Project 6. Capacity Development for Local Urban Governance

Intended Outcomes

Outcome No. 1: Efficient and Effective Urban Development Management

Key Result Areas

KRA NO. 2: Institutions Development
KRA NO. 3: Capacity Building

Rationale

Urban development is location specific. The composite effect of the development of the various urban areas, constitute a significant driver of economic development. Therefore, the management of location specific development by those who are most proximate and direct beneficiaries to the results is the key to responsive, progressive urban governance.

Policies, regulations, resource allocation decisions, and other forms of government intervention affect the location choices of people and business. Experience has shown, for example, that highly centralized governmental systems tended to create mega cities within the location of central government offices, that creates stark contrast in the under development of remote regions and localities.

The Local Government Code enacted a decade ago provided a milestone effort at truly achieving a meaningful decentralization process. But ten years hence, several problems persist: local government still lack capacity for good local governance, executive departments are still wont to have direct control over implementation and resources, and within local governments themselves, the institutional mechanisms for promoting good governance, transparency, participation and accountability remain deficient. Weaknesses in the local government code emerge as potential factors that hinder good and accountable local governance.

For example, local governments have generally poor revenue generation performance and re primarily dependent on the IRA. The provision of IRA, which is not tied to local government performance, creates disincentives for LGUs to improve revenue generation performance (Webster, et al. 2003). Also, the formula for allocating IRA among levels of local governments is inequitable in relation to the devolved services. Amendments to the local government code should highlight reforms in the criteria for allocating IRA among LGUs and particularly leveraging amounts in relation to performance.

While many recent efforts were initiated to review and amend the local government code, a comprehensive and integrative approach has yet to be formulated to completely review and address the diverse governance issues that the code should address.

The local government code strengthened the urban development functions of the LGUs. But much remains to be done in order to develop the required capacities for sound urban development and good urban governance. Interventions to improve capacities and to provide tools, particularly in the areas of urban development planning, poverty reduction, public investments formulation and development financing, among others will be critical to cities being able to effectively implement their city development strategies.

Objectives

1. To improve the vertical compartmentalization of urban governance functions within the context of devolution.
2. To build the capacities of local governments for efficient and effective urban governance.
3. To promote sharing and application of comparative experience and best practices.

Project Components/Scope of Work

The project is organized into various interventions towards improving local government capacity for more efficient and effective urban governance.

1. Review and Amendment of the Local Government Code
2. Regulatory Framework and Models for LGUs
3. Formulation of City Public Investment and Development Financing Models
4. Pilot implementation in six (6) selected LGUs
5. Documentation of Best Practices in Urban Development Planning and Socialized Housing Schemes

A. Review and Amendment of the Local Government Code

The local government code has undergone a extensive review process. Such effort has been coordinated by DILG. But a deeper review of the code is needed particularly as it addresses urban governance and secure tenure. This component will involve a comprehensive review and amendment of the local government code and will integrate recent past efforts to amend it. The amendment will ensure the proper identification of the scope of functions, responsibility and resources that should be devolved and define the corresponding accountabilities at national and local levels. The code will define the new relationship between the national government and local government units within the context of an expanded devolution. It will provide the principles that will guide cities in defining their governance roles and functions.

The code will also correct existing deficiencies in the current local government code, particularly in the allocation and provision of IRA to LGUs. First, the allocation among levels of government provinces, cities, municipalities and barangay will be reviewed including the criteria for such allocation policies. New criteria and applications will be included in the revised code. Second, the provision of IRA should be leveraged against revenue and development performance of LGUs. This component will articulate the principles, develop the criteria and performance indicators, and design the formula for computing the amount to be transferred, and the process of releasing the IRA to LGUs.

The study will include mechanisms for clearly defining and strengthening the internal and public accountability of LGUs. This will involve designing the oversight monitoring system, the public information and feedback mechanisms, and the standards on the verifiability and public availability of information (transparency). ↑

B. Regulatory Framework and Models for LGUs

At present regulatory activities of LGUs are mandated in existing laws and in the local government code. But LGUs are empowered to enforce regulations that further improve the efficiency, equity and overall functioning of their communities. Regulations create order, protect rights, and ensure fairness. They also generate revenues.

Also regulation does just involve issuing permits or licenses but also other forms of intervention that encourage desired actions and discourage undesirable ones. The regulatory framework and models for LGUs will provide a menu of interventions that LGUs can creatively apply to achieve urban development goals.

Activities under this component involve a review of existing laws on regulation by LGUs, survey of existing regulatory practices, and development of models for specific LGU classifications.

This component may provide an area focus to complement efforts under the city development strategy, but will apply to cities, which are not direct beneficiaries of the city development strategy. ↑

C. Formulation of City Public Investment and Development Financing Models

Urban development plans cannot be implemented without the corresponding resources that match objectives and tasks. This project component will formulate models for public investment program development by LGUs which will contain approaches, methodologies and best practice illustrations on the following: