Santiago
Santiago’s Repopulation Program (SRP) was initiated due to the more conducive political and economic environment in Chile following the election of a democratic government in 1990 after 17 years of dictatorship. The SRP formed the core of a broader strategy for urban regeneration established by the Municipality of Santiago that same year after many decades of urban decay in and depopulation of Santiago’s municipal district (SMD). The goal was to reestablish the central, historical role that Santiago had always played in the past as the capital city of the Metropolitan Region by attracting middle-income residents to the city center
Over several decades, beginning in the middle of the 20th century, the SMD was plagued by high crime, pollution and lack of investment in public areas. However, the SRP has been widely recognized as successful in reversing these trends and revitalizing the city center. It also boosted interest in infill development in other municipalities that face similar problems of urban decay and population loss.
Toward the end of the 1980s, several ongoing problems began to give rise to significant urban deterioration in SMD. First, between 1952 and 1992, Santiago’s population decreased by 50 percent. Not surprisingly, the loss of population was coupled with a decrease in the housing stock and deterioration of the environment. The 1985 earthquake exacerbated this situation, causing major structural damage to many buildings that were never repaired. The private sector, for its part, had stopped investing in the district.
Despite its deterioration, the SMD always maintained enormous potential for growth given its comparative advantages over other recently developed areas in the Metropolitan Region; the SMD had excellent urban infrastructure, which included sewage, water pipes, lighting, pavement, public schools, and hospitals. It also offered benefits due to its central location such as proximity to work, commercial areas and public transport. Moreover, it was endowed with a rich cultural legacy and heritage, and large public green spaces.
In 1990, after assessing the challenges of the municipal district, the Municipality of Santiago developed a clear strategic vision with the goal of recovering the prominent residential role of SMD. The Santiago Repopulation Program’s (SRP) objective was to attract 100,000 new residents to the district over the course of 15 years. In order to stop the exodus of residents and attract new ones, the Municipality decided to work on three fronts simultaneously. First, it needed to attract private investment in housing. Second, it needed to improve the deteriorated physical environment of the district through public investments. Third, it needed to change the negative popular perception of SDM.
The SRP was anchored in a participatory exercise led by Santiago’s Mayor Jaime Ravinet (1990-2000), resulting in the development of a “Plan for the Renovation of Santiago”. This plan had three components: (i) Restoring the residential character of the district, (ii) strengthening the commercial, industrial, and service activities; and (iii) improving the quality of life by providing better public spaces, redesigning private and public transport, increasing residents’ security, and protecting the environment.
Mayor Ravinet’s administration shared the assessment’s recommendations with the community through a participatory forum. Indeed, more than 16,000 residents took part in council meetings under the slogan, “Santiago, a Task of all”. Residents voiced their desire to stop the exodus of inhabitants and to restore the quality of life in Santiago. As a result of this process, the Plan for the Renovation of Santiago was prepared and launched at the “First Convention of Santiago.”
The implementation of the Plan for the Renovation of Santiago resulted in the creation of two programs, namely the SRP and the Housing Rehabilitation Program (REHA). The SRP’s goal was to attract new residents and activate the housing market in the municipal district by utilizing a public-private partnership (PPP) structure. The REHA’s aim was to reconstruct 500 tenement halls comprised of 7,500 housing units. These tenements are old collective condominiums that were originally built to serve the housing needs of the most vulnerable population. The Mayor assigned the responsibility of these programs to the newly created Santiago Development Corporation (SDC).
The SDC was created in 1985 to foster economic and urban development in the SMD. Its responsibilities focused on planning, coordinating, and executing projects for the urban, economic and social development of the municipal district. In addition, the SDC was responsible for developing visions for the city, and conducting research and analysis to determine the city’s growth trends. On the evaluation side, the SDC was mandated to conduct impact assessments of its projects.
The scale of the repopulation program was so huge that it would not have succeeded without the active participation of the private sector. However, the private developers did not believe that the rate of return on their investment would compare to building on the periphery. After meeting with developers and private sector players, the Mayor and the SDC realized that there was a need for a paradigm shift to convince the developers to invest by changing the image of the city. The SRP therefore focused on these tasks:
(i) Identifying available land for redevelopment: The process of updating the cadaster included identifying 90 hectares of land owned by private entities and public bodies (the Municipality and other national ministries) that qualified for redevelopment and whose owners were willing to sell their properties. The SDC also compiled a list of potential interested developers to buy the land.
(ii) Redefining the national housing subsidy to fit Santiago’s needs: In 1992, the Ministry of Housing and Urban Development (MHUD) designed and implemented a program to subsidize purchase of housing units in priority renovation areas by middle-income buyers called the Subsidy for Urban Renovation (SUR) to support the SRP.
(iii) Demonstrating the existence of large demand for housing in the district: The SDC organized buyers in the SMD and sped up the allocation and sale of pilot units in order to stimulate demand for housing in the inner city.
(iv) Collaborating with private developers through the Repopulation Agreements: The SDC created a mechanism to formalize the cooperation with private developers called, “Repopulation Agreements”. These were formal letters of collaboration between the SDC, the Municipality and private developers in which the SDC pledged to broker housing demand and supply.
The Santiago Municipal District is divided into 6 zones comprised of 20 neighborhoods. The Mayor and the City Council are popularly elected every 4 years, and are in charge of the city administration. There is also a Communal Council of Civil Society Organizations elected from representatives of all organizations in the district. The Council advises the Mayor’s administration, suggests plebiscites for some special investment projects, and participates in the discussions of master and zoning plans.
Municipalities are enabled by law to create corporations, which are private, non-profit organizations governed by private law. A maximum of seven percent of the municipal budget can be assigned to such corporations. These organizations are accountable to the Municipality every six-months for their activities and use of resources. Directors of corporations do not receive any compensation for their performance, and municipalities cannot be the guarantors of commitments subscribed to by these entities. As such, the SDC was in charge of implementing investment and renovation plans —one of the most important being the Santiago Repopulation Program between 1992 and 2010.
Most of the SDC’s budget comes from transfers from the Municipality of Santiago (72 percent). The rest of its budget comes from the lease of real estate properties that it owns. The budget is used to cover the administrative and human resource costs of the SRP.
Investors became interested in the Santiago Municipal District after realizing that Santiago offered a combination of three important elements for rental revenue. First, the pilot projects demonstrated that there was a high demand for housing. Second, the new subsidy covered a significant part of the housing value. Third, the master plan allowed greater flexibility and high floor-area-ratios (FAR).
The first project built was essential in generating confidence in the rest of the industry. As soon as the project was completed, more than 300 interested buyers showed up at the sales office to purchase units. The developer (Paz-Froimovic) understood the opportunity and immediately bought three other sites and started five new developments.
The SDC’s role has evolved significantly during the last 20 years. The SDC’s leadership was key to creating the conditions and putting the incentives in place for the private sector to start investing in Santiago. During the implementation of the SRP, the municipal Master Plan was modified 29 times. These changes sought to alter the height and density of development. The changes also included the definition of areas of patrimonial protection. The following points summarize the activities undertaken by SDC during the SRP.
Initiation (1990-1995)
Work primarily carried out by SDC
• The SRP planned a Land Bank, a list of pre-approved buyers, and a pilot project. It also obtained official permission to apply on behalf of housing buyers to obtain the housing subsidy.
• The SDC and the Municipality implemented a set of multiple complementary investments together with promotional activities.
• The interest of private developers was sparked.
• The SRP helped with access to credit and the housing subsidy.
Consolidation (1996-2002)
Collaboration between the SDC, the Municipality, and private developers
• The SDC started to sign new “Repopulation Agreements” with private developers interested in the role of coordination between developers and housing applicants.
• The SDC worked on accelerating the SUR subsidy application process, advising real estate developers about the design and location of their projects, selling units, and so on.
• In 1996, the MHUD allowed the use of the SUR subsidy for housing costing up to USD 90,000 (UF 2,000). On average, 750 SUR subsidies were allocated each year to housing applicants in the SMD.
• To preserve the provision of social housing in the district, the collaboration agreement with the pilot housing cooperative continued. However, increases in the price of land lead to the cooperative’s bankruptcy in 1997.
• The Municipality and the SDC developed a strong campaign to improve the image and highlight the advantages and benefits of living in Santiago.
Expansion (2003 – 2010)
Process primarily driven by the private sector
• The repopulation process became autonomous. The housing market in the Santiago Municipal District became the most vibrant in the metropolitan region.
• The SDC’s role in the Repopulation Program decreased.
• As demand increased, more developers entered SMD’s housing market without the assistance of the SDC.
• The proportion of people buying a housing unit using the SUR housing subsidy decreased significantly.
Redefinition (2010 – present)
Re-thinking the future role of the SRP
• In 2010, the SDC reoriented its focus to respond to the needs generated by the earthquake that occurred in February 2010.
• Today, the SDC and the Municipality of Santiago must respond to two different kinds of residents: (i) The traditional residents, the majority of them elderly, who claim that the new developments have worsened their quality of life; and (ii) the new residents (generally young professionals) who live in the new developments, who demand more green areas, social infrastructure, building management, etc.
• The Municipality plans to address the new challenges by redefining the role of the SDC and the Repopulation Program. In this context, the Municipality has requested a complete assessment of the impact that the repopulation has had on the SMD.
The most important outcome of the SRP was to boost the housing market and repopulate the SMD, which has now become one of the most vibrant residential areas in the Metropolitan Region. Between 2002 and 2012, the population increased by 55.1 percent and the housing stock almost doubled. 646 development projects were undertaken as part of the SRP. Although the SUR subsidy was applicable to many other districts in the Metropolitan Region, because of the SRP, the SMD was the only one that actually benefited from its use.
Over the years, the housing market has become more autonomous and competitive. Around 10,000 units were developed under collaboration agreements between developers and the SDC from 1990–2012. Until the year 2000, around 40 percent of the housing projects were the result of PPPs between real estate developers with the SDC and the Municipality of Santiago. However, since then, the housing market in the district of Santiago has started to work autonomously. In addition, the financial outcomes of Santiago’s renovation plan have been significant. The total municipal revenues increased 55.2 percent in the period 2001–2013.
However, the SRP has received criticism. The area is now characterized by high-rise apartment buildings of poor aesthetic quality. Critics blame this on the flexibility of the master plan, as well as the mild regulations. Residents point out that the new buildings are not well integrated into the existing environment. In many cases, this situation has generated opposition from residents to the construction of new buildings. Residents started to oppose new projects and demand that the Municipality freeze building permits and reduce the FAR and heights allowed in their neighborhoods.
These criticisms have raised the question of whether the SRP has resulted in gentrification. Indeed, the SRP did not include a proactive strategy to prevent gentrification; the few actions taken, such as the affordable housing constructed as part of the pilot housing cooperative, were reactive rather than proactive. The economic feasibility of building affordable housing for low-income households turned out to be very low. The following lessons were learned from the SRP:
• Maintain proactive municipal leadership. Because the repopulation process takes time to realize progress, institutional and political stability are very important when creating major change.
• Create institutional arrangements to support public and private cooperation and partnerships. The Santiago Development Corporation created the conditions for establishing a PPP with real estate developers that would have been impossible under the normal municipal organizational structure, greatly invigorating the SRP.
• Adjust incentives and regulations for private developers to respond to changes in market dynamics. Both the SUR subsidy and the flexibility of Santiago’s Master Plan were key to making the repopulation plan a success by attracting private investors and low- and middle-income household buyers.
• Continuous community participation. Participation and engagement should be a permanent part of a city regeneration processes, not only during the design phase, but also during project implementation.
• Holistic approach to collaboration and renovation by all stakeholders. All parts of the SRP strategy worked together in a complementary fashion to achieve the goal of repopulating and revitalizing the city.
