Private shelter and urban initiatives sector program

The Ministry of Housing and Urban Development (MINVU) will implement the program. A private, non-profit Shelter Finance Corporation will be established to help MINVU to manage the low-income mortgage finance program -- which will account for half of HG funds. The goal is to have at least three substantial private lenders operating in the low-income housing market by the program"s end; the stability provided by USAID funds is expected to generate matching funds from the private lenders. A complementary program of policy and regulatory reform will address expansion of the existing low-income mortgage guaranty program managed by MINVU, and will support the development of private mortgage payment insurance, of a payroll deduction system for low-income mortgages, and of a new market system to place securitized low- income mortgages among institutional investors. Secondly, $15 million in HG funds will be dedicated to the revitalization of inner city areas, particularly in Santiago. It is expected that these funds will be used to purchase large properties or parcels of land in order to achieve economies of scale in urban renewal, both residential and commercial. Where possible, funds will be allocated to applicants with matching funds or property resources for a proposed project. In addition, the project will build the land use planning capabilities of MINVU and of the Corporation for the Development of Santiago (CDS -- a private nonprofit corporation; it is expected that eventually other non-governmental organizations will participate in initiating urban revitalization projects. The small-scale urban initiatives component aims to build the capabilities of local governments and community organizations to carry out infrastructure projects that address the serious environmental threats facing small communities throughout Chile. Eight to twelve demonstration projects, proposed by local governments and community groups, and ranging in cost from $400,000 to $600,000, will be funded. Illustrative categories include wastewater treatment, potable water delivery, and neighborhood street paving. The selection of proposals will be based in part on the ability of potential beneficiaries to afford the projects.