Department of Human Settlements and Urban Development Kogowaran ng Pananatanang Panta at Pagpapaunlad ng Kalunsuran MEMORANDUM CIRCULAR NO. 207\-000, Series of 2021 (November 2, 2021) To : ALL CONCERNED FROM qi THE SECRETARY SUBJECT : GUIDELINES FOR THE BALAI FILIPINO COMMUNITIES RENTAL HOUSING PROGRAM Pursuant to Department Order No. 2021-008, Series of 2021 entitled “Adopting and Implementing the BALAI Filipino Communities Public Rental Housing as Alternative Secure Housing Tenure”, this Guidelines is hereby issued. Rule 1 General Provisions Section 1. Title. These Guidelines shall be referred to as the “Guidelines for the BALAI Filipino Public Rental Housing Program” (or the “Program”). Section 2. Objective. These Guidelines aim to provide for a uniform and efficient implementation of the Program with the ultimate objective of providing, through public rental housing, an alternative decent and affordable secure housing tenure for different sectors of the society who otherwise cannot afford or who do not prefer in the meantime to avail of homeownership. Section 3. Scope of Application. These Guidelines shall apply to rental housing managed, implemented, monitored, and/or provided with financial subsidy and technical assistance by and with the Department of Human Settlements and Urban Development (DHSUD), any of its attached shelter agencies, and any of the program proponents hereinafter provided. The Program excludes ineligible projects, properties and premises not meeting the criteria and not operating as public rental housing enterprises such as: 3.1 Residential care facilities; 3.2 Nursing homes; 3.3 Emergency shelters; and 3.4 Boarding Houses. Rule 2 Role of The Department of Human Settlements and Urban Development Section 4. Management and Oversight. The DHSUD shall: 4.1 Oversee and coordinate the implementation, monitoring and evaluation of the program even beyond the completion of the rental housing project; DDHSUD Building, Katyaan Avenve comer Mayaman Steet, Dliman, Quezon City Tal no (02) 8424-8070 | 096-137-0106 | O916-674-1443,Memorandum Circular No. LOL\- 00d Series of 2021 (November 2¢ _, 2021) 4.2 Extend assistance to the proponents to facilitate the issuance of necessary permits, clearances and certifications as may be required for or applicable to rental housing development, in accordance with Executive Order No. 45, series of 2001, entitled "Prescribing Time Periods for Issuance of Housing Related Certifications, Clearances and Permits, and Imposing Sanctions for Failure to Observe the Same", Republic Act No. 11032, or the “Ease of Doing Business and Efficient Government Service Delivery Act of 2018”, and other applicable laws and regulations on permitting processes, including in the availment of and processing under the Housing One-Stop Processing Center (HOPC) upon its adoption and implementation; 43 Facilitate linkage and matching of the proposed rental housing projects with the lending facilities/program of the Key Shelter Agencies (KSAs) and other possible sources of funds for the purpose; and 44 Serve as a repository of data and information about the program. Section 5. Financial Assistance or Subsidy for Rental Housing Development. The DHSUD shall provide for appropriate assistance or subsidy for the development of the rental housing project, utilizing available proceeds from the incentivized compliance of the developers to the Balanced Housing Development Program (or Balanced Housing) under Section 18 of Republic Act No. 7279, as amended by Republic Act No. 10884, and as implemented by HLURB Resolution No. 965, Series of 2017 and DHSUD Department Order No. 2021-004, Series of 2021. Rule3 Role of The Attached Shelter Agencies Section 6. Capacity Building and Technical Support. The assistance to be provided by the attached Shelter Agencies to the proponents in the implementation of the Program shall primarily be the provision of financial and technical assistance, in accordance with their respective mandates and subject to existing laws, rules and regulations. Capacity building and technical support for the project implementation shall be extended in order to assist the proponents in the overall rental housing project advocacy, planning and management. Capacity Building and provision of technical assistance shall consist of: 6.1 Conceptualization of the specific rental Program in relation to the proponent; 62 Review and assessment of the viability of the site identified for the rental housing development and the rental housing program in accordance with the internal guidelines and policies set forth by the attached shelter agencies; Page 2 of 8 PagesMemorandum Circular No. 2221-008 Series of 2021 (November 2¢_, 2021) 63. Ensuring that the designs of the site and the proposed rental housing buildings and units are compliant with applicable laws and regulations, in particular, the minimum technical design and standards under Batas Pambansa Big. 220 as made applicable to the Program; 64 Assistance in the preparation not only of site development plan but also of the complete plan for the rental housing project, subject to the designs and approval of the proponents; 65 Assistance in the preparation of the Terms of Reference for the hiring of services of real estate developers and contractors as may be necessary or appropriate to facilitate the bidding and implementation of the proposed Rental Housing Project; and 6.6 Support in the pre-qualification of potential rental housing beneficiaries to ensure its conformity with the eligibility requirements of the attached shelter agencies. Section 7. Public Rental Housing Production. The National Housing Authority (NHA), utilizing its own internally generated funds and/or funds appropriated in the General Appropriations Act, shall be engaged in development and production of the rental housing units intended for the beneficiaries of the Proponents, especially the informal settler families residing in danger areas and those to be affected or temporarily displaced by government infrastructure projects. Section 8. Public Rental Housing Financing. Rental Housing financing mechanisms shall be established by the Home Development Mutual Fund (HDMF) and Social Housing Finance Corporation (SHFC) to finance rental Housing construction for the low-income formal and informal sectors, respectively. Participating proponents will be prequalified by the HDMF/SHFC using their internally promulgated guidelines and criteria. The rental housing assistance to be extended to the proponents for the construction of rental housing unit is in the form of an institutional loan of the proponent based on the cost of eligible work and the number of eligible self-contained rental housing units within a project. The said amount shall be repaid to the attached shelter agency concerned by the proponents. The subsidy to be provided by the DHSUD, on the other hand, is a non- recoverable component of the project. Section 9. Securitization. To liquefy the exposure of the attached shelter agencies implementing the Program, the National Home Mortgage Finance Corporation (NHMFC), may purchase and/or securitize rental streams to ensure the continuous flow of funds for the purpose, in accordance with existing rules and regulations, and in particular, Section 22 of Republic Act 11201. Section 10. Supplemental Guidelines of the Attached Shelter Agencies. Upon issuance and effectivity of these Guidelines, the attached shelter agencies Page 3 of 8 PagesMemorandum Circular No. 2021-008 Series of 2021 (November ££, 2021) shall issue their respective supplemental guidelines as may be necessary, in accordance with their respective mandates and subject to relevant laws and rules and regulations. Rule 4 Role of The Different Program Proponents Section 11. Program Proponents and Qualifications. The Program shall be open and made available to proponents who will signify their intentions to participate in the said program, to include: 11.1 Local Government Units (LGUs), for their qualified constituents, especially those residing in informal settlements; 11.2 National Government Agencies (NGAs) and Government-Owned and Controlled Corporations (GOCCs), for their qualified employees; 113 State Universities and Colleges (SUCs), for their teaching and non- teaching personnel, and students, pursuant to and consistent with Section 3 of Republic Act No. 11396, which requires all SUCs, through their governing boards, to prepare and implement a Land Use Development and Infrastructure Plan (LUDIP) designed to improve and optimally use their resources including the construction of dormitories for students and housing sites for employees of the SUCs; and 11.4 Qualified Non-Government Organizations (NGOs) and Cooperatives, for their bona fide members. As stated, the Program excludes ineligible projects, properties or premises that do not meet the criteria as public rental housing enterprises in accordance herewith and with the guidelines as may hereinafter be issued. Section 12. Duties and Responsibilities. In the availment and implementation of the program, it shall be the duties and responsibilities of the proponent to: 12.1 Supply lands suitable for rental housing as its counterpart for the Project; 12.2 Formulate and recommend policies and rules and regulations on its rental housing program, including the eligibility of applicants and determination of awards, amount of rent to be imposed on appropriate administrative measures and/or penalty for violation of the rental housing rules, collection of rents and estate management of rented housing units, and grounds for termination of housing privilege; 12.3 Secure necessary permits, certifications and licenses for the development of rental housing projects from the regulatory government agencies; Page 4 of 8 PagesMemorandum Circular No. 2°21: 008 Series of 2021 (November 2¢ _, 2021) 12.4 Conduct an inventory of potential beneficiaries of its proposed rental housing project and award of rental housing units to qualified applicants; 125 Be responsible for estate management of the rental housing project, which includes the upkeep and day-to-day running of the rented housing units, overseeing, maintaining, supervising staff members, managing budgets and events, and prescribing the guidelines for the Project after development for its preservation; 12.6 Execute a Letter of Guaranty and Deed of Assignment to ensure the appropriation and assignment of the amount equivalent to the applicable annual amortizations in the internal operating budget and assign and transfer its rights and interests on the income from the lease of its properties and income from its other existing business, respectively in favor of the attached shelter agencies; and 12.7 Review the implementation of the program every five (5) years to ensure that it remains relevant and in consonance with current conditions, including but not limited to the following: 12.7.1 Capability of beneficiaries to pay the rent; 12.722 Rent adjustment mechanism to provide for upward and downward adjustment of rent according to the changes in the household income of rental housing tenants; and 12.73 Surrender of rented housing units in case of failure of beneficiary to satisfy the conditions of the rental agreement including the prescribed income thresholds. Section 13. Proponent’s Eligibility. To qualify for the Program, the proponent must: 13.1 Have juridical personality; 13.2 Own and provide lands suitable for rental housing, which shall serve as its counterpart for the said project; 133 Have good credit standing among banks, financial institutions and other key shelter agencies; 13.4 Be financially capable to fulfill its commitments to the program; 135 Secure a Sanggunian or Board Resolution approving the availment of loan for rental housing projects; and 13.6 Submit a letter of intent to participate in the Program addressed to the Secretary of the Department of Human Settlements and Urban Development. The project must create a minimum number of units that would be rented at or below the average market housing rents or prices for comparable housing Page 5 of 8 PagesMemorandum Circular No. 4°2\- 08 ‘Series of 2021 (November 25 __, 2021) in a community or area to the potential rental housing beneficiaries who would be willing to rent/lease the units. Section 14, Collateral and Guaranty Requirements. The following are the required collateral/guaranty for the availment of institutional loans: 14.1 Project site/land for the proposed rental housing project. The land must be covered by a Transfer Certificate of Title (TCT)/Original Certificate of Title (OCT) and other proof of legal ownership issued by the Register of Deeds free from liens and encumbrances and must be registered in the name of the proponent; 14.2 Other additional or suitable collateral acceptable to the lending institutions, the value of which must be in accordance with the terms and conditions of the loans; and 14.3 Assignment of rental payments from commercial concessions of the proponent. Section 15. Procedure for the Availment. In the first level of transaction, the proponent shall signify its intention to engage in rental housing development to DHSUD. Based on the intended beneficiaries of the proposed rental housing project, DHSUD will match the proposal with any of the available programs of the attached shelter agencies for the purpose. Upon receipt of the proposal from DHSUD, the attached shelter agency concerned shall undertake the necessary complete staff work in accordance with these Guidelines. In the second level, once the proposed rental housing project is approved by the Board of Directors of the attached shelter agency concerned, they shall coordinate with the DHSUD for the possible extension of subsidy for site/land development, subject to the availability of funds. In the third level, the proponent shall execute the Letter of Guaranty and Deed of Assignment in favor of the financing attached shelter agency to ensure repayment of loans, and together shall jointly monitor the implementation of rental housing project and awarding of units to qualified beneficiaries after completion. Production and Financing Flowchart is hereto attached as Annex A. Miscellaneous Provisions Section 16. Qualifications of the Beneficiaries. Beneficiaries of the Program shall primarily be those who do not have the resources to obtain adequate, suitable and affordable shelter and are qualified to be the beneficiaries of the Government's socialized housing program either under Republic Act No. 7279, otherwise known as the “Urban Development and Housing Act of 1992 (or the UDHA)”, or other existing laws, rules and regulations, to include those who may be displaced or relocated under Republic Act No. 10752 or the “Right-of-Way Act”. Page 6 of 8 PagesMemorandum Circular No. t0t!-000 Series of 2021 (November _2€, 2021) Persons, individuals, or groups who may be disqualified under Section 27 of the UDHA shall likewise be disqualified to avail of or be beneficiaries of this Program. Section 17. Project’s Design and Standards The minimum technical design and standards as prescribed under the existing implementing rules and regulations of Batas Pambansa Big. 220 are hereby made applicable to the site or land development and construction of units and buildings under the Program. Section 18. Monitoring and Evaluation. The proponent’s compliance to the conditionalities set forth under the Program shall be monitored by the Public Housing Settlement Service (PHSS) of DHSUD together with the HDMF, NHA, NHMFC and SHFC. The PHSS shall formulate a monitoring and verification mechanism in all rental housing projects. Compliance of the proponents pertains to the carrying out of specific conditionalities of the program. Non-compliance to any of the conditionalities of both DHSUD and the attached shelter agencies may have corresponding consequences which may lead to termination of the project. Section 19. Separability Clause. The provisions of these Guidelines are separable, and in the event that any provision herein is declared null and void, the validity of all other provisions shall not be affected thereby. Section 20. Effectivity. These Guidelines shall take effect immediately. ry (November & , 2021) Page 7 of 8 PagesMemorandum Circular No. £021- 008 Series of 2021 (November 2£ _, 2021) ANNEX A FIGURE 1. BALAI RENTAL HOUSING FINANCING/PRODUCTION FLOW, START No Yes "Subject to availablity of funds Page 8 of 8 Pages