By Lavern Clarke, Staff ReporterOPERATION PRIDE beneficiaries owe the Government and its agencies $4.4 billion as at December 2002, funds spent on developing land for them to occupy.
The outstanding receivables represent funds that ought to have been contributed by the prospective property owners, but which the state has seeded, on expectations that the agency would have been reimbursed, according to Christopher Castriota, spokesman for the Ministry of Water and Housing.
National Housing Development Corporation (NHDC) boss, Milverton Reynolds, who has headed the agency since February 2002, has ignored requests for comment on the size of the receivables and the strategies to reduce it. Mortgage manager, Donna-Marie Ashton, to whom Wednesday Business spoke, referred the queries back to Reynolds.
Under the programme managed by the NHDC, the informal settlers or squatters pay an initial 20 per cent deposit as seeding for infrastructure work within the PRIDE schemes. The deposit is calculated on concessionary or below market prices at which the informal settlers will eventually acquire the subdivided lots.
Castriota notes that payments are not always made in one tranche, saying the problem has arisen largely because of the slow pace at which people pay.
"That is part of what has brought about that large amount of outstanding receivables," he said Tuesday. "Oftentimes, the Ministry would advance funds so that some amount of work can start, whether to clear land or pay the surveyors, in anticipation that the intended beneficiaries would continue to pay up their 20 per cent."
Asked why the funds are not recovered by placing the lots on the market, the Ministry spokesman said there were other costs built into the receivables.
Information obtained on NHDC operations show that the housing agency spent about $640 million on PRIDE schemes for the fiscal year ending March 2000, according to Ministry Paper 50/2000, the most recent documentation on the NHDC that <B>Wednesday Business<P> could obtain. The provident societies, through which the NHDC does business with prospective land owners, only provided $44.37 million, which amounted to just about 7 per cent of the expenditure.
Meantime, the current receivables exceed by almost 100 per cent, the funds approved by Cabinet for shelter-related and other spending.
In January 2000, Cabinet decided that Government would spend no more than $2.5 billion to finance six housing and planning projects within the Ministry of Water and Housing, to be distributed over a 10-year period to the year 2011. But with $4.4 billion of receivables, PRIDE alone has overshot the approved figure by about $2 billion.
Castriota said the expansive size of the receivables could well be related to the almost doubling of beneficiaries under the programme, which last year topped 30,000, among other factors. He had no immediate response on why the squatters were allowed to build up that amount of credit.
The extent of the beneficiaries' indebtedness was disclosed in February by Water and Housing Minister, Donald Buchanan, at a closed door NHDC retreat in St. Elizabeth.
But, while noting that the funds were needed to finance the construction of other schemes, Buchanan, whose government continues to defend the shelter programme as one of the best means to 'give land to the landless', urged the NHDC to continue issuing titles to those beneficiaries who pay up, to prove that PRIDE "is working and is delivering," said a press release coming out of the retreat.
The programme has been dogged by allegations of fraud and charges of cronyism and political interference.
At the time of the disclosure, another 4,801 new titles were ready for distribution across 12 schemes. Beneficiaries pay for their lots under mortgage arrangements with the shelter agency, but even at that level, NHDC has problems collecting.
In March 2000, mortgage arrears amounted to $114.19 million on property valued then at a combined $3.78 billion and distributed among 16,610 mortgagors. The outstanding payments were up slightly by $700,000, over the $113.5 billion recorded the year prior.
The agreements with landowners stipulate that properties will be sold to recover arrears, but the Ministry Paper noted that while 4,189 demand letters and 301 sale letters were issued, only seven units were actually put up for sale, one of which was eventually withdrawn.
Mortgagors are given five months in which to bring their accounts up to date with the NHDC before the agency moves to foreclose, but the Ministry Paper also said clearly that the final decision does not rest with the agency.
"The Ministry of Water and Housing will resort to foreclosure only where we are convinced that the mortgagor has absolutely no intention of paying," it said.
