negotiations that it would carry out a Housing Policy Study, and discuss the study's conclusions and recommendations no later than December 31, 1986. 3.04 It is recognized that the Bank desire to support a gradual reform of the Mexican housing finance system cannot be properly addressed on a project specific basis, but only through a system-wide policy dialogue to be developed over time, eventually supported by a sequence of lending operations during the next five years. The proposed project should therefore be interpreted as a first step towards concrete cooperation. Project Objectives 3.05 The proposed project is aimed at the following objectives: a) support replicability and growth of the FONHAPO program, which focusses housing investment to the poorest and largest segment of the housing market; b) support FONHAPO during a critical expansionary phase by promoting the application of new onlending terms while assuring specific standards of financial performance and providing technical assistance for institutional strengthening; and c) support the Government in addressing sector issues. Project Description 3.06 The loan would finance a slice (para. 3.09) of the 1985-1988 credit program of FONHAPO, a trust fund administered by BANOBRAS, which would be the Borrower. Counterpart funds would be appropriated annually - 16 - in the Government budget and passed on to FONHAPO as equity contributions. FONHAPO would enter into Sub-loan Agreements, secured by collateral guarantees, with States, Municipalities and social or cooperative organizations for the preparation of serviced sites for low-income housing schemes. FONHAPO will provide technical assistance to: (a) support sub-borrowers in the preparation, appraisal, implementation, selection of beneficiaries, allocation and transfer of facilities, collection of charges, monitoring and evaluation of sub-projects; (b) establishment of a computer program system for financial information; (c) designing and promoting the use of collection models for its sub-borrowers; and (d) carrying out a study to develop a medium term program. Bank funds (the proposed loan amount is US$150 million) would be used to partially finance basic infrastructure works (earthworks, drainage, roads, sewerage, water and electricity networks) and starter dwellings on the serviced lots in which about 140,000 low-income households could settle. The target group would be formed by households with incomes below 2.5 times the minimum wage9/. They would be expected to make an initial deposit and to make mortgage payments to the sub-borrowers indexed to the current value of minimum wages. In parallel with the execution of the project, the Government would carry out a joint study with the Bank on the national housing finance system. Project Costs 3.07 The estimated costs of the proposed project, excluding taxes, are shown in the Summary Table (page vi). The appraisal of project cost has been based on actual cost experience, corresponding to the average unit prices of a sample of 105 sub-projects financed by FONHAPO during the first half of 1984. These costs were expressed in constant 1984 dollar equivalents (i.e. US$890 for a serviced lot of 117 m2 and US$3,700 for a 3-room unit of 38 m2). A flat rate of 10% has been included for possible physical increases in all components. The price escalation on the annual investments has been calculated according to a seven year disbursement profile (Bank-wide average for lines of credit) and to standard projections of dollar inflation, in the assumption that corresponding adjustments in the value of the local currency will maintain the exchange rate parity.10/ Bank Participation 3.08 The Bank would finance 50% of the total cost of selected sub-projects, corresponding to the foreign exchange component (estimated at 25% of total costs) and an equivalent contribution towards local costs, given the social nature of the project. Thus the loan would assist in financing works equivalent to US$233 million and another US$67 million of related expenditures in land purchases and preparations, professional, 9/ According to the 1980 Census, 72% of Mexico's economically active population earns incomes below 3 minimum wages and 57% earns less than 1.6 minimum wages. Eligibility for FONHAPO's sub-loans is limited to heads of households whose monetary income is below 2.5 minimum wages (currently equivalent to US$355 per month). The figure of 2.0 MW is usually interpreted as the absolute poverty level in Mexico. 10/ International inflation assumptions were made as follows: 1985 (5.0%); 1986 (7.5%); 1987-90 (8.0%); 1991 and thereafter (5.0%). - 17 - administrative and technical assistance services for a total of USS300 million equivalent. At current average costs this investment would permit the settlement of 142,000 families in serviced lots and the financing of 15,200 starter dwelling units (Table 5.23 in Annex V). 3.09 The Bank-financed Project would represent about 19% of FONHAPO's planned production of about 400,000 units under the 1985-1988 Medium Term Program and about 11% of the 800,000 units expected under the 1985-1992 Long Term Program (both figures based on 1984 constant dollar prices). Bank participation would be slanted in favor of Sites and Services rather than Progressive Construction sub-projects (45% versus only 5% respectively of the total units financed under these two lines of credit). In dollar terms, about 2/3 of Bank disbursements would be made against sub-projects of the first kind and the remaining 1/3 against progressive construction sub-projects (compare Tables 5.12 and 5 22 in Annex V). Criteria for Sub-project Selection 3.10 Selection of sub-projects for Bank financing would be based on considerations of unit costs and affordability by the chosen target group according to FONHAPO's general credit conditions (Table 4 on page 28) and would have to meet the following additional criteria: a) only sites and services and progressive construction sub-projects, (i.e. financed under FONHAPO's two main lines of credit, which account for 85% of the agency's activities) (para. 7.03); b) sub-projects above a certain size (e.g. costing not less than US$500,000 equivalent) so as to reduce the Bank's supervision, and disbursement activities to a manageable number of operations; c) sub-projects yielding a rate of financial return of not less than 9% per annum; and d) sub-projects located in the priority cities which the National Urban Development Plan has singled out for preferential attention on the basis of: (i) relative size and growth rate; (ii) specific role in the national urban and productive systems; (iii) industrial development potential; (iv) local entrepreneurial and management capacity; (v) accessibility and area*of influence; (vi) diversity and quality of available urban services; (vii) specific administrative role.11/ Commitment of Bank Funds 3.11 Presentation to the Bank of Programs for commitment of Bank Loan proceeds would be required annually by December 31 for each forthcoming fiscal year and would be jointly reviewed in light of FONHAPO's annual investment budgets. Sub-loan Agreements bearing Bank financing would be sent to the Bank for approval. Assuming that the average sub-project 11/ Bank loan proceeds would be directed to the 59 "strategic" medium-size cities and to communities on the fringes of the three metropolitan areas (Mexico City, Guadalajara and Monterrey), complementing investments supported by the Bank's FIFAPA credits for water and sewerage networks and the IDB funded FM loans which are also directed to these cities. - 18 - approved for Bank financing would cost US$1.5 to US$2.5 million equivalent (in-keeping with the mean cost of FONRAPO's larger operations which include 750 to 1200 units) the Bank loan would support the financing of about twenty five sub-projects per year.12/ Commitment of Loan Funds is expected to be completed by December 31, 1990. 3.12 FONHAPO's processing of sub-loan applications follows a structured three-step procedure (promotion, preparation and evaluation) which is described in Chapter IV and involves an average period of 6 to 12 months. The Fund would continue to offer technical assistance to sub-borrowers as needed during the three stages through its regional offices. The central office would be mainly concerned with the general administration of the program and the final steps of sub-loan approval. Based on a review of the files of sample sub-projects in course of execution Bank staff have found the regulations, forms and procedures currently in use of acceptable quality. Procurement 3.13 Mexicos's construction industry is highly developed and capable of executing works at costs competitive with international bidders and none of the individual contracts would be large enough to attract foreign firms. Therefore, most construction contracts would be awarded through local competitive bidding procedures (LCB) acceptable to the Bank. The sub-borrowers (States, Municipalities, building cooperatives and community organizations) would be responsible for inviting bids, evaluating them and awarding construction contracts under FONHAPO's supervision.13/ Mexican Federal and State laws controlling procurement in publicly funded programe provide a satisfactory competitive climate but differ from Bank policy and guidelines on certain specific aspects.14/ Agreement was reached with BANOBRAS to follow procurement procedures consistent with Bank guidelines on those sub-projects which would be partially financed with loan proceeds. 12/ During the first seven months of 1984, FONHAPO has funded 105 sites and services and progressive construction sub-loans. During 1983, 79 sub-loans were made in the two selected lines of credit. 13/ FONHAPO emphasizes the rapid and efficient execution of sub-projects as the best protection against escalating construction costs. According to information provided by the agency, the average implementation period of a large sample of recent sub-projects ranged from nine to twelve months (Table 3, page 23). The agency expressed concern with the time lag and price escalation which may result from tendering works under LCB in some specific situations. 14/ The exceptions noted concern: (i) a tendency to keep advertisement time to the statutory minimum in ICB tenders and the generally inadequate circulation-publication of bid invitations; (ii) the possible re-evaluation of the financial, technical, equipment or manpower capacities of previously pre-qualified bidders during the review of tenders; and (iii) the possible rejection of the lowest bid on the basis of "unreasonably- low pricing. - 19 - 3.14 Given the wide territorial distribution of sub-projects, such agreement would have a useful and diffused impact on local procurement practices in different parts of the country. Therefore FONHAPO would: a) undertake a formal commitment to enforce fully congruent LCB procedures in operations financed under the loan (which would represent its largest and more structured initiatives) while strongly suggesting their adoption to all Sub-borrowers; b) use force account procedures, up to a 21% share of loan financed works only in situations where their greater efficiency and economic advantage over alternative methods can be reasonably demonstrated, and will supply such justification with the submission of the corresponding Sub-loan Agreements for Bank approval. 3.15 The adoption of force account methods (administracion directa) for execution of part of the infrastructure works (up to an aggregate amount of US$50 million equivalent) would be consistent with the Government policy of progressive devolution of construction, maintenance and operation responsibilities to local utility corporations. Furthermore, low-income housing projects are often financed as part of the Emergency Employment Plan (PEZUC) which supports deployment of labor-intensive procedures. Finally in many municipalities the sub-borrowers contribute directly a portion of the investment resources in kind, providing self-help or contracted labor, off-site infrastructure, construction materials or land tracts to be developed. Loan Disbursement 3.16 No Bank disbursement is anticipated against the purchase of land, or external infrastructure which are generally provided by the sub-borrowers, nor against design and engineering fees or project administration charges which are typical local costs shared between FONHAPO and the sub-borrowers. The Bank would disburse only against civil works at the rate of 65% of expenditures. Disbursements in respect of expenditures under construction contracts exceeding US$500,000 equivalent would be fully documented. All other disbursements would be against statements of expenditures. It is proposed to establish a Special Account at BANOBRAS on the order of US$8.5 million, from which the Borrower would withdraw the peso equivalent of the Bank's share of expenditures made on eligible sub-projects according to the exchange rate in effect at the time disbursements were made by FONHAPO. The Bank would further withdraw from the Loan Account to replenish the Special Account pari-passu with the submission of withdrawal documents by the Borrower. It was agreed that the Bank would finance expenditures made by PONHAPO after January 1st., 1985, as eligible for retroactive financing up to the equivalent of US$8.5 million, provided that such disbursements were made in accordance with the criteria and procedures stipulated in the Loan Agreement. December 31, 1992, is the Closing Date. - 20 - Table 2: Loan Disbursement Schedule (based an average seven-year profile for lines of credit) Calendar Year Government Bank Bank Fiscal Semest. Ending Semester Cumulative Semester Cumulative Year Semester June 1985 16.5 16.5 - 8.5/a December 1985 12.7 29.2 14.6 23.1/b First FY86 June 1986 8.0 37.2 8.0 31.1 Second FY86 December 1986 8.0 45.2 8.0 39.1 First FY87 June 1987 9.2 54.4 9.2 48.3 Second FY87 December 1987 9.2 63.6 9.2 57.5 First FY88 June 1988 10.2 73.8 10.2 67.7 Second FY88 December 1988 10.2 84.0 10.2 77.9 First FY89 June 1989 11.5 95.5 11.5 89.4 Second FY89 December 1989 11.5 107.0 11.5 100.9 First FY90 June 1990 12.3 119.3 12.3 113.2 Second FY90 December 1990 12.3 131.6 12.3 125.5 First FY91 June 1991 13.0 144.6 9.7/c 135.2 Second FY91 December 1991 5.4 5.4 9.7/c 144.9 First FY92 June 1992 - 150.0 5.1/c 150.0 Second FY92 a/ Special Account established upon loan effectiveness. b/ Includes US$8.5 M retro-active disbursement (since January 1, 1985). £[/ Rate of disbusement reduced to recover Special account advance. Supervision and Monitoring 3.17 Given the territorial spread and the number of subprojects (at least 100 would Include Bank financing), FOIGBAPO would adequately staff regional offices and comply with agreed supervision and monitoring procedures limiting Bank personnel verification to intermittent control on a sample basis. FONHAPO would forward to the Bank quarterly reports on project progress and expenditures according to an agreed format. The appraisal mission was satisfied that the supervision system applied by FONHAPO is adequate (para. 4.07) and anticipates that Bank supervision commitments on this project would not represent an extraordinary burden, falling within the norm of 2-3 field mission per year. FONHAPO would forward to the lank civil works contracts exceeding the equivalent of US$500,000, which would be subject to ex-post review on a sample basis. Review of contract documents would be carried out ex-post and ex-ante for - 21 - all contracts exceeding US$1.5 million equivalent. FONHAPO would continue evaluating annually the impact of the project according to a program satisfactory to the Bank, regularly forward to the Bank its monitoring reports. The proposed key monitoring indicators are presented in Table 5.24. Accounting and Auditing 3.18 FONHAPO's accounts have been regularly audited by a firm of independent public accountants acceptable to the Bank. The 1983 audited report qualified the financial statements relating to the final disposition of the old mortgage portfolio, an area of activity that will shortly become immaterial to the financial statements as a whole (para. 5.04). With the exception of the controls surrounding the collection of the old mortgage portfolio, the accounting and internal controls are adequate. The records are current and audit reports are presented on a timely basis. The independent auditors would be requested to extend their normal audit scope to include a special review of and a report on Bank financed disbursements. The Special Account would be audited by BANOBRAS independent auditors. IV. IMPLEMENTATION ASPECTS General 4.01 As already mentioned (para. 2.05), FONHAPO is structured in several functional departments (gerencias). Each of these departments intervenes in different stages of the preparation and management of subloans, according to the procedures established in FONHAPO's Organizational Manual. The new structure of the agency is presented in Annex II (Chart II-1). Charts IV-1 to IV-9 of Annex IV detail the specific responsibilities of the various departments and their interactions. A description of the cycle of subloan preparation and of the required technical features of subprojects is given in the same Annex. Planning and Budgeting (Charts IV-1 and IV-4 in Annex) 4.02 Every year, the Government appropriates to FONEAPO a certain amount of resources, in the sector investment budget of SEDUE. Within the month of September, FONHAPO's Planning Department, in consultation with other departments, must submit a Program of Annual Operations which is discussed first with SEDUE's budgeting authorities and then with SPP. The budgetary request must specify FONHAPO's intended contribution to investment through internally generated resources, the number and type of units the Fund proposes to finance during the year and the geographical distribution of the credits under consideration. Eventual deviations of the annual programs from the targets set In SEDUE's Medium Term Housing Plan must be justified In light of the marketing experience acquired (Monitoring and Evaluation Department), the current status of the pipeline (Social Promotion Department), the operating results of the previous year (Finance Department), as well as other aspects (Legal, Operations, Technical Departments). The Planning Department also follow up on implementation of the annual investment program, ensures its adherence to sectoral objectives (as defined by SEDUE), and recommends to the General Director any strategic changes that my be required. - 22 - Promotion (Charts IV-1 and IV-4 in Annex) 4.03 This is the main responsibility of the Social Promotion Department, which makes the first contacts with potential Sub-borrowers. The Department keeps the general public informed on FONHAPO's objectives and procedures through field visits and the media, identifies opportunities for local investment, carries out meetings with interested groups, illustrates prototype technical solutions and financial schemes, and checks out proposed project sites. It keeps a register of potential sub-borrowers and holds the relevant information on file. Social Promotion operates in close coordination with the Regional Delegations and can periodically suggest to the Planning Department appropriate modifications to FONHAPO's credit conditions based on the findings of direct surveys of the socio-economic characteristics of target groups (para. 4.14). Design Standards and Building Codes 4.04 The technical standards currently adopted in FONHAPO's subprojects (see Technical Notes in Annex IV) are economical for both infrastructure and dwellings. Infrastructure specifications and levels of service generally comply with the minimum requirements of local utility companies, which do not deviate substantially from national regulations. In the absence of local codes, FONHAPO has been adopting the minimum Federal norms which are acceptable to the Bank. Dwelling design, layouts and specifications mostly conform with SEDUE's tested prototypes, which are generally cost-efficient and consistent Bank experience in low income projects. Progressive Construction and Self-help Activities 4.05 Different patterns of site development can be observed In the ongoing sub-projects. In the first pattern, the beneficiary household occupies its lot as soon as it is improved. The family erects a temporary shack on the back of the lot, moves in, and undertakes the construction of the house with more permanent materials on the front only later. In the second pattern, a single-room, multi-purpose unit is built with durable materials, in which the household finds shelter while it keeps adding on to the construction. Finally, in other cases, the household continues to live in the original rental premises elsewhere, until the unit in which it will transfer is sufficiently "complete". 4.06 The share of construction works carried out through self-help labor also varies. In general it can be said that in 50% of the cases the beneficiaries contract construction or improvement works to specialized labor; for another 25%, there takes place a combination of self-help with contracted labor; and only for the remaining 25% beneficiaries construct the entire building themselves with little or no contracting of external labor. FONHAPO estimates that a typical loan including 500 units, generates about 216 temporary jobs over a period of 8 months, with an average investment of Mex$80 millions. - 23 - Works Supervision (Charts IV-2 and IV-6 in Annex) 4.07 One critical role of FONHAPO's regional offices is to supervise the progress and the proper execution of the works financed. The Department of Operations Staff visits each sub-project monthly and records the physical progress of the construction against the expected disbursement profile. This information is reported to the Central Office on well designed and useful forms, which permit close monitoring of the progress. Implementation Periods 4.08 The construction period of a typical Sites and Services sub-project ranges from six to seven months (1983-1984 average for about 105 sub-projects). Tendering normally requires one to one and a half months. Progressive Construction sub-projects generally take a little longer, nine to ten months, with basically the same tendering period as sites and services sub-projects. FONHAPO's reports on physical progress indicate that execution delays may take up to 20% of contracted construction time. In its calculations, the appraisal mission adopted the following average implementation schedules, starting at the time the sub-loan agreement is approved by FONHAPO's Loan Committee: Table 3: Average Sub-project Implementation Schedules Sites & Services Progressive Construction Tendering & Contract Award 1 to 1.5 months 1 to 1.5 months Construction @ to Contract 6 to 7 months 9 to 10 months Allowance for Delays 1 to 1.5 months 1.5 to 2 months Implementation Periods 9 months average 12 months average Advance Disbursement and Guarantees (Charts IV-2 and IV-6 in Annex) 4.09 Once a Sub-loan Agreement is approved by FONHAPO's Loan Committee, and signed by the General Director, the Finance Department issues and advance (up to 40% of the credit) to the sub-borrower who must secure it by providing collateral guarantees. Sub-loan guarantees may take the form of a real collateral, or of an affidavit ("aval") by the State Government, which authorizes the Federal Authority (SHCP) to retain the sub-loan amount from the fiscal participations of the State in case of default by the sub-borrower. In addition the Sub-borrower must provide a mortgage guarantee as well as pledge and trust guarantees. 4.10 The remainder of the sub-loan is disbursed on the basis of work progress, as certified by the Department of Operations. The advance is recovered proportionally from each successive payment. The final disbursement is released upon the issuance by Operations of a certificate of final acceptance of the executed works (para. 4.11). The Planning Department keeps track of each disbursement made by Finance for control and budgetary purposes. - 24 - Works Completion and Final Disbursement (Charts IV-2 and IV-6 in Annex) 4.11 When sub-project construction is finished, the Sub-borrower applies for an inspection by FONRAPO's Operations Department which issues the document certifying the satisfactory completion of all works (finiquito de ejercicio fisico-financiero). Upon receipt of this document, Finance pays off the sub-loan balance with a final check. The grace period thus expires and the Sub-borrower initiates loan repayment to FONHAPO. Allocation to Final Beneficiaries (Charts IV-2 and IV-7 in Annex) 4.12 An important feature of FONRAPO's operation is that sub-loans become effective only after the sub-project facilities have been built and a pre-identified group of buyers has been assigned the legal possession of mortgaged premises by the Sub-borrower. FONHAPO controls this process of allocation to the ultimate beneficiaries through the following steps: a) Pre-selection: during the stage of sub-project identification, the sub-borrower is required to carry out a study of the target group and to produce a preliminary documentation with the assistance of FONHAPO's Social Department Staff. A Cedula Socio-Economica must be compiled for each beneficiary household and a tentative register of potential beneficiaries is prepared (Cuadro de Concentracion de la Demanda Captada) which constitutes an integral part of the sub-loan application. FONHAPO reviews and analyzes this profile of socio-economic characteristics of the target group in view of their family composition and the employment condition of the heads of household and-compares their paying capacity with the estimated unit costs of the proposed sub-project. b) Allocation Plan: prior to sub-loan approval, FONHAPO counsels the community organization involved and supervises the formulation of a plan for the allocation of the serviced plots and dwellings to individual beneficiaries: it controls the authenticity of the information supplied by the borrower and verifies the legal validity of individual household contracts. This plan must be updated as soon as works reach the stage of 85% advance. c) Allocation Process: FinalLy, the Social Department authorizes the actual process of allocation after the final cost of the units is determined and the financial atrangements between the sub-borrower and the beneficiaries are approved. It then releases a document upon its satisfactory completion of allocation procedures. Collection of Payments (Charts IV-3 and IV-9 in Annex) 4.13 The sub-borrowers recover sub-project costs from the final beneficiaries through mortgage schemes, which include recuperation of FONHAPO's subloan as well as other investment and administrative costs borne by the Sub-borrower. Mortgages entail a 10% deposit and monthly amortization payments up to the full amortization of loaned principal amount. As part of its extension services, FONHAPO's staff advises the sub-borrowers in setting out repayment schemes and collection programs. This assistance covers three major steps: - 25 - a) Collection of Deposits: the program for collection of down payments must be prepared as part of the sub-loan application. Actual collection initiates at the moment physical works achieve 85% advance and is expected to be completed before the full credit amount is paid out (upon FOMAPO's final acceptance of the works) and the repayment of the subloan is undertaken; when necessary, the amount of down payments is re-adjusted once the final price of the unit has been determined; b) Collection of Monthly Payments: the sub-borrower must present to FONHAPO a finalized plan for collection of mortgage payments from beneficiaries as a condition for signing a sub-loan agreement; at this moment suitable legal and financial arrangement must be in place, including the specification of the legal remedies to be applied when necessary; c) Final Liberation of the Guarantees: before FONHAPO's Loan Committee authorizes the final liberation of the guarantees and the formal closing of the sub-loan (Finiquito Total de Credito), it must be satisfied that the recuperation process has been satisfactorily established. Monitoring and Evaluation (Charts IV-3 and IV-9 in Annex) 4.14 The Monitoring and Evaluation Unit reports directly to FONHAPO's management assessing the impact of the agency's programs (see Annex VI). The reports are yearly and based on a stratified samples of sub-projects and beneficiary households. They generally include the following: a) a statement of the evaluation criteria used in the survey, including critical comments on particular aspects of the process; b) the main findings of field visits and interviews, and a review of the performance of specific lines of credits and sub-projects; c) the evaluation of the impact of FONHAPO's lending program in specific areas of the country; and d) the global evaluation of FONHAPO's operations, products and impact. V. FINANCIAL ASPECTS FONHAPO's Old Portfolio 5.01 Original Assets: The original capital of FONHAPO as a separate entity consisted of approximately Mex$8,448 million (Balance Sheet as of December 31, 1981 in Table 5.1 of Annex V), and was composed for 20% of cash and receivables, for 50% of a mortgage porcfolio, and for 30% of land and projects in process. FONHAPO inherited numerous administrative problems connected with the latter assets. Many accounts due to FONHAPO were from purchasers who withheld payments complaining that damages caused by seismic tremors should be repaired. Almost immediately FONHAPO had to start protecting the land properties against illegal invasions. - 26 - 5.02 Land Properties: The initial problems of title defense have been substantially resolved and management currently maintains detailed records of each property to periodically determine its highest and best use. The financial projections accompanying this report assume all land will be sold by 1992. The July 31, 1984 value of these assets was of Mex$3,360 million (US$20 million). 5.03 The Original Mortgage Portfolio: FONHAPO will incur losses relating to the final collection of these accounts which at July 31, 1984, were valued at Mex$3,411 million (about US$20 million). Unreliable lists of payments prepared by BANOBRAS, the continued complaints of tenants, costly repairs, and a standing FONHAPO's offer to deliver a clear title at a 20% discount, all indicate potential losses. The Government recognizes this fact and supports FONHAPO's efforts to divest these assets as soon as possible by granting supplementary funds for the repair activities (Table 5.2). In practice, the Fund maintains separate accounts and a separate administration (the Gerencia de Desarrollo lamobiliario) for the activities related to the original portfolio. Management expects to liquidate these accounts within five years and a provision for losses has been recorded in the financial projections in this report (Table 5.16). Not only will the final disposition of these accounts relieve FONHAPO's management of an administrative burden and clear the way for the new programs, it will also remove all reasons for the external auditor's qualified opinion of the financial statements for the last three years, which deals exclusively with items related to the founding assets. 5.04 Relevance to Future Operations: The possible defects in the old mortgage portfolio should be viewed in relation to current and projected activities. For instance, as of July 31, 1984, the investments in the new program that began in 1982 were four times bigger than the old mortgage portfolio (Table 5.3). Projected annual investment in the new programs for 1985, will be ten times the old portfolio. In 1985 the losses relaced to -he old portfolio will be in the order of 3% of net income. The collectibility of this old portfolio does not therefore emerge as a significant issue in the appraisal of the loan program for 1985 to 1988. The New Lending Programs and the Level of Government Support 5.05 For its new operations, FONHAPO depends heavily on Treasury transfers. In 1983, this item represented 63% of the Fund's new investments, which amounted to 7.2 billion pesos (about US$60 million at the June 1983 controlled exchange rate). For the following year, SPP initially authorized an investment budget of 8.8 billions pesos with Federal transfers amounting to 54% of the total. However, the total Government contribution was raised to 13.4 billion pesos with a complementary allocation made in March 1984, reaching 75.1% of FONHAPO's 17.9 billion pesos of new sub-loans. Converted in June, 1984 dollars, these represented about US$107 millions.15/ The 1985 Budget raised Government transfers to 20.5 billion pes7s (76.5% of total), to which FONRAPO intends to add 6.3 billion of internally generated resources, 15/ See: FONHAPO, Programs Operativo Anual, 1984, p.25. - 27 - achieving an investment total of 26.8 billion pesos (approximately US$140 million in December, 1984 equivalent), which should result in the completion of 69,000 units now in progress and the initiation of 98,000 new ones. 5.06 Will the Government's fiscal effort to continue FONHAPO's expansion be sustained indefinitely? The Medium Term Housing Plan set out the ambitious target of reaching an annual production capacity of 200,000 units in year 1988. While the priority attached to the program by the Administration is not in question, persisting inflation and fiscal constraints justify some doubts as to the achievability of the original targets. 5.07 Therefore the appraisal mission drew two alternative scenarios: Scenario A, in which housing starts are levelled off at 100,000 units per year with a gradual phasing out of budgetary transfers; and Scenario B, in which the annual support of the Government is maintained constant in real terms (the equivalent of US$100 million per year) and housing starts achieve the expected volume of 200,000 by 1991. Both cases were analyzed through a computer model (described in Annex V), in which a number of assumptions are made as to the composition of FONHAPO's program and the level of capital recovery in each sub-program. Before reviewing these results, it is important to discuss the main features of FONHAPO's formulae of capital recovery. FONHAPO's Capital Recovery 5.08 Main Features: As in all schemes of Mexican housing finance, the monthly repayments of FONHAPO's loans are indexed to the variations of the minimum wage. Moreover, the unit costs of the subproject facilities to be financed must be contained within set multiples of the minimum wage applicable at the moment a subloan is approved. Monthly charges are established as a constant fraction of nominal wages and are inclusive of interest and capital amortization. Loan maturity is flexible, depending on the speed of inflation. Because the minimum wage rates are officially adjusted to the accumulated value of inflation (once or twice a year, albeit with some delay), this system has the merit of introducing some adjustment in loan repayment, but also renders the prevailing credit conditions in the housing sector difficult to comrare with those of other sectors of the economy. A detailed description of FONHAPO's mortgage instrument is given in Annex II para 4. The basic information is displayed in Table 4. The amortization schedules for two typical subloans are given in Tables 5.4 and 5.5 of Annex V. 5.09 As long as the minimum wage increases (in nominal terms) faster than the applicable interest rate, most of the monthly payments go to amortize outstanding principal, therefore shortening sub-loan maturity. This rapid pattLrn of disbursement and repayment is FONHAPO's chosen weapon against escalating project costs and diminishing returns due to inflation. In sum, the Fund's present financial scheme emphasizes the quick turnover of capital and the relative affordability of housing solutions. - 28 - Table 4: Summary of FONHAPO's Credit Conditions Sites & Services Progressive Complete Conditions Rome Upgrading Construction Dwellings a) Project Unit Cost Up to from 500 from 1001 from 1501 from 2001 (daily MW multiples) 500 to 1000 to 1500 to 2000 upwards b) Percentage Financed . a) Social Groups 95% 90% 85% 80% 75% b) Institutional 90% 85% 80% 75% 75% Borrowers c) Loanable Amount Up to 476 901 1276 1601 (daily MW Multiples) 475 to 900 to 1275 to 1600 upwards d) Starting Interest 9% 9% 11% 11% d/ Rate e) Yearly Adjustment 1.1 1.1 1.1 1.1 1.1 Monthly Payments: f) as % of monthly MW 11% 21% 36% 45% 55% g) as % of *he 2.5 MW income ceL:Ing 4.4% 8.4% 14.4% 18% 22% h) Down Payment 10% 10% 10% 10% 10% (% of credit amount) Notes: Beneficiaries households are pre-identified by the Sub-borrower during sub-project preparation; sub-loan conditions are then determined by FONHAPO as follows: a/ the unit cost of the sub-project (total cost including contingencies divided by the number of units) is compared to stated price ranges ex- pressed in multiples of the daily minimum wage prevailing In the region; costs and minimum wages are updated to the time of Loan Committee review; b/ the percentage of total cost that FONHAPO will finance is 5% higher for social organizations and cooperatives, than it is for institutions and local governments; c) thus, the loanable amount (to Sub-borrowers) varies accordingly and is also related to the unit cost of the sub-project; d) the starting interest rate is again based on the cost of the unit; it increases by one point above 11% for each 100 MW cost increment beyond 1600 MW (e.g.: 15% for projects with unit loanable amount of 2000 MW); - e/ all interest rates are adjusted annually by a 1.1 factor; f monthly payments: these must be contained below the stated proportion of monthly MW for different unit cost categories (1 MW - 30.4 DMW); g/ proportion of monthly payments to the 2.5 MW income ceiling for FONHAPO's beneficiaries; h/ the Sub-borrower begins collection of the 10% down payments from the from the beneficiaries prior to the signing of the Sub-loan Agreement as soon as works reach 85% progress. Source: FONHAPO, Politicas de Administracion Crediticia y Financiera, 1984. - 29 - 5.10 Compared to the average cost of funds (51.9% p.a. as of April 1985) FONHAPO's starting interest rates of 9% to 15% p.a. are markedly negative. The gap is somewhat reduced over the life of the sub-loans. As the starting rates are adjusted yearly by 1.1 per year, the impact of this factor is rapidly compounded because interest charges are applied monthly on the outstanding principal, which is reduced through amortization payments only at the end of the year. The spread between nominal and effective interest rates thus increases quite rapidly during the life of the loan and helps capital recovery. For illustration purposes, assuming a given pattern of inflation and corresponding adjustments of the minimum wage, the correlation between nominal and effective interest rates on typical FONHAPO sub-loans would result as follows: Table 5: Nominal and Effective Interest Rates (Based on Amortization Tables 5.4 and 5.5 in Annex V) Sub-programs Interest Rates 1st. Year 2nd Year 3rd Year 4th Year Sites and Nominal 9.0% 9.9% 10.8% 11.9% Services: Effective 10.3% 12.4% 17.4% 18.2% Progressive Nominal 11.0% 12.1% 13.3% 14.4% Housing: Effective 12.2% 14.1% 17.0% 23.2% (assumed inflation/MW trend) +42.0% +24.4% +20.6% +14.4% 5.11 Expected Capital Recovery: For the purpose of this report, capital recovery is defined as the percentage of loaned principal amount that is paid off over time by the discounted stream of payments made to FONHAPO by the sub-borrower. To determine the present value of future payments, assumptions must be made on annual inflation rates over the life of the loans and eventual deviations from the forecasted values will have to be monitored. This approach appears necessary to evaluate the Project's mechanism for the amortization of sub-loans which, as explained above, indexes monthly payments to the current value of minimum wages, which are periodically adjusted to the accumulated level of inflation.16/ 5.12 Future Inflation Assumptions: Table 5.6 and Chart V-3 compare the historical behavior of minimum wage rates (MW) with the consumer prices index (CPI), the construction price index for social housing (INCEVIS), and the average cost of funds to the banking system (CPP). Expectedly, the correlation among these variables is not stable from year to year, but a remarkable consistency can be observed in their trends over time. The inflation projections adopted as basic reference in the appraisal of this 16/ While the "real" terms results of this approach are possibly more reliable, they are not immediately comparable with the average targets of "nominal" cost recovery on other housing projects of the Bank which a 1981 staff survey reported to be the range of 2/3 of investment costs. More recent evaluations, made in real terms, point to considerably lower results. - 30 - project are deliberately conservative and assume a slow and gradual decline from 1984 values of -30% per year. To gain awareness of what could happen under alternative conditions, a more optimistic projection was also outlined at -45% per year and a pessimistic one at -15% per year. 5.13 Sensitivity to Inflation: Using a computerized model of the typical amortization schedules for FONHAPO loans (Tables 5.4 and 5.5) the mission tested the sensitivity of the capital recovery ratio (CRR) to different evolutionary hypotheses of descending inflation. This was done for: (a) the individual loans of different types and vintages; and b) for the entire project portfolio assuming given shares and investment profiles for different type loans. 5.14 Under plausible circumstances (Scenario A.1), in which inflation rates are assumed to contract each year to 70% of the previous year's rate, and that corresponding adjustments are made to the value of the minimum wage, hence of the monthly payments, the typical sub-loan made by FONHAPO would yield acceptable real terms recoveries. Under the same inflation assumptions, the returns on the overall project including sub-loans of all kinds and vintages show a small positive balance (Table 5.12). This virtual surplus would become progressively larger (and capital recoveries correspondingly higher) under less conservative assumptions of domestic inflation. 5.15 The approach presented above assumes that the pace of inflation continue to decline steadily over the life of the individual sub-loans, down to a chosen cut-off rate of 9% in year 1990, after which inflation would supposingly level. Alternative projections were made, assuming the rate of inflation to remain constant throughout the life of the loans (Chart V-4). Corresponding results are obviously less optimistic, as shown in Table 5.08 and this comparative summary: Table 6: Capital Recovery Ratios on FONHAPO's Sub-Loans Start Year 1985 1986 1987 1988 1989 1990 1991 1992 Annual Inflation 42.0 29.4 20.6 14.4 10.1 9.0 9.0 9.0 CRRs with a) 69.1 81.2 91.5 98.4 101.9 102.6 102.6 102.6 CRRs with b) 56.8 67.9 78.3 87.3 94.4 96.1 96.1 96.1 a) inflation declining, or b) inflation constant, during the loan life. 5.16 Other Sensitivity Tests: Some complementary analyses were carried out to determine the sensitivity of the ratio of capital recovery to variations of: a) the starting rates of interest; b) the factor of yearly adjustment of interest rates; and c) the percentage of down payments. These tests were also performed under two conditions: (i) assuming inflation to remain constant throughout the life of the sub-loan; and (ii) assuming different scenarios of gradual decline of inflation. - 31 - 5.17 The results, presented in Table 5.09 to 5.11 and in Table 5.7 afford the following conclusions: a) the sensitivity of Capital Recovery Ratios (CRRs) to variations of the starting rate of interest is obviously high in both circumstances; b) the speed of annual adjustment of the interest rate is significant (for the reasons explained in para. 5.10) but their Impact is limited by the brevity of the amortization period which ranges between 45 and 125 months; and c) the variations in the percentage of down payment are not affecting significantly the real returns on the investment; in an environment of rapidly declining inflation they make little difference as soon as inflation hovers around 30% per year and actually induce diminishing results thereafter, but it should not be forgotten that down payments constitute a critical factor of liquidity for FONHAPO at the present time. 5.18 In conclusion, the most critical factor in FONHAPO's onlending terms remains the level of the starting rate. Any modification aiming at improving cost recovery should therefore concentrate on this variable. Financial Prospects of FONHAPO 5.19 If the inflation assumptions of our Scenario A.1 (a -30% decline each year, with a 9% cut-off), are accepted as reasonable, and supposing further that FONHAPO's overall program would level off to a production of 100,000 housing starts per year (e.g. at half the original target level set for 1988 by SEDUE's Housing Development Plan), the returns from the agency's new portfolio should rapidly reduce the need for Treasury grants to a tolerable level (about US$50 million equivalent by 1988) (Table 5.12 and Chart V-5). Albeit decreasing, budgetary support would still be needed up to 1991 because of the following reasons: (i) the high level of erosion experienced on capital loaned in the initial years; (ii) the deliberate decision to keep repayment terms affordable by the target group; and (iii) the maintenance of a substantial level of investment. 5.20 A sensitivity analysis, based on a slower pace of inflation decline (of -15% per year), and correspondingly lower adjustments to the nominal value of minimum wages, produces the results shown in Scenario A.2 (Table 5.13). In this case, Government transfers would still be on the order of US$70 million equivalent in 1988. 5.21 An alternative projection has been run (Scenario B), assuming that the GOM should decide to maintain the present volume of budgetary support to FONAPO at US$100 million equivalent per year. Under similar inflationary assumptions as in Scenario A.1, this would permit FONHAPO to achieve indeed the planned production target of 200,000 housing starts (in 1991) but, in this case, the Government would still be financing about 23% of the agency's investment in 1992 (see Table 5.14). - 32 - FONHAPO's Total Program 5.22 Only estimates of the actual volume of future government transfers to FONHAPO are available. The Medium-Term Plan for Economic Development identifies this program as a cornerstone of its social policy and of the Emergency Employment Scheme, but no specific price tag is attached to this recognized priority. The only figures available are those originally proposed by SEDUE in the Mid-Term Housing Plan 1983-1988, setting out the ambitious physical targets mentioned in para. 5.06, which now may have to be reconsidered in light of persisting fiscal difficulties, higher than expected inflation, competitive public expenditures commitments, and the unpredictable flow of future revenues. 5.23 The only reliable information that can be obtained at this point in time is the 1985 authorized budget which is for FONRAPO in the order of Mex$26,800 million (US$140 million at the December 31 exchange rate), of which MexS20,500 (US$107 million) constitute committed Government transfers and Mex$6,300 (US$33 million) FONHAPO's own resources. For the years to come it is safe to assume that fiscal transfers (including the Bank loan) are unlikely to supercede the 1985 volume and that any incremental expansion of the program would have to be financed out of FONHAPO's increasing po2tfolio returns. 5.24 In Scenario A, which was adopted as the basic reference for project appraisal, it has been conservatively assumed that during the sexenio the yearly production of FONHAPO would level off at 100,000 starts, a volume that the agency might achieve as early as 1985 or 1986. Should this become the case, the internally generated funds from FONHAPO's portfolio would progressively reduce the need for Government support. Treasury transfers would represent a diminishing percentage of total investment and could eventually be phased out as the agency becomes independently viable for a production of the stated, constant volumr The detailed analysis of FONHAPO's pro-forma financial statements (Balance Sheets, Income Statements, Sources and Application of Funds, Government Transfers and Annual Movements in the Mortgage Portfolio) presented in Tables 5.15 to 5.19, has been limited to this perspective situation. The Bank-Financed Project 5.25 In light of the uncertainty on the actual size of future Government transfers, it is proposed that the Bank participation be limited to a strategic, but circumscribed portion of FONHAPO's Investment Program which we have defined as the Project. According to a seven year projection of disbursement and to the conservative assumptions made above, this means that the Project's expenditures (including the Bank loan and the counterpart funding) will be on the order of 1/8 of the expected FONHAPO's onlending in any given year (see Chart V-5). However, when related to Government transfers, the Bank disbursement may amount to nearly 25% of the external support needed by FONHAPO to maintain a production of 100,000 units over the next four-year period (1985-1988). In this respect, apart from the foreign exchange benefit, Bank participation in the FONHAPO's program would help significantly in relieving the Government short-term fiscal burden. Tables 5.20 to 5.24 display the basic information concerning the proposed project. - 33 - Financial Rates of Return 5.26 Financial rates of return (IRR's) have been calculated for the Bank-financed project as a whole and separately for each of the two lines of credit which would be supported with proceeds of the Loan. Furthermore, IRR's have been computed for typical sub-loans of different vintages at constant levels of inflation (Table 5.8) and under varying rates of inflation decline (Table 5.7). Calculations have been made on the discounted streams of payments (real IRR's) and on the nominal streams (nominal IRR's). 5.27 The Project yields a positive IRR (above 10%) only if calculated in nominal terms, but the IRR is expectedly negative (by a couple of points) when calculated in real terms (an inequivocal indication of the need of subsidy). With inflation slowing down during the life of the sub-loans (by -30% each year), the real IRR improves from an average -14.3% on loans made during 1985 to -0.8% on loans made in 1988, and would become positive thereafter. Results vary between -15.5% to zero on Sites and Services sub-loans and between -11.8% to +2.4% in Progressive Construction sub-loans. If instead the calculations are repeated assuming inflation to keep level, the IRR's are correspondingly lower as shown in Table 5.8. 5.28 These calculations assume the equity contributions to have zero opportunity cost for FONRAPO, which is evidently not the case for the GOM. A true measure of the amount of public subsidy involved in the FONHAPO program would need to account for this as well as for other costs implicit in the running of the Fund which are shown in the Projected Income Statements (Table 5.19). The proposed joint annual reviews of FONHAPO's performance and investment programs would include these considerations (Annex V, para I-a). 5.29 The foregoing analysis has been developed to illustrate the financial and fiscal implications of public intervention in low-income housing credit, and to measure the extent of its replicability on a wider basis. The project would include a broader study (Draft Terms of Reference in Annex VIII) under which similar analyses would be performed for other and weightier programs of Mexican housing credit with the intent of achieving an integrated picture of the sector. It is in this comparative context that the operations of FONHAPO are likely to emerge as a useful indication for system-wide improvement. VI. ECONOMIC ASPECTS General 6.01 The main economic benefit of the project, gauged by its lasting contribution to national income, would be the flow of rental value generated by the additions to the housing stock. Reference could be made to other benefits, most notably to the project's impact on the level of employment during a situation of generalized underemployment of the available labor supply. By FONHAPO's own estimates, an investment of one million dollar equivalent in the production of Sites and Services would - 34 - generate approximately 500 direct jobs during 8 months of constructionl7/. These other benefits are not quantified in this report. Likewise, in regard to costs, the only measured cost used in the analysis is the market value of investments in land acquisition, infrastructure, buildings and maintenancel8/. 6.02 -Two alternative methods have been adopted for the evaluation of imputed rental values. The first one uses the traditional approach based on current levels of rent (sale prices) paid by the household for equivalent units after moving into the project sites. It is based on data collected in six existing projects developed with FONHAPO's financing. The projects were selected so as to represent the diversity of solutions encompassed by the program. The other approach uses costs for a "typical" lot (i.e. the averages for all sub-projects implemented in the first semester of 1984) and rental values derived from current levels of rent paid by the target population before moving into the sub-project as reported in the 1984 FONHAPO Evaluation Sample (FES) (see Chapter VI Annex). Costs and Benefits: Market Value after Access to FONHAPO Sub-projects 6.03 Table 7 below summarizes the relevant information on the selected projects. In all cases, the cost of land is based on actual market values and the quoted price includes each lot's share of land donated for infrastructure and services. Investment costs equal actual costs as recorded by FONHAPO and --for the reasons discussed in Chapter VI Annex-- without adjustment for inflation, taxes or conversion factors. In the case of Sites and Services the estimated rental value is based on equivalent sites with some improvements, typically a non-durable structure without services. 6.04 The resulting economic rates of return (ERR) are rather high -- in the range of 16% to 26% per year. Moreover, the sites and services projects have systematically higher rates of return than projects involving the production of semi-finished or finished housingl9/. In theory the ERR's based on rental streams should equal those based on sale-prices. In fact, for the examples at hand they differ - but by an acceptable small margin. In four out of six cases, the ERR's calculated with the sale prices exceed those estimated with rental values, but only in one case by more than 30% (project 003). 17/ For a fuller discussion of the potential and limitation of housing construction as an instrument of employment generation, see: PRELAC: El Efecto Empleo de la Inversion Publica, Santiago: Investigaciones sobre Empleo No. 23 (1984), esp. pp. 40-49. 18/ See Chapter VI Annex for a discussion of the procedures used in the cost/benefit analysis and for a definition of costs and time horizon. 19/ Project 105 is an atypical example of home-upgrading (Vivienda Mejorada) concerning a dilapidated tugurio in downtown Mexico-City. ILI-INCOME IISNG PROJECT Table 7: ERs Based on Invesiment Cost and Market Value in Selected 20MIAO Projects: (in thousands at arrent pesos) Project 1MAEO Unit Equivalent Unit ER (Type and Location) Saleable Invest. Total Sales Rental Appraisal Sales/b Rental/c Land Cost Cost Cost Price Value/a Date Price Value A: Sites and Services on Progressive Housing 061 13.8 62.5 76.3 96.3 18.0 12/83 21.50 22.46 TucZa (Chiapas) 024 22.8 97.2 119.9 158.7 33.6 06/83 26.18 26.21 anterrey (Nuero Lean) 005 25.6 174.4 200.0 293.7 44.4 02/84 26.38 19.6 Yaqui-Mayo (Sonora) B: Semi-finished or Finished Units 022 16.5 450.0 466.5 565.1 91.2 12/85 2D.04 18.40 Morelia (Midmacan) - periphery 047 43.2 496.9 540.1 809.9 90.0 02/84 19.71 15.90 Veracrus (Veracmz) 105 229.2 125.2 354.3/d 484.0/e 73.2 06/84 20.56 19.24 Meoico (D.F.) - City Center (recede]acion de vecEinad) - Source: Sub-grencia IMobiliaria (1MIAK), Lic. Ernesto Sodi. a/ Annual Reat C/ Cost of land in to; invesbnnt cast in tl; sale in t2, based on mission's independent evaluatia. c/ Cost of land in t; investment cost in 1; mmalized rental strean of equal value for t...4 Origima cost inflated to be crwpatible with appraisal date. e/ Actual met value of FURAMO produced unit (rendelacian). Note: The reported cost of land is eased an special appraisals of actual mxket values prepared for the Camisian Nacional de Avaluos. Data on equivalent units for Sites and Services project includes existing unit, usually built of temporary mterials and considered to be without acumercial. value. - 36 - Alternative Measurement of Benefits: Rents Paid before Access to Project. 6.05 In this alternative approach (based on current levels of rent paid by the target population), we consider the aggregate sub-project data for all renters in the FES sample. As measure of the increasing willingness of families to spend on housing of better quality, we raised the percentage of the budget spent on housing by one standard deviation: this raises the share from 16% to 24% (calculated on the basis of the head of household's income alone). The higher market value of the new units would normally be associated with an impmovement in the average income of renters. To capture this effect we increased the average income of the head of househo.Ld by one standard deviation, from Mex$23,785 per month to Mex$36,244 (a rise of 52%). With these upward adjustments the rent payable per room in the new housing units (in mid-1984 prices) is estimated at Mex$4,367 per month. Table 8: ERs Based on Investmmt Cost and Imputed Rental Value of FORMHAO Projects (in ncminal pesos (thousands), first semester 1984) FMO Lot (unit)/4 Impated Land Investment Cost Rent per EMR Cet/i Infra- One Cre room a b structure roan/2 Unit/3 (year)/ 5 Sites and Services 56.8 149.3 196.5 - A 21.4 17.3 B 16.2 12.7 C 14.1 10.8 Core Unit (3 rooms) 56.8 149.3 - 663.4 A 17.4 16.6 B 12.4 11.9 C 10.5 10.0 Legend a for SBS = with 30% reduction in building cost (adm.); for core = 1 year construction period. b for S8S = full cost of construction; for core = 2 yeas construction period. A Mz$52.4 (corresponds to lVpotbesis of daible adjustment, see Table 6.8, in Annex VI). B Nz$39.3 (corresponds to a 25% reduction in A value). C Mx$34.4 (corresponds to typothesis of maintenance of average income in Table 6.8, in Annex VI). Notes 11117 m2 per lot; 2/ roan of 12 E?.; 3/ unit of 40.5 2; 4/ Missian estimates (AZ). 5/ See Table 6.8 in Annex VI. - 37 - 6.06 Expectedly, there is considerable variation among the ERR's shown in Table 8, which correspond to different sensitivity assumptions concerning the costs and the benefits of the project. However, and this is the important result, the range of values and the direction of this variation are compatible with the figures in Table 7 which shows that Sites and Services projects have higher rates of return than Progressive Construction projects. Under the preferred set of assumptions (A, a) the estimated ERR for a typical Sites and Services project is 21% (the range in Table 7 is from 16% to 26%). For a Progressive Construction project the race falls to 17% (with a range between 16% and 19%). The juxtaposition of pessimistic assumptions concerning benefits (C) and costs (c) yields ERR's of approximately 10% for either Sites and Services or Progressive Construction projects. In sum, this alternative approach to the evaluation of economic costs and benefits of a typical unit in the proposed project supports the previous results based on actual market values for six case studies. It confirms the conclusion that the project has high and apparently stable rates of return. VII. PROJECT RISKS General 7.01 Several factors could have an adverse impact on the successful implementation of the Bank financed project or its expected results. These concern: (i) the capacity of FONHAPO's present structure to expand over time and yet to maintain the present degree of operational efficiency; (ii) the availability of land sites of adequate quality, quantity and price to permit development of FONHAPO's projects; (iii) the consistency and continuity of the Government's housing sector policy; (iv) the evolution of the general conditions of the economy and the market; and (v) possible delays or shortfalls in beneficiaries repayments to sub-borrowers, which would raise the level of Implicit project subsidy. Growth Capacity of FONHAPO 7.02 Will FONHAPO be able to sustain a continued process of growth, without loosing its present efficiency? Undoubtedly, further expansion of its operations is desirable for the agency to make a significant impact on the sector, but this expansion can be only as rapid as afforded by gradual development of its institutional base and by the extent of financial support it will obtain from the Government. At present, the Fund appears to be well organized and staffed for the present scale of operations. Some significant structural changes have been introduced last year to accompany the rapid expansion of the pipeline (i.e. the new organizational chart, the creation of the regional offices, the adoption of a series of operational manuals and of new financing rules). The growing volume of operations requires new processing techniques, greater computerization of records, an improved system of information and intensified technical assistance, and supervision and monitoring of the projects' impact. - 38 - 7.03 Special care must be taken to limit the agency's involvement in sideline activities such as home upgrading, finished housing units, and supplies of building materials, which demand staff deployment and resources not always proportionate to their benefits (para. 3.10 a)). Similarly, political pressures or the ambition of extensive geographic coverage, should not prematurely dilute FONHAPO's operations into an excessive number of small projects (para. 3.10 b)). The technical preparation of sub-loans and the reliability of cost estimates and implementation schedules need to be kept up to standard. Finally, the future financial viability of the agency will greatly depend on the rational management of its resources and their rapid turnover. All these potential issues have been addressed in the design of the Bank financed project and are the object of corresponding loan covenants. Land-Sites Availability 7.04 Shortage of areas with suitable pricing and characteristics for low income housing development has traditionally plagued housing policy in Mexico. To some extent, the origin of this shortage is political and is rooted in the perceived opportunity cost of available public land reserves which tend to be allocated to "higher- (but not necessarily "best") uses. The present Administration has focussed early on this problem and has attributed to SEDUE special powers for the priority utilization of unutilized public property for low income housing. It has also made available to SEDUE a limited budget for advance purchase of land reserves. To the extent that these powers will be used to support FONHAPO's operations, they could go a long way towards providing suitable project sites at prices affordable by its target group. In addition, FONHAPO itself makes available part of its resources to Sub-borrowers to finance land acquisitions. While land purchases related to Bank-financed sub-projects would not be the object of direct disbursement of loan proceeds, they would be recognized in respect of cost sharing to the extent of 11.6% of base costs (approximately US$35 million equivalent including contingencies). 7.05 Admittedly, there is the possibility of speculative (windfall) gains resulting from future extra-market constraints in the supply of urban land for low-income housing, specially in sub-projects built on land previously owned (or expropriated) by the Government. To neutralize these gains (and not to further subsidize the original credit recipients), the Bank should encourage FONHAPO (or its agents) to price all project-related land at market values. Possible Policy Changes 7.06 Continuity of Government support is deemed critical for the future of FONHAPO. This involves three main risks. First, the Government could find itself in a position that does not afford sustaining fiscal allocations to FONHAPO at the scale planned. It must be noted in this respect that the extraordinary expansion of the agency's activities during 1984, was permitted by a "strategic" (i.e. complementary) allocation made in the month of March, which nearly doubled the resources granted under the ord:!nary budget (para. 5.05). A sudden contraction in the annual - 39 - volume of funds transferred to FONHAPO would not cause grave concern for the counterpart financing of the Bank project, since the latter represents only a portion of the planned 1985-1988 investment program of the agency (para. 3.07), but it would affect its public outlook as a rapidly expanding financial agent and the morale of its staff. 7.07 Second, it is quite conceivable that, in the future, the Government may seek to obtain alternative financing for the FONHAPO program through the banking system (e.g. from FOVI-FOGA), or through the devolution to FONHAPO of some of the deposits in the payroll funds (e.g. from INFONAVIT) (para. 1.21). This might involve the need for some changes in the rules of operations of FONHAPO and some shifts in product and target population. Protective covenants in this respect are included in the legal documents. 7.08 Thirdly, the onlending terms on FONHAPO's sub-loans (para. 5.08) have been considerably hardened only last year. While it is probably too soon to assess the full impact of these changes on the market, demand has remained quite high, which may point to the fact that no alternative sources of financing are available to the clientele of FONRAPO at present. While new alternative credit windows could be opened by the Government, possibly at more concessionary terms, this risk is mitigated by the high level of commitment the Government has accorded to the FONHAPO program. This consideration also underscores the fact that a certain gradualism must be used in the introduction of measures to increase the profitability of FONRAPO's operations, at least until the time the agency's activities had reached fuller maturity and the paying capacity of its target population had actually improved. 7.09 The latter point is critical, when one considers FONHAPO's statutory objective of serving a large target population of very limited personal income. The purchasing power of this group has been eroded by inflation during the last years and the threshold of affordability of Government-financed conventional housing slid up to higher and higher income levels, to the extent that 70% of Mexicans became excluded from the benefits of regulated housing credit. A reasonable measure of subsidy to FONHAPO could be accepted as long as its production remains clearly targetted to the low-earning groups (para. 5.19). Inflation and Minimum Wages 7.10 As we have seen in Chapter V, FONHAPO's terms of capital recovery are closely tied to the minimum wage policy. This may be justified in an economy experiencing high rates of inflation, where wages are not automatically indexed and their adjustments often lag behind the escalation of prices (as is the case at present). Should the Government be successful in progressively reducing the inflation rate (and we believe the conservative expectations upon which this appraisal is based are realistic) FONHAPO's current terms allow for acceptable rates of recuperation. If, as can be expected, the Government should gradually up-grade real wages to reapproach historical levels, this would have direct impact on construction prices, but would not adversely affect FONRAPO's capital recovery since it would also result in proportionately higher monthly payments. Only in the case that construction costs should rise much faster than minimum wages, - 40 - would FONHAPO's present formula become vulnerable. However, this circumstance could be offset by the introduction of additional charges for interest during construction or similar adjustments. A protective covenant involving joint review of the terms of cost recovery for the agency by the Bank and the Guarantor is included in the Loan Agreement. Other Risks 7.11 Two risks usuilly associated with low-income housing projects have been substantially reduced by FONHAPO's past and current practice. Because of its experience in the field, it is improbable that FONHAPO will face technical difficulties in identifying affordable sub-projects for its target population (see Annex VI). And there appear to be no danger that the demand resulting from a country-wide shortage of housing could lead to higher income groups obtaining the facilities targetted for ti2 lower income population. These risks are reduced by the combination of FONHAPO's procedures for pre-identification of credit recipients (who are not individuals but organizations) which minimize delays in effective occupancy of the improved sites and by the active role of other financial intermediaries for the higher income brackets. 7.12 Finally, the project faces one additional risk, associated with the wholesale character of FONHAPO's lending. There is the possibility that beneficiary households delay payments or fail to pay the intermediary agencies (i.e. FONRAPO's Sub-borrowers). Because many of these agencies are well established and often governmental entities, this would not cause default in payments to FONHAPO whose loans are properly secured (para.4.09). But it would, of course, lead to an increase in the level of final subsidy implied in the project. To reduce this risk, FONRAPO should establish closer monitoring of the collection procedures of the intermediary agencies and enforce legal action against unusual failures in individual repayments. VIII. ASSURANCES 8.01 During loan negotiations the following assurances were obtained: (a) The Government would carry out a Housing Policy Study, and discuss the study's conclusions and recommendations not later than December 31, 1986 (para. 1.25, 3.06 and Annex VIII). (b) FONHAPO would prepare and forward to the Bank, for comment, not later than December 31, 1985 a technical assistance program based on an evaluation of sub-borroweis' requirements and carry out such program not later than March 31, 1986 (para. 3.12). - 41 - (c) Not later than December 31, 1985, FONHAPO would forward to the Bank for its comments a program to monitor the economic, financial and social impact of sub-projects. This program would be adopted not later than March 31, 1986. The preliminary results and values of agreed monitoring indicators wculd be forwarded to the Bank beginning March 31, 1986 and annually thereafter. FONHAPO would, by December 31 of each year, forward to the Bank for review and comment, the proposed investment program for the following fiscal year as well as the final evaluation of activities during the previous fiscal year (para. 3.17 and 4.14). (d) FONHAPO would, by December 31, 1985, furnish to the Bank for its comments the results of a study of FONHAPO's medium term financial viability. The recommendations of the study, would be adopted not later than December 31, 1986. (e) FONHAPO would adopt the Statement of Policy (condition of effectiveness) (para. 7.07 and Annex II, para. 4). (f) BANOBRAS would enter into contractual arrangements with the Government providing for the transfer of loan funds to FONHAPO as equity contributions of the Government and repayment of the loan by the Government (condition of effectiveness). (g) FONHAPO would calculate expected capital recovery on a yearly basis for typical sites and services and progressive construction subloans and would forward results to the Bank by March 31 of each year. If in any year capital recovery, calculated in accordance with agreed assumptions, falls below 50%, FONHAPO would take appropriate measures to increase capital recovery to such level. (h) The Government would monitor FONHAPO's economic cost recovery on the basis of a formula accertable to the Bank and to exchange views on the results of this calculation during annual reviews of the FONHAPO program (para. 5.28). 8.02 With the above assurances and conditions, the project is suitable for a Bank loan of US$150.0 million to BANOBRAS for a period of 15 years, including a grace period of three years at the standard, variable interest rate. OpGAN1GRAMA QEl F10E1COM1S0 FON00 DE HA817AC10NES POPU�ARES • � CO1l1Tr 'fECN1C0 � ОЕ 010TRiS1�C10И ОЕ FОИОО� ' йаееi+ё к�iв 01ПЕСС10N OEt1E11AL •еао.а ` �' .`1 г 0 1 � в• Fй-•-.i сеевы■•еюи � а.•........J 1.............'.".'. Т1СМКа • i l01ЧГt М •• i ..= ее■тв.►е.и �.�а.� ." игииа • 1М.Мtв1 Огl.АС10М ау11р1Г,• КвМеаерll OIfa11110t1e eтt.Re0l�0 вwИ1ЧТ.вСро • �оеи► иwовi►iвме Чеиrlевсю� rииlаеiои reвrae т ги МЧ�fвСqNц e0M111AЯ�eqN 1 �YaIWCqM М е � т! )ОМ4� otCWlaatW� г110тlСf0е СееТ0е г1ва�Сц.а 1ЧеС1АЧ� �0e11101 1Mre�YlT1C. T CeMтf�eqM гR[вwwRe е! hтпе 1feM�ia ееиlв.тее t Че��еqе еа wrue�te• иегеrм � fпiмiвв�iеи lигиv�по■ вмааие � соиг.а ает[ивТв�Rрп wtteurerтц�pf, в ,� ,��ат �j ,� еа иеае и rеог�lое еагеатr г и►ооwею■ еие 3�'�° е.ете тtто.и�в еwмиарв i а �atiiтte СОМ1.Оа �ае �. г.110У1е aeWlleeTMбeq ��еав г�ивмС�tве wповrери � �л�� тw.rae 'аг rarмuuo ��q�w еоигго ' ' иегik w�ммо г аоiм.са� vмеа• • саолоиаса ot eoooaaaeros е[ �MMYf�t�e е НюЧМW в �лriг� i 1�iпо°и°M иrе.ы�а.ьве �h►tt1�1 ' ееУУ0�о� � г1МвМе1{ое 1�МвМе1t110е тКМ14 ееlтеl • 1 raк�tterв �рМ rRt0Y1q ое 1NYy1Kjo г liwiыtй�o ieгоewoor О et teteг�ee т еитtи.е .' па�ар�w .оаw.кbио ryd � eicurcиaa( ot ипwсаа иам л+nга .us.w игиеае � �н] t'нт т петr>» г r"мг�гr тт.еiто.м► тiемеее � � н н �,,,+ F СеМ}а11►1еЧ 1МУе11е1о11!• �еа��lе 1 ивг�аflд l�YreiTe.pe11 r N М го0ТtС70I е f11e�1Q1010M • • о ' вв.ии• �', ое ►woewuoи • ь- ��i: � п итitевме � мiмм в , уΡ;и •rMCty М � r iii�ь�e��oy � �а w � О -43- CHAPTER II ANNEX Page I MEXICO LOW INCOME HOUSING PROJECT FONHAPO's NEW OPERATIONAL STRUCTURE 1. The statutory objectives of FONHAPO are as specified below:l/ i) to finance the following schemes envisaged in the National Housing Program: (1) land reserves; (2) sites and services; (3) progressive construction dwellings; (4) home upgrading; (5) complete dwellings; and (6) production and distribution of building materials; ii) to finance housing projects of agencies of the federal, state and municipal governments, and of cooperative associations and organizations legally constituted to build low-income housing; iii) to finance the purchase and construction of rental dwellings and residential estates; iv) to request, receive and purchase land of any type of tenure; to sell such land in order to obtain resources for financing low-income housing and to constitute FONRAPO's own land reserves for its puiposes; V) to promote, support, and develop mechanisms which lower the cost of housing construction inputs; vi) to make loans for the acquisition, construction or upgrading of low-income housing; vii) to make loans for the supply of building materials, supporting low-income housing construction; viii) to discount, re-discount or give out to be re-discounted credit titles corresponding to operations consistent with the Fund's objectives; ix) to guarantee the amortization and the payment of interests on titles or certificates which may be issued through other credit Institutions in order to obtain resources to implement the Fund's objectives; Z) to obtain loans in national currency from whatever credit source in accordance with the relevant legislation, ensuring that the interest rate and other charges on its active lending operations shall cover the payments due on its passive lending operations; I/ Acuerdo con el que se autoriza la creacion del Fideicomiso Foudo de Habitaciones Populares, Diario Oficial de la Federacion, April 2, 1985, Mexico D.F. and Contrato de Fideicomiso Fondo de Habitaciones Populares, of Mi y -13,1981, between SHCP, BANOBRAS and SABOP. -44- CHAPTER II ANNEX Page 2 xi) to promote and participate in research, technical or other activities, related to the provision of low-income housing; xii) to support other activities of information, support,.advice, study and promotion for the provision of low-income housing; 3dii) to promote in general the improvement of the residential conditions of population groups with lesser incomes. 2. The sources of financing of FONHAPO are listed below: I) the active patrimony of the pre-existing Fondo de Habitaciones Populares, according to the audited statements of December 31, 1980 (see para. 5.01 and Table 5.3 in Chapter V Annex); ii) the contributions of whatever type by the Federal Government, Federative Entities (the States and the D.F.), Municipalities and other public or private institutions; iii) the resources generated by direct investments of the Fund; iv) the income obtained from the transferred equity capital; v) whatever other contribution and fixed or movable assets which the Fund may acquire under whatever legal title. 3. The rules of operation of FONHAPO include the following: i) ensure the consistency of its lending programs with policies of national/regional development and with local demographic, economic and social characteristics, giving priority to sub-projects located in areas or centers specified by the Government; ii) allocate no more than 10% of its resources to the Federal District in the geographical distribution of funds; iii) require Sub-borrowers to supply appropriate social, legal, technical and financial justification for each sub-loan application, and demand a study specifying the characteristics of final beneficiaries; iv) revise the marketing studies and financial projections prepared by Sub-borrowers to ensure the economic feasibility of the planned operations; v) ensure that sub-projects meet appropriate architectural and planning standards and minimize the cost of the housing units; -45- CHAPTER II ANNEX Page 3 vi) require updating of sub-projects investment costs (prices must be adjusted to one moth prior to sub-loa signature) and include price escalation in the loan amount so as to minimize need for later complements; vii) achieve the best possible combination of local contributions and own financing; viii) supply technical assistance and management advice to sub-borrowers for the preparation and processing of their projects, and supervise works, providing consultants selected from a roster and financing if necessary for these purposes; ix) require full documentation of disbursement of sub-loan proceeds and request auditing of expenditures for works, supplies and services;. x) review and approve sub-loan applications through a Technical Committee for the Distribution of Funds on the basis of standardized procedures and documentation. 4. Terms and Conditions for FONHAPO credits (Table 4 and para. 5.08) were revised In March, 1984, as follows: i) Cost Sharing: Sub-borrowers must make a direct contribution to the cost of investment, either in cash or in kind (e.g. land, infrastructure, materials, labor); In practice FONHAPO finances from 75 to 95 percent of total Investment costs, depending on the line of credit and/or the characteristics of the Sub-borrower; ii) Sub-loan Amount: established In function of the cost of the units to be produced, expressed In multiples of the daily minimum wage prevailing I the geographical zone where the sub-project is located at the time the sub-loan is signed; there is a specified range of units costs for each line of credit and a maximum ceiling of 2,000 times the applicable minimum daily wage (In January 1985, this unit cost ceiling was equivalent to US$9,364); iiI) Down Payment: all FONHAPO's sub-loans, except those for building materials, require down payments of an average 10 of the principal amounts, which is deposited at the beginning of the financing period, one month after certification of works completion; iv) Monthly Payments: established as a fixed proportion of the applicable minimum wage at the time of each payment (end of the mowth) and increased over time as the minimum wage is adjusted to inflation; the percentage is established by PONHAPO in function of the costs of the units; -46- CHAPTER II ANNEX Page 4 v) Interest Rates: charged at the end of each month on outstanding principal amount; starting rates vary for the different lines of credit and are adjusted annually by a factor of 1.1; vi) Amortization of Principal Amount: computed on a yearly basis: thus the portion of monthly payment accruing to capital amortization is smaller than it should be, while the balance represents interest payments; this result is compounded by the yearly adjustment of interest rates and creates over time a significant differential between nominal and effective annual rates (see para 5.10, Table 5); vii) Maturity: the maximum amortization period is established in 20 years; however, rapid inflation in the nominal level of monthly payments may result in much shorter periods of loan repayment (presently they vary between 3.5 and 7 years); viii) Loan Insurance: there are two types of mandatory loan insurance covering 75% of outstanding principal amount: one on the amortization of the loan, and one against exceptional events; ix) Collateral: a sub-loan must be secured by a fiscal guarantee from the Government of the State in which the sub-projects are located or by other securities to the satisfaction of FONHAPO; x) Penalties for Arrears: a charge of 5% per month is levied on delayed payments; FONHAPO reserves the right to foreclose sub-loans after a 90 days delay. -47- CHAPTER IV ANNEX Page 1 MELICO LOW INCOME ROUSING PROJECT TECHNICAL NOTES Preparation of Sub-projects 1. Once the interest of a potential sub-borrower in receiving a loan is ascertained by FONHAPO, the next step consists in the development of the studies necessary for the preparation and the execution of a credit contract. Four phases can be distinguished: a) Identification of Sub-projects and Sub-loan Application: this includes the promotional efforts and advisory services described in para. 4.03 of Chapter IV. During this phase, a first documentation on the sub-project is compiled on the basis of a standardized format. Various Departments of FONHAPO are called upon to give their opinion on the technical, operational, financial, legal and social aspects of the sub-project. Once the favorable opinion of each is obtained, the application is considered viable and the sub-borrower is instructed to proceed with actual preparation. b) Feasibility Studies and Preparation of Sub-loan Documents: this second phase consists in the preparation of the sub-project documents (technical, financial, legal and social). Preliminary engineering design and studies are prepared. Occasionally, FONHAPO makes a project preparation loan to cover the costs of surveys and engineering drawings,1/ but in the majority of cases, these costs are borne by the sub-borrowers. This process is iterative, and may require two or three consultations with FONHAPO's professionals. The legal aspects of land tenure, and the Sub-borrower's criteria for selection of ultimate beneficiaries are also preliminarily reviewed. This phase ends with the authorization of the credit by FONHAPO's Loan Committee, which is based on the amount estimated through preliminary costing plus an allowance for physical and price contingencies. c) Final Engineering and Sub-borrowers Commitments: this phase lasts from 35 to 45 days, during which time the engineering drawings, cost estimates and sub-loan documents are finalized. FONHAPO's technical personnel then makes a field visit, to ascertain the 1/ Since the fund requires that engineering documents and working drawings be signed by a professional, FONHAPO.maintains a roster of qualified consultants which it makes available to sub-borrowers on request. The roster includes specialists in Urban Design, Architecture, Equipment, Infrastructure, Building Site Organization, Construction Supervision, Cost Estimates and Legal Services. CHAPTER IV ANNEX Page 2 congruence of the design to the topography and soil characteristics of the site, its present land use and tenure situation, and the availability of off-site infrastructure. At the same time, the sub-borrower's representatives are instructed on FONHAPO's supervision, monitoring and disbursement practices. It is during this phase that a formal commitment is obtained from the sub-borrower and the local utility companies for the provision of off-site infrastructure, if this is not already available. Similarly, the tenure situation of the proposed land-site is subject to verification. In all cases, one of FONHAPO's conditions for granting the credit is that the sub-borrower must produce clear title for the subproject site. d) Sub-Loan Agreement: the Sub-loan Agreement is formalized between FONHAPO's General Director and the Sub-borrower, only after the project documentation is completed in all its details and has received satisfactory review by all concerned departments of the Fund. To ensure compliance with effectiveness conditions, the Legal Department pays a visit to the sub-borrower. The planning Department makes the relevant budgetary controls. The Loan Agreement is stipulated according to a standardized form, which has been reviewed by the Mission and found acceptable. FONHAPO requires that a contingency allowance be included in the loan amount and discourages the practice of subsequent adjustments to the loan amount for cost overruns. However, in those cases where an adjustment to the original terms and conditions of a contract is justified (whether due to changes in specifications, number of solutions or loan amount) a formal application must be made and meet with the approval of the Operations, Finance, Legal and Social Departments. Prior to the stipulation of a Revised Loan Agreement, the sub-project must be re-programmed in all its aspects. Extension Services 2. FONHAPO's own staff contribution focusses on two Stages of the development of a sub-project. In the preparatory stage, it assists in the creation of a Support Committee (when no social organization exists as yet) or provides advice to an existing organization (for the establishment or strengthening of a suitable technical cadre). During a second stage, that of administration of the credit, FONHAPO's staff meets periodically with the Support Committee to accompany and guide its relation with the sub-borrower during the various phases of loan processing, and for obtaining the services and infrastructure envisaged in the Loan Agreement. Although FONHAPO is basically a financial rather than an implementation agent, it considers extremely important to set up the initial structures of the Support Committees, so that they can eventually develop into larger and effective community organizations within which the future residents can supervise and manage the credit themselves, solve all problems typical of the settlement and promote social, cultural, and recreational activities. CHAPTER IV ANNEX Page 3 Technical Aspects 3. Land Availability. In the majority of cases the sub-borrower already owns the land. Quite often, FONHAPO's financed sub-projects are implemented on areas which had been acquired in the past by the State Housing Institutes or by Federal housing agencies like INDECO.2/ In other cases the site is acquired on the market by sub-borrowers and mnly rarely it is the product of expropriation or re-use of ejido property. The lack of adequate planning in the past account for the fact that generally, the sites available for FONHAPO's programs tend to be located at the periphery of cities, sometimes separated from the presently urbanized areas, with poor access roads and scant, if any, urban services. In time, these problems will be lessened as the cities expand and the areas where FONHAPO's settlements took place become more accessible and better serviced. In order to facilitate the purchase of suitable sites, FONHAPO makes available sub-loans for this purpose. 4. Lot Sizes and Land Use: The average lot size on the sub-projects fin.nced by FONHAPO during 1983 and 1984, was of 117 m2, with a modal range of 60 to 200 m2. This plot size, which applies to both sites and services and progressive construction sub-projects, is in line with recommended standards and similar experiences of the Bank. Typically, some 2/3 of the land sites are salable to individual households. About 10% of the gross area is reserved for community facilities (schools, health and social center&, recreational areas) which are improved through various ongoing sectoral investment programs. The corresponding portion of the sites is generally donat-d to the corresponding authorities. The rest constitutes rights of way which are turned over to the mnicipalities. 5. Infrastructure Standards: As mentioned above, one of the requirements for credit approval is the formal commitment by the sub-borrower to provide the needed off-site infrastructure, complying with the specifications and levels of service prescribed by the public utility companies. FONHAPO finances only on-site infrastructure, which generally include the following: i) streets and pedestrian walkways: levelling and compacting of sub-grade for the whole roadway width, concrete curbs and unpaved sidewalks; in some cases a compacted base course is laid out, with or without asphalt seal spray (asphalt pavement is rarely provided); 2/ INDECO, the National Institute for Housing and Community Development was a public low-income housing agency, active from 1970 to 1982. After 1982, its activities were incorporated in the FONHAPO program. Its actions included slum rehabilitation and the acquisition of land reserves for sites and services and urban upgrading. INDECO financing was often obtained through bridge loans granted by the FOVI program. The conditions of the loans were similar to those granted by the PFV for the least expensive housing type (VAIN). The total output of INDECO during the last sexenio was on the order of 130,000 units. -50- CHAPTER IV ANNEX Page 4 ii) drainage of surface waters: open gutters are used as much as practicable, with concrete pipes only when strictly necessary; iii) sanitation: some type of sanitation is always provided, usually in form of concrete-pipe waterborne sewerage with individual-household connections; iv) fresh water: PVC is the material mostly used in the networks, which always include household connections; ground reservoirs, watertanks and electrically driven pumping wells when necessary; and v) electricity and public lighting: aerial distribution with copper conductor wire and pole-mounted transformers are mostly used for low tension networks; the same poles are used for the installation of public lighting lamps. 6. Shelter Standards. The line of credit for progressive construction dwellings (Vivienda Progresiva) provides funds for the erection of dwelling units as well as for implementation of the corresponding infrastructure facilities. The average size nf a start-up unit, in subprojects initiated during 1983 and 1984, was of 38 m2 with a modal range of 27 m2 to 42 =2. The covered space is generally divided into a living room, one or two bedrooms, a kitchen and a bathroom. Construction techniques are generally labor-intensive, typical of the regions in which sub-projects are built. Materials also tend to be traditional: stone masonry and concrete for the foundation works; bricks, cinder blocks or wood for the walls; and concrete, asbestos, or zinc plate for the roofs. Design layouts are elementary, mostly conforming with well tested prototypes supplied by SEDUE, which in general result satisfactory. � MATRIZ D� COARE8PON8AB1L1DAD опnо о 8istema � Dtorg®miento де Creditoв а � PiiOC��O , rA�R Rt�PON�A1{Lt � еwпbгв е�ввогlроlеfn лnгпЬrе еМвагiреlдУе ьеиwаиа ._ лр. 1вв. 1� • 4а е.в. н�! 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Doeиentв- о laitle�irc�onei де v!- i R1вlомеlбп де pretoelГов [lдмеlегев. •}+ 7�д ' аlаодв дв 1ов 9то{та-- + Llвtютaoidn дв {оlав дв iивlо. + t+1 ввв у 1lвавв до ег{д!- в Rв{iвсто Ч lеаеьсlаеав еоа атев дв lдев � i� со да1 ГасNдГ0 1r а1 те етпlба tигЧга Ч poaiDla егfдцов). - � {lвгто дв 1в девввдв. • Lrвlwelбо дв ргееви дв рговосlQa. .� Deurrolla де 1ов ввt_ I Leudlов ►ге17 [всидlе де вгвlвесlЫ- ' Incл {$п df1 в�ёё йе�iё�lвелwlвlбе Ч � П 6pLICITUD дlos пквваеlов рвгв ■lовтев 1lдвд рагв в1 оеот{а-- vlвЪt{TrJa дв ее N оеегреlaato т ееп- вlапга Ч1 erfdlto. + Ггв[aettlсllавд efenteв. •�+ сгвNсlбп дв1 ег(дlсо. + ГгеlвеtlЫlliвд Llпапеlвгв. + _1_ + ►гаlaettlillдвд lатiдlгв. Т � � Applleatlo + ргвгвееlыllид .ое1.1. ' ' Noeltteвelбn в!в►!1lдад дд erldsto. Н Ii Артобасlбп де 4кидlо де шевртоуаt- • Inседтвсlбп де атрвдlмсе де виtврrоупtо. � � Soltettu4. ео рв ы w вргоЬвеlбо + Rer1вlбп да ироеtов сiеоцов. •�. � • рог Cwlei Тiепlее. + RLtlвlба �в ввраеtев ! Wxlвгав. � ' ♦ tввlвlбе дв ирвеtов �итlдlеов. • + � � + 1W1вlбп де вврвееов воеlаlи. � • Уе.ве. ргввввtвсlбо дв ао11е1еид. � . ' AuthOTiz6tti0A ' Yo.b. вргеiегlба д•1 егЧlео. � ' Noeltlскlбо да вргоЧсlбп. � . Iq II1 t:опегвеаеlбп. ' lвевiиеlба де1 ирадlтtв Ч1 ргоТвгео � iC ejвcuclvo. CoпttBCt ♦ веvlвlба иркеов еkдlееа �} � + {w!вlОп вврвесев (!ыцlвгев. } � ♦ tпlвlбо вврвсtов lusfdlеав. "+" Ф + !иlвlбn црвееев аееlвlц. � е ►j • Llabлelбв дв еааегвге • • п • tler м irae � • . . ' , •�' � н ♦ Е1дее�е(бв да ilиqив вit7clp �. С , ♦ соеклtавj,бw дв еlев еае кеедtеМо. �.. F� • Caaerol prinepuнeвL � . .• „ - - - . вв*в• , ьлfq�.п•...�.«...,..е...вг�....в.т..7�.А� �....fw�..в.ввв.в.....�..wwв . :•в.вwг+. м•-.�r.«...в.в�в..�•.��w..-.+�+�ввв•+ai+ . • м�►тд�г о� сордеsроNвд����оа►о � • � �,�,,о , 8ts�eme � Otorgeмiento де Credttas �ROC�RO � � �А�■ . 1ltlstlONfA�Ls nопbгв дввоНро(дп мгпбгв rгвагlроlде впрМдвд -� �, . tв� д� в.s. � Миггоllе еkвlео-f! 1 �h1вlQe, ►"Nгьlкr ► ееаtгеlвт • =Мвл1вlQц�b Авваев ►!в!м у Rвртtв. � � - ... D L1iAC1c10 nмеlеге iв1 вJвгеl-- в3 дакггоllе Ч1 wвn .. � е1е й1 erN(ee. ев (!вlео дв1 ccidta. ' � � ' 1t. N!nlttrкleu. • � wileu.в дв ■tвtвlг«lвв. • • , ' д �в1lеlеед ► иtев�,в д'в Т►ввlекf/в 7 Мр М пелlвегкliМ (�ввкв в1вlstrвelQв де1 егЧ! ►lввввlвtе). • и• • Савелl и wв+е• мв.#ие.ееl � V�~f СиЬtо а 1вв еавllсlо_ � 11I 1bd1[tекlй. евв дв еавtгвевеlав - • �а1lelt�d /в ве�1[!екlовов. � дв1 «вдlta (вв}ве![! + lSевlвlбв вs/оеtав tfевlеов •�• 7д D�8bUr8111l1t. ск[амв. вовtо �/о в h+lвtQa аркеов [lвмеlвгов ++ V7 , вееlемв). • !rvlвlдв вqоееев )огlдlеев � ♦ ев�еаlав вqвеtев вееLlев + ' • ' Te.b. ►гвтавскtQа дв e1ellev+. � • • ' rs.вs. ведl[1гмlбв • ' Пв/те=гвввеlQа е(мlев. •• • Rв/мlтввкlбn [1а«lегв � !у ' гв/еецвrвеlд� ►rввв*wвtвl - � . ' • • ewnв*!е lbdl[[евеегев � � твлiввеlбв !е1 в)вт- • fslleleod де [tв1 lее. � L1f Itul�вlte Ч! *� fв ьс��. } . 1 е!с!о ttcalео-►lввв-- в)вгеlсlе. е1•га де1 ectdlte. ♦ h,b де М{гввi дв�дв)вдlеввlбв. , + � r Nwee ttввl М1 вевев дв1 аеЧlео. + N Ч ' L1в�огвеlби�мвtтаtв М[цl!!w� � Н 1 • ►lгов й еевегвсе Ч[falеlre, + � � • �1вЬегкlQв еtев{ее Ч [!аlpilее • Сtвггв ►еевириевl и1 esMlеа. � еввlluatQe f иRве- t 1вееRтвеlQе де �вbекlQв 1е cn /ге • 1длt1[lгвгlбn 1/гвlвев4гкlав Ч 1в dr � Е ADJUDlGC10N оlмtо N1 /гоегввв дв 1в 8евведа. iтввв /в llмtt[lев--- м�в. вдJвдlыеlls М 1ев - еlде, er3aneuelбe е • lввуlв(мtо Т вкюгlа дв lnсвRгвеlбл дв �,. Ыведв lмм�lвв [!nв_ 1еев3гееtбе дв 1в де- 1в двввnдв. еlв/дв еее 1м гееаг- �в• • Rвеlвего де lвеввгкlAn дв !в двевлlв. � юв да1 ►d1RA►0, !! ►гвЧ)nдlЧеlй 11вЬогасlбв / ее�вl---' • . A110C8C�OR . •lмее де м/ее�тввв �►в1е • 1в егрвlакliв вееlаl дв1 tc+ve � дв ег�sвlвкlй воqlвl, �евв!lеевгее. � ; ее lвlсlв еав 1в qro-- • м{ем д• ►nadJrdleвeldв / и3и1аlв�tо, : � 4.е Nеlдв 1в1 erNieв рт •►ге{там й в/leileвelCe. 'е,+ Слiев Tteвtca ► ем1- i Мвгт,веlвf/д М ееввовеев !адlвеtив3вв } вв см в1 !lвtрlts 1д ввtгв вeeNLtвb Т �гв/о дв Иае[lсLсlов. �. вJегеееее. i1i Ад1и1lевеlбе, [•р!'lввее А1 ►гоRв ' . вв М М��r1lекеlв. •�Wвгвlвlбn Т и<диLевпее дв1 г+ге�гвв дв М J�W Lые tQa. • iвев{rкtt�l+ Ч в�г/вдlмtв 1в вдj.дlиеlбе. � � . � • . . � � N • � Авв�вггвв(уев вМ' lnapгвwNln ♦ w��вумwыв N •�гвЬ•вletn . , ..�...�.. в Т-в.вrььwвьь..�.м�.wвв ». -в•.. �..а�.....вw-в. . , �..в�.в• . -.�п.�� +в+М+t.�..�...вь .. � � . •-^w�+Тив+.. в. мвr't.тпьw+�т+ww��'rв�млl7.. , N1ATRIZ С�Е COдAE8PONSAB1LfГ.�AD �„n� , • 8lвtете , Otorgemlento де Cradttos � PгaocSSO ' ' , � � ��ве Мвп�онвwвеьR ��� ��� �,г,у�� у��Т ееоslМдвд _. вр. fin. �иг: . '1в, 1 в1.д. ыв. RвеvТвтвеlбn �в ев►l- I ltcurвnelQa дв �е� j�ем ►°т ееа- � qвfеткfба rrqtetr.вв �е гкервгкlas. • 1 RfMCrACION св1 в lаеегиа М1 -- ве�вемв. ► �еы�гвв tbвenl ► ив.lвfваее ►гqгевгввr �е rew � . ertllte eterpLa. 11.вдв вs 1а ►вгtв !,� Мгкlы. , я1 Ч1 в�егеlеlе м • ylteaelQn 1е 1а nevreneLы да м�тсМв • ' М1lекlы цевеи в' а1 1lвввг �S! Ч nвкв l!вlев ►те�гвввlе, к1 . RераутепС � 1в �l�ег�тl�' tеевlлввlе в1 tLlТиlсе 1в1 в)вгеtеtо М1 � tt ввеерткlы <1ве.авт.аlы �е1 и1�е • йвbеrкlы ►т.втевв иllвsтlво и г.еа►е- • ' '.r" • Ч a.eresa- �е1 пНlее вtгввtв fв гк1ы. . еlдв. 1аа rqee авс!►вls�ев • tвеqвткlбn ie 1а ввееtlквеl�в. • � . !er ввогtlввеllв. ♦ !в►тмsе �еаlеlвl. } ' 1iI !!еlpfa ео tвralaaciбe ie 1в твео •�вltеееи и clstNtю. , • + �г ' ' tв1 �е1 ег� ►етвеlбв Т е1 erNtes ; be![!екlСв в Севlеl Тiевlм. дlto. а=�. i LlЬегаеlбп 1в Свтгоttав: + � . , . мiwetee а I.. ке1 Llвbтвеlбв fe1 ввгее . :' в��CI� е11вИв teI ееетрвlм 1 Мвtео /в �гв- Ч пвlиецв ►вn е1 •�+tiигкlы �в1 ввпе ie мlие!/а, • � te М 1ев ertlJteв г ви 1ивеlде, slвtввв �в еевтвввlеа- • 0lкеввеlтеs т te.ae. Ч вграееов ►�в�- ♦. + �+ -� + •} гдвеtае еоп 1ов ftti'- te ы etiдlte. tУвlвв �в1 ввпе 1в nвlnвсlы. � ps �еи(!еlвкlое. . Evaluatioп I1 wкгвеlАп 7 MWLtвnes ► веипе е ы�Lмlо Ч1 ►го�тавв ie trвlиеlы Соа+ , • � 9� hо�еееов. 11о И1 ►соцввв И е� р�гкlСа т lгедаееев. ' + } } + Й . • [ввlwсtбд Cдettвw. + ОЬиглеlомв е lвfетввеlы М 1в вввlи- } w etбa ►вгсl�wler М 1и /гив. 1 I1I Iв►веее. �ввlиеlы М lqвеее • fвletalмtв ы1 �tv�tstls И ввциеlАд • �w еwи 1в вееtQв еааеtава !s►ка. [lаааеlггв 7 erNlt!- ♦ р�М:леlеие е !в[мвеlы �в 1а ввп- '�° '�' + � � е!а 1в1 [�аМвА1�D. lraelбв Nrclаlвг Ч 1.а (rив.' I� С1еМ1. мlиеfдв lлецгвl • hаlиеlы 01еЧ1. • И1 /Q{А/0 iеМгвеliл , ►геlиееев • !в*ееее). в , 1 � •• . � ' М г! н ' с . •i , w • аи►г«...ьи w мв.вr..ап ' t е.гг..�миьи е!. ■*г.ь..wг♦ -54- ' " ' It�iG AND BUDGE�ING - FRLIMOTION CHAPTER IV A1�IDiFZ: Chиrt N-4 г� 01А=iЯАМА РОд РЯОС� У RlЯРОNЯАl1L10АО РОА ОЕд=NС1А PAOCSiOt ` ilвСвгnв Оtог�впНiвпео дв СrвдlСрв вtвмвМi+ .. в.а �.мь. �м М.м.л.n M.++r гьавn.r и..пвь rr.rrв .�� вм.в.�и. вми МГьА1tвМ 'М1М vlвМwв�в 1�r'N ��1b� аваУlw ввlh _ •Уи Т �1fва�- . агМи п.иn аьп. - • виwм. . в..w в..wгв+ в..6. f.вr.+• и!в 7.....в. 1в. f.....�. иw Т r.д. �вм м.rtw. 1Мл ьlвввfw 1Yar ilaвstw м ьwrвw 1lаавв аьлвем. _ п� вwив s вв.ь. ввТ sимв c.awn ьгw оr.г.гм. , • `:nlsu иwL1 4ц4 вуЛвW иии L41в вваrад+ 1МвУ wУ1ви �Т^ •� а Wu р.гкt а 1ьвв. qвиаt ав аьвr рме . r 1ьм qвгвsl ав 1ьм О�rва4 1ЛV !У�/! . л. � . . • , в �3гс ' ' i � 1 • � г 1 , 1.пиг• � � i � . _ Ij М Yrs � � i. ---' I ii.в. i 1 I � (� 01АОдАМА РОд РдрС�S0 У дрР0lV�ддlLlрАр РОд ОЕд�1УСТА PRpCE/ра - 1� 8lвwпв Оtоrрвпlмsо дв Crвdltqв ���п Рг'ОпОVМfСв iМг1'�rв tl�вв�1М �+' АМ'вОвlвn Овпlвв .аГвWtвУо °/вг�аbп МвмвеNn haгfd4o Нnв�вnв fвгrа"д iввпlМ wдвl Ип1вЬ�в•b 1в[впв4вW М . ..гlььв s иr: ввгг.е.�и ь ' . lУвiв ггМгlав- Гв�.l�. г1вв. . гqввв ава•tв1 7/в liвl У hR �s1M. А "fв lмfвм- � �а� - '• � . !. а�.1 и ц- в ы.и.. Р$рМ ION -:- .,, •��+- '.l:цвг_ав. �:цл ;и г - [в1Swв �1[Гвв1 ' �~ м . _':): :.га-:.1ь.-� вв Т/в ваед3 <А [паl�вlв. и ммоавwвв 1цв1вrli � 11в4 а afw4 М . авС1Мв. - i мел. иг.м вв в.р.ги L влr aгw.ilrв. Wв вв иw G иа�1в. 1 ' 1 � i CHå= IV A~ : Chairt TV-5 Preparation PIT åpproval 一56一里些中匹J凡越旦望‘ch勰t Iv-6 舀 . � •м\м . 1 � �' � ...ri.1 .вга.■ -п w .n.w.�. � - ьи>глмМ » w.qл •амп � � I I - 1 ' � 1 .-_. • ааивдда эV iвц�� •..,..,.„ » ' . г: ..:..�_ I лиа.. .г 1.. � _. м =г;::... 1 -и7 .1а. иги■ 1 ( I � I111 .. . Э I I I 'f:1 '_`в'"�. wввl^1 �1ар I I I 1 I •�•Ч I I I . _ °в1а °��.•�•��`г„ I �а1в^Iв..в и i ьвilNг. sN1.7 • »lавгв. `1а ; л�ваМ Ki>V � � ( { т8�о�аад �та С • • ' :..1.ь11 и в.ь1 ..•в.. • Wlй7YYl' • \1вм.гКtа У:1.в_в;�.:в • � � •а171w. •БТ.вs в.fа.•.. . . 'wfиtall' Iи I ••.•г W1а.авв.вl и:iа»`ь.-.�аь.а �вив•»alotмi • i,в rм.иS.а}" -.1�1м.а w1и w\аи.. и1и .oaaw.. .и... 1 с. ц�ява�3�=аА -+ и . п`"� ..> �:' - iЛа.а•rрlа.агв+1 и .>>.•. м w n>. ws••. а 1 � . .Mtw � I ь••_ -�r+t м[и » _se.a. .; -.аии н»рп 1 - ь.г- I i '.а1l1 а ь в.. • А 110}•Jв�1N � '.t 1 • q/ -\.1. _ w, _ � � • ивта n��3ваот�► ••в��кмг� » ь++ь 1и1а1г i и1^.11 I •Мв1iМ игии 1 . � •г гв1М вуf' .гдlгь�.1 wы.. -и1:^iм • � ваки лии~ •�р>.>1г•1w » • iN� � в�авв •г рt.п .г .r1a - _ гвlТгивl в w..ь в:I •.^ . � •гу\агаlв^(м«а I I в► s1a1r1 .""11Р _ " ' -иав ь.� .*амау _ _ . o��e��3FAuaP�-а=д ; .. �.и.1 а,,.. � W вИ�в1 в1' вV 11 ва1.1а� И 7 • '.г 1 в Увlаьа. I _ьвЧ . .в .ь1 в1 в а.гавг , 1 �. . -г1^..�.Т � 1 в_Чв.._ .. SSS д � �гУΡ1� а1":�1а'�га 1 �ьiZif и1Ч�вj"й i�O1aZ "Т"� ..w.ы ы �....у ;•г»в:.и.. • . л.. _:: . . 'М•Иг �� вWгвв► в вв ��1..ви`.;'• wга.м:��ы� .r � . .. .. в°N'°М 1°л°ив0 � °1+в11W°ииц 1°fosв в°виwl/ еа1РМв'i +гоNв°°°М и°�и.ид° °ws� sв �sПи°о ие�оа°л�R °11°+ввввР М1°•в���°О ваwлоиs+0 ' "Р�D°O�р^1v° . вда1Р��� �Р оаив�w�В,воар вшвав[g � =09ii�0llд д1"JNa7t1i0 !!Од pVO171Y\/BNOdS7tl А OS�JOtld l10д f/Wt/tl�V10 t-ni ��вЧ� :хннл�v лг интаvн� -1.5- 'J О� CHAPTER IV ANNE7C: Chart IV-R Гl�1l 01АОдАМр РОд РдОСа�0 У дqP0111iA��L1OA0 POR ОадеNС/А РдОСа/�1 U1Y1 flвапв ОеогОвпlмво дв Сгвдltав гввиввп..иw вввпrвмМ ✓вввпвllв ввввгв�Ув вмввМrв ввwЧвв ввгв�riвввв вввввМwв �ьlwв�вl Fw1вМв �Ммввв ,, вввlвl увwввМвгlв вrт Мпв1� вввNвв M11sw1Y вв ввУ. вв вУвгив ы1в1ИI М вNlивиl}. У1.1вв .1в1в вв 1м- в1 � �.в..й..` � • вы1М в N..i - • w.N. SUBLOAN ......в... •�... � .... REPAYMENT •. `•••1вв•••.`. 1 а+ ив 1ы М�ивв в. ...ь.� � I ✓ � . i1.1и ив. в�в � � W 1в1вв . У4• ' � � I I��..r.� . н.7.. � � � 1...и .r.и .uи..rr wиlвНв. ~в44в I ' и ы и 11вJ I I у r1вв. 1 w.вв в ввв.вм r.I,вв в`1.Мви14 .1М • rr W. м1и. 1 ~ W1Y lиивf' � • в.м. м. i � ГГ�11 о�аоwлмл род агеос<во v д■вvoиw�uaw� pow овд<ис�w pwoeвSO1 ии 1lвевп�в ОiагОвпдвлео дв Сгвдlеов wивввЧбв w �wnвв ввв'вilвw wl.мwвw 1иг1в1вв вNмви Мввггввв ввввгr�Мв r� •1мвМвn I ввпИв ввГNвsвМ ввв1М ь.w1вУМlвув rwквl ММ1вв и.в..• мв ь м1w1r ' rioиrroкlиc - lцвУ У«r в вввв.У M1r :вwвУ �r s rввв иlвв в вr й1� ь вwав. �* вв М1вв• �lfLUATION •1м. �"в• в w.- « W+ м. и в.иr- ;��. 1..1ь I .в.. .1в.. � , I ,,,в r1r . � � � � ' �._. `� �.� 1 I М ИвуввУв I � • � I _в4'йи виlr Чв I � Иии ввlвв � 1�ви w ь 1 � lиви ввЧ` . вМ.�11rв вв1 1 �+ивв114в ы вlвв 1!М f •МУ ви\ви1 wи.. м I Э i ы. w I � _ i I -4в вввlrМв - � 1.ввl. � • -59- CHAPTBR IV АНКFц: Chart Iv-o REVISION OF SUBLOAN A�GRE�'tENT 01АО17АМА POFi РАОСН�О У дН9РОN/AO1L10A0 PO:i �<Ч�NС1А PROCESDJ .и1,.1и. дtвtвпв ОtогОвтlвnга дв Сгвдlsав pw.wн.wf�0 . � Мrгдl. Mrr.dи оепlrв �г �вrмвв в�.�^ Р1вм.вlм 1иwУ1и Мммвв аl�� 1миМl1вг1. O1� евпвгвl ииЧвв вМ'.r1�в/в .л.�'/ в.ав 7• -• • . iвtгв. 'ги1 Nв ыvиЧ1.. • � •..lstгв'1А1. и1М и11г1� ,:...,г. :г�••У1••» Applicat on for R 1в1оп ` с•нЧ1в- I глиывlв у . � И'в в1 I Агwн вамl I л w1г1.и1Lв. I i � 1 I Мв1V в//в/1wв I/и1М NlMtM М1М вв.вви/ Мв1М УМвси yylY в/гКМв� Ив1/\ ММ/fM � 1Jв/1!и ��1с1� �мwвrввгвlвв Ч1И1ав f �lиввl/ввв г�1 кWв 7/Ч1� 1wr\с1{HW � ,1и . ,.1.•игУ. .1..и1... ...1и. ии. .1..�,1и Re-AppralвaL � tвсвввв. А1в1М) и f nв[UУв. I У:1.в I+'в�в �•с1:• +сг�[1:в м . w.Ч. г1.в и.И1•в ��г�1гУ Мfв Мг1И У\М1wмв � р.lв. 1 М а.ысlимаввt 1 ..:r..:'.. _ и � � А�р� и i г •сЧ\ ввмвв• 'wdlu wмвв а3!/. в1М. `.вlвси v�Ч1- а.вlвгм в�1I1. ви/вси У/1Г1 уlивв вN1(1• в•{р ..вF.и мUМ. в виlw -rU1. в м1 .м1М / лwW- иtв/м м1'1 W1ив'1n и�ь pJ.!1вв. в sN/11в. св frMltв. г� .µ1{{\, ы вгЧlгв. •/N�1Y. 1 I 1 lкwn ивввlw сив.вr /..w\И вlлв вм.wи � Ч W1ilNгвrY. вс 1f ивtвгlв. -. а-чми i I � .ц.и. ! S lgaa те -60- ��� f �,� �_ б /�р /� -61- CHAPTER V ANNEX Page 1 MEXICO LOW-INCOME HOUSING PROJECT A, DESCRIPTION OF THE CONP=R MODEL USED FOR THE FINANCIAL ANALYSIS General The financial analysis, projections and statistical tables presented in ttz repor-.: were produced with a computer model that uses LOTUS 1-2-3 on an IBM-PC or compatible equipment with a minimum of 512K memory. The nodules are fairly complex and require approximately 200 ZB of memory. The model consists of three distinct modules. The first, the amortization module, is a simulation of PONHAPO's lending practices, which produces a monthly amortization table of a given FONRAPO loan together With accompanying statistics such as the length of amortization, the Internal rates of return and the percentage of capital recovery, based on either the nominal )r the discounted cash flows. The second module, the program and Investment module, produces a projection of FONRAPO lending activity from 1984 to 1992 ; a forecast of cash revenues from the mortgage portfol:io which can be expressed In current Mexican pesos or In constant 1984 dollars. The third module, the financial statement - module, produces projected balance sheets and Income statements from 1384 to 1992 and contains historical financial statements since the founding of FOARAP0 In 1980. Model Flexibility and Future Use The user inputs provide for flexibility, allowing to change many assumptions such as Interest rate and relation of minimum wage to Inflation, loan sizev etc. With a modest amount of additional mark, the underlying assumptions built into the tables of FONHAPOs loan conditions such as the percentage of miniwm wage devoted to monthly payments and the starting interest rates may be changed as well. Also the model can Incorporate actual Inflation rates or user supplied projected an annual inflation rates for each disbursement year. The basic conceptual characteristics of the model are described in the following pages, Use of the model as it stands requires a person familiar with LOTUS 1-2-3, although with additional work the model could be made more "user-friendly" for deployment by financial analysts with no prior computer experience and could become a useful tool to unify World Bank and FONHAPO's criteria In monitoring loan activities. 1. Amortization Module The amortization module simulates PONHAPOs lending practices and produces a monthly amortization table. A description of current FONHAPO's lending practices is contained in paras. 5.08 and 5.09 of the report and -62- CHAPTER V ANNEX Page 2 will not be repeated here other than to mention that the interest rate and monthly payment vary each year and are dependent on the original amount of the loan and the periodic changes in the minimum wage. To calculate discounted cash flows and expected levels of current peso lending activity, the model incorporates inflation assumptions supplied by the user for the years 1984 to 1995. a. User Input The model requires the user to input the following information: Inflation rate in 1984 Annual rate of change in the inflation rate The minimum (cut off) inflation rate Start year Financed amount, expressed in multiples of minimum wages Relationship between inflation and the minimum wage. b. Computer Supplied Input to the Amortization Table Annual inflation rate 1984 to 1985 based on user inputs of inflation rate in 1984 and projected changes. Size of the loan, expressed in multiples of minimum wages (escalated by the computer supplied inflation rates). Disbursement schedule, based on the current FONHAPO practice of advancing 40% of loan upon effectiveness followed by an 11 month disbursement period which is the current average disbursement period for a typical loan. From a data table incorporated in the model the computer supplies the loan amount and the percentage of down payment, the starting interest rate corresponding to the origina'. size of the loan, the yearly percentage increase in starting interest rate, and the percentage and amount of monthly payment adjusted yearly for the change in the minimum wage. c. Output: Amortization Table (see Tables 5.4 and 5.5) The model calculates a monthly amortization table showing monthly payments of capital and interest until maturity. In addition, the amortization table calculates a cash flow discounted by the annual projected inflation rate compounded monthly. d. Output: Financial Indicators (Table 5.7) Upon completing the amortization table, the model calculates the internal rate of return and the capital recovery ratios based on the nominal or discounted cash flows as well as the number of months of amortization. In addition, the model calculates the factors of annual capital amortization and interest charges to be used in the program and investment, and in the financial statement modules. -63- CHAPTER V ANNEX Page 3 By incorporating the projected number of units to be financed each year, a data table will supply levels of investment and the corresponding statistics over the disbursement period of the World Bank loan in order to evaluate the capital recovery on the project and on the program as a whole (see Module II, below). The Bank financed project contemplates participation in two of FONHAPO's programs, sites and services and progressive housing, each with distinct terms as to starting interest rates and level of monthly payments. Consequently, the project data evaluation prepares the key statistics of each component and combines them in a consolidated analysis. f. Sensitivity Analyses (Tables 5.7 to 5.11) The module allows to produce a series of tables based on selected values of all the basic inputs (starting inflation rate, rate of annual charge in inflation, cut off rate of inflation, start year for the loans, financed amount, relation between inflation and minimum wage, percentage of down payment and pace of annual change in the interest rate). It also allows to derive rates of return and capital recovery ratios for loans of different types (sites and services or progressive housing) and vintages (start years) and combines results to analyze returns on the total project portfolio under varying conditions. g. Interpretation of Key Indicators The most critical indicator of FONHAPO's operation is, of course the capital recovery of the loan itself. It is recognized that any corrective measure to improve recovery would Involve changes in the basic loan conditions. Other cost factors, such as the complementary share of investment directly contributed by the sub-borrowers or the general administrative expenses of FONHAPO are not treated in this model, but have been considered in the formulation of the project's total costs (see Project Costs Table on page vi). It is also recognized that the cost recovery levels of the loan terms are discounted only for inflation and do not account for the opportunity cost of the capital transfers that FONHAPO as a public agency receives In form of equity contribution from the Central Government. The model has been conceived for eventual use by FONHAPO itself and is strictly intended to produce indicators for internal financial control. I-a. Economic Variant of the Amortization Module The Program Division has studied a variant to the Amortization Module. This consists in the introduction of a formula-derived measure of the opportunity cost of capital, which would permit to express the returnS on FONHAPO's subloans In terms of market or "shadow" costs (i.e. in an economic mode). On the other hand, by zeroing the values of the variables introduced, the computer falls back into its unmodified version and produces the original results (i.e. In the financial mode). The formula proposed by the LC1MX economist consists in the following: -64- CHAPTER V ANNEX Page 4 (1) Balance Sheet Identities: I w L - D (wher. z_- at wzTh; . - loans; D * debts, deposits) Zero-Profit-Candition9-- . (2) R (1 -a)L DD - %. + L.CI from which (3) [ i-D[ + P-. . + Ca where (4) ID - (1 + Rd) ( + dP) - 1 and (i (by definition) The following parameters would be specified by the model user: Rd = real opportunity cost of loanable funds Rk = required rate of return on equity 1 = equilibrium debt-equity ratio CI = intermediation cost per loan unit a = rate of default and arrearage dP = inflation rate The economic discount factor in equation 3 is simply equal to the social rate of return to capital (Rk) when the debt-equity ratio is zero (the intermediary does not borrow, it only receives equity or transfers), provided that the cost of intermediation is zero and the rate of default and arrearage is also zero. Alternatively, if intermediation costs and default and arrearage are zero, and if the debt-equity ratio is infinite (the intermediary funds all its lending by borrowing), than the discount rate is simply the opportunity cost of loanable funds (equation 4). The latter becomes equal to the (expected) rate of inflation if the real opportunity cost of loanable funds (Rd) is zero. Hence the financial (cash management) mode of the model is seen as a special limiting case of economic mode. II. Program and Investment Module (Tables 5.12, 5.13, and 5.15) This module imports the amortization statistics, for different loan-sizes escalated by inflation and produces a projected level of loan placements during the estimated seven-year (1985 to 1992) disbursement period. By incorporating the cash flow from the mortgage portfolio and other estimates of miscellaneous incomes such as supervision fees and income from land sales the module estimates the level of Government transfers necessary to finance the projected level of activity. a. User input Inflation assumptions used in the amortization module. Projected units of investment during the seven year disbursement period 1985-1992 by line of credit (sites and services, progressive housing and home improvement loans). Estimates of miscellaneous income. -65- CHAPTER V ANNEX Page 5 b. Output Average loan size and investment for each line of credit and for each disbursement year (the model assumes FONHAPO stops loan operations in 1992, the last disbursement year, in order to evaluate post disbursement portfolio recovery). Yearly and accumulated cash receipts. Yearly and accumulated cash deficit (Government transfers) or surplus during the disbursement period. Post disbursement cash receipts from the mortgage portfolio to maturity in 1998. Percentage of Government transfers required to finance the projected loan activity. III. Financial Statement Module (Tables 5.1 to 5.3 and 5.15 to 5.19) This module imports the project investment data together with the cash flow projections and converts it into projected balance sheets, statement of results of operations, a statement of yearly and accumulated Government transfers and a statement of sources and uses of funds. The premises used in these projections are detailed in Chapter V Annex B ofthis report. a. User input User supplied premises relating to miscellaneous income and expenses. b. Computer input Levels of investment and cash recovery from the program and investment module. c. Output: 1985 to final maturity in 1998 Balance sheet (Table 5.15) Income statement (Table 5.16) Statement of source and uses of funds (Table 5.17) Statement of yearly and accumulated Government transfers (Table 5.18). d. Interpretation of output It is interesting to note that FONHAPO's operating expenses represent approximately 3.5% of loan placements and are substantially covered by its miscellaneous income from other sources. Barring anomalies in the pattern of expenses or significant changes in the nature of its operations as a wholesale mortgage lender, monitoring of FONHAPO's operations can be reduced to close analysis of the discounted capital recovery results from lending activities simulated in the amortization module. -66- CHAPTER V ANNEX Page 6 B. PRINCIPAL ASSUMPTIONS UNDERLYING THE FINANCIAL PROJECTIONS Income projections 1. Loans under the new housing program a. All FONHAPO loans to sub-borrowers are guaranteed by the Mexican federal government. Consequently, the projections carry no provision for uncollectible accounts. b. The interest rates charged are based on the current FONHAPO regulations (Politicas de Administracion Crediticia y Financiers, page 11). Based on the average size loan for each program as of July 1984, the projections contain the following rates: Starting Annual Rates increase Program Sites and Services 9% 10% Progressive Housing 11% 10% Rome Improvements 9% 10% The loan terms provide for a 10% down payment and the aonthly payments vary each year according to inflation assumptions. These variables have been extensively analyzed in computer models prepared by Bank staff. c. Amortization and construction costs The amortization of FONHAPO project loans include the following assumptions: Inflation starts in 1984 at 60% and decreases at the rate of 30% per year down to a minimum of 9%. Minimum wages increase annually by a percentage equal to the inflation of the previous year. The nonthly payments increase each year in the same proportion as the increase in minimum wages. Construction costs increase annually by a percentage equal to the current year's inflation; on the average, 67% of construction costs are incurred in the start year with a carry-over of 33% (at the new costs) in the following year, except in 1992, the last year of the program, when all costs of 1992 starts are incurred in 1992. The down payment is received in the last month of the start year and monthly payments begin the first month of the following year. CHAPTER V ANNEX Page 7 2. Interest income and expenses a. Short-term investments Under current bank regulations FONHAPO may borrow funds at lower-than-market rates but receives market rates on any short-term deposits. In 1984 FONHAPO's short-term borrowings costs were 15% and interest paid on short-term deposits is approximately 30%. The financial management of FOMBAPO proudly asserts that all administrative costs are covered by this difference. As inflation decreases, however, this margin between interest income and interest costs will decrease. The projections show this Income decreasing from Mex$ 1,116,079 (72% of net income) in 1984 to Mex$ 189,000 (.5% of net income) in 1992. b. Construction funds FONHAPO's financial management estimates that the interest income earned on government transfers received before they are needed for disbursements to sub-borrowers approximates 2.1% of construction costs. 3. Construction income Management estimates its income for supervision projects will approximate 2% of construction costs. 4. Sales of property FONBAPO's inventory of developable land will be completely sold by 1992. Cost of sales will average 60% of sales, including modest amounts invested each year. Expense projections 1. Personnel The projections show personnel costs increasing at a rate equal to the inflation of the previous year with the exception of 1984, 1985 and 1986. During these years personnel costs increase an additional 20% to reflect the costs of new personnel as FONHAPO builds its organization and staffs its field offices. 2. Repairs grant buildings The projections show repairs to the buildings (received from BANOBRAS when FONHAP was created) ending in 1987 under the assumption FONHAPO will be successful in its intensive campaign to dispose of these units. 3. Administrative expenses The projections show administrative expenses increasing at a rate equal to the inflation of the current year. -68- CHAPTER V ANNEX Page 8 4. BANOBRAS commissions The commissions BANOBRAS charges for processing collections from the low-cost housing portfolio will end in 1984 according to FONHAPO's financial management. 5. Depreciation and amortization Depreciable assets, an imaterial item in FONHAPO's financial statements, i-ll be completely depreciated by 1992. Because new equipment requirements are not expected to be significant In relation to program costs, the projections make no provision for equipment acquisitions after 1984. 6. Old portfolio losses FONHAPO's management should not be held responsible for losses incurred in the collection of the low-income mortgage portfolio received when FONRAPO was created. Several buildings needed extensive repairs and the computer tab runs of clients were unreliable. The losses recorded to 1986 in the disposition of the low-cost housing portfolio reflect the differences between the tab runs and the accounting records and the up to 20% discount FONHAPO offers an owner to settle immediately his outstanding balance. These losses are not material to the scale of projected operations. C-69- -ATER V ANNEX MEXICO Table 5.1 LOW INCOME HOUSING PROJECT Coidensed Financial Statements from Inception to July 31, 1984 - - - F01814PO CONENED IALANCE SIEET aepressed in thousands of pesos) Deceber 31, July 31 - Assets 1990 191 1992 1993 - 1984 - Cash in banks 23,223 24,535 25,296 16,373 Short-firs deposits-discountefeotes 1,950,47? 5,001,356 5,000,000 Short twrs Investments 3.011 1,515,220 521,90 968,417 1,352,220 kcmts receivable 549,338 340,666 933,307 2,523,612 730,16 Soverneent grant uartqa*es 3,03,744 4,165,450 3,908,705- 3,I81,72T 1,411,241 Now progras loans: Completed and interest buaring . 50,195 2,124,177 3,100,000 Non-intrstf beiring- Progress paymets 545 519 1,843,593 4,806,839 4,843,939 Advances 6,539,960 FONI projects inproces 826,639 367,12 279,790 23,242 64,215 Equipeent, net of depreciation 97,010 39,644 41,996 45,052 44,040 Apartments ad locales for sale 537,315 337,659 563,664 219,398 496,906 Develable land 2,106,756 1,724,871 1,621,2053 3,365,252 *3,359,93V other assets 63,799 22,795 20,784 42,391 19,799 8,158,211 8,786,156 12,475,171 23,296,755 2,99,6190 Liabilities and net uorth Liabilities: lank loms 12,455,61 1,950,479 5,001,356 5,000,000 Accounts payable 958,969 319,021 343,452 586,99 781,122 Provision for repairs - - 1,500,000 1,500,000 1,500,000 Other 13,414,6St- 319,020 3,793,931 7,01,345 7,231,122 Net North: Sovernment grants, net of rior yews results of operations (3,713,527) 8,448,040 10,254,865 16,379,852 21,612,143 Less,ites charged back (66,9531 1823,490) (2,5564,046) (2,778,735 (2,779,6881 (3,790,4801 7,624,542 7,670,819 13,600,117 18,932,455 Revaluation of assets 1,697,627 . 1,52,738 "Current year results (1,475,952) 842,586- 1,010,421 900,16 1,013,37 (5,256,4321 8,467,129 8,681,240 16,198,410 21,699,518 9,158,218 8,796,156 12,475,171 23,296,755 29,979,690- Prepared by i&e o 19-le-i -70- CHAPTER V ANNEX Table 5.2 MEICO LO1 INCOME HOUSING PROJECT Condensed Financial Statements from Incepttion to July 31, 1984 FONHAPO ITEMS CHARSED TO GOVERMENT Inpressed in thousands of pesos) For the year ending December 31, 7 anths --- --- July 31 1990 1981 19G2 1983 194 Total Balance beginning of period 66,953 023,498 2,584,046 2,778,735 Extraordinary repairs grant buildings 66.953 140,842 109,468 317,263 Provision for repairs 1,500,000 1,500,060 Estiated losses from invaded properties 363,507 89,659 453.16ib Cost in liquidating grant properties 154.653 154,53 Provision for bad debts 97,343 IB9,744 287,057 Other 61,421 4,945 953 67,319 66.953 756.545 1,760.548 194, 69 953 2,779,688 Balance end of period 66,953 823.496 2,584,046 2,776,735 2,779,683 FDNHPPO SUMMARY OF GOERNMENT GRANTS Iepressed in thousands of pesos) For the year ending December 31, 7 months -- July 31 1900 1981 1992 1993 1984 Total Balance beginning of period 823,696 (3,713,527) 5,448,040 10,254,365 16,370,852 823,696 Cash grants received 544,410 465,010 970,000 5,119,000 4,239,100 11,336,520 Gavernment assumption of debts 13,167,011 13,167,011 Transfer of results of operations (5,092,059) (1,475,952) 942,596 1,010,421 1,000,176 (3,696,859) Other 456 5,496 (5,7611 15,434) (12,985) (18,226) 14,537,223) 12,161,567 1,806,25 6,123,997 5,233,291 21,612,143 lalance end of period (3.713,527) 9,448,040 10,254,865 lk,379,852 *21,612,143 PrePared by F!D on 1-kc-64 CHAPTER V ANNEX -71- Table 5.3 MEXICO LOW INCOME HOUSING PROJECT Condensed Financial Statements from Inception to July 31, 1984 F01OPU CONIENSEl INC= STATENEOT (expressed in thousands of pesos) For the year ending Dhcember 31, 7 manths - MD.. July 31 1980 1981 1982 1983 1994 Income: - - - Interest---- Short-ters investents 150,000 700,000 796,589 1,000,000 1,306,976 Les, interest eapase (1,573,329) (28,1471 1299,244) 1353,1811 (655,930) (1,423,329) 411,853 497,344 646,919 651,046 Bovermant grant portfolio 453,973 439,731 554,658 500,000 301,746 IIne progra leas 40,000 - 269,773 . 376,845 Other (969,35) 851,594 1,092,002 1,416,592 1,416,637 Sale of property 192,473 1,081,497 512,706 599,269 32,504 Less, cost of sales (115,514) (714,106) (324,90) (353,440) (225,823) Less, sales upeses (18,219) (88,147) (23,8353 154,262) 1295) 59,741 279,244 163,8 9 181,566 102,396 Rental and other 74,007 87,043 154,926 103,295 105,397 (836,607) 1,217,971 1,410,713 1,701,453 1,624,430 Costs and eponses: Persemel 5,079 L7,975 146,601 352,077 283,669 Repaire grant buildings 133,739 56,528 39.811 276,005 145,462 Admtistrative 67,979 69,187 133,745 119,853 127,35 BMORA coissions 302,135 219,400 69,077 41,628 11,934 Depreciation and amortization 15,913 13,195 11,058 12,224 3,196 Other 114.601 - 39,441 639,345 375,295 399,292 800,787 611,055 Net income for the period (1,475,952) 942,586 1,011,421 900,666 1,013,375 Prepered by PLI o 19-Dec-4 S � ' � , � ' . �1�q �Н __ ___ __ __ __ _ _ _ ___ ___ __ __ _ __ _ _ 7С � i��д� � п + ��#��#�����������������'��'�������#������l�������l������ � 0 � � ; r � 1 виw�..ь. �'iй.�-ё'iiv�'�Т.йй�i''��•уi.й'i�йй~�'�if"�%ай�йR:Яg�iS�ьа:�йн..ёrrrривнн...о s ry е ее � Q � ��� х � i оееое� � � � � ����ыS`�ТлS'вSмыиТ,:'вS'�S'�ыыыыУвыныынины +� р„( .г e�Qo �+ � � iii=i:ЯЯнйGнмнынмййн�.iii.йi'iGT+iвi+Ciiвйi�iii:iWC::1:'1i::C1:гZr°iв°i.?iв��.°ir�iвд7i.i��r`'�° '�" "•! � � r��= л е р р О д О О е О е О О О О е е в О б р о е О е д� О О О О О О О О О О О е д О О е о е е О О О О Ф О О О� � у Qis �•=ai ■_ ��� �=�=s�рΡ=t� � �� =�3 ��: � � ��: ��� ��__���� 3��� s � � ����Яt� ���: tL�Ce�aiC��SCJ�i�G�Y3��q�C�$ЯЯ�O1iiS�qC=�Y Я�5�рi1� � � � �°s�л� � � .,..,..,.. ^s х � ����i�' � Я o������iili�Яiii�i[iйрЯЯЯрЯдZf�р���������i��iгоёоооооооо� �% h+ 1у ff�� ' � г� 7�R ц���_ �� ,� � й й й о о о ё о о л ё ё о о о+ а+++ а+ а+ а± а а+ а+++++ в+++ �� М ��я�+аааа�а�������Яа�������ааа��s�������s��� r" � о в✓ О � �+g в� в� в�в� в� " вiii в вii iiвiв i ,� � в Q � в� в� ваj � �� �3i е��� i=� i� i i i���� i���� а������� i i i+ в в i i+ в i i е е е е в о е е е е е о п~ Ф � . 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Chart v-I. meXlco : LOW INCONE HOUSING PROJECT LOAN REPAYMENT DIAGRAM FOR SITES AND SERVICES SUBPROJECTS Averoge Subloan Arnount =250 Minimum Wag% Mpohti.I Payments - 41.0% of Minimpm 1ýhöe Minimum Wågå Adjusted fo Inflörion bcclinc oF -30X p« yur Stärring Infefest Röm 9.0 . ådjushol b4 4.4 ench for 000 254(45 10X ý29~ 210164 Löwnmment 001 20153 10ýý - P.V. öf Wohuräfemerifs -W Ist-k% (#007) 4444 Dishurse«nt- 5 T Ifjol$ Cd PV 59,0 (31.714 Mig 5753 Nof ~ vered tji p f27169 (0.54 P~ r DisbunemnTs Monthq NOW& 74x11 Effi Hu 41139 Advancc 0 PRINCIPAL 1 2 5 6 1 8 1 10 11 12 13 44 16 14 97 te 31 21 **1 24 2% ft 211 18 ffi 0 0 4 54 1131 ffi 0 4,1 41 42 43,0 49 4147,1 4f 80 &t i I dishuriemnt per;öd - repöqtnenr period - p::ý l paqmtnfs - MW Odjuårmnh + 42.0;1 - ->r + 2!91. 4 . +20.41- ý4.4 Y. 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OK Mini~ Wage Minimum Wa0 A4j4,sräd Ib Inf 1~ Dedi'rgng -303 per q~ OöMng Intant Ra& 12X a4~ kr 4.1 mch 4~ nio @.- Downpoqment lags n of V.ootmsmmmm 146* DB Mia Offir P«PINU PRINCIPA 00 00 30^ tf." 40 Y- Advance 10X . . . . . . . . . flank% 7^ 8 a NA 0 o~flo ;*&"3j4w4n4nj,»mag«mmja att 90i ffixi "U Oc~ repdymtnir period +410 nr 14.4 Y. .V. VOUC 4+ efitbar&Cmnt/Rdpg«nr Sf~ lh rwROMI ruks JgQtN iftjwtdn MEXICO LOW INCOME HOUSING PROJECT Table 5.6: Historical Trends of Key Indicators (1980 values - 100) 1 US$ Year CPI MW(*) INCEVIS CPP Hx$ (June Rates) 1975 38.18 38.77 31.67 +15.7 +3.3 +25.1 1976 44.21 40.07 39.62 56.81 11.76 12,49 +29.2 +60.0 '+31.5 +7.1 1977 57.00 64.09 52.08 60.82 12.59 23.09 +17.5 +13.4 +19.0 +20.4 1978 66.98 72.73 62.00 73.23 15.16 22.82 +18.2 +16.8 +24.9 +5.8 1979 79.17 84.92 77.45 77,44 16.04 22.84 +26.4 +17.8 +29.1 +27.6 1980 100.00 100.00 100.00 100.00 20.04 22.92 +28.0 +30.9 +29.0 +35.1 1981 127.00 130.92 129,04 133.96 20.47 24.42 +58.9 +34.0 +54.7 +43.1 1982 203.35 175.38 199.70 194.06 27.66 47.75 +101.9 +61.9 +83.9 +48.1 1983 410.52 283.98 367.18 286.09 39.59 119.96 +67.1 +52.8 +58.9 -14.1 1984 .669.79 434.05 583.56 246.12 58.63 167.41 +59.2 +56.3 1985 678.52 51.90** 212.18** . (M) Minimum wages applied January through June. (**) April Rates. CPI - Consumer Price Index; MW - Daily Minimum Wage in Urban Areas; INCEVIS - National Index of Construction Prices for Social Interest Housing; CPP - Average Cost of Funds (Costo Porcentual Promedio) to the Banking System; Note: The relative congruency of the yearly adjustments among the three price indices. 더… MEXI.C01 LOW COST HOUSING PROJECT Sceлario А-2 Scenarlo А-1 Scenarlo А-3 1n11+tion -151 1п11п1аn •JOt 1all�tia •1S3 511Е5 АМО SEAY1[Е5 S1fE5 АМО 5ЕА91[Е5 511Е5 N10 5EW1[fS 1 -•-----. •-в_.•-.. ----------ввв..-ь. ------------------ Маип�1 Discounted Na1nE1 Oiuaмtel Maiu1 huoиtN Ма о1 S1irt Ма. �1в 1e41n ------------ ---•---..--•• 5ttet Мо. М1а 1пl1п -........... ............- 51ut Чо. Nie 1еf1л ..._..__... .•........... utlans 1еи pte ri,e гил 1ид [дА 1дА [дR 1аг Pets ыgе ►Еtл 1АЧ [fdt 1RR [RR 11и pt� нуе иtе tГд [Rд [I!1 [АА � 1ь,55е w0. 3ь 9w 51.о1 9.п 1го.о1 -23,91 5ь.31 wes 1о 9м 1zo1 9.11 1ю.v1 •15,51 Ы.п и0s 1s 9м 3з.о1 9.и 122.п -1.11 a.s1 16,111 1416 31 1,133 1).11 9.51 120.31 -20.31 е1.11 19В6 13 1,711 24.11 4.51 122.01 •9.21 19.6L 19A6 1Т 1,2L2 1/.11 9.11 123.11 -1.51 l1.01 � 11,191 1911 39 2,051 78.9i 9.11 120.Ы -11.Ot 86,51 19А1 16 1,113 20.61 9.11 123,33 -1.Ы А9,71 1911 1i 1,192 10,01 9.91 121.31 -0.31 99.11 � 11,522 19в0 10 2,013 31.11 9.11 121.01 •13.41 11.Ы 198А 11 2,103 11.11 4.А1 123.91 -1.12 95.91 19i9 11 1,Ы1 9,01 9.91 121.31 .01 100.01 11,г51 19е9 11 г,Ь9е 2Ь.п 9.п 121.51 -11.о1 1ь.е1 19е9 1в 2,ws 1о.п 9.91 121,п -о.31 94,ц 19е9 1а 1,1и 9.о1 9.п 12�.и .е1 1ео.о1 1в,20+ w9o 13 1,ье2 2�.п 9.н 12ьи -е.+1 е1.ц 199о 1е 2,ы1 o,ot 9.91 121.п .о1 1оо.о1 199о и l,9м 9.ot 9.п 1н.31 .о>; 1оо.о1 1В,251 1991 11 5,113 19.31 9.Ы 122.Ы •6.11 ВЬ.21 1491 1В 2,101 9.01 9.91 121.71 .03 100.01 1941 11 7,125 9.01 9.91 l11.71 .01 100.01 ' 1,691 1942 15 6,OS1 �6,11 9.6t 121,01 -1.4У 90.51 1992 1В 3,11Ь 9.01 9.91 121.31 .01 100.01 1992 11 2,316 9.01 9.9i 121.31 .01 100.01 _...... ..° ----• ---- •-•.. .... ...° • °. ..... ---- ----- ---- ----- 121,1и'r ioe�l cuponenl 9-5t 121-1д -1u.9i 11_1t 1at�1 соропмt 4:Bi 123-11 _2-01 13:01 1ot�1 еовропмt 9_/i 121-1i Y1.01 l1.11 � � vR0eдE55[6f и0иS1и6 1ЯОБkЕц1vЕ ►+А►51и6 PЯOiRE4519E N<K151Ni и н ---.....-•--------- ................... .-------•---....... и Мса�м1 Оi�ссиМгд Moetinel Oistounld Мелiиl liимlN '• • Мо о1 5tut No. еи [а11п .......----• ------•-•-•-• 5tut Мо. Min Inf1n ............ ........°-° 51ut 1b. Mie 1Н1п -..--.._... _..�.--..._. пl�тs 1иг Oлts rile ►�le 1pR' [Fk 1RR САА 1�и pett и1г n!e 1RR Сkд 1AR [RR 1ги pete ир гдв 111 {М 1i! � -••--.. .... ..... ..... ..... ...° ----- ----- -.... .._. ..... _._.. ..... .---• -••-- -.... ----- ---- ° •-- --°. .-... ..... ..... ._.. .-°. 1,98J 1985 11 919 51.01 11.11 130.Ы -21.Ы 55.:1 19AS S2 414 12.01 12.01 131.71 -l1.А1 10.11 19В5 И 919 33.01 13.51 110.ц -i.11 �Т.71 1,95е 19еЬ 1Т 1,1ц и.п п.п пьst -и.ы ы.1t 19еь 5е 1,31Т 29.п 12.ц 13е.31 -s.ь1 ы.s1 ltаь es 1,2е2 и.21 i2.s1 tи.п о.и 1о1.и � 1 2,ОЫ 19А] 19 2,OS1 ]6.41 12.11 133.]1 •11.11 8).01 1481 Ь) 1,Т13 20.Ы 12.51 111.11 -1.11 95.В1 148Т ЬЬ 1,492 10.01 12.51 113.21 i.1t 101.21 � � 2,1о0 19еи s2 :,е13 31.и 12.ц 131.9t -11.о1 13.и1 1900 ьs 2,1о3 11.1t 12.51 и2.1t 1.11 1o3.5t [Мв ьь t,ь11 9.ot 12.51 и3.21 i./1 иТ.п и 2,1еа 1909 s1 3,ыь 2Ь.11 12.и иь 21 •1.11 19.п 1919 Ьь 2,105 1о.п 1г.s1 1л�.21 2.п 1ог.и lvвя ьь [,1ео 9.о1 11.s1 tu.n :.11 lн.п 'д 2,191 w90 51 1,Ьв2 :2.п 12.ц 11;.91 -sм е:.31 19+о ЬЬ 2,л1е 9.о1 п.51 1л3,21 2.и lо1.11 l99о ьь 1,969 9.о1 l1.51 и3.п :.п 1оТ.п � 2,1AS H9i ЬО 5,115 19.31 12.51 119.А1 -'1.91 91.Ы 1991 Ы :,101 9.01 i2.51 113.21 2.11 101.11 1991 ЬЬ 2,125 9.Oi 12.51 (13.i1 Z.11 101.11 д sЬ2 199: л2 a,es1 1ел1 п.sк 11о.е1 -1.о1 91.и1 1ro2 еь 3,116 9.о1 1:.s1 1и.2к z11 1оье1 199: аь 2,31ь 9,о1 11.51 113.ц :л1 иТл1 � 15,2:1 1ot�1 caponent t1.3t 13e.9t -1.9i 80.5t 1оtЛ селропмt 12.51 111.11 .01 i00.l1 Tot11 capanent 12.31 112.93 1,61 105.21 ~ ....... ,..__ ..... --•- ----- •--- ----- ---- • °--- °-- ----- ---- ----- 101N [0l1Р011[1115 101Н [ONFOYEMIS 101и [01�O11Er18 нЭ ..-------•-••-- --------------- ............... � Маип�1 Olewuntгd Nм1nU Ь�наиlЧ lоланl CiuиelN ty Ма oi 5tut Мо. М�п I�11n ------------ ------------- 5tut Мо. Nin 1п(1е -°--------- ------...---- Stul Ма. Ми (еflв ------.-. t'� utlcas уеи yus eEqe г�се lkA tRR 1RR [RR Теи pets пqг r�te lkfг [АЯ 1АА t1й qw уЬtс r1/1 г�tл 11Я W 1R1 �Ci� C.i --•---- .... ..... ..... ..... ..°• --•-- ••--- --... .... ----- •---- ----- ----- ----. ..... _..-- ---- ----- ----- ----- ----- ----- ----- --- 1в,sц !9а 1о 9м s1.u: 1а31 пьаl -2s.21 ь9.1t иое ц 919 12.о1 1о.31 125.s: -и.п и.11 190s 53 9м 33.о1 t0.ь1 121.51-+.9i 69.и 11,30s 191е 1: 1,133 13л1 1о.п 1и.11 -w.u e1.n 190Ь s1 1,311 :v.ь1 1o.s1 12z51 •1.01 u.n !+и sь [,1�2 u.t1 1о.п 13o.n -l.51 n.и н,nЬ 1+ОТ 11 2,os1 3ь.п 1о.31 12s,o1 -и.о1 91.п 1м1 ss l,111 т.ы 1о.Ы 1т,.11 -3.s1 9l.s1 !nT s7 1,м: 1о.о1 10.п 1ю.и о.и n.я и,62: и11 1Ь 2,1и 31.и 1о.31 12s.�: •1:.91 9в.а н11 5ь :,103 и.п 1о.п 13о.г1 -О.п 91.ц иа я 1,и1 9.о1 1е.п 1ю.ы о.п м.и у 20,139 НВ9 Ч 3,11i 2/.Ti 10.3i 126,11 -10,01 101.41 1909 S7 2,10i 10.1i 10.11 130.Ы 0.Ы 601.9I 19Н !1 1,1р 9.O1 10.11 130.11 0,11 101.11 � 2о,и1 1v9o 5о 1,ь12 22.Т1 1о.п и1.11 -1.и 102.ь1 w90 sT 2,и1 v.o1 1о.п 13о.и о.п ьо2.ы 199о sr 1,9м 9.п 1о.а 1ю.Ы о.п и2,ы � � 2о,1и 1991 s2 s,11s и.�1 1о.е1 1г,.31 -s.o1 102.Ы 1991 я 2,еег 9.о1 1о.11 1�.ы о.п 102.et tn1 у1 2,12s 9.п w,n t3o.11 /.1t 10�,ы 1° s,2sЬ w92 s/ e,es/ 1ь.+1 1о.и 129.01 -3,01 w2.ы 1»t s1 3,н6 9.е1 1о.11 ио.е1 о.п 1ot.e1 1992 5Т 2,3и 9.п 1о.п 13о.Ы о.п 102.01 "' �' ---..__ .... .---• ---- -.... .--- •---- �•-- ----- .._. ..._ _-- ----- � С 11't,329 1еlе1 1at1 сел�амt 10.11 126.)1 •9.91 41.01 iеlлl 1atA сол�аиls 10.Tt 129.Ti 1.91 11.11 1ete1 1еlЬ еwаивll 10.р 1i0.1>< -O,i1 ri.1l ■еквввв ввsа иsав авв■ дrкак ввn вввкв ■гвв прв вsвв tsua ивв вгаw � kw Огмин Ьу h0 и 05•м+-15 1Ьи0 а wi! ulcrUtiмe е1 2)-Sгр•Ч . -79- ýRT V ANNEX IMICO: LM INCOM HOUSING PRWECr Table 5-V- ?MJECT RE~ ~SIS: VARYING LEMS OF START~ n*%ATJON CoAstant Inflation During Declining laflation During Life of Sub-loans Life of Sub-lomw SITES AND SERVICES SITES AND SERVICES -------------- --------------- Koninal Dis:mnted Inf. Nomina! Discounted start mo. rate pats IRR CRR IRR CPR year pats IRR ClIR IRR ClIR 55.01 39 9..l 120.71 -21.01 59.11 2.01 34 119.r. -30. DI 49X I 50.0% 34 9.71 120.51 - 27. 55 1. ".3% 50.01 40 9. 4X 121.41 -12.72 62.01 45M 38 9M , 121.01 -M. 1% 53.9% 45.01 43 9. 5Z 122.71 -16.21 65.5Z 40.01 39 9.4Z 121.71 -22.4Z 56.9% 40.01 46 9.71 124.31 -11.51 69.61 35.0% 42 9.41 123.11 -19.51 60.61 35.02 49 9.9Z 125.91 -10.91 74.11 ».01 45 9.71 124.91 -16.2. 65.0% 30.01 53 9.9% 127.51 -8.22 79.2Z 25.0% 49 9.91 127.01 -12.n 7o.y. 25.01 57 10.01 129.91 2,-.oi 2#.01 54 9.91 M.21 -9. OZ 77.2'. 20.DI 62 10.222 111.6! -3.01 91.21 15.01 60 10.31 IM. 01 - 4. M.' 96.42 MOZ 67 10.31 13c.61 -0.91 97.21 10.01 69 10.41 tr.61 -0. 3Z 99.21 10.01 71 10. 52 1358. 6,4 0.6*. 10 1. <r. SSIVE HMSING PROMSSIVE HMSINS nosinal Di scounted Inf. MDRinal Di scounted start No. rate pets IRR CRII - IRR CRII y~ pmts IRR CRR IRR CRR 55.01 40 11.41 128.81 -29.7Z 46.21 55.01 49 12.1% 133.71 -17.ZZ 60.2' . SOM 42 11.51 130.31 -26. = 40.71 50.01 52 12. IZ 135.51 -14.911 63.EM 45.0% 45 11.81 132.5% -=. 5% 51.71 45. Dx så 11.21 138.n. -12.31 åa. 11 40.DI 49 12.21 135.21 - 2 0. 6% 55.1% 40.01 61 1*1.6Z 141.61 -9.5Z 73.41 35.0% 52 12.11 137.3Z -17.6Z 59.1% 35.01 '66 12.61 145.41 -6.1. 79.11 30.0% 56 12.31 140.71 -14.3% M. 11 30.DZ 73 13.01 151.41 -4.IZ 86.21 25.0% 62 12.61 145.51 - 10. bX 70.6X 25. OZ 82 13.61 1b0.5Z -1.31 93.21 '10. 01 2D.01 70 12.91 152.r. -6.62 79.3% 2 92 14.2Z 172.71 LIZ 105.bl 15.02 84 13.11X 166.U -1. 7Z ?3.4% 15. DZ 104 13.21 170.01 2.OX 109.01 10.01 96 12.61 166.71 1. 79 107.3å, 10. M 114 11.91 161.12 IM 107.81 BOTN PROGRANS BOTN COMPONENTS Nciainal liscounted Inf. Nobinal Di scouted Inf. No. start No. rate pets IRR CRR IRR CRR: year pets IRR CRR IRR CRR 55.01 44 10.41 125.3Z -19.71 59.SZ 35 lO.U 122.61 -29.61 C.0% ....DI 37 50.OX 46 10.31 126.41 -17.4Z &2.61 50.02 39 10.3Z IZ3.91 -27.1% 50.41 45.01 50 10.51 129.11 -14.01 å6.4Z 45.01 42 10.3Z 125.01 -24. SZ 53.11 40.61 54 10.7% 130.4Z -12.11 70.91 40.01 44 10.41 13. 51 -21.8% Så.31 35.01 58 10.91 132.7Z -9.51 75.g*. 35.01 47 10.41 128.11 -18.91 60.0% 30.01 63 11.0% 135.91 -6.91 814.61 30.01 51 10.bl 130.41 -15.61 64.7% 25.01 70 11.32 140.61 -4.02 Mål 25.02 U IOM 133.51 -12.01 70.5% 20.01 77 11.6% 146.71 -1.51 96.3Z 20.01 å2 11.01 137.21 -8.21 r..?% 15.01 86 U.3% 147.61 0.1% 101.31 15.0% 72 am im.n -3. n a.q% 10.01 93 11.01 146.51 1.01 104.01 10.01 83 11.2Z 147.R 0.41 102.0% Run precared by PLIl on 05-kr-95 -80- CHAPTER V ANM Table 5.9 MEXICO: LOW COST HOUSING PROJECT PROJECT RETURNS ANALYSIS: 1) DIFFERENT START-YEAR INFLATION (SCENARIO A-1) 2) INFLATION CONSTANT DURING LIFE OF SUB-LOANS Sites and Services - 127,102 Actions Nominal Discounted Project No. Cutoff ISin ------ - ------- loans pats* year rate IRR CRR IRR CRR Hex (000) 36 1995 42.01 9.7% 120.1% -23.52 57.51 106,903,997 39 1996 29.41 9.41 120.7% -16.21 68.11 70,652,169 42 1997 20.61 9.5Z 121.7 -10.41 79.01 56,299,413 44 198B 14.41 9.51 122.5! -6.312 86.01 50,226,020 46 1989 10.11 9.8% 123.4% -3.51 92.31 47,716,935 47 1990 9.01 9.8% 123.7% -2.31 93.81 47,390,254 PROGRESSIVE HOUSINS- 15,227 ACTIONS Nominal Discounted Project No. Cutoff Infin --------- ----------- loans pts* year rate IRR CRR IRR CRR Hex (000) 43 1995 42.0% 11.6% 130.2% -22.01 55.3Z 53,391,094 49 1986 29.41 12.2% 133.82 -14.2% 67.51 35,297,103 54 1987 20.61 12.1% 136.2% -8.21 79.11 28,114,302 59 1998 14.41 12.41 139.22 -3.71 89.9% 25,086,372 64 1989 10.11 12.42 141.2% -0.71 98.5% 23,933,499 66 1990 9.02 12.51 141.8% 0.01 100.8% 23,665,416 BOTH COPONENTS- 142,329 ACTIONS Nominal Discounted Project Cutoff Infin ----- ------ -- loans year rate IRR CRR IRR CRR Nex (0001 1985 42.0% 10.3% 123.51 -23.0% 56.81 160,295,081 1986 29.4% 10.4! 125.11 -15.51 67.91 105,939,272 1987 20.61 10.3% 126.51 -9.7% 78.3% 84,403,715 1999 14.41 10.51 128.1% -5.4% 87.3% 75,312,392 1989 10.11 10.71 129.4 -2.51 94.4Z 71,550,434 1990 9.0% 10.7% 129.7 -1.9% 96.11 71,045,671 * excluding average 12 months suhloan disbursemnt period -81- MEXICO: LOW COST HOUSING PROJECT CHAPTER V ANNEX Table 5.10 PROJECT RETURN ANALYSIS: CAPITAL RECOVERY RATIO WITH INFLATION DECLINING Downpayments and Start-Year Downpayments and Starting Inflation Interest rates SITES MD SEWICES SITES Al SERICES Start lampayment percent Start Dounpayment percent rate 52 102 151 202 rate 5% 10 151 201 60.01 55.11 56.52 57.91 59.11 9.0% 53.5% 54.7 56.01 57.41 55.OZ 57.8 59.11 60.41 61.71 10.01 54.71 55.82 57.01 56.31 50.01 60.91 62.01 6S.31 64.51 11.01 55.81 57.01 59.01 59.21 45.02 64.6 65.52 66.51 67.1 12.01 57.11 5.31 59.11 60.11 40.02 69.01 69.6 70.21 71.01 13.0 51.41 59.42 60.32 61.2z 35.02 73.51 74.12 74.51 75.01 14.01 59.81 60.6Z 61.51 62.2E 30.01 79.91 79.22 79.41 79.71 15.01 61.32 62.01 62.8 63.42 25.0 85.31 85.02 84.81 84.9? 16.0Z 63.11 63.41 64.01 64.61 20.02 91.61 91.22 90.9% 90.3% 17.0 65.01 64.91 65.31 65.91 15.01 99.21 97.22 96.51 95.9 138.01 66.8% 66.61 66.72 67.01 10.0Z 103.51 101.91 100.1 100.01 19.0 69.01 68.32 60.21 66.31 PROGRESSIVE IOUSINS PROGRESSIVE IIUSING Start Dampayumnt percent Start Iumpayment percent i of I -- int rate 52 101 15% 202 rate 51 101 151 201 60.01 55.81 57.01 58.01 59.2% 9.0z 53.m 54.7n 56.01 57.4Z 55.01 59.11 60.22 61.22 62.1% 10.0! 54.71 55.85 57.01 51.31 50.02 63.OZ 63.92 64.7? 65.5% 1I.0t 55.11 57.01 3.01 59.22 45.02 67.81 66.12 68.62 69.2% 12.01 57.11 5.3% 59.11 60.1% 40.0 73.21 73.42 73.41 73.6% 13.0% 59.4% 59.41 " 60.31 61.2 35.02 79.7Z 79.12 78.92 78.9% 14.02 59.8? 60.62 61.51 62.2Z 30.01 87.71 86.22 35.12 84.5% 15.01 61.31 62.01 62.81 63.4% 25.01 97.9 95.22 93.02 91.2% 16.01 63.11 63.4? 64.02 64.61 20.0Z 105.5% 105.62 102.22 99.21 17.02 65.01 64.92 65.32 65.91 15.02 104.41 109.02 112.12 107.6% 13.01 66.i 66.6 66.72 67.0 10.02 103.1Z 107.82 112.5? 114.9% 19.01 69.0% 61.31 1.22 61.3 COWINED P90611 CDWIED PMlM6RM Start Downpayaent percent Start hepayment percent infl int rate 52 102 15% 202 rate 52 102 152 20% 60.01 35.3% 56.71 57.92 59.1% 9.02 53.52 54.75 56.01 57.4% 5.02 9.21 59.51 60.72 61.11 10.0 54.71 5.2 57.01 St.3 50.01 61.7? 62.61 63.7z 64.e% 11.01 55.1 57.01 6.02 59.22 45.01 65.72 66.42 67.21 68.11 12.01 57.1% 50.31 59.11 -0.11 40.0? 70.41 70.92 71.31 71.91 13.01 5e.4? 59.42 60.31 61.21 35.02 75.7? 75.82 76.12 76.4% 14.02 59.1Z 60.61 61.51 62.21 30.02 32.02 81.61 11.42 11.4? 15.02 61.3% 62.01 62.1 63.41 25.01 89.71 8.62 87.71 97.0? 16.02 63.12 63.4t 64.O 64.61 20.0% 96.52 96.3 94.81 93.41 17.01 65.01 64.9% 65.31 65.9 15.02 100. 1 101.31 101.92 100.0% IiF. - T &61% 66.7r 67.01 10.02 103.3 104.04 104.91 105.2% 19.01 69.02 6A.31 68.21 0.31 - MEXICO: LOi COST HOUSING PROJECT -82- CHAPTER V ANNEX Table 5.11 PROJECT RETURNS ANALYSIS: CAPITAL RECOVERY RATIOS WITH VARIOUS STARTING INTEREST AND INFLATION CONSTANT DURING LIFE OF THE SUB-LOANS. SITES MUISEAY[CES Start Itarting interet rate infl rate 9. g 11.01 13.OZ 15.01 17.01 19.02 60.01 56.51 59.21 60.1! 42.2Z 64.31 67.11 M.lf 59.11 61.11 63.2! 65.7! 68.4Z 71.6! 50.01 62.0 64.4! 66.91 69.91 73.2% 76.41 45.02 65.5! 68.2! 71.31 74.52 71.11 12.0% 40.0! 49.61 72.1! 76.1! 79.91 14.2Z w.7 35.01 74.1% 77.6Z 81.62 86.42 91.2! 95.62 30.01 79.2! 93.52 96.6 93.71 99.72 10.1! 25.01 85.0! 90.21 96.0Z 101.9 1098.0! 114.1! 20.0! 91.2% 97.2! 104.81 112.21 119.3% 125.12 15.02 97.2% 104.91 114.5! 123.9! 131.1! 136.3% 10.0% 101.9! 111.0! 122.7! 133.91 134.71 134.7! PROGRESSIYE HOUSING SMfARY OF PREIKS Inflation Start Starting interest rate imfl sInflation rate is start year TALE rate 9.02 11.0! 13.02 15.01 17.01 19.02 Annual Reduction Rate: 0.0! <- - --- - -- -- Hiains inflation rate 9.0! 60.02 54.7% 57.0! 59.4! 62.0! 64.95 68.32 55.0! 57.71 60.2! 62.91 66.01 69.8 73.7% Interest Rate 50.0! 61.01 63.8 67.01 71.1! 75.1! 79.52 - - 45.0! 64.7% 69.11 72.32 76.5% 81.2z 96.7 Starting Interest Rate: TAKE 40.0! 69.2! 73.4! 78.0! 83.2E 89.1! 95.4! 35.01 74.3! 79.11 95.1! 91.41 96.7! 105.61 30.0% 10.01 96.2! 94.12 102.5! 110.4! 111.52 Annual Increase: 10.01 25.01 86.85 95.21 105.92 110.9 110.6! 110.82 20.0! 94.6% 105.62 109.92 19.9 109.9 109.92 15.0M 102.5! 109.02 109.01 109.0! 109.0! 109.0! 10.0 107.9! 107.9R 107.9! 107.8Z 107.9O 107.12 CDMINED PMRM Start Starting interest rate infl rate 9.0% 11.0! 13.01 15.01 17.0! 19.02 60.0 535.9 57.11 59.91 62.11 64.6! 67.5! 5.0! 5.6% 60.6! 63.1! 65.5 6.9! 2.3! 50.01 61.71 64.11 67.01 70.31 73.11 77.51 45.0! 65.21 61.21 7f.6 75.2! 79.2! 3.7? 40.0! 69.5 73.0! 76.71 81.0! 5.92 91.0! 35.01 74.21 7.11 12.92 W.2 93.92 99.11 30.02 79.4! 84.4! 90.5 96.1 102.6! 10.7! 25.0 3.61 92.02 99.5 105.0! 109.0 112.9 20.0! 92.4% 100.21 106.61 111.4! 116.0! 119.12 1S.0 99a% 106.31 11261 118.7 -12.41 121.72 10.0! 10.0! 109.92 117.3! 124.1 12.3 123.3! 3e prepe by PIU o 21-ftv-44 -83- CAPTER V ANNEX Chart V-4 CAPITAL RECOVERY RATIOS MEXICO: LOW INCOME HOUSING PROJECT i lox - ___ ___ 100re - ____ 8-Iwo 1 70% w 9- 0 0 50%- 40T.- 30%- 0.0% 20.0% 40.0% 60.0% ANNUAL INFLATION 0 Decdning Inflation + Constant Inflation Start Year 1985 1986 1987 1988 1989 1990 1991 1992 Annal Inflation 42.0 29.4 20.6 14.4 10.1 9.0 9.0 9.0 CRRs with a) 69.1 81.2 91.5 98.4 101.9 102.6 102.6 102.6 CRRs with b) 56.8 67.9 78.3 87.3 94.4 96.1 96.1 96.1 a) inflation declining, or b) inflation constant, during the loan life. � 1 Н t�1 11t 11•оу 1l гв 14 а1 Уi�гЧlJ � � � , . и в р� в � • � Чtв мм Ум мвв мвв мiт ввlв вв>• вtt■ вttt � о ц•и и•R iсч[ ts•я и•1ь и•n i!•к и•n и•� irn r1гi���r Еу М вввв вгм na мвв вввв вва вма тв soa sгм 1 w я•s- n•а!- и•ь цч1 n•я и�е tгк is's! [1•n hи+1 � ' �1м1►мfi 1� , тQi 1w�и1 г п�и1гп�1 lиwииl а+ � г�i егвввев - мвтsгп nвваив •vгвмв ввввмЧ ввоsкм tигтв тгвт гпгмв вnмгеt � т'ии nst'rиn гк1'!1ы 1 nм'mn nы'Чк11 иы'rn11 1!к'!ип 1иг'tьцl 11и'киi пn'ьsьl ыlгtп+»r Р"� вмв:r пмssл мпsтsв мавтввв qMM:7 ssst:гм гe•assse тмввмг тевввл■ впввпв ьМ'ск1 tu'ы мг1 11и'n11 1Кь'ttn 1ги'1ы 1 1+1t'1га лг►'1ы 1 1и1'цt1 11t►'К ►► ц+ггг � � :lвпгиwl п�n+1 ва1 гиlгw�l `� ввnfsвsв • sвмв мвлвтв мвммв етвмввв tовввм гввввмв влвввв■ ■вввгsи мвгмм pG iЧ'R1'11 М1'и1'11 RC,'i1Ч К1'!i!1 1i1'1lt1 f!f'ео11 ц1'►1г1 ti1'lllь Ht'М1 I1!'К1 N1г1Мг»r а твпм мпмм нмма вгвавлв вмквгвв ■вваsгав гмггеи nввsн ■тмв.еr ввввм■ ьи'ск! еи'ич ui'ии 1и'�и! tt/'к11 1n'!1и ov�'ии n�'ru [к'К! 1К'и1 ЧЛга и � а �»t1 1+г7 н ввавtл7 мммМУ pbptii ммгllр iiммвг аfвмвм втИtмt ttff•вt• itsiaмs вМRвмв и 1п't1!'и ыс'n!И► nc'ас'11 1н'n1'1г га'с!ы 1s1'nu сгл'1К► 1w'te,► sм'цк► t1t'и► 1 � tK'Ki i/S'eiL l1l't11 tц'!!I Кг'еь1 In'[11 !гl'f1 1ц'1С 1/i'ii - CR'1) Ч�++�1 М�г+�1 � � !Lt'iN'1 !11'г!1'1 � г11'и1 R1'!!l !1l'I1f i!о'10! г!l'!tt !1г'гR 12l'!11 1lt'l! lыfк► ЧнЧrМу 1 оо 1м'сц1 • 1го'tць ta'цгь 112'Чи t►t'ltiь ios'1w ок'►111 м1'►и си'п1 и►'1ге иг�ви, �w и1�! � .1ew17e�r1 lвРlwи� елsмм вмгмм вsммм ■ввssn• гвsввпв гвттггп пмввввв ввгтвл■ вввгввм мввввев � ,�; г!L'11I1 ц!'111► ц!'l111 i!!'11I1 iЧ'1111 1l1'l111 1li'М11 !1i'l1I1 i1i'М1 н - -------- ------- -------- --•---•- --.._... ....---. ....._.. .._.._. _...... 3 хе'ц !sк've кс'п пi'1г кги К1'►г 1п'►г rt1'и s1t'п м�ь»1 r•►1,�e1 � tn'ttt [гэ'са ' cn'cn cn'си иг'оп гоо'ог1 ►и'и1 sn'и •!it'п 1вн'М мииму [[1'it1 tt1'и► tt1'�г► tcriгl иь'аь ьn'о[+ т'tc+ :д'н1 1н'н1 н���иг rw и1г! С_9 • -1eApiN1 (1вМ� PG4t ввsгт лпмп sвамв макпа гвггава rsssггs 'ггтгn гввпи гмггn •егтткв а ыPtw ыс'tn 11t'vt ык'cn rt'�+! ыt'i~ь иt'in ыс'�п +1t'п1 +►с`ы +1+г1+ и1еlм�ь 1т1е� маsв nввкм втем юлм ■ввмгв ■втгагв ■пмм ■мвввв sвтвввв ьtтьв � ' 101'101 М1'001 110'N1 0о1'001 400'001 001'k1 М1'М1 011'1i 11i'11 1 .-._. �....- ---- ----- -°---. ....... ....... .-._-. ....... ....... � 100'1к 101'R 000'К ОМ'К 010'К 101'К 001'К 111'(к 1!1'11 NI+'q Ри�1 о ооо'ы 1а'ы оа'ы 1а'ы оа'ы ооо'п и1'[с 1м'� к1'1: м1гм� •�1гимЧ � 011'ti 101'tt 101'ii 101'[[ 011'tt 001'ft 111'1[ М1'11 ;tl'tt иы�ж Мг M11S �j �iи .w 1r. � !i1'i IN'i iH`i !Oi'г f01't 11!'! 11i'1 i11 [К i11лI1 1� 1А [К 1к sot [о[ [ос ко[ !к [к iK г1г� »11г11г1 1++ьь�! и ц ц ц ц 111 111 11i цi ц1 [М гlгл п1Р11г1 пiиll�мf� 1111-tЧ1 iц1 1�1 1ы1 и1� Mi1 11/1 Я11 !Ч1 1111 , aMnN гц1 эо lьм:<аы!-Мi гэslэиlэ гц1-ьи1 i�эиlэиli �эlrпгоа► Nr N1Nro еэмвеi � (•в'д хд� -%NOISY73NI) �V'дх �8д 3�1iYJ,S 000`OOi ZV �I�tITIIAS'1 НУ�1�h1d =i'V OI�YЮaS 1ZT'S a198t Z�SfO�d �NISПOH ZSO� MOZ 10�IX3W -85- CHAPTER V ANNEX SCENARIO A.1 Chart V-5 MEXICO: Low Income Housing Project PROJECT IMPACT ON TOTAL . FONHAPO PROGRAM 547 in constant 1984 dol"IaT millions 116 90 A 197 Govt. Transfers 130D A Reinvested.Income 41 7 Annual Increments 1100, 17 1110 170 197 Sao 154 7W 4 49 170 70 5% 107 JVrAL rAV ADD jC1111111dill 40( 300 136 .77 At 157 100 77 100 5D 7b7A&. SAWAC areawAtwy Alt - 1984. 1985 1986 S87 199 109 Yiirs Z Project /Program: 14y. 12y# 12% 1270 127 12%. 127. MEXICO: LOW COST HOUSING PROJECT ТеЫе 5.1Э: �CENARIO A.Zt PROGRAlt LEV�LLIt3G АТ 100,0�0 5TARTS PER YEAR !Inflatioл -1$Х р.а.) 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Ч21,М1 � Н aa•L••• вввиllв вииив t•i•uи вввввав вввУSи wввав Увааив тааь вввавввi •• 1, kс.ьlсlи иs+,Чи 1l1ц,я11 нг33,1я1 и331,Мп 11ЧS,1ln 1ии,1» 1 1n11,1rn 11s11,an 1+sr/,иs1 111S1,1N1 1� вОиив •в•iiaaa iY•atfa ваiliiJ WYaa ваiвва вЧввУв Raaa � вв�ввввв �в 11 �Л t�=: � � � iвсвс�ив! UМг1м� и � ргивt в1 umtwtr F+ с Ф 1"1 � r�r1� и.п и.п �1.п и.п n.п п.п i1.n l1.st 1s.u w :.. иЧ вввв вви вив тв вввв ве sиr вм вввr !тJ �кг.wlаи и.и и.s3 1:.п ег.п и.п а.п 11.п и.п я.п u.n `� sa■ ввЧ вви аа веи wi вав еа аа ваа hMrN 11 1l/ в 1FtyN 1ц fМг ! rl 1 М®{zC0 и �,<1w �пс� �OUSIN� PROJ�CT � 5�а ТаЫе 5.14 s SCENAItrO В: PROGRAM I�ITH TKANSFERS LEVELLING АТ US$100,000 MILLTON I'ER YEAR 1..с о ►ьlwо мrиl ь1r вссмиlи 1�1[sга�г ин-1т [ис>х[1 и tlwlьвl �r 1М+ 1au1s � ..__ ни .�.._�.�� r.........'ж_. .1и7 r нв� 1+м 1+и 1пь !м1 1n3•1м .. .... ._. .... .� �. .._ �. .... _ �__ ,д iьи; t1вн; � wlдьи r+Ч и3 �п м гп !и 1п п п п n �к.ви. t:.11вl:...г. , s13 713 ::с >.1 >,t ж s/i 3в� ж � rв1.�. вам и7 +н 1,3а 1,�н г,1и г,+и г,н� :,ra s,1п гwц ь1rи: wtм+N иг:ск ц,Л7 1l,tt1 и,111 t1,1U и,7ц Я,331 N,R1 Л,ц1 M,i13 >~ kMrвиlw 1ьмiМ ?1,1l1 71,1t1 ri,7Y М.17) Я,И1 17,lN Т3,1Ч И,Я1 19,�13 �"'1 1сlСвrвllвир 11,131 11,W 31,121 33,1ic M,t13 1S,SN Sl,1ц М,ьr М,371 � ы.:н 113,и3 tи,rn 1г1.:l3 lи.lта !ы ,1и n1,и+ iгь.rн tи,13ь � о и влвлв ■кltУв вtlвввв ttlи,• ■Чви1 Ч.Увв Мi<1ив вввliвУ 4ит Увi{ц tвlвг а<с.r:lсlи се�lс ы,3n иг,11г :�+,ьи иг,w ц1,�3 t11,ut я1,1я !,гll,ги 1,3и,7>. 1,7и,37ь }, uasau ииив еавиав ививв wави ипw sаеев . wввwав иавwга вwsави О iMw1 iвмКви!• О � slгМ w мс,ln 1п,ы 1 13l,аи и1,rи 1ц,311 1st,:a и:,lьs w,ьц /s►,1n ц7,ги и7,п! � hMrntlr! Wc1y l1.t1ь l1,151 11ь,ti7 1Ч,131 1М,1lS 711,113 l31,ь71 Ль,111 311,М3 1ы,31S н 1�►м� ивl:и 1г,:ь7 •� г7,rи л,т и,1ц 7г,1ц u,w и,+и и,7» и,111 »,1ы � _ _ _ 1 _ _ _ __ _ си,!!г ия,м7 п»,цг п17,гsь 1tsь,m сл7,и1 ац,т <,7в,3ц . � Чи,nь : nн,lи о � вaatufa лвваал ввиивв ваввива иивви авиави вs+ввавв ваввавв иитв вввsаtУ х � ыcr.UlN lсrмlвмг- ,� 1 LlK.1 с.с��" ыl,и! ьsс.:,г и1,1я и:ь,ги 11и,т 1rl,1n 1гцлlк 131г,иr и�,1я . иn,11ь � мвМнии ььв:М »,1и lи,ги :и,и1 1и,я: m,1N и+,3и 3,и7ли ь7г1,п+ 1,us,иs l,lи,са гwм+wс�и п,:ю и,7и а,ьr n,1и 13:,1г7 1n,1ьs n1,1a кn,3к1 7и,п! 7и,п>' и ........ .._._.. _.._... _._._ ___.... __..... ........ ._... ..�. м 1я,:1т ии ж иь sи иn и1 ип 1ы и 1в. sa/ п,и1 nь 111111л и 3s11h сд71s п: � 1 1 1 1 1^1 1 1 1 1 1 . �i :i3в7:it Wиfл YYiвi. ииiиi ивввви вввваву " '' i•a.Wft ваа•вtавв NYWY и tM� 11 вв: "д [_] •crl, и1,я! 1s1,м3 и1,3и 111s,n>' _ пsь,711 11Я,1и 1�7ь,т 1ri,n3 17и,1» п,7n,1и � вда.авв ,iккввЧ Уивiц вfвi:вti ЧУвJ{t ЧYiYi YtiYr ививtl ивввW УУвWв J �::...1сl.с 1>.,su и1,s►1 пи,+3ь 1nr,117 и7t,1и икs,lн иы,ги и,lя.нi и,е1,1п 1г,1и,1п •��в ЧУМУ виУввв иввии ввrвви КУвви Уи�У Wllm вОУвУ ii0lLY {вiвОfl 1/М11Мс 1/М h�1tr 1iтМвУв17 Н А 1cw ввМв1 1в сма Ч1�.1U рс � Твr1г �1S1,Ч11 c1IM,/c1! 111М,1М1 111М,1М1 111М,1111 111И,1111 111М.1М1 111Мв1М1 111М,МИ {1,:M,�f! У иик+и •.ввввн вwвrв иавив• twвaw ro"--s авивsв ввваw аввовав ваsиввs � Н ксwгсlи nя,ии 1ня,.3г1 11ls+,w3 117s+,uu lьа+,игь 11.вr,ии 1иs+,и:3 un+.ut► 1иs1,+и1 1w,и1 � :assuaa вклtsак кцлиа иакави аи.sвва sац:nв вrагваь вrввлв .asoa. аьив+• :Л _ � • с 1lмиwt lrм�lsь м ь lwсгвl �' � М 1Чнtвввl: Tw1r M.11 ьв.ti 3l.11 Y.S3 11.1t 31.11 l1.11 _ ZS.J1 Il.71 •)ц.ц � вив лав иЧ ввл виа ии ии вввв вт вва ы..lсги и.и и.п и.п �.ы 71.s1 и.п ьз.3а 3�.а >..и -и.п вив �ав ли иав вsе ..аа вввв ru вw rи ~си►м h К� ■ tt•ы-и . 7п г.1в � и � • , 1 - . . ' MF.XICO: I.OW COST HOUSING PROJECT Ргоlкtеl fiмлci�l st�tилts 1981-1992 ТаЫе 5.15: PROJECTED BALANCE SHEET . 1lИas�ls ef lkiicin Pesesl ktнl Projпle0 . _ _._�.-------------•----. _....__._.. 1u1r S1 Gec. 31 .Н9з- �4еlе 19ез 19и 19н 19/s нвь t9ет w1a 1о19 19;о 199ь 199г 19sa ...... ----- ----- ----- ..... ..... ----- ----- ----- ----- ----- ----- -•--- [�~А in 1иlе 25,29ь 1ь.1тз 1,151,6з1 592.11т S1.9i� ц.I19 3ь,о19 10,оз4 1Q1,19S 11,119 116,5?о 211,i11,1fi tnrгst�мt о1 lixoмtel notn 3,0о1,33ь 5,0оо,000 S,ООО,А10 5,100,000 5,Оь4,000 2,9SO,000 о 0 о о о l;Аа! lг►в 1�rиtмets 9ье,�1� 1.з52,2ю 1,зоо,ооа 1,зоа,ооо зоо,оас о о о о о о kcante ►кеir�Ие 2,sгs,ы2 тза.ьss тзо,ооо �за.оао 2оо,ох о е о о о о iore►nме! qrмt мгt��ое� 1,i81.12з 7,111,2Ч I,11ь,/Ti 1,ззS.12з lo) о 0 о 0 4 0 New Рга�г�е lемs) . сеМlгtеа- 1яз �.г Р.ьег I,1IO,1n 6,c�,aro ь,оs9,оlь 9,тs¢,огь з.3s9,о1ь 1,13э,о1ь о о о о о се.оlгtи•1л0 !е 1992 н,иб,зь2 1ь,ооl,иь n,ти,ы� 1з1,ы ь,9я9 11s,sт6,1w 21т,s91лтs 2sт,зи,о:1 29з,з9ь,еть зьs,ооь.оэо ►� Мrекм а1 Реlвеrlе 1,14i,1S1 1о,11з,т91 9рΡо fCNWO P►ejecte i� Ргасгsе Яг,I12 ь1,215 ь1,оА1 ь1,f44 ь1.000 61,о04 ь1.о?D 6�.А?0 ь4,Ро0 i1.0oo N.PW 6,QP0 С5 Е�е1Ремl, 1е! 01 й0reci+lia 15,о52 11,о1о 39,513 I1,й1 2д,ь1S iз.1з1 11,8SA 1I,1I4 ь,т1-0 1,221 Q 0 � �rteмls ав1 lкди 1а едг 219,391 191.9f+i 300,ОМ 544,004 5С9,000 500,бо0 549,1д0 500,г40 300,64о 5'}9,Оро 50б,роо 5рр,ррр Mre1:•�l1е lеед 3, цS,lS1 3,з59,9;1 з.зтl,оl2 3,з1з,з32 3,oSF,210 1,556,210 2,05Ь.270 1,5Si.210 1.05Ь.I)0 556.I]0 101 101 •• 01ьег �ssгll 11,311 19.т99 2о,000 10,Q00 20.Qa0 2�,оо4 ip,oo0 20,одо 20,Оо0 2о,tф 2о,о01 10,о40 ! ' --•------- --------- -----._-_ _._.._.._ _...._..-- --------- --------- -------_ __...._.». _.._.__. ..�._»� �._----_ � р�, л,гlь,rss I1,9n,ьeo зз,ап,3от ьз,ьsо,о3в 1ао,rl.юз 1з9,ыs.ыь 1т1,:2о,иs 219,тs+,ОSт гsv,oes,19I rб,sт9,sls цs,nь,ьоэ и1,и2.1rь � �' каикцм■ ■tпааадав sesвaaasss авsааввеав .в■вsакавкк aгsaaaaassr sssssassass ssussssиs sr_sss'_даs sssrnsus suassssss ssssmsxersm � А L�eд�liliee en1 вг! ro►tь � ...................._... li�lililietit „ � 1и1 1а»•litcaelгl еоlи S,Оо1,зЯ 5.oD0,W0 S,3�i,oo0 5,04о.4(-0 5.oo1ti,Q�0 S.1Q0 0�?0 i,T00,000 9,Ооо,оо0 13,о94,0оо 1),2о0,009 22.ооо,400 � • kcwиll /�)�Ые S1ir9i9 111,122 Wo.004 6+)0,0о4 fo4,o04 140.ь:: �д0,490 1о4,000 1,о00,0о0 J,iб0,000 l,14D,00o M10,W4 frene�a 1а rгP�in 1,SGO,000 1.5оо,080 ^ и .......... ........... ...._.._.. ..__.....- ----...--- ....._.._. ........-•-- --------.. __....._.... ---------- ..___---_ ..__--__._ � т,4ii,иS 1,ti1,122 5,140,0�0 S,14o,100 S,14o,дi4 5,940,000 ь.100,00о 1,100,010 11,ооо,0о0 1i,W0,oio 2з.400,00о Ио,001 _.__� .. .......... .......... ...------ ---------- --------- ....._.._ .......__ _._.._.. _..----- -•-------. ._------- а w! .егlti: � krмewl ре�lе, ne1 ei О 1te.1 сьх�и нсь 1s,ьоо,lи 1т.егб,гт9 гs,iз2,ты sо,lьз,n9 1о.iоt.пт 1ae.+sa,�;o 1ю,ио,ьs� ит,lоо,s.з 1sь,92ь,993 1sь,1оз,91т 11s,Ilь,aol а � Atrdutfa И essels 1,ь91,ь2) l,152,т31 l,1SI,]з1 1.i52,131 1,15t,тj1 1,15?,т31 l,/Sl,тз1 1,1S2,тЯ 1,152.)i1 1,f51.131 1.Нl.т31 1,/57.730 аеlеl� e�eie0s 19t�-1992 9ое,ььь I,о21,ц1 2,ьss,lo9 s,130,ц2 12,ги,ОS� гз,9tt,бsт з9,ба,9и к,0о1,1з3 ",ж,1ы 11т,5п,тw 1ss,т,т,в9 2еs,Iг0,ои � �� � ---------- ---�_._. _..._..... -------._ .--- �, 7д 1ь 1t1 ио 21 ь9, sи ю.w зот s1 �о os/ ,0 s:1 sо3lз:.тn ьn 1тг 121 и3 ги 9и Оя IOS,ors n2 пь 1я s1з и2,зть,ьо9 2ы.оп,lоь •� 1 1 / 1 1 1 1 1 1 1 \ , 1 / 1 1 . F'д ---------- ---------- ---------- _.�_...- --�...... ._---_.__ _.._.----• -----__. _.._---__ _----____ _----__ �_..._ �, . Л,?1i,тц 21,9т1,И0 33,911,3от 1з,LSO,Q'А t0?,зt1,S03 131,ь2S,ь2S 1Ii,221,115 219,1S1,1S1 2SS,Oii,192 291,5т9,513 ,i+S,Ль,ьМ 211,112,GOi кивкиsкк •к�sss�sa is:asss:п ::ssattazs ssausszsm: тssas=sss=a ■saиsяsra ssaиssssи asassssaa:s ansиssssa ssn�asaяa ssu:гmsa MEXICO: LOW COST HOUSII3G PROJ�C'Т Prolected Financlai г!аlгмпlг 1981-1992 ТаЫе 5.16; Projected Упсоте Statementв - Revenuee and Expenditureв b � CONOENSED 1ИСОИЕ 51А1ЕМЕИ1 1tбousands of Merican pesosl .. • -.Aclw1-•-- -------------------------------Projectгd...----------•-° ----------------._.....-------....................---..... � 1 eonlhs � J�1r з) Тоlа1 199т- • 1993 19д4 1481 1985 148b 1481 1988 1984 1990 1991 199I 199В ----- ----- ..... ...._ ..... _..-- ----- ----- ---.. ..... .---- ----- Н fnterest гortqage porllolio- боrегпггпl qrant portFolio . 300,000 388,11Ь 500,000 i00,000 116.l3! 0 д 0 0 0 0 Ner р►оg►аг 1o�ns- 1983 • 2д9,113 318,815 500,Од0 ЬОО,ООО 500,400 400,000 102,I1b О 0 0 0 Ner progra� loans- 14В1-199? 0 0 0 1,500,81В 1,855,556 4,531,055 11,636,114 19,883,938 г1,801,1Ы 30,095,J10 35,031,3Ы 1?1,А01,109 .......... .......... .......... .......... .......... .......... .......... .......... ........... ......---- --------.. ...------• .. 769,113 165,591 1,OOO,G00 2,100,В1В 5.171,687 9,931,055 11,158,360 l9,863,438 ?1,801,1Ы 30,495,340 35,032,351 1?1,В01,109 й .......--- --• ....... .......... .......... .......... ......•--- ----..._-. -------•-- ---------- -........- -•----•--- •------... n Olher fпсоге, пгl- 5hart-lгг.lпУ�slг�пl� l,ООд,а0о l,зоь,9lь �,140,5зо l,1ьl,мо 1,tзl,воо еьs,�оо ьоь,еол 4г4,?оо зге,ооо 31В,Ооо з�е,Оrо Conslruclion funds 2�1I 0 0 311,00? 180,110 1,16В,192 1,18�,11? 1,11Т,729 1,91В,990 2,f51,099 ?,351,?3В 3,10B,59J lгss, inlигs! гдрепsе 1353,1В11 (dS5,91('1 11,!?1,1511 t8B2,0001 1611,100i l132,6001 (302,1001 1412,1001 1189,0001 11В9,000) 11В9,0001 О . ---------- ---------- ------•--- ....------ --•--••--• --........ ....._.... .._....... ...----•-- -----•--•- -•------•• ---....._. 616.819 651,O1b 1,151,�i81 1,ЬЫ,110 1,186,192 1,916,11? ?,015,129 ?,141,090 2,316,д99 2,510,?ЗА 3,591,590 � рр Rгnlal апд othгr 103�295 105,Ji1 1BO,b81 105,397 105,391 105,391 105,391 145,391 l05,391 105,391 105,391 .1"'i � Сопslгр�l�оп iпсоге 2.Oi 0 0 3I1,1Ы 113,21В 1.113,133 1,113,419 1,ЬВ8.314 1,881,151 I,051,380 i,139,111 3,218,216 Sa1es oF ргорегlу 584.?д8 32В,501 182,000 111,104 1,095,101 1,500,д00 1,500,404 1,500,000 1,500,000 1,500,000 1,500,000 • less, cast oF sales ��53,1101 1225,8231 1i89,?00) U6?,1241 1д51,0Ы1 f900,000! 19р0,000! l400,0001 1400,00�11 (900,0001 • l956,2101 less, sales ыpenses 151,?b?1 1?351 {4,В101 f1,11?) 1t0,951M l15,0001 1t5,0001 f1S,0001 115,0001 113,OOOf 1lS,000! • ......... ......_... .-•---.... .......--- --------.. ._....-•-- ----...... .....----- --------.. _..---.... .......-.- .......... . 931,ЬЭ4 8SB,839 ?,150,505 2,811,В23 3,131,B1i 1,020,55J 1,153,810 /,16b,239 5,090,В16 5,469,909 1,471,993 1, i 01,153 1, 611,130 3,150, 505 5, 211, Ы 1 В, 403, 5о1 13, 951, 601 19,192,10о I1, 630,111 29, А95, 410 35, 5о5, 219 12, 5! 0, 319 12 Т, 801,104 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -----•---- --•----•-- -----••--- ...-----•- Н Caslа апд erpenees: � . 1-' Persannel 35Z.01) ?83,869 526,811 435,b?1 1,194.988 1,91D,9B5 ?,310,81В ?,Ы1,9р1 2,91В,315 3,?13,729 3,50?,965 ?В,О?J,1l9 � • Repiirs grant бuildinys 216,005 115,1Ы ?10,111 140,000 250,000 100,000 0 0 0 0 0 0 и ааг;пягlгаи�г 118,ВSз 1t1,з53 ?зь,slз 4о3,о1е ыs,ВОь 154,1?г Вь3,+о1 9so,6o5 1,о3ь,1ь0 1,1г9,и4 1,?з1,оЫ 9,e1B,w? • еАиоынаs ооп:,;lопs 41,6Ie и,эз4 tа,1ы а о 0 о о о о о о � 4 Depreclalion зпд aгorli:alion 11,121 3,19Ь 5,119 5,119 5,419 5,114 5,119 5,119 3,179 5,419 1,?I1 0 ' 01д pallolfo losse� О 39,111 531,i50 90,Z10 90,251 !01 !0! 0 0 0 О 0 800,1В1 Ы 1,055 1,595,3д1 1,834,38В 2,111,521 2,801,185 3,109,108 3,д33,991 3,990,01) 1,S1B,6?? 1,)35,217 31,812,�l1 .......... .......... .......... .......... .......... .......... .......... .......... .......... .•----.... ..------.. ._.....--- Мг! incoae (ог the period 900,866 1,013,315 1,555,k13 3,318,153 6,431,91] 11,1Sd,419 15,9BI,19I 20,996,1Bb ?5,905,026 31,216,Ы1 31,115,ОВ2 89,932,19В дсс, iпсагг Eг4innin0 о1 уеаг 904,666 900,688 2,155,809 5,831,ОЫ 1?,166,038 ?3,1??,451 39,101,949 60,101,135 Bb,30b,1Ы 111,522,18В 155,791,864 Ad jus lгtnls l01, 510 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------- ----------- ---•----... Ассигиlаlед lпсоп мд а1 уиг 900,бд8 ?,0?1,551 ?,455,В09 5,831,ObY 1?,2д6,038 ?3,1Z?,151 • 39,101,919 b0,101,135 ВЬ,306,1Ы 111,5??,188 155,?91,864 ?15,230,0д8 ■uвsasast ■агмаsгs• игавивss вккагввавв ввпклгвss ssдвratas sвввапаи иsгвsвиr sаекгssгн аsагnеов■ sаваавввеtа авиssвьавв . ,' ,1 MEXICO: LOW COST HOUSING PROJECT Projected financial stitilentl 1784-1992 .Table 5.17. Projected Sources and Applications of Funds STATEMENT OF SOURCE AND APPLICATION OF FUNDS ............. .............................. ktual Projected ...... .................................................................................................................. 7 sonthi July 31 total 1904 1106 107 1989 19N 1990 1991 1192 1991 Sources of cash: Net incote for the period 1,013,375 1,555,143 3,370,255 6,431,917 11,15b,419 15,"2.492 20,996,196 25,505,026 31,216,627 37,775,082 89,932,198 Add, non cash items Depreciation and amortization 3,196 5,479 5,41? 5,119 5,479 5,479 51479 51419 5,479 1,221 old portfolio losses 39,411 534,250 90,270 90'al 10) (0) 0 0 0 0 Cost of land sold 225,021 2209,200 62,720 657,00 900,000 900,000 90,000 900,000 900,000 956,270 .......... .......... ---------- ---------- ---------- .......... ---------- ---------- ---------- ---------- .......... 1,201,635 2,384,071 3,936,722 7.194,769 12,061,698 16.097,970 21.901,663 26,910,505 32,122,106 38,732,573 09,932,196 Proceeds fro& annual governeent grant% 4,275.115 10,733,597 24,330,499 30,239,469 26,047,703 22,420,028 16,030,125 9,226,410 1123,006) 26,422,014 Proceeds from short-tire bank loans 0 0 100,000 200,000 3,700,000 4,000,00 4,200,000 4,800,000 (22,000,0001 Pavients, on tortIdge porfolios- Government grant portfolio 213,270 500,000 1-00,000 663,869 (0) 101 (0) (0) (0) (0) Government portfolio settlements 157,764 361,000 361,000 361.004 10) 10) 10) (0) 10) (0) Won program loans- 1983 450,000 872,000 1,300,000 1. foo. Doti 1,500,0DO 1,659,016 10) (0) 10) (0) Nov progrde loans- 1984-1992 (0) 1,03,018 5,773,132 13,923,6V 26,789,703 40,499,491 52,119,612 62,976,951 73,700,068 90,704,560 363,006,090 Collection of receivables 1,792,957 1.793,612 0 530,000 200,000 0 0 0 0 0 W Increlit in accounts Payable 114,133 213,011 0 0 0 0 0 200,00 200,000 200,000 1600,000) Realization of FONHAPO projects 219,027 219,242 0 0 0 0 0 0 0 0 Reductloo in discounted notes 1,136 0 0 2,050,000 2,950,000 0 0 0 0 Increase in revalued anots 0 0 0 0 0 0 0 0 miscellaneous 285,213 170,828 ---------- ......... ---------- ---------- .......... .......... ........... ........... . ......... ........... 8,879,311 10,872,335 36.103.432 54,522,193 70,719,303 94,015, M 91,bll,603 103,213,065 112,299,969 162,859,167 432,330, M .......... ---------- .......... ---------- ---------- .......... ......... ........... ---------- ........... .......... Uses of cash: low orcque cash investients 0,002,872 16,238,160 37,10,366 55,656,741 10,672,013 84,415,676 94,237,611 102,719,004 111,963,714 162,313,796 Increase in short tire Invest sents 303,003 331,583 0 il'040,0001 (300,0001 0 0 0 0 0 Invest eent in apartments and locales 277,510 280,602 0 0 0 0 0 0 0 0 Inviiiient In developable land 220,505 300,000 400,000 400,000 400,000 400,000 foo,000 400,000 400,000 40,000 Invoillant in lQuIpeent 2,104 10) 0 0 0 0 0 0 0 10) Refund government grant& 105,226,001 Other net 153 (4065) ---------- .......... ..... .... ...... .......... ...... . .. ........... ........... . ......... ....... . .. M 8,087,021 17,146,000 37,562".66 55,056,7il 70,772,013 84,815,676 14,631,618 103.10,004 112,363,714 162,713,196 165,216,001 .......... .......... .......... .......... .......... .......... ---------- ........ .. ........... ........... .......... Net change in casi, (8,513) 1,726,535 (1,158,954) 1533,9481 122,7101 (170) 126,015) 94,862 163,7461 145,371 247,112,287 Cash at iffieftinq of Year 25,296 25,296 1,751,831 592,677 59,929 36,219 3b,049 10,034 104'"3 11,149 l8b,520 ---------- ....... .. .......... .......... .......... .......... ......... .......... .......... ........... Cash at end of year 16,783 1,751,831 592,977 50,929 36,219 36,041 10,034 104,695 41,149 186,320 247,2fe'loi MEXICO: LOW COST HOUSING PROJECT ►гоlкtb Finиcl+l stцoмt� tfl1-l99I TaЫ e 5.18: Projected Government Graпtв апд Аппиаl Moкkgage Portfolio 511иlWRY Of 6p9FRNNEIT 6RANTS teepeнN iг tAousmds of Pesosl ------------------------•---------..__..._...----------------- Р►оlкlед 7 гonlhs ..............°-........._..--------.......-°---.............................-----°----------°-........-•---•-- 7u1r 31 1oU1 1993- 1981 1v61 19А{ 19В5 l9ВЬ 19В1 l9ВА 1989 1990 19i1 199! !99! ..--- ----- ---._ ..... ..... ..... ..-° •---- ---•. ..... ...-- ---.. 8+1тсг Erqrnnlnq о1 ргпод 11,?ьs,?еь 1ь.s1в,е5? 1ы31е,еsг г1,иг,1w s1,н?,9и еt,ы t,us 109,1зо,ые 13г,13о,1+ь мв,9ео,тп lsе,?�2ь.ье1 1sе,ев5,ы s 1Вь,хs,ьв9 � C+sA 1r+nts recelred 5,119,040 1,?38.104 10,133,591 21,33J,iэA 30,7л9,169 I9.д47,1�ц :?,fI0,02B 1b,8:OJ 2S i,2?b,110 П?3,04b1 1А,12?,011 11дS,??8,0011 ►,� `гlгп риlад �d�ustuпt� t5.1i11 4li,9851 � 1Ь,)18,В5? ?о,ь03,9Ы 21,11?,114 51,11I,41� 61,b62,115 107,130,118 13i,150,i16 119,980,2)1 15А.?ОЬ,Ь8! 158,083,673 188,505,689 1,214,ЬВе � i4uped ba1F lv иecilin �or'l 12.118,1351 1i,119,6881 11,?)9,ЬЯ81 11,?19,b8@1 11,i19.d8B! 1t,I19,b881 11,I79,6881 11,27S,b881 f1,I19,Ь881 11,219,ЬВВ1 11,714,68А1 11,�19,6881 .. -----•---- ---------- -------•-- ---•-•---- -••------- ----------- ----------- •------.,__ ._...------ ----------- •-------.._ ._...----- • Веl+есе епд of rиг 1F,b00.111 11,821,IT4 13,832,1д1 5�!,163,:54 ВЛ,102,121 1^8,150,13с� 130,810,158 11I,1Q0,581 13д,9l6,993 13b,B0i,9BT 1Bi,2?b,001 0 �А векаввввва еа.веваки ■иеав:ааа еаг..вяка ■sвuesaia aessazsstsi ssssaassssa ■гsакеааааа saea•ssaa¢а ааааsааатаг [ееzракавt вaY7tastss �v виlиадr oF амwб: иаvЕигиr 1м моагыьsЕ Pa+rlaros irдlected 7 woths ------------------•°-----•----...................................-----..._......--------....._.................... � lulr i1 1оl+1 l99I- � 19В1 19А1 19А5 1986 198Т 19В8 19В9 1490 1991 199? 1498 бorern�мt qгыt гatl+pes: ----- ----- ----- ----- ._... ----- '----- ----- ----- ----- ---- ........................... .. 6+1�псе lealnninQ о1 уиг i,861,723 5,881,1?i 2,18b,113 1,33S,12i ' 1 �О ffn+t ush ггltlиееl: (137,TЬU 1181,0001 13Ы,48о) 13Ы,0011 �.+ Diнounl оп sеlllггмtг Ni 139,1111 140.?S01 190,?10г 190,?5l1 и 1 Ca11eclionS 1?13 2101 1500,0001 1100 0001 (883 8Ь91 л 1 , , !.'� В�д deE1s (�11.6001 : , -----• .......... .......... .......... уг�уΡ 9+1�псг мд oF rги -3,111,21А i,185.113 1,3ц,1t3 101 1.� .пнапгs иывпаа• seaearraea ■nues:ae • О Eslu+le inlerest incoгe SBB, Nd 500,000 300,д04 1t6,1J1 а as'аатквав иаsвввви ивввввааа аввввtвае■ �, Ner ргорг+г сауlеRгд 1a+ns-1981 +пд primt , В+1�осе 1e�ienla4 oF 1еп I,li{.111 1,1I1,111 д,059,91Ь 1,759,о16 г,359,01д 1,В5Э,01b , Ner coвplet�ons ?,315,А27 1,8?Ь,В39 CaU ections on princ+.p+1 (130,0001 181?,0001 11,304,о0о1 11,100,000) 11,300,0001 (1,В59,01Ы у .......... .......... °-------- -._...-... .......... .......... � l1+l+псв епд о1 уа► 1,МЮ,000 6,459,016 1,159,016 3,359,018 1,l59,016 0 ? h auaaвass■ saasaassas иевмиав saassats■ ввагвsnвв веваввави � 316,В15 300,000 ЬОО,ООО 500,000 100,ОР0 10I,216 и sавваввавв гвкааигва aar�at•гав мгавввn■ ввоtгаtм arssЧSaas Ner ргоqг+г савоlгlгд 1o+ns-1981 !о 1992: � � ----------------°----°----------...--- � l+lапсе iyinning о! rиг о 11,ы 1,3ы 1Ь,оо1,ы ь е1,131,дТ1 131,ы ь,981 иs,531,1ы i11,s91,91s 2s1,331,0?1 т9з,з9ь,вТ1 збs,ооь,о9о Ner ca�plellons 1b.7iA,180 3T,162,J86 35,bS8,111 10,8i2,013 81,11S,Ыd 41,I31,618 102.119,001 11l,9Ы,1Н lЫ,3l3,198 0 tq Ссllкtions оп егlпсiрьl 11,6?3.8181 13,113,13?1115,9?3,b8i1126,189,10)1 110,198,1911 15?,1)9,А1?1 f6I,91b,4511 115,900,B6B1 190,191,SBD1136S,OOb,0901 7Q 6+1�гге мд о1 rиг 11,Ы1,362 1b,001,616 В1,131,Ы1 131,д16,981 11S,3i1,1b9 211,591,915 i5I,331,0I1 I93,396,811 36:,ООд,090 - 0 ■аавагваев ваsаавпsе aattrJaets аs.вгаееиа asuees:aae urassaaaea гsеавмеак ssaeaaaasaa asasassisu tsaпaaпa !пlг.гг! lпсо.г о 1.sол,еlв 1,es3,ssь 9,311,oss l1,Ь3Ь,п1 l9,еы ,938 г1,во1,1ы 30,o9s,71o з5,о3l,тз1 1?1,еа1,1о9 sazs:auaa ва:аsа:ава nав.веsн ивsааагп г■rstatsвь Чааипгг аа■аак■ваа вsввsаив■ ,гмгsавп aususвau Г�'� . 1 �I�: LOW С05Т HOUSING PROJFCT . PrOjкted Flгидгi гl+tекпtг 19И•Н92 ТаЫе 5.19s Projected Income Statemeпts - Intereвtг Renteг Othd�re апд Coeta СО8дЕМ5Еб 1МС0l1Е 51АiЕМЕЧ1 1lAousгnls о1 Mn1u! Pгsosl iklwl Рго1кlгд -•--•------- -----• ....................................•-•--------.............................................................. � 1 welhs Jг1r 71 iot�1 l993• -19д3 19д1 1981 19д5 1486 19д1 198д 1984 19� 1991 1942 Н41 � • • ----- ---.. ..... ..... ..... ..... ..... .-•-- ---.. .._.. _.... R�te о( in11гl1on 80.01 12,01 29,1i 20,Ы 11,91 .10.11 9,OI 9,0У 9,01 9.01 " еавев вввав вaess srsa sssu ввмs вии иsав пив вви■ � 1М0!!: А InltГlSt• р:`ы�тЯг l;wа1-!и! lегеslкпls .1,Ооо,ооо 1,3оь,91ь t,1lo,sso 1,1ы,ооо 1,:31,еоо еьs,гао ь04,еоо 1гl,гоо 318,оо0 31е,ооо 3ге,ооо Агl:, iпlнгs! ирми 1з53,1еи 1ьss,9зо1 u,121,1su ne2,o0o1 lы1,10о► м32,ь0о1 13ог,1оо1 1:1п,1оо1 п19,ооо1 uw,0ao1 г1е9,о0о1 и .......... .......... .......... ....'..... ......-". ....."'-. '......... .......... ..i....... ..�...� "' ......�... ыь,е19 ьsl,оlь 1,иь,019 де:,0оо ыдlоо 132,ьоо 302,10о :12,1оо 1в9,ооо 189,ооо llv,aoa � Canstruclion tMndt 2,1t 311,001 180,110 1,168,192 1,111,112 1,112,129 1,41д,990 � 1i1,094 2 351 23В 3,10В 590 Банммt ргм! ра!lalio 5,?0,400 3д8,71ь 500,004 3д0,000 116,131 0 0 0 0 0 0 � Ne. Ргарг�в lоиь- 19д3 2ь4,113 318,A1S 5д0,000 b00,OW 500,000 100,000 102,216 0 0 0 0 Ner ргоаг�о lans- 1481-1942 0 1,540,В1В 1,@55,5ib 9,53I,Of5 11,b3ь,114 19,763,93д 21,14{,181 30,095,310 35,03I,331 121,Уо1,109 и .......... .......... .........' --------•- -в------•� ---------- --------'- --.....-.. --..-.-.-. .......... .....-...- -------.... .в , 1,11ь,592 1,11ь,bi? 2.4S7,i'В1 1,Оьз,228 1,251,81В 11,853,1ь1 1b,Al3,119 22,OSS,02t 21,1S0,2ь3 32,6S,37B 3B,b29,92b 121,b41,109 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -•----._.. ........-- ------..... S�ta oF properlr 589,2Ы 32В S01 48.,000 711,i00 1,045,191 1,540,040 1,500.000 1,500,000 1,500,000 l�300,000 1,500,000 0 V� �р !!и, гоsl oI нlгг 1зs�,11о► 112s,e23► 1289,z0o1 11ы,12о1 1ьs1,0ы ► woo,0o0> 19оо,оооl woo,oo01 19оо,оооl 19оо,оо01 19ц,21о1 N lгss, �г1ег ггрммг ---151:16t1 .----.11А51 -_.-11=t401 ....�1!7111 ---110,9511 (15,0001 115,000! 115,0001 115,000! 115,0001 115,0001 � 1е1,5ьь 102,3аь 181.9ао юо, )ье 1n,o91 sas,0oo Ses,ooo sls,oo0 ses,ooo 5вs,оао „ 521,13о о н .......... .......... .......... .......... ....•----- -._...... ----....._ _......._. .....----. _.....---- -......_.. .......... о Fмl�1 !пд otlег 103,295 105,397 180,881 145,391 105,391 103,391 105,39) 103,341 105,391 l05,391 lOS,391 а е!!:!.!�l1м 1г�г.. 2.о1 321.1о1 )13,21е 1,из,13s 1,и3,11о 1,ьве,311 1,1e4,1s: 1,os1,3eo 2,2тv,211 3,2и,21ь � 103.295 105,391 SO5,111 84А,ы5 1,21В,531 1,511,831 1,193,)11 1,990,119 2,1Sг,)11 2,3i1,81 3,3i1,ь13 0 1,)д1,1sз l,ы1,1ю з,15о,3оs s,212,ы 1 е,9оз.sоl lз,9s1,ьо1 l9,192,2оо I1,ью,1» ' 2v,e9s,olo as,sьs,2w {:,slо,з:9 l21,101,1о9 . ---------- ---------- ---------- ---------- ---------- ---------- -------•-- ----•----- --•------- --._..._. .......... ....------- Loslг и1 ггрмsеs: Риsапlеl 332,011 183,ьь9 5?ь,В11 935,ь21 1,199,9д6 1,99D,9д5 2,J10,B1B 2,Ы1,901 2,41В,313 3,213,129 3,А2,9ы 21,023,119 у аг0�lгs у►,п! 6ui1d1гgs 21ь,ооs 11s,1ь: 21о,111 1оо,ооо 2so,ooo 1ао,ооо b.иlгпгн.• 11s,es3 1г�,3sа тзь,sl3 103,018 ыs,еое т51,п2 1ь3,а: 95о,ьоs 1,03ь,1м 1,1г9,1и 1,2л,а2 +,ив,и2 �' BAN088A8 couiгsiмs 41,62А 11.9;1 22,1ь3 ~ 1е�►к1llton ггi гlortitгtlan 11,721 3,196 5,119 у,119 5.119 6,119 6,119 6,119 6,119 5,/19 1,У71 т OId 1atlolfo lаsге~ 39,111 531,250 40,210 90,2i1 (01 101 ' :� а .......... ..._..--- ..._...... ......---. ...._.... -..•------ ----....»_ .......... .......... --•-•.....- ------•--- -......... r 1оо,181 ы 1,oss 1,sяs,3ь2 1,еи,3и s,нь,s:1 т,ео1,1е5 3,го9,lое 3,и3,991 3,99о,ои 1,3и,�:: 1,пs,2и а1,еп,2и '° Ме! iпсове 1or !he �мiод 900,ььь 1,013,315 1,5SS,1Ч 3.3]8,253 6,131,911 11,158,1l9 15,981,191 20,99ь,18ь 25,905,02ь 31,2t6,�21 31,1]S,OA2 И,932,191 kc, iком 1ry�nnin� о1 �ги 900,bьб 400,ьь6 2,1SS,109 S,В34,Оь7 12,2ь6,03В 23,112,151 34,101,919 ь0,401,135 1ь,306,181 111,522,211 1SS,291,BN Mjuгl�ents 101,510 Accuwl�ld lпсо,е тд oi �ец 400,ьь6 2,021,551 1,155,104 S,A31,082 12,2Ь6,038 23,122,1l1 34,101,919 ь0,{O1,13b 1ь,30ь,1Ы 111,522,11i 155,291,lь9 2{5,230,Оь1 ■ливеив ввмsввввв ■гввввивs пиsивгs ивввеигs миоsив вввигим евввгикв ввииввв вsвикиввв иввтsвм вввммввм MEXICO: LOW COST HOUSING PROJECT Tab1e 5.20: prcject'в Inveatmeпtв in сцттепt Мех$ 1 F1Y11CE� A1MJ1L АМ1 ACGIUAff� 1ПУЕl11Е111 11/1•1t1г Е11ц4SЕ1 1М i1tl11SA11/! oF lё11[АМ 1Ei0S Ai 11� Oi 11o1UA5E1ё11i 1�+ 1n3 1�и не1 1+и 1т 1»о 1n1 1т 1т-1пе Afc11yl (M{1 , 1�{1�11ar tвl� 1�i�1nu 111 b0,01 1г.01 г1.11 го.11 11.11 10.1t 1,01 1.о1 1.01 1.ог Мсrии 1 iN1+liи гсl� то.ег ю.ог �о.о1 и.п �ом зо.еt и.п �.п олt �1с1.и �+�и н� Ти 1,3То 1,и� г,а3 г,wь г,и� г,иг г,1�1 мlсеtи to UПct1a rct� 1оо.ог 1оо.ог 1оо.ог 1oo.oi 1oo.ot tоо.ок 1оо.п lалг 1oo,ei м Sl1м и1 игviсм 1151 � { 1сlс! �WM N М1�l10с1 ...� и т и.,.г в.,вт ввв,п иит ■■■„г .,,,, ■и.г н Мо. иlвtirc о 16,531 11,311 11,19{ 11,Sгг 11,751 11,г11 11,гi1 1,111 •• Агг� си! µг calutia 11Ус 11 1Ч,000 t1o,110 г11,Т11 3t1,169 J13,1T1 113,NO 1Sо,ц1 140,1о3 531,1N 1 ""'_..' ' "- ".�_.__ ...�_.... .--°°' '..._.._._ ...�..'-- »"'.�.. "•"»�« 1-1 Теес1 сие 100и .....У_ 1 i,i1t,{01 .1.1/S,S11 5,►31,011 /,511,111 1,631,711 1,2]г,101 i,f31,1г1 г,i11,1г1 � о1�М�1� иУс1�о (�) • ь 1; (�1cI М1иГ, Н Ч1�11Мс ввв� и!в1 ааиsТ ииs1 ивев1 ввив1 ииад sassвt тввг �• � wo. �oi.t1«с о i,»о 1,ne г,оы т,1оо т,1� :,1►: г,1�s цг ННН ��с.Мг с"е �г и1�с1о.11кс о1 ыt,ооо ы<,,1ю 1,1>,,т •1,�ь1,г1s 1,sи,1и 1,t�,1ю 1,т,1и г,ац,то г,:3о,n1 .' � ielсl cat 10011 � 1,1и,1s1 s,гн,а+ г,ит,:1ь ��,ги,1ц ��,1�,аг i,u�,u� �,ио,ьп 1,n�,ти ---W.... ._.._._ ........--- -------- -------_ .......--- ..._..... .._--__ .____.. � 1 re�e lмгмииtс 1и1 t° w 1 t�tc1 иМи Н Nlrtfeц МА 01 Oi 01 01 01 1! 01 01 � иУ■ ниi Уви Чив иiи ии1 tliY {Yia иiи w. я1.11�с о о о о о о е о о м Атrу� сиt М,.el�tiм 1Mn f1 112,i00 г11,219 111,011 Я1,132 1ц,оЯ No,ofl i21,г1S i10,Я1 121,115 � _.�... .......... ..._.».. .......-° -------... ...._.... .......... .----°_ , _.....__ i�ta1 cwt 1о111 1 1 0 о 1 1 1 1 1 � ..... ......_... ---------. _»..__. ..».___ .......... .........w� Totc1� ►r tи Тгr • � г иtсl и1л1... w 1иi lоог lоог • 1ои lоог 1а: 1иi 1м tiYt ввиt YYi вtЧв иiit ивУ Npi МiЧ ив{в • 1е. иlд1�� 0 11,3ц 11,3о! Н,2ц 11,�22 г0,131 21,11� 20,131 S,23i Мгв� cnt �ег и1�l1е� l1Ук 11 МА 21i,гf1 3и,1гj 131,7<,0 502,11г Sl3,tl1 N7,111 1i1�Об1 111,2Я rсиl с�Т ии1 � о а,ги,lи +,иs,гs: �o,oso,wo t,os�,o1: 11,и1,1у3 1г,Н1,:а 13,ог+,ьео а,1и,ж /fMaitpt иlцtв�и tftЧЧN1 aЧqиttt Чltlfиia ■Rвiиви /Чвв4ввв ивиtии ивtиии � or�r►t Н kcw�lc►и 1...с►.с.Т- • v� :1е� w исас.. о J,�n,w+ 1,п�,п1 13,sи,о11 �,1t�,1a г1,ы 1,ом тs,по,ж и,но,lи и,ж,гs� о1,но,гsо � h м►1и lwcl о 11н rn 3+3о я1 � п� гог 1� оя и: 13 п� ьа и�и и� � а: огг г� us,u� гТ w�и '� М� М i i � i i г �� i� � i � i � ,, qy lмnлi kuiq .___.._� � 1 0 1 .»...»._� .....�..� ._.---- ,- о С .__...._._ ..�....�. ._.......... ��.._... _.............. ......_ � n> о s ги 1ьь 1Т т s1o го и1 ои и,и�,ае о1 sa 1и и al,sьs от r1 1и 11 нs in 11 и3 ы 1�� 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 ■ивввиввви вiи�иввиМ ■иииRвиМ иJи�Мtии Чввв+вв�F4и виввиtМи в�ввивиFввв tииRlии{У иiииаицв� NiiYfiнaи . 1 � мс�.гн ог ги . г�-3q-н и.г 11и.сы Меци иг г�г 1 м о M�XICO: LOW С05Т HOUSING PROJECT ТаЫе 5.21с Projвet's Cash F1ow 1п Current Мех$ 1А�С FINMCEO A11111A1 АМр AtCUI�ATEO 1МЧЕ911ЕМТ 1РЧ•191г E1PRE55E1 111 11DU'3АМ05 Of 1Е11САМ РЕ505 Ai i11ri 4F 1151UA5El1Е111 ......................°-••-------------....----._.._.._------- СА;И FLOY SWNAY ................. � С И81 11i3 1?18 Ni7 14В! 14i1 t910 Н11 И12 1193-1191 � ,.-- °-• -°- -°- °-- °.. .... ..° ---. ......... л 1lвwгсммtс 1га iвrneмвt Ргецвв о s,г:�,1ье е,ье3,ц: е,1я,lоо э,оsе,яlг и,�1,ц3 1:,и1,цг 13,1r,ьоо 1,гы,3о5 о•Н. ------------- ------------- ------------ -----•--..__. .._......--•- ------------- •----_.....- -------------- ------•------- ------------- с-, С�сУ гкиРlвi � х t�ьА гкоrм� 1га lоиы t'' 01� Oaгtlolio саllкtiмс � 011 �r1fe11e вtl�в • 1нi �at(д1а СΡСΡСΡ���� hior 1о 1?д3 � Fra 1415-199: iвrestwlc 0 5�1,111 1,i95,S77 1,001,190 i,191,416 1,471,51г 10,71f,103 1t,123,011 13,i51,)12 ' �2,р00,163 s�и,ilьа 2.o11Arrsгceel о 1а,tез и3,ю1 1е9,1ье 1n,1n ttь,lп т1ь,11е 1и,5п n,t+o � lr/ и1и 1.1.rK1.r...i s.11 1.гвв1вгвl о 1ov,w1 11r,у1г 1tг,ыь гоl,оаl :31,1s1 гя,г�s :u,on n,os5 ' � 1 � ._......_. ......._.. ....._... ---------- ..._...... ...------- --..__._.. .---...... _�.... ---------- м г 0 135,141 г,1Ч,ВS3 1,333,4В5 1,Н1,1бt 1,131,111 11,415,315 13,317,И1 13,]12,111 32,100,Ч1 иG ------------- ---........_ ........___ .........__ ....._....... .____.._ .____.... .............. ._._-------.. ......_..... , и Mk ивh 11ов 1гц11 0 t1,11В,4641 11,196,5041 N,10i,1151 12,682,1Ь01 11,889,2101 l1,052,0311 1ц,1101 1,1Ч,113 32,100,�д7 ксвиlсси о и,1lо,vы i �r,+1s,1и1 u:,olv,eeu :1s,и1,ы +ь п1,ы 1,w:1 11i,ы1,+го1 1и,1»,Ою1 . и,lп,ьsп :E,o:l,oas . Е+М 1в(icil �с � ►егсм! ы{в�„t,„,1 aS.91 ы1.е1 11.н гг.о1 1ь.п t.s1 а.ц -ти.ы :и GY llаь lгов м Ко�tв н � оасиt о1 iвмсtвгаt 1пс1. 1и1 я1к1 11J1 31.51 51.51 13.01 1].S3 11.51 11.61 1Ч.31 МА 1в11c1t fra вев Кдцвв и в Рмсевt е! iвrнlwt 1nt1. 1�в� �aes1 �s.ч1 u.s1 и.s1 �1.n 1r.s1 �.31 е.11 -ги.п w � Ф, � � М и ryг: , � С � 1яi 11висN КМга7 301 tN� i of 1 riEXICQ: LOW COST HOUSING PROJECT • ТеЫ а 5.22: pкoject'е Сввh F1ow iп f984 US$ 1А11С F1MA1N:E1 A11MMl АМ 1CC111lAiE1 lМУЕl11EMi ИЧ•1t12 ElrRES5E1 1М 11q1�8N1S � 111/ q11M9 1tN 1f13 1118 1111 1?11 1f11 1110 1t11 1412 1Mf-11M A�иrltiau __ .... ..»..._. t�пьll� ►ьи 6oi ик 2v2 2и !и !о! п vl �t п 1кг�и� i t�llыla гые юi ю! �i юt ьо! и! 11i о! ot � и1ц.и.,,г н1 эм 1,w 1,11� 2,1о� 2,�оь 2,ыt 2,111 �,111 ►иг11 �tutn � EitM и1 кnfсп 0 11,Sц 16,711 11,111 11,522 11,251 11,211 11,251 1,641 о г►о1г�н1�� кrаlм е 1,no 1,+se 2,о+2 :,1и 2,111 s,1�2 2,l1s �: о.• . t�го.и Ьа�1м •--^о о о о о е е 1 о о� о 11,su u,sos w,ж 1ч,ь22 ю,иv 2о,11ь ю,1аэ --s,ж ----• о sквпt иеккц иккли лик:s икии втпца иииs к:s:гк asrsкa asaaa:s lotd iccuwlitN �luls о 11,ць зь,ы1 уь,о91 1s,пэ �е,1�е ltь,ы � 1it,or� 112,зtt нt,3r � itв{йв в\иУ• aвtitЧ iвЧаi■ вtiввfк виивв Чиfii иiafY iRKit иii3N А1УУ1� 1�IMlNi1• Eftм W w�icп i0 H3,L1I {13,111 l11,131 111,401 115,OW l16,о31 115,о01 13,1i1 10 М hеlгиЧw и�~fм о• ь,111 ь,1ь2 1,оа1 1,1n 1,soo 1,sн т,1ю l,пь о х t�гпгв ьа.1М ^- - о е о о о о о 1 в о g 10 -f20,1б0 С20,192 -121,ю3 i21,WS 672,541 f22,511 f27,1M wiS,]В1 • �»..fo � ossz:se ■иииа аиапи suuaaa ваккаааа ваиика sasrassa икsив ииваsа ииsкк kr�l�t.ь г.rиг.иг- , й lfем w жriсм Ео l13,е1т п1,о�+ и1,11! 1ss,Hв вlо,ьоl иs,ь�1 11ео,и1 /1a,so+ 11о1,sоь гrprK�tw 6o.�in1 о ь,1а 13,1эт ю,�1 21,tьs тs,ги 1t,1n 1е,2и sт,1n u,1vs д lугми 1о�.1�1 о о о о 1 о о е о о � ю� 12e,wo ио,�2 н1,1s1 и1,т<: 11os,1a пто,иь 11so,ns пх,1о1 ~1sь,1а1 виввУа вtiMpt •вцив• вивиf! иtиtii ttвиQf RilцSfi вLУиtl иitliиi вииWв tasli f1a� r�r11 Ьо п,11ь 1ь,ц1 11о,�1ь 11s,»о t11,1b iю,ь2ь i22,105 • 121,111 f42,1N ' авивЧв еввв+sи вмвавав ивии■ lsuw• ■еиsав вививв иssas» ssаввт иввааи k�.,.1.1.� 1о u,nб и,121 1:о,и1 tи,nt 1я,tо� аs,я1 в11,�х 11и,о1г пе1,1г1 iвtiвiц ■ивfввi вУиви Ltiвaa\• виwив• вiflaOt виУви дкввУ fYYYiв ввiииiв lгвиlп~ irn 1Ysicu'owгwntг • rearlr 1о uu,s231 !1lг,sэтl иlо,�эо! us,usl 1s�,n11 1н,42и usu 1ls,29o 1п,11ь tевЧ{s■ авиаив викки ввввsввв вУва/!7 вpfWf виlitЧ иваиlв 7i1�11tt и/iц=1 Ьи...1�1и :о 1111,s2зь 1131,ии и11,1ое► 1H7,21U иs1,lи1 11st,ersl uS�,��1 tlзг,ьм► и,1�1 вOtiia7 iЧitiJa 1вкltU /utiH■ iiииt \УУви iYtltl■ кsttlЧ вiпfаи икввр ionrвwt tгд~1мs �� � lасмt �r ь.м�иие� • � � cr rwlr w1 1s.n ь1.st �1,si i1.oi u,s2 1,si о.12 -2и,л м� вsаа assa веаа ■иа ии аиа иаа ии san sssa к�wlым М~ 1s,n г+,п ы,п �ь.1! м.1к и.2к ц.lУ :1.1i -�.п ;^ � вiи !ив вiи вУв вввв ви, в:>/ Чвв вfti ии N� iJ • ' � hqrN 1� 1l1 а 11-Sy-l1 1и1 1i�икд lrqru 30i 1уг � о! 1 ! MEXICO: LOW COST HOUSING PROJECT � ТаЫе 5.23: Project �в Year Productlon of Un1ta 1М� F[WC11 /11MM1 1W! ACC1M1AiE1 tMYE911E111 1t11-l112 El1RESSEI 111t11C1i11Е504 11 f11E � 11511115E1E1i F.-eAlC0.AT1t! ff'f1A0L1 11CY10NS Н81 lТВS lfBб 1?81 Н11 1t1f Н10 11?1 11t2 1f13-N91 � lhwyllыcc ---• --- ---- •--. ._.. ..... .... ._.. ..... .__..._. t+n+e1.. г+е. 1о1 1:1 т :и 1ц ео1 п п п � hгсиl+ц caylctioc iв ctrt Yer- 5i1и +о1 sиrtcк 1001 1001 1041 1001 1001 1001 100t 1001 t001 .. мугмlir� Мкiс� 1001 1001 10Q1 1001 100L 1001 1601 1001 1101 lyrorN lисiу 1041 1001 1001 1001 1001 1001 1001 1101 1001 � Nr1и of stortt 1о 1о�- litи +Ч игrlсм 0 11�558 121 16�317 311 1Т�Н1 ц1 1]�522 111 11�231 Я1 11�211 Я1 11�251 ц1 1�111 ц1 �i 1 муг...1.. мсьу h- о -1,ло ю1 1,rse s71 :,а: ц1 :,1оо 3э1 - 2,1и гп - т,и2 1п i,11s 1+1 su 3п � lугоfм wc,ly 0 о 11: о 211 о т 0 2п 1 111 о 2п 1 т е 1п 0 11�000 1001 100�000 100I t00�000 1001 100�000 1001 100�000 1001 100�000 1061 100�000 100i i00�000 1601 � ииив ввеаиа ви виаиs so вsиив ви иивав ви ивrиа sи ииив ви виави ввs вssssaa 4в kcвrd+eN оWЧг ef oeuls ic р�- о liем +в1 �псв о 1ь,ць и,1о3 ю,ovi 11,1w оs,lго 1a,es1 1к2,и1 121,ео: 7 моКксlл 1«с1у 1 е,ж 3,27е ь,ооо 1,1и 1o,2w l2,1ео н,ьи es,m � ,� 1+Огом1 Mciy 0 0 0 0 0 0 0 0 0 .� ��о и,и6 ц,и! Sь,мг 2s,2н 16,1�1 иь,ы 1 1я,еп е12,3т+ �� иuzssss к:тsпик ииssак вsиsкиг sкиииs иииsи eaasmu esuaaaas ивиаиа М 1 Wir и 1.rкеnве в+1е~ 1в► cкliq� й 0+ сrгие wr cerb 11111- :1ек +м игсlск е 11,ssr 16,3+2 и,и1 u,sn e1,2s1 и,т.1 е1,231 1,111 hyrвc+ir� lвrciy 0 1�110 1,151 2�012 2�100 2,1р 4,112 2�11! , S6t . 1oMon11a+1M 0 1 1 0 0 1 0 0 1 а и1к �w и+►ео 1яи- lеtк +М иг�iск 1 � 0 1 0 1 1 1 0 1 мугксf� Mcfy 1 0 0 0 1 0 0 0 0 lоугопi loaiy 0 0 0 1 0 0 0 0 0 0 11,ц6 11,i0i N,2S1 t1,122 70,1N 21,111 11,ц1 6,2ц fiiвiвt вtдаRвi иЯвii ииfЧ ввввив aiiвsat iiitд• 1iFиp - п- 1а1+1 w�бer о1 iorestoкt uoies- sы м+и sег.еск о u,3s1 n1 1ь,и2 т nвнl т 12sn 1п u,2s1 "1 и,211 w1 е1,2я 1v1 1,и1 1п lrepкciro Mwiy 1 1,f10 11l 1,1'31 111 2,012 111 2,100 e1i 2,1М 111 l,Н2 11i 2,115 111 362 111 (рг+вN lисiу 0 1 01 0 01 0 11 0 01 1 01 1 01 1 01 У--- 0 01 , а� ------о 1в,sц u,sos и,1ц 1t,r2: ю,1и 2о,иь то,и1 s,2sь г�о � ииУ■ fiiifY вивW риЧв вfцив диiti Чввив iiYвY fвиiи и.� Сие Oer кс�ас s�ек +и н..кк иl,ооо 21о,1и 2r1,иi 3a,vи тn,н1 и1,о+о 1sо,2и но,�3 sте,�Ч w с моlгк+lм Moosfy 111,000 111,110 1,11J�12S 1,ц1,213 1,i61,161 1,122,111 1,111,117 �,046,111 2,2ю,i21 � 1оlгоrи и.о1у и2,оа 2м,2ю 111,а2 ю1,1s2 1ц,1ю ио,о» s23,21т s1o,3t1 ь:1,21s мyr�r Ь� ги ■ т.-sц-и и.t гьwси Куг+. ю1 гМо 1 и 1 . +- . PLAMR V M~ -97- KUICO LM-~ HOUSING- PRWBCT Table 5.24. Monitoring Tadicators in ProjtrOW Reports Göverneent Fiscal Ycem 1985 1986 1987 19BB 1989 1990 1991 1992 Sewster (S - SprIng; F Fall) s F s F s F S F s F s F s F s F m* ~ Yäff 1986 1987 1988 1989 1990 1991 1992 C114HAIM im ad M 15 21 26 32 39 45 52 60 67 76 84 90 97 100 EERMRsem Mt491 % % z z z % z % % z % % % z >UMM W« ~ x dey) $ $ $ $ $ $ $ $ $ $ 5 $ IN= (12 months rum~ z z z z % z % % z % z CP1 (12 "ha ~ c~ % % % z % i i z LIS$ ~ rate ~ ) $ $ $ $ $ $ 5 5 CPP (12 bo runntm ~ ) % z % z % % % an Sites ud Sewkes M z z z 2 2 z z z CER an Pr~ ve units M z 2 z z on Sites and Ser~ M $ $ $ $ $ $ $ $ IRR an Pr~ sive M $ $ $ $ $ $ $ $ $ $ $ $ $ AWWZ Siten ad Senrices (MO) % 2 % z z % % z z z z z UHU aW Pmgressive Units z % z z z 2 % % nållions $ $ $ $ $ $ $ $ $ $ Gavt. Mmafez9 (m Z of total) % % z z z z z z z z % % Own PCBM~ (as z cf ~ ) % % % % z z z % z z x ~ udilloffis $ $ $ $ $ $ $ $ $ PM= m % of total % z % % z % % % % z DRESD9M an 2 of S & 5 % % z z z Z z % x % z % z m % of PCU % % z z z z z z i z u~ of lmm n' n* e n' r17 e ål NEIJ ~ units n- n! e fil n* n' e no e n' 1~ av. ~ (units) n. r? e e n* no n* e rio e n' äl d (Ppaw) av. value (~ ) $ $ $ $ s $ s $ s $ $ $ $ $ In hukuorters no å, e flo e T? e e n* n* e no no no no smw In r~ nål offims ný r? no n' no no de n, GLIGMT ~~INVESPEKM IWI0 z z z z z z MIN. WAGES -98- CEL47w= VI AM= Chart VI-1 5.0 ----- - - - -- - - --* MEXICO: LINE OF CREDIT FOR LOU INCOME HOUSING 1977 HOUSEHOLD SURVEY INCOME DISTRIBUTION 1us - 180 Hex$ (Jan.1984 exchange rate) 1 MW - Mex$ 927 x day - US$ 4.83 x day 4.0 Mx-----$-.-MeS 112,784 - per month - . 3 Mex$ 84,589 - US$427 x month 3.0 . 83% of Total Population below this IFEoe iFel- - 2.5 Mex$ 70,490 - US$356 x month FONHAPO'8 CEILING -5 ---A--- - - ProRressive Construction 2.0 --i-392-S$285 x mont POVERTY LEVEL Mex$ 42,294 - . US$214 x month 1.5--- --- geadSnce Ceiling kex628,196 Mex$ 28,196 - 1.0 U$ xUSU142 x month Mex$ 14,098 - 5 US$71 x month 0 10 20 30 40 50 60 70 8C 90 100 2 OF HOUSEHOLDS -99- CHAPTER VI ANNEX Page 1 MEXICO LOW INCOME HOUSING PROJECT A. FINDINGS OF THE 1984 FONRAPO EVALUATION SAMPLE (FES)1/ Distributional Impact of the FONHAPO Program 1. FONHAPO's projects are intended for low-income families who, given their low incomes and independent employment relations, do not qualify for credits from other public housing programs. Nonetheless, it is realized that even the most affordable of FONHAPO's solutions, through Sites and Services projects, are not accessible to the very poorest sectors of the population2/. Table 6.1, presents the best possible match-up of the available couEtry-wide income distribution data with the information in the FONHAPO Evaluation Sample (FES) of 1984. 2. While 40% of the 1980 Census respondents reported incomes below 0.9 of the minimum wage (MW), the equivalent share for the FES is 24%. On the other hand, 52% of the workers in the FES earned between 0.9 and 1.6 HWs versus 32% in the Census distribution. Admittedly, the comparison is fraught with problems, beginning with the mis-match of dates and the difficulty of comparing data on head-of-household income (in the FES) with the distribution of Income between all members of the economically active population (Census data)3/. The direction of the finding is clear enough, nevertheless. The FONHAPb program, though accessible to the large group of workers in the lowest income bracket, is primarily addressed to workers with earnings close to, but not below the minimum wage. 1/ The survey upon which this analysis is based was conducted between May and July 1984 by FONHAPO's Monitoring and Evaluation Unit. Special thanks are due to Dr. Noemi Stoloveky and Mr. Ernesto Sodi for access to this material and for the help given to Mr. Paulo Vieira da Cunha (Consultant) in the interpretation of the six case studies explored in this Annex. 2/ A recent survey of self-help housing experiences in Mexico City concludes: "In the past twenty five years squatter settlements... have not usually hosted the poorest of the urban poor within them" (P.M.Ward: "The practice and potential of self-help housing in Mexico City", p. 182 in Self-Help Housing: A Critique, London: Mansell Pub. Co. (1982). In a similar vein, a study by the World Bank found that Sites and Services solutions are generally too expensive for the bottom 20% of families and "serve the upper segment of the groups that can afford them". (IBRD: Sites and Services and Upgrading, A Review of Bank Assisted Pro ects, p. 22, Washington D.C. (1978)). 3/ Note that: a) almost 17% of the EAP failed to disclose income data on the Census; b) the real value of the MW was higher in 1980 than in 1984; and c) the income of heads of households is usually higher than that of other members of the EAP. -100- CHAPEl!R VI AINNX| Pag 2 IDl-INME -XD PROJ Table 6.1: Ince~ Distributim of EAP and Credit Recip,ent In the YhiA0 Evalution Semple() Incom Classee 19) Ceneue (EAP) fi - 14 (Headony) (in Wä) N % %I/ %/Ac. A y 57Acc (000's) up to 0.9 5,591 25.3 39.8 39.8 16 23.5 23.5 0.9-1.6 4,558 20.7 32.4 72.2 35 51.5 75.0 1.6-3.0 2,576 11.7 18.3 90.5 17 25.0 100.0 Ovr 3.0 1,330 6.0 9.5 100.0 - - - w/o imane 4,344 19.7 - - - - - Missig Data 3,669 16.6 - - - - - TAL 22,066 100.0 100.0 100.0 6B 100.0 100.0 Souroes: (a) X Cenmo General de PoblacioN, Resmen General Abreviado (Mexico D.P.: 1984). Table 12, pg. 215. In Mw, 1980 (referece date for the Csums), the aage -inimm e w eited l regon and ector acoording to the Camdzi2m Namal de Salarios Miniens mN YO36 per dor or WP4, per mn:th, asing a 30 day-pid month. Therefore, the Cns clas of earrs up to YL43,610 wld oorrspnd to 0.9 N%s; MS$6,610 to 1.6 Ms md M~12,110 to approximtely 3.0 Nils. (1-) F!, for Sitee and Services ony. Inen date was converted into NKW using the appropriate laen1 definition at date and reglon. Note: Beteen 1980 and 193, the rmal anmal avera valu of the avrag mignimm age fell ly approximtely 25%, the December based va]na fell ly almst 29%. See CEPAL: Notas para el Estio F~med e de America Latina, IC3 - Mexico. Table 16. () Sites and Services progrm, 1984 CHAPTER VI ANNEX Page 3 3. In this respect it is important to observe that the main thrust of the Programa Financiero de Is Vivienda - the competing housing finance program - is, according to the Census data, directed to the upper 10% income distribution: a share which, in Mexico is reached with the scant figure of three or more minimum wages. This group is not represented in the FONHAPO's program. Note also that the distributional criteria of FONHAPO's Sites and Services sub-program compares most favorably with that implied by the output of INFONAVIT, the main public agent in the housing market (Table 6.2 below). Table 6.2: Credit Recipients by Head of Household Income: Household: INFONAVIT and FONHAPO Evaluation Sample. (in Z) Income Classes INFONAVIT* FONHAPO ** (KWs) 1980 1981 1982 1983 1984 up to 1.00 - - - - 36.8 1.00 - 1.24 36.0 20.8 29.7 50.0 19.2 1.25 - 2.00 35.7 39.6 36.5 35.0 35.3 2.01 + 28.3 39.6 33.8 15.0 8.7 TOTAL 100.0 100.0 100.0 100.0 100.0 Sources: INFONAVIT - M. Schteingart: -El Sector Inmobiliario y la Viviendi en la Crisis. Comercio Exterior, Vol. 34, No. 8 (August, 1984). Table 5, p. 146; FONHAPO - FES, 1984. * Intended target income group of housing produced by the Institute (including sites and services). Sites and Services Program, 1984. 4. As shown in Table 6.2, despite the increased progressivity in the allocation of credits by INFONAVIT (mainly the result of the enlarged production of Sites and Services in 1983), 15% of the 1983 total was directed to workers earning more than 2 MW. FONHAPO's equivalent share. also shown in Table 6.2, is 9% (in 1984). Moreover, and more importantly, 37% of FONHAPO's credit recipients earned less than the statutory minimum. The INFONAVIT program does not reach this population. -102- CHAPTER VI ANNEX Fage . 5. The foregoing discussion has been based on iidividual incomes. A preferred measure of either the affordability, or the distributional merit of the progran would be the level of family income (including transfers and income-in-kind). Indeed, the distribution (interpersonal welfare) yardstick should ideally be marked in levels of total family income per capita. Unfortunately, this kind of data is not reported in the published Census material; and it is simply unknown in the case of INFONAVIT housing recipients. The FES does report it (though curiously FONHAPO's own allocational criteria also exclude measures of family income). According to FES data (see Table 6.3), 75% of the families in the Sites and Services program had monthly earnings below 2 MW. The lower quartile of the distribution showed levels of income below or up the relevant regional minimum. This is most certainly a situation of acute poverty, in this case concentrated in one of the four projects analyzed in the FES. Table 6.3: Distribution of Credit Recipients bX Total Family Income. FONHAPO Evaluation Sample - 1984* (in %) Income Classes Contract Nos. (in MWs) 91 99 139 152 Total 0.5 - 1.1 0 25 62 21 25 1.1 - 1.7 2b 30 0 36 25 1.7 - 2.0 44 15 18 14 25 2.0 - 4.0 30 30 0 29 25 TOTAL 100 100 100 100 100 Source: FES, 1984 * Sites dnd Services Program 6. Variations in sample size and the very small size of some samples limit reliability of the project specific findings reported in Table 6.3. With this caveat in mind, the evidence shows that at least some of FONHAPO'q Sites and Services projects are tilted towards the upper range of the low earning population. For example, of the buyers in project 91 (located in Quintana Roo, within a petroleum exploration zone), 74% had family earning in excess of 1.7 MW and none had a level below the minimum. Meanwhile, the fragile evidence of 11 observations for project 139 (in a depressed urban area of the State of Aguascalientes) would indicate that nearly the whole project is directed to families with incomes below the minimum. -103- CHAPTER VI ANNEX Page 5 7. Table 6.4 summarizes the distributional characteristics of the FES and its disaggregation at project level. The mean income of the household head is 1.33 MW, well below the maximum level established for FONHAPO (2.5 MW); the average family income is, expectedly, higher but still below 2 MW. This figure is usually interpreted as the poverty level for the family. The average per capita income is 0.43 MW, a surprisingly low figure (approximately US$61 per month). In conformance to the goals of the program, a substantial share of recipients are workers in the informal" sector; that is, they are not employees. In fact, given the earnings data, it is apparent that most employees are themselves workers in enterprises which operate at the margin of the minimum wage, and perhaps other legislation. At one extreme (project 139), 73% of the heads of household are own-account workers with average earnings of 0.75 MW per month, leading to an extremely low family income per capita of 0.15 MW (16 US$ per month). At the other extreme (project 152), the per capita family income is nearly four times as large. Table 6.4: Summary Measures of Project Characteristics FONHAPO Evaluation Sample, 1984* (income data in min. wages) Family Head of Hous. Income per Household % Informal Contract No. Income/1 Income/1 capita/1 size/2 (head) 91 1.95 1.68 0.50 4.87 52 (24) (33) (60) (2.15) 99 1.88 1.18 0.41 5.05 55 (53) (34) (54) (2.13) 139 0.97 0.75 0.15 6.91 73 (46) (28) (33) (2.47) 152 1.77 1.43 0.57 3.50 64 (44) (29) (47) (1.40) TOTAL 1.74 1.33 0.43 4.97 59/a (45) (41) (65) (2.31) 1/ Figures in parentheses are cofficients of variation x 100. 2/ Figures in parentheses are standard deviations. a/ 55% of the families headed by workers in the informal sector have incomes below 1.7 MW, while only 43% of the families headed by employees are in this bracket. * Sites and Services Program. -104- CHAPTER VI ANNEX Page 6 8. Other information gathered by the staff of FONHAPO indicates that the majority of workers in the sample could be classified as "semi-skilled" or better, and many of these had factory employment. Most had worked continuously over the previous twelve months, and while the data summarized in paragraph 7 suggest that they were not well paid, there is indication that they formed a moderately "privileged" and thus financially viable group in terms of borrowing/repayment capacity. 9. The data on Table 6.5, also suggest this conclusion. The majority of families lived before the project in units with access to public services (water, light, and to a lesser extent drainage), built of durable materials, and with access to Loth kitchen and bath. The most notable deficiencies are the lack of internal bath (51% of the units used before did not have them) and public drainage (32% of the unit without access); and except for the latter case, it would not seem that the "richer" households in the sample enjoyed a disproportionate share of the desirable characteristics. In comparison to the national average as measured by the 1980 Census, this particular housing stock is of higher quality, though it is inferior to the average for Mexico City and other major metropolitan areas. Table 6.5: Housing Characteristics in the FONHAPO Evaluation Sample Before Access to the Project* Characteristics % Of total sample/a % In the upper quartile/b Bath: inside 48.5 24.2 Kitchen: inside 80.9 27.3 Walls: durable materials 95.6 26.2 Roof: durable materials 52.9 25.0 Water: public connection 73.5 26.0 Light: public connection 89.7 26.2 Drainage: public connection 67.6 32.6 * Sites and Services (N = 68 cases), 1984. a/ Percentage of units having the corresponding characteristics. b/ Percentage of positive responses belonging to households in the upper quartile of the family income distribution. 10. In sum, based on an evaluation of FONHAPO's own past experience, it is evident.t'hat the Sites and Services program is reaching its intended target population. It is meeting the demands of the low-income housing market but not the poorest segment in this market. Within this spectrum, the program allows for considerable divergence in income most noticeable across projects;-and, understandably so, for FONHAPO projects are organized around pre-existing groups or organizations with pre-established levels of housing demand. The groups are not homogeneous, however. Therefore, there -105- CHAPTER VI ANE Page 7 are significant variations in total earnings, household size and levels of welfare at the project level. Undoubtedly, these deficiencies, if stable, will be reflected in the uneven development of the sites4/. The Household budget: Is FONHAPO's solution affordable? 11. It is commonly assumed that a low-income family could spend up to about 20% of its monthly income on housing. Less than 10% of FONHAPO's beneficiaries were spending more than that share before the project, and as it is shown on Table 6.6, practically none of them were spending (or were planning to spend) in excess of this guideline after the project, though it is important to note that the definition of housing expenditure is, in this case, limited to the repayment of the loan and does not include building and maintenance costs. Table 6.6: Shares of Expenditures in Food and Housing in Total Family Income - FONHAPO Evaluation Sample* Budget Shares (Z) Percentage of Households Food & Food Housing Food & osing Food Housing Housing before after before after < 30 None < 40 23.5 22.1 -- 27.9 26.5 30 - 39 1 - 9 40 -49 20.6 36.8 57.4 14.7 20.6 40 - 55 10 - 19 50 -59 29.4 32.4 41.2 25.0 13.2 > 55 20 - 29 60 -79 26.5 2.9 1.5 17.7 26.5 > 29 >79 -- 5.9 - 14.7 13.2 OF TOTAL FAMILY INCOME 100.0 100.0 100.0 100.0 100.0 * Sites and Services Program (N = 68 cases), 1984. 12. Before the project, 22% of the recipients declared no monetary expenditures for housing. For these families, the new credit will further constrain the household budget. Moreover, for the entire sample, the average shar( of the budget to be spent on loan repayments alone is approximately equal to the share of total housing expenditures before the project. This means that total expenditures on housing (including the piecemeal production of the new unit) will increase for the average family. Yet, as we have mentioned, for the FES the average level of expenditures on housing is typically low with nearly 60% of respondents declaring an after-project share not exceeding 9% of the household budget. Thus, it is safe to conclude that the mean household could spend an additional 10% of its budget on housing construction (this would amount to 4/ The data in the FES do not permit a more detailed examination of the life-cycle of the families in the program. Some indication point in the direction of typically young families who have not reached the top of their earning potential. -106- CHAPTER VI ANNEX Page 8 approximately 2 MWs per year, on average, currently the cost of construction is 27.6 MW per m2). The lingering doubt in an examination of the ability (vs. willingness) to spend on housing, concerns the weight of the other items in the budget, most importantly, food (Table 6.6). 13. Returning to Table 6.6, we observe that nearly 30% of the families spent only 40-55% of their budget on food and that no more than a quarter of them, spent in excess of 55%. When combined with housing, the two items account for more than 60% of the budget of 32% of the families before the project, and 40% of the families after the project. Thus, it appears that most families should be able to meet the additional demand for house building funds. Indeed, the proportion of families with severe budget limitations (i.e. spending more than 3/4 of their income on food and housing alone) is relatively low, below 15%. 14. To conclude, FONHAPO's Sites and Services program is affordable to its target population even when proper account is taken of the required complement of funds for progressive house building. There are however indications that a minority of credit recipients (perhaps as many as 15%) will face difficulties to meet the additional costs of construction. For this reason (and considering that in the consolidation of a Sites and Services project those factors, which relate to income and the creation of an investment surplus at the household level, should be the most important in explaining the levels of improvement that can be achieved) it is advisable that supplementary loans be extended to the original credit recipients, for the purpose of house building. The FONHAPO program allows and presently encourages such loans. Housing Conditions After the Credit 15. The FES contains data on 20 households who had already built a housing unit on the new, improved lot (approximately 30% of the sample). Most of those who built are among the poorest in the sample: 45% of the families who had built new units belonged to the lowest quartile of income. The units are built in two projects, one finished in June 1984 (Rincon del Ramos, Aguascalientes, with 664 lots), and another still in construction at the time of the survey (Chatumel, Quintana Roo with 430 lots). It appears that in neither case there has been as yet a substantial gain in living standards, though admittedly the projects are at the very early stage of consolidation. To a large extent this is due to the maintenance of previous housing standards: mostly one-room units but with internal kitchen and bath. Both projects are to be served by public light and water, but only one of them will have public drainage facilities. Though deficient in some respect, this pattern of supply maintains the pre-project level of access to public utilities by the households. In the decision to approve loans for Sites and Services projects, FONHAPO takes into consideration the provision of basic (i.e. off-site) urban services. This means that, as a norm, Sites and Services projects have standard access to transport, education and health facilities. However, because they are generally located in the periphery of urban areas, it is expected that residents will have longer trips to work, shopping and recreation. CHAPTER VI ANNEX -107- Page 9 B. NOTES ON THE MEASUREMENT OF COSTS AND BENEFITS 1. In evaluating costs and benefits, we have focused on the changes in total consumption (or net value added) which are likely to result from the proposed project. Costs and benefits have been measured in domestic market prices. The goods and services involved are for the most part non-tradeable. When tradeable, as in the case of steel, the quantities considered would not affect significantly the foreign balance. Therefore, the introduction of either border pricing or of appropriate conversion factors would unnecessarily complicate an already compla= valuation problem. Note further that no deduction has been made for the Value Added Tax (IVA), which normally is charged on all final sales. By law, purchases for the production of Social Interest Housing (VIS) are exempt from this tax, which does not appear in FONHAPO's own accounting costs. Shadow prices, applicable only to unskilled labor which constitutes a minor fraction of total construction costs, were judged not to have a major Impact on the rates of return and were not considered. 2. For the calculation of the ERRs it has been assumed that the new stock lasts for 25 years from the date the project begun. A yearly allowance of 1Z of total construction costs has been made for maintenance, with uniform incidence for the first 10 years following the completion of the unit. The residual value of stock and land at the end of the project cycle has been ignored. Since all housing is progressively built, the following conventions were used in the analysis of the typical unit in the standard project: (a) the unit was defined as a 3-room construction (each room with 12 m2) progressively built in the case of Sites and Services projects, or delivered "finished" in the case of start-up dwellings (with a total construction area of 40.50 m2); (b) data on costs provided by FONHAPO were based an the first semester 1984 averages. Accordingly, the cost per m2 of construction was established at Mex$16,371; the market price of a standard lot with 11.80 m2 at Mex$56,813 and the cost of urbanization at Mex$1,278 per m2; (c) since no account could be taken of differences in construction costs and/or in layouts favored by own account builders, both of.which would result in additional benefits for the units, we have assumed equal imputed rent for both the "finished" start-up units (with 40.50 m2) and the "finished" self-constructed unit (with 36.00m2); and (d) a cash flow sequence defined as shown in the following Table 6.7. 3. Given the difficulties In imputing a market price to a product that does not yet exist and is not easily compared to others, the measurement of future streams of rental values is fraught with problems. And, in this case, the task is further complicated for the project does not involve the production of standardized, ready-to-market units. Rather, the units are to be built progressively and the price of half a house is probably not equal to one-half the price of a finished house. Moreover, it is one of the merits of this project, that houses are to be produced in accordance to the tastes, willingness and capabilities of the families involved. Thus, In this case, the estimate of Imputed rental values requires additional assumptions to current practice. -108- CHAPTER VI ANNEX Page 10 MEXICO LOW-INCOME HOUSING PROJECT Table 6.7: Cash Flow for Cost Benefit Analysis Sites and Services Start-up Dwellings Year Costs Benefits Costs Benefits 1 Land acquisition Land acquistion and urbanization and urbanization 2 Construction of Construction of unit room 1 3 Construction of Rent for Maintenance Rent for room 2 room 1 3 rooms 4 Construction of Rent for room 3 2 rooms 5 Maintenance Rent for 3 rooms 6 " 13 Maintenance Rent for Rent for 3 rooms 3 rooms 15 Rent for Rent for 3 rooms 3 rooms 25 Rent for Rent for 3 rooms 3 rooms -109- CHAPTER VI ANNEX Page 11 4. More than one half of the household covered by the FONHAPO Evaluation Sample (Annex II B) were previously renters (see Table 6.8 below and Table 8 in Chapter VI). Of these, approximately one half used to rent finished units and only one third, finished units including bath and kitchen. Curiously, renters of the nore endowed units used to pay lower rents per room - a result that may reflect the increasing instability of the samples (due to their small sizes) and/or the possibility that "finished units" are in fact dilapidated and rent-controlled portions of the stock. Note that according to the FONHAPO Evaluation Sample, average income decline as quality supposedly "improves" when, in fact, one would expect the opposite to occur. ERR Sensitivity Analysis 5. Concerning the economic benefits of the project, in addition to the preferred set of assumptions (termed A) in Table 8 on page 36, two other sets were considered: B) a sensitivity experiment supposing a 25% reduction in the imputed rental value implied by the assumptions in set A); and C) the value which results from combining the use of the average income reported in the first row of Table 6.2 with a one standard deviation increases in the share of the head's income to be spent for rent. Set C) depicts the following simulation: on the one hand, a greater willingness of households to spend income on housing because they are purchasing (building) a home of their own (which leads to an increase in the share of housing expenditures in the household budget); on the other hand, set C) supposes that households are incapable of raising their income levels over time (which leads to their building a unit without market improvement in quality with respect to their previous situation(*). 6. Concerning the economic costs of the project, two alternatives are explored in Table 8. For Sites and Services projects, under alternative a) the share of ad:inistration costs (and the implicit profit margin of commercial builders) in total project costs are deducted from the construction investments. According to FONHAPO's practice, this share is usually set at 30% of total investment costs. Alternative b) corresponds to full cost pricing on the assumption that self-built practices are uncommon and do not amount to a large share of total construction costs. For Progressive Construction projects, alternative a) assumes a one-year production cycle which in fact over-estimates current FONHAPO experience. Alternative b), in this case, presumes a conservatively long, two-year project cycle. () The income reported in Table 7 (page 35) is that of the head of household only. Considering total family income, the average FES household spends a below-average share of the budget for housing. Thus the assumption of an increased share could be realistically met even with stable incomes. -110- CHAPTER VI ANE Page 12 Table 6.8: Rental Paynents in the FES Saple before Access to the Subprojects* (in nomLnal pesos) Type** Renters % of MLn. Hshold. % Hshld. Rent Room Rent/roa Number FES Head's Head 's Mean Value Mean ($/month) Income Income ($/muth) N ($/month) All Renters 37 54.4 23,785 15.6 37.17 2.0 18.59 (12,459)a/ (8.5) [87,35]b/ [43,671 Renters 18 26.5 21,310 18.5 39.54 2.4 16.47 Finished Units*** (11,532) (9.5) [91,84] [38,27] Renters 13 19,1 18,303 17,7 32,40 2,4 13,50 Finished Units (8,916) (9.7) [74,53] [31.05] (inside bath & kitchen) * Sites and Services project, 1984. ** Based on declared previous form of tenancy and housing type of intervieiees. Sites and Services project only. In noinal pesos-first senester, 1984. m** All units with kitchen and bath (soow external) with walls and roof of pernanet mterials. a/ Standard deviations. &/ Supposing that the ean incoe and the share of housing in the budgt of the head E bousehold are one standard deviation above the m. CHAPTER VIII ANNEX Page 1 MEXICO LOW INCOME HOUSING PROJECT TERMS OF REFERENCE: MEXICO HOUSING FINANCE SECTOR STUDY Issues in the Housing Finance System of Mexico 1. The three main questions facing the housing finance system of Mexico at present are: a) How well is the system adjusting to the current period of high inflation and reduced economic activity? The current housing finance system of Mexico has been developed incrementally in an environment of considerably lower inflation than at present and the resource base of the sector has been seriously eroded by inflation since 1979, dramatically so since 1982. In early 1984, the Government has taken three major decisions: it has reorganized the public institutional framework, it has increased the allocation of resources to housing, and it has changed the onlending conditions of the publicly sponsored agencies in the housing market. The adjustment of lending conditions to inflation has been only partial and it has not covered all major housing finance institutions. There are therefore two unanswered questions regarding the current transition: first, will the variable rate mortgages recently designed lead to a more complete adjustment and full capital recovery as inflation declines; second, how quickly and with what kinds of mortgage instruments is it possible to improve the various payroll funds such as INFONAVIT which have yet to make the necessary operational adjustments to their new economic environment. b) What are the possible avenues for increasing the coordination of the variety of financial institutions intervening in the housing sector? The Bank's public housing sector report (*) shows the complexity of the housing finance system of Mexico and its fragmented nature. Simplifying somewhat, the Mexican housing finance system is based on three distincts approaches which have led to the emergence of three differential sub-systems most clearly distinguishable by the sources of their funds: (a) the banking sector; (b) the special housing funds financed by payroll taxes; and (c) the public housing programs financed through Government equity and budgetary allocations. Flow of funds information on the total housing finance system that is comprehensive and up to date is not readily available. During the period 1977-1981 the total amount of annual housing financing available was of the order of US$1.8 billion. The composition of (*) Public Housing Policy in Mexico, Urban Sector Report No. 4993-ME (Green Cover) IBRD, June 1984. CHAPTER VIII ANNEX Page 2 total housing finance resources was approximately 24% from the banking sector, 63% from the housing funds and about 13% from Government programs. The various social housing programs which cut across the three sources of funds accounted for little over one half of total sector resources. In 1984, the housing sector received a high level of priority in order to stimulate the economy and to soften the impact of the economic crisis on middle and low income households. The total amount of resources earmarked for housing was US$2.7 billion with a planned composition of financing as follows: 45% banking sector, 40% housing funds 15% public programs. c) What kind of actions are possible to improve the availability of housing finance to an increasing proportion of the Mexican population? All the evidence points to a rapidly growing demand for housing fueled by population growth and urbanization over the next two decades, and housing has been defined as a priority sector in Mexico. On the other hand, the need to restore the strength of the economy dictates that national priority be given to raising the level of domestic savings and to increasing the efficiency of the existing productive system. In the case of housing, such national priorities imply that attention be given first to capital recovery and the ability of financial institutions to expand their program in a sustained and viable way without requiring external injections of scarce financial resources. Increasing the efficiency of the housing finance system also means serving a wider proportion of the Mexican households. Therefore a review and technical analysis of the current situation is necessary on three fronts: resource mobilization for housing finance; lending policies and lending instruments; an evaluation of the structure of the present system and of coordination requirements, including smn examination of the support facilities already in place or needed such as deposit insurance, mortgage insurance, refinancing facilities. 2. It should be noted that this study's priority is on the improvemtnt of the financial institutions serving housing but that the Mexican informal sector is very large. The growth of the informal sector is due for a significant part to non-financial constraints which should be the object of another study. The main area of overlap lies in improving access to financing for low and middle-income households through improved lending policies. Objectives of the Study 3. The objectives of the study are: a) to describe in a comprehensive manner the current structure of the Mexican housing finance system and the various institutions which make up that system; CHAPTER VIII ANNEX -113- Page 3 b) to inventory and analyze the financial instruments that are presently available to finance the various phases of the development process; c) to provide an evaluation of the performance of the various institutional components of the housing finance system: efficiency in resource mobilization, capacity to adjust to the current 2 inflationary environment, ability to finance various household income groups; d) to propose possible strategies for the evolution of the housing finance system (instruments, institutions) which could improve its contribution to national savings, increase the coordination and efficiency of rhe system in an inflationary environment and make financing available to a higher proportion of Mexican households, particularly middle and low income households. These strategic proposals would cover both financial instruments and institutional interactions. An Illustrative Outline 4. The outline which follows is not meant to represent the final structure of the report, rather it is intended to be a vehicle for the determination of the scope of study, for the clearer identification of the technical work to be performed and as a means to determine the allocation of tasks among participants. Part I. CONTEXT 5. This section should draw as much as possible from existing sources. It should cover: (i) The Housing Sector a) income and housing in the 1980s: an overview of the sources of income growth in the past decade, a close analysis of these sources and a forecast of income growth; b) price of housing and tenure choice in the 1980s: demographic trends, household formation and impact on housing prices. Balance between formal and informal housing; c) housing production in the 1980s: distinction between residential and non-residential construction; analysis of the statistical record by type of units apd by local housing markets; projection of the composition of output in the 1980s. (ii) The Housing Finance Institutions and Windows: a) an overview of the banking sector in Mexico and latest trends; b) the Banking sector, FOVI-FOGA; c) the housing funds: complete inventory description of major types; d) public programs (such as FONHAPO). -114- CHAPTER VIII ANNEX Page 4 Part II. EVALUATION 6. Housing Finance and Housing Demand: The Broider Issues a) financing housing: is the cost of financing housing out of line with costs of financing other investments or activities? b) inflation, nominal interest rates and housing demand: cash flow and affordability problems created by high levels of inflation and fluctuating interest rates. 7. Current Financial Instruments: Description and evaluation. The objective of this section would be to establish the extent to which identical borrowers may be fazing widely different financing according to sources and the degree of consistent pricing fir essentially identical household characteristics and/or housing units. Given th : fragmented institutional structure of Mexico, another question to be addressed in this section is how households who have been successful in financing their house might be combining loans from different sources and what the impact of such multiple borrowing might be on their income cash flow and credit risk. It would cover: a) types of financing for various real estate development activities (land acquisition, construction, long term finance); b) variations in financial terms offered by various institutions. Performance of the Various Institutions 8. In spite of the magnitude of the task, it would Se very important for the study to have maximum coverage of all the institutions and agencies financing housing. Since the comparison of financial terms offered to borrowers will have been performed in the earlier section the focus of this section would be on three major issues: a) sources of funds and mobilization of Fe-ings; b) volume, types of loans and borrowers; c) capital recovery and financiel viability. 9. The performance of the major individual institutions within each of the three components of the present housing fi.nance system (banking sector, housing funds, and government-financed programs) will be evaluated. Part III. RECOMMENDATIONS 10. As noted earlier, the three major issue. facing the Mexican Housing Finance system at present are: its degree of adaptation to high levels of inflation, effective coordination mechanisms and reduced fragmentation of the institutional structure; improved access to financing on the part of households. Recommendation regarding the system will cover two major parts: improvement of the financial instruments and institutional improvement. -115- CHAPTER VIII ANNEX Page 5 11. Improvements of financial instruments: this section should discuss several important facts of the "mortgage menu problem" in Mexico, i.e. the needs of the borrowers (inflation and the "tilt problem"), the needs of the lenders (maturity matching, profitability and capacity to expand) and the needs of the long-term investors (capital recovery, inflation and interest levels, credit risk, call protection, etc.). a) policies toward adjustments to inflation (adjusting without comprehensive indexing); b) interest rates; c) types of financing needed for various components of the housing sector (land, development, construction finance, mortgage finance). 12. Institutional improvements and financial viability: more noney less important than its better use, especially in the housing funds; systemic issues of institutional coordinations in Mexico: - money and capital market constraints (competing claims on financial savings); - improvement of institutional set-up missing institutional mechanims? - non-financial constraints (land, legalizatien, standards and controls) for the record only. 13. Strategies for housing finance: a) Major issues b) Strengths and limitations of the present structure c) Possible directions. -116- REFERENCE BOOKS AND DOCUMENTS 1. Books, Publianed Articles: Araud, G., Boom G. and Urquidi, V. (1973): Studies on Employment in the Mexican Housing lnaustry. Paris: OECL - Development Center Studies, Employment Series, No. 10. Garza, G. and Schteingart, M. (1978): La Accion Habitacional del Lstado en Mexico. Mexico, D.F.: El Colegio de Mexico. CEPAL, (1983): Notas para el Estudio Economico de America Latina. Mexico, D.F. Dimitris, D. (1974): Labor Conditions and Industrial Relations in the Building Industry of Mexico. Paris: OECD - Development Center Studies. Linn, Johannes (1983): Cities in the Developing World. New York, Oxford University. NAFINSA (Nacional Financiera): Nuevo Sistema de Financiamiento para la Vivienda, in El Mercado de Valores, Vol. KLIV, Num. 10, March 5, 1984, Mexico, D.F. PREALC: El Efecto Empleo de la Inversion Publica, in Investigaciones sobre Empleo, No. 23, Santiago, 1984. Schteingart, M. (1982): "Elementos para un Balance de la Accion Habitacional del Estado en Mexico (1970-1980)." Habitacion, Vol. 2, No. 7/8, pp. 89-98. Schteingart, M. (1984): El Sector lnmobilario y la Vivienda en Crisis, in ~Comercio Exterior," Vol. 34, No. 8, Mexico, D.F. SPP (1984): Censo General de Poblacion: Resumen General Abreviado. Mexico, D.F. SPP (1981): Industria de la Construccion y sus Insumos: Analisis y Expectativas. Mexico, D.F.: Secretaria de Programacion y Presupuesto, Subsecretaria de Programacion. SPP (1983): Sistema de Cuentas Nacional de Mexico. Mexico, D.F.: Secretaria de Programacion y Presupuesto. SPP (1983): Mexico - Informacion sobre Aspectos Gec,grnficos, Sociales y Economicos, Vol. III. Mexico, D.F.: Secretaria de Programacion y Presupuesto. Urias, H. (1983): -Crisis y Recuperacion: El Ciclo Rectrrente de la Industria de la Construccion." Comercio Exterior, Vol. 33, No. 10, pp. 894-903. -117- Ward, P. M. (1982): "The Practice and Potential of Self-Help Housing in Mexico City" in Self-Help Housing: a Critique. London, Mansell Publ. Co. 2. Government Reports and Published Official Documents: Banco de Mexico (1983): Informe Anual 1982. Mexico, D.F. Banco de Mexico (1984): Indicadores Economicos, November. Mexico, D.F. FOVI - FOGA (1980): Informe 1980 - Programa 1981, Mexico, D.F. (1981): Informe 1981 - Programa 1982, Mexico, D.F. (1983): Informe 1982 - Programa 1983, Mexico, D.F. FOVI - FOGA (1982): Vivienda de Interes Social Tipos VAIM, VIS-A y VIS-B. Banco de Mexico, Mexico, D.F. INFONAVIT (1981): Noveno Informe de Actividades - 1980. (1982): Decimo Informe de Actividades - 1981. (1983): Decimoprimer Informe de Actividades - 1982. 3. Unpublished Papers and Monographs: CIHAC (1983): El Mercado Mexicano de la Construccion. Mexico, D.F.: Centro Impulsor de la Construccion y la Habitacion, A.C. COVI (1982): Necesidades de Vivienda y Escenario de Programacion del Sector Publico. Mexico, D.F.: Comision Intersecretarial de Planeacion, Programacion y Financiamiento de la Vivienda. COVI (1982a): Estadistica Basica de Vivienda, 1973-1980. Mexico, D.F.: Comision Intersecretarial de Planificacion, Programacion y Financiamiento de la Vivienda. FONHAPO: Audited Financial Statements, years 1981, 1982, 1983. FONHAPO: Credit Committee Information Report, July 1983. FONHAPO (1984): Financial Statements. July 31, 1984. FONHAPO (1982): Guia del Promovente, 1 and 2; Guia del Acreditado, 1 and 2. FONHAPO (1982, 1983, 1984): Informes de Evaluacion. FONHAPO (1984): Instructivo para la Elaboracion de los Formatos para la Contratacion del Credito. FONHAPO (1984): Instrumentacion de las Delegaciones Regionales. FONHAPO (1984): Manual de Organizacion. -118- FONHAPO (1984): Políticas de Administracion Crediticia y Financiera. FONHAPO (1984): Problematica del Suelo. FONHAPO (1984): Programa Operativo Anual, 1984. FONHAPO (1984): Reglas de Operacion. FONHAPO (1984): Typical Loan Agreement Format. Ochoa-Rosso, F. (1983): "Perspectivas de la Industria de la Construccion." Paper presented at the 14th Annual Meeting of the Camara Nacional de la Industria de la Construccion (CNIC). PNV (s/d): Programa Nacional de Vivienda - Avance e Instrumentos Generados. Mexico, D.F.: Programa Nacional de la Vivienda. Roman Segovia, G. (1983): "Una Modalidad de Financiamiento para la produccion de Viviendas en Mexico: El Caso de FOVI." Masters' Thesis, El Colegio de Mexico, CEDDU. Reyes Heroles, J. (1981): "La Distribucion de los Ingresos por Trabajo en Mexico." Mexico D.F.: Banco de Mexico - Documento de Investi- gacion, No. 44. SEDUE/DGCPV (1983): Diagnostico de los Programas de Vivienda de Interes Social. Mexico, D.F.: Secretaria de Desarrollo Urbano y Ecologia. SEDUE/DGCPV (1983a): Evaluacion de Programas de Vivienda del Sector Publico. Mexico, D.F.: Secretaria de Desarrollo Urbano y Ecologia. SEDUE/DGCPV (1983b): Programa de Vivienda Integrado de Mediano Plazo, 1984. 4. Bank Papers: IBRD: Cost Recovery Experience. Unpublished mimeograph paper, EAPWU, June 1981. IBRD: Mexico: Territorial Development and Fiscal Devolution. Urban Sector Report No. 5188a-ME (yellow cover), Jure 1984. IBRD: Public Housing Policy in Mexico. Urban Sector Report No. 4993-ME (green cover), June 1984. IBRD: Mexico: Local Competitive Bidding Procedures. June 1984. Unpublished mimeographed paper, LCP, June 1984. IBRD: Sites and Services and Upgrading, a Review of Bank-Assisted Projec'.s. Washington, D.C., 1984.