Private sector low cost shelter

investors against default on loans provided the Government of Costa Rica (GOCR) in a project to help the private sector establish a replicable, non-subsidized, low-cost shelter program for low-income families. The Agricultural Bank of Cartago (DECAP) will channel project funds to the Sistema Nacional de Ahorro y Prestamo (SNAP) which will in turn provide consumer loans. The project will finance some 16,000 housing solutions for families with incomes below the national median. Loans will be available for either a serviced lot (with potable water, sewerage, electricity, storm drainage, streets, and sidewalks); a serviced lot plus a home improvement (i.e., a first phase living space); or a serviced lot, sanitary core, and multi-purpose area of 16.5 sq m. A 10% down payment will be required; monthly mortage payments will be over 20 years and limited to 30% of monthly income. Over 40% of project funds will be allocated to 10-year home improvement loans (some 7,296). The estimated average loan amount will be enough to construct two or more of the following improvements: sanitary facilities, an added bedroom, a new roof,and/or concrete floor and foundation. Private developers and contractors will reorient past efforts directed at middle-income families to the poor. Efforts will be placed on developing projects that meet beneficiary paying capacity; construction financing risks will be borne by developers/promoters. The SNAP will develop a financial planning framework to monitor its financial condition, analyze the impact of the costs of the resources it uses, and determine the spread and lending terms needed to maintain the system"s viability. The SNAP will also take steps to mobilize internal savings (e.g., by promoting new types of savings such as Christmas accounts) and will diversify the gamut of its loan activities by allocating resources for shorter term investments such as home improvements, construction financing, lot acquisition, etc. To increase productivity, SNAP will undertake operational reforms in regard to loan collection and processing, personnel training and deployment, and internal communications. Development Grant funds ($300,000) will finance long- and short-term technical assistance to help in these efforts.