Identifying bottlenecks in the Local Planning System through a review of the Quezon City

Comprehensive Land Use Program (2011-2030).

Abstract

In order to account for bottlenecks in sustainable, inclusive urban development, I take a look at the
political economy of the PH local planning system and enumerate the unintended consequences of
applying market logics in urban policymaking using Navarro’s urban land nexus framework and Ortega’s
Desakota model for neoliberal structuring of space. Finally, I scrutinize World Bank recommendations
from its 2017 PH urbanization review and international initiatives such as the BRI and JICA dream plan to
assess whether these might hurt or harm PH urban development.

The local planning system

Navarro and Boquet describe partly the organizational structure of local governments in charge of urban
planning in the Philippines. The planning process, that is headed by the LGU, is mandated to produce
two outputs: the Comprehensive Land Use Plan (CLUP), which details the physical reconfiguration of the
city through zoning ordinances (RA 7160, Sec. 20c), and the Comprehensive Development Plan (CDP),
where the LGU details strategies to promote the general welfare of the its constituents (RA 7160, Sec.
106 and 109). Although the Rationalized Local Planning System (2005) guidelines developed by DILG
stress that these programs are meant to be aligned with National Development Plans, in practice,
leaving local government in charge of city development leads to fragmented and uneven urbanization;
this is due in part to the inability of LGUs to structure long-term plans in the face of changing
administrations.

Land use regulation in theory ensures that the interests of the community is protected by determining
the most appropriate use of the land. This rationalized planning system is meant to distribute growth
evenly through a city by providing important services to residents: access to education, jobs, open
spaces for recreation, health care, and others. However, political economy factors in the local planning
system determine whether this framework eventually leads to sustainable growth.

In order to assess whether this planning system is effective, Navarro offers us a framework called the
urban land nexus that focuses on infrastructure as one of the key drivers of urban growth. She describes
three interconnected spaces in any urbanized area: the production space where work and employment
are concentrated, the social space as in residential neighborhoods, and circulation space, that which
connects the production space to the social space. (Navarro, 2014) Within this framework, she
concedes, there are liabilities and assets that residents share and will be subject to degradation and
dysfunctionalities if not looked after by effective institutions. She pushes for the importance of an urban
planning method that takes into consideration the optimal amount of infrastructure that promotes
interconnectivity and productivity by alleviating urban congestion.

Of course, an important corollary to such a framework is that as your social spaces expand, so too
should production and circulation spaces—or that they should otherwise run efficiently. However,
several factors undercut the capacity of LGUs to scale.
Possible bottlenecks to urban development

Institutional fragmentation remains one of the largest factors in growth. Even adjacent local
governments differ in terms of socio-economic growth because of varying natural resources, economic
activity, and human capital. Because of this mismatch in urban expansion, services that cover several
jurisdictions like traffic management, waste and environmental management, and major infrastructure
are harder to coordinate.

The World Bank review of Philippine urbanization (2017) also cites weaknesses in the fiscal
decentralization framework as one of the reasons why cities cannot efficiently provide urban services;
and eventually connect to nearby areas. Highly-urbanized cities rely on own-source revenues for almost
80% of total operating income in 2014; due mainly to real property and business tax bases. The heavy
concentration of private businesses and economic activity in these areas allow them to do so. Provinces,
municipalities, and non-Metro Manila cities rely more heavily on internal revenue allotment instead.
This disparity results in uneven development and promotes fragmented, isolated planning in the part of
LGUs.

In addition to this, according to the review, LGUs have not maximized the revenue-raising powers
afforded to them by the local government code. Even if they are allowed to adjust rates every few years,
administrations do not update schedules of market values because it might drive away businesses. Since
real property and business taxes are the most viable bases for revenue in major cities, this incentivizes
profit-driven development, and leads to poorly managed urban growth.

Unintended consequences

Introducing market logics like this in urban policymaking makes for two major unintended
consequences:

(1) State roles are minimized in favor of attracting private business that will generate revenue for these
local governments; and as Navarro observes, planning becomes narrowly focused on piecemeal zoning
restructuring and land conversion. Instead of focusing on strategic plans for enhancing links within the
circulation space, LGUs commit significant effort in permitting and licensing activities for private
businesses instead (Navarro, 2014).

A good example of this would be the conversion of a previously institutional zone—the Philippine
Tuberculosis Society Inc.—to a major commercial zone per city ordinance (SP-918, S-2000). Since PTSI
lost funding, a portion of the 6.5-hectare Quezon Institute property was sold to Puregold, where a
supermarket now stands (Arnaldo, 2011). The CLUP rationalizes this decision as turning part of a vacant
property into a “performing asset” and is looking to develop the now major commercial zone into
mixed-use land, possibly with the help of Ayala Land Inc. with the clearance of the National Historical
Commission of the Philippines.

Residents also stand to face negative externalities from dubious exemptions to zoning laws like
condominium developer SMDC’s 42-storey property along Katipunan (GMA News, 2012). The developer
was able to secure the exemption after merely a day of applying; despite exceeding the height limit
prescribed by the zoning ordinance for the area that lies along a major fault line.

Exemptions like these set a dangerous precedence for the city; as long as any endeavor can be profitable
for LGUs, local laws and strategic plans may be skirted in favor of big businesses. One only needs to
secure the necessary permits and licenses.

(2) Ortega (2012) presents a similar argument through his Desakota model of neoliberal production of
suburban space. Profit-centered development leads to a neoliberal restructuring of the city that only
exacerbates inequality and goes against the inclusive, sustainable growth that the CLUP advocates.

Much of the policy intervention that the CLUP prescribes focus on infrastructure development in order
to decongest growth areas; and converting “non-growth” areas for socialized housing. Quezon City was
lauded for passing a “landmark” housing code in September 2018, the Comprehensive Socialized
Housing Code (SP-2771, S-2018). Since then, Quezon City has been claiming forfeited property through
public auction sales to develop into socialized housing projects (SP-2706, S-2018; SP-2707, S-2018; SP-
2836, S-2019; et al).

However laudable, these policy recommendations fail to account for the “non-growth areas” in Quezon
City that occupy the most land, yet have the lowest population density; 11 barangays with a combined
population of over 100,000 sharing a combined land area of 680 hectares: high-end residential
subdivisions.

These low-density residential areas enjoy larger provisions for space, private roads, and higher security
compared to most of Quezon City. The CLUP argues that residents of these areas will not be keen to
introduce drastic changes to the character of their place and so the appropriate policy intervention for
“mature stable areas” such as these “is to preserve their essential character.”

A number of these areas contribute to Quezon City’s second largest tax source, valued at over 3.431
billion pesos in 2017 before the fair market value hike (Business World, 2019). According to city
government projections, an additional 700 million pesos in revenue stands to be collected after the first
year of FMV hike implementation.

Quezon City justifies the suspension of the tax hike as a way to alleviate rising costs on QC property
owners (SP-2556, S-2016), however World Bank (2017) estimates about 20.3 billion pesos lost in real
property tax because of outdated schedules of market value. This is an important resource that can
otherwise go to infrastructure projects, or the socialized housing initiative.

Fear of political backlash from an important sector of the city might be one of the reasons why there
isn’t much of an aggressive tax collection scheme. Yet, much of the burden of underdeveloped
infrastructure due to lack of resources will not be carried by these property owners.

Meanwhile, congestion continues to worsen in designated growth centers due to lack of infrastructure
support. As one of the densest populations in the Philippines— with an estimated population of 2.9M as
of 2018 (PSA, 2019)— Quezon City it is also home to many institutions; including two of the country’s
premiere universities, University of the Philippines Diliman, and Ateneo de Manila University; two of the
leading media networks and their associated radio stations, GMA and ABS CBN networks; a slew of
government offices including the Batasan Complex, and some of the biggest IT parks and retail hubs: SM
City North Edsa, the Araneta Center, UP Ayala Technohub, Eton Centris, and currently developing Vertis
North.

The CLUP identifies these resources as major growth engines; critical to the city’s vision of becoming the
country’s knowledge industry capital. The city is considering the creation of a CBD-Knowledge
Community District that encompasses highly specialized hospitals, research and educational institutions,
national and international civil society organizations, and major commercial areas. This area covers the
North and East Triangles, the Veterans Memorial Medical Center; the vicinity of SM North Edsa, UP
Campus including Technohub; Ateneo de Manila and Miriam College; the Balara Filtration Plant; and the
residential communities of UP Village, Teachers’ Village, Pinyahan, Krus na Ligas, Loyola Heights, and
Xavierville.

It’s an ambitious endeavor that requires partnerships with major developers who own most of the land
in these areas. More and more, Ortega observes, local strategic planning requires comprehensive
“revenue-generating” public-private partnerships like these to facilitate infrastructure development and
deliver public goods and services to the city.

As it is in the case of “Metro CALA” (Cavite and Laguna) in Ortega’s study, these efforts are to be funded
by loans from government financial institutions, commercial banks, and international institutions such as
the World Bank, Japan International Cooperating Agency (JICA), the Asian Development Bank (ADB), and
many others.

Although maintaining the real estate boom from the perspective of the government may be one way to
sustain economic development, this also facilitates the redistribution of previously government owned
land to private property, and delegates the responsibility of housing to the private sector. This
neoliberal restructuring of the city space not only undermines city management capabilities of the LGU,
it leaves the planning system wide open to private agendas.

Prescriptions to PH urban development

The World Bank’s Philippine Urbanization Review highlights several guidelines for sustainable and
inclusive urban development that focuses on the role cities as engines for growth.

Aside from infrastructure development, the review recommends fostering city competitiveness to
generate economic development and create more jobs. Simplifying business registration and tax
regimes will spur rapid business growth and attract foreign investment, that will in turn lead to
technological upgrade; better trade connectivity; and higher productivity for incumbent firms.

As we’ve seen, market-driven policy recommendations such as these require strong facilitation from the
local government in order for its residents to reap the benefits. Without detailed provisions in the CLUP
and CDP to redistribute gains from new businesses, this might only lead to unmitigated urban sprawl. In
the absence of a national urban policy, local governments are disincentivized from collaborating at a
metropolitan level.

Inclusive development involves substantial investments in housing, education, and livelihood support as
prescribed by the World Bank. Again, this requires delineating the responsibilities of private partners,
and the local government in terms of providing basic infrastructure and services. Considering that
private real estate development is a major source of income for the local government, it will take strong
political will and major policy reforms to transfer housing finance and land management arrangements
from the private sector to the LGU. The socialized housing code is a promising start, if it is to be followed
through correctly.

Then there are the external infrastructure investments from international initiatives. The Japan
International Cooperation Agency’s (JICA) “Dream Plan” for Metro Manila and neighboring regions
envision a Greater Capital Region which includes connectivity enhancing projects such as rail systems,
redevelopment of ports in strategic locations, and a new international airport. These developments will
serve to decongest the national capital region through a strong transport system, and preliminary
studies suggest at least 2.4 billion pesos in savings from traffic costs (JICA, 2014).

Conventionally, international grants fast-tracks development at minimal to no cost to recipient

countries. However, these require a strong national mandate for it to accomplish its intended
objectives—interconnectivity and growth at a metropolitan level. Officials not only have to negotiate for
the proper implementation of these projects according the national priorities, they also have manage
the expectations of these benefactors, and make sure that projects deliver results. Sometimes in an
effort to justify grants, infrastructure projects are concentrated in highly-developed urban centers which
will promise immediate results, instead of allocating them to more underdeveloped areas; creating for
uneven development across the country.

In a study by Minxing Chen et al (2018), urbanization along China’s Belt and Road is correlated to
significant reduction in extreme poverty. Although it is too early to tell in the case of the Philippines, the
study shows that regional cooperation along the Belt and Road fosters urbanization that eventually
leads to economic development.

We’ve yet to see whether the integration of Duterte’s Build Build Build initiative with China’s BRI will
lead to growth, but China-backed projects are under heavy scrutinization in policy circles because of
unintended costs to recipient countries. Within the context of ongoing maritime disputes with China,
one important question is whether these opportunities might compromise state sovereignty.

Conclusion

Several factors embedded in the local planning system make sustainable, inclusive development for the
Philippines at the city level difficult to achieve. Uneven responsibilities to local governments and not
enough support from the national level only lead to a market-driven model of urbanization, and in turn,
creates uneven development and exacerbates socio-economic inequality. This unintended neoliberal
restructuring of cityscapes maybe disciplined through massive policy reform, the creation of national
urban policies, and international initiatives, but without strong institutions to oversee its
implementation, urbanization—and consequently, economic growth—will remain limited.
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