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Georgia: Georgia Housing Voucher Purchase Program
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Background
Based on the highly successful USAID Armenia Housing Purchase Voucher Program implemented by the Urban Institute from 2000- 2005 for households displaced from the 1988 Earthquake, The U.S. Department of State BPRM awarded a Cooperative Agreement to UI to pilot a similar voucher program to provide permanent shelter to families displaced from the civil conflicts in Georgia in the early 1990’s. Kutaisi, Georgia’s second largest city, was selected as the venue because of its high concentration of internally displaced persons (IDPs) from Georgia’s breakaway region of Abkhazia. The pilot is testing the concept in the local context and demonstrating the approach to all stakeholders, including the Government of Georgia and the donor community, to inform a broader national housing strategy and to garner support for a potential roll-out of a larger program.
Approach
Beneficiary selection is site-based, whereby Collective Centers (public buildings used as temporary shelter) in a defined geographic area of the city, are considered based on the severity of living conditions and the willingness of IDP residents to participate. All willing, eligible IDP households are provided with a housing purchase voucher based on family size and composition. The voucher translates into the size of a housing unit (in standard room numbers) and is priced at the average current market value so that the housing unit can be purchased from the marketplace. A family may employ the “shopping incentive” by bargaining down sellers and contracting for an eligible unit for less than the voucher value, thereby keeping the difference between the voucher and the cost of the housing unit. Similarly, a beneficiary may add his/her own resources to the voucher sum to buy a better property. All financial transactions are executed through local banks under contract with UI, using “blocked” sole purpose accounts in the names of both beneficiary buyers and contract sellers to assure funds are used as intended and increase transparency. The voucher may be used anywhere in Georgia.
Results
Buyer Trust All indications are that the pilot program will be very successful, with 70% of the 129 beneficiaries from seven Collective Centers to-date have already found an apartment. Of this 70%, 47 % of the beneficiaries have purchased housing units (with contracts or closed) and 23% are in process. All 129 families have registered their vouchers at the authorized bank, an important first step and an indicator that the beneficiaries trust the program and are going to make an effort to use their voucher. Seller Trust The market is cooperating as sellers and important stakeholders are demonstrating trust in the program. This is a key accomplishment. Without cooperation by the “supply side”, the program will not function. Host Community Support and Local Capacity The program is being embraced by the local population. The NGOs, bank and other partners are clearly demonstrating the capacity to implement the program. The NGOs are doing all social work and the bank is doing the title searches, apartment inspections, etc. in accordance with program procedures. Positive Perception The program has received only positive press. There are no signs of resentment or resistance by the “host community”. Residents are seeing the benefits as the collective centers (kindergartens and other public buildings) are being returned to the community. Demand There is a huge demand. Hundreds of IDP families have come to the program’s “Information Center” to inquire about the program and several hundred IDP families have been registered as “being interested” to participate in a future potential program. Counterpart Cooperation The coordination among program implementers (Urban Institute and its partners) and both the Central and Local governments has been good as sound operating procedures have been established among the counterparts. The local government of Kutaisi has been especially helpful, and is keeping pace with executing the procedures necessary so that successful beneficiaries vacate the collective centers. On Schedule Based on UI’s experience with similar programs in the region, most vouchers will have been redeemed by the end of May 2006 with most families having moved out of the collective centers by then as well. Cost Effective The “cost per beneficiary family” (excluding administration) is running at an average of $3,675. This is for the purchase of a regular, legal apartment in a mainstream residential, multi-unit building. The average number of household members is 3.1 and the apartments being purchased are an average of 2.1 rooms. Over one in four sales are permitting the beneficiary to keep some of the funds in accordance to the program’s "shopping incentive” with an average remainder of $900 for the applicable transactions (but less than 8% of the overall disbursed funds to-date). The remainders help some beneficiaries to incur costs for moving expenses, to do some small renovations to the new apartment, or just to offset living expenses. Less than 5% of the deals show that the buyer has added his/her own resources to the voucher value. This all demonstrates that the vouchers are accurately priced and the housing market prices are stable. Staying in Kutaisi Almost all families are finding and buying apartments right in Kutaisi. So, far 70% of the sales are in Kutaisi and most in the same micro-region of the pilot. This is positive as it shows that a support structure has been established for the IDPs and generally they want to stay in the communities where they have been living. This will facilitate future planning.
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