The nonrecourse loan to AMAL will be advanced in two tranches, ,000 in 2009 and ,000 in 2010. The loan will be repayable in 20 years and will make possible efforts by the Palestinian Investment Authority to construct 30,000 affordable homes available in the next ten years to address the massive deficit of affordable housing.
UN-HABITAT will undertake ongoing monitoring of the nonrecourse loan and underlying equity investment through monthly investor reporting on the AMAL portfolio of housing loans, quarterly program updates and through annual due diligence site visits.
UN-HABITAT will assess lessons learned with a view to apply the financial product and partnership arrangement in large-scale housing programs in other regions of the world.
In addition, UN-HABITAT will work with the Palestine Investment Fund and CHF International to establish processes for sustainable materials and environmental design, explore introduction of title insurance and establish broader-based regional urban planning.
There is high demand for affordable housing and access to housing finance products in the Palestinian Territories. As of 2007, there was an estimated housing shortage of 146,000 units. Additionally, because the population is young and birth rates have been high, new household formation will increase future demand for housing and aggravate the shortage--by another 400,000 units over the next 10 years-if new units are not developed.
The AMAL project is designed to address this need in part by providing secure takeout finance for development and construction of affordable homes across the West Bank. To enable the launch of AMAL, the program sponsors (Senior Debt Creditors PIF, OPIC and IFC) needed to raise sufficient Tier I/Tier II capital to satisfy the Palestinian Capital Markets Authority of the financial viability and soundness of the secondary mortgage takeout finance program.
UN Habitat's investment will complete the Tier I/Tier II capitalization of AMAL necessary to allow AMAL to operate under the regulations of the Capital Markets Authority. UN Habitat's investment will be structured as a nonrecourse loan to a new Palestinian NGO which will make the AMAL investment and can also take on sustainable design and social housing inclusion technical assistance work.
The key events and factors enabling the commitment to be realized are the extensive groundwork that was laid by Palestinian Investment Fund; the support of OPIC and IFC; UN-HABITAT's historic record of work in occupied Palestinian territories, including humanitarian interventions and post-conflict housing reconstruction; and support for UN-HABITAT efforts by both the governments of Israel and Palestinian Authority.
SEEKING: financial assistance, implementing partners.
Technical assistance for borrower education, modification and enhancement of environmental standards to fit criteria for optimizing sustainable construction in West Bank
OFFERING: best practice information.
Expertise in urban planning, land tenure and title issues, housing finance