By Lavern Clarke, Staff ReporterTHE $4.4 billion owed by Operation PRIDE beneficiaries will be converted to mortgages, said Milverton Reynolds this week, in outlining the major strategy he plans to use to collect on the outstanding receivables.
In eight years, the Government has invested $5.9 billion in the shelter schemes, aimed largely at giving land to poor Jamaicans, many of them squatters, but has only recouped $1.03 billion of the funds from the recipients of property.
The payments amount to 17.4 per cent of the total spent on the 83 schemes on which construction has either begun or have been completed.
Noting the size of the collections as a plus for the programme, Reynolds said it compares favourably to the 5-10 per cent required by the open market.
The majority of the monies already recouped, $501.5 million, was collected within the current fiscal year, up to February. Within those eleven months, the collections have surpassed total collections made over the prior seven years combined, according to NHDC figures.
Speaking with the Financial Gleaner in a combined interview of NHDC-Pride and Ministry of Housing officials, Reynolds said the mortgages will be split between the National Housing Trust, which will take up 40 per cent, and the other 60 per cent to his agency, the National Housing Development Corporation.
But the responsibility for ensuring that the mortgage payments are kept up to date, he said, is that of his agency, including taking action against delinquents. Reynolds insists that the arrangement does not expose the NHT in any way, since NHDC will foreclose and recoup the payments by selling the units on the open market, if necessary.
Under the deal worked out with the NHT, the Trust will pay over $1.76 billion directly to the NHDC over the next 12-18 months, and recoup its funds from the mortgage payments of qualified beneficiaries.
Reynolds, a one-time head of the NHT, said that of the total reflows to come from the Trust, his agency can access $680 million now. The arrangement gives NHDC access to the lump sums it needs to finance construction of its current schemes.
The shelter agency currently manages a $3 billion mortgage portfolio, said Reynolds, on which it has cut arrears by a percentage point to about 3 per cent, over the past year.
Launched in early 1994, the nine year-old PRIDE programme has delivered 30,010 shelter solutions up to October 2002, but its delivery of titles to the properties has not kept pace.
Suggesting that the absence of titles has been a factor in the unwillingness of beneficiaries to keep their payments up, the NHDC says it plans to deliver 20,000 duplicates titles over the next year and create mortgages for the properties to help "speed up collections."
Some 4,800 titles are ready for disbursement and another 2,000 are expected to be delivered within six weeks.
Reynolds, who was appointed managing director in March 2002 during a period of turbulence and heavy financial losses for the agency, quickly made his presence felt by taking a tough stance with delinquent property owners.
In the last six months, he has auctioned off 14 properties that had gone into arrears double the amount of units confiscated and placed on the market in the first five years of the shelter programme.
And, following warnings since last year, Reynolds said he is about ready to take action on the Rosemount and Norwood schemes in Montego Bay if their compliance levels do not improve.
There are now 116 PRIDE schemes on the NHDC's books, 33 of which are in varying stages of design. The schemes account for 44,000 solutions, and covers some 200,000 persons.
There are plans to ramp up the provision of solutions to provide another 50,000 units a plan the minister was reluctant to discuss and Reynolds will soon expand the NHDC operations to do more open market developments.
There is also a wider plan to "consolidate the housing portfolio" within the Ministry of Water and Housing under the NHDC, with Reynolds to have combined responsibility for open market schemes, PRIDE and the Ministry's $1 billion joint venture portfolio.
"You are going to find that all three areas are going to come together it will happen in fiscal 2003/04," Water and Housing Minister Donald Buchanan told the Financial Gleaner, in what he described as a "cohesion and co-ordination of the shelter programme."
Though the joint venture programme is eight years old, its operation has never been fully disclosed. But now, a policy paper governing its operations will be laid in the House in April.
The joint venture programme covers 70 schemes and 12,000 solutions, but only 20 of those schemes representing 5,000 solutions have progressed to implementation. It is those 20 schemes on which the $1 billion value is placed.
In the meantime, Buchanan said Government is no longer giving budgetary support to constructing the PRIDE schemes, making it imperative that the NHDC collect from beneficiaries to keep the programme liquid.
But, his Ministry, which he has headed since April 2002, continues to subsidise the cost of the development of particular schemes by donating the land.
"The question of subsidy is project specific," said the Minister, explaining that assistance is determined on an individual basis with no cap placed on the value of the subsidy to the various schemes.
The Ministry's intervention is requested where NHDC determines that the selected beneficiaries cannot afford the cost of the developed property, said Reynolds.
Additionally, in the case of 'brownfield' sites, that is, properties inhabited by squatters, the shelter agency might carve off portions confiscated by individuals and sell those at prices above the concessions that the occupants get but still below market.
